Devon Energy CEO on ability to survive—“exceptionally strong”

 

As Devon Energy reported $92 million net loss in the third quarter of the year, it still had a strong cash flow—strong enough that CEO Dave Hager says the company is capable of staying strong financially in the current economic operating environment. Even with $33 a barrel hedging.

Devon’s adjusted core loss was brought down to $12 million or 4 cents a diluted share, prompting Hager to recently tell investors, “The company’s financial position continues to remain exceptionally strong with excellent liquidity and low leverage.”

Indeed, Devon came out of the third quarter with $1.9 billion in cash, prompting Hager to emphasize the company’s optimism about its ongoing merger with Tulsa-based WPX Energy.

“The first true merger of equals within the E & P space in nearly two decades.”

He described it as a merger with an asset base underpinned by a premium position in the economic core of the Delaware Basin. Hager claimed it will result in immediate cost synergies, higher free cash flow and the financial strength to accelerate the return of cash to shareholders.

Hager wouldn’t offer any possible changes to the company’s 2021 guidance but he stressed that an emphasis on cost reduction and protection of production will be obvious. He also said the company will be able to fund its maintenance capital program “at an ultra low breakeven level of $33 WTI pricing, if not lower with the leading edge results we are achieving in the Delaware.”

The formalized guidance for the coming year won’t be released until the merger with WPX is completed.