Devon Energy (DVN)

Our capital expenditures consist of amounts related to our oil and gas exploration and development operations, our midstream operations and other corporate activities. The vast majority of our capital expenditures are for the acquisition, drilling or development of oil and gas properties, which totaled $8.7 billion, $5.6 billion and $6.8 billion in 2008, 2007 and 2006, respectively. The 2008 capital expenditures include $2.6 billion related to acquisitions of properties in Texas, Louisiana, Oklahoma and Canada. The 2006 capital expenditures include $2.0 billion related to the acquisition of the Chief properties. Excluding the effect of these acquisitions, the increase in capital expenditures from 2006 to 2008 was due to increased drilling activities in the Barnett Shale, Gulf of Mexico, Carthage, Cana, Woodford Shale, Groesbeck and Washakie areas of the United States, the Lloydminster and Jackfish projects in Canada, and in the Polvo development in Brazil. Expenditures also increased due to inflationary pressure driven by increased competition for field services.

 

Our capital expenditures for our midstream operations are primarily for the construction and expansion of natural gas processing plants, natural gas pipeline systems and oil pipelines. These midstream facilities exist primarily to support our oil and gas development operations. The majority of our midstream expenditures from 2006 to 2008 were related to development activities in the Barnett Shale, the Woodford Shale in southeastern Oklahoma and Jackfish in Canada.

 

 

Following are the components of our capital expenditures for the years ended 2008, 2007 and 2006.

 

Our capital expenditures consist of amounts related to our oil and gas exploration and development operations, our midstream operations and other corporate activities. The vast majority of our capital expenditures are for the acquisition, drilling or development of oil and gas properties, which totaled $8.7 billion, $5.6 billion and $6.8 billion in 2008, 2007 and 2006, respectively. The 2008 capital expenditures include $2.6 billion related to acquisitions of properties in Texas, Louisiana, Oklahoma and Canada. The 2006 capital expenditures include $2.0 billion related to the acquisition of the Chief properties. Excluding the effect of these acquisitions, the increase in capital expenditures from 2006 to 2008 was due to increased drilling activities in the Barnett Shale, Gulf of Mexico, Carthage, Cana, Woodford Shale, Groesbeck and Washakie areas of the United States, the Lloydminster and Jackfish projects in Canada, and in the Polvo development in Brazil. Expenditures also increased due to inflationary pressure driven by increased competition for field services.

 

Our capital expenditures for our midstream operations are primarily for the construction and expansion of natural gas processing plants, natural gas pipeline systems and oil pipelines. These midstream facilities exist primarily to support our oil and gas development operations. The majority of our midstream expenditures from 2006 to 2008 were related to development activities in the Barnett Shale, the Woodford Shale in southeastern Oklahoma and Jackfish in Canada.

 

 

In February 2009, we provided guidance for our 2009 capital expenditures, which are expected to range from $4.7 billion to $5.4 billion. This estimate is significantly lower than our 2008 capital expenditures, which coincides with the significant decline in current oil, gas and NGL prices, as well as the near-term price expectations. To a certain degree, the ultimate timing of these capital expenditures is within our control. Therefore, if oil and gas prices fluctuate from current estimates, we could choose to defer a portion of these planned 2009 capital expenditures until later periods, or accelerate capital expenditures planned for periods

beyond 2009 to achieve the desired balance between sources and uses of liquidity. Based upon current price expectations for 2009 and the commodity price collars and fixed-price contracts we have in place, we anticipate having adequate capital resources to fund our 2009 capital expenditures.

 

 

In February 2009, we provided guidance for our 2009 capital expenditures, which are expected to range from $4.7 billion to $5.4 billion. This estimate is significantly lower than our 2008 capital expenditures, which coincides with the significant decline in current oil, gas and NGL prices, as well as the near-term price expectations. To a certain degree, the ultimate timing of these capital expenditures is within our control. Therefore, if oil and gas prices fluctuate from current estimates, we could choose to defer a portion of these planned 2009 capital expenditures until later periods, or accelerate capital expenditures planned for periods

beyond 2009 to achieve the desired balance between sources and uses of liquidity. Based upon current price expectations for 2009 and the commodity price collars and fixed-price contracts we have in place, we anticipate having adequate capital resources to fund our 2009 capital expenditures.

 

 

Following are the components of our capital expenditures for the
years ended 2008, 2007 and 2006.

 

Our capital expenditures consist of amounts related to our oil
and gas exploration and development operations, our midstream
operations and other corporate activities. The vast majority of
our capital expenditures are for the acquisition, drilling or
development of oil and gas properties, which totaled
$8.7 billion, $5.6 billion and $6.8 billion in
2008, 2007 and 2006, respectively. The 2008 capital expenditures
include $2.6 billion related to acquisitions of properties
in Texas, Louisiana, Oklahoma and Canada. The 2006 capital
expenditures include $2.0 billion related to the
acquisition of the Chief properties. Excluding the effect of
these acquisitions, the increase in capital expenditures from
2006 to 2008 was due to increased drilling activities in the
Barnett Shale, Gulf of Mexico, Carthage, Cana, Woodford Shale,
Groesbeck and Washakie areas of the United States, the
Lloydminster and Jackfish projects in Canada, and in the Polvo
development in Brazil. Expenditures also increased due to
inflationary pressure driven by increased competition for field
services.

