UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-10067
DEVON ENERGY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Oklahoma 73-1474008
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
20 N. Broadway, Suite 1500
Oklahoma City, Oklahoma 73102
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (405) 235-3611
Not applicable
Former name, former address and former fiscal year, if changed
from last report.
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
The number of shares outstanding of Registrant's common
stock, par value $.10, as of July 27, 1999, was 48,845,000.
1 of 58 total pages
(Exhibit Index is found at page 36)
DEVON ENERGY CORPORATION
Index to Form 10-Q Quarterly Report
to the Securities and Exchange Commission
Page No.
Part I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets, June 30, 1999 (Unaudited) 4
and December 31, 1998
Consolidated Statements of Operations (Unaudited) 5
for the Three Months and Six Months Ended June 30, 1999
and 1998
Consolidated Statements of Comprehensive Operations 6
(Unaudited) for the Three Months and Six Months Ended
June 30, 1999 and 1998
Consolidated Statements of Cash Flows (Unaudited) 7
for the Six Months Ended June 30, 1999 and 1998
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial 15
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 27
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 28
Item 6. Exhibits and Reports on Form 8-K 29
DEFINITIONS
As used in this document:
"Mcf" means thousand cubic feet
"MMcf" means million cubic feet
"Bcf" means billion cubic feet
"Bbl" means barrel
"MBbls" means thousand barrels
"MMBbls" means million barrels
"Boe" means equivalent barrels of oil
"Mboe" means thousand equivalent barrels of oil
"Oil" includes crude oil and condensate
"NGLs" means natural gas liquids
DEVON ENERGY CORPORATION
Part I. Financial Information
Item 1. Consolidated Financial Statements
June 30, 1999 and 1998
(Forming a part of Form 10-Q Quarterly Report
to the Securities and Exchange Commission)
DEVON ENERGY CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In Thousands, Except Share Data)
June 30, December 31,
1999 1998
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 13,994 19,154
Accounts receivable 83,712 83,858
Inventories 2,624 2,750
Prepaid expenses 2,309 2,351
Deferred income taxes 605 605
Investments and other assets 1,516 1,930
Total current assets 104,760 110,648
Property and equipment, at cost,
based on the full cost method of
accounting for oil and gas properties 2,801,801 2,610,511
Less accumulated depreciation,
depletion and amortization 1,616,172 1,509,583
1,185,629 1,100,928
Other assets 14,774 14,780
Total assets $1,305,163 1,226,356
Liabilities and stockholders' equity
Current liabilities:
Accounts payable:
Trade 37,344 40,177
Revenues and royalties due to
others 8,839 12,508
Accrued expenses 27,494 27,971
Total current liabilities 73,677 80,656
Other liabilities 34,584 34,747
Long-term debt 448,013 405,271
Deferred income taxes 44,149 33,219
Company-obligated mandatorily redeemable
convertible preferred securities of
subsidiary trust holding solely 6.5%
convertible junior subordinated
debentures of Devon Energy Corporation 149,500 149,500
Stockholders' equity:
Preferred stock of $1.00 par value.
Authorized 3,000,000 shares; none
issued - -
Common stock of $.10 par value.
Authorized 400,000,000 shares;
issued 48,820,000 in 1999 and
48,425,000 in 1998 4,882 4,842
Additional paid-in capital 807,270 796,992
Accumulated deficit (225,582) (242,909)
Accumulated other comprehensive loss (31,330) (35,962)
Total stockholders' equity 555,240 522,963
Total liabilities and stockholders'
equity $1,305,163 1,226,356
See accompanying notes to consolidated financial statements.
DEVON ENERGY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
(Unaudited)
Revenues
Oil sales $36,871 33,984 64,784 75,573
Gas sales 59,387 54,650 112,938 106,555
Natural gas liquids sales 5,835 4,873 9,764 9,687
Other 2,219 11,268 4,092 13,397
Total revenues 104,312 104,775 191,578 205,212
Costs and expenses
Lease operating expenses 27,100 28,303 54,520 57,679
Production taxes 3,446 3,851 6,415 7,266
Depreciation, depletion and
amortization 35,763 31,165 69,321 61,158
General and administrative expenses 6,952 6,141 13,175 11,784
Interest expense 7,115 5,427 13,779 10,837
Deferred effect of changes in foreign
currency exchange rate on subsidiary's
long-term debt (5,585) 6,921 (8,746) 6,921
Distributions on preferred securities
of subsidiary trust 2,430 2,430 4,859 4,859
Total costs and expenses 77,221 84,238 153,323 160,504
Earnings before income tax expense 27,091 20,537 38,255 44,708
Income tax expense
Current 2,399 2,171 4,302 5,331
Deferred 8,483 6,193 11,764 12,979
Total income tax expense 10,882 8,364 16,066 18,310
Net earnings $ 16,209 12,173 22,189 26,398
Net earnings per average common share
outstanding (Note 1) - basic and
diluted $0.33 0.25 0.46 0.55
Weighted average common shares
outstanding - basic (Note 1) 48,679 48,366 48,575 48,338
See accompanying notes to consolidated financial statements.
DEVON ENERGY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Comprehensive Operations
(In Thousands)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
(Unaudited)
Net earnings $16,209 12,173 22,189 26,398
Other comprehensive earnings (loss) -
foreign currency translation
adjustments (Note 1) 3,008 (3,960) 4,632 (3,104)
Comprehensive earnings $19,217 8,213 26,821 23,294
See accompanying notes to consolidated financial statements.
DEVON ENERGY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In Thousands)
Six Months Ended June 30,
1999 1998
(Unaudited)
Cash flows from operating activities
Net earnings $ 22,189 26,398
Adjustments to reconcile net earnings
to net cash provided by
operating activities:
Depreciation, depletion and
amortization 69,321 61,158
Deferred effect of changes in
foreign currency exchange rate
on subsidiary's long-term debt (8,746) 6,921
(Gain) loss on sale of assets (33) 57
Deferred income taxes 11,764 12,979
Other -- 901
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 1,306 15,077
Inventories 154 1,609
Prepaid expenses 87 (113)
Other assets (38) 929
Increase (decrease) in:
Accounts payable (7,897) (12,415)
Accrued expenses (802) (11,005)
Long-term other liabilities (1,394) 336
Net cash provided by operating
activities 85,911 102,832
Cash flows from investing activities
Proceeds from sale of property and
equipment 4,906 55,590
Proceeds from sale of investments -- 43,034
Capital expenditures (139,895) (171,498)
Decrease (increase) in other assets 570 (2,114)
Net cash used in investing
activities (134,419) (74,988)
Cash flows from financing activities
Proceeds from borrowings on revolving
lines of credit 538,014 735,714
Principal payments on revolving lines
of credit (501,072) (786,413)
Issuance of common stock, net of
issuance costs 10,152 1,236
Dividends paid on common stock (4,862) (3,232)
Increase in long-term other liabilities 1,049 5,584
Net cash provided (used) by
financing activities 43,281 (47,111)
Effect of exchange rate changes on cash 67 297
Net increase (decrease) in cash and cash
equivalents (5,160) (18,970)
Cash and cash equivalents at beginning of
period 19,154 42,065
Cash and cash equivalents at end of
period $ 13,994 23,095
See accompanying notes to consolidated financial statements.
DEVON ENERGY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Basis of Presentation
On December 10, 1998, Devon Energy Corporation ("Devon") and
Northstar Energy Corporation ("Northstar") closed a merger of the
two companies (the "Northstar Combination"). At that date,
Northstar became a wholly-owned subsidiary of Devon. Pursuant to
the Northstar Combination, Northstar's common shareholders
received approximately 16.1 million exchangeable shares (the
"Exchangeable Shares") based on an exchange ratio of 0.235
Exchangeable Shares for each Northstar common share outstanding.
The Exchangeable Shares were issued by Northstar, but are
exchangeable at any time into Devon's common shares on a one-for-
one basis. Prior to such exchange, the Exchangeable Shares have
rights identical to those of Devon's common shares, including
dividend, voting and liquidation rights. Between December 10,
1998 and June 30, 1999, approximately 11 million of the
originally issued 16.1 million Exchangeable Shares had been
exchanged for shares of Devon common stock.
The Northstar Combination was accounted for under the
pooling-of-interests method of accounting for business
combinations. All operational and financial information
contained herein includes the combined amounts of Devon and
Northstar for all periods presented. The separate results of
operations of Devon and Northstar for the three month and six
month periods ended June 30, 1998 are as follows:
Three Months Six Months
Ended Ended
June 30, 1998 June 30, 1998
(In Thousands)
Revenues:
Devon $ 62,553 127,434
Northstar 42,222 77,778
Combined $ 104,775 205,212
Net earnings:
Devon 7,615 17,756
Northstar 4,558 8,642
Combined $ 12,173 26,398
The accompanying consolidated financial statements and notes
thereto have been prepared pursuant to the rules and regulations
of the Securities and Exchange Commission. Accordingly, certain
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been omitted. The accompanying consolidated
financial statements and notes thereto should be read in
conjunction with the consolidated financial statements and notes
thereto included in Devon's 1998 annual report on Form 10-K.
