Devon repeats strong quarterly gains with increased oil production


The cash keeps rolling in for Devon Energy, thanks to increased oil production and leaders aren’t backing off their efforts to grow production for the remainder of the year.

Devon Energy Corp. repeated its record $1.7 billion cash flow from operating ativities  in the first quarter of the year as it  reported financial and operational results.

The $1.7 billion also proved to be the highest quarter for cash flow when the company finished its 2023 fiscal year. The first quarter results allowed Devon to repurchase 4.7 million shares of common stock at a total cost of $205 million.

During the quarter, Devon saw a 4% increase in production as it averaged 664,000 oil-equivalent barrels a day. There was a 5% gain in production in the Delaware Basin compared to the first quarter of 2023.  As a result of the increased production, it strengthened Devon’s balance sheet with cash balances increasing by $274 million to a total of $1.1 billion.

“By all measures, Devon delivered an outstanding set of results in the first quarter that demonstrated the comprehensive execution
we achieved across every element of our disciplined strategy,” said Rick Muncrief, president and CEO.

“Based on the impressive operating momentum we have established year to date, we have raised our second quarter and full-year 2024 guidance.”

Devon reported net earnings of $596 million, or $0.94 per diluted share, in the first quarter of 2024. Adjusting for items analysts
typically exclude from estimates, the company’s core earnings were $730 million, or $1.16 per diluted share.

Devon’s operating cash flow totaled $1.7 billion in the first quarter, a 4 percent increase versus the year-ago period. This level of cash flow funded all the company’s capital requirements and resulted in $844 million of free cash flow for the quarter.

Based on the first quarter financial performance, Devon declared a fixed-plus-variable dividend of $0.35 per share, payable on
June 28, 2024, to shareholders of record at the close of business on June 14, 2024. The dividend payout consists of the fixed
dividend at $0.22 per share and a variable distribution of $0.13 per share.

Devon’s capital activity in the first quarter averaged 24 operated drilling rigs and 7 completion crews across its asset portfolio. This
level of activity resulted in 102 gross operated wells being placed online, with an average lateral length of 9,300 feet.

Results were driven by better-than-planned well productivity, cycle time improvements that brought forward activity and the easing of infrastructure constraints in the Delaware Basin. Devon’s oil production totaled 319,000 barrels per day in the quarter, which was 48 percent of total volumes.

Upstream capital spending was at the bottom end of the company’s guidance range in the first quarter totaling $842 million. This
represents a 3 percent decrease in upstream spending compared to the fourth quarter of 2023. Midstream, carbon and corporate
capital totaled $95 million in the quarter.
Devon’s first quarter operating performance was driven by its Delaware Basin asset, which accounted for 66 percent of companywide volumes at 437,000 Boe per day. This production result represents a growth rate of 5 percent compared to the year-ago period, driven by 59 gross operated wells being placed online during the quarter.

Average 30-day production rates from this activity reached
3,200 Boe per day, representing a 20 percent-plus improvement in well productivity versus the year ago period.

Based on the strength of first quarter results, Devon is increasing its full-year 2024 production forecast by 2 percent to a range of
655,000 to 675,000 Boe per day. This incremental production in 2024 is expected to be delivered without an increase in capital
spending. The company expects to deliver this improved production outlook with capital spending in a range of $3.3 billion to $3.6 billion, a 10 percent decline versus 2023.

Due to the addition of a fourth Delaware completion crew in January, the company’s capital program in 2024 is expected to be
weighted towards the first half of the year. As a result of this activity timing, second quarter production is expected to increase
to a range of 670,000 to 690,000 Boe per day and capital spending is estimated to approximate $950 million for the quarter.