Robust oil production helped Oklahoma City-based Devon Energy add $776 million to its operating cash flow but the company is moving ahead with plans to unload billions of dollars in assets in the coming year.
CEO Dave Hager says they’re looking for higher returns for shareholders as they push to meeting a $1 billion divestment goal set in May. As of the end of October, the company had sold $420 million in assets since July and Hager says in 2018, the company will work to a goal of operating on less capital expenditures and reducing debt.
“First and foremost, our capital program is being designed to optimize returns, not production growth,” Hager said on an earnings call. “We fully acknowledge that our industry, in general, has not delivered acceptable returns and I would include Devon in that. That’s what this effort is all about.”
He went on to explain details of the “2020 Vision” in mind for Devon as the firm focuses on “top-tier returns” for investors. As the company explained in its 3rd Quarter report, it cut nearly $10 million from its lease operating expenses compared to the second quarter. The report indicated the company was on pace to cut costs by an annualized $1.4 billion by the end of the year.
Devon’s report said its financial strength will be enhanced by proceeds from the ongoing divestiture program. It explained the most significant asset remaining within the divestiture program was select leasehold within the Barnett Shale focused primarily in Johnson County. Initial bids are expected in the fourth quarter.
