Filed by Devon Energy Corporation
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Devon Energy Corporation
Commission File No. 0-30176
INVESTOR NOTICE
The following communication contains "forward-looking statements" as defined by
the Securities and Exchange Commission. Such statements are those concerning the
companies' merger and strategic plans, expectations and objectives for future
operations. All statements, other than statements of historical facts, included
in the following communication that address activities, events or developments
that the companies expect, believe or anticipate will or may occur in the future
are forward-looking statements. This includes completion of the proposed merger,
reserve estimates, future financial performance, future equity issuance and
other matters. These statements are based on certain assumptions made by the
companies based on their experience and perception of historical trends, current
conditions, expected future developments and other factors they believe are
appropriate in the circumstances. Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the control of
the companies. Statements regarding future production are subject to all of the
risks and uncertainties normally incident to the exploration for and development
and production of oil and gas. These risks include, but are not limited to,
inflation or lack of availability of goods and services, environmental risks,
drilling risks and regulatory changes. Investors are cautioned that any such
statements are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the forward-looking
statements.
Investors and security holders are advised to read the joint proxy statement/
prospectus included in the Registration Statement on Form S-4 filed with the SEC
in connection with the proposed merger because it contains important
information. The joint proxy statement/prospectus has been filed with the SEC by
Devon and Santa Fe Snyder. Investors and security holders may obtain a free copy
of the joint proxy statement/prospectus and other documents filed by Devon and
Santa Fe Snyder with the SEC at the SEC's web site at www.sec.gov. The joint
proxy statement/prospectus and such other documents (relating to Devon) may also
be obtained for free from Devon by directing such request to: Devon Energy
Corporation, 20 North Broadway, Suite 1500, Oklahoma City, Oklahoma 73102-8260,
Attention: Investor Relations, telephone: (405) 552-4570, e-mail:
[email protected]. The joint proxy statement/prospectus and such other
documents (relating to Santa Fe Snyder) may also be obtained for free from Santa
Fe Snyder by directing such request to: Santa Fe Snyder Corporation, 840
Gessner, Suite 1400, Houston, Texas 10023, Attention: Investor Relations,
telephone: (713) 507-5307, e-mail: [email protected].
<PAGE>
Devon, its directors, executive officers and certain members of management and
employees may be considered "participants in the solicitation" of proxies from
Devon's shareholders in connection with the merger. Information regarding such
persons and a description of their interests in the merger is contained in
Devon's filing with the SEC under Rule 425 on May 26, 2000.
Santa Fe Snyder, its directors, executive officers and certain members of
management and employees may be considered "participants in the solicitation" of
proxies from Santa Fe Snyder's shareholders in connection with the merger.
Information regarding such persons and a description of their interests in the
merger is contained in Santa Fe Snyder's filing with the SEC under Rule 14a-12
on May 26, 2000.
<PAGE>
DEVON
SECOND QUARTER UPDATE
2000
Second Quarter Results Continue Record Pace
Record oil and gas production and higher product prices resulted in
net earnings of $91 million in the second quarter of 2000. Please refer to the
attached news release of July 27, 2000, for further details.
Devon to Merge with Santa Fe Snyder
Devon's proposed merger with Santa Fe Snyder Corporation, announced on
May 26, 2000, is moving toward completion. A special meeting of Devon
stockholders is scheduled for August 29, 2000, to consider and vote upon the
merger. A Joint Proxy Statement/Prospectus concerning the merger has been sent
to stockholders. It is not necessary to attend the meeting. However, your vote
is important and we encourage you to take the time to review the materials and
cast your vote. If shareholders of both companies approve the merger, closing
should occur on or soon after the date of the meeting.
Operational Spotlight:
Coalbed Methane Drilling Gains Momentum
Devon is a leader in the production of coalbed methane (CBM), which is
natural gas found in shallow coal deposits. In addition to our mature San Juan
Basin properties in New Mexico, we are developing two other CBM projects. We
drilled a total of 172 CBM wells in the first half of 2000 in the Powder River
Basin of Wyoming. This brings our total number of Powder River CBM wells to
about 700. Approximately 400 of these wells are currently producing gas, with
Devon's net production at approximately 30 million cubic feet per day at June
30. The remaining 300 wells await tie-in to compression and gathering systems.
With 8 rigs running, we plan to drill 300 to 400 more wells in the basin in the
second half of the year.