In the opinion of Devon's management, all adjustments (all
of which are normal and recurring) have been made which are
necessary to fairly state the consolidated financial position of
Devon and its subsidiaries as of June 30, 1999, and the results
of their operations and their cash flows for the three month and
six month periods ended June 30, 1999 and 1998.
2. Earnings Per Share
The following tables reconcile the net earnings and common
shares outstanding used in the calculations of basic and diluted
earnings per share for the three month periods ended June 30,
1999 and 1998, and the six month period ended June 30, 1998. The
diluted earnings per share calculation for the six month period
ended June 30, 1999, produced results that were anti-dilutive.
This calculation increased net earnings by $3.0 million and
increased the common shares outstanding by 5.2 million shares.
Net
Common Earnings
Net Shares Per
Earnings Outstanding Share
(In Thousands)
Three Months Ended June 30, 1999:
Basic earnings per share $16,209 48,679 $0.33
Dilutive effect of:
Potential common shares issuable upon the
conversion of Trust Convertible Preferred
securities (the increase in net earnings
is net of income tax expense of $963,000) 1,506 4,902
Potential common shares issuable upon the
exercise of outstanding stock options - 505
Diluted earnings per share $17,715 54,086 $0.33
Three Months Ended June 30, 1998:
Basic earnings per share $12,173 48,366 $0.25
Dilutive effect of:
Potential common shares issuable upon the
conversion of Trust Convertible Preferred
securities (the increase in net earnings
is net of income tax expense of $963,000) 1,506 4,902
Potential common shares issuable upon the
exercise of outstanding stock options - 557
Diluted earnings per share $13,679 53,825 $0.25
Six Months Ended June 30, 1998:
Basic earnings per share $26,398 48,338 $0.55
Dilutive effect of:
Potential common shares issuable upon the
conversion of Trust Convertible Preferred
securities (the increase in net earnings
is net of income tax expense of $1,926,000) 3,013 4,902
Potential common shares issuable upon the
exercise of outstanding stock options - 560
Diluted earnings per share $29,411 53,800 $0.55
3. Segment Information
Devon manages its business by country. As such, Devon
identifies its segments based on geographic areas. Devon has two
reportable segments: its operations in the U.S. and its
operations in Canada. Substantially all of both segments'
operations involve oil and gas producing activities.
Following is certain financial information regarding Devon's
segments. The revenues reported are all from external customers.
U.S. Canada Total
(In Thousands)
As of June 30, 1999:
Current assets $ 55,090 49,670 104,760
Property and equipment, net of
accumulated depreciation,
depletion and amortization 679,996 505,633 1,185,629
Other assets 13,850 924 14,774
Total assets $748,936 556,227 1,305,163
Current liabilities 21,196 52,481 73,677
Long-term debt 60,000 388,013 448,013
Deferred tax liabilities (assets) 59,719 (15,570) 44,149
Other liabilities 30,243 4,341 34,584
TCP Securities 149,500 - 149,500
Stockholders' equity 428,278 126,962 555,240
Total liabilities and stockholders'
equity $748,936 556,227 1,305,163
Three Months ended June 30, 1999:
Revenues
Oil sales $ 19,930 16,941 36,871
Gas sales 32,448 26,939 59,387
Natural gas liquids sales 3,685 2,150 5,835
Other 678 1,541 2,219
Total revenues 56,741 47,571 104,312
Costs and expenses
Lease operating expenses 14,343 12,757 27,100
Production taxes 3,165 281 3,446
Depreciation, depletion and amortization 18,762 17,001 35,763
General and administrative expenses 4,044 2,908 6,952
Interest expense 846 6,269 7,115
Deferred effect of changes in foreign
currency exchange rate on subsidiary's
long-term debt - (5,585) (5,585)
Distributions on preferred securities of
subsidiary trust 2,430 - 2,430
Total costs and expenses 43,590 33,631 77,221
Earnings before income tax expense 13,151 13,940 27,091
Income tax expense
Current 1,890 509 2,399
Deferred 2,231 6,252 8,483
Total income tax expense 4,121 6,761 10,882
Net earnings $ 9,030 7,179 16,209
Capital expenditures $ 39,138 17,959 57,097
Three months ended June 30, 1998:
Revenues
Oil sales $17,959 16,025 33,984
Gas sales 33,097 21,553 54,650
Natural gas liquids sales 3,455 1,418 4,873
Other 1,120 10,148 11,268
Total revenues 55,631 49,144 104,775
Costs and expenses
Lease operating expenses 16,692 11,611 28,303
Production taxes 3,450 401 3,851
Depreciation, depletion and amortization 21,058 10,107 31,165
General and administrative expenses 3,049 3,092 6,141
Interest expense 40 5,387 5,427
Deferred effect of changes in foreign
currency exchange rate on subsidiary's
long-term debt - 6,921 6,921
Distributions on preferred securities of
subsidiary trust 2,430 - 2,430
Total costs and expenses 46,719 37,519 84,238
Earnings before income tax expense 8,912 11,625 20,537
Income tax expense
Current 1,364 807 2,171
Deferred 1,296 4,897 6,193
Total income tax expense 2,660 5,704 8,364
Net earnings $ 6,252 5,921 12,173
Capital expenditures $46,408 22,925 69,333
Six months ended June 30, 1999:
Revenues
Oil sales $34,397 30,387 64,784
Gas sales 60,609 52,329 112,938
Natural gas liquids sales 6,203 3,561 9,764
Other 1,378 2,714 4,092
Total revenues 102,587 88,991 191,578
Costs and expenses
Lease operating expenses 29,266 25,254 54,520
Production taxes 5,757 658 6,415
Depreciation, depletion and amortization 36,771 32,550 69,321
General and administrative expenses 6,958 6,217 13,175
Interest expense 1,488 12,291 13,779
Deferred effect of changes in foreign
currency exchange rate on subsidiary's
long-term debt - (8,746) (8,746)
Distributions on preferred securities of
subsidiary trust 4,859 - 4,859
Total costs and expenses 85,099 68,224 153,323
Earnings before income tax expense 17,488 20,767 38,255
Income tax expense
Current 2,710 1,592 4,302
Deferred 2,326 9,438 11,764
Total income tax expense 5,036 11,030 16,066
Net earnings $ 12,452 9,737 22,189
Capital expenditures $ 81,604 58,291 139,895
Six months ended June 30, 1998:
Revenues
Oil sales $ 39,067 36,506 75,573
Gas sales 65,078 41,477 106,555
Natural gas liquids sales 7,000 2,687 9,687
Other 2,302 11,095 13,397
Total revenues 113,447 91,765 205,212
Costs and expenses
Lease operating expenses 33,364 24,315 57,679
Production taxes 6,406 860 7,266
Depreciation, depletion and amortization 40,456 20,702 61,158
General and administrative expenses 5,733 6,051 11,784
Interest expense 50 10,787 10,837
Deferred effect of changes in foreign
currency exchange rate on subsidiary's
long-term debt - 6,921 6,921
Distributions on preferred securities
of subsidiary trust 4,859 - 4,859
Total costs and expenses 90,868 69,636 160,504
Earnings before income tax expense 22,579 22,129 44,708
Income tax expense
Current 3,405 1,926 5,331
Deferred 4,021 8,958 12,979
Total income tax expense 7,426 10,884 18,310
Net earnings $15,153 11,245 26,398
Capital expenditures $83,594 87,904 171,498
4. Pending Merger
On May 20, 1999, Devon and PennzEnergy Company
("PennzEnergy") announced their intention to merge the two
companies. In the merger, Devon stockholders will receive one
share of common stock of a newly formed entity currently referred
to as New Devon for each share of Devon common stock owned.
PennzEnergy stockholders will receive 0.4475 shares of New
Devon's common stock for each share of PennzEnergy common stock
owned. The merger is subject to approval by the stockholders of
both companies at separate meetings to be held on August 17,
1999, as well as certain regulatory approvals. If approved, the
merger is expected to be consummated shortly after the
stockholder meetings. The merger will be accounted for under the
purchase method of accounting for business combinations as an
acquisition of PennzEnergy by Devon. Therefore, Devon's 1999
operating results will include the effect of the merger for the
period from the merger closing through the end of the year.
PennzEnergy's year-end 1998 proved oil and gas reserves
totaled 361 million Boe, including 188 million Boe onshore the
United States, 79 million Boe offshore the United States, and 94
million Boe in other countries. PennzEnergy's year-end 1998
undeveloped leasehold included 12.1 million net acres, including
1.2 million net acres onshore the United States, 0.4 million net
acres offshore the United States, and 10.5 million net acres
internationally.
On July 16, 1999, Devon and PennzEnergy filed definitive
proxy materials concerning this pending merger. The proxy
materials contain further disclosures regarding the merger and
certain financial data concerning both companies.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The following discussion addresses material changes in
results of operations for the three month and six month periods
ended June 30, 1999, compared to the three month and six month
periods ended June 30, 1998, and in financial condition since
December 31, 1998. It is presumed that readers have read or have
access to Devon's 1998 annual report on Form 10-K.
