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These excerpts taken from the DVN 10-K filed Feb 27, 2009. Interest
Expense
The following schedule includes the components of interest
expense between 2006 and 2008.
Interest based on debt outstanding decreased $82 million
from 2007 to 2008. This decrease was largely due to lower
average outstanding amounts for commercial paper and credit
facility borrowings in 2008 than in 2007. The decrease in
borrowings resulted largely from the use of proceeds from our
West African divestiture program and cash flow from operations
to repay all commercial paper and credit facility borrowings in
the second quarter of 2008. Additionally, we retired debentures
with a face value of $652 million during 2008, primarily
during the third quarter.
Interest based on debt outstanding increased $22 million
from 2006 to 2007. This increase was largely due to higher
average outstanding amounts for commercial paper and credit
facility borrowings in 2007 than in 2006, partially offset by
the effects of repaying various maturing notes in 2007 and 2006.
Capitalized interest increased from 2007 to 2008 primarily due
to higher cumulative costs related to large-scale development
projects in the Gulf of Mexico and Brazil, partially offset by
lower capitalized interest resulting from the completion of the
Access Pipeline in Canada.
Capitalized interest increased from 2006 to 2007 primarily due
to higher cumulative costs related to large-scale development
projects in the Gulf of Mexico and Brazil. Higher cumulative
costs related to the development of the second phase of our
Jackfish heavy oil development project in Canada and the
construction of the related Access Pipeline also contributed to
the increase.
Table of Contents
Interest
Expense
The following schedule includes the components of interest
expense between 2006 and 2008.
Interest based on debt outstanding decreased $82 million
from 2007 to 2008. This decrease was largely due to lower
average outstanding amounts for commercial paper and credit
facility borrowings in 2008 than in 2007. The decrease in
borrowings resulted largely from the use of proceeds from our
West African divestiture program and cash flow from operations
to repay all commercial paper and credit facility borrowings in
the second quarter of 2008. Additionally, we retired debentures
with a face value of $652 million during 2008, primarily
during the third quarter.
Interest based on debt outstanding increased $22 million
from 2006 to 2007. This increase was largely due to higher
average outstanding amounts for commercial paper and credit
facility borrowings in 2007 than in 2006, partially offset by
the effects of repaying various maturing notes in 2007 and 2006.
Capitalized interest increased from 2007 to 2008 primarily due
to higher cumulative costs related to large-scale development
projects in the Gulf of Mexico and Brazil, partially offset by
lower capitalized interest resulting from the completion of the
Access Pipeline in Canada.
Capitalized interest increased from 2006 to 2007 primarily due
to higher cumulative costs related to large-scale development
projects in the Gulf of Mexico and Brazil. Higher cumulative
costs related to the development of the second phase of our
Jackfish heavy oil development project in Canada and the
construction of the related Access Pipeline also contributed to
the increase.
Table of Contents
Interest Expense The following schedule includes the components of interest expense between 2006 and 2008.
Interest based on debt outstanding decreased $82 million from 2007 to 2008. This decrease was largely due to lower average outstanding amounts for commercial paper and credit facility borrowings in 2008 than in 2007. The decrease in borrowings resulted largely from the use of proceeds from our West African divestiture program and cash flow from operations to repay all commercial paper and credit facility borrowings in the second quarter of 2008. Additionally, we retired debentures with a face value of $652 million during 2008, primarily during the third quarter. Interest based on debt outstanding increased $22 million from 2006 to 2007. This increase was largely due to higher average outstanding amounts for commercial paper and credit facility borrowings in 2007 than in 2006, partially offset by the effects of repaying various maturing notes in 2007 and 2006. Capitalized interest increased from 2007 to 2008 primarily due to higher cumulative costs related to large-scale development projects in the Gulf of Mexico and Brazil, partially offset by lower capitalized interest resulting from the completion of the Access Pipeline in Canada. Capitalized interest increased from 2006 to 2007 primarily due to higher cumulative costs related to large-scale development projects in the Gulf of Mexico and Brazil. Higher cumulative costs related to the development of the second phase of our Jackfish heavy oil development project in Canada and the construction of the related Access Pipeline also contributed to the increase.
Table of ContentsInterest Expense The following schedule includes the components of interest expense between 2006 and 2008.
