Vincent White - Senior Vice President of Investor Relations David Hager - Executive Vice President of Exploration & Production Jeffrey Agosta - Chief Financial Officer and Executive Vice President John Richels - Chief Executive Officer, President and Director

Welcome to Devon Energy's Third Quarter 2010 Earnings Conference Call. [Operator Instructions] At this time, I'd like to turn the conference over to Mr. Vince White, Senior Vice President of Investor Relations. Sir, you may begin.

Thank you and good morning, everyone. Welcome to Devon's third quarter 2010 earnings call and webcast. Today's call will follow our usual format. I'll begin with some preliminary housekeeping and compliance items and then our President and CEO, John Richels will provide his perspective. Following John's remarks, Dave Hager, our EVP of Exploration and Production will cover the operating highlights and then finally, following Dave's comments, Jeff Agosta, our Chief Financial Officer, will review our financial results and our outlook. At that point, we'll open the call up to your questions. Our Executive Chairman, Larry Nichols and other senior members of the management team are with us today for the Q&A session. And as a courtesy to the other participants, we ask that each of you limit your questions to one initial inquiry and one follow-up. We'll limit the call to about an hour, and we will be around for the rest of the day to answer questions after the call. A replay of this call will be available later today through a link on Devon's homepage. During the call today, we will provide some color on some of our forward-looking estimates based on the actual results for the first nine months of the year, and our outlook for the balance of 2011 and 2012. We will not be issuing a revised 8-K today, because our outlook for the remainder of the year falls within the updated ranges we provided in the Form 8-K that we filed last August. To access a comprehensive summary of our current guidance, which includes any refinements we make today, you can go to devonenergy.com and click on the Guidance link found within the Investor Relations section of our website. Please note that all references today for our plans, forecasts, expectations and estimates, are considered…

Thanks, Vince and good morning, everyone. For the third quarter of 2010, Devon delivered another very solid performance both operationally and financially. Production from our North American Onshore properties totaled 613,000 barrels of oil equivalent per day in the third quarter, a 4% increase over the third quarter of 2009. This production growth was driven by an 11% increase in oil and natural gas liquids production. In the current environment, oil and NGLs now account for roughly half of Devon's total oil gas and NGL sales revenue. Strong realized prices for our oil production and improved cost efficiencies resulting from the repositioning drove our adjusted earnings from continuing operations up more than 40% over the year-ago quarter to $571 million or $1.31 per diluted share. Cash flow for balance sheet changes climbed 47% over the third quarter of last year and combined with the divestiture proceeds Devon's total cash inflows for the third quarter approached $4 billion, far exceeding our total capital demands for the quarter. As a result, we exited the month of September with an enviable position of $4 billion of cash on hand and a bulletproof balance sheet. And on the operations front, we continued successful execution of our focused North American Onshore strategy as evidenced by quarterly production records at our liquids-rich Barnett and Cana shale plays and a multiyear production high from our Permian Basin properties. We also continue to make significant strides during the quarter towards completing the strategic repositioning that we announced just one year ago. In the third quarter, we completed the sales of our interest in the ACG field in Azerbaijan and our remaining assets in China. So to date, we've received aggregate pretax divestiture proceeds of approximately $6.8 billion. The only significant divestiture package remaining, that's our Brazilian assets, is…

Thanks, John and good morning, everyone. I will begin with a quick recap of company-wide drilling activity. We exited the third quarter with 67 Devon-operated rigs running and during the quarter, we drilled 407 wells. These include 384 development wells and 23 exploration wells. All but three of the wells were successful. Capital expenditures for exploration and development from our North American Onshore operations were $1.4 billion for the third quarter, bringing our total through the first nine months to $3.5 billion excluding the Pike acquisition. This level of activity increased third quarter production from retained properties by 4% over the third quarter of 2009, led by an 11% increase in oil and liquids production over the 2009 quarter. Moving now to our quarterly operating highlights. First, at our Jackfish thermal oil project in Eastern Alberta, our third quarter daily production averaged a little over 21,000 barrels per day net of royalties. As we indicated in our last quarterly call, Jackfish was taken down for three weeks during the third quarter for scheduled maintenance. Following the turnaround, plant operations were restored on September 30. However, it will take a few weeks to fully restore the steam chambers and climb back to plant capacity. Accordingly, fourth quarter production at Jackfish is expected to average about 23,000 barrels per day net of royalties. Construction of Jackfish 2 is roughly 90% complete and continuing to trend under budget. We expect to begin injecting steam in the second quarter of next year delivering first oil in late 2011 with production ramping throughout 2012. Our third Jackfish project, Jackfish 3 has now been sanctioned, and we filed a regulatory application during the third quarter. Pending regulatory approval, we could begin site work by late next year with plant startups target for 2015. Detailed engineering work…

Thanks, Dave, and good morning, everyone. Today, I will begin by looking at some of the key drivers that shaped our third quarter financial results and review how these factors impact our outlook for the upcoming quarter and 2011. As Vince mentioned earlier, we have reclassified the assets, liabilities and results of operations from our international assets into discontinued operations for all accounting periods presented. Since we completed our exit from the Gulf of Mexico during the second quarter, our third quarter results from continuing ops represent just our North American Onshore operations. Or in other words, the result of the repositioned Devon. Looking first to production. In the third quarter, we produced 56.4 million oil equivalent barrels or approximately 613,000 barrels per day. This was in line with the production forecast range we've provided during last quarter's call and about 1% less than last quarter's production for our North American Onshore assets. You may recall that during last quarter's call, we told you that production from the second quarter had benefited from a 9,000 barrel per day royalty adjustment related to prior periods. Also, due to a scheduled plant turnaround, Jackfish was off-line for three weeks during the third quarter. As a result, average daily production from Jackfish was 8,000 barrels per day lower on a sequential quarter basis. Removing the out-of-period royalty adjustment, and the impact of Jackfish maintenance, sequential quarter production was up almost 2%. On a year-over-year basis, third quarter production for our North American Onshore assets increased 22,000 barrels per day or 4%. As mentioned before, an 11% increase in oil and NGL production drove the favorable comparison. Looking ahead, our high-quality North American Onshore assets remain on track to deliver full year production of 223 million to 224 million equivalent barrels. This implies fourth…