 

Our capital expenditures for our midstream operations are
primarily for the construction and expansion of natural gas
processing plants, natural gas pipeline systems and oil
pipelines. These midstream facilities exist primarily to support
our oil and gas development operations. The majority of our
midstream expenditures from 2006 to 2008 were related to
development activities in the Barnett Shale, the Woodford Shale
in southeastern Oklahoma and Jackfish in Canada.

 

 

Following are the components of our capital expenditures for the
years ended 2008, 2007 and 2006.

 

Our capital expenditures consist of amounts related to our oil
and gas exploration and development operations, our midstream
operations and other corporate activities. The vast majority of
our capital expenditures are for the acquisition, drilling or
development of oil and gas properties, which totaled
$8.7 billion, $5.6 billion and $6.8 billion in
2008, 2007 and 2006, respectively. The 2008 capital expenditures
include $2.6 billion related to acquisitions of properties
in Texas, Louisiana, Oklahoma and Canada. The 2006 capital
expenditures include $2.0 billion related to the
acquisition of the Chief properties. Excluding the effect of
these acquisitions, the increase in capital expenditures from
2006 to 2008 was due to increased drilling activities in the
Barnett Shale, Gulf of Mexico, Carthage, Cana, Woodford Shale,
Groesbeck and Washakie areas of the United States, the
Lloydminster and Jackfish projects in Canada, and in the Polvo
development in Brazil. Expenditures also increased due to
inflationary pressure driven by increased competition for field
services.

 

Our capital expenditures for our midstream operations are
primarily for the construction and expansion of natural gas
processing plants, natural gas pipeline systems and oil
pipelines. These midstream facilities exist primarily to support
our oil and gas development operations. The majority of our
midstream expenditures from 2006 to 2008 were related to
development activities in the Barnett Shale, the Woodford Shale
in southeastern Oklahoma and Jackfish in Canada.

 

 

Though we have completed several major property acquisitions in recent years, these transactions are opportunity driven. Thus, we do not “budget,” nor can we reasonably predict, the timing or size of such possible acquisitions.

 

Our capital expenditures budget is based on an expected range of future oil, gas and NGL prices as well as the expected costs of the capital additions. Should actual prices received differ materially from our price expectations for our future production, some projects may be accelerated or deferred and, consequently, may increase or decrease total 2009 capital expenditures. In addition, if the actual material or labor costs of the budgeted items vary significantly from the anticipated amounts, actual capital expenditures could vary materially from our estimates.

 

Given the limitations discussed above, the following table shows expected ranges for drilling, development and facilities expenditures by geographic area. Development capital includes development activity related to reserves classified as proved and drilling that does not offset currently productive units and for which there

is not a certainty of continued production from a known productive formation. Exploration capital includes exploratory drilling to find and produce oil or gas in previously untested fault blocks or new reservoirs.

 

 

In addition to the above expenditures for drilling, development and facilities, we expect to spend between $325 million to $425 million on our marketing and midstream assets, which primarily include our oil pipelines, natural gas processing plants, and gas pipeline systems. Additionally, we expect to capitalize between $460 million and $480 million of G&A expenses in accordance with the full cost method of accounting and to capitalize between $110 million and $120 million of interest. We also expect to pay between $105 million and $115 million for plugging and abandonment charges, and to spend between $230 million and $250 million for other non-oil and gas property fixed assets. We anticipate spending between $40 million and $50 million to fulfill drilling commitments related to our assets held for sale.

 

 

Though we have completed several major property acquisitions in recent years, these transactions are opportunity driven. Thus, we do not “budget,” nor can we reasonably predict, the timing or size of such possible acquisitions.

 

Our capital expenditures budget is based on an expected range of future oil, gas and NGL prices as well as the expected costs of the capital additions. Should actual prices received differ materially from our price expectations for our future production, some projects may be accelerated or deferred and, consequently, may increase or decrease total 2009 capital expenditures. In addition, if the actual material or labor costs of the budgeted items vary significantly from the anticipated amounts, actual capital expenditures could vary materially from our estimates.

 

Given the limitations discussed above, the following table shows expected ranges for drilling, development and facilities expenditures by geographic area. Development capital includes development activity related to reserves classified as proved and drilling that does not offset currently productive units and for which there

is not a certainty of continued production from a known productive formation. Exploration capital includes exploratory drilling to find and produce oil or gas in previously untested fault blocks or new reservoirs.

 

 

In addition to the above expenditures for drilling, development and facilities, we expect to spend between $325 million to $425 million on our marketing and midstream assets, which primarily include our oil pipelines, natural gas processing plants, and gas pipeline systems. Additionally, we expect to capitalize between $460 million and $480 million of G&A expenses in accordance with the full cost method of accounting and to capitalize between $110 million and $120 million of interest. We also expect to pay between $105 million and $115 million for plugging and abandonment charges, and to spend between $230 million and $250 million for other non-oil and gas property fixed assets. We anticipate spending between $40 million and $50 million to fulfill drilling commitments related to our assets held for sale.