Overview
On December 10, 1998, Devon merged with Canadian-based
Northstar. As a result of accounting for this combination as a
"pooling-of-interests," the financial data for all periods
presented herein represent the combined results of the two
companies. The pooling-of-interests method of accounting
requires historical information to be restated as if the
combining companies had always been merged. The restated data
varies significantly from the historical data Devon has
previously presented on a stand-alone basis.
Net earnings for the quarter ended June 30, 1999 were $16.2
million, or $0.33 per share. These compare to 1998's second
quarter net earnings of $12.2 million, or $0.25 per share. An
increase in the 1999 quarter's average prices for oil, gas and
NGLs, and a reduction in expenses due to changes in the
U.S./Canadian currency exchange rate, were the primary reasons
for the rise in the 1999 quarter's net earnings. The increase in
net earnings from these items was partially offset by the effect
of certain nonrecurring revenue items in 1998's quarter and by
higher depreciation, depletion and amortization expenses and
interest expense in the 1999 period.
Net earnings for the first half of 1999 were $22.2 million,
or $0.46 per share. These compare to net earnings for the first
half of 1998 of $26.4 million, or $0.55 per share. Increases in
the 1999 period's depreciation, depletion and amortization
expenses and interest expense, along with the effect of the 1998
period's nonrecurring revenue items, were the primary causes for
the reduction in 1999's first half net earnings. The effects of
these items on 1999's net earnings were partially offset by a
reduction in expenses due to changes in the U.S./Canadian
currency exchange rate during the first half of 1999 compared to
the same period of 1998.
Results of Operations
Total revenues decreased $0.5 million, or 1%, in the second
quarter of 1999, and $13.6 million, or 7%, in the first half of
1999. Oil, gas and NGLs revenues increased $8.6 million, or 9%,
for the second quarter of 1999, and decreased $4.3 million, or
2%, for the first half of 1999. The quarterly comparisons of
production and price changes are shown in the following tables.
(Note: Unless otherwise stated, all references in this report to
dollar amounts regarding Devon's Canadian operations are
expressed in U.S. dollars.)
Total
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 Change 1999 1998 Change
Production
Oil (MBbls) 2,506 2,908 -14% 5,071 6,105 -17%
Gas (MMcf) 36,280 34,139 +6% 71,402 66,662 +7%
NGL (MBbls) 515 534 -4% 991 1,043 -5%
Oil, Gas and NGLs (MBoe) 19,067 9,131 -1% 17,962 18,258 -2%
Average Prices
Oil (Per Bbl) $14.71 11.69 +26% 12.78 12.38 +3%
Gas (Per Mcf) 1.64 1.60 +3% 1.58 1.60 -1%
NGL (Per Bbl) 11.33 9.13 +24% 9.85 9.29 +6%
<FN>
Oil, Gas and NGLs (Per Boe)1 11.26 10.24 +10% 10.44 10.51 -1%
(In Thousands)
Revenues
Oil $36,871 33,984 +8% 64,784 75,573 -14%
Gas 59,387 54,650 +9% 112,938 106,555 +6%
NGLs 5,835 4,873 +20% 9,764 9,687 +1%
Combined $102,093 93,507 +9% 187,486 191,815 -2%
Domestic
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 Change 1999 1998 Change
Production
Oil (MBbls) 1,231 1,421 -13% 2,530 2,906 -13%
Gas (MMcf) 16,933 16,666 +2% 33,294 32,601 +2%
NGL (MBbls) 351 378 -7% 665 732 -9%
Oil, Gas and NGLs (MBoe) 14,404 4,576 -4% 8,744 9,071 -4%
Average Prices
Oil (Per Bbl) $16.19 12.64 +28% 13.60 13.44 +1%
Gas (Per Mcf) 1.92 1.99 -4% 1.82 2.00 -9%
NGL (Per Bbl) 10.50 9.14 +15% 9.33 9.56 -2%
<FN>
Oil, Gas and NGLs (Per Boe)1 12.73 11.91 +7% 11.57 12.25 -6%
(In Thousands)
Revenues
Oil $19,930 17,959 +11% 34,397 39,067 -12%
Gas 32,448 33,097 -2% 60,609 65,078 -7%
NGLs 3,685 3,455 +7% 6,203 7,000 -11%
Combined $56,063 54,511 +3% 101,209 111,145 -9%
Canada
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 Change 1999 1998 Change
Production
Oil (MBbls) 1,275 1,487 -14% 2,541 3,199 -21%
Gas (MMcf) 19,347 17,473 +11% 38,108 34,061 +12%
NGL (MBbls) 164 156 +5% 326 311 +5%
Oil, Gas and NGLs (MBoe) 14,663 4,555 +2% 9,218 9,187 --
Average Prices
Oil (Per Bbl) $13.29 10.78 +23% 11.96 11.41 +5%
Gas (Per Mcf) 1.39 1.23 +13% 1.37 1.22 +12%
NGL (Per Bbl) 13.11 9.09 +44% 10.92 8.64 +26%
<FN>
Oil, Gas and NGLs (Per Boe)1 9.87 8.56 +15% 9.36 8.78 +7%
(In Thousands)
Revenues
Oil $16,941 16,025 +6% 30,387 36,506 -17%
Gas 26,939 21,553 +25% 52,329 41,477 +26%
NGLs 2,150 1,418 +52% 3,561 2,687 +33%
Combined $46,030 38,996 +18% 86,277 80,670 +7%
<FN>
1 Gas volumes are converted to Boe or MBoe at the rate of six Mcf of gas
per barrel of oil, based upon the approximate relative energy content of
natural gas and oil, which rate is not necessarily indicative of the
relationship of oil and gas prices. The respective prices of oil, gas
and NGLs are affected by market and other factors in addition to
relative energy content.
Oil Revenues. Oil revenues increased $2.9 million, or 8%,
in the second quarter of 1999. An increase in the average price
of $3.02 per barrel, or 26%, increased oil revenues by $7.6
million. This was partially offset by a $4.7 million reduction
in oil revenues caused by a decrease in production of 402,000
barrels, or 12%. Low oil prices during the last half of 1998 and
the first quarter of 1999 led to the decision to defer many oil-
oriented projects. This, along with normal decline, accounted
for the majority of the decrease in oil production in the 1999
quarter compared to the 1998 quarter.
Oil revenues decreased $10.8 million, or 14%, in the first
half of 1999. A decrease in production of 1.0 million barrels,
or 17%, caused oil revenues to decline by $12.8 million. This
was partially offset by a $2.0 million increase in oil revenues
caused by an increase in the average price of $0.40 per barrel,
or 3%. Approximately 264,000 barrels of the reduction in oil
production were attributable to the disposition of certain
Canadian producing properties at the end of 1998's first and
fourth quarters. As stated above, low oil prices led to the
deferral of many oil-oriented projects during the last half of
1998 and the first half of 1999. Also, during the first quarter
of 1999, the low prices led to the decision to shut-in some oil
properties. These factors, along with normal decline, accounted
for the majority of the decrease in oil production in the first
half of 1999.
Gas Revenues. Gas revenues increased $4.7 million, or 9%,
in the second quarter of 1999. Production rose 2.1 Bcf, or 6%,
in the 1999 period. This increase in production added $3.4
million to gas revenues in the 1999 period. The remaining $1.3
million of increased gas revenues was caused by an increase in
the average gas price of $0.04 per Mcf, or 3%.
Devon's San Juan Basin coal seam gas properties produced 5.8
Bcf in 1999's second quarter compared to 5.1 Bcf in the 1998
second quarter. Devon's other domestic properties produced 11.1
Bcf in the 1999 quarter compared to 11.6 Bcf in the 1998 quarter.
The coal seam gas properties averaged $1.75 per Mcf in the 1999
quarter compared to $1.76 per Mcf in the 1998 quarter. The other
domestic properties averaged $2.00 per Mcf in the 1999 quarter
compared to $2.09 per Mcf in the 1998 quarter.
Canadian gas production increased 1.9 Bcf, or 11%, in 1999's
second quarter. Production added from two acquisitions in 1998
(one in July and the other in December) was the primary cause of
the increased production in 1999's second quarter.
Gas revenues increased $6.4 million, or 6%, in the first
half of 1999. Production rose 4.7 Bcf, or 7%, in the 1999
period. This increase in production added $7.6 million to gas
revenues in the 1999 period. This increase in gas revenues was
partially offset by a $1.2 million reduction in gas revenues
caused by a drop in the average gas price in the first half of
1999 of $0.02 per Mcf, or 1%.
Devon's San Juan Basin coal seam gas properties produced
11.3 Bcf in 1999's first half compared to 10.1 Bcf in 1998's
first half. Devon's other domestic properties produced 22.0 Bcf
in the first half of 1999 compared to 22.5 Bcf in the first half
of 1998. The coal seam gas properties averaged $1.71 per Mcf in
1999's first half compared to $1.79 per Mcf in 1998's first half.
The other domestic properties averaged $1.88 per Mcf in 1999's
first half compared to $2.09 per Mcf in 1998's first half.
Canadian gas production increased 4.0 Bcf, or 12%, in the
first half of 1999. Production added from two acquisitions in
1998 (one in July and the other in December) was the primary
cause of the increased production in the first half of 1999.
