Devon Energy Corp. reported a net loss of $102 million or 27 cents per diluted share in the fourth quarter of 2020, according to the earnings report released Tuesday following the close of markets. The company’s CEO also made it clear Devon won’t finance any expansion projects for now.
During the quarter, Devon also finalized its merger with WPX energy.
The company said adjusting for items analysts typically exclude from estimates, Devon’s core earnings were $0.00 per diluted share. Its operating cash flow totaled $773 million for the quarter, enough to fund all capital requirements and generate $263 million of free cash flow for the combined company.
On a pro forma basis, the company exited the fourth quarter with $2.6 billion of cash and a debt balance of $7.9 billion.
Subsequent to year-end, Devon elected to redeem $43 million of senior notes that were due in 2022, positioning the company with no debt maturities until the second half of 2023.
Devon said its pro forma oil production exceeded guidance by 5% in the fourth quarter, well productivity and capital efficiency gains were made in the Delaware Basin and production expense improved 14% year over year.
“The power of Devon’s portfolio and strategy was clearly evidenced by our strong financial and operating performance in the quarter,” said Rick Muncrief, president and CEO.
The increased cash returns resulted in Devon declaring an industry-first variable dividend of 19 cents a share.
With crude oil prices in the U.S. closing at more than $60 a barrel in Tuesday’s trading, the company leader also had words of caution.
“And while the recent uptick in commodity prices is certainly a welcomed change, Devon will remain extremely disciplined,”
Muncrief added. “With our capital program, we have no intention of adding growth projects until demand fundamentals recover
and worldwide inventory overhangs clear up.”
Devon reported a 7% increase in oil production in the fourth quarter compared to the third quarter.
The company also commented about President Biden’s recent halt of new federal drilling permits. The company’s activity in the Permian Basin of Southeast New Mexico was noted as Devon brought 23 wells online in the region and their initial 30-day production rates averaged 3,200 Boe per day and 70% was oil.
The company secured more than 500 federal drilling permits before Biden announced his permitting freeze.
“This proactive planning has prepared the company for the recent directive from the Department of Interior that suspended leasing, permitting, and right of way approvals for 60 days on federal lands. Devon is engaging and collaborating with policymakers and does not expect any material changes to its activity on federal acreage during this 60-day period or in 2021,” stated the earnings release.
Click here to view the entire Devon release.
