UPDATE 3-Devon profit tops Street view as oil output rises
* Second-quarter adjusted EPS $1.21 versus Street view 95 cents * Gas volumes drive production beat -analysts (Adds information on Woodford oil shale from conference call, byline) By Anna Driver Aug 7 (Reuters) - U.S. oil and gas producer Devon Energy Corp's quarterly profit jumped a higher-than-expected 43 percent as production from properties in the Permian basin of Texas boosted oil output by 14 percent, and gas volumes grew. Devon and other U.S. exploration companies, including EOG Resources Inc, are investing heavily in domestic shale formations like the Eagle Ford and Permian basin as a means of increasing production. Shares of Devon were up less than one percent at $56.13 on Wednesday. Devon's oil and gas output in the quarter rose to 698,000 barrels of oil equivalent per day (boed), from 679,000 in the same quarter a year earlier. Oil production averaged 169,000 boed. "Production above the high-end of guidance and an impressive (earnings per share) beat are certainly positives," analysts at Houston-based energy investment Simmons & Co said in a note to clients. Still, gas volumes, the biggest driver of the production beat, tend to be less profitable than oil, analysts noted. Devon's stock has underperformed peers this year, partly due to its high exposure to low natural gas prices and natural gas liquids. To keep its crude output growing, Devon told analysts on a conference call that it will continue to drill more Permian wells. It also said it has met with success exploring for oil in north-central Oklahoma in the Woodford shale. Initial production in the Woodford, which is located beneath the company's Mississippi Lime acreage, is so far about 80 percent oil, Dave Hager, Devon's chief operating officer told analysts on the call. The Woodford and Mississippian combined have the potential to "provide the next leg of large-scale highly economic growth for Devon," said Hager. PROFIT RISES Net profit rose to $683 million, or $1.68 per share, in the second quarter, from $477 million, or $1.18 per share, a year earlier. Excluding one-time items, Devon had earnings of $1.21 per share. Wall Street analysts on average had expected a profit of 95 cents per share, according to Thomson Reuters I/B/E/S. The Oklahoma City-based company's revenue rose about 21 percent to $3.09 billion. One of Devon's peers, EOG, reported better-than-expected second-quarter earnings after the close of trading on Tuesday. The Houston company's wells in the Eagle Ford basin produced more crude oil than anticipated as EOG improved its hydraulic fracturing technique, executives told analysts on a conference call. Shares of EOG were up 1.75 percent at $155.90 on Wednesday. Andrew Coleman, oil company analyst at Raymond James, wrote on Wednesday that EOG's operations "continue to impress." (Reporting by Garima Goel in Bangalore and Anna Driver in Houston; Editing by Terry Wade, Matthew Lewis and Carol Bishopric)
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