Interest based on debt outstanding decreased $82 million from 2007 to 2008. This decrease was largely due to lower average outstanding amounts for commercial paper and credit facility borrowings in 2008 than in 2007. The decrease in borrowings resulted largely from the use of proceeds from our West African divestiture program and cash flow from operations to repay all commercial paper and credit facility borrowings in the second quarter of 2008. Additionally, we retired debentures with a face value of $652 million during 2008, primarily during the third quarter. Interest based on debt outstanding increased $22 million from 2006 to 2007. This increase was largely due to higher average outstanding amounts for commercial paper and credit facility borrowings in 2007 than in 2006, partially offset by the effects of repaying various maturing notes in 2007 and 2006. Capitalized interest increased from 2007 to 2008 primarily due to higher cumulative costs related to large-scale development projects in the Gulf of Mexico and Brazil, partially offset by lower capitalized interest resulting from the completion of the Access Pipeline in Canada. Capitalized interest increased from 2006 to 2007 primarily due to higher cumulative costs related to large-scale development projects in the Gulf of Mexico and Brazil. Higher cumulative costs related to the development of the second phase of our Jackfish heavy oil development project in Canada and the construction of the related Access Pipeline also contributed to the increase.
Table of ContentsInterest
Expense
Future interest rates and debt outstanding have a significant
effect on our interest expense. We can only marginally influence
the prices we will receive in 2009 from sales of oil, gas and
NGLs and the resulting cash flow. This increases the margin of
error inherent in estimating future outstanding debt balances
and related interest expense. Other factors which affect
outstanding debt balances and related interest expense, such as
the amount and timing of capital expenditures are generally
within our control.
As of January 31, 2009, we had total debt of
$6.2 billion. This included $6.0 billion of fixed-rate
debt and $0.2 billion of variable-rate commercial paper
borrowings. The fixed-rate debt bears interest at an overall
weighted average rate of 7.23%. The commercial paper borrowings
bear interest at variable rates based on a standard index such
as the Federal Funds Rate, LIBOR, or the money market rate as
found on the commercial paper market. As of January 31,
2009, the weighted average variable rate for our commercial
paper borrowings was 3.33%. Additionally, any future borrowings
under our credit facilities would bear interest at various
fixed-rate options for periods up to twelve months and are
generally less than the prime rate.
Based on the factors above, we expect our 2009 interest expense
to be between $330 million and $340 million. This
estimate assumes no material changes in prevailing interest
rates or to our existing interest rate swap contracts presented
above. This estimate also assumes that our total debt will
increase approximately $1.0 billion during 2009, primarily
in the form of commercial paper borrowings.
The 2009 interest expense estimate above is comprised of three
primary components — interest related to outstanding
debt, fees and issuance costs, and capitalized interest. We
expect the interest expense in 2009 related to our fixed-rate
and floating-rate debt, including net accretion of related
discounts, to be between $435 million and
$445 million. We expect the interest expense in 2009
related to facility and agency fees, amortization of debt
issuance costs and other miscellaneous items not related to
outstanding debt balances to be between $5 million and
$15 million. We also expect to capitalize between
$110 million and $120 million of interest during 2009.
Table of Contents
Interest
Expense
Future interest rates and debt outstanding have a significant
effect on our interest expense. We can only marginally influence
the prices we will receive in 2009 from sales of oil, gas and
NGLs and the resulting cash flow. This increases the margin of
error inherent in estimating future outstanding debt balances
and related interest expense. Other factors which affect
outstanding debt balances and related interest expense, such as
the amount and timing of capital expenditures are generally
within our control.
As of January 31, 2009, we had total debt of
$6.2 billion. This included $6.0 billion of fixed-rate
debt and $0.2 billion of variable-rate commercial paper
borrowings. The fixed-rate debt bears interest at an overall
weighted average rate of 7.23%. The commercial paper borrowings
bear interest at variable rates based on a standard index such
as the Federal Funds Rate, LIBOR, or the money market rate as
found on the commercial paper market. As of January 31,
2009, the weighted average variable rate for our commercial
paper borrowings was 3.33%. Additionally, any future borrowings
under our credit facilities would bear interest at various
fixed-rate options for periods up to twelve months and are
generally less than the prime rate.
