Devon—it’s all about commitment to shareholders

Devon's Muncrief—just getting started - Oklahoma Energy Today


With historic cash flow reported in the 4th quarter for Oklahoma City’s Devon Energy, one thing is clear…the company’s commitment to its shareholders.

It was repeated during this week’s conference call by Rick Muncrief, President and CEO who addressed investors and reporters.

‘I want to be clear that there’s no change to our disciplined strategy,” he declared. “At Devon, we are driven by per share value creation, not the pursuit of produced volumes.”

He went on to explain the company has designed, for the upcoming year, a consistent capital program to sustain production, deliver high returns on capital employed and generation of significant free cash flow that can be harvested for shareholders.

However, I want to be quick to add that we are not just a high-yielding dividend story, we are also compounding per share growth for investors through the execution of our $2 billion share repurchase program. By upsizing this buyback authorization twice during the year, we reduced our outstanding share count by 4% since program inception and security shares as a substantial discount to current trading levels.”

Devon expects to build on its oil and gas production throughout the remainder of the year. It plans to reach an average of 643,000 to 663,000 BOE a day for the full year and half of that is oil.

“Combined with the tailwinds from share repurchases and our two well-timed acquisitions,” said Muncrief, “our volumes on a per share basis are on track to deliver an attractive high single-digit growth rate once again in 2023.”

The capital investment required for the production growth is expected to range from $3.6 billion to $3.8 billion he told investors during the conference call.

Devon already saw production per share advance by 9% year-over-year and Muncrief said the growth resulted from a combination of record oil production that more than doubled since 2020 and accretive acquisitions and timely stock buybacks.

Devon’s first quarter production, once it’s revealed could be lower largely due to some infrastructure downtime in the Delaware Basin. Muncrief said it was due to a temporary outage of a compressor station and some minor third-party midstream interruptions. The outages could limit first quarter volumes by about 10,000 BOE a day.

But he is also optimistic the problems will be resolved and operations will resume by the end of the quarter.

“The key takeaway here is that while our first quarter production will be held back a bit due to timing of activity and infrastructure, we do expect volumes to fully recover and increase over the remaining few quarters of 2023 to an average of roughly 660,000 BOE per day,” said Muncrief.

“So in summary, since we first unveiled the industry’s very first cash return pointing mark in late 2020, we have created tremendous amount of value for our shareholders. 2021 was a great year. 2022 was one for the record books and 2023 is shaping up to be another excellent year for Devon.”