Devon Energy Corp. raises 2012 spending by $1 billion, targets oil

OKLAHOMA CITY, Okla., Wed Apr 4, 2012 – Devon Energy Corp. will spend $1 billion more than planned this year on acreage acquisition and exploration in shale basins that produce oil and more profitable natural gas with a high liquids content, the company said on Wednesday.

Devon, like most other U.S. exploration and production companies, is shifting capital away from natural gas drilling in a time when prices for that fuel are at a decade low. Energy companies are instead targeting crude oil trapped in rock like shale and natural gas that can be stripped of valuable liquids like propane.

“We’re very confident that there are a lot of oil and liquids-rich opportunities to be found in North America,” Dave Hager, Devon’s head of exploration and production, told analysts.

In addition to previously announced exploration plans in emerging basins like the Utica Shale in Ohio, Devon said it has amassed 500,000 acres in the Cline shale in West Texas that holds oil. Devon is also targeting oil on another 250,000 acres in an unspecified location and the company hopes to increase that position to 500,000 acres, Hager said in remarks broadcast over the Internet.

The Oklahoma City, Oklahoma, company now plans to spend $6.1 billion to $6.5 billion this year, up $1 billion from its original budget.

Devon has no plans to use its $7.1 billion cash pile on a large acquisition as some have speculated, said John Richels, the company’s chief executive officer.

Richels said he and other executives at Devon have not spent “five minutes” thinking about a big acquisition. Instead, the company’s cash will be invested in exploration and production projects, Richels said.