Based on the factors above, we expect our 2009 interest expense
to be between $330 million and $340 million. This
estimate assumes no material changes in prevailing interest
rates or to our existing interest rate swap contracts presented
above. This estimate also assumes that our total debt will
increase approximately $1.0 billion during 2009, primarily
in the form of commercial paper borrowings.
The 2009 interest expense estimate above is comprised of three
primary components — interest related to outstanding
debt, fees and issuance costs, and capitalized interest. We
expect the interest expense in 2009 related to our fixed-rate
and floating-rate debt, including net accretion of related
discounts, to be between $435 million and
$445 million. We expect the interest expense in 2009
related to facility and agency fees, amortization of debt
issuance costs and other miscellaneous items not related to
outstanding debt balances to be between $5 million and
$15 million. We also expect to capitalize between
$110 million and $120 million of interest during 2009.
Table of Contents
Interest Expense Future interest rates and debt outstanding have a significant effect on our interest expense. We can only marginally influence the prices we will receive in 2009 from sales of oil, gas and NGLs and the resulting cash flow. This increases the margin of error inherent in estimating future outstanding debt balances and related interest expense. Other factors which affect outstanding debt balances and related interest expense, such as the amount and timing of capital expenditures are generally within our control. As of January 31, 2009, we had total debt of $6.2 billion. This included $6.0 billion of fixed-rate debt and $0.2 billion of variable-rate commercial paper borrowings. The fixed-rate debt bears interest at an overall weighted average rate of 7.23%. The commercial paper borrowings bear interest at variable rates based on a standard index such as the Federal Funds Rate, LIBOR, or the money market rate as found on the commercial paper market. As of January 31, 2009, the weighted average variable rate for our commercial paper borrowings was 3.33%. Additionally, any future borrowings under our credit facilities would bear interest at various fixed-rate options for periods up to twelve months and are generally less than the prime rate. Based on the factors above, we expect our 2009 interest expense to be between $330 million and $340 million. This estimate assumes no material changes in prevailing interest rates or to our existing interest rate swap contracts presented above. This estimate also assumes that our total debt will increase approximately $1.0 billion during 2009, primarily in the form of commercial paper borrowings. The 2009 interest expense estimate above is comprised of three primary components — interest related to outstanding debt, fees and issuance costs, and capitalized interest. We expect the interest expense in 2009 related to our fixed-rate and floating-rate debt, including net accretion of related discounts, to be between $435 million and $445 million. We expect the interest expense in 2009 related to facility and agency fees, amortization of debt issuance costs and other miscellaneous items not related to outstanding debt balances to be between $5 million and $15 million. We also expect to capitalize between $110 million and $120 million of interest during 2009.
Table of ContentsInterest Expense Future interest rates and debt outstanding have a significant effect on our interest expense. We can only marginally influence the prices we will receive in 2009 from sales of oil, gas and NGLs and the resulting cash flow. This increases the margin of error inherent in estimating future outstanding debt balances and related interest expense. Other factors which affect outstanding debt balances and related interest expense, such as the amount and timing of capital expenditures are generally within our control. As of January 31, 2009, we had total debt of $6.2 billion. This included $6.0 billion of fixed-rate debt and $0.2 billion of variable-rate commercial paper borrowings. The fixed-rate debt bears interest at an overall weighted average rate of 7.23%. The commercial paper borrowings bear interest at variable rates based on a standard index such as the Federal Funds Rate, LIBOR, or the money market rate as found on the commercial paper market. As of January 31, 2009, the weighted average variable rate for our commercial paper borrowings was 3.33%. Additionally, any future borrowings under our credit facilities would bear interest at various fixed-rate options for periods up to twelve months and are generally less than the prime rate. Based on the factors above, we expect our 2009 interest expense to be between $330 million and $340 million. This estimate assumes no material changes in prevailing interest rates or to our existing interest rate swap contracts presented above. This estimate also assumes that our total debt will increase approximately $1.0 billion during 2009, primarily in the form of commercial paper borrowings. The 2009 interest expense estimate above is comprised of three primary components — interest related to outstanding debt, fees and issuance costs, and capitalized interest. We expect the interest expense in 2009 related to our fixed-rate and floating-rate debt, including net accretion of related discounts, to be between $435 million and $445 million. We expect the interest expense in 2009 related to facility and agency fees, amortization of debt issuance costs and other miscellaneous items not related to outstanding debt balances to be between $5 million and $15 million. We also expect to capitalize between $110 million and $120 million of interest during 2009.
