Devon Energy (NYSE:DVN) reported record oil and gas production in the first quarter of 2012, as the company continued its sharp focus on oil and liquids development in the North American onshore.

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Production Growth
Devon Energy reported record production of 694,000 barrels of oil equivalent (BOE) per day in the most recent quarter, up 10% from the first quarter of 2011. Crude oil and natural gas liquids composed 37% of this production stream.

The company is allocating its entire capital budget towards the development of oil and liquids areas and reported 26% year over year growth in the production of these hydrocarbons during the first quarter of 2012. This capital plan is expected to deliver 23% growth in oil production and 12% growth in natural gas liquids in 2012.

In the long term, Devon Energy expects that the company's slavish devotion to oil and liquids development will lead to five-year compound annual growth of 19% for crude oil and 13% for natural gas liquids.

SEE: Oil And Gas Industry Primer

Permian Basin
The Permian Basin in Texas and New Mexico is one area that Devon Energy is focused on in its quest for liquids production growth is. The company added five rigs in this basin during the first quarter of 2012, and is now operating 21 rigs there.

The gas and oil giant has 500,000 net acres prospective for the Cline Shale, a light oil play present in parts of the Permian Basin. The company is drilling its first well into this emerging play and expects to drill 15 in 2012.

Devon Energy is also working on the Bone Spring play in the Permian Basin and completed 16 wells here in the quarter. The company reported an average production rate of 580 BOE from each of these wells.

Another company active in the Permian basin is Apache Corporation (NYSE:APA), which operates 31 rigs in this basin. The company reported average production of 99,000 BOE per day from the Permian Basin in the first quarter of 2012.

Concho Resources (NYSE:CXO) operates exclusively in the Permian Basin and currently operates 37 rigs here. The company participated in 210 gross wells during the first quarter of 2012.

SEE: What Determines Oil Prices?

Devon Energy is looking to grow oil production from Canada, where the company is developing multiple oil sands projects in Alberta. The Jackfish 2 project is slowly ramping up, and is already producing 21,000 barrels of oil per day in the first quarter of 2012. The project's ultimate capacity is 35,000 barrels of oil per day. Devon Energy has completed 30% of the Jackfish 3 project, which has a similar capacity and is expected to start up production in 2014.

Nexen (NYSE:NXY) operates the Long Lake oil sands project and reported $18 million in operating cash flow here in the first quarter of 2012.

New Oil Plays
Devon Energy is not resting and is planning for long-term oil production growth as well. The company has assembled a 250,000 net acre position in an undisclosed oil play in the United States and is targeting a final position of 500,000 net acres.

SEE: A Guide To Investing In Oil Markets

The Bottom Line
Devon Energy completed the divestiture of its international and offshore oil and gas operations in 2011, and has wasted no time in delivering on its promise to focus on crude oil and liquids development in North America. The company expects this strategy to increase shareholder value in the long term.

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At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Tickers in this Article: DVN, APA, CXO, NXY

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