Core Viewpoint - Devon Energy Corporation (DVN) has shown a year-to-date stock gain of 1.6%, contrasting with a 22.8% decline in the Zacks Oil & Gas - Exploration and Production - United States industry and a 1.3% decline in the broader Zacks Oil and Energy sector [1] Performance Analysis - Over the past year, DVN's stock has declined by 32.7%, indicating a gradual recovery path, while Occidental Petroleum Corporation (OXY) experienced a 31.7% decline [2] - Devon Energy's return on invested capital (ROIC) stands at 8.71%, outperforming the industry average of 7.33% [15] Factors Contributing to Performance - The company benefits from a well-balanced commodity mix, focusing on oil, natural gas, and natural gas liquids, with a production replacement rate of 154% in 2024 [7] - DVN has a diversified, multi-basin portfolio of high-margin oil and gas assets, enhancing its asset base through strategic acquisitions [8] - The acquisition of Grayson Mill Energy's Williston Basin assets expanded net acreage from 123,000 to 430,000 acres, expected to triple production from 50,000 to 150,000 barrels of oil equivalent per day (Boe/d) [9] - A low-cost operating model supports profitability, with ongoing efforts to reduce drilling and completion expenses and streamline the workforce [10] Earnings Performance - DVN has reported strong earnings results, with an average earnings surprise of 6.09% over the last four quarters, despite missing expectations in the most recent quarter [12][13] - The Zacks Consensus Estimate for DVN's earnings per share for 2025 and 2026 has declined by 15.23% and 18.2%, respectively, in the past 60 days [17] Valuation - Devon Energy's shares are currently trading at a trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA TTM) of 3.61X, significantly lower than the industry average of 9.39X, indicating an inexpensive valuation [20] Summary - Devon Energy's multi-basin assets and balanced exposure to various commodities contribute positively to its performance, with a better return than the industry and an attractive valuation [21]

Core Insights - Devon Energy reported revenue of $4.45 billion for the quarter ended March 2025, reflecting a year-over-year increase of 23.8% [1] - The company's EPS was $1.21, slightly up from $1.16 in the same quarter last year, but below the consensus estimate of $1.27, resulting in an EPS surprise of -4.72% [1] - The revenue exceeded the Zacks Consensus Estimate of $4.36 billion, indicating a positive surprise of +2.05% [1] Financial Performance Metrics - Total oil equivalent production was 815 million barrels per day, slightly below the average estimate of 817.2 million barrels [4] - Average daily oil production was 388 million barrels, exceeding the average estimate of 383.85 million barrels [4] - Average daily gas production reached 1,346 million cubic feet, surpassing the estimate of 1,329.95 million cubic feet [4] - Average daily NGL production was 203 million barrels, below the estimate of 211.1 million barrels [4] - Marketing and midstream revenues were reported at $1.42 billion, exceeding the average estimate of $1.27 billion, with a year-over-year increase of +28.1% [4] - Revenues from oil, gas, and NGL sales totaled $3.13 billion, slightly above the estimate of $3.10 billion, marking an 18.9% year-over-year increase [4] - Oil revenues were $2.41 billion, slightly below the estimate of $2.43 billion [4] - NGL revenues were reported at $403 million, also below the estimate of $407.79 million [4] - The company reported a loss of $98 million from oil, gas, and NGL derivatives, contrasting with the average estimate of a $17.88 million gain, representing a year-over-year decline of -32.4% [4] Stock Performance - Devon Energy's shares have returned +15.2% over the past month, outperforming the Zacks S&P 500 composite, which saw a +3.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Viewpoint - Devon Energy has successfully positioned itself as a low-cost, efficient U.S. onshore oil and gas producer, allowing it to generate substantial free cash flow and withstand lower oil prices [1][8]. Production and Financial Performance - In the first quarter, Devon Energy produced an average of 388,000 barrels of oil per day, exceeding its production guidance by 5,000 barrels [3]. - The company's total output averaged 815,000 barrels of oil equivalent (BOE) per day, benefiting from strong performance in the Rockies and Eagle Ford regions [3]. - Devon achieved $1.9 billion in operating cash flow, a 17% increase from the previous quarter, and generated $1 billion in free cash flow [4]. Cost Management and Shareholder Returns - The company plans to reduce an additional $1 billion in costs over the next two years, enhancing its cash generation capabilities [2]. - Devon returned $464 million to shareholders through dividends and $301 million through share repurchases, while increasing its cash balance by $388 million to $1.2 billion [5]. Strategic Priorities and Future Outlook - CEO Clay Gaspar emphasized the company's focus on operational excellence, financial strength, and shareholder rewards as key strategic priorities [6]. - A business optimization plan is expected to deliver $1 billion in annual pre-tax cash flow improvements by the end of next year, allowing for a reduction in capital spending by $100 million [6]. - Despite the cut in capital spending, Devon increased its production guidance for the year, expecting oil output to average between 382,000 and 388,000 barrels per day, a 1% increase from the initial outlook [6]. Market Positioning - Devon Energy's strategy of enhancing efficiency positions it well to navigate volatile oil markets, making it a high-quality oil stock to hold throughout the oil market cycle [8].

