Devon Energy exceeded first-quarter production expectations with 664,000 oil-equivalent barrels per day, driven by a 5% increase in Delaware Basin production.
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Devon Energy Wells Drilled Since 2023
The company reported substantial financial results with $1.7 billion in operating cash flow and $596 million in net earnings. Capital management was effective, highlighted by $205 million spent on share repurchases and a declared dividend of $0.35 per share. Operational efficiency improvements in the Delaware Basin led to a 20%+ increase in well productivity year-over-year. Devon has raised its 2024 production forecast to 655,000-675,000 barrels per day and reduced capital expenditure projections, reflecting a strong operational and financial outlook.
Delaware Basin
The Delaware Basin significantly contributed to Devon Energy’s strong performance in the first quarter of 2024. Here are the key points related to the Delaware Basin from the report:
- Production Growth: Production in the Delaware Basin increased by 5% year-over-year, which was a major factor driving the company’s results above guidance.
- Well Productivity Improvements: The Basin saw a notable improvement in well productivity, with a 20%+ increase compared to the previous year. This was highlighted by average 30-day production rates reaching 3,200 oil-equivalent barrels per day from newly operated wells.
- Operational Focus: The Delaware Basin was central to Devon’s operational strategy, accounting for 66% of the company-wide volumes, totaling 437,000 oil-equivalent barrels per day.
- Infrastructure Developments: Improved productivity and easing of infrastructure constraints in the Basin contributed to better-than-planned production outcomes.
- Capital Activity: The company maintained a high level of operational activity in the Basin, with significant capital investment leading to the online placement of 59 gross operated wells during the quarter.
These points underscore the Delaware Basin’s critical role in Devon Energy’s operational success and strategic focus.
Drilling
The report highlights several key aspects of Devon Energy’s drilling activities, particularly in the context of their operational focus in the Delaware Basin:
- Operated Drilling Rigs and Completion Crews: Devon’s capital activity for the first quarter involved maintaining 24 operated drilling rigs and 7 completion crews across its asset portfolio. This indicates a significant level of drilling and well completion activity.
- Well Placement and Lateral Lengths: The company successfully placed 102 gross operated wells online during the quarter, which is indicative of their aggressive drilling schedule. These wells featured an average lateral length of 9,300 feet, demonstrating Devon’s focus on extended-reach horizontal drilling to maximize reservoir contact and efficiency.
- Well Productivity Improvement: The Delaware Basin saw a more than 20% improvement in well productivity year over year. This suggests that the drilling operations were not only extensive but also increasingly effective, leading to higher output per well.
- Cycle Time Improvements: The report also notes cycle time improvements, which involve reducing the time from drilling initiation to well completion. This efficiency enhancement likely contributed to bringing forward activity and easing infrastructure constraints, allowing for quicker and more productive use of the drilling rigs and completion crews.
- Capital Spending on Upstream Activities: Upstream capital spending was tightly managed, totaling $842 million for the quarter, positioned at the lower end of the guidance range. This reflects disciplined capital management in drilling operations, focusing on cost efficiency alongside production growth.
These details from the report underline Devon Energy’s strategic and efficient approach to drilling, particularly in the Delaware Basin, emphasizing improved productivity, efficiency gains, and effective capital deployment in their drilling operations.
Completions
Devon Energy’s completion activities, particularly emphasizing their operations within the Delaware Basin:
- Completion Crews: Devon operated with 7 completion crews during the first quarter of 2024. This number of crews supports significant completion operations, which are integral to preparing wells for production after drilling.
- Well Completions: A total of 102 gross operated wells were placed online, which includes the completion process necessary for wells to begin production. This indicates a high level of completion activity to match the company’s drilling efforts.
- Productivity Improvements: The report highlights over 20% improvement in well productivity year over year in the Delaware Basin. This improvement is likely attributed not just to drilling techniques but also to enhanced completion practices that maximize hydrocarbon extraction.
- Addition of Completion Crews: The report notes the addition of a fourth Delaware completion crew in January 2024. This expansion in the number of crews is likely a response to the need for increased completion capacity to handle the number of wells drilled and to capitalize on productive drilling operations.
- Operational Impact: The effective use of completion crews and strategies in the Delaware Basin has been a crucial factor in driving volumes above guidance, indicating that completions are a critical component of Devon’s operational success and efficiency.
These points reflect the integral role that completions play in Devon Energy’s strategy, particularly in enhancing well productivity and operational efficiency in the Delaware Basin.
Capital Spending
The report provides detailed insights into Devon Energy’s capital spending for the first quarter of 2024, emphasizing disciplined management and strategic investment. Here are the key points:
- Total Capital Spending: Devon reported that its capital spending for the first quarter totaled $842 million in upstream activities, which is at the lower end of the company’s guidance range. This reflects a cautious approach to spending, aligning with strategic priorities and operational needs.
- Comparison to Previous Periods: This spending represents a 3% decrease compared to the fourth quarter of 2023, indicating a reduction in capital expenditures as part of Devon’s effort to optimize costs and improve financial efficiency.
- Midstream and Corporate Capital: In addition to upstream spending, midstream, carbon, and corporate capital expenditures amounted to $95 million for the quarter.
- Capital Efficiency and Productivity Improvements: The report highlights a more than 20% improvement in well productivity year over year in the Delaware Basin, suggesting that the capital being spent is not only being managed carefully but is also contributing to significant operational improvements.
- Future Capital Spending: For the full year of 2024, Devon anticipates capital spending to be between $3.3 billion and $3.6 billion, which is a 10% decline compared to 2023. This forecasted reduction is part of the company’s strategy to enhance its financial position while still aiming to increase production.
These details illustrate Devon Energy’s focus on maintaining a strong investment-grade financial position while strategically managing capital spending to enhance operational efficiency and shareholder returns.
