Core Viewpoint - Devon Energy Corporation is a significant player in the energy sector, focusing on oil and natural gas exploration, development, and production, with a positive outlook from analysts and a strong consensus for a Buy rating [1][2][6] Group 1: Company Overview - Devon Energy operates in the United States and Canada, competing with major firms like ExxonMobil and Chevron [1] - The company has a market capitalization of approximately $28 billion, indicating its substantial presence in the energy market [4] Group 2: Analyst Recommendations - Susquehanna maintained a Positive grade for Devon Energy, recommending a hold on the stock [1][6] - The average brokerage recommendation (ABR) for Devon Energy is 1.53, with 21 out of 29 brokerage firms rating it as a Strong Buy [2][6] Group 3: Stock Performance - At the time of the announcement, Devon Energy's stock price was $44.66, reflecting a slight increase of 0.50% from the previous session [3] - The stock has traded within a range of $44.33 to $46.15, with the highest price over the past year being $46.15 and the lowest at $25.89, indicating significant growth potential [3] - The trading volume for Devon Energy is 12.66 million shares, showing active investor interest [5] Group 4: Price Target Adjustment - Susquehanna raised the price target for Devon Energy from $47 to $52, reflecting confidence in the company's future performance [4][6]

Gaspar said the companies expect to realize $1 billion in annual pre-tax run-rate synergies by year-end 2027 , attributing the opportunity to scale, operational overlap, best-practice implementation, cost optimization, and improved infrastructure utilization. He noted the synergy targets are incremental to Devon’s existing business optimization program and framed them as “true operational and efficiency gains.” Gaspar also said that any potential capital savings tied to reduced activity would be incremental ...

Core Viewpoint - The merger between Devon Energy Corporation and Cotera Energy is expected to create significant shareholder value through enhanced operational efficiencies, increased free cash flow, and a robust capital return strategy, including higher dividends and share repurchases. Group 1: Merger and Strategic Outlook - The merger is positioned to create an industry leader that delivers differentiated value to investors, with a focus on capital returns through higher dividends and a significant share repurchase authorization [1][4] - The combined portfolio will leverage a world-class position in the Delaware Basin, expected to generate over half of total production and cash flow, supported by a decade of top-tier inventory [3][4] - The merger is anticipated to deliver $1 billion in annual pretax run-rate synergies by year-end 2027, enhancing operational efficiency and free cash flow generation [2][3] Group 2: Financial Performance and Capital Returns - Devon Energy generated $3.1 billion in free cash flow in 2025, allowing for $2.2 billion in returns to shareholders through dividends, share buybacks, and debt retirement [14] - The quarterly dividend was increased by 9% to $0.24 per share, with plans for a further 31% increase following the merger, reflecting confidence in the combined company's cash return capabilities [15] - The company reduced its shares outstanding by approximately 5% over the past year and anticipates a new share repurchase authorization of over $5 billion post-merger [15][16] Group 3: Operational Efficiency and Business Optimization - Devon Energy achieved an impressive reserve replacement rate of 193% at a finding and development cost of just over $6 per BOE, indicating strong operational execution [6] - The company has captured 85% of its $1 billion business optimization target within a year, with a focus on leveraging technology and continuous improvement to drive further efficiencies [9][21] - Capital efficiency improved by over 15% from preliminary 2025 outlook, enabling the company to extract more value from every dollar invested [7][8] Group 4: Production and Cost Management - Production optimization efforts led to free cash flow of $700 million in Q4, driven by strong new well performance and improved base production management [5] - Operating costs significantly improved, reflecting enhanced reliability and operational efficiency, with capital spending finishing 4% better than guidance [5][10] - The company expects production to average around 830,000 BOE per day in Q1 2026, despite weather-related downtime [16]

