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These excerpts taken from the DVN 10-K filed Feb 27, 2009. Operating
Cash Flow
Our operating cash flow has increased approximately 73% since
2006, reaching a total of $9.3 billion in 2008. We expect
operating cash flow to continue to be our primary source of
liquidity. Our operating cash flow is sensitive to many
variables, the most volatile of which is pricing of the oil, gas
and NGLs we produce.
Commodity Prices — Prices for oil, gas and NGLs
are determined primarily by prevailing market conditions.
Regional and worldwide economic activity, weather and other
substantially variable factors influence market conditions for
these products. These factors, which are difficult to predict,
create volatility in oil, gas and NGL prices and are beyond our
control. Although we expect this volatility to continue
throughout 2009, we expect 2009 oil, gas and NGL prices will be
noticeably lower than those for 2008. The corresponding
reduction in our operating cash flow will require us to scale
back certain uses of cash during 2009 compared to 2008,
including most notably our capital expenditures.
To mitigate some of the risk inherent in prices, we have
utilized various price collars to set minimum and maximum prices
on a portion of our production. We have also utilized various
price swap contracts and fixed-price physical delivery contracts
to fix the price of a portion of our future oil and gas
production. Based on contracts in place as of February 16,
2009, in 2009 approximately 10% of our estimated gas production
is subject to either price collars or fixed-price contracts. The
key terms of these contracts are summarized in
“Item 7A. Quantitative and Qualitative Disclosures
about Market Risk.”
Commodity prices can also affect our operating cash flow through
an indirect effect on operating expenses. Significant commodity
price increases, as experienced in recent years, can lead to an
increase in drilling and development activities. As a result,
the demand and cost for people, services, equipment and
materials may also increase, causing a negative impact on our
cash flow. However, the inverse is also true during periods of
depressed commodity prices such as what we are currently
experiencing.
Interest Rates — Our operating cash flow can
also be sensitive to interest rate fluctuations. As of
January 31, 2009, we had long-term 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%. We also have interest rate swaps
to mitigate a portion of the fair value effects of interest rate
fluctuations on our fixed-rate debt. Under the terms of these
swaps, we receive a fixed rate and pay a variable rate on a
total notional amount of $1.05 billion. Including the
effects of these swaps, the weighted-average interest rate
related to our fixed-rate debt was 6.64% as of January 31,
2009. The key terms of these interest rate swaps are included in
“Item 7A. Quantitative and Qualitative Disclosures of
Market Risk.”
Table of Contents
Credit Losses — Our operating cash flow is also
exposed to credit risk in a variety of ways. We are exposed to
the credit risk of the customers who purchase our oil, gas and
NGL production. We are also exposed to credit risk related to
the collection of receivables from our joint-interest partners
for their proportionate share of expenditures made on projects
we operate. We are also exposed to the credit risk of
counterparties to our derivative financial contracts as
discussed previously in this report.
The recent deterioration of the global financial and capital
markets, combined with the drop in commodity prices, has
increased our credit risk exposure. However, we utilize a
variety of mechanisms to limit our exposure to the credit risks
of our customers, partners and counterparties. Such mechanisms
include, under certain conditions, prepayment requirements for
commodity sales and collateral posting requirements in our
existing derivative contracts.
Operating
Cash Flow
Our operating cash flow has increased approximately 73% since
2006, reaching a total of $9.3 billion in 2008. We expect
operating cash flow to continue to be our primary source of
liquidity. Our operating cash flow is sensitive to many
variables, the most volatile of which is pricing of the oil, gas
and NGLs we produce.
Commodity Prices — Prices for oil, gas and NGLs
are determined primarily by prevailing market conditions.
Regional and worldwide economic activity, weather and other
substantially variable factors influence market conditions for
these products. These factors, which are difficult to predict,
create volatility in oil, gas and NGL prices and are beyond our
control. Although we expect this volatility to continue
throughout 2009, we expect 2009 oil, gas and NGL prices will be
noticeably lower than those for 2008. The corresponding
reduction in our operating cash flow will require us to scale
back certain uses of cash during 2009 compared to 2008,
including most notably our capital expenditures.
