Devon Energy's 2Q profit falls on lower prices

OKLAHOMA CITY -- Devon Energy, a major natural gas producer, said Wednesday its second-quarter net income declined after overall revenue dropped nearly 21 percent because of lower oil and natural gas prices.

Separately, Devon announced that Sumitomo Corp. has agreed to invest $1.4 billion in Devon's Texas oil and gas fields for a 30 percent stake in the project.

The Oklahoma City company's shares fell more than 4 percent in afternoon trading.

For the April-through-June quarter, Devon reported net income of $477 million, or $1.18 per share. That compared with $2.7 billion, or $6.48 per share, a year ago when the company had a $2.5 billion one-time gain on asset sales.

In the recent quarter, Devon recorded a $250 million after-tax loss on derivatives. Excluding that one-time loss, it made $224 million, or 55 cents per share.

Revenue fell to $2.56 billion from $3.22 billion.

Analysts, on average, predicted earnings of 80 cents per share on revenue of $2.23 billion, according to FactSet. Such estimates typically exclude one-time items.

Total production of oil, natural gas and natural gas liquids rose 2.8 percent to an average of 679,000 barrels of oil equivalent per day. Prices fell for all three products.

Under the tentative agreement with Japan's Sumitomo, Devon will receive $340 million in cash and an additional $1.025 billion investment in its development of 650,000 acres of Cline and the Midland-Wolfcamp shale fields in Texas. The partnership expects to drill about 40 wells this year. The deal is expected to close in the third quarter.

Shares of Devon fell $2.59, or 4.4 percent, to $56.53. The stock has ranged from $50.74 to $77.17 per share in the past 52 weeks.