Fitch lifts Devon Energy

Fitch Ratings said it upgraded Devon Energy Corp.'s issuer default rating and senior unsecured notes to BBB+ from BBB and its preferred stock to BBB- from BB+. The short-term issuer default and commercial paper ratings were affirmed at F2.

The agency also upgraded the senior unsecured notes of Devon Financing Corp. ULC, PennzEnergy Co. and Ocean Energy to BBB from BBB-.

The outlook is stable.

The agency said the upgrade reflects the robust credit profile of the company and the anticipated debt reduction to occur in 2008.

Devon's ratings are supported by the company's sizable reserve base and production profile, the significant cash generation coming from its midstream operations, strong one- and three-year organic reserve replacement rates and the company's continued efforts to reduce debt, Fitch said.

Offsetting concerns focus on the potential for the company to pursue further acquisitions, increased shareholder-friendly activities and expectations of sizable capital expenditures to support long lead-time projects, which increase the company's exposure to near-term commodity price falls, the agency added.

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