Devon Energy reported second quarter earnings of $899 million or $1.41 per share and $536 million of core earnings, or $0.84 per share that were nearly double of what was reported in the first quarter when it totaled $494 million or $0.77 per share.
With 21 operating rigs and 6 completion well units, the Oklahoma City energy company’s total oil, gas and NGL sales totaled $2.7 billion. The second quarter performance was so strong, Devon decided to increase its full-year 2025 oil production forecast to a range of 384,000 to 390,000 barrels per day.
How strong was its production? Devon achieved production of 841,000 oil equivalent production (Boe) per day, exceeding the top-end of guidance and averaged 387,000 barrels per day of oil production, exceeding midpoint guidance.
Plus, Devon is boosting its investments in natural gas production with the announcement of two new agreements to further diversify its natural gas marketing portfolio. The first agreement, effective in 2028, will supply 50 MMcf per day for LNG exports over a 10-year term, with pricing indexed to international markets.
Additionally, the company has entered into a gas sale agreement with CPV Basin Ranch Energy Center, to support its proposed
1,350 MW combined-cycle natural gas power plant. Expected to begin in 2028, Devon will provide 65 MMcf per day over a
seven-year term with pricing indexed to ERCOT West.
“In the second quarter, we delivered exceptional results exceeding our production guidance with 841,000 Boe per day,” said Clay
Gaspar, president and CEO.
“We generated $1.5 billion in operating cash flow and $589 million in free cash flow, with capital investments 7 percent below guidance. Our disciplined capital allocation approach supported robust returns to shareholders through dividends and share repurchases, while strengthening our balance sheet and ending the quarter with $1.8 billion in cash.”
He said the business plan at Devon is positioning it to achiee $1 billion in annual pre-tax free cash flow by the end of 2026.
“For the second consecutive quarter, we reduced 2025 capital by $100 million while raising production forecasts, further strengthening our free cash flow trajectory. Our team’s innovation and commitment ensure we are well-equipped to navigate price volatility, adapt to market trends, and maximize returns for shareholders,” Gaspar added.
FINANCIAL RESULTS
Devon reported net earnings of $899 million, or $1.41 per diluted share, in the second quarter of 2025. Adjusting for items analysts
typically exclude from estimates, the company’s core earnings were $536 million, or $0.84 per diluted share.
Operating cash flow totaled $1.5 billion in the second quarter, which funded all the company’s capital requirements and resulted in $589 million of free cash flow for the quarter. In addition to this free cash flow, Devon received $372 million in proceeds from the
divestiture of its equity ownership in the Matterhorn Pipeline.
During the quarter, Devon’s investment-grade financial position strengthened with cash balances increasing by $525 million to a total of $1.8 billion. The company ended the quarter with outstanding debt of $8.9 billion and a net debt-to-EBITDAX ratio of 0.9 times.
RETURN OF CAPITAL
Devon declared its fixed quarterly cash dividend of $0.24 per share, payable on Sep. 30, 2025, to shareholders of record at the close of business on Sep. 15, 2025.
The company also returned capital to shareholders through the ongoing execution of its $5.0 billion share-repurchase program.
During the second quarter, Devon repurchased 7.9 million of its shares for $249 million. Since the inception of the share repurchase program, the company has repurchased 85.4 million shares, at a total cost of $3.9 billion.
Devon Energy Tower
OPERATING RESULTS
Devon’s capital activity in the second quarter averaged 21 operated drilling rigs and 6 completion crews across its asset portfolio. This level of activity resulted in 110 gross operated wells being placed online, with an average lateral length of 10,300 feet. Total capital investment was $932 million, or 7 percent below guidance. This positive variance was primarily attributable to lower completion cost primarily in the Delaware, as wells as lower infrastructure and facilities spend, efficiency gains, and effective supply chain management across the asset portfolio.
Production averaged 841,000 Boe per day in the second quarter, exceeding the top-end of guidance. This result represents a 3
percent increase quarter over quarter driven by strong growth from the Delaware Basin. Oil totaled 387,000 barrels per day in the quarter, which was 46 percent of total volume and at the top-end of the company’s guidance range.
For the second quarter, Devon’s oil, gas and NGL sales totaled $2.7 billion. The company’s realized price during the period,
including commodity hedges, was $36.30 per Boe, compared with the prior quarter of $42.45 per Boe. The lower price
realization was primarily driven by reduced crude, natural gas, and natural gas liquids benchmark pricing. Also contributing to
the lower pricing was the expanded regional gas price differential in the Delaware Basin driven by infrastructure constraints.
Production costs, including taxes, averaged $11.75 per Boe in the second quarter, a 5 percent reduction from the prior quarter. The
largest component of production costs is lease operating expense and gathering, processing and transportation costs, which totaled
$9.17 per Boe in the quarter.
During the second quarter, Devon divested its equity interest in the Matterhorn Pipeline for $372 million, resulting in a $307 million gain and approximately $68 million of associated taxes.
On August 1, 2025, Devon acquired all outstanding noncontrolling interests in Cotton Draw Midstream (CDM) for $260 million, resulting in 100% ownership of CDM’s equity. Following this transaction, Devon will no longer distribute a portion of CDM’s cash flows to noncontrolling interest holders, resulting in approximately $50 million in annual distribution savings.
MARKETING AGREEMENTS
Devon is announcing two new agreements to further diversify its natural gas marketing portfolio. The first agreement, effective
in 2028, will supply 50 MMcf per day for LNG exports over a 10-year term, with pricing indexed to international markets.
Additionally, the company has entered into a gas sale agreement with CPV Basin Ranch Energy Center, to support its proposed
1,350 MW combined-cycle natural gas power plant. Expected to begin in 2028, Devon will provide 65 MMcf per day over a
seven-year term with pricing indexed to ERCOT West.
2025 OUTLOOK
Based on the strength of results to date, Devon is increasing its full-year 2025 oil production forecast to a range of 384,000 to 390,000 barrels per day. The company is also increasing its total production outlook and now expects volumes to be in the range of 825,000 to 842,000 Boe per day. Devon has also revised its full-year capital guidance to a range of $3.6 billion to $3.8 billion, down from the previous estimate of approximately $3.8 billion. This $100 million reduction largely reflects the success of the company’s business optimization plan that has resulted in capital reductions for two consecutive quarters.
Additionally, the company is lowering its 2025 current tax expense outlook to 10 percent of pre-tax earnings compared to previous expectations of 15 percent. The reduction is related to change in federal legislation.
In the third quarter of 2025, Devon expects oil production to average 384,000 to 390,000 barrels per day. Capital spending in
the third quarter is expected to be approximately $900 million.
