Chairman and CEO J. Larry Nichols notes that 2008 was marked by record oil and gas prices and activity levels, but "we are dealing with a very different reality in 2009."
Devon drilled 2,441 wells in 2008 with a 98 percent success rate. That resulted in the addition of 584 million barrels of oil and 1.6 trillion cubic feet of natural gas to reserves.
No area contributed more to growth in reserves than the Barnett Shale in North Texas, the report said. Some 659 wells were drilled in the shale, including the company's 2,000th horizontal well.
Production continued its upward trajectory, with a 31 percent year-over-year net increase.
Barnett Shale wells were producing almost 1.2 billion cubic feet of gas per day at year-end.
The report calls the shale Devon's most important asset, responsible for 37 percent of proven reserves and 28 percent of its oil and gas production.
The company reported $15.2 billion in revenues for 2008, an increase of 34 percent. It also had its best quarter on record, with $2.6 billion in earnings in the third quarter.
But thanks to plummeting prices and a $10.4 billion non-cash impairment charge to the book value of oil and gas properties, the company recorded its largest quarterly loss in the fourth quarter of $6.8 billion.
Devon has responded to the drastic decline in oil and gas prices by cutting its exploration and capital budget by more than half for 2009.
"In the near term, we believe it is prudent to reduce development drilling on our shorter-cycle projects in North America," Nichols wrote.
Instead long-term production projects in Canada, the Gulf of Mexico and offshore Brazil will be funded (35-40 percent of exploration budget).
The report points to more than 27,000 undrilled locations "representing many years of undrilled inventory and growth potential," adding, "Devon is poised to maintain its position as a leading U.S.-based independent oil and gas producer."
On the community service side, the report notes that the Wise Eyes program Devon initiated in 1993 to help the Wise County sheriff establish a community crime watch program has served as the model for 28 similar programs in five states.