Financial Performance - Net earnings for Q1 2025 were $494 million, or $0.77 per diluted share, while core earnings were $779 million, or $1.21 per diluted share[156]. - Net earnings for Q1 2025 were $509 million, down from $609 million in Q1 2024, reflecting a decrease of approximately 16.4%[175]. - Core earnings attributable to Devon (Non-GAAP) for Q1 2025 were $794 million, compared to $743 million in Q1 2024, reflecting a 6.9% increase[232]. - EBITDAX for Q1 2025 was $2.086 billion, up from $1.791 billion in Q1 2024, indicating a 16.5% growth[238]. - Field-level cash margin for Q1 2025 was $2,214 million, with a cash margin per BOE of $30.16, slightly down from $31.09 in Q1 2024[184]. - Field-level cash margin for Q1 2025 reached $2.214 billion, compared to $1.878 billion in Q1 2024, marking an 17.9% increase[238]. - The effective income tax rate remained stable at 21% for both Q1 2025 and Q1 2024, with total income tax expense decreasing to $137 million from $159 million[191]. Production and Operations - In Q1 2025, oil production totaled 388 MBbls/d, exceeding the plan by 1%[156]. - Total production volumes increased by 23% from Q1 2024 to Q1 2025, reaching 815 MBoe/d, driven by the Grayson Mill acquisition and new well activity[177][178]. - Production expenses increased by 4% to $912 million in Q1 2025, primarily due to new well activity in the Delaware Basin and Rockies[166]. - Production expenses rose by 21% to $912 million in Q1 2025, primarily due to increased activity in the Rockies related to the Grayson Mill acquisition[182]. - The company has approximately 30% and 35% of its remaining anticipated 2025 oil and gas production hedged, respectively[163]. - Devon's production expenses include lease operating, gathering, processing, and transportation expenses, which are critical for calculating Field-Level Cash Margin[233]. Cash Flow and Capital Expenditures - The company generated $1.9 billion of operating cash flow in Q1 2025, with a total of $6.8 billion for the past twelve trailing months[156]. - Operating cash flow for Q1 2025 was $1,942 million, up from $1,738 million in Q1 2024, representing an increase of approximately 12%[193]. - Total capital expenditures for Q1 2025 were $934 million, compared to $894 million in Q1 2024, reflecting a year-over-year increase of about 4.5%[196]. - The company expects capital expenditures for the remainder of 2025 to be approximately $2.7 billion to $2.9 billion[223]. Shareholder Returns - The company completed approximately 73% of its $5.0 billion share repurchase program, purchasing about 77.5 million shares for approximately $3.6 billion[156]. - Share repurchases amounted to $301 million in Q1 2025, compared to $205 million in Q1 2024, indicating a 46.8% increase in shareholder return through buybacks[201]. - The fixed dividend was raised by 9% from $0.22 to $0.24 per share in Q1 2025, with total dividends paid amounting to $163 million[203]. Asset Management - The company reported asset impairments of $254 million in Q1 2025, resulting from the rationalization of two headquarters-related real estate assets[169]. - Devon's asset impairments for Q1 2025 totaled $254 million, compared to no impairments reported in Q1 2024[238]. - Devon agreed to sell its investment in Matterhorn for approximately $375 million, with proceeds aimed at strengthening its financial position[224]. Cost Management - G&A costs decreased by 16% to $130 million in Q1 2025, primarily due to lower labor and benefit costs[171]. - General and administrative expenses increased by 14% to $130 million in Q1 2025, driven by higher employee compensation, although G&A per BOE decreased by 6%[187]. - Net financing costs increased to $123 million in Q1 2025, up from $76 million in Q1 2024, reflecting changes in debt management strategies[188]. - The company recognized a $542 million increase in earnings due to higher production volumes from the Grayson Mill acquisition and new well activity[178]. Market Conditions - Realized prices for unhedged oil increased by 2% to $69.13 per barrel, while unhedged gas prices rose by 96% to $2.55 per Mcf[162]. - Realized prices for oil decreased by 8% to $69.13 per Bbl in Q1 2025, while gas prices increased by 97% to $2.55 per Mcf, contributing to a $45 million decrease in earnings[179]. - A 10% change in the forward curves of commodity derivatives would have impacted Devon's net positions by approximately $275 million as of March 31, 2025[240].

