Devon Energy Corporation (NYSE: DVN) has reported outstanding financial and operational results for the second quarter of 2024. Highlights include record oil production, a significant strategic acquisition, and an increase in shareholder returns. The company achieved net earnings of $844 million and a remarkable operating cash flow of $1.5 billion. Additionally, Devon Energy has raised its full-year production outlook for the second time this year, reflecting its strong performance and efficient operations.
Record Production Key Factors
- Excellent Well Productivity in the Delaware Basin: The company’s Delaware Basin asset played a significant role, accounting for 65% of the companywide volumes at 461,000 Boe per day. This area saw a growth rate of 5% quarter-over-quarter, driven by the completion of 62 gross operated wells during the quarter.
- Improved Operational Efficiencies: Devon achieved notable improvements in cycle times and operational efficiencies across the company. Metrics such as drilled and completed feet per day improved by 12% and 6%, respectively, compared to the previous year.
- High Activity Levels: The company’s capital activity in the second quarter averaged 22 operated drilling rigs and 6 completion crews across its asset portfolio, leading to 114 gross operated wells being placed online, with an average lateral length of 9,300 feet.
- Effective Cost Management: The company maintained a low-cost structure with production costs, including taxes, averaging $12.25 per Boe, a decline of 1% from the prior period. This helped expand field-level cash margins by 6% year-over-year to $31.19 per Boe.
These combined factors of high productivity, efficient operations, strategic capital deployment, and effective cost management enabled Devon Energy to achieve record oil production levels in Q2 2024.
Devon Energy Q2 2024 Earnings Highlights
Financial and Operational Performance
- Net Earnings: $844 million, or $1.34 per diluted share.
- Core Earnings: $885 million, or $1.41 per diluted share.
- Operating Cash Flow: $1.5 billion.
- Free Cash Flow: $587 million.
- Cash Balances: $1.2 billion.
- Oil Production: Record high of 335,000 barrels per day.
- Total Production: 707,000 Boe per day, a 7% increase YoY.
- Production Costs: Averaged $12.25 per Boe.
- Dividend: Declared a fixed-plus-variable dividend of $0.44 per share.
- Share Repurchase: 5.2 million shares repurchased at a cost of $256 million; authorization increased to $5 billion.
- Upstream Capital Spending: $828 million, 14% decrease YoY.
Strategic Developments
- Acquisition: Announced acquisition of Grayson Mill Energy’s Williston Basin assets for $5 billion, enhancing production and scale.
- Operational Efficiency: Improved drilling and completion metrics in the Delaware Basin.
- Production Outlook: Increased full-year 2024 production guidance by 5% to 677,000 – 688,000 Boe per day.
- Capital Guidance: Full-year capital range maintained at $3.3 billion to $3.6 billion, expecting to be in the upper half.
CEO’s Statement Rick Muncrief, President and CEO, highlighted strong operational performance and disciplined capital management, emphasizing the strategic value of the Grayson Mill acquisition and the enhanced shareholder return program.
Strategic Acquisition Details
- Williston Basin Business: Acquisition valued at $5 billion, adding 307,000 net acres and 100,000 Boe per day production.
- Transaction Structure: $3.25 billion in cash and $1.75 billion in stock.
- Expected Closing: By the end of Q3 2024.
In conclusion, Devon Energy’s exceptional performance in Q2 2024 underscores the strength of its operational efficiency and strategic foresight. With record oil production, robust financial results, and a transformative acquisition in the Williston Basin, Devon is well-positioned for continued growth and enhanced shareholder value. The company’s disciplined capital management and commitment to operational excellence ensure a promising outlook for the remainder of the year and beyond. As Devon Energy continues to execute on its strategic priorities, it remains a leading force in the U.S. oil and gas industry.
