Devon reports increased oil production and cash flow and increased growth expectations

With $1 billion in upstream revenue in the fourth quarter and a 28 percent year-over-year increase in oil production, Oklahoma City’s Devon Energy on Tuesday declared a 22 percent increase in its quarterly dividend reaching 11 cents.

The company’s fourth quarter results showed its operating cash flow expanded year over year to $579 million while the quarter’s cash flow generation accelerated to $171 million.

“Devon’s transformation to a U.S. oil business is now complete and the operating performance we achieved in 2019 showcases the world-class capabilities of our highly focused asset portfolio,” said Dave Hager, president and CEO. “A consistent theme throughout 2019 was the steady improvement in well productivity and capital
efficiency that drove oil production above guidance for four consecutive quarters while keeping our total capital investment below forecast.”

As a result, 2020 per-share growth expectations were raised.

“Based on our success in the Delaware Basin, we now expect
operational efficiencies to drive Devon’s oil growth rates higher with lower capital requirements. This improved operating outlook supports our announcement to increase the dividend by 22 percent and our new $1 billion share repurchase program.”

Total net production from Devon’s retained assets averaged 340,000 oil-equivalent barrels (Boe) per day during the fourth quarter. Oil production averaged 160,000 barrels per day, a 28 percent increase from the same period a year ago. This result exceeded the company’s midpoint guidance by 3,000 barrels per
day due to strong well productivity and timing of completions in the Delaware Basin.

The company’s upstream capital spending in the fourth quarter was $373 million, or 6 percent below midpoint guidance.

The company’s upstream revenue, excluding commodity derivatives, totaled $1.0 billion in the fourth quarter. This represents a 13 percent increase in revenue compared to the third quarter of 2019. The increase in upstream revenue resulted from growth in higher-value oil production and improved
commodity price realizations for all products produced.

Devon’s lease operating expense (LOE) totaled $251 million in the fourth quarter. The expenses were down 17 percent compared to the fourth quarter a year ago.

Devon’s general and administrative cost improved 21 percent in the fourth quarter to $119 million and helped the company to exit 2019 with nearly $240 million of annualized run-rate savings compared to 2018.

The company exited the fourth quarter with $1.8 billion in cash and an undrawn credit facility of $3 billion. At year’s end, Devon’s total debt outstanding was $4.3 billion.

In the fourth quarter, Devon entered into an agreement to sell its Barnett Shale assets for $770 million. With this transaction, combined with the exit from Canada early in the year, Devon has now completed its transformation to a U.S. oil growth business.

It also has enhanced the company’s repurchasing of 147 million shares or nearly 28 percent of outstanding shares since 2018 at a total cost of $4.8 billion. Devon’s board also okayed a new $1 billion share-repurchase program.

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Source: Devon Energy release