 

 

In February 2009, we provided guidance for our 2009 capital
expenditures, which are expected to range from $4.7 billion
to $5.4 billion. This estimate is significantly lower than
our 2008 capital expenditures, which coincides with the
significant decline in current oil, gas and NGL prices, as well
as the near-term price expectations. To a certain degree, the
ultimate timing of these capital expenditures is within our
control. Therefore, if oil and gas prices fluctuate from current
estimates, we could choose to defer a portion of these planned
2009 capital expenditures until later periods, or accelerate
capital expenditures planned for periods

beyond 2009 to achieve the desired balance between sources and
uses of liquidity. Based upon current price expectations for
2009 and the commodity price collars and fixed-price contracts
we have in place, we anticipate having adequate capital
resources to fund our 2009 capital expenditures.

 

 

In February 2009, we provided guidance for our 2009 capital
expenditures, which are expected to range from $4.7 billion
to $5.4 billion. This estimate is significantly lower than
our 2008 capital expenditures, which coincides with the
significant decline in current oil, gas and NGL prices, as well
as the near-term price expectations. To a certain degree, the
ultimate timing of these capital expenditures is within our
control. Therefore, if oil and gas prices fluctuate from current
estimates, we could choose to defer a portion of these planned
2009 capital expenditures until later periods, or accelerate
capital expenditures planned for periods

beyond 2009 to achieve the desired balance between sources and
uses of liquidity. Based upon current price expectations for
2009 and the commodity price collars and fixed-price contracts
we have in place, we anticipate having adequate capital
resources to fund our 2009 capital expenditures.

 

 

Though we have completed several major property acquisitions in
recent years, these transactions are opportunity driven. Thus,
we do not “budget,” nor can we reasonably predict, the
timing or size of such possible acquisitions.

 

Our capital expenditures budget is based on an expected range of
future oil, gas and NGL prices as well as the expected costs of
the capital additions. Should actual prices received differ
materially from our price expectations for our future
production, some projects may be accelerated or deferred and,
consequently, may increase or decrease total 2009 capital
expenditures. In addition, if the actual material or labor costs
of the budgeted items vary significantly from the anticipated
amounts, actual capital expenditures could vary materially from
our estimates.

 

Given the limitations discussed above, the following table shows
expected ranges for drilling, development and facilities
expenditures by geographic area. Development capital includes
development activity related to reserves classified as proved
and drilling that does not offset currently productive units and
for which there

is not a certainty of continued production from a known
productive formation. Exploration capital includes exploratory
drilling to find and produce oil or gas in previously untested
fault blocks or new reservoirs.

 

 

In addition to the above expenditures for drilling, development
and facilities, we expect to spend between $325 million to
$425 million on our marketing and midstream assets, which
primarily include our oil pipelines, natural gas processing
plants, and gas pipeline systems. Additionally, we expect to
capitalize between $460 million and $480 million of
G&A expenses in accordance with the full cost method of
accounting and to capitalize between $110 million and
$120 million of interest. We also expect to pay between
$105 million and $115 million for plugging and
abandonment charges, and to spend between $230 million and
$250 million for other non-oil and gas property fixed
assets. We anticipate spending between $40 million and
$50 million to fulfill drilling commitments related to our
assets held for sale.

 

 

Though we have completed several major property acquisitions in
recent years, these transactions are opportunity driven. Thus,
we do not “budget,” nor can we reasonably predict, the
timing or size of such possible acquisitions.

 

Our capital expenditures budget is based on an expected range of
future oil, gas and NGL prices as well as the expected costs of
the capital additions. Should actual prices received differ
materially from our price expectations for our future
production, some projects may be accelerated or deferred and,
consequently, may increase or decrease total 2009 capital
expenditures. In addition, if the actual material or labor costs
of the budgeted items vary significantly from the anticipated
amounts, actual capital expenditures could vary materially from
our estimates.

 

Given the limitations discussed above, the following table shows
expected ranges for drilling, development and facilities
expenditures by geographic area. Development capital includes
development activity related to reserves classified as proved
and drilling that does not offset currently productive units and
for which there

is not a certainty of continued production from a known
productive formation. Exploration capital includes exploratory
drilling to find and produce oil or gas in previously untested
fault blocks or new reservoirs.

 

 

In addition to the above expenditures for drilling, development
and facilities, we expect to spend between $325 million to
$425 million on our marketing and midstream assets, which
primarily include our oil pipelines, natural gas processing
plants, and gas pipeline systems. Additionally, we expect to
capitalize between $460 million and $480 million of
G&A expenses in accordance with the full cost method of
accounting and to capitalize between $110 million and
$120 million of interest. We also expect to pay between
$105 million and $115 million for plugging and
abandonment charges, and to spend between $230 million and
$250 million for other non-oil and gas property fixed
assets. We anticipate spending between $40 million and
$50 million to fulfill drilling commitments related to our
assets held for sale.