To mitigate some of the risk inherent in prices, we have
utilized various price collars to set minimum and maximum prices
on a portion of our production. We have also utilized various
price swap contracts and fixed-price physical delivery contracts
to fix the price of a portion of our future oil and gas
production. Based on contracts in place as of February 16,
2009, in 2009 approximately 10% of our estimated gas production
is subject to either price collars or fixed-price contracts. The
key terms of these contracts are summarized in
“Item 7A. Quantitative and Qualitative Disclosures
about Market Risk.”
Commodity prices can also affect our operating cash flow through
an indirect effect on operating expenses. Significant commodity
price increases, as experienced in recent years, can lead to an
increase in drilling and development activities. As a result,
the demand and cost for people, services, equipment and
materials may also increase, causing a negative impact on our
cash flow. However, the inverse is also true during periods of
depressed commodity prices such as what we are currently
experiencing.
Interest Rates — Our operating cash flow can
also be sensitive to interest rate fluctuations. As of
January 31, 2009, we had long-term 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%. We also have interest rate swaps
to mitigate a portion of the fair value effects of interest rate
fluctuations on our fixed-rate debt. Under the terms of these
swaps, we receive a fixed rate and pay a variable rate on a
total notional amount of $1.05 billion. Including the
effects of these swaps, the weighted-average interest rate
related to our fixed-rate debt was 6.64% as of January 31,
2009. The key terms of these interest rate swaps are included in
“Item 7A. Quantitative and Qualitative Disclosures of
Market Risk.”
Table of Contents
Credit Losses — Our operating cash flow is also
exposed to credit risk in a variety of ways. We are exposed to
the credit risk of the customers who purchase our oil, gas and
NGL production. We are also exposed to credit risk related to
the collection of receivables from our joint-interest partners
for their proportionate share of expenditures made on projects
we operate. We are also exposed to the credit risk of
counterparties to our derivative financial contracts as
discussed previously in this report.
The recent deterioration of the global financial and capital
markets, combined with the drop in commodity prices, has
increased our credit risk exposure. However, we utilize a
variety of mechanisms to limit our exposure to the credit risks
of our customers, partners and counterparties. Such mechanisms
include, under certain conditions, prepayment requirements for
commodity sales and collateral posting requirements in our
existing derivative contracts.
Operating Cash Flow Our operating cash flow has increased approximately 73% since 2006, reaching a total of $9.3 billion in 2008. We expect operating cash flow to continue to be our primary source of liquidity. Our operating cash flow is sensitive to many variables, the most volatile of which is pricing of the oil, gas and NGLs we produce. Commodity Prices — Prices for oil, gas and NGLs are determined primarily by prevailing market conditions. Regional and worldwide economic activity, weather and other substantially variable factors influence market conditions for these products. These factors, which are difficult to predict, create volatility in oil, gas and NGL prices and are beyond our control. Although we expect this volatility to continue throughout 2009, we expect 2009 oil, gas and NGL prices will be noticeably lower than those for 2008. The corresponding reduction in our operating cash flow will require us to scale back certain uses of cash during 2009 compared to 2008, including most notably our capital expenditures. To mitigate some of the risk inherent in prices, we have utilized various price collars to set minimum and maximum prices on a portion of our production. We have also utilized various price swap contracts and fixed-price physical delivery contracts to fix the price of a portion of our future oil and gas production. Based on contracts in place as of February 16, 2009, in 2009 approximately 10% of our estimated gas production is subject to either price collars or fixed-price contracts. The key terms of these contracts are summarized in “Item 7A. Quantitative and Qualitative Disclosures about Market Risk.” Commodity prices can also affect our operating cash flow through an indirect effect on operating expenses. Significant commodity price increases, as experienced in recent years, can lead to an increase in drilling and development activities. As a result, the demand and cost for people, services, equipment and materials may also increase, causing a negative impact on our cash flow. However, the inverse is also true during periods of depressed commodity prices such as what we are currently experiencing. Interest Rates — Our operating cash flow can also be sensitive to interest rate fluctuations. As of January 31, 2009, we had long-term 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%. We also have interest rate swaps to mitigate a portion of the fair value effects of interest rate fluctuations on our fixed-rate debt. Under the terms of these swaps, we receive a fixed rate and pay a variable rate on a total notional amount of $1.05 billion. Including the effects of these swaps, the weighted-average interest rate related to our fixed-rate debt was 6.64% as of January 31, 2009. The key terms of these interest rate swaps are included in “Item 7A. Quantitative and Qualitative Disclosures of Market Risk.”