Financial Data and Key Metrics Changes - Devon Energy generated $3.1 billion in free cash flow for 2025, enabling $2.2 billion in returns to shareholders through dividends, share buybacks, and debt retirement [16][17] - The quarterly dividend was increased by 9% to $0.24 per share, with plans for a further 31% increase post-merger [16][17] - The company ended the year with $1.4 billion in cash and a net debt to EBITDA ratio of less than one turn, indicating strong financial health [17] Business Line Data and Key Metrics Changes - Production optimization efforts led to oil production exceeding guidance, with a reserve replacement rate of 193% at a finding and development cost of just over $6 per BOE [10][11] - Capital spending finished 4% better than guidance, reflecting improved drilling and completion efficiencies [9][10] - The business optimization program achieved 85% of its $1 billion target within a year, with expectations to meet the full target by 2026 [12][22] Market Data and Key Metrics Changes - Devon's production for Q1 2026 is expected to average around 830,000 BOE per day, accounting for weather-related downtime [18] - The company anticipates a significant new share repurchase authorization of more than $5 billion following the merger [17] Company Strategy and Development Direction - The merger with Coterra Energy is expected to create substantial value through operational synergies, with a target of $1 billion in annual pre-tax run rate synergies by year-end 2027 [5][6] - The company is focusing on enhancing free cash flow generation to accelerate capital returns to shareholders [8] - Devon is exploring opportunities for portfolio rationalization and investments in innovative technologies, such as geothermal energy through Fervo Energy [15][61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capture synergies from the merger and deliver enhanced cash returns to shareholders [16][17] - The company is committed to continuous improvement and leveraging technology to enhance operational efficiency [12][13] - Management emphasized the importance of being in a strong financial position to explore long-term opportunities, both domestically and internationally [35][39] Other Important Information - Devon's capital efficiency improved by more than 15% from the preliminary 2025 outlook, with well productivity standing over 20% above the peer average [11][12] - The company is actively implementing AI-enabled technologies to optimize production and reduce costs [12][24] Q&A Session Summary Question: Insights on business optimization progress and key milestones for 2026 - Management reported achieving 85% of the $1 billion target and expressed confidence in reaching the full amount, emphasizing the role of technology in unlocking potential [22][23] Question: Plans for the Delaware position and future activity - Management highlighted the strength of the Delaware Basin and confirmed ongoing efforts to improve recovery and reduce downtime [28][29] Question: Exploration strategy and potential international opportunities - Management acknowledged exploring various international opportunities while maintaining confidence in the domestic market [34][39] Question: Insights on cash operating expenses and optimization efforts - Management noted consistent improvements in workflow optimization and condition-based maintenance contributing to lower costs [43][44] Question: Future capital allocation and productivity expectations - Management indicated that capital allocation will remain similar to previous years, with a focus on maintaining productivity levels across various regions [58][87] Question: Comments on the impressive Delaware results and repeatability - Management confirmed that the strong performance was due to both new well productivity and improved base operations, with expectations for continued success [74][76]

Financial Data and Key Metrics Changes - Devon Energy generated $3.1 billion in free cash flow for 2025, enabling $2.2 billion in returns to shareholders through dividends, share buybacks, and debt retirement [16][17] - The quarterly dividend was increased by 9% to $0.24 per share, with plans for a further 31% increase post-merger [16][17] - The company ended the year with $1.4 billion in cash and a net debt to EBITDA ratio of less than one turn, indicating strong financial health [17] Business Line Data and Key Metrics Changes - Production optimization efforts led to oil production exceeding guidance, with a reserve replacement rate of 193% at a finding and development cost of just over $6 per BOE [9][10] - Capital spending was 4% better than guidance, reflecting efficiencies in drilling and completion [9] - The business optimization program achieved 85% of its $1 billion target within a year, with expectations to meet the full target by 2026 [12][22] Market Data and Key Metrics Changes - The merger with Coterra Energy is expected to create significant synergies, with a target of $1 billion in annual pre-tax run rate synergies by year-end 2027 [5][6] - The Delaware Basin is highlighted as a key area for production, expected to generate more than half of total production and cash flow [5][6] Company Strategy and Development Direction - The merger with Coterra Energy is positioned as a transformative opportunity for value creation, leveraging complementary portfolios and operational efficiencies [5][6][8] - The company is focused on enhancing free cash flow generation and returning capital to shareholders through dividends and share repurchases [8][16] - Devon is exploring opportunities for portfolio rationalization and investments in innovative technologies, such as geothermal energy through Fervo Energy [15][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capture synergies from the merger and maintain strong operational performance [16][17] - The outlook for 2026 remains unchanged despite weather-related downtime in Q1, with production expected to average around 830,000 BOE per day [18][19] - Management emphasized a commitment to continuous improvement and operational efficiency as core to the company's culture [12][13] Other Important Information - The company has over 100 active work streams focused on driving sustained production gains while reducing capital requirements [12][13] - Devon's capital efficiency ranks among the best in the industry, with well productivity over 20% above peer averages [11] Q&A Session Summary Question: Business optimization progress and key milestones for 2026 - Management reported achieving 85% of the $1 billion target and expressed confidence in reaching the full amount, emphasizing the role of technology in unlocking potential [22][24] Question: Plans for the Delaware position and well targeting - Management confirmed ongoing focus on innovative technology and recovery improvements in the Delaware Basin, with plans to remain active in the area [28][29] Question: Exploration strategy and international opportunities - Management indicated interest in exploring international opportunities while maintaining confidence in the U.S. shale market, emphasizing long-term investments [34][39] Question: Cash operating expenses and optimization efforts - Management noted consistent improvements in workflow and maintenance approaches contributing to lower operating expenses [43][44] Question: 2026 program and capital allocation - Management indicated that capital allocation will remain similar to previous years, with a focus on maximizing value creation across regions [58] Question: Geothermal investment in Fervo Energy - Management highlighted the strategic partnership with Fervo Energy, emphasizing the potential for value creation through innovative geothermal technology [60][61]