In the Vermejo Park Ranch, in the Raton Basin in New Mexico, we
drilled 79 CBM wells in the first half of the year. This completed the 2000
drilling program and was in addition to 35 wells drilled in 1999. Our Raton
Basin program is in the early stages and production is expected to increase for
several years.
These CBM projects are expected to be a growing part of Devon's North
American natural gas production base over the next few years as they are
developed further. Holding some 240,000 net acres in the Powder River Basin and
700,000 acres in the Vermejo Park Ranch, we have plenty of room to continue
drilling at a rapid pace for the next several years.
Common Stock Trading Data
Quarter Ended High Low Last Volume
-----------------------------------------------------------------
1999:
Second $ 37 7/16 $ 26 1/8 $ 35 3/4 14,221,500
Third $ 44 15/16 $ 33 $ 41 7/16 39,958,800
Fourth $ 42 $ 29 1/2 $ 32 7/8 31,130,200
2000:
First $ 48 9/16 $ 31 7/16 $ 48 9/16 23,705,600
Second $ 56 3/16 $ 54 5/16 $ 56 38,676,300
-----------------------------------------------------------------
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Transfer Agent Investor Relations Contacts Stock Market Information
<S> <C> <C>
EquiServe Analysts and Media Devon Energy Corporation's common stock is
Client Administration, Mail Stop 45-02-62 Vince White: (405) 552-4505 traded on the American Stock Exchange
P.O. Box 1865 Zack Hager: (405) 552-4526 under the symbol DVN.
Boston, MA 02105-1865 Individuals and Brokers
Toll Free: (800) 733-5001 Shea Snyder: (405) 552-4782
World Wide Web: http://www.equiserve.com Material Requests
Nakita Rizzo: (405) 552-4570
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[GRAPHIC OMITTED]
DEVON ENERGY CORPORATION
20 North Broadway, Suite 1500 Oklahoma City, Oklahoma 73102
Telephone (405) 235-3611 Fax (405) 552-4667
Website: www.devonenergy.com
<PAGE>
[GRAPHIC OMITTED] 20 North Broadway, Suite 1500 Telephone:405/235-3611
Oklahoma City, Oklahoma 73102-8260 FAX 405/552-4667
PRESS RELEASE
--------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
Contact: Zack Hager
Investor Relations
(405) 552-4526
Devon Energy's Net Earnings Soar 460 Percent:
Second Quarter 2000 Earnings Per Share Top $1.00
OKLAHOMA CITY, OKLAHOMA, July 27, 2000--Devon Energy Corporation (AMEX: DVN,
TSE: NSX) today reported record revenues and net earnings for the quarter ended
June 30, 2000. Record second quarter oil and gas production and higher product
prices led to the increases in revenues and net earnings. For the quarter ended
June 30, 2000, net earnings were $90.7 million or $1.02 per common share ($1.00
per diluted common share). This compares to second quarter 1999 net earnings of
$16.2 million or 33 cents per common share.
Net earnings for the first six months of 2000 were $151.8 million or $1.70 per
share ($1.67 per diluted share), also record highs. This compares to net
earnings of $22.2 million or 46 cents per common share in the first six months
of 1999.
Higher Production and Prices Push Revenues to Record Levels
Sales of Devon's oil, gas and natural gas liquids (NGLs) were up 281
percent in the second quarter of 2000 to $389.4 million, another record. This
compares with second quarter 1999 sales of oil, gas and NGLs of $102.1 million.
Significant gains in both production and prices contributed to the increase in
revenues.
Total production of oil, gas and NGLs was up 111 percent over the second quarter
of 1999 to 19.1 million barrels of oil equivalent (Boe). The record pace of year
2000 production growth is largely the result of Devon's August 17, 1999, merger
with PennzEnergy Company.
