SEC Comment Letter for DEVON ENERGY (DVN) — Jan 17, 2014
DEVON ENERGY CORP/DE (DVN) (CIK 0001090012)
Date: Jan. 17, 2014 · CIK: 0001090012 · Accession: 0000000000-14-002756
AI Filing Summary & Sentiment
Reasoning
Referenced dates: December 26, 2013, December 11, 2013
Letter
January 17, 2014 Jeffrey A. Agosta Chief Financial Officer Devon Energy Corporat ion 333 West Sheridan Avenue Oklahoma City, OK 73102
Re: Devon Energy Corporation Form 10-K for Fiscal Year Ended December 31, 2012 Filed February 21, 2013 Response letter dated December 26, 2013 File No. 001 -32318
Dear Mr. Agosta :
We have reviewed your response letter and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to this letter within ten business days by amending your filing, by providing the requested information, or by advising us when you will provide the requested response. If you do not believe our comments apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response.
Form 10 -K for Fiscal Year Ended December 31, 2012
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview of 2012 Results, page 23
1. We note your response to comment 4 in our letter dated December 11, 2013. Please revise to present a reserve replacement measure based on all causal factors resulting in changes to your proved reserves along side the reserve replacement measure currently presented on page 24 of your Form 10 -K.
Non-GAAP Measures, page 43
2. Your response to comment 6 in our letter dated December 11, 2013 does not appear to state whether you consider the non -GAAP measure “Adjuste d Cash Flow” to be a performance measure or a liquidity measure. If you consider “Adjusted Cash Flow” to be a performance measure, please tell us why earnings from continuing operations is not
Jeffrey A. Agosta Devon Energy Corporation January 1 7, 2014 Page 2
deemed to be the most directly comparable GAAP -basis measure. If you consider “Adjusted Cash Flow” to be a liquidity measure, please revise to comply with the guidance per Item 10(e)(1)(ii)(A) of Regulation S -K.
3. Based on your response to comment 7 in our letter dated December 11, 2013, it appears that the adjustment captioned “income tax accrual adjustment” could be revised to better indicate its nature. Please revise to provide a more descriptive caption for this line item.
Notes to Consolidated Financ ial Statements
Note 6 – Income Taxes, page 66
4. We note your response to comments 9 and 10 in our letter dated December 11, 2013. Please revise your disclosure of critical accounting estimates regarding income taxes to specifically address unremitted foreign earnings deemed to be indefinitely reinvested. Your revised disclosure should include a discussion of the uncertainties associated wi th unrecognized deferred tax liabilities related to foreign earnings that are deemed to be indefinitely reinvested and a description of the types of events that would enable management to calculate the amount of the unrecognized deferred tax liability. Fo r additional guidance, refer to section V of SEC Release No. 33 -8350.
Note 22 – Supplemental Information on Oil and Gas Operations (Unaudited), page 87
Standardized Measure, page 97
5. Your response to comment 12 in our letter dated December 11, 2013 indic ates that certain production costs are excluded from the present value of estimated future net revenues used to compute the full cost ceiling bec ause they are not property -level expenditures. Please provide us with additional information describing the na ture of these costs and explain your application of Rule 4 -10(c)(4)(i)(A) of Regulation S -X regarding the treatment of estimated future expenditures to be incurred in developing and producing proved reserves in calculating the limitation on capitalized costs. As part of your response, please tell us more about your determination that these costs are deemed to be directly identifiable to production activities only for purposes of calculating the standardized measure of discounted future net cash flows .
You m ay contact Svitlana Sweat at (202) 551 -3326 or me at (202) 551 -3311 if you have questions regarding comments on the financial statements and related matters.
Sincerely,
/s/ Ethan Horowitz
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January 17, 2014 Jeffrey A. Agosta Chief Financial Officer Devon Energy Corporat ion 333 West Sheridan Avenue Oklahoma City, OK 73102 Re: Devon Energy Corporation Form 10-K for Fiscal Year Ended December 31, 2012 Filed February 21, 2013 Response letter dated December 26, 2013 File No. 001 -32318 Dear Mr. Agosta : We have reviewed your response letter and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to this letter within ten business days by amending your filing, by providing the requested information, or by advising us when you will provide the requested response. If you do not believe our comments apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response. Form 10 -K for Fiscal Year Ended December 31, 2012 Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview of 2012 Results, page 23 1. We note your response to comment 4 in our letter dated December 11, 2013. Please revise to present a reserve replacement measure based on all causal factors resulting in changes to your proved reserves along side the reserve replacement measure currently presented on page 24 of your Form 10 -K. Non-GAAP Measures, page 43 2. Your response to comment 6 in our letter dated December 11, 2013 does not appear to state whether you consider the non -GAAP measure “Adjuste d Cash Flow” to be a performance measure or a liquidity measure. If you consider “Adjusted Cash Flow” to be a performance measure, please tell us why earnings from continuing operations is not Jeffrey A. Agosta Devon Energy Corporation January 1 7, 2014 Page 2 deemed to be the most directly comparable GAAP -basis measure. If you consider “Adjusted Cash Flow” to be a liquidity measure, please revise to comply with the guidance per Item 10(e)(1)(ii)(A) of Regulation S -K. 3. Based on your response to comment 7 in our letter dated December 11, 2013, it appears that the adjustment captioned “income tax accrual adjustment” could be revised to better indicate its nature. Please revise to provide a more descriptive caption for this line item. Notes to Consolidated Financ ial Statements Note 6 – Income Taxes, page 66 4. We note your response to comments 9 and 10 in our letter dated December 11, 2013. Please revise your disclosure of critical accounting estimates regarding income taxes to specifically address unremitted foreign earnings deemed to be indefinitely reinvested. Your revised disclosure should include a discussion of the uncertainties associated wi th unrecognized deferred tax liabilities related to foreign earnings that are deemed to be indefinitely reinvested and a description of the types of events that would enable management to calculate the amount of the unrecognized deferred tax liability. Fo r additional guidance, refer to section V of SEC Release No. 33 -8350. Note 22 – Supplemental Information on Oil and Gas Operations (Unaudited), page 87 Standardized Measure, page 97 5. Your response to comment 12 in our letter dated December 11, 2013 indic ates that certain production costs are excluded from the present value of estimated future net revenues used to compute the full cost ceiling bec ause they are not property -level expenditures. Please provide us with additional information describing the na ture of these costs and explain your application of Rule 4 -10(c)(4)(i)(A) of Regulation S -X regarding the treatment of estimated future expenditures to be incurred in developing and producing proved reserves in calculating the limitation on capitalized costs. As part of your response, please tell us more about your determination that these costs are deemed to be directly identifiable to production activities only for purposes of calculating the standardized measure of discounted future net cash flows . You m ay contact Svitlana Sweat at (202) 551 -3326 or me at (202) 551 -3311 if you have questions regarding comments on the financial statements and related matters. Sincerely, /s/ Ethan Horowitz Ethan Horowitz Branch Chief