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These excerpts taken from the DVN 10-K filed Feb 27, 2009. Depreciation,
Depletion and Amortization of Oil and Gas Properties
(“DD&A”)
DD&A of oil and gas properties is calculated by multiplying
the percentage of total proved reserve volumes produced during
the year, by the “depletable base.” The depletable
base represents our net capitalized investment plus future
development costs related to proved undeveloped reserves.
Generally, if reserve volumes are revised up or down, then the
DD&A rate per unit of production will change inversely.
However, if the depletable base changes, then the DD&A rate
moves in the same direction. The per unit DD&A rate is not
affected by production volumes. Absolute or total DD&A, as
opposed to the rate per unit of production, generally moves in
the same direction as production volumes. Oil and gas property
DD&A is calculated separately on a
country-by-country
basis.
The changes in our production volumes, DD&A rate per unit
and DD&A of oil and gas properties between 2006 and 2008
are shown in the table below.
The following table details the increases in DD&A of oil
and gas properties between 2006 and 2008 due to the changes in
production volumes and DD&A rate presented in the table
above.
2008 vs. 2007 Oil and gas property related DD&A
increased $434 million due to a 15% increase in the
DD&A rate. The largest contributor to the rate increase was
inflationary pressure on both the costs incurred during 2008 as
well as the estimated development costs to be spent in future
periods on proved undeveloped reserves. Other factors
contributing to the rate increase include reductions in reserve
estimates due to lower 2008 year-end commodity prices and
the transfer of previously unproved costs to the depletable base
as a result of 2008 drilling activities. In addition to the
impact from the higher 2008 rate, our 6% production increase
caused oil and gas property related DD&A expense to
increase $164 million.
Table of Contents
2007 vs. 2006 Oil and gas property related DD&A
increased $355 million due to a 15% increase in the
DD&A rate. The largest contributor to the rate increase was
inflationary pressure on both the costs incurred during 2007 as
well as the estimated development costs to be spent in future
periods on proved undeveloped reserves. Other factors
contributing to the rate increase include the transfer of
previously unproved costs to the depletable base as a result of
2007 drilling activities and a higher
Canadian-to-U.S. dollar exchange rate in 2007. The net
effect of these increases was partially offset by higher reserve
estimates due to higher 2007 year-end commodity prices. In
addition to the impact from the higher 2007 rate, our 12%
production increase caused oil and gas property related
DD&A expense to increase $242 million.
Depreciation,
Depletion and Amortization of Oil and Gas Properties
(“DD&A”)
DD&A of oil and gas properties is calculated by multiplying
the percentage of total proved reserve volumes produced during
the year, by the “depletable base.” The depletable
base represents our net capitalized investment plus future
development costs related to proved undeveloped reserves.
Generally, if reserve volumes are revised up or down, then the
DD&A rate per unit of production will change inversely.
However, if the depletable base changes, then the DD&A rate
moves in the same direction. The per unit DD&A rate is not
affected by production volumes. Absolute or total DD&A, as
opposed to the rate per unit of production, generally moves in
the same direction as production volumes. Oil and gas property
DD&A is calculated separately on a
country-by-country
basis.
The changes in our production volumes, DD&A rate per unit
and DD&A of oil and gas properties between 2006 and 2008
are shown in the table below.
The following table details the increases in DD&A of oil
and gas properties between 2006 and 2008 due to the changes in
production volumes and DD&A rate presented in the table
above.
2008 vs. 2007 Oil and gas property related DD&A
increased $434 million due to a 15% increase in the
DD&A rate. The largest contributor to the rate increase was
inflationary pressure on both the costs incurred during 2008 as
well as the estimated development costs to be spent in future
periods on proved undeveloped reserves. Other factors
contributing to the rate increase include reductions in reserve
estimates due to lower 2008 year-end commodity prices and
the transfer of previously unproved costs to the depletable base
as a result of 2008 drilling activities. In addition to the
impact from the higher 2008 rate, our 6% production increase
caused oil and gas property related DD&A expense to
increase $164 million.