Oil, natural gas and NGLs prices were all dramatically higher in the second
quarter of 2000. Devon's second quarter average oil price increased 73 percent
from $14.71 per barrel in 1999 to $25.47 per barrel in 2000. The average price
for Devon's second quarter natural gas production increased 83 percent from
$1.64 per thousand cubic feet in 1999 to $3.00 per thousand cubic feet in 2000.
The average price received for the company's NGLs increased 67 percent from
$11.33 per barrel in 1999 to $18.87 per barrel in 2000.
<PAGE>
Allen Turner, Senior Vice President, remarked, "Many oil and gas companies are
reporting earnings growth in this period of robust oil and gas prices. In
addition to higher commodity prices, Devon has enjoyed strong production growth.
The expansion brought by the PennzEnergy merger late last year is the largest
contributing factor.
"However, we are also quite pleased with the production growth in our Gulf of
Mexico/Gulf Coast division during the last three months. In this particular
geologic area it can be difficult to offset normal production decline. In the
most recent quarter, we not only sustained production in this area, we actually
grew production. Second quarter 2000 production for this division was eight
percent higher than in the first quarter of this year.
"In many of our previous mergers and acquisitions, we have gained not only
existing production, but also exploitation opportunities. This is proving true
with the PennzEnergy assets, particularly in the Gulf of Mexico."
PennzEnergy Merger Increases Expenses; But Pre-tax Earnings Still Rise
In addition to driving revenues higher, the PennzEnergy merger caused
expenses to rise. Total pre-tax expenses jumped $170.3 million to $247.5 million
for the second quarter of 2000. However, this expense increase was far less than
the $296.5 million revenue gain. As a result, pre-tax earnings rose 466 percent
in the second quarter to $153.4 million.
Nonetheless, most of Devon's expenses were higher, reflecting the expanded scope
of operations. Lease operating expenses increased 161 percent in the most recent
quarter to $70.8 million. Production taxes were up 230 percent to $11.4 million
in the second quarter of 2000. Second quarter depreciation, depletion and
amortization of property and equipment increased $77.4 million to $113.2 million
in 2000. General and administrative expenses increased by $9.2 million to $16.1
million in the most recent quarter. Total second quarter financing costs
increased by $21.7 million to $25.7 million in 2000.
Income Taxes
Income tax expense for the most recent quarter was $62.6 million or 41
percent of pre-tax earnings. This compares to second quarter 1999 income tax
expense of $10.9 million or 40 percent of pre-tax earnings. Approximately $29.0
million of second quarter 2000 income tax expense was deferred, not requiring
the use of cash.
Zero Coupon Convertible Debentures Issued at Attractive Interest Rate
On June 22, 2000, the company announced a private placement of 20-year
zero coupon convertible debentures. Net proceeds of the issue were approximately
$346 million. Devon intends to use the proceeds to repay higher cost existing
debt and for other corporate purposes. The effective interest rate on the
debentures is 3.875 percent per annum. Because the debentures bear no coupon
interest rate, there are no cash interest payments required until redemption.
Each debenture, which was priced at $464.13, is convertible into 5.7593 shares
of Devon common stock.
<PAGE>
Merger with Santa Fe Snyder on Schedule
Devon's proposed merger with Santa Fe Snyder Corporation, originally
announced on May 26, 2000, has moved a step closer to completion. As reported on
July 13, 2000, the Registration Statement on Form S-4 was declared effective by
the SEC on July 12, 2000. Definitive proxy materials were filed with the SEC on
July 21, 2000. Distribution of printed proxy materials began on July 25, 2000.
Shareholders of each company will meet on August 29, 2000 to vote on the merger.
Assuming shareholders of both companies approve the transaction, completion of
the merger will follow shortly thereafter. The merger of Devon and Santa Fe
Snyder will make Devon one of the five largest independent oil and gas companies
based in the United States.
This press release includes "forward-looking statements" as defined by the
Securities and Exchange Commission. Such statements are those concerning the
company's plans, expectations and objectives for future operations. All
statements included in this press release, other than statements of historical
facts, that address activities, events or developments that the company expects,
believes or anticipates will or may occur in the future, are forward-looking
statements. Such statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of the company. Investors
are cautioned that any such statements are not guarantees of future performance
and that actual results or developments may differ materially from those
projected in the forward-looking statements.