NGLs Revenues. NGLs revenues increased $1.0 million, or
20%, in the second quarter of 1999. An increase in the average
price of $2.20 per barrel, or 24%, caused NGLs revenues to
increase $1.1 million in the 1999 quarter. This increase in NGLs
revenues was offset by a $0.1 million reduction caused by a
production decrease of 19,000 barrels, or 4%.
NGLs revenues increased $0.1 million, or 1%, in the first
half of 1999. An increase in the average price of $0.56 per
barrel, or 6%, caused NGLs revenues to increase $0.6 million in
the first half of 1999. This increase in NGLs revenues was
substantially offset by a $0.5 million reduction caused by a
production decrease of 52,000 barrels, or 5%.
Other Revenues. Other revenues decreased from $11.3 million
in the second quarter of 1998 to $2.2 million in the comparable
quarter of 1999. The reduction in other revenues was primarily
due to two nonrecurring revenue items recognized in 1998's second
quarter. In the second quarter of 1998, Northstar received a one-
time payment of $5.0 million from a gas purchaser related to the
termination of a gas contract. Also, Northstar received $2.8
million in 1998's second quarter in return for the termination of
a management arrangement with a third party.
Other revenues decreased from $13.4 million in the first
half of 1998 to $4.1 million in the first half of 1999. The 1998
nonrecurring revenue items discussed in the above paragraph were
the primary causes of the drop in other revenues for the first
half of 1999.
Production and Operating Expenses. The components of
production and operating expenses are set forth in the following
tables.
Total
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 Change 1999 1998 Change
Absolute (Thousands)
Recurring operations and maintenance expenses $25,776 26,864 -4% 51,808 54,739 -5%
Well workover expenses 1,324 1,439 -8% 2,712 2,940 -8%
Production taxes 3,446 3,851 -11% 6,415 7,266 -12%
Total production and operating expenses $30,546 32,154 -5% 60,935 64,945 -6%
Per Boe
Recurring operations and maintenance expenses 2.84 2.94 -3% 2.88 3.00 -4%
Well workover expenses 0.15 0.16 -6% 0.15 0.16 -6%
Production taxes 0.38 0.42 -10% 0.36 0.40 -10%
Total production and operating expenses $3.37 3.52 -4% 3.39 3.56 -5%
Domestic
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 Change 1999 1998 Change
Absolute (Thousands)
Recurring operations and maintenance expenses $13,490 15,395 -12% 27,298 30,879 -12%
Well workover expenses 853 1,297 -34% 1,968 2,485 -21%
Production taxes 3,165 3,450 -8% 5,757 6,406 -10%
Total production and operating expenses $17,508 20,142 -13% 35,023 39,770 -12%
Per Boe
Recurring operations and maintenance expenses 3.06 3.36 -9% 3.12 3.40 -8%
Well workover expenses 0.20 0.28 -29% 0.23 0.27 -15%
Production taxes 0.72 0.76 -5% 0.66 0.71 -7%
Total production and operating expenses $3.98 4.40 -10% 4.01 4.38 -8%
Canada
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 Change 1999 1998 Change
Absolute (Thousands)
Recurring operations and maintenance expenses $12,286 11,469 +7% 24,510 23,860 +3%
Well workover expenses 471 142 +232% 744 455 +64%
Production taxes 281 401 -30% 658 860 -23%
Total production and operating expenses $13,0381 2,012 +9% 25,912 25,175 +3%
Per Boe
Recurring operations and maintenance expenses 2.64 2.52 +5% 2.66 2.60 +2%
Well workover expenses 0.10 0.03 +233% 0.08 0.05 +60%
Production taxes 0.06 0.09 -33% 0.07 0.09 -22%
Total production and operating expenses $2.80 2.64 +6% 2.81 2.74 +3%
Recurring operations and maintenance expenses decreased $1.1
million, or 4%, in the second quarter of 1999. Domestic expenses
were $1.9 million lower in the 1999 quarter. These reductions
were mostly from Devon's oil producing properties, where various
efficiencies were achieved since 1998's second quarter and
certain non-essential services were delayed due to low oil prices
in effect earlier in 1999. Canada's recurring expenses were $0.8
million higher in the 1999 quarter. A significant portion of
this increase is related to the 1.9 Bcf, or 11%, increase in
Canada's gas production in the 1999 quarter. A large part of the
increased gas volumes is subject to processing fees which are
recorded as recurring operations and maintenance expenses.
Recurring operations and maintenance expenses decreased $2.9
million, or 5%, in the first half of 1999. Domestic expenses
were $3.6 million lower in the 1999 period primarily due to the
efficiencies and delays of non-essential services described in
the above paragraph. Canada's recurring expenses were $0.7
million higher in the first half of 1999 due primarily to the
variable processing fees associated with a part of the 4.0 Bcf,
or 12%, increase in Canadian gas production in the first half of
1999.
Even though combined oil, gas and NGLs revenues were up for
the second quarter of 1999 compared to that of 1998, production
taxes in the 1999 quarter were $0.4 million lower than in the
1998 quarter. The decrease in 1999's production taxes was caused
by a combination of specific Devon properties qualifying for
production tax exemptions or reductions, revisions in early 1999
of production tax rate structures by some of the states in which
Devon operates, and recoveries of overpayments of 1998 Canadian
taxes. These same factors, along with lower combined oil, gas
and NGLs revenues, combined to produce lower production taxes in
the first half of 1999 compared to the first half of 1998.
Depreciation, Depletion and Amortization Expenses ("DD&A").
Oil and gas property related DD&A increased $4.7 million, or 16%,
from $30.1 million in the second quarter of 1998 to $34.8 million
in the second quarter of 1999. An increase in the combined U.S.
and Canadian DD&A rate from $3.30 per Boe in the 1998 quarter to
$3.84 per Boe in the 1999 quarter caused oil and gas property
related DD&A to increase $4.9 million. This increase in DD&A was
partially offset by a decrease of $0.2 million caused by the 1%
drop in combined oil, gas and NGLs production in the 1999
quarter.
Oil and gas property related DD&A increased $8.3 million, or
14%, from $59.1 million in the first half of 1998 to $67.4
million in the first half of 1999. An increase in the combined
U.S. and Canadian DD&A rate from $3.24 per Boe in the first half
of 1998 to $3.75 per Boe in the first half of 1999 caused oil and
gas property related DD&A to increase $9.2 million. This
increase in DD&A was partially offset by a decrease of $0.9
million caused by the 2% drop in combined oil, gas and NGLs
production in the first half of 1999.
General and Administrative Expenses ("G&A"). Devon's G&A
consist of three primary components. The largest of these
components is the gross amount of expenses incurred for personnel
costs, office expenses, professional fees and other G&A items.
The gross amount of these expenses is partially offset by two
offsetting components of G&A. One is the amount of G&A
capitalized pursuant to the full cost method of accounting. The
other is the amount of G&A reimbursed by working interest owners
of properties for which Devon serves as the operator. These
reimbursements are received during both the drilling and
operational stages of a property's life. The gross amount of
expenses incurred, less the amounts capitalized and reimbursed,
is recorded as G&A in the consolidated statements of operations.
G&A increased $0.8 million, or 13%, in the second quarter of
1999 compared to the same quarter of 1998. Gross G&A increased
$0.9 million, or 7%, in the 1999 quarter. G&A also increased due
to a $0.4 million reduction in the amount of reimbursements on
operated properties. This was due to lower reimbursements on
Canadian properties, where a less extensive capital program in
1999 led to a reduction in drilling overhead reimbursements. G&A
was lowered by $0.5 million due to an increase in the amount
capitalized as part of oil and gas properties. The amount
capitalized increased from $2.5 million in the second quarter of
1998 to $3.0 million in the second quarter of 1999.
G&A increased $1.4 million, or 12%, in the first half of
1999. Gross G&A increased $0.9 million, or 3%, in the 1999
period. G&A also increased due to a $1.3 million reduction in
the amount of reimbursements on operated properties. As
discussed in the above paragraph, this decrease was related to a
less extensive Canadian drilling program in 1999. G&A was
lowered by $0.8 million due to an increase in the amount
capitalized as part of oil and gas properties. The amount
capitalized increased from $4.8 million in the first half of 1998
to $5.6 million in the first half of 1999.
Interest Expense. Interest expense increased $1.7 million,
or 24%, in 1999's second quarter. An increase in the average
debt balance outstanding from $325.8 million in the second
quarter of 1998 to $454.1 million in the second quarter of 1999
caused interest expense to increase by $1.9 million. This was
partially offset by a $0.5 million reduction caused by a drop in
the annualized interest rate on outstanding debt from 6.6% in the
second quarter of 1998 to 6.0% in the second quarter of 1999.
The remaining increase of $0.3 million was caused by an increase
in other components of interest expense such as facility and
agency fees and the amortization of capitalized loan costs.