Financial Data and Key Metrics Changes - Devon Energy reported core earnings of $779 million or $1.21 per share, with EBITDAX at $2.1 billion and operating cash flow of $1.9 billion, exceeding consensus estimates [14][15] - The company generated $1 billion in free cash flow for Q1, marking the highest level since Q3 2022, and returned nearly half to shareholders through dividends and share buybacks [9][15] - Cash balances increased by $388 million, reaching $1.2 billion, resulting in a net debt to EBITDA ratio of one times [18] Business Line Data and Key Metrics Changes - Oil production exceeded guidance, reaching 388,000 barrels per day, attributed to strong performance in the Rockies and Eagle Ford [7][14] - The Delaware Basin showed exceptional performance with a 12% increase in completion efficiencies year to date and a 7% increase in drilling speeds [10] - In the Eagle Ford, Devon achieved a nearly 50% reduction in costs following the dissolution of the partnership with BPX, with expected savings of $2.7 million per well [12][13] Market Data and Key Metrics Changes - Devon increased its full-year oil production outlook to a range of 382,000 to 388,000 barrels per day, reflecting a 1% increase from previous estimates [16] - The company is well-positioned to generate over $2 billion in free cash flow for the remainder of the year, with a corporate breakeven at around $45 WTI [16][18] Company Strategy and Development Direction - Devon's strategic priorities include operational excellence, maintaining financial strength, and returning value to shareholders, with a focus on business optimization to generate an additional $1 billion in annual free cash flow by year-end 2026 [4][5] - The company plans to reduce full-year capital investment by $100 million to a range of $3.7 billion to $3.9 billion, driven by better performance and capital efficiencies [17] - Devon aims to enhance operating margins and capital efficiency through targeted actions, including lowering drilling and completion costs and renegotiating contracts [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate commodity price cycles and emphasized the importance of operational consistency in decision-making [5][76] - The leadership team is closely monitoring market dynamics and is prepared to adjust plans to maintain financial strength and deliver top-tier returns [7][78] - Management indicated that while they are not currently making cuts in response to weaker oil prices, they are prepared to reevaluate plans if prices fall into the low $50s [76][78] Other Important Information - Devon's business optimization plan is expected to deliver $1 billion in pretax free cash flow improvements by year-end 2026, with a focus on capital efficiency, production optimization, and corporate cost reductions [21][24] - The company has reached an agreement to sell its interest in the Matterhorn pipeline for approximately $375 million, which will enhance cash position and liquidity [18] Q&A Session Summary Question: Can you unpack the cost reductions discussed in slides ten and eleven? - Management highlighted confidence in achieving cost reductions, particularly in commercial opportunities due to renegotiated contracts that will take effect in 2026 [28][31] Question: Can you clarify the impact of lower GP and T rates in the Delaware? - Management indicated that legacy contracts have been renegotiated, significantly reducing costs, which will materially benefit the overall business [44][46] Question: What are the incremental midstream investments that could be subject to future monetization? - Management stated that they are evaluating midstream assets for potential monetization, emphasizing a holistic approach to asset management [48][49] Question: How is technology being integrated into the business optimization plan? - Management discussed the substantial investment in technology and analytics to improve operations, which is expected to drive significant productivity gains [59][63] Question: What is the outlook for maintenance CapEx over the next couple of years? - Management expects maintenance CapEx to decrease to around $3.4 billion by 2027 due to ongoing optimization efforts [112][113] Question: Which asset has more flexibility to slow down if needed? - Management indicated that the Powder River Basin, while challenging, has significant upside potential and may be prioritized for continued investment [120]