Table of ContentsInterest
Expense
The following schedule includes the components of interest
expense between 2006 and 2008.
Devon has various non-contributory defined benefit pension
plans, including qualified plans (“Qualified Plans”)
and nonqualified plans (“Supplemental Plans”). The
Qualified Plans provide retirement benefits for
Table of Contents
DEVON
ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS —
(Continued)
U.S. and Canadian employees meeting certain age and service
requirements. Benefits for the Qualified Plans are based on the
employees’ years of service and compensation and are funded
from assets held in the plans’ trusts.
Devon’s funding policy regarding the Qualified Plans is to
contribute the amount of funds necessary for the Qualified
Plans’ assets to approximately equal the present value of
benefits earned by the participants, as calculated in accordance
with the provisions of the Pension Protection Act. As of
December 31, 2008 and 2007, the fair values of the
Qualified Plans’ assets were $430 million and
$619 million, respectively. The assets were
$209 million less and $62 million more, respectively,
than the related accumulated benefit obligation. The amount of
contributions required during future periods will depend on
investment returns from the plan assets during the same period
as well as changes in long-term interest rates.
The Supplemental Plans provide retirement benefits for certain
employees whose benefits under the Qualified Plans are limited
by income tax regulations. The Supplemental Plans’ benefits
are based on the employees’ years of service and
compensation. For certain Supplemental Plans, Devon has
established trusts to fund these plans’ benefit
obligations. The total value of these trusts was
$50 million and $59 million at December 31, 2008
and 2007, respectively, and is included in noncurrent other
assets in the consolidated balance sheets. For the remaining
Supplemental Plans for which trusts have not been established,
benefits are funded from Devon’s available cash and cash
equivalents.
Devon also has defined benefit postretirement plans
(“Postretirement Plans”) that provide benefits for
substantially all U.S. employees. The Postretirement Plans
provide medical and, in some cases, life insurance benefits and
are, depending on the type of plan, either contributory or
non-contributory. Benefit obligations for the Postretirement
Plans are estimated based on Devon’s future cost-sharing
intentions. Devon’s funding policy for the Postretirement
Plans is to fund the benefits as they become payable with
available cash and cash equivalents.
Interest
Expense
The following schedule includes the components of interest
expense between 2006 and 2008.
Devon has various non-contributory defined benefit pension
plans, including qualified plans (“Qualified Plans”)
and nonqualified plans (“Supplemental Plans”). The
Qualified Plans provide retirement benefits for
Table of Contents
DEVON
ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS —
(Continued)
U.S. and Canadian employees meeting certain age and service
requirements. Benefits for the Qualified Plans are based on the
employees’ years of service and compensation and are funded
from assets held in the plans’ trusts.
Devon’s funding policy regarding the Qualified Plans is to
contribute the amount of funds necessary for the Qualified
Plans’ assets to approximately equal the present value of
benefits earned by the participants, as calculated in accordance
with the provisions of the Pension Protection Act. As of
December 31, 2008 and 2007, the fair values of the
Qualified Plans’ assets were $430 million and
$619 million, respectively. The assets were
$209 million less and $62 million more, respectively,
than the related accumulated benefit obligation. The amount of
contributions required during future periods will depend on
investment returns from the plan assets during the same period
as well as changes in long-term interest rates.
The Supplemental Plans provide retirement benefits for certain
employees whose benefits under the Qualified Plans are limited
by income tax regulations. The Supplemental Plans’ benefits
are based on the employees’ years of service and
compensation. For certain Supplemental Plans, Devon has
established trusts to fund these plans’ benefit
obligations. The total value of these trusts was
$50 million and $59 million at December 31, 2008
and 2007, respectively, and is included in noncurrent other
assets in the consolidated balance sheets. For the remaining
Supplemental Plans for which trusts have not been established,
benefits are funded from Devon’s available cash and cash
equivalents.
Devon also has defined benefit postretirement plans
(“Postretirement Plans”) that provide benefits for
substantially all U.S. employees. The Postretirement Plans
provide medical and, in some cases, life insurance benefits and
are, depending on the type of plan, either contributory or
non-contributory. Benefit obligations for the Postretirement
Plans are estimated based on Devon’s future cost-sharing
intentions. Devon’s funding policy for the Postretirement
Plans is to fund the benefits as they become payable with
available cash and cash equivalents.