Table of ContentsCredit Losses — Our operating cash flow is also exposed to credit risk in a variety of ways. We are exposed to the credit risk of the customers who purchase our oil, gas and NGL production. We are also exposed to credit risk related to the collection of receivables from our joint-interest partners for their proportionate share of expenditures made on projects we operate. We are also exposed to the credit risk of counterparties to our derivative financial contracts as discussed previously in this report. The recent deterioration of the global financial and capital markets, combined with the drop in commodity prices, has increased our credit risk exposure. However, we utilize a variety of mechanisms to limit our exposure to the credit risks of our customers, partners and counterparties. Such mechanisms include, under certain conditions, prepayment requirements for commodity sales and collateral posting requirements in our existing derivative contracts. Operating Cash Flow Our operating cash flow has increased approximately 73% since 2006, reaching a total of $9.3 billion in 2008. We expect operating cash flow to continue to be our primary source of liquidity. Our operating cash flow is sensitive to many variables, the most volatile of which is pricing of the oil, gas and NGLs we produce. Commodity Prices — Prices for oil, gas and NGLs are determined primarily by prevailing market conditions. Regional and worldwide economic activity, weather and other substantially variable factors influence market conditions for these products. These factors, which are difficult to predict, create volatility in oil, gas and NGL prices and are beyond our control. Although we expect this volatility to continue throughout 2009, we expect 2009 oil, gas and NGL prices will be noticeably lower than those for 2008. The corresponding reduction in our operating cash flow will require us to scale back certain uses of cash during 2009 compared to 2008, including most notably our capital expenditures. To mitigate some of the risk inherent in prices, we have utilized various price collars to set minimum and maximum prices on a portion of our production. We have also utilized various price swap contracts and fixed-price physical delivery contracts to fix the price of a portion of our future oil and gas production. Based on contracts in place as of February 16, 2009, in 2009 approximately 10% of our estimated gas production is subject to either price collars or fixed-price contracts. The key terms of these contracts are summarized in “Item 7A. Quantitative and Qualitative Disclosures about Market Risk.” Commodity prices can also affect our operating cash flow through an indirect effect on operating expenses. Significant commodity price increases, as experienced in recent years, can lead to an increase in drilling and development activities. As a result, the demand and cost for people, services, equipment and materials may also increase, causing a negative impact on our cash flow. However, the inverse is also true during periods of depressed commodity prices such as what we are currently experiencing. Interest Rates — Our operating cash flow can also be sensitive to interest rate fluctuations. As of January 31, 2009, we had long-term 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%. We also have interest rate swaps to mitigate a portion of the fair value effects of interest rate fluctuations on our fixed-rate debt. Under the terms of these swaps, we receive a fixed rate and pay a variable rate on a total notional amount of $1.05 billion. Including the effects of these swaps, the weighted-average interest rate related to our fixed-rate debt was 6.64% as of January 31, 2009. The key terms of these interest rate swaps are included in “Item 7A. Quantitative and Qualitative Disclosures of Market Risk.”
