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These excerpts taken from the DVN 10-K filed Jun 9, 2008. Exchangeable
Debentures
The exchangeable debentures consist of $381 million of
4.90% debentures and $271 million of
4.95% debentures. The exchangeable debentures were issued
on August 3, 1998 and mature August 15, 2008. The
exchangeable debentures are callable at 100.5% of principal as
of December 31, 2007.
The exchangeable debentures are exchangeable at the option of
the holders at any time prior to maturity, unless previously
redeemed, for shares of Chevron common stock that Devon owns. In
lieu of delivering Chevron common stock to an exchanging
debenture holder, Devon may, at its option, pay to such holder
an amount of cash equal to the market value of the Chevron
common stock. At maturity, holders who have not exercised their
exchange rights will receive an amount in cash equal to the
principal amount of the debentures.
During 2007, certain holders of exchangeable debentures
exercised their option to exchange their debentures for shares
of Chevron common stock prior to the debentures’
August 15, 2008 maturity date. Devon elected to pay the
exchanging debenture holders cash totaling $167 million in
lieu of delivering shares of Chevron common stock. As a result
of these exchanges, Devon retired outstanding exchangeable
debentures with a book value totaling $105 million and
reduced the related embedded derivative option’s balance by
$62 million.
As of December 31, 2007, Devon owned approximately
14.2 million shares of Chevron common stock. The majority
of these shares are held for possible exchange when holders
redeem their exchangeable debentures. Each $1,000 principal
amount of the exchangeable debentures is exchangeable into
18.6566 shares of Chevron common stock, an exchange rate
equivalent to $53.60 per share of Chevron stock.
As of December 31, 2007, the exchangeable debentures are
due within one year. However, Devon continues to classify this
debt as long-term because it has the intent and ability to
refinance these debentures on a long-term basis with the
available capacity under its existing credit facilities or other
long-tem financing arrangements.
The exchangeable debentures were assumed as part of the 1999
acquisition of PennzEnergy. As a result, the fair values of the
exchangeable debentures were determined as of August 17,
1999, based on market quotations. In accordance with derivative
accounting standards, the total fair value of the debentures was
allocated between the interest-bearing debt and the option to
exchange Chevron common stock that is embedded in the
debentures. Accordingly, a discount was recorded on the
debentures and is being accreted using the effective interest
method, which raised the effective interest rate on the
debentures to 7.76%.
Exchangeable Debentures The exchangeable debentures consist of $381 million of 4.90% debentures and $271 million of 4.95% debentures. The exchangeable debentures were issued on August 3, 1998 and mature August 15, 2008. The exchangeable debentures are callable at 100.5% of principal as of December 31, 2007. The exchangeable debentures are exchangeable at the option of the holders at any time prior to maturity, unless previously redeemed, for shares of Chevron common stock that Devon owns. In lieu of delivering Chevron common stock to an exchanging debenture holder, Devon may, at its option, pay to such holder an amount of cash equal to the market value of the Chevron common stock. At maturity, holders who have not exercised their exchange rights will receive an amount in cash equal to the principal amount of the debentures. During 2007, certain holders of exchangeable debentures exercised their option to exchange their debentures for shares of Chevron common stock prior to the debentures’ August 15, 2008 maturity date. Devon elected to pay the exchanging debenture holders cash totaling $167 million in lieu of delivering shares of Chevron common stock. As a result of these exchanges, Devon retired outstanding exchangeable debentures with a book value totaling $105 million and reduced the related embedded derivative option’s balance by $62 million. As of December 31, 2007, Devon owned approximately 14.2 million shares of Chevron common stock. The majority of these shares are held for possible exchange when holders redeem their exchangeable debentures. Each $1,000 principal amount of the exchangeable debentures is exchangeable into 18.6566 shares of Chevron common stock, an exchange rate equivalent to $53.60 per share of Chevron stock. As of December 31, 2007, the exchangeable debentures are due within one year. However, Devon continues to classify this debt as long-term because it has the intent and ability to refinance these debentures on a long-term basis with the available capacity under its existing credit facilities or other long-tem financing arrangements. The exchangeable debentures were assumed as part of the 1999 acquisition of PennzEnergy. As a result, the fair values of the exchangeable debentures were determined as of August 17, 1999, based on market quotations. In accordance with derivative accounting standards, the total fair value of the debentures was allocated between the interest-bearing debt and the option to exchange Chevron common stock that is embedded in the debentures. Accordingly, a discount was recorded on the debentures and is being accreted using the effective interest method, which raised the effective interest rate on the debentures to 7.76%. These excerpts taken from the DVN 10-K filed Feb 28, 2008. Exchangeable
Debentures
The exchangeable debentures consist of $381 million of
4.90% debentures and $271 million of
4.95% debentures. The exchangeable debentures were issued
on August 3, 1998 and mature August 15, 2008. The
exchangeable debentures are callable at 100.5% of principal as
of December 31, 2007.
The exchangeable debentures are exchangeable at the option of
the holders at any time prior to maturity, unless previously
redeemed, for shares of Chevron common stock that Devon owns. In
lieu of delivering Chevron common stock to an exchanging
debenture holder, Devon may, at its option, pay to such holder
an amount of cash equal to the market value of the Chevron
common stock. At maturity, holders who have not exercised their
exchange rights will receive an amount in cash equal to the
principal amount of the debentures.