Oil Production and Acquisitions - Oil production increased to 389 MBbls/d, a 12% year-over-year growth, with significant contributions from the Delaware Basin and Rockies [164] - The acquisition of Grayson Mill's Williston Basin business for approximately $5.0 billion is expected to enhance oil production and operational scale [161] - The company completed the acquisition of all outstanding noncontrolling interests in CDM for $260 million, fully attributing future net income to the company [209] Financial Performance - Earnings attributable to Devon were $2.6 billion, or $4.17 per diluted share, while core earnings were $2.5 billion, or $3.92 per diluted share [164] - The company achieved $6.7 billion in operating cash flow for 2025, demonstrating resilience despite lower oil prices [169] - Operating cash flow for 2025 was $6,711 million, slightly up from $6,600 million in 2024, funding capital expenditures and shareholder returns [195] - The company reported earnings attributable to Devon (GAAP) of $3.466 billion, with core earnings (Non-GAAP) of $3.252 billion, translating to $4.17 and $3.92 per diluted share respectively [260] Shareholder Returns - The company returned approximately $1.7 billion to shareholders through dividends and share repurchases in 2025 [170] - A cash dividend of $0.24 per share was announced for the first quarter of 2026, totaling approximately $149 million [230] - The company repurchased 30.8 million shares of common stock for $1.1 billion in 2025, maintaining its share repurchase program [206] - The company has authorized a $5.0 billion share repurchase program, with $4.5 billion executed as of February 1, 2026 [231] Capital Expenditures and Budget - Capital expenditures totaled $3,592 million in 2025, representing approximately 54% of operating cash flow [199] - The 2026 capital budget is expected to be approximately 4% lower than 2025, focusing on high-return projects in the Delaware Basin [172] - The company expects to achieve its capital investment priorities while maintaining capital discipline, with a capital expenditure budget for 2026 projected at approximately $3.5 billion to $3.7 billion, about 4% lower than 2025 [218][232] Price and Market Conditions - WTI oil prices averaged $64.87 per Bbl in 2025, reflecting a 14% decline from $75.79 per Bbl in 2024 [171] - Realized prices for oil decreased by 12% to $36.60 per Boe, contributing to an estimated $1.3 billion decrease in earnings [179] - The company utilizes derivative financial instruments to mitigate price risk associated with oil, gas, and NGL production [217] - The company systematically hedges a portion of its production to manage the volatility and unpredictability of oil and gas pricing, which is a major market risk exposure [268] Expenses and Margins - Production expenses increased by 12% in 2025 to $3,567 million, driven by increased activity in the Rockies and new well activity in the Delaware Basin [182] - Field-level cash margin decreased to $7,656 million in 2025 from $7,993 million in 2024, with a per BOE margin of $24.97 compared to $29.63 [184] - Total depreciation, depletion, and amortization (DD&A) increased by 10% to $3,595 million in 2025, primarily due to higher volumes from the Grayson Mill acquisition [185] - General and administrative (G&A) expenses per BOE decreased by 13% to $1.60 in 2025, reflecting operational efficiencies from the Grayson Mill acquisition [187] Tax and Financial Position - The effective income tax rate increased to 23% in 2025 from 21% in 2024, with total income tax expense rising to $785 million [192] - The company’s income tax expense for 2025 was $785 million, reflecting the complexities of federal, state, and foreign tax jurisdictions [252] - The company had total debt of $8.4 billion as of December 31, 2025, with $7.4 billion in fixed-rate debentures averaging 5.7% interest and a $1.0 billion Term Loan at a variable rate of 5.4% [270] - The company has approximately $3.0 billion of available borrowing capacity under its Senior Credit Facility, with a debt-to-capitalization ratio of 24.8% as of December 31, 2025 [222][223] Strategic Initiatives - The business optimization plan is projected to improve annual pre-tax cash flow by $1.0 billion, with approximately $850 million achieved through 2025 [163] - The strategic merger with Coterra is expected to unlock $1.0 billion in sustainable annual synergies and enhance cash returns to shareholders through a planned quarterly dividend of $0.315 per share [235] - The company expects material incremental cash benefits from the OBBB legislation, which reinstates 100% bonus depreciation and allows for the expensing of domestic research costs starting in 2025 [253] Risk Management - Credit risk exposure includes customers purchasing oil, gas, and NGL production, with mechanisms in place to limit this exposure [221] - The company recognized deferred tax assets and liabilities for temporary differences, operating losses, and other tax carryforwards, routinely assessing these assets for potential valuation allowances [252] - The company reported no risk of impairment for its oil and gas assets as of December 31, 2025 [251] - 91% of the company's proved reserves were subjected to third-party audits in 2025, reflecting the importance of accurate reserve estimation [244] - The company had approximately $800 million in undeveloped leasehold costs as of December 31, 2025, with $17 million scheduled to expire in 2026 [243]

