HOUSTON (Reuters) - U.S. oil producer Devon Energy Corp DVN.N on Tuesday missed Wall Street estimates for quarterly profit as expenses rose and a misplaced bet on the direction of oil prices offset higher oil output.

A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma September 15, 2015. REUTERS/Nick Oxford - TM3EB9F0WO901

Devon’s stock fell as much as 4.6 percent to $43 in after-hours trading on Tuesday. Its shares had been up 9 percent this year at 4 p.m. EDT, compared with a 13 percent increase in U.S. crude futures.

The Oklahoma City-based company said costs rose 39 percent to $2.73 billion in the three months ended June 30, as marketing expenses increased.

It said revenue realized from producing oil and gas fell 20 percent from a year earlier to $1.07 billion. At the same time, expenses on that production rose 26 percent, the company said.

Oil prices were higher in the quarter than the company had hedged its production, costing $131 million to settle the derivatives, a spokesman said.

Ben Montalbano, co-founder of energy researcher PetroNerds, which tracks hedging by oil and gas firms, said Devon hedged about 57 percent of its second-quarter oil production at prices about $5.80 a barrel below average prices.

Oil producers typically use hedges to lock in a price for their oil, guaranteeing a fixed amount for their output. But some independent oil producers this year hedged production at about $55 per barrel, giving up much of the quarter’s increase in oil prices, Montalbano said.

Devon produced 541,000 barrels of oil-equivalent per day (boep/d) in the second quarter of 2018, compared with 536,000 boep/d a year ago. The results were largely higher than its expected 524,000-to-549,000 boep/d range.

But its realized revenue from oil and gas output fell 20 percent to $1.07 billion because of the derivatives, the company reported.

Devon also took a $154 million asset impairment charge during the quarter on land in Oklahoma it no longer expects to develop, the spokesman said.

The company also cut its yearly oil production target to account for discontinued operations following the more than $3 billion sale of its interest in oil pipeline company EnLink Midstream.

Net loss attributable to Devon was $425 million, or 83 cents per share, in the quarter, compared with a profit of $219 million, or 41 cents per share, a year earlier.

Excluding one-time items, the company earned 34 cents per share, below analysts’ average estimate of 36 cents, according to Thomson Reuters I/B/E/S.

Revenue rose to $2.25 billion from $2.17 billion.