Devon Energy has reported that additional facilities work at its Jackfish 1 heavy oil project in Alberta, Canada, is now complete, and full-scale operations have been restored. The work at Jackfish 1 was related to minor facility repairs the company identified during recent turnaround startup activities. The company elected to perform the incremental maintenance work that temporarily curtailed production as opposed to deferring the repairs to a future date.
The company estimates that its Q3 2018 net production in Canada will be approximately 104,000 BOED as a result of the maintenance at Jackfish 1. The temporary curtailment of volumes at Jackfish represents less than 1% of total expected company-wide production in 2018. Production at the company’s Jackfish 2 and Jackfish 3 facilities were at nameplate capacity for the entirety of Q3.
With the Jackfish complex resuming full-scale operations, the company expects Q4 net production in Canada, after the impact of higher sliding-scale royalties, to increase to an average of 115,000 to 120,000 BOED. This operational momentum will carry into 2019, with Canadian net production estimated to exit the current year in excess of 120,000 BOED.
Q3 US Production Exceeds Guidance; Capital Spending Below Expectations
Devon estimates that net production in the US will be approximately 418,000 BOED during Q3 2018. During the quarter, the company monetized minor, non-core assets with an associated production impact of approximately 2,000 BOED. This production result exceeds the company’s Q3 guidance range, adjusted for the non-core asset sales, of 398,000 to 417,000 BOED.
A key driver of the Q3 production outperformance was higher natural gas liquids yields and recoveries, which benefit from access to premium pricing in the Mont Belvieu market. Devon’s US oil production in Q3 was in line with the midpoint of guidance.
The company effectively controlled capital costs during Q3. Devon’s upstream capital spending was $523 million in the quarter, which was $52 million, or 9% below the company’s midpoint guidance.