Interest expense increased $2.9 million, or 27%, in the
first half of 1999. An increase in the average debt balance
outstanding from $342.6 million in the first half of 1998 to
$426.3 million in the first half of 1999 caused interest expense
to increase by $2.6 million. This was partially offset by a $0.2
million reduction due to a drop in the average annualized
interest rate from 6.4% in the first half of 1998 to 6.2% in the
first half of 1999. The remaining increase of $0.5 million was
caused by an increase in the other components of interest
expense.
The following schedule includes the components of interest
expense for the second quarter and first half of 1999 and 1998.
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Interest based on debt outstanding $6,765 5,335 13,185 10,798
Facility and agency fees 152 142 298 259
Amortization of capitalized loan costs 96 26 165 45
Hedging gains -- (85) -- (188)
Other 102 9 131 (77)
Total interest expense $7,115 5,427 13,779 10,837
Deferred Effect of Changes in Foreign Currency Exchange Rate
on Subsidiary's Long-term Debt. Devon's Canadian subsidiary
Northstar has certain fixed rate senior notes which are
denominated in U.S. dollars. The outstanding principal amount of
these notes is $225 million. Changes in the exchange rate
between the U.S. dollar and the Canadian dollar from the dates
the notes were issued to the dates of repayment will increase or
decrease the expected amount of Canadian dollars eventually
required to repay the notes. Such changes in the Canadian dollar
equivalent balance of the debt are required to be included in
determining net earnings for the period in which the exchange
rate changes.
The rate of converting Canadian dollars to U.S. dollars
increased from $0.6535 at the end of 1998 to $0.6626 at the end
of 1999's first quarter and to $0.6793 at the end of 1999's
second quarter. These increases in the exchange rate reduced the
Canadian dollar equivalent of debt recorded by Northstar.
Therefore, $5.6 million and $8.7 million of reduced expenses were
recognized in 1999's second quarter and first six months,
respectively.
The rate of converting Canadian dollars to U.S. dollars
remained virtually constant from the end of 1997 to the end of
1998's first quarter, and no effect of the change in the exchange
rate was recorded in the first quarter of 1998. However, the
conversion rate decreased from $0.6997 at the end of 1997 and
$0.7045 at the end of March 1998 to $0.6813 at the end of June
1998. The drop in the conversion rate during the quarter and
year-to-date periods of 1998 caused $6.9 million of expense to be
recognized in each period.
Distributions on Preferred Securities of Subsidiary Trust.
Devon has $149.5 million of 6.5% Trust Convertible Preferred
Securities outstanding. Distributions on these securities accrue
and are paid at the rate of 1.625% per quarter.
Income Taxes. During interim periods, income tax expense is
based on the estimated effective income tax rate that is expected
for the entire fiscal year. The effective tax rates estimated
for the quarters and six month periods ended June 30, 1999 and
1998 were not materially different. The estimated effective tax
rate in the second quarter of 1999 was 40% compared to 41% in the
second quarter of 1998. The estimated effective tax rate in the
first half of 1999 was 42% compared to 41% in the first half of
1998.
Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS 109"), requires that the tax
benefit of available tax carryforwards be recorded as an asset to
the extent that management assesses the utilization of such
carryforwards to be "more likely than not". When the future
utilization of some portion of the carryforwards is determined
not to be "more likely than not", SFAS 109 requires that a
valuation allowance be provided to reduce the recorded tax
benefits from such assets.
Included as deferred tax assets at June 30, 1999, were
approximately $21.8 million of net operating loss carryforwards.
The carryforwards include U.S. federal net operating loss
carryforwards, the majority of which do not begin to expire until
2008, U.S. state net operating loss carryforwards which expire
primarily between 1999 and 2011, and Canadian carryforwards which
expire primarily between 2000 and 2005. Devon expects the tax
benefits from the net operating loss carryforwards to be utilized
between 1999 and 2002. Such expectation is based upon current
estimates of taxable income during this period, considering
limitations on the annual utilization of these benefits as set
forth by federal tax regulations. Significant changes in such
estimates caused by variables such as future oil and gas prices
or capital expenditures could alter the timing of the eventual
utilization of such carryforwards. There can be no assurance
that Devon will generate any specific level of continuing taxable
earnings. However, Devon's management believes that future
taxable income will more likely than not be sufficient to utilize
substantially all its tax carryforwards prior to their
expirations.
Capital Expenditures, Capital Resources and Liquidity
The following discussion of capital expenditures, capital
resources and liquidity should be read in conjunction with the
consolidated statements of cash flows included in Part I, Item 1
included elsewhere herein.
Capital Expenditures. Approximately $139.9 million was
spent in the first six months of 1999 for capital expenditures.
This total included $101.7 million for the acquisition, drilling
and development of oil and gas properties, $36.9 million related
to the construction of an extensive gas gathering system, related
CO2 removal facilities and gas processing project all located in
the Powder River Basin of Wyoming, and $1.3 million for other
fixed assets.
Approximately $171.5 million was spent for capital
expenditures in the first half of 1998. This total included
$169.4 million for the acquisition, drilling and development of
oil and gas properties and $2.1 million for other fixed assets.
Capital Resources and Liquidity. Net cash provided by
operating activities ("operating cash flow") continued to be the
primary source of capital and liquidity in the first half of
1999. Operating cash flow in the first half of 1999 was $85.9
million, compared to $102.8 million in the first half of 1998.
The decrease in operating cash flow in the first half of 1999 was
primarily caused by the reduction in total revenues discussed
previously in this section.
In addition to operating cash flow, Devon also utilized a
portion of its credit facilities during the first half of 1999 to
fund capital expenditures. Net borrowings against the credit
facilities in the first half of 1999 were $36.9 million. As of
June 30, 1999, Devon had $177 million available under its $400
million credit facilities.
Year 2000 Status. Devon's company-wide Year 2000
Project ("the Project") is proceeding on schedule. The Project
is addressing the Year 2000 issue caused by computer programs
being written utilizing two digits rather than four to define an
applicable year. As a result, Devon's computer equipment,
software (all of which is externally developed), and devices with
embedded technology that are time sensitive may misinterpret the
actual date beginning on January 1, 2000. This could result in a
system failure or miscalculations causing disruptions of
operations, including, but not limited to, a temporary inability
to process transactions.
Devon has undertaken various initiatives intended to ensure
that its computer equipment and software will function properly
with respect to dates in the Year 2000 and thereafter. In
planning and developing the Project, Devon has considered both
its information technology ("IT") and its non-IT systems. The
term "computer equipment and software" includes systems that are
commonly thought of as IT systems, including accounting, data
processing, telephone systems, scanning equipment, and other
miscellaneous systems. Those items not to be considered as IT
technology include alarm systems, fax machines, monitors for
field operations, or other miscellaneous systems. Both IT and
non-IT systems may contain embedded technology, which complicates
Devon's Year 2000 identification, assessment, remediation, and
testing efforts. Based upon its identification and assessment
efforts to date, Devon is in the process of replacing the
computer equipment and software it currently uses to become Year
2000 compliant. In addition, in the ordinary course of replacing
computer equipment and software, Devon plans to obtain
replacements that are in compliance with year 2000.
Devon has also mailed letters to its significant vendors and
service providers and has verbally communicated with many
strategic customers to determine the extent to which interfaces
with such entities are vulnerable to Year 2000 issues and whether
the products and services purchased from or by such entities are
year 2000 compliant. Devon has received an overall favorable
response from such third parties and it is anticipated that their
significant Year 2000 issues will be addressed on a timely basis.
With regard to IT and non-IT systems and communications with
third parties, Devon anticipates that the Project will be
completed by September 30, 1999.
As noted above, Devon is in the process of replacing certain
computer equipment and software because of the Year 2000 issue.
Devon estimates that the total cost of such replacements will
approximate $0.5 million. Substantially all of the personnel
being used on the Project are existing Devon employees. Devon
does not separately track the time that its own employees spend
on the Project. Therefore, the internal costs incurred on the
Project are not known. Such costs would consist almost entirely
of the payroll costs associated with the time spent on the
Project. Third party consulting costs of Devon's Year 2000
identification, assessment, remediation and testing efforts, as
well as currently anticipated costs to be incurred with respect
to Year 2000 issues of third parties, are expected to be
approximately $0.2 million.
Devon has not yet begun a comprehensive analysis of the
operational problems and costs that would be reasonably likely to
result from the failure by Devon and significant third parties to
complete efforts necessary to achieve Year 2000 compliance on a
timely basis. A contingency plan has not been developed for
dealing with the most reasonably likely worst case scenario, and
such scenario has not yet been clearly identified. Devon plans
to complete such analysis and contingency planning by December
31, 1999.
Devon presently does not expect to incur significant
operational problems due to the Year 2000 issue. However, if all
Year 2000 issues are not properly and timely identified,
assessed, remediated and tested, there can be no assurances that
the Year 2000 issue will not materially impact Devon's results of
operations or adversely affect its relationships with customers,
vendors, or others. Additionally, there can be no assurance that
the Year 2000 issues of other entities will not have a material
impact on Devon's systems or results of operations.
