Devon reports strong earnings and increased oil production in 3Q

Oklahoma City’s Devon Energy reported 2019 third quarter net earnings of $109 million or 27 cents a diluted share along with a 22 percent increase in cash flow, resulting in an increase in the full year 2019 guidance for the company.

Core earnings were $103 million or 26 cents a share while the operating cash flow totaled $597 million which was a 22 percent increase over the second quarter flow.

The company also stated its third-quarter oil production increased compared to a year ago. Total net production from Devon’s retained assets averaged 325,000 oil-equivalent barrels (Boe) per day during the third quarter. Oil production averaged 148,000 barrels per day, a 19 percent increase from the same period a year ago. This result exceeded the company’s midpoint guidance by 3 percent or 4,000 barrels per day due to strong well productivity and timing of completions in the Delaware Basin.

The company predicts its fourth quarter production should average 154,000 to 160,000 barrels a day or six percent higher than the third quarter. For the year, Devon leaders believe oil growth will be 20 to 21 percent higher for 2019 over 2018.

“The third quarter featured exceptional execution across all aspects of our strategic plan reflecting our unwavering commitment to deliver attractive financial returns, improve capital efficiency and grow shareholder distributions,” said Dave Hager, president and CEO.

Upstream revenues total $1.1 billion for the third quarter and the company’s realized price including commodity hedges was $27.72 per Boe compared with $27.85 per Boe in the second quarter. The drop was the result of lower crude, natural gas and natural gas liquids pricing.

Through Oct. 31, 2019, Devon had repurchased 147 million shares, or approximately 28 percent of outstanding shares since 2018, at a total cost of $4.8 billion, under its $5 billion authorization. In the third quarter, the company completed $550 million of share repurchases and returned $35 million of additional capital to shareholders through its quarterly dividend.

Devon had net production of 121,000 Boe a day in Oklahoma’s STACK and brought online 16 wells in the quarter with 30-day rates averaging 1,600 Boe a day. The firm said the infill development projects which are spaced at 4 to 6 wells a unit are “exceeding well productivity expectations.” The STACK assets are projected to generate $370 million of free cash flow in 2019. However, the company’s overall activity in the STACK declined in the third quarter.

Devon saw net production in the Delaware Basin of 127,000 Boe a day which was 59 percent higher than the third quarter of 2018. The biggest contributor, according to the company’s announcement was new well activity in the Leonard Shale. Devon brought online 15 Leonard wells in the quarter with an average 30-day production rate of 2,200 Boe per day.

Production in the Powder River Basin averaged 25,000 Boe a day which was 33 percent higher than a year ago. Eighteen new wells were brought on line in the Parkman, Teapot, Turner and Niobrara formations.

Devon also has started production on 8 successful Niobrara appraisal wells in its 200,000 net acre position in the oil fairway of the play. The company intends to accelerate Niobrara appraisal activity in 2020.

In the Eagle Ford, Devon reports its third quarter net production was 45,000 Boe a day. But the company did not bring online any new wells in the third quarter. However, the firm plans to bring online more than 25 Eagle Ford Wells in the fourth quarter.

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