For once, I'm not going to blabber about the Barnett shale (where production was up 9% sequentially and 35% year over year.) Let's take a look at Lloydminster instead. This Canadian play targets oil, but not the oil sands -- that's what the Jackfish project is all about. Nope, Lloydminster produces regular old heavy Canadian crude. There's nothing too flashy here -- until you look at the numbers.
Lloydminster has grown even faster than Devon's natural-gas-oriented Barnett play, albeit off of a much smaller base. The company ran four rigs here during the quarter, and drilled 145 new wells -- a pretty blistering pace. Production rose 9% sequentially and 46% over the prior year. In 2007 as a whole, Devon drilled 429 wells in the play, adding 22 million barrels of reserves at a cost of $241 million. That, my non-savant friends, is about an $11-per-barrel finding cost, which is rock bottom for oil. Compare that figure to firmwide F&D costs of $18-plus for Occidental Petroleum
Lloydminster is but a small piece of the petroleum pie, representing roughly one-quarter of Devon's oil production. Altogether, though, oil is slowly becoming a more significant piece of the overall production profile. Oil's 29% production gain for the year, along with a lift in natural gas liquids, took natural gas down to 64% of total production, from 67% in 2006.
And then there's the deepwater initiatives. With contractor Diamond Offshore's