Devon confident in 2026 outlook strength
Clay Gaspar, President and CEO at Oklahoma City’s Devon Energy continued that the company’s outlook for 2026 “is even stronger than our current trajectory.”
However, he said Devon plans to continue its production levels while further lowering capital requirements and building on momentum established this year.
Additionally, management wants to extend operational efficiency wins across all core basins.
Meanwhile, Oklahoma Energy producers watch how Devon pivots to disciplined reinvestment frameworks next cycle.
“Our focus on operational excellence, technology adoption, and disciplined capital allocation gives us confidence in our ability to deliver stronger results in 2026 and continue creating long-term value for our shareholders.”
Therefore, executives believe commodity volatility and structural pricing risk will not derail 2026 margin expanse.
FINANCIAL RESULTS — Devon capital structure / balance sheet
During the quarter, Devon took its next step on its debt reduction program by retiring $485 million of outstanding debt prior to maturity.
However, that accelerated prepayment pace shows confidence in forward cash generation strength.
Additionally, the company used cash on hand to close on the previously announced acquisition of all outstanding noncontrolling interests in Cotton Draw Midstream (CDM) for $260 million, resulting in approximately $50 million in annual distribution savings.
Also, integrated midstream control improves value capture through cycle.
At the end of the third quarter, Devon had a cash balance of $1.3 billion and an undrawn credit facility of $3 billion.
Finally, outstanding debt totaled $8.4 billion and the company’s net debt-to-EBITDAX ratio was 0.9 times.
This leverage framework remains structurally moderate relative to peers across Permian, Eagle Ford, Rockies and other competitive basins.
RETURN OF CAPITAL — shareholder yield strategy
Devon declared its fixed quarterly cash dividend of $0.24 per share, payable on Dec. 30, 2025, to shareholders of record at the close of business on Dec. 15, 2025.
Additionally, this reflects repeatable base distribution confidence.
The company also returned capital to shareholders through the ongoing execution of its $5.0 billion share repurchase program.
During the third quarter, Devon repurchased 7.3 million of its shares for $250 million.
Since inception of the program, the company has returned $4.1 billion to shareholders by retiring approximately 13 percent of its outstanding shares.
Therefore, capital yield discipline remains durable regardless of near-term commodity variance.
OPERATING RESULTS — production scale, cost control, Delaware Basin development
Devon’s capital activity in the third quarter averaged 17 operated drilling rigs and 5 completion crews across its asset portfolio.
However, this cadence signals full cycle cost normalized deployment.
This level of activity resulted in 102 gross operated wells being placed online, with an average lateral length of 10,300 feet.
Capital investment, excluding acquisition capital, was $859 million, or 5 percent below guidance.
Additionally, technology compression and contractor cost standardization continue lowering facility spend variance.
This positive variance was primarily attributable to effective cost management and timing of facility spend.
Also, this discipline keeps capex more competitive relative to WTI pricing cycles.
Additionally, the company completed two lease acquisitions in the Delaware Basin for $168 million, securing approximately 60 net locations at an average cost of around $3 million per location.
Permian Basin drilling optionality continues expanding through targeted bolt-on acreage.
Devon also invested $25 million to expand its water infrastructure in the Delaware, enhancing water disposal flexibility across the Permian.
Meanwhile, water networks directly improve uptime and reduce service risk over multi-year buildout windows.
Production averaged 853,000 Boe per day in the third quarter, exceeding the top-end of guidance.
Additionally, this beat was driven by better-than-expected well performance primarily in the Rockies and Eagle Ford.
Oil totaled 390,000 barrels per day in the quarter, which was 46 percent of total volume and at the top-end of the company’s guidance.
Also, this ratio reflects sustained shift toward higher margin crude revenue mix.
For the third quarter, Devon’s oil, gas, and NGL sales totaled $2.8 billion.
The company’s realized price during the period, including commodity hedges, was $36.46 per Boe, compared with the second quarter of $36.30 per Boe.
The increased price realization was primarily driven by higher crude benchmark pricing, partially offset by lower natural gas and NGL prices.
However, wellhead pricing optimization strategies continue offsetting regional dislocation risk.
Natural gas pricing was impacted by expanded regional gas price differentials in the Delaware Basin driven by infrastructure constraints.
Additionally, operators across Texas remain challenged by pipeline congestion in peak winter build periods.
Production costs, including taxes, averaged $11.41 per Boe in the third quarter, a 3 percent reduction from the second quarter.
The largest component of production costs is lease operating expense and gathering, processing and transportation costs, which totaled $8.85 per Boe in the quarter.
Effective cost management efforts and lower well workovers drove per-unit rates 3 percent below guidance expectations for the quarter.
Therefore, structural inflation pressures remain partially muted inside this footprint.
Underpinning these results is the continued strong progress in advancing the company’s business optimization plan.
To date, Devon has already achieved more than 60 percent of its $1 billion target, demonstrating the effectiveness and urgency of these initiatives.
These actions are strengthening margins and maximizing capital efficiency across Devon’s assets.
Finally, elevated operational leverage compounds incremental efficiency capture across commodity cycles.
UPDATED OUTLOOK — capital expectations / 2026 volume profile
Devon’s fourth quarter capital is expected to range from $890 million to $950 million.
With this level of investment, the company expects to bring online around 90 gross operated wells during the quarter.
Fourth-quarter production is expected to range from 828,000 to 844,000 Boe per day, with oil production expected to range from 383,000 to 388,000 barrels per day.
Additionally, share repurchases will likely continue through year end consistent with prior guidance.
In 2026, the company aims to maintain total production at approximately 835,000 to 855,000 Boe per day, including about 388,000 barrels of oil per day.
Therefore, portfolio stability remains central to valuation compression avoidance.
Supported by ongoing business optimization efforts, capital requirements are projected to decrease by $100 million from 2025 levels, resulting in an expected range of $3.5 billion to $3.7 billion.
Also, this capital moderation positions Devon well for macro dislocation events through next presidential cycle.