Devon Energy posts surprising adjusted Q2 profit on cost cuts

By Ernest Scheyder

HOUSTON, Aug 2 (Reuters) – U.S. oil producer Devon Energy Corp posted an unexpected adjusted quarterly profit on Tuesday and narrowed its net loss as drastic cost cuts, especially in labor and supply expenses, offset the slump in crude prices.

The cost cuts highlight the stark choices facing Devon and the rest of the oil and natural gas industry, with commodity prices mired in a steep slump.

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Devon said it cut lease operating expenses, which include labor, supply and other costs, by 26 percent in the quarter and is on track to cut costs by $1 billion this year.

The company reported a second-quarter net loss of $1.57 billion, or $3.04 per share, compared with a loss of $2.82 billion, or $6.94 per share, a year earlier.

Excluding asset impairment charges, restructuring costs and other one-time items, Devon earned 6 cents per share.

By that measure, analysts expected a loss of 19 cents per share, according to Thomson Reuters I/B/E/S.

Shares of Devon rose slightly in after-hours trading on Tuesday to $36.13 per share.

Production during the quarter fell 5 percent to about 644,000 barrels of oil equivalent per day.

Last month Devon sold its stake in a Canada pipeline for $1.1 billion.

That deal came after Devon bought 80,000 acres in Oklahoma in late June from a private owner for $1.9 billion.

Both deals are part of Devon’s plan to realign its portfolio by selling more than $3 billion in assets and focusing on areas where management thinks the company has the best chance of success.

Devon plans a conference call to discuss the quarterly results at 1500 GMT on Wednesday.

(Reporting by Ernest Scheyder; Editing by Steve Orlofsky, Terry Wade and David Gregorio)

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