May 7, 2008 / 1:33 PM / 10 years ago

UPDATE 4-Devon Energy 1st-quarter profit rises 15 percent

(Updates share price)

HOUSTON, May 7 (Reuters) - Devon Energy Corp (DVN.N) reported a 15 percent rise in quarterly profit and topped Wall Street forecasts on Wednesday, as a 9 percent increase in output and higher prices for crude oil and natural gas boosted results.

First-quarter profit was $747 million, or $1.66 per share, up from $649 million, or $1.44 per share, a year earlier.

Excluding one-time items, analysts said Devon earned about $2.50 per share, well above the average analyst estimate of $2.33 from Reuters Estimates.

“Devon’s execution continues to be solid and their ongoing focus on the Barnett, deepwater projects and Canadian oil sands has allowed them to create a predictable profile with attractive production upside,” Simmons & Co Int’l told clients.

Still, Devon’s results may be viewed as somewhat neutral because they lack a near-term catalyst, the research firm wrote.

Revenue rose 20 percent to $2.98 billion. Revenue from oil sales soared to $1.25 billion from $691 a year ago, while natural gas revenue rose 31 percent to $1.63 billion.

Devon said its oil and gas production increased 9 percent to 640,000 barrels of oil equivalent per day in the quarter.

Production growth was concentrated in U.S. onshore fields such as the Barnett Shale in north Texas and Canada, the company said.

The company said that production this year will be at the low end of its previous forecast of 240 million to 247 million barrels of oil equivalent (boe), due to the reduction of its share of output form a project.

It expects to produce around 58 million boe in the second quarter with more in the following quarters.

Devon also said it has plugged and abandoned a well at its “Chuck” prospect in the deepwater Gulf of Mexico.

Stephen Hadden, the company’s senior vice president in charge of exploration and production, said Devon was disappointed in what it found in the well. He said there were hydrocarbons present and the company is evaluating what to do with the prospect.

Shares fell $3.91, or 3.25 percent, to $116.42 in afternoon trading on the New York Stock Exchange. (Reporting by Anna Driver in Houston and Michael Erman in New York, editing by Dave Zimmerman and Andre Grenon)

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