Devon Energy (NYSE:DVN) Q4 2025 Earnings call February 18, 2026 11:00 AM ET Speaker12Welcome to Devon Energy's fourth quarter 2025 conference call. At this time, all participants are in listen-only mode. This call is being recorded. I'd now like to turn the call over to Mr. Chris Carr, Director of Investor Relations. You may begin.Speaker3Good morning, and thank you for joining us on the call today. Last night, we issued Devon's fourth quarter and year-end 2025 earnings release and presentation materials. T ...

Q4 2025 EARNINGS PRESENTATION February 17, 2026 NYSE: DVN DEVONENERGY.COM KEY HIGHLIGHTS Announced transformational merger with Coterra Energy Outperformed Q4 expectations across key value drivers 2. Business optimization accelerates value capture 3. Value beyond business optimization Significant free cash flow fuels shareholder returns 5. (1) Subject to Board approval following the close of Devon and Coterra merger. OUR DISCIPLINED MODEL CREATES SIGNIFICANT VALUE Q4 2025 EARNINGS PRESENTATION • 2 1. 4. Cre ...

Core Viewpoint - Devon Energy Corp reported strong fourth quarter earnings, exceeding analyst expectations, which has positively impacted its stock price and reflects growth potential through consolidation with Coterra [1][2]. Financial Performance - The company reported earnings of 82 cents per share and revenue of $4.12 billion for the fourth quarter, both surpassing analyst forecasts [1]. - The stock price increased by 1.1% to $44.51 following the earnings report, with a 12-month consensus target price of $47.86, indicating a 6.3% premium to current levels [2]. Market Sentiment - Analysts are generally optimistic, with 23 out of 29 firms rating the stock as "buy" or better, suggesting strong market confidence [2]. - The stock reached a 17-month high of $45.32 and has rebounded 76% from its lows in April, indicating a significant recovery [2]. Options Market - Options for Devon Energy appear attractively priced, with a Schaeffer's Volatility Index (SVI) of 37%, suggesting that near-term option traders expect relatively low volatility [3].

Management attributed the Q4 production beat to strong new well performance and a 2% outperformance in base production management, which added approximately 5,000 barrels of oil per day. Capital efficiency improved by 15% compared to preliminary 2025 outlooks, driven by a 4% reduction in capital spending through advanced drilling and completion cycle times. The business optimization program has captured 85% of its $1 billion target within one year, shifting from a temporary initiative to a core cultur ...