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Shale play Devon Energy reported mixed fourth quarter earnings after the market with plans to separate its Canadian and Barnett Shale assets. $DVN also announced it is adding $5 billion to its stock buyback plan and raised its quarterly dividend to 9 cents per share.


Devon

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

Devon Energy Corp NYSE: DVN Reported Earnings After Close Tuesday

$0.10 Missed $0.31 EPS BUT $3.71Bil Beat $1.97 Billion Revenue Forecast

Earnings

Devon Energy Corp (NYSE: DVN) reported fourth-quarter earnings Tuesday with a profit of $1.15 billion or $2.48 on a per-share basis, .10 cents per share when adjusting for one-time gains and various costs. It missed guidance for adjusted earnings of 31 cents per share. DVN revenue was $3.71 billion, nearly double the Wall Street consensus estimate of $1.97 billion.

Devon Energy Corp NYSE: DVN

Market Reaction : After Hours 30.00 +1.69 (+5.97%)

Highlights

  • Light-oil production advances 20 percent year over year in fourth quarter
  • Prolific well productivity in Delaware Basin drives high-return U.S. oil growth
  • U.S. oil reserves added at attractive finding cost
  • Corporate cost structure improves 21 percent in fourth quarter
  • Divestiture program approaches nearly $5 billion in proceeds
  • Stock-repurchase program reaches $3.4 billion

Completing Transformation to High-Return U.S. Oil Growth Company

Additionally, in a separate press release issued today, Devon announced that its board of directors has authorized the company to pursue the separation of its Canadian and Barnett Shale assets to complete the transformation to a high-return U.S. oil growth business. The company will evaluate multiple methods of separating the assets, including a potential sale or spin-off. The separation will allow Devon to focus on its top-tier, high-return U.S. oil assets and is aligned with the company’s previously announced long-term strategic plan.

“With our world-class U.S. oil resource plays rapidly building momentum and achieving operating scale, the final step in our multi-year transformation is an aggressive, transformational move that will accelerate value creation for our shareholders by further simplifying our resource-rich asset portfolio,” said Hager. “New Devon will emerge with a highly focused U.S. oil portfolio and has the ability to substantially increase returns and profitability as we aggressively align our cost structure to expand margins with this top-tier oil business. The New Devon will be able to grow oil volumes at a mid-teens rate while generating free cash flow at pricing above $46 per barrel.”

Share-Repurchase Program Increased to $5 Billion and Dividend Raised 13 Percent

Devon also announced today that its board of directors authorized a $1 billion increase to the company’s previously announced $4 billion share-repurchase program, bringing the total repurchase program to $5 billion. The authorization for the repurchase program expires on Dec. 31, 2019. As of Feb. 18, 2019, Devon had completed $3.4 billion of repurchases under the program, totaling approximately 90 million shares.

All purchases will be made in accordance with applicable laws from time to time in open-market or private transactions, depending on market conditions, and may be discontinued at any time. At the current share price, this program covers nearly 30 percent of the company’s outstanding common stock.

Additionally, the company’s board of directors approved a 13 percent increase in its quarterly common stock dividend beginning in the second quarter of 2019. The new quarterly dividend rate will be $0.09 per share, compared to the prior quarterly dividend of $0.08 per share. The adjusted dividend is payable on June 28, 2019, to stockholders of record at the close of business on June 14, 2019.

Devon Energy Corp Q3 Earnings Recap

$0.63 Beat Exp $0.43 EPS and $2.58 Beat $2.12 Billion Revenue Forecast

Earnings

Devon Energy Corp (NYSE: DVN) reported third -quarter earnings Tuesday of $2.54 billion. On a per-share basis a profit of $5.14. Earnings, adjusted to account for discontinued operations, came to 63 cents per share beating expectations of 43 cents per share. 

Revenue of $2.58 billion beat forecasts of $2.12 billion.with consensus. Investors were looking for an improvement from Q2 and an update on divestures and operating expenses.  

Devon Energy Corp NYSE: DVN

Market Reaction : After hours 32.35 −0.58 (-1.76%)

Highlights

  • Delaware Basin and Eagle Ford drive U.S. production outperformance
  • Third-quarter upstream capital expenditures were 9 percent below guidance
  • Operating cash flow expands 61 percent year over year to $807 million
  • Free cash flow generation reaches $249 million in third quarter
  • Stock-repurchase program on pace to decrease share count by 20 percent

Capital Spending Below Q3 Guidance;

No Change to 2018 Outlook In addition to the strong U.S. production performance, the company maintained discipline with its capital program. Devon’s upstream capital spending was $523 million in the third quarter, which was $52 million, or 9 percent below the company’s midpoint guidance.

For the full year, Devon has made no modifications to its capital outlook and expects its upstream capital spending to be approximately $2.4 billion in 2018.

 

Devon Divestures 

Devon Divesture Program

Devon announced they entered into a deal with Carrizo Oil & Gas to divest non-core Delaware Basin acreage for $215 million.

Devon has been aggressively divesting assets for a number of years. The deal includes 2.5 Mboe/d in production and 9,600 net acres in Ward and Reeves County, Texas. The deal is expected to close by the fourth quarter of 2018. Carrizo cited that the asset holds over 100 net potential de-risked locations across the Wolfcamp A and B, with upside from other zones.

CRZO cited a high degree of operational control with more than 90% of net acreage operated Minimal near-term drilling obligations as 94% of the acreage is held by production Low average royalty of approximately 20% Net production of approximately 2,500 Boe/d (60% oil)

More than 100 net potential de-risked drilling locations identified across the Wolfcamp A and B based on 7,000-ft. laterals, with significant upside potential from additional zones, further delineation, and future downspacing Includes salt-water disposal wells that can be integrated into the Company’s system Significant opportunities to generate efficiencies from increased scale, extension of lateral lengths, and integration of infrastructure, Read More

Last year Devon sold Eagle Ford Assets to Penn Virginia for $205 Million as part of its $1 billion divestiture plan, first announced in May, 2017.

Devon Energy Operations Devon Energy Operations

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. Today the company produces approximately 250,000 barrels a day and has a deep inventory of development opportunities to deliver future oil growth. Devon also produces about 1.3 billion cubic feet of natural gas a day and about 100,000 barrels of natural gas liquids per day.

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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