Impact of Recently Issued Accounting Standards Not Yet
Adopted. In June 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133"). SFAS 133 establishes accounting and reporting
standards for derivative instruments, including certain
recognition of all derivatives as either assets or liabilities in
the balance sheet and measurement of those instruments at fair
value. If certain conditions are met, a derivative may be
specifically designated as a hedge. The accounting for changes
in the fair value of a derivative (that is, gains and losses)
depends on the intended use of the derivative and whether it
qualifies as a hedge. A subsequent pronouncement, SFAS 137, was
issued in July 1999 that delayed the effective date of SFAS 133
until the fiscal year beginning after June 15, 2000. Devon plans
to adopt the provisions of SFAS 133 in the first quarter of the
year ending December 31, 2001, and is currently evaluating the
effects of this pronouncement.
Pending Merger. On May 20, 1999, Devon and PennzEnergy
Company ("PennzEnergy") announced their intention to merge the
two companies. In the merger, Devon stockholders will receive
one share of common stock of a newly formed entity currently
referred to as New Devon for each share of Devon common stock
owned. PennzEnergy stockholders will receive 0.4775 shares of
New Devon's common stock for each share of PennzEnergy common
stock owned. The merger is subject to approval by the
stockholders of both companies at separate meetings to be held on
August 17, 1999, as well as certain regulatory approvals. If
approved, the merger is expected to be consummated shortly after
the stockholder meetings. The merger will be accounted for under
the purchase method of accounting for business combinations as an
acquisition of PennzEnergy by Devon. Therefore, Devon's 1999
operating results will include the effect of the merger for the
period from the merger closing through the end of the year.
PennzEnergy's year-end 1998 proved oil and gas reserves
totaled 361 million Boe, including 188 million Boe onshore the
United States, 79 million Boe offshore the United States, and 94
million Boe in other countries. PennzEnergy's year-end 1998
undeveloped leasehold included 12.1 million net acres, including
1.2 million net acres onshore the United States, 0.4 million net
acres offshore the United States, and 10.5 million net acres
internationally.
On July 16, 1999, Devon and PennzEnergy filed definitive
proxy materials concerning this pending merger. The proxy
materials contain further disclosures regarding the merger and
certain financial data concerning both companies.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
The information included in "Quantitative and Qualitative
Disclosures About Market Risk" in Item 7A of Devon's 1998 Annual
Report on Form 10-K is incorporated herein by reference. Such
information includes a description of Devon's potential exposure
to market risks, including commodity price risk, interest rate
risk and foreign currency risk. As of June 30, 1999, there have
been no material changes in Devon's market risk exposure from
that disclosed in the 1998 Form 10-K.
Part II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company's annual meeting of shareholders was held in
Oklahoma City, Oklahoma at 10:00 a.m. local time, on Wednesday,
May 19, 1999.
(b) Proxies for the meeting were solicited pursuant to
Regulation 14 under the Securities and Exchange Act of 1934, as
amended. There was no solicitation in opposition to the nominees
for election as directors as listed in the proxy statement and
all nominees were elected.
(c) Out of a total of 48,492,259 shares outstanding and entitled
to vote, 42,124,647 shares were present at the meeting in person
or by proxy, representing approximately 87 percent of the total
outstanding. The only matter voted upon at the meeting was the
election of four directors to serve on the Company's board of
directors until the 2002 annual meeting of shareholders. The
vote tabulation with respect to each nominee was as follows:
Authority
Nominee For Withheld
Luke R. Corbett 41,948,256 176,391
Michael E. Gellert 41,938,596 186,051
Michael M. Kanovsky 41,949,226 175,421
H. R. Sanders, Jr. 41,943,257 181,390
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K are
as follows:
Exhibit
No.
2.1 Amended and Restated Combination Agreement between the
Registrant and Northstar Energy Corporation dated as of June 29,
1998 (incorporated by reference to Annex B to Registrant's
definitive proxy statement for a special meeting of shareholders,
filed November 6, 1998).
2.2 Amended and Restated Agreement and Plan of
Merger, dated as of May 19, 1999, by and among
Registrant, Devon Delaware Corporation, Devon
Oklahoma Corporation and PennzEnergy Company
(incorporated by reference to Annex A to
Registrant's definitive proxy statement for a
special meeting of shareholders filed on July 16,
1999).
3.1 Registrant's Amended and Restated
Certificate of incorporation (incorporated by
reference to Exhibit 3 to Registrant's Form 8-K
dated as of December 11, 1998).
3.2 Registrant's Amended and Restated
Bylaws.
4.1 Form of Common Stock Certificate
(incorporated by reference to Exhibit 4.1 to
Registrant's Registration Statement on Form 8-B
filed on June 7, 1995).
4.2 Rights Agreement between Registrant and
The First National Bank of Boston (incorporated by
reference to Exhibit 4.2 to Registrant's
Registration Statement on Form 8-B filed on June
7, 1995).
4.3 First Amendment to Rights Agreement
between Registrant and The First National Bank of
Boston, dated October 16, 1996 (incorporated by
reference to Exhibit H-1 to Addendum A to
Registrant's definitive proxy statement for a
special meeting of shareholders, filed on November
6, 1996).
4.4 Second Amendment to Rights Agreement between
Registrant and the First National Bank of Boston,
dated December 31, 1996 (incorporated by reference
to Exhibit 4.2 to Registrant's Current Report on
Form 8-K dated December 31, 1996).
4.5 Third Amendment to Rights Agreement between Registrant and
The First National Bank of Boston, dated December 10, 1998
(incorporated by reference to Exhibit 4.5 of Registrant's Annual
Report on Form 10-K for the year ended December 31, 1998).
4.6 Fourth Amendment to Rights Agreement between
Registrant and the First National Bank of Boston,
dated May 19, 1999.
4.7 Certificate of Designations of Series A
Junior Participating Preferred Stock of Registrant
(incorporated by reference to Exhibit 3.3 to
Registrant's Registration Statement on Form 8-B
filed on June 7, 1995).
4.8 Certificate of Trust of Devon Financing
Trust [incorporated by reference to Exhibit 4.5 to
Amendment No. 1 to Registrant's Registration
Statement on Form S-3 (No. 333-00815)].
4.9 Amended and Restated Declaration of
Trust of Devon Financing Trust, dated as of July
3, 1996, by J. Larry Nichols, H. Allen Turner,
William T. Vaughn, The Bank of New York (Delaware)
and The Bank of New York as Trustees and the
Registrant as Sponsor [incorporated by reference
to Exhibit 4.6 to Amendment No. 1 to Registrant's
Registration Statement on Form S-3 (No. 333-
00815)].
4.10 Indenture, dated as of July 3, 1996, between the
Registrant and The Bank of New York [incorporated
by reference to Exhibit 4.7 to Amendment No. 1 to
Registrant's Registration Statement on Form S-3
(No. 333-00815)].
4.11 First Supplemental Indenture, dated as of July 3,
1996, between the Registrant and The Bank of New
York [incorporated by reference to Exhibit 4.8 to
Amendment No. 1 to Registrant's Registration
Statement on Form S-3 (No. 333-00815)].
4.12 Form of 6 1/2% Preferred Convertible
Securities (included as Exhibit A-1 to Exhibit 4.7
above).
4.13 Form of 6 1/2% Convertible Junior
Subordinated Debentures (included as Exhibit B to
Exhibit 4.7 above).
4.14 Preferred Securities Guarantee
Agreement, dated July 3, 1996, between Registrant,
as Guarantor, and The Bank of New York, as
Preferred Guarantee Trustee [incorporated by
reference to Exhibit 4.11 to Amendment No. 1 to
Registrant's Registration Statement on Form S-3
(No. 333-00815)].
4.15 Stock Rights and Restrictions Agreement,
dated as of December 31, 1996, between Registrant
and Kerr-McGee Corporation (incorporated by
reference to Exhibit 4.3 to Registrant's Current
Report on Form 8-K dated December 31, 1996).
4.16 Registration Rights Agreement, dated December 31, 1996, by
and between Registrant and Kerr-McGee Corporation (incorporated
by reference to Exhibit 4.4 to Registrant's Current Report on
Form 8-K, dated December 31, 1996).
4.17 Agreement, dated July 15, 1999, by and among
Registrant, Devon Delaware Corporation and Kerr-
McGee Corporation (incorporated by reference to
Exhibit 4 to Registrant's Current Report on Form 8-
K dated July 15, 1999).
4.18 Support Agreement, dated December 10,
1998, between the Registrant and Northstar Energy
Corporation (incorporated by reference to Exhibit
4.1 to Registrant's Form 8-K dated as of December
11, 1998).
4.19 Exchangeable Share Provisions
(incorporated by reference to Exhibit 4.2 to
Registrant's Form 8-K dated as of December 11,
1998).
10.1 U.S. Credit Agreement, dated December 11,
1998, among the Registrant, as U.S. Borrower,
NationsBank, N.A., as Administrative Agent,
NationsBanc Montgomery Securities, L.L.C., as
Arranger, Bank One, Texas, N.A., as Syndication
Agent, Bank of Montreal, as Documentation Agent,
First Union, as Co-Documentation Agent, and
Certain Financial Institutions, as Lenders
(incorporated by reference to Exhibit 10.1 to
Registrant's Form 8-K dated as of December 11,
1998).