Core Viewpoint - Devon Energy Corp. reported mixed financial results for the first quarter of 2025, with earnings per share missing estimates but revenues exceeding expectations. The company showed significant year-over-year production growth, particularly in oil and natural gas liquids, while facing challenges in realized prices for oil. Financial Performance - Earnings per share (EPS) for Q1 2025 was $1.21, missing the Zacks Consensus Estimate of $1.27 by 4.72% [1] - GAAP EPS was 77 cents, down from 94 cents in the same quarter last year, influenced by fair value changes, asset impairments, and restructuring costs [2] - Total revenues for the quarter were $4.45 billion, surpassing the Zacks Consensus Estimate of $4.36 billion by 2.05% [3] Production Metrics - Net production totaled 815,000 barrels of oil equivalent per day (Boe/d), up 22.7% year over year, within the guided range of 805,000-825,000 Boe/d [4] - Natural gas liquids production increased 23% year over year to 203,000 barrels per day (Bbl/d), while oil production rose 21.6% to 398,000 Bbl/d [5] Price Realization - Realized oil prices were $69.15 per barrel, down 7.98% from $75.15 a year ago, while realized prices for natural gas liquids increased 5.8% to $21.93 per barrel [6] - Realized gas prices were $2.48 per thousand cubic feet, up 53.1% from $1.62 a year ago, contributing to an overall realized price of $42.45 per Boe, down 3.6% year over year [6][8] Operational Highlights - Total production expenses were $912 million, up 21.4% year over year, while production costs averaged $12.42 per Boe, a slight decline of 0.08% from the prior year [7] - The company repurchased shares worth $301 million and paid dividends of $163 million in the first quarter [7] Strategic Developments - On April 1, 2025, Devon finalized the dissolution of its Eagle Ford partnership, gaining approximately 46,000 net acres in the Blackhawk Field [10] - On May 5, 2025, the company agreed to sell its equity stake in the Matterhorn Pipeline for around $375 million, with proceeds aimed at enhancing its financial standing [11] Financial Position - As of March 31, 2025, cash and cash equivalents were $1.23 billion, up from $0.85 billion at the end of 2024, while long-term debt remained at $8.39 billion [12] - Net cash from operating activities was $1.94 billion, compared to $1.66 billion in Q1 2024, with capital expenditures totaling $0.93 billion, a 4.5% increase from the previous year [13] Future Guidance - Second-quarter production is expected to be in the range of 810,000-828,000 Boe/d, with capital spending estimated between $0.98-$1.04 billion [14] - Full-year production guidance for 2025 has been revised to 810,000-828,000 Boe/d, reflecting strong first-quarter volumes [14][15]

Financial Performance - Devon Energy delivered $1.0 billion in free cash flow in Q1 2025[2] - The company returned $464 million to shareholders through dividends and share repurchases[3] - Q1 2025 saw $163 million paid in dividends and $301 million in share repurchases[3, 21] - The company's cash balance increased to $1.2 billion[2] Operational Highlights - Oil production averaged 388,000 barrels per day, exceeding guidance[2, 11] - Capital spending was $964 million, 5% under midpoint guidance[2, 11] - The reinvestment rate was reduced to 50% of operating cash flow[2, 11] Future Outlook and Strategy - Devon launched a Business Optimization Plan targeting $1 billion in annual pre-tax free cash flow improvement by year-end 2026[3, 35] - The company anticipates $3.7 - $3.9 billion in total capital spending[22] - Devon expects to retire $2.5 billion in absolute debt[27]

分组1 - Devon Energy reported quarterly earnings of $1.21 per share, missing the Zacks Consensus Estimate of $1.27 per share, but showing an increase from $1.16 per share a year ago, resulting in an earnings surprise of -4.72% [1] - The company posted revenues of $4.45 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.05%, compared to year-ago revenues of $3.6 billion [2] - Over the last four quarters, Devon Energy has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] 分组2 - The stock has underperformed the market, losing about 6.5% since the beginning of the year, compared to the S&P 500's decline of -3.9% [3] - The current consensus EPS estimate for the coming quarter is $0.98 on $4.06 billion in revenues, and for the current fiscal year, it is $4.34 on $16.81 billion in revenues [7] - The Zacks Industry Rank for Oil and Gas - Exploration and Production - United States is currently in the bottom 24% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Financial Performance - Total revenues for Q1 2025 reached $4.45 billion, a