Oklahoma City-based Devon Energy Corporation’s plan for growth is proving to be highly successful as the company posted $425 million in net earnings for the second quarter of 2017, up from a loss of more than $1.5 billion for the same quarter last year.
“Devon achieved another high-quality operating performance in the second quarter, building operational momentum in our U.S. resource plays and accelerating efficiency gains across our portfolio,” said Dave Hager, president and CEO. “These successful efforts resulted in record-setting well results that drove our U.S. oil production above guidance expectations with a capital investment that was 17 percent below our budget year to date. As a result of this strong capital efficiency, we are lowering our full-year capital outlook by $100 million and, importantly, we have not made any changes to our planned activity levels in 2017.”
“Given our advantaged asset base and ability to deliver best-in-class well results, we remain well positioned to deliver value and returns on our capital investments as we navigate industry conditions,” said Hager. “With our ability to deliver attractive returns in this environment, our top strategic priorities are to maintain operational momentum in our U.S. resource plays, organically fund our capital investment and further improve our investment-grade financial strength.”
Oil accounted for the largest component of the company’s product mix at 44 percent of total volumes.
Devon’s total production exceeded its midpoint guidance by 6,000 oil-equivalent barrels (Boe) per day during the second quarter of 2017 to average 536,000 Boe per day, according to a company press release.
The majority of Devon’s production was attributable to its U.S. resource plays, which averaged 412,000 Boe per day during the second quarter. The company heralded nine high-rate development wells in the STACK and Delaware Basin that achieved initial 30-day rates averaging nearly 2,000 Boe per day.
In the third quarter, Devon expects total oil production to range between 234,000 and 244,000 Boe per day. A maintenance event at Jackfish 2, completed over a three-week period in July, is expected to diminish production by approximately 15,000 Boe per day during the third quarter.
Devon has also lowered its 2017 capital outlook by $100 million. Based on the company’s strong performance driven by drilling and completion efficiency gains in the STACK and Delaware Basin coupled with supply chain initiatives that have offset industry inflation, Devon now expects E&P capital investment to range from $1.9 billion to $2.2 billion in 2017. The company remains on track to increase to 20 working rigs by the end of 2017.
Devon continued to improve the company’s financial strength through its previously announced $1 billion divestiture program. In aggregate, Devon’s divestiture program will include nearly 35,000 Boe per day (approximately 30 percent liquids) from select Barnett Shale and Eagle Ford leaseholds, along with other domestic non-core assets.
In July, Devon announced the sale of its non-core Lavaca County assets in the Eagle Ford for $205 million. The sale is expected to close by the end of 2017. Devon has sold $340 million in assets or nearly one-third of its divestiture target.
Devon is actively marketing its Johnson County properties in the Barnett Shale. This divestiture is expected to contribute to the $1 billion non-core divestiture program over the next year.