During 2007, certain holders of exchangeable debentures
exercised their option to exchange their debentures for shares
of Chevron common stock prior to the debentures’
August 15, 2008 maturity date. Devon elected to pay the
exchanging debenture holders cash totaling $167 million in
lieu of delivering shares of Chevron common stock. As a result
of these exchanges, Devon retired outstanding exchangeable
debentures with a book value totaling $105 million and
reduced the related embedded derivative option’s balance by
$62 million.
As of December 31, 2007, Devon owned approximately
14.2 million shares of Chevron common stock. The majority
of these shares are held for possible exchange when holders
redeem their exchangeable debentures. Each $1,000 principal
amount of the exchangeable debentures is exchangeable into
18.6566 shares of Chevron common stock, an exchange rate
equivalent to $53.60 per share of Chevron stock.
As of December 31, 2007, the exchangeable debentures are
due within one year. However, Devon continues to classify this
debt as long-term because it has the intent and ability to
refinance these debentures on a long-term basis with the
available capacity under its existing credit facilities or other
long-tem financing arrangements.
The exchangeable debentures were assumed as part of the 1999
acquisition of PennzEnergy. As a result, the fair values of the
exchangeable debentures were determined as of August 17,
1999, based on market quotations. In accordance with derivative
accounting standards, the total fair value of the debentures was
allocated between the interest-bearing debt and the option to
exchange Chevron common stock that is embedded in the
debentures. Accordingly, a discount was recorded on the
debentures and is being accreted using the effective interest
method, which raised the effective interest rate on the
debentures to 7.76%.
Exchangeable Debentures The exchangeable debentures consist of $381 million of 4.90% debentures and $271 million of 4.95% debentures. The exchangeable debentures were issued on August 3, 1998 and mature August 15, 2008. The exchangeable debentures are callable at 100.5% of principal as of December 31, 2007. The exchangeable debentures are exchangeable at the option of the holders at any time prior to maturity, unless previously redeemed, for shares of Chevron common stock that Devon owns. In lieu of delivering Chevron common stock to an exchanging debenture holder, Devon may, at its option, pay to such holder an amount of cash equal to the market value of the Chevron common stock. At maturity, holders who have not exercised their exchange rights will receive an amount in cash equal to the principal amount of the debentures. During 2007, certain holders of exchangeable debentures exercised their option to exchange their debentures for shares of Chevron common stock prior to the debentures’ August 15, 2008 maturity date. Devon elected to pay the exchanging debenture holders cash totaling $167 million in lieu of delivering shares of Chevron common stock. As a result of these exchanges, Devon retired outstanding exchangeable debentures with a book value totaling $105 million and reduced the related embedded derivative option’s balance by $62 million. As of December 31, 2007, Devon owned approximately 14.2 million shares of Chevron common stock. The majority of these shares are held for possible exchange when holders redeem their exchangeable debentures. Each $1,000 principal amount of the exchangeable debentures is exchangeable into 18.6566 shares of Chevron common stock, an exchange rate equivalent to $53.60 per share of Chevron stock. As of December 31, 2007, the exchangeable debentures are due within one year. However, Devon continues to classify this debt as long-term because it has the intent and ability to refinance these debentures on a long-term basis with the available capacity under its existing credit facilities or other long-tem financing arrangements. The exchangeable debentures were assumed as part of the 1999 acquisition of PennzEnergy. As a result, the fair values of the exchangeable debentures were determined as of August 17, 1999, based on market quotations. In accordance with derivative accounting standards, the total fair value of the debentures was allocated between the interest-bearing debt and the option to exchange Chevron common stock that is embedded in the debentures. Accordingly, a discount was recorded on the debentures and is being accreted using the effective interest method, which raised the effective interest rate on the debentures to 7.76%. This excerpt taken from the DVN 10-K filed Feb 28, 2007. Exchangeable
Debentures
The exchangeable debentures consist of $444 million of
4.90% debentures and $316 million of
4.95% debentures. The exchangeable debentures were issued
on August 3, 1998 and mature August 15, 2008. The
exchangeable debentures were callable beginning August 15,
2000, initially at 104.0% of principal and at prices declining
to 100.5% of principal on or after August 15, 2007. At
December 31, 2006, the call price was 101% of principal.
The exchangeable debentures are exchangeable at the option of
the holders at any time prior to maturity, unless previously
redeemed, for shares of Chevron common stock. In lieu of
delivering Chevron common stock to an exchanging debenture
holder, Devon may, at its option, pay to such holder an amount
of cash equal to the market value of the Chevron common stock.
At maturity, holders who have not exercised their exchange
rights will receive an amount in cash equal to the principal
amount of the debentures.
As of December 31, 2006, Devon beneficially owned
approximately 14.2 million shares of Chevron common stock.
These shares have been deposited with an exchange agent for
possible exchange for the
Table of Contents
DEVON
ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
exchangeable debentures. Each $1,000 principal amount of the
exchangeable debentures is exchangeable into 18.6566 shares
of Chevron common stock, an exchange rate equivalent to $53.60
per share of Chevron stock.
The exchangeable debentures were assumed as part of the 1999
PennzEnergy acquisition. As a result, the fair values of the
exchangeable debentures were determined as of August 17,
1999, based on market quotations. In accordance with derivative
accounting standards, the total fair value of the debentures was
allocated between the interest-bearing debt and the option to
exchange Chevron common stock that is embedded in the
debentures. Accordingly, a discount was recorded on the
debentures and is being accreted using the effective interest
method which raised the effective interest rate on the
debentures to 7.76%.
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