Table of ContentsCredit Losses — Our operating cash flow is also exposed to credit risk in a variety of ways. We are exposed to the credit risk of the customers who purchase our oil, gas and NGL production. We are also exposed to credit risk related to the collection of receivables from our joint-interest partners for their proportionate share of expenditures made on projects we operate. We are also exposed to the credit risk of counterparties to our derivative financial contracts as discussed previously in this report. The recent deterioration of the global financial and capital markets, combined with the drop in commodity prices, has increased our credit risk exposure. However, we utilize a variety of mechanisms to limit our exposure to the credit risks of our customers, partners and counterparties. Such mechanisms include, under certain conditions, prepayment requirements for commodity sales and collateral posting requirements in our existing derivative contracts. These excerpts taken from the DVN 10-K filed Jun 9, 2008. Operating
Cash Flow
Our operating cash flow has increased approximately 16% since
2005, reaching a total of $6.2 billion in 2007. We expect
operating cash flow to continue to be our primary source of
liquidity. Our operating cash flow is sensitive to many
variables, the most volatile of which is pricing of the oil,
natural gas and NGLs we produce. Prices for these commodities
are determined primarily by prevailing market conditions.
Regional and worldwide economic activity, weather and other
substantially variable factors influence market conditions for
these products. These factors are beyond our control and are
difficult to predict.
We periodically deem it appropriate to mitigate some of the risk
inherent in oil and natural gas prices. Accordingly, we have
utilized price collars to set minimum and maximum prices on a
portion of our production. We have also utilized various price
swap contracts and fixed-price physical delivery contracts to
fix the price to be received for a portion of future oil and
natural gas production. Based on contracts in place as of
February 15, 2008, in 2008 approximately 64% of our
estimated natural gas production and 12% of our estimated oil
production are subject to either price collars, swaps or
fixed-price contracts. The key terms of these contracts are
summarized in “Item 7A. Quantitative and Qualitative
Disclosures about Market Risk.”
Table of Contents
Commodity prices can also affect our operating cash flow through
an indirect effect on operating expenses. Significant commodity
price increases, as experienced in recent years, can lead to an
increase in drilling and development activities. As a result,
the demand and cost for people, services, equipment and
materials may also increase, causing a negative impact on our
cash flow.
Operating Cash Flow Our operating cash flow has increased approximately 16% since 2005, reaching a total of $6.2 billion in 2007. We expect operating cash flow to continue to be our primary source of liquidity. Our operating cash flow is sensitive to many variables, the most volatile of which is pricing of the oil, natural gas and NGLs we produce. Prices for these commodities are determined primarily by prevailing market conditions. Regional and worldwide economic activity, weather and other substantially variable factors influence market conditions for these products. These factors are beyond our control and are difficult to predict. We periodically deem it appropriate to mitigate some of the risk inherent in oil and natural gas prices. Accordingly, we have utilized price collars to set minimum and maximum prices on a portion of our production. We have also utilized various price swap contracts and fixed-price physical delivery contracts to fix the price to be received for a portion of future oil and natural gas production. Based on contracts in place as of February 15, 2008, in 2008 approximately 64% of our estimated natural gas production and 12% of our estimated oil production are subject to either price collars, swaps or fixed-price contracts. The key terms of these contracts are summarized in “Item 7A. Quantitative and Qualitative Disclosures about Market Risk.”
Table of ContentsCommodity prices can also affect our operating cash flow through an indirect effect on operating expenses. Significant commodity price increases, as experienced in recent years, can lead to an increase in drilling and development activities. As a result, the demand and cost for people, services, equipment and materials may also increase, causing a negative impact on our cash flow. These excerpts taken from the DVN 10-K filed Feb 28, 2008. Operating
Cash Flow
Our operating cash flow has increased approximately 16% since
2005, reaching a total of $6.2 billion in 2007. We expect
operating cash flow to continue to be our primary source of
liquidity. Our operating cash flow is sensitive to many
variables, the most volatile of which is pricing of the oil,
natural gas and NGLs we produce. Prices for these commodities
are determined primarily by prevailing market conditions.