10.2 Canadian Credit Agreement, dated December 11,
1998, among Northstar Energy Corporation and Devon
Energy Canada Corporation, as Canadian Borrowers,
Bank of America Canada, as Administrative Agent,
NationsBanc Montgomery Securities, L.L.C., as
Arranger, First Chicago Capital Markets, Inc., as
Syndication Agent, Bank of Montreal, as
Documentation Agent, First Union, as Co-
Documentation Agent, and Certain Financial
Institutions, as Lenders (incorporated by
reference to Exhibit 10.2 to Registrant's Form 8-K
dated as of December 11, 1998).
10.3 Morrison Petroleums Ltd. U.S. $75,000,000
6.76% Senior Notes Due July 19, 2005 Note
Agreement Dated as of July 19, 1995 (incorporated
by reference to Exhibit 10.3 of Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1998).
10.4 Northstar Energy Corporation U.S.
$150,000,000 6.79% Senior Notes Due 2009 Note
Agreement Dated as of March 2, 1998 (incorporated
by reference to Exhibit 10.4 of Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1998).
10.5 Devon Energy Corporation 1988 Stock Option
Plan [incorporated by reference to Exhibit 10.4 to
Registrant's Registration Statement on Form S-4
(No. 33-23564)].*
10.6 Devon Energy Corporation 1993 Stock Option
Plan (incorporated by reference to Exhibit A to
Registrant's Proxy Statement for the 1993 Annual
Meeting of Shareholders filed on May 6, 1993).*
10.7 Devon Energy Corporation 1997 Stock Option
Plan (incorporated by reference to Exhibit A to
Registrant's Proxy Statement for the 1997 Annual
Meeting of the Shareholders filed on April 3,
1997).*
10.8 Severance Agreement between Devon Energy
Corporation (Nevada), Devon Energy Corporation
(Delaware) and Mr. J. Larry Nichols, dated
December 3, 1992 (incorporated by reference to
Exhibit 10.10 to Registrant's Amendment No. 1 to
Annual Report on Form 10-K for the year ended
December 31, 1992).*
10.9 Severance Agreement between Devon Energy
Corporation (Nevada), Devon Energy Corporation
(Delaware) and Mr. J. Michael Lacey, dated
December 3, 1992 (incorporated by reference to
Exhibit 10.12 to Registrant's Amendment No. 1 to
Annual Report on Form 10-K for the year ended
December 31, 1992).*
10.10 Severance Agreement between Devon Energy
Corporation (Nevada), Devon Energy Corporation
(Delaware) and Mr. H. Allen Turner, dated December
3, 1992 (incorporated by reference to Exhibit
10.13 to Registrant's Amendment No. 1 to Annual
Report on Form 10-K for the year ended December
31, 1992).*
10.11 Severance Agreement between Devon Energy
Corporation (Nevada), Devon Energy Corporation
(Delaware) and Mr. Darryl G. Smette, dated
December 3, 1992 (incorporated by reference to
Exhibit 10.14 to Registrant's Amendment No. 1 to
Annual Report on Form 10-K for the year ended
December 31, 1992).*
10.12 Severance Agreement between Devon Energy
Corporation (Nevada), Registrant and Duke R.
Ligon, dated March 26, 1997 (incorporated by
reference to Exhibit 10.11 to Registrant's
Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).*
10.13 Employment Agreement between Devon
Energy Corporation (Nevada), Registrant and Duke
R. Ligon, dated February 7, 1997 (incorporated by
reference to Exhibit 10.12 to Registrant's
Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).*
10.14 Supplemental Retirement Income
Agreement among Devon Energy Corporation (Nevada),
Registrant and John W. Nichols, dated March 26,
1997 (incorporated by reference to Exhibit 10.13
to Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997).*
10.15 Supplemental Benefit Agreement
between Northstar Energy Corporation and John A.
Hagg dated February 17, 1999 (incorporated by
reference to Exhibit 10.15 of Registrant's Annual
Report on Form 10-K for the year ended December
31, 1998).*
10.16 Consulting Agreement between
Registrant and Thomas F. Ferguson dated June 1,
1989 (incorporated by reference to Exhibit 10.16
of Registrant's Annual Report on Form 10-K for the
year ended December 31, 1998).*
10.17 Sale and Purchase Agreement
relating to Registrant's San Juan Basin gas
properties (incorporated by reference to Exhibit
10.15 to Registrant's Quarterly Report on Form 10-
Q for the quarter ended September 30, 1995).
10.18 Second Restatement of and Amendment
to Sale and Purchase Agreement relating to
Registrant's San Juan Basin gas properties
(incorporated by reference to Exhibit 10.16 to
Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995).
10.19 Registration Rights Agreement, dated July 3, 1996, by
and among the Registrant, Devon Financing Trust and Morgan
Stanley & Co. Incorporated [incorporated by reference to Exhibit
10.1 to Amendment No. 1 to Registrant's Registration Statement on
Form S-3 (No. 333-00815)].
10.20 Supplemental Agreement to Amended and Restated
Agreement and Plan of Merger, dated as of July 8, 1999, by and
among Registrant, Devon Delaware Corporation, Devon Oklahoma
Corporation and PennzEnergy Company [incorporated by reference to
Exhibit 10.1 of Devon Delaware
Corporation's Registration Statement on Form S-4
(No. 333-82903)].
10.21 Amended and Restated Stock Option Agreement, dated as
of May 19, 1999, by and between Devon Energy Corporation, as
issuer and PennzEnergy Company, as grantee (incorporated by
reference to Annex D to Registrant's definitive proxy statement
for a special meeting of shareholders filed on July 16, 1999).
10.22 Amended and Restated Stock Option Agreement, dated as
of May 19, 1999, by and between PennzEnergy Company, as issuer,
and Devon Energy Corporation, as grantee (incorporated by
reference to Annex E to Registrant's definitive proxy statement
for a special meeting of shareholders filed on July 16, 1999).
* Compensatory plans or arrangements.
(b) Reports on Form 8-K - A Current Report on Form
8-K was filed on April 28, 1999, regarding certain
revisions to the Registrant's forward-looking
information initially included in its February 8, 1999
Form 8-K. A Current Report on Form 8-K was filed on
May 21, 1999, regarding the resignation of Kerr-McGee
Corporation's three representatives from the
Registrant's Board of Directors. A Current Report on
Form 8-K was filed on June 1, 1999, regarding the
announcement of the planned merger with PennzEnergy. A
Current Report on Form 8-K was filed on July 22, 1999,
regarding the termination of certain agreements
previously entered into with Kerr-McGee Corporation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
DEVON ENERGY CORPORATION
Date: August 10, 1999 /s/Danny J. Heatly
Danny J. Heatly
Controller
INDEX TO EXHIBITS
Page
2.1 Amended and Restated Combination Agreement between the Registrant #
and Northstar Energy Corporation dated as of June 29, 1998
(incorporated by reference to Annex B to Registrant's definitive
proxy statement for a special meeting of shareholders, filed
November 6, 1998).
2.2 Amended and Restated Agreement and Plan of Merger, dated as of May #
19, 1999, by and among Registrant, Devon Delaware Corporation, Devon
Oklahoma Corporation and PennzEnergy Company (incorporated by refer-
ence to Annex A to Registrant's definitive proxy statement for a
special meeting of shareholders filed on July 16, 1999).
3.1 Registrant's Amended and Restated Certificate of incorporation #
(incorporated by reference to Exhibit 3 to Registrant's Form 8-K
dated as of December 11, 1998).
3.2 Registrant's Amended and Restated Bylaws. 42
4.1 Form of Common Stock Certificate (incorporated by reference to #
Exhibit 4.1 to Registrant's Registration Statement on Form 8-B
filed on June 7, 1995).
4.2 Rights Agreement between Registrant and The First National Bank of #
Boston (incorporated by reference to Exhibit 4.2 to Registrant's
Registration Statement on Form 8-B filed on June 7, 1995).
4.3 First Amendment to Rights Agreement between Registrant and The First #
National Bank of Boston, dated October 16, 1996 (incorporated by
reference to Exhibit H-1 to Addendum A to Registrant's definitive
proxy statement for a special meeting of shareholders, filed on
November 6, 1996).
4.4 Second Amendment to Rights Agreement between Registrant and the First #
National Bank of Boston, dated December 31, 1996 (incorporated by
reference to Exhibit 4.2 to Registrant's Current Report on Form 8-K
dated December 31, 1996).
4.5 Third Amendment to Rights Agreement between Registrant and The First #
National Bank of Boston, dated December 10, 1998 (incorporated by
reference to Exhibit 4.5 of Registrant's Annual Report on Form 10-K
for the year ended December 31, 1998).
4.6 Fourth Amendment to Rights Agreement between Registrant and The 57
First National Bank of Boston, dated May 19, 1999.
4.7 Certificate of Designations of Series A Junior Participating #
Preferred Stock of Registrant (incorporated by reference to
Exhibit 3.3 to Registrant's Registration Statement on Form 8-B
filed on June 7, 1995).
4.8 Certificate of Trust of Devon Financing Trust [incorporated by #
reference to Exhibit 4.5 to Amendment No. 1 to Registrant's
Registration Statement on Form S-3 (No. 333-00815)].
