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    Devon Energy Woodford shale update

    When independent oil and gas exploration and production company Devon Energy Corp. (NYSE: DVN) presented at the UBS Global Oil and Gas Conference in May, the company briefed analysts and investors on its current 2010 capital expenditure budget that reinforced its position in the oil and gas shale plays.

    Forty-four percent of the $4.4 to $4.8 billion budget is allocated to the unconventional resource. The company is very active in the Barnett and the Woodford. According to IHS Herold data, the company was the top producer in the Barnett in 2008 with 441,306,166 total gas, and the number two producer in the Woodford with 29,740,645 total gas that same year.

    In the Woodford, the company has leasehold in both the Cana Woodford and the Arkoma Woodford.

    Cana Woodford shale
    Devon holds 180,000 net acres in the Cana Woodford shale. In 2009, the company drilled 41 wells in the area and plans to drill a total of 80 in 2010. Net risked resource for the area is 7.0 tcfe with a low cost of entry ($2,200/acre) and a low average royalty burden (21%). In the first quarter of 2010, the company’s net production in the area was 73 MMcfe/d, up from 53MMcfe/d in the third quarter of 2009.

    For gas in the region, the company is constructing a gas processing plant with a capacity of 200 MMcf/d. Completion is expected in early 2011.

    Arkoma Woodford
    The company holds another 58,000 net acres by production in the Arkoma Woodford. Net risked resource for the area is 1.6 tcfe with a cost of entry at $400/acre and a 19% royalty burden. In the first quarter of 2010, net production by the company was 88 MMcfe/d, up from 74 MMcfe/d in the third quarter of 2009. In 2009, the company drilled 61 wells in the area. Eighty-five wells are planned for 2010.

    The company’s midstream infrastructure for the area holds a processing capacity of 200 MMcf/d.

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