WRAPUP 1-Devon, XTO profits down but output up

By Anna Driver HOUSTON, Nov 4 (Reuters) - Devon Energy Corp and XTO Energy Inc reported lower quarterly earnings on Wednesday as crude oil and natural gas prices fell from a year ago, but higher output and cost-cutting helped the U.S. independents top Wall Street expectations. Devon shares rose slightly in early trading, while XTO shares climbed 2.4 percent. The global economic slowdown has hurt demand for both natural gas and crude oil. As a result, stockpiles swelled in the third quarter and prices tumbled, cutting into profits at energy companies. Natural gas prices fell 62 percent from a year ago in the third quarter, while the average price of crude oil was just over half of that of a year ago. To help offset the decline in oil and gas prices, both companies worked to hold down costs. XTO said its total production expense declined 5 percent, while Devon's lease operating expenses fell 15 percent in the quarter. Both Devon and XTO reported higher oil and gas output. XTO's output jumped a hefty 23 percent, while Devon reported a 6 percent increase. Devon, the third-largest U.S. independent oil and gas company by market value, had a quarterly profit of $499 million, or $1.12 per share, compared with $2.6 billion, or $5.88 per share, a year earlier. Excluding one-time items, Devon reported a profit of $491 million, or $1.10 per share, above the 90 cents that analysts had expected, according to Thomson Reuters I/B/E/S. Energy research firm Tudor, Pickering, Holt & Co characterized Devon's results as "strong" and said the company's stock -- which has underperformed peers by 34 percent year-to-date -- would get a boost from the results. The company's revenue from oil, gas and natural gas liquids sales fell 54 percent to $1.7 billion, while XTO saw its revenue rise 8 percent to a record $2.29 billion. XTO's profit fell 4 percent in the quarter. Excluding loss on the value of trading positions, XTO's profit of 88 cents per share topped the 84 cents that analysts had forecast, according to Thomson Reuters I/B/E/S.. XTO also said it now expects 2009 production to rise 23 percent compared with an earlier forecast for an increase of 20 percent. The Fort Worth, Texas company also said it also expects double-digit production growth in 2010. In Europe, France's Total and Norwegian rival Statoil have added to the downbeat tone from the oil industry, promising to tackle a tough environment with cost cuts as they announced big drops in third-quarter profit. . Devon shares rose 0.3 percent to $66.63, while XTO shares climbed 2.4 percent to $43.27. (Reporting by Anna Driver in Houston, editing by Dave Zimmerman) Keywords: ENERGY/ ([e-mail]; 1 713 210 8509; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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