slight increase from $4.40 billion in Q4 2024[3] - The company reported net earnings of $509 million for Q1 2025, down from $653 million in Q4 2024[3] - Basic net earnings per share were $0.77 in Q1 2025, compared to $0.98 in Q4 2024[3] - Net financing costs for Q1 2025 were $123 million, consistent with Q4 2024, and up from $76 million in Q1 2024[6] - Total income tax expense for Q1 2025 was $137 million, a decrease from $187 million in Q4 2024 and $239 million in Q3 2024[7] - Devon's net earnings for Q1 2025 were $509 million, with core earnings (non-GAAP) at $794 million, translating to $1.21 per diluted share[23] - EBITDAX (non-GAAP) for Q1 2025 was $2.086 billion, reflecting a net debt-to-EBITDAX ratio of 1.0[29] - Free cash flow (non-GAAP) for Q1 2025 was $1.008 billion, with total operating cash flow at $1.942 billion[31] Production and Sales - Oil, gas, and NGL sales amounted to $3.12 billion in Q1 2025, compared to $3.08 billion in Q4 2024[3] - Total production in Q1 2025 was 388 MBoe/d, a decrease from 398 MBoe/d in Q4 2024[11] - Production guidance for Q2 2025 includes oil at 381-387 MBbls/d and total oil equivalent at 810-828 MBoe/d[35] Expenses and Capital Expenditures - Production expenses totaled $912 million in Q1 2025, up from $881 million in Q4 2024, reflecting a 3.5% increase[5] - Lease operating expenses increased to $479 million in Q1 2025, compared to $445 million in Q4 2024, marking a 7.6% rise[5] - Capital expenditures in Q1 2025 were $934 million, slightly higher than $926 million in Q4 2024[10] - Total capital expenditures for Q1 2025 amounted to $964 million, an increase from $926 million in Q4 2024[12] - Upstream capital expenditures reached $908 million in Q1 2025, compared to $872 million in Q4 2024, reflecting a 4.1% increase[12] - The company plans to increase capital expenditures by 10% in 2025 to support new projects and technology advancements[3] - Upstream capital expenditures guidance for 2025 is set between $3.475 billion and $3.625 billion[36] Debt and Equity - The net debt-to-EBITDAX ratio was reported at 1.5x, indicating a stable leverage position[3] - Total debt as of Q1 2025 was $8.880 billion, with net debt (non-GAAP) at $7.646 billion after accounting for cash and cash equivalents[27] - Long-term debt remained stable at $8,395 million in Q1 2025 compared to $8,398 million in Q4 2024[9] - Total stockholders' equity attributable to the company increased to $14,545 million in Q1 2025 from $14,496 million in Q4 2024[9] Cash Flow and Assets - Net cash from operating activities for Q1 2025 was $1,942 million, up from $1,664 million in Q4 2024[10] - Cash, cash equivalents, and restricted cash at the end of Q1 2025 were $1,234 million, up from $846 million at the end of Q4 2024[10] - Total current assets increased to $3,905 million in Q1 2025 from $3,427 million in Q4 2024, driven by higher cash and accounts receivable[9] Market and Pricing - Realized price for oil in the Delaware Basin was $70.28 per barrel in Q1 2025, slightly up from $69.06 in Q4 2024[17] - The realized price for natural gas in the Delaware Basin was $2.47 per Mcf in Q1 2025, significantly higher than $1.01 in Q4 2024[17] - Field-level cash margin in the Delaware Basin was $31.13 per barrel in Q1 2025, up from $28.90 in Q4 2024[19] Hedging and Guidance - Devon has hedged 15,000 Bbls/d at an average price of $72.18 for Q2 2025[40] - Q2 2025 natural gas price swaps volume is 342,000 MMBtu/d at an average price of $3.36/MMBtu[42] - Oil price realizations guidance for Q2 2025 is projected at 95%-99% of WTI[37] - Current income tax rate guidance for Q2 2025 is estimated between 14% and 16%[39]

Core Viewpoint - Devon Energy Corp. reported its financial and operational results for Q1 2025, declared its quarterly dividend, and provided an updated outlook for 2025 [1] Financial Results - The company’s earnings release, supplemental financial tables, guidance, and related earnings presentation are available on its Investor Relations website [1] Conference Call - A conference call for Q1 results will take place on May 7, 2025, at 10:00 a.m. Central time, primarily for analyst and investor Q&A [2] Company Overview - Devon Energy is a leading oil and gas producer in the U.S. with a diversified multi-basin portfolio, particularly noted for its position in the Delaware Basin [3] - The company employs a disciplined cash-return business model aimed at achieving strong returns, generating free cash flow, and returning capital to shareholders while maintaining safe and sustainable operations [3]