As Devon Energy prepares to hold an approaching annual meeting of stockholders where they will vote on the merger with Coterra Energy, the Oklahoma City company also released its earnings report this week covering the fourth quarter and all of 2025.
Devon recorded operations generated $1.5 billion of operating cash flow and $702 million of free cash flow during fourth quarter. It had net earnings of $562 million, or $0.90 per diluted share, in the fourth quarter of 2025. Adjusting for items analysts typically exclude from estimates, the company’s core earnings were $510 million, or $0.82 per diluted share.
“Devon’s disciplined execution and operational excellence defined 2025, culminating in outstanding results that exceeded fourth quarter expectations across all major value drivers,” said Clay Gaspar, president and CEO. “The success we achieved this year was underpinned by the momentum generated through our focused business optimization efforts, resulting in significant free cash flow and meaningful cash returns to shareholders.”
Devon’s capital activity in the fourth quarter averaged 19 operated drilling rigs and 4 completion crews across its asset portfolio. This level of activity resulted in 95 gross operated wells being placed online, with an average lateral length of 10,200 feet. Capital investment, excluding acquisition capital, was $883 million, or 4 percent below guidance. As a result, the company said it averaged 390,000 barrels of oil production per day in the fourth quarter, exceeding the top-end of guidance.
The company also completed $141 million in leasehold
acquisitions across multiple assets in its portfolio, primarily in the Delaware Basin. Production averaged 851,000 Boe per day in the fourth quarter, exceeding the top-end of guidance. This positive result was driven by better-than-expected well performance, primarily in the Delaware Basin. The 390,000 barrels a day of oil production was 46 percent of total volume and above the top-end of the company’s guidance.
Q1 2026 OUTLOOK
Production in the first quarter of 2026 is estimated to be reduced by 1 percent or 10,000 Boe per day (50 percent oil) due to
the impact of severe winter weather. Adjusting for this downtime, the company expects production to average 823,000 to
843,000 Boe per day. Capital spending in the first quarter is expected to be approximately $900 million.
Devon anticipates a closing in the second quarter of its merger with Coterra Energy and as a result, will move headquarters to Houston, Texas as it announced in early February. The new company will still be called Devon Energy and upon completion of the transaction, Devon shareholders will own approximately 54 percent of the combined company and Coterra shareholders will own approximately 46 percent of the combined company on a fully diluted basis.
During the fourth quarter, Devon returned capital to shareholders through an ongoing execution of its $5 billion share repurchase program. The company said it repurchased 7.1 million shares for $250 million during the quarter but in the wake of the merger with Coterra, the share repurchasing activity was suspended and will be through the closing. Following the close of the merger with Coterra Energy and the associated free cash flow benefits in the upcoming years, the company expects to establish a new share repurchase authorization in excess of $5 billion, subject to Board approval.
Underpinning these results is the continued strong progress in advancing the company’s business optimization plan. To date,
Devon has already achieved 85 percent of its $1 billion target, demonstrating the effectiveness and urgency of these initiatives.
With strong momentum established, the company is on track to fully achieve its $1 billion target by year-end 2026.
Devon exited the year with estimated proved reserves of 2.4 billion Boe. Proved undeveloped reserves accounted for 24 percent of the total. Extensions and discoveries and positive performance revisions from the company’s drilling program added 593 million Boe of reserves in 2025, equating to a replacement rate of 193 percent of production.
Q1 2026 OUTLOOK
Production in the first quarter of 2026 is estimated to be reduced by 1 percent or 10,000 Boe per day (50 percent oil) due to
the impact of severe winter weather. Adjusting for this downtime, the company expects production to average 823,000 to
843,000 Boe per day. Capital spending in the first quarter is expected to be approximately $900 million.