Table of Contents
2007 vs. 2006 Oil and gas property related DD&A
increased $355 million due to a 15% increase in the
DD&A rate. The largest contributor to the rate increase was
inflationary pressure on both the costs incurred during 2007 as
well as the estimated development costs to be spent in future
periods on proved undeveloped reserves. Other factors
contributing to the rate increase include the transfer of
previously unproved costs to the depletable base as a result of
2007 drilling activities and a higher
Canadian-to-U.S. dollar exchange rate in 2007. The net
effect of these increases was partially offset by higher reserve
estimates due to higher 2007 year-end commodity prices. In
addition to the impact from the higher 2007 rate, our 12%
production increase caused oil and gas property related
DD&A expense to increase $242 million.
This excerpt taken from the DVN 10-K filed Jun 9, 2008. Depreciation,
Depletion and Amortization of Oil and Gas Properties
(“DD&A”)
DD&A of oil and gas properties is calculated by multiplying
the percentage of total proved reserve volumes produced during
the year, by the “depletable base.” The depletable
base represents our net capitalized investment plus future
development costs related to proved undeveloped reserves.
Generally, if reserve volumes are revised up or down, then the
DD&A rate per unit of production will change inversely.
However, if the depletable base changes, then the DD&A rate
moves in the same direction. The per unit DD&A rate is not
affected by production volumes. Absolute or total DD&A, as
opposed to the rate per unit of production, generally moves in
the same direction as production volumes. Oil and gas property
DD&A is calculated separately on a
country-by-country
basis.
The changes in our production volumes, DD&A rate per unit
and DD&A of oil and gas properties between 2005 and 2007
are shown in the table below.
Table of Contents
The following table details the increases and decreases in
DD&A of oil and gas properties between 2005 and 2007 due to
the changes in production volumes and DD&A rate presented
in the table above.
2007 vs. 2006 The 12% production increase caused oil and
gas property related DD&A to increase $242 million. In
addition, oil and gas property related DD&A increased
$355 million due to a 15% increase in the DD&A rate.
The largest contributor to the rate increase was inflationary
pressure on both the costs incurred during 2007 as well as the
estimated development costs to be spent in future periods on
proved undeveloped reserves. Other factors contributing to the
rate increase include the transfer of previously unproved costs
to the depletable base as a result of 2007 drilling activities
and a higher Canadian-to-U.S. dollar exchange rate in 2007.
The effect of these increases was partially offset by a decrease
resulting from higher reserve estimates due to the effects of
higher 2007 year-end commodity prices.
2006 vs. 2005 The 3% production decrease caused oil and
gas property related DD&A to decrease $51 million.
However, oil and gas property related DD&A increased
$342 million due to a 20% increase in the DD&A rate.
The largest contributor to the rate increase was inflationary
pressure on both the costs incurred during 2006 as well as the
estimated development costs to be spent in future periods on
proved undeveloped reserves. Other factors contributing to the
rate increase included the June 2006 Chief acquisition and the
transfer of previously unproved costs to the depletable base as
a result of 2006 drilling activities. A reduction in reserve
estimates due to the effects of lower 2006 year-end
commodity prices also contributed to the rate increase.
This excerpt taken from the DVN 10-K filed Feb 28, 2008. Depreciation,
Depletion and Amortization of Oil and Gas Properties
(“DD&A”)
DD&A of oil and gas properties is calculated by multiplying
the percentage of total proved reserve volumes produced during
the year, by the “depletable base.” The depletable
base represents our net capitalized investment plus future
development costs related to proved undeveloped reserves.
Generally, if reserve volumes are revised up or down, then the
DD&A rate per unit of production will change inversely.
