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Devon Energy Corp.'s (DVN) second-quarter earnings plunged 76% on lower commodity prices even as production soared, though the results beat market expectations, sending shares higher.

Devon is the latest in a string of independent producers to announce big output gains even as drilling activity slowed as oil and natural gas prices plunged from last summer's highs.

Independent producers such as Chesapeake Energy Corp. (CHK)and Anadarko Petroleum Corp. (APC) recently reported production increases. Independents search for and produce oil and natural gas but don't have refining or marketing operations.

Devon, one of the biggest U.S. independent producers, posted income of $314 million, or 70 cents a share, down from $1.3 billion, or $2.88 a share, a year earlier. The results included 4 cents a share this year and $1.57 a share last year, respectively, in earnings from discontinued operations. Excluding items that include hedging losses and severance costs, the latest quarter's earnings were 85 cents. Revenue decreased 41% to $2.09 billion.

The Oklahoma City-based company's production climbed to a record 65.4 million barrels of oil equivalent during the second quarter - a 12% gain over the same period a year earlier and a 5% increase over the first quarter.

Devon's production growth is even more remarkable in that it funded all capital expenditures and dividends within cash flow for the quarter, analysts at Simmons & Co. wrote in a note to clients on Wednesday. "In short, impressive quarterly results both operationally and financially."

Analysts polled by Thomson Reuters had forecast, on average, earnings of 59 cents and revenue of $1.92 billion.

Devon Chief Executive Larry Nichols said the company would boost its overall production this year, despite voluntary production curtailments in the second half of 2009.

During a call to discuss the company's second-quarter earnings, Nichols said that overall production would increase by 7 million barrels of oil equivalent in 2009. At the same time, the company plans to curtail production of 3 million barrels of oil equivalent during the later half of the year. Devon will defer some well completions, shut in some marginal wells in the Rockies and slow its output in the Barnett Shale, where the company produced about 1.2 billion cubic feet of natural gas per day during the second quarter.

Despite lower drilling activity, "our assets significantly outperformed expectations," Nichols said during the call.

Devon now expects to produce 243 million to 247 million barrels of oil equivalent in 2009 - a 3% increase over 2008 levels.

Meanwhile, the company is still on the lookout for a partner to participate in its four oil discoveries in the U.S. Gulf of Mexico.

A partnership would allow Devon to reduce its capital costs while still maintaining "meaningful exposure" to the discoveries, Nichols said.

Shares of Devon recently traded $2.52, or 4.12%, higher at $63.75 apiece.

-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com

(Kerry Grace Benn in New York contributed to this report.)