Oil & Gas News

Devon Raises Guidance and Beats Q1 Profit Estimates

Devon, Earnings

In a recent announcement, Devon Energy, a prominent U.S. shale producer, disclosed that it had surpassed first-quarter profit expectations. This achievement comes as the company experiences a significant boost in production from its operations in the Delaware Basin, which has compensated for a downturn in natural gas prices.

The company, headquartered in Oklahoma City, reported an encouraging uptick in its full-year production forecast for 2024. Originally estimated, the new projection has been adjusted upward by 2%, setting the expected range at 655,000 to 675,000 barrels of oil equivalent per day (boepd). This revision reflects Devon’s successful operational strategies and the robust output from the Delaware Basin, which continues to be a pivotal area of production for the firm.

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During the first quarter of 2024, the landscape of U.S. crude prices remained relatively stable, confined within a narrow range despite the escalation of global geopolitical tensions. This steadiness is attributed to sustained supplies from non-OPEC countries. Conversely, the milder winter season coupled with an oversupply situation exerted downward pressure on natural gas prices, driving them to a three-and-a-half-year low during the quarter.

Devon Energy’s total production for the January to March quarter was notably high at 664,000 boepd, marking a significant increase from the 641,000 boepd reported in the same period of the previous year. The Delaware Basin assets have been particularly prolific, contributing 66% of the company’s total volumes, equating to 437,000 boepd.

In terms of pricing, Devon noted a decrease in the realized prices for natural gas. Without the impact of hedges, the price stood at $1.30 per thousand cubic feet (mcf), which represents a sharp 43% decline from the previous year’s figure of $2.29 per mcf.

Mineral RightsFinancially, Devon Energy outperformed expectations with its adjusted income figures. For the quarter ending March 31, the company recorded an adjusted income of $1.16 per share, which surpassed the average analyst estimate of $1.11 per share, based on LSEG data.

A strategic operational move by Devon was the addition of a fourth completion crew in the Delaware Basin at the beginning of January 2024. This expansion is part of a broader capital program which the company anticipates will be heavily concentrated in the first half of the year. As a direct consequence of this intensified activity, production levels for the second quarter are projected to rise, with estimates ranging from 670,000 to 690,000 boepd.

CEO Rick Muncrief commented on the developments, stating, “This improved outlook raises production targets and increases free cash flow projections, which will enhance our ability to accelerate the return of capital to shareholders.” This statement underscores the company’s optimistic stance on its operational capacity and financial health, highlighting its readiness to deliver enhanced shareholder value through increased returns.

The positive developments at Devon Energy serve as a testament to the company’s adept management and strategic operational focus. By leveraging its assets in the Delaware Basin and navigating the challenges posed by fluctuating market conditions, Devon has not only managed to surpass financial expectations but has also set a positive trajectory for continued growth and profitability in the coming months. This strategic positioning is poised to bolster the company’s market standing and enhance its competitive edge in the dynamic energy sector.

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