Regional and worldwide economic activity, weather and other
substantially variable factors influence market conditions for
these products. These factors are beyond our control and are
difficult to predict.
We periodically deem it appropriate to mitigate some of the risk
inherent in oil and natural gas prices. Accordingly, we have
utilized price collars to set minimum and maximum prices on a
portion of our production. We have also utilized various price
swap contracts and fixed-price physical delivery contracts to
fix the price to be received for a portion of future oil and
natural gas production. Based on contracts in place as of
February 15, 2008, in 2008 approximately 64% of our
estimated natural gas production and 12% of our estimated oil
production are subject to either price collars, swaps or
fixed-price contracts. The key terms of these contracts are
summarized in “Item 7A. Quantitative and Qualitative
Disclosures about Market Risk.”
Table of Contents
Commodity prices can also affect our operating cash flow through
an indirect effect on operating expenses. Significant commodity
price increases, as experienced in recent years, can lead to an
increase in drilling and development activities. As a result,
the demand and cost for people, services, equipment and
materials may also increase, causing a negative impact on our
cash flow.
Operating Cash Flow Our operating cash flow has increased approximately 16% since 2005, reaching a total of $6.2 billion in 2007. We expect operating cash flow to continue to be our primary source of liquidity. Our operating cash flow is sensitive to many variables, the most volatile of which is pricing of the oil, natural gas and NGLs we produce. Prices for these commodities are determined primarily by prevailing market conditions. Regional and worldwide economic activity, weather and other substantially variable factors influence market conditions for these products. These factors are beyond our control and are difficult to predict. We periodically deem it appropriate to mitigate some of the risk inherent in oil and natural gas prices. Accordingly, we have utilized price collars to set minimum and maximum prices on a portion of our production. We have also utilized various price swap contracts and fixed-price physical delivery contracts to fix the price to be received for a portion of future oil and natural gas production. Based on contracts in place as of February 15, 2008, in 2008 approximately 64% of our estimated natural gas production and 12% of our estimated oil production are subject to either price collars, swaps or fixed-price contracts. The key terms of these contracts are summarized in “Item 7A. Quantitative and Qualitative Disclosures about Market Risk.”
Table of ContentsCommodity prices can also affect our operating cash flow through an indirect effect on operating expenses. Significant commodity price increases, as experienced in recent years, can lead to an increase in drilling and development activities. As a result, the demand and cost for people, services, equipment and materials may also increase, causing a negative impact on our cash flow. This excerpt taken from the DVN 10-K filed Feb 28, 2007. Operating
Cash Flow
Our operating cash flow has increased nearly 25% since 2004,
reaching a total of $5.9 billion in 2006. We expect
operating cash flow to continue to be our primary source of
liquidity. Our operating cash flow is sensitive to many
variables, the most volatile of which is pricing of the oil,
natural gas and NGLs produced. Prices for these commodities are
determined primarily by prevailing market conditions. Regional
and worldwide economic activity, weather and other substantially
variable factors influence market conditions for these products.
These factors are beyond our control and are difficult to
predict.
We periodically believe it appropriate to mitigate some of the
risk inherent in oil and natural gas prices. We have used a
variety of avenues to achieve this partial risk mitigation. We
have utilized price collars to set minimum and maximum prices on
a portion of our production. We have also utilized various price
swap contracts and fixed-price physical delivery contracts to
fix the price to be received for a portion of future oil and
natural gas production. Based on contracts currently in place,
approximately 5% of our estimated 2007 natural gas production
(3% of our total Boe production) is subject to either price
collars, swaps or fixed-price contracts.
Commodity prices can also affect our operating cash flow through
an indirect effect on operating expenses. Significant commodity
price increases, as experienced in recent years, can lead to an
increase in drilling and development activities. As a result,
the demand and cost for people, services, equipment and
materials may also increase, causing a negative impact on our
cash flow.
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