Devon Energy Earnings Higher Than Expected, Increases Dividend with Record Free Cash Flow

Shale play Devon Energy reported better than expected third quarter earnings after the market of non-GAAP EPS of $1.65 which beat by $0.10 on revenue of $3.84 billion which beat by $210 million. Production per share increased 10% year-over-year in the third quarter with Delaware Basin well productivity improving more than 20% versus first half of 2023. Fourth-quarter production is expected to range from 640,000 to 660,000 Boe per day, with oil production approximating 315,000 barrels per day. The company declared a $0.77 per share fixed-plus-variable quarterly dividend, 57.1% increase from the prior dividend of $0.49 giving a forward yield 6.8%. $DVN stock fell 2% in after hours on the news.

Devon

Devon Energy Corp NYSE: DVN

Devon reports with other key Shale names with footprints in the main shale basins the Permian, Marcellus and Utica.

Devon Energy Q3 2023 Earnings

Devon Energy Corp NYSE: DVN Reported Earnings After Close Tuesday

Highlights

  • Q3 Non-GAAP EPS of $1.65 beats by $0.10.
  • Revenue of $3.84B (-29.3% Y/Y) beats by $210M.
  • Production per share increased 10 percent year-over-year in the third quarter
  • Delaware Basin well productivity improved more than 20 percent versus first half of 2023
  • Operating cash flow increased 23 percent compared to the second quarter to $1.7 billion
  • Free cash flow more than doubled quarter-over-quarter to $843 million
  • Fixed-plus-variable dividend increased by 57 percent versus second quarter to $0.77 per share
  • Balance sheet strengthened with debt reduction and cash balances increasing to a total of $761 million

DVN Stock Market Reaction

  • $44.19 ▼ -1.10 (-2.43%) today
  • 44.19 ▼ -22.57 (-33.81%) past year
  • $44.19 ▲ +14.63 (+49.49%) past 5 years
  • 52wk High $73.98
  • 52wk Low $42.59

Financial

Devon Energy’s operating cash flow reached $1.7 billion, and with a capital reinvestment rate of 52 percent of cash flow, the company generated $843 million of free cash flow.

The company improved its financial position by retiring $242 million of outstanding debt and increasing its cash on hand by $273 million to a total of $761 million. Devon’s net debt-to-EBITDAX ratio was a modest 0.7 times.

Return of Capital to Shareholders

Reflecting the strong financial performance, Devon declared a fixed-plus-variable dividend of $0.77 per share, a 57 percent increase from the second quarter of 2023. Additionally, the company has been actively repurchasing shares through its $3.0 billion share-repurchase program, reducing its outstanding share count by up to 9 percent.

Outlook

  • Devon’s fourth quarter capital is expected to range from $870 million to $930 million.
  • With this level of investment, the company expects to bring online around 100 gross operated wells during the quarter.
  • Fourth-quarter production is expected to range from 640,000 to 660,000 Boe per day, with oil production approximating 315,000 barrels per day.
  • This decrease in production from the third quarter is driven by declines in the Williston Basin and timing of completions in the Delaware Basin.
  • In 2024, the company plans to sustain oil production at around 315,000 barrels per day, with total volumes approximating 650,000 Boe per day.
  • Capital requirements are expected to decline approximately 10 percent from 2023 levels to a range of $3.3 billion to $3.6 billion. This program is estimated to be funded at pricing levels below $40 per barrel.

About Devon Energy

Devon Energy Corporation is a leading independent oil and natural gas exploration and production company. Devon’s operations are focused onshore in the United States and Canada. Devon has more than doubled its onshore North American oil production since 2011. Headquartered in Oklahoma City, Devon is a Fortune 500 company and is included in the S&P 500 Index. Its common shares trade on the New York Stock Exchange under the ticker symbol DVN.

Source: Devon  

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