Devon Energy’s first quarter earnings came in better than analyst expectations and it was a result of strong oil production and cost management by the Oklahoma City energy company. At the same time, Devon raised its full-year production forecast and lowered capital expenditure guidance.
First quarter earnings for Oklahoma City’s Devon Energy actually came in below its fourth quarter earnings 2024, according to the financial report released Tuesday. But the company recorded a large gain in operating cash flow and a gain in oil, gas and NGL sales.
Devon reported it delivered $494 million of net earnings or 77 cents a share along with $779 million of core earnings or $1.21 a share. It compared to the fourth quarter 2024 net earnings of $639 million and 98 cents a share and $756 million in core earnings or $1.16 a share.
In the fourth quarter, Devon generated $1.7 billion of operating cash flow and $738 million of free cash flow but in the most recent quarter, the company had $1.9 billion in operating cash flow. It represented a 17% increase over the previous quarter. But the company also saw a 1% gain in revenues from oil, gas and NGL sales compared to the previous quarter.
“Devon delivered a strong first quarter, driven by operating excellence and financial discipline,” said Clay Gaspar, president and CEO.
“Oil production once again exceeded our expectations driven by robust base performance and exceptional well results across our
assets. This resulted in significant free cash flow, with $464 million returned to shareholders through dividends and share buybacks.”
He said Devon’s recently announced business optimization plan is on track to deliver $1 billion in annual pre-tax free cash flow improvements by the end of 2026.
“We are pulling forward some progress into this year and are cutting 2025 full year capital by $100 million while maintaining our productive capacity for the remainder of the year. With this, our team has already secured the majority of our 2025 year-end target. We have clear visibility into the remaining goals, and I am confident in our ability to execute this plan effectively,” Gaspar added.
During the quarter, Devon’s investment-grade financial position strengthened with cash balances increasing by $388 million to a total of $1.2 billion. The company ended the quarter with outstanding debt of $8.9 billion and a net debt-to-EBITDAX ratio of 1.0 times.
RETURN OF CAPITAL
Devon declared its fixed quarterly cash dividend of $0.24 per share, payable on Jun. 30, 2025, to shareholders of record at the close of business on Jun. 13, 2025.
Devon also returned capital to shareholders through the ongoing execution of its $5.0 billion share-repurchase program. During the
first quarter, the company repurchased 8.5 million of its shares for $301 million. Since the inception of the share repurchase program, the company has repurchased 77.5 million shares, at a total cost of $3.6 billion.
OPERATING RESULTS
Devon’s capital activity in the first quarter averaged 23 operated drilling rigs and 6 completion crews across its asset portfolio. This
level of activity resulted in 136 gross operated wells being placed online, with an average lateral length of 10,700 feet. Total capital
investment was $964 million, or 5 percent below guidance.
The company said the positive variance was attributable to effective cost management and lower infrastructure spend primarily in the Delaware Basin. Devon’s oil production in the first quarter reached 388,000 barrels per day, exceeding guidance by 5,000 barrels. This positive result was driven by strong base performance in the Rockies and better-than-expected well performance in the Eagle Ford. Total companywide production averaged 815,000 oil-equivalent barrels (Boe) per day.
For the first quarter, Devon’s oil, gas and NGL sales totaled $3.1 billion, a 1 percent increase in revenues compared to the prior
quarter. The company’s realized price during the period, including commodity hedges, was $42.45 per Boe, up $2.13 per Boe from prior quarter. The improvement was primarily due to higher natural gas liquids (NGL) and natural gas pricing. Natural gas
pricing benefited from improved basin differentials primarily in the Delaware.
Production costs, including taxes, averaged $12.42 per Boe in the first quarter. The largest component of production costs is lease
operating expense and gathering, processing and transportation costs, which totaled $9.31 per Boe in the quarter.
In the first quarter, Devon divested two corporate real estate assets that resulted in a total impairment of $254 million and sale
proceeds of $120 million. As a result of these transactions, Devon’s annual DD&A will decrease by approximately $15 million,
and its run-rate financing costs will be reduced by $20 million from the extinguishment of an associated financing lease.
PORTFOLIO UPDATES
On Apr. 1, 2025, the company closed its previously announced Eagle Ford partnership dissolution. Upon close, Devon holds
approximately 46,000 net acres with greater than a 95 percent working interest and operatorship in the Blackhawk Field.
On May 5, 2025, Devon agreed to sell its equity interest in the Matterhorn Pipeline for approximately $375 million. The
transaction is subject to customary terms and conditions and is expected to close in the second quarter of 2025. Proceeds from
the divestiture will be used to further strengthen the company’s investment-grade financial position. The monetization of Devon’s equity ownership will not change the terms or conditions of the company’s secured capacity on the pipeline.
2025 OUTLOOK
Based on the strength of first quarter results, Devon is increasing its full-year 2025 oil production forecast by 1 percent to a range of 382,000 to 388,000 barrels per day. The company is also increasing its total production outlook and now expects volumes to be in the range of 810,000 to 828,000 Boe per day.
Devon has also revised its full-year capital guidance to a range of $3.7 billion to $3.9 billion, down from the previous estimate of approximately $3.9 billion. This $100 million reduction reflects the early success of the company’s recently launched business optimization plan.
In the second quarter of 2025, Devon expects oil production to average 381,000 to 387,000 barrels per day. Capital spending in
the second quarter is expected to be approximately $1.0 billion and includes $50 million related to multiple land trades in the
Delaware Basin that will increase interest on greater than 30 wells.
With the ongoing market and price volatility, Devon will continue to monitor the macro environment and has significant flexibility to adjust its activity and capital programs. Given the company’s investment grade financial position along with low breakeven funding levels, Devon is well positioned to execute on its disciplined plan.
Additional details of Devon’s forward-looking guidance are available on the company’s website at www.devonenergy.com