UPDATE 2-Devon profit tops Street view as oil output rises
* Second-quarter EPS $1.21 versus Street view 95 cents
* Gas volumes drive production beat -analysts
* Shares down slightly in morning trading
(Add analyst comment, industry background, updates share price) Aug 7 (Reuters) - U.S. oil and gas producer Devon Energy Corp's quarterly profit jumped a higher-than-expected 43 percent as production from properties in the Permian basin of Texas boosted oil output by 14 percent and gas volumes grew. Devon and other U.S. exploration companies including EOG Resources Inc are investing heavily in domestic shale formations like the Eagle Ford and Permian basin as a means of increasing production, especially more profitable oil output. Shares of Devon were down 0.2 percent at $55.68 on Wednesday morning on the New York Stock Exchange. Devon's oil and gas output in the quarter rose to 698,000 barrels oil equivalent per day (boed), up from 679,000 in the same quarter a year earlier. Oil production averaged 169,000 boed. "Production above the high-end of guidance and an impressive (earnings per share) beat are certainly positives," analysts at Houston-based energy investment Simmons & Co said in a note to clients. Still, the analysts noted that the biggest driver of the production beat were gas volumes that tend to be less profitable than oil. That may dampen some investor enthusiasm about the results. Devon's stock has underperformed peers this year, partly due to its high exposure to low natural gas prices and natural gas liquids. Net profit rose to $683 million, or $1.68 per share, in the second quarter, from $477 million or $1.18 per share a year earlier. Excluding one-time items, Devon had a profit of $1.21 per share. Wall Street analysts on average had expected a profit of 95 cents per share, according to Thomson Reuters I/B/E/S. The Oklahoma City-based company's revenue rose about 21 percent to $3.09 billion. One of Devon's peers, EOG, reported better-than-expected second-quarter earnings after the close of trading on Tuesday.
The Houston company's wells in the Eagle Ford basin produced more crude oil than anticipated as the EOG improved its hydraulic fracturing technique, executives told analysts on a conference call. Shares of EOG were up 1.7 percent at $155.81 on Wednesday morning. Andrew Coleman, oil company analyst at Raymond James, wrote on Wednesday that EOG's operations "continue to impress."
(Reporting by Garima Goel in Bangalore and Anna Driver in Houston; editing by Terry Wade and Matthew Lewis)