Devon Energy Corporation is an independent energy company engaged in oil and gas
property acquisition, exploration and production. It is one of the top 10 public
independent oil and gas companies based in the United States, as measured by oil
and gas reserves. Devon's Canadian operations are conducted by its subsidiary,
Northstar Energy Corporation. Shares of Devon Energy Corporation trade on the
American Stock Exchange under the symbol DVN.
INVESTOR NOTICES
Investors and security holders are advised to read the joint proxy statement/
prospectus included in the Registration Statement on Form S-4 filed with the SEC
in connection with the proposed merger because it contains important
information. The joint proxy statement/prospectus has been filed with the SEC by
Devon and Santa Fe Snyder. Investors and security holders may obtain a free copy
of the joint proxy statement/prospectus and other documents filed by Devon and
Santa Fe Snyder with the SEC at the SEC's web site at www.sec.gov. The joint
proxy statement/prospectus and such other documents (relating to Devon) may also
be obtained for free from Devon by directing such request to: Devon Energy
Corporation, 20 North Broadway, Suite 1500, Oklahoma City, Oklahoma 73102-8260,
Attention: Investor Relations, telephone: (405) 552-4570, e-mail:
[email protected]. The joint proxy statement/prospectus and such other
documents (relating to Santa Fe Snyder) may also be obtained for free from Santa
Fe Snyder by directing such request to: Santa Fe Snyder Corporation, 840
Gessner, Suite 1400, Houston, Texas 77024, Attention: Investor Relations,
telephone: (713) 507-5307, e-mail: [email protected].
<PAGE>
Devon, its directors, executive officers and certain members of management and
employees may be considered "participants in the solicitation" of proxies from
Devon's shareholders in connection with the merger. Information regarding such
persons and a description of their interests in the merger is contained in the
joint proxy statement/prospectus and in Devon's filing with the SEC under Rule
425 on May 26, 2000.
Santa Fe Snyder, its directors, executive officers and certain members of
management and employees may be considered "participants in the solicitation" of
proxies from Santa Fe Snyder's shareholders in connection with the merger.
Information regarding such persons and a description of their interests in the
merger is contained in the joint proxy statement/prospectus and Santa Fe
Snyder's filing with the SEC under Rule 14a-12 on May 26, 2000.
FINANCIAL INFORMATION FOLLOWS
<PAGE>
<TABLE>
<CAPTION>
DEVON ENERGY CORPORATION
STATEMENT OF OPERATIONS DATA (US$)
(In thousands, except per share and % change data)
Quarter Ended June 30, Six Months Ended June 30,
2000 1999 % Change 2000 1999 % Change
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Oil sales $148,249 $36,871 302% $293,793 $64,784 353%
Gas sales 210,754 59,387 255% 366,286 112,938 224%
Natural gas liquids sales 30,433 5,835 422% 65,703 9,764 573%
Other 11,407 2,219 414% 22,772 4,092 457%
Total revenues $400,843 $104,312 284% $748,554 $191,578 291%
Net earnings $90,734 $16,209 460% $151,821 $22,189 584%
Net earnings applicable to common shareholders $88,300 $16,209 445% $146,953 $22,189 562%
Net earnings per common share
Basic $1.02 $0.33 209% $1.70 $0.46 270%
Diluted $1.00 $0.33 203% $1.67 $0.46 263%
Weighted average common shares outstanding
Basic 86,756 48,679 78% 86,481 48,575 78%
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA (US$)
(In thousands, except % change data)
June 30, December 31,
2000 1999 % Change
---- ---- --------
<S> <C> <C> <C>
Total assets $4,827,936 $4,623,160 4%
Debentures exchangeable into shares
of Chevron Corporation common stock $760,313 $760,313 --%
Senior convertible debentures $352,853 - NM
Other long-term debt $672,661 $1,026,808 -34%
Stockholders' equity $2,177,620 $2,025,520 8%
Working capital $356,097 $189,750 88%
Common shares outstanding $ 86,982 86,085 1%
NM Not Meaningful
</TABLE>
###
