Is Devon Energy Stock a Buy Now?

Core Viewpoint - Devon Energy is considered an attractive stock for investors with a long-term optimistic outlook on oil and gas, particularly due to its operational progress and integration of the Grayson Mill acquisition [2][5]. Production and Financial Performance - In Q4, Devon Energy achieved total oil and gas production of 848,000 barrels of oil equivalent per day (BOE/D), exceeding prior estimates of 811,000 to 830,000 BOE/D [2]. - The outperformance was attributed to better well productivity in the Eagle Ford assets and a contribution of 117,000 BOE/D from the Grayson Mill acquisition, surpassing the previous estimate of 110,000 BOE/D [3]. - Management raised its 2025 production guidance by 2% to a range of 805,000 to 825,000 BOE/D, projecting free cash flow (FCF) of over $3 billion at an oil price of$70 per barrel, which represents 12.3% of its market cap of approximately $24.4 billion [4]. Capital Allocation and Dividend Policy - Devon Energy's capital allocation plan allocates 30$800 million to $1.2 billion of the potential$3 billion in FCF on share buybacks, with a fixed dividend costing approximately $620 million in 2025 and$900 million earmarked for balance sheet improvements [9][10]. Strategic Outlook - Management believes that integrating Grayson Mill with existing assets will yield additional cost savings and enhance operational efficiency through continued investment in multizone projects in the Permian region [5]. - The focus for 2025 appears to be on debt repayment and share repurchases rather than a variable dividend, with $1.5 billion of its$8.9 billion debt maturing in 2025 and 2026 [10]. - The capital allocation strategy is viewed positively, as it is expected to reduce share count and interest payments, leading to increased cash flow per share for investors in the future [11].