Oklahoma City’s Devon Energy reported third quarter net earnings of $2.5 billion or $5.14 per diluted share.
Adjusted cored earnings came to $324 million or 65 cents a share, more than the estimates of analysts. The company stated that it’s operating cash flow totaled $807 million or 61 percent more than the third quarter of 2017.
As a result, the operating cash flow fully funded Devon’s total capital investments and also generated $249 million of free cash flow in the quarter.
Some of the cash flow also came from Devon’s divestiture of EnLink and other assets which produced $3 billion in the quarter. Devon stated that its total proceeds from its divestiture program have now reached $4.7 billion and the company anticipates it to reach $5 billion by the end of the year.
“Devon continued to execute at a high level on its U.S.-focused growth initiatives,” said Dave Hager, president and CEO. “Our third-quarter performance was highlighted by improving well productivity and capital efficiency that drove U.S. production above the high end of guidance with a total capital investment well below forecast.”
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’s production averaged 522,000 oil-equivalent barrels a day for the quarter. Its oil and natural gas liquids volumes were up 67 percent of the product mix.
Third-quarter production was highlighted by results from Devon’s U.S. resource plays, which are attaining the highest returns in the company’s portfolio. U.S. production averaged 418,000 Boe per day in the quarter, exceeding the company’s third-quarter guidance range, adjusted for asset sales, of 398,000 to 417,000 Boe per day.
Within Devon’s diversified U.S. portfolio, the strongest asset-level performance was achieved by the company’s Delaware Basin operations in southeast New Mexico. Oil production from this world-class asset increased 45 percent year over year, driving volumes in the Delaware to 79,000 Boe per day. A key driver of growth was seven prolific Wolfcamp wells around the state-line area that averaged initial 30-day rates of 4,000 Boe per day per well.
Devon’s Eagle Ford assets in south Texas also delivered strong results, with production advancing 12 percent compared to the second quarter of 2018. The growth was driven by 20 high-rate wells brought online during the quarter that averaged initial 30-day rates of approximately 3,000 Boe per day per well.
With the strong well productivity Devon has achieved year to date in the U.S., light-oil production growth from retained assets is on track to advance 17 percent in 2018. This growth rate is trending at approximately 200 basis points above the company’s original budget expectations, adjusted for asset sales.
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