Not only did Devon Energy record operating cash flow of $1.7 billion in the first quarter, its oil production also reached an all-time high of 320,000 barrels a day during the period. It also decided to increase its share buyback by 50%.
One of the highlights of the company’s oil production was its Exotic Cat Raider project that achieved per-well rates as high as 7,200 Boe a day.
Devon reported net earnings of $995 million, or $1.53 per diluted share, in the first quarter of 2023. Adjusting for items analysts
typically exclude from estimates, the company’s core earnings were $952 million, or $1.46 per diluted share.
Free cash flow during the quarter reached $665 million and the company declared a dividend payout of 72 cents a share. It also accelerated its share buyback activity with $692 million in repurchases year-to-date. The company decided to increase its share-repurchase by 50% to $3 billion.
“Devon’s strong financial performance in the first quarter was fueled by record-setting oil production and effective cost management across the portfolio,” said Rick Muncrief, president and CEO.
“This solid operational execution, combined with low reinvestment rates, has allowed Devon to generate free cash flow for 11 consecutive quarters across a variety of market conditions. This success showcases the durability of our business model to
consistently create value through the cycle.”
At the end of the first quarter, the company had a cash balance of $887 million and an undrawn credit facility of $3 billion.
Outstanding debt totaled $6.4 billion and the company’s net debt-to-EBITDAX ratio was 0.6 times.
Oil production averaged 320,000 barrels per day in the first quarter, exceeding midpoint guidance by 2,000 barrels per day. This record-setting oil volume performance was driven by better-than-forecasted results across the company’s diversified portfolio. Total production for the first quarter averaged 641,000 oil-equivalent barrels (Boe) per day.
Devon’s total capital spending, excluding acquisitions, was $988 million in the first quarter. This level of investment was in range with guidance expectations, reflecting improvements in service-cost price stability and availability.
Production costs averaged $12.02 per Boe, a 2 percent reduction compared to the previous quarter. The improved cost structure was driven by lower production taxes, resulting in field-level cash margins of $34.42 per Boe in the first quarter.
Delaware Basin: Production increased 5 percent year over year to an average of 415,000 Boe per day (51 percent oil). During
the quarter, Devon operated 16 rigs and 4 completion crews, resulting in 42 gross wells placed online across the company’s
400,000 net acres in the basin.
Capital activity from the quarter was headlined by the Exotic Cat Raider development within the company’s Todd area in Lea
County, New Mexico. This 3-mile lateral project, consisting of 6 wells drilled in the Upper Wolfcamp formation, exceeded predrill expectations with 30-day rates reaching as high as 7,200 Boe per day. Per-well recoveries from this high-impact development are currently on track to surpass 2 million BOE.
Another key operational event in the quarter was the successful restart of the company’s Stateline compressor station 8. This
compressor facility has resumed operations and downtime associated with this temporary outage has been confined to the
first quarter. The company also recently commenced operations at its Stateline compressor station 10, providing even more
flexibility in this area of the basin going forward.
Eagle Ford: Production averaged 68,000 Boe per day (59 percent oil), a 90 percent increase in production compared to the
year-ago quarter. This volume growth was driven by the Validus acquisition and the commencement of 26 gross wells to first
production. Over the remainder of 2023, Devon plans to place online an additional 65 infill wells and execute up to 10 refracs
across its 82,000 net acre position.
Anadarko Basin: Production increased by 5 percent from the previous quarter to an average of 81,000 Boe per day (49 percent
gas). In the first quarter, Devon placed 7 wells online and spud 19 new wells supported by a $100 million drilling carry with
Dow. The top well result for the quarter was the Hornet 9 16-14N 2HX, targeting the Meramec formation, that achieved a 30-
day rate of 4,000 Boe per day (57 percent liquids). In 2023, the company expects to spud up to 40 new wells in this basin.
Williston Basin: Production averaged 53,000 Boe per day (67 percent oil), a 10 percent increase year over year. First-quarter
results were highlighted by the 4-well Palo Pinto project that achieved average 30-day rates of 2,900 Boe per day. This highmargin asset remains on track to bring online 40 development wells in 2023 and harvest approximately $700 million of cash flow for the year.
Powder River Basin: Production increased 7 percent year-over-year to an average of 19,000 Boe per day (75 percent oil). This
growth was primarily driven by successful Niobrara appraisal and Parkman development work over the past year. The company
possesses 300,000 net acres in the oil fairway of this emerging resource opportunity.
For the full-year 2023, Devon has not made any modifications to its previously announced plan to sustain production in the
range of 643,000 to 663,000 Boe per day. Additionally, total capital investment for the year remains at an expected range of
$3.6 billion to $3.8 billion. These capital requirements in 2023 are estimated to be self-funded at pricing levels as low as a $40
WTI oil price.