4.9 Amended and Restated Declaration of Trust of Devon Financing Trust, #
dated as of July 3, 1996, by J. Larry Nichols, H. Allen Turner,
William T. Vaughn, The Bank of New York (Delaware) and The Bank
of New York as Trustees and the Registrant as Sponsor [incorporated
by reference to Exhibit 4.6 to Amendment No. 1 to Registrant's
Registration Statement on Form S-3 (No. 333-00815)].
4.10 Indenture, dated as of July 3, 1996, between the Registrant and #
The Bank of New York [incorporated by reference to Exhibit 4.7 to
Amendment No. 1 to Registrant's Registration Statement on Form
S-3 (No. 333-00815)].
4.11 First Supplemental Indenture, dated as of July 3, 1996, between #
the Registrant and The Bank of New York [incorporated by reference
to Exhibit 4.8 to Amendment No. 1 to Registrant's Registration
Statement on Form S-3 (No. 333-00815)].
4.12 Form of 6 1/2% Preferred Convertible Securities (included as #
Exhibit A-1 to Exhibit 4.7 above).
4.13 Form of 6 1/2% Convertible Junior Subordinated Debentures #
(included as Exhibit B to Exhibit 4.7 above).
4.14 Preferred Securities Guarantee Agreement, dated July 3, 1996, #
between Registrant, as Guarantor, and The Bank of New York, as
Preferred Guarantee Trustee [incorporated by reference to
Exhibit 4.11 to Amendment No. 1 to Registrant's Registration
Statement on Form S-3 (No. 333-00815)].
4.15 Stock Rights and Restrictions Agreement, dated as of December 31, #
1996, between Registrant and Kerr-McGee Corporation (incorporated
by reference to Exhibit 4.3 to Registrant's Current Report on
Form 8-K dated December 31, 1996).
4.16 Registration Rights Agreement, dated December 31, 1996, by and #
between Registrant and Kerr-McGee Corporation (incorporated by
reference to Exhibit 4.4 to Registrant's Current Report on
Form 8-K, dated December 31, 1996).
4.17 Agreement, dated July 15, 1999, by and among Registrant, Devon #
Delaware Corporation and Kerr-McGee Corporation (incorporated by
reference to Exhibit 4 to Registrant's Current Report on Form 8-k
dated July 15, 1999).
4.18 Support Agreement, dated December 10, 1998, between the Registrant #
and Northstar Energy Corporation (incorporated by reference to
Exhibit 4.1 to Registrant's Form 8-K dated as of December 11, 1998).
4.19 Exchangeable Share Provisions (incorporated by reference to Exhibit #
4.2 to Registrant's Form 8-K dated as of December 11, 1998).
10.1 U.S. Credit Agreement, dated December 11, 1998, among the #
Registrant, as U.S. Borrower, NationsBank, N.A., as
Administrative Agent, NationsBanc Montgomery Securities,
L.L.C., as Arranger, Bank One, Texas, N.A., as Syndication
Agent, Bank of Montreal, as Documentation Agent, First Union,
as Co-Documentation Agent, and Certain Financial Institutions,
as Lenders (incorporated by reference to Exhibit 10.1 to
Registrant's Form 8-K dated as of December 11, 1998).
10.2 Canadian Credit Agreement, dated December 11, 1998, among Northstar #
Energy Corporation and Devon Energy Canada Corporation, as
Canadian Borrowers, Bank of America Canada, as Administrative Agent,
NationsBanc Montgomery Securities, L.L.C., as Arranger, First
Chicago Capital Markets, Inc., as Syndication Agent, Bank of
Montreal, as Documentation Agent, First Union, as Co-Documentation
Agent, and Certain Financial Institutions, as Lenders (incorporated
by reference to Exhibit 10.2 to Registrant's Form 8-K dated as of
December 11, 1998).
10.3 Morrison Petroleums Ltd. U.S. $75,000,000 6.76% Senior Notes Due #
July 19, 2005 Note Agreement Dated as of July 19, 1995
(incorporated by reference to Exhibit 10.3 of Registrant's Annual
Report on Form 10-K for the year ended December 31, 1998).
10.4 Northstar Energy Corporation U.S. $150,000,000 6.79% Senior Notes #
Due 2009 Note Agreement Dated as of March 2, 1998 (incorporated
by reference to Exhibit 10.4 of Registrant's Annual Report on
Form 10-K for the year ended December 31, 1998).
10.5 Devon Energy Corporation 1988 Stock Option Plan [incorporated by #
reference to Exhibit 10.4 to Registrant's Registration Statement
on Form S-4 (No. 33-23564)].*
10.6 Devon Energy Corporation 1993 Stock Option Plan (incorporated #
by reference to Exhibit A to Registrant's Proxy Statement for
the 1993 Annual Meeting of Shareholders filed on May 6, 1993).*
10.7 Devon Energy Corporation 1997 Stock Option Plan (incorporated #
by reference to Exhibit A to Registrant's Proxy Statement for
the 1997 Annual Meeting of the Shareholders filed on April 3,
1997).*
10.8 Severance Agreement between Devon Energy Corporation (Nevada), #
Devon Energy Corporation (Delaware) and Mr. J. Larry Nichols,
dated December 3, 1992 (incorporated by reference to Exhibit
10.10 to Registrant's Amendment No. 1 to Annual Report on
Form 10-K for the year ended December 31, 1992).*
10.9 Severance Agreement between Devon Energy Corporation (Nevada), #
Devon Energy Corporation (Delaware) and Mr. J. Michael Lacey,
dated December 3, 1992 (incorporated by reference to Exhibit
10.12 to Registrant's Amendment No. 1 to Annual Report on Form
10-K for the year ended December 31, 1992).*
10.10 Severance Agreement between Devon Energy Corporation (Nevada), #
Devon Energy Corporation (Delaware) and Mr. H. Allen Turner,
dated December 3, 1992 (incorporated by reference to Exhibit
10.13 to Registrant's Amendment No. 1 to Annual Report on Form
10-K for the year ended December 31, 1992).*
10.11 Severance Agreement between Devon Energy Corporation (Nevada), #
Devon Energy Corporation (Delaware) and Mr. Darryl G. Smette,
dated December 3, 1992 (incorporated by reference to Exhibit
10.14 to Registrant's Amendment No. 1 to Annual Report on Form
10-K for the year ended December 31, 1992).*
10.12 Severance Agreement between Devon Energy Corporation (Nevada), #
Registrant and Duke R. Ligon, dated March 26, 1997 (incorporated
by reference to Exhibit 10.11 to Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997).*
10.13 Employment Agreement between Devon Energy Corporation (Nevada), #
Registrant and Duke R. Ligon, dated February 7, 1997 (incorporated
by reference to Exhibit 10.12 to Registrant's Quarterly Report
on Form 10-Q for the quarter ended June30,1997).*
10.14 Supplemental Retirement Income Agreement among Devon Energy #
Corporation (Nevada), Registrant and John W. Nichols, dated
March 26, 1997 (incorporated by reference to Exhibit 10.13
to Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).*
10.15 Supplemental Benefit Agreement between Northstar Energy #
Corporation and John A. Hagg dated February 17, 1999
(incorporated by reference to Exhibit 10.15 of Registrant's
Annual Report on Form 10-K for the year ended December
31, 1998).*
10.16 Consulting Agreement between Registrant and Thomas F. #
Ferguson dated June 1, 1989 incorporated by reference to
Exhibit 10.16 of Registrant's Annual Report on Form 10-K
for the year ended December 31, 1998).*
10.17 Sale and Purchase Agreement relating to Registrant's San Juan #
Basin gas properties (incorporated by reference to Exhibit
10.15 to Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995).
10.18 Second Restatement of and Amendment to Sale and Purchase Agreement #
relating to Registrant's San Juan Basin gas properties(incorporated
by reference to Exhibit 10.16 to Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1995).
10.19 Registration Rights Agreement, dated July 3, 1996, by and among #
the Registrant, Devon Financing Trust and Morgan Stanley & Co.
Incorporated [incorporated by reference to Exhibit 10.1 to
Amendment No. 1 to Registrant's Registration Statement on Form
S-3 (No. 333-00815)].
10.20 Supplemental Agreement to Amended and Restated Agreement and Plan #
of Merger, dated as of July 8, 1999, by and among Registrant,
Devon Delaware Corporation, Devon Oklahoma Corporation and
PennzEnergy Company [incorporated by reference to Exhibit 10.1
of Devon Delaware Corporation's Registration Statement on Form
S-4 (No. 333-82903)].
10.21 Amended and Restated Stock Option Agreement, dated as of May 19, #
1999, by and between Devon Energy Corporation, as issuer and
PennzEnergy Company, as grantee (incorporated by reference to
Annex D to Registrant's definitive proxy statement for a special
meeting of shareholders filed on July 16, 1999).
10.22 Amended and Restated Stock Option Agreement, dated as of May 19, #
1999, by and between PennzEnergy Company, as issuer, and Devon
Energy Corporation, as grantee (incorporated by reference to Annex
E to Registrant's definitive proxy statement for a special
meeting of shareholders filed on July 16, 1999).
# Incorporated by reference.