Devon Energy Corp. today reported a net loss of $2.1 billion, or $4.85 per common share ($4.85 per diluted common share), for the year ended December 31, 2008. Increased natural gas and liquids production and sales were more than offset by a $7.1 billion non-cash, after-tax reduction in the carrying value of oil and gas properties. For the quarter ended December 31, 2008, Devon reported a net loss of $6.8 billion, or $15.42 per common share ($15.42 per diluted common share), also reflecting the $7.1 billion non-cash charge. Devon's full-year and fourth-quarter 2008 financial results were impacted by certain items securities analysts typically exclude from their published estimates. The most significant of these items was a $7.1 billion after-tax reduction in the carrying value of oil and gas properties. This was the result of a non-cash, full-cost ceiling adjustment in the fourth quarter of 2008. This charge resulted from application of the ceiling test as prescribed by the SEC for companies that follow the full-cost method of accounting. Under the full-cost method of accounting, a company's net book value of its oil and gas properties, less related deferred income taxes, may not exceed a calculated ceiling. The test is performed separately for each country in which the company operates. The ceiling is the estimated after-tax stream of future net revenues from proved oil and gas properties, discounted at 10% per year, using year-end costs and prices held flat plus the cost of unevaluated properties. Any excess is written off as a non-cash expense. The expense may not be reversed in future periods, even though higher oil and gas prices may subsequently increase the ceiling. Full-cost companies must use the prices in effect at the end of each accounting quarter to calculate the ceiling value of reserves. Future net revenues are calculated assuming continuation of prices and costs in effect at the time of the calculation, except for changes that are fixed and determinable by existing contracts. Although the SEC recently modified its rules applicable to the ceiling test, the new rules do not take effect until year-end 2009. Excluding the reduction in carrying value of oil and gas properties and other adjusting items, Devon earned $4.4 billion or $9.91 per diluted common share in 2008. In the fourth quarter of 2008, excluding adjusting items, the company earned $297 million, or 67 cents per diluted common share. "Despite the effects of the sharp fourth-quarter declines in oil and natural gas prices, 2008 was a very successful year for the company," says J. Larry Nichols, chairman and chief executive officer. "Cash flow reached an all-time record of nearly $10 billion. We increased oil and gas production by 6% and drilled 2,441 wells with a 98% success rate. In addition, we added 584 million barrels of proved reserves before price revisions at a very attractive cost per barrel."