However, if the depletable base changes, then the DD&A rate
moves in the same direction. The per unit DD&A rate is not
affected by production volumes. Absolute or total DD&A, as
opposed to the rate per unit of production, generally moves in
the same direction as production volumes. Oil and gas property
DD&A is calculated separately on a
country-by-country
basis.
The changes in our production volumes, DD&A rate per unit
and DD&A of oil and gas properties between 2005 and 2007
are shown in the table below.
Table of Contents
The following table details the increases and decreases in
DD&A of oil and gas properties between 2005 and 2007 due to
the changes in production volumes and DD&A rate presented
in the table above.
2007 vs. 2006 The 12% production increase caused oil and
gas property related DD&A to increase $242 million. In
addition, oil and gas property related DD&A increased
$355 million due to a 15% increase in the DD&A rate.
The largest contributor to the rate increase was inflationary
pressure on both the costs incurred during 2007 as well as the
estimated development costs to be spent in future periods on
proved undeveloped reserves. Other factors contributing to the
rate increase include the transfer of previously unproved costs
to the depletable base as a result of 2007 drilling activities
and a higher Canadian-to-U.S. dollar exchange rate in 2007.
The effect of these increases was partially offset by a decrease
resulting from higher reserve estimates due to the effects of
higher 2007 year-end commodity prices.
2006 vs. 2005 The 3% production decrease caused oil and
gas property related DD&A to decrease $51 million.
However, oil and gas property related DD&A increased
$342 million due to a 20% increase in the DD&A rate.
The largest contributor to the rate increase was inflationary
pressure on both the costs incurred during 2006 as well as the
estimated development costs to be spent in future periods on
proved undeveloped reserves. Other factors contributing to the
rate increase included the June 2006 Chief acquisition and the
transfer of previously unproved costs to the depletable base as
a result of 2006 drilling activities. A reduction in reserve
estimates due to the effects of lower 2006 year-end
commodity prices also contributed to the rate increase.
This excerpt taken from the DVN 10-K filed Feb 28, 2007. Depreciation,
Depletion and Amortization of Oil and Gas Properties
(“DD&A”)
DD&A of oil and gas properties is calculated by multiplying
the percentage of total proved reserve volumes produced during
the year, by the “depletable base.” The depletable
base represents the net capitalized investment plus future
development costs in those reserves. Generally, if reserve
volumes are revised up or down, then the DD&A rate per unit
of production will change inversely. However, if the depletable
base changes, then the DD&A rate moves in the same
direction. The per unit DD&A rate is not affected by
Table of Contents
production volumes. Absolute or total DD&A, as opposed to
the rate per unit of production, generally moves in the same
direction as production volumes. Oil and gas property DD&A
is calculated separately on a
country-by-country
basis.
The following table details the changes in DD&A of oil and
gas properties between 2004 and 2006. The changes due to volumes
in the table represent the effect on DD&A due to decreases
in combined oil, gas and NGL production.
2006 vs. 2005 Oil and gas property related DD&A
increased $370 million in 2006 due to an increase in the
DD&A rate from $8.86 per Boe in 2005 to $10.59 per Boe
in 2006. The largest contributor to the rate increase was
inflationary pressure on both the costs incurred during 2006 as
well as the estimated development costs to be spent in future
periods on proved undeveloped reserves. Other factors
contributing to the rate increase include the June 2006 Chief
acquisition and the transfer of previously unproved costs to the
depletable base as a result of 2006 drilling activities. A
reduction in reserve estimates due to the effects of
2006 year-end commodity prices also contributed to the rate
increase.
2005 vs. 2004 Oil and gas property related DD&A
increased $99 million in 2005 due to an increase in the
DD&A rate from $8.41 per Boe in 2004 to $8.86 per Boe
in 2005. The largest contributor to the rate increase was the
effect of inflationary pressure on finding and development costs
for reserve discoveries and extensions. Changes in the
Canadian-to-U.S. dollar
exchange rate also caused the rate to increase. These increases
were partially offset by a decrease in the rate as a result of
our 2005 property divestitures.
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