Interest Expense The following schedule includes the components of interest expense between 2006 and 2008.
Devon has various non-contributory defined benefit pension plans, including qualified plans (“Qualified Plans”) and nonqualified plans (“Supplemental Plans”). The Qualified Plans provide retirement benefits for
Table of ContentsDEVON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) U.S. and Canadian employees meeting certain age and service requirements. Benefits for the Qualified Plans are based on the employees’ years of service and compensation and are funded from assets held in the plans’ trusts. Devon’s funding policy regarding the Qualified Plans is to contribute the amount of funds necessary for the Qualified Plans’ assets to approximately equal the present value of benefits earned by the participants, as calculated in accordance with the provisions of the Pension Protection Act. As of December 31, 2008 and 2007, the fair values of the Qualified Plans’ assets were $430 million and $619 million, respectively. The assets were $209 million less and $62 million more, respectively, than the related accumulated benefit obligation. The amount of contributions required during future periods will depend on investment returns from the plan assets during the same period as well as changes in long-term interest rates. The Supplemental Plans provide retirement benefits for certain employees whose benefits under the Qualified Plans are limited by income tax regulations. The Supplemental Plans’ benefits are based on the employees’ years of service and compensation. For certain Supplemental Plans, Devon has established trusts to fund these plans’ benefit obligations. The total value of these trusts was $50 million and $59 million at December 31, 2008 and 2007, respectively, and is included in noncurrent other assets in the consolidated balance sheets. For the remaining Supplemental Plans for which trusts have not been established, benefits are funded from Devon’s available cash and cash equivalents. Devon also has defined benefit postretirement plans (“Postretirement Plans”) that provide benefits for substantially all U.S. employees. The Postretirement Plans provide medical and, in some cases, life insurance benefits and are, depending on the type of plan, either contributory or non-contributory. Benefit obligations for the Postretirement Plans are estimated based on Devon’s future cost-sharing intentions. Devon’s funding policy for the Postretirement Plans is to fund the benefits as they become payable with available cash and cash equivalents. Interest Expense The following schedule includes the components of interest expense between 2006 and 2008.
Devon has various non-contributory defined benefit pension plans, including qualified plans (“Qualified Plans”) and nonqualified plans (“Supplemental Plans”). The Qualified Plans provide retirement benefits for
Table of ContentsDEVON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) U.S. and Canadian employees meeting certain age and service requirements. Benefits for the Qualified Plans are based on the employees’ years of service and compensation and are funded from assets held in the plans’ trusts. Devon’s funding policy regarding the Qualified Plans is to contribute the amount of funds necessary for the Qualified Plans’ assets to approximately equal the present value of benefits earned by the participants, as calculated in accordance with the provisions of the Pension Protection Act. As of December 31, 2008 and 2007, the fair values of the Qualified Plans’ assets were $430 million and $619 million, respectively. The assets were $209 million less and $62 million more, respectively, than the related accumulated benefit obligation. The amount of contributions required during future periods will depend on investment returns from the plan assets during the same period as well as changes in long-term interest rates. The Supplemental Plans provide retirement benefits for certain employees whose benefits under the Qualified Plans are limited by income tax regulations. The Supplemental Plans’ benefits are based on the employees’ years of service and compensation. For certain Supplemental Plans, Devon has established trusts to fund these plans’ benefit obligations. The total value of these trusts was $50 million and $59 million at December 31, 2008 and 2007, respectively, and is included in noncurrent other assets in the consolidated balance sheets. For the remaining Supplemental Plans for which trusts have not been established, benefits are funded from Devon’s available cash and cash equivalents. Devon also has defined benefit postretirement plans (“Postretirement Plans”) that provide benefits for substantially all U.S. employees. The Postretirement Plans provide medical and, in some cases, life insurance benefits and are, depending on the type of plan, either contributory or non-contributory. Benefit obligations for the Postretirement Plans are estimated based on Devon’s future cost-sharing intentions. Devon’s funding policy for the Postretirement Plans is to fund the benefits as they become payable with available cash and cash equivalents. | EXCERPTS ON THIS PAGE:
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