In their Q3 2024 earnings report, Devon Energy delivered strong insights on production performance, drilling advancements, and operational efficiencies. The company’s disciplined approach, particularly in the Delaware and Eagle Ford basins, showcases its drive for efficient and high-return production. Here’s a breakdown of Devon’s latest achievements and forward-looking expectations for 2024 and beyond.

Delaware Basin: Leading the Way in Production Growth

The Delaware Basin continues to be a crown jewel in Devon’s portfolio, making up a substantial portion of the company’s output. In Q3 2024, the Delaware Basin accounted for 67% of Devon’s total production, reaching an impressive 488,000 barrels of oil equivalent per day (BOE/d). This was a 6% increase from the previous quarter, highlighting the asset’s robust performance.

A key contributor to this growth is Devon’s CBR 12-1 development—a 21-well project targeting six different landing zones in the Bone Spring and Wolfcamp formations. Brought online across Q2 and Q3, these wells delivered average initial 30-day production rates of 3,300 BOE/d per well, with estimated ultimate recoveries (EURs) exceeding 2 million BOE per well. The multi-zone project exemplifies Devon’s capital-efficient approach and ability to balance inventory growth, net present value, and internal rate of return.

Eagle Ford: High-Return Operations in South Texas

Devon also made strides in its Eagle Ford operations. In Q3, Devon’s Eagle Ford assets averaged 68,000 BOE/d, with most activity concentrated in DeWitt and Karnes counties. Known for their productive wells, these areas in the Eagle Ford provide some of the highest rate-of-return drilling opportunities in North America. Devon’s strategic acquisition of Validus Energy in 2022—an $1.8 billion investment that added 42,000 net acres in the Karnes Trough oil window—has strengthened Devon’s foothold in this prolific basin.

This acquisition not only enhanced Devon’s operational footprint but also added approximately 35,000 BOE/d in production and 350 high-quality drilling locations, positioning the Eagle Ford as a reliable cash generator for Devon’s future growth.

Drilling Efficiency: Continuous Improvement

Efficiency in drilling is a critical focus for Devon Energy. In Q3 2024, the company recorded a 14% improvement in drilling efficiency compared to the previous year. Devon now achieves an impressive 1,034 feet drilled per day, up from 999 feet in 2023. This gain in efficiency translates into faster project completions and lower costs, ultimately supporting Devon’s goal of increasing production while maintaining a lean cost structure.

Completion Efficiency: Boosting Operational Speed

In addition to drilling, Devon has achieved a 12% improvement in completion efficiency. The number of feet completed per day rose to 1,178 feet, compared to 1,065 feet the previous year. This increase allows Devon to bring wells online faster, optimizing production schedules and allowing the company to capture higher returns from newly drilled wells more quickly.

Enhanced Well Performance: Strong Returns from New Drills

Devon’s ongoing investments in technology and operational excellence have also yielded gains in well productivity. Cumulative oil volumes for wells drilled in 2024 reached 2,152 thousand barrels of oil (MBO), up from 1,955 MBO in 2023. This increase reflects Devon’s ability to achieve higher output per well, reinforcing the company’s reputation for strong well performance and efficient resource extraction across its asset portfolio.

Looking Ahead: Devon’s 2024 and 2025 Outlook

As Devon wraps up 2024, its outlook for the fourth quarter and beyond remains optimistic. Here’s a snapshot of what Devon expects for the remainder of the year and into 2025:

1. Fourth Quarter 2024 Guidance:
   • Production: Projected between 811,000 and 830,000 BOE/d, with oil production estimated between 380,000 and 390,000 barrels per day (Bbl/d).
   • Capital Expenditures: Expected to be in the range of $870 million to $930 million.
2. Full-Year 2024:
   • Production: Average production is anticipated to be between 800,000 and 820,000 BOE/d, with oil production averaging 375,000 to 385,000 Bbl/d.
   • Capital Spending: Devon’s total capital investment is forecasted to be $3.3 billion to $3.6 billion.
3. 2025 Preliminary Outlook:
   • Production: Anticipated to average around 800,000 BOE/d, with an oil production component of about 380,000 Bbl/d.
   • Capital Expenditures: Devon plans to invest between $4.0 billion and $4.2 billion.
   • Free Cash Flow: Devon projects significant free cash flow generation based on a $70 WTI oil price, with yields ranging from 5% to 14%, depending on pricing conditions.

Conclusion: Focused Growth with Efficiency and Shareholder Value

Devon Energy’s third-quarter results highlight its operational strength across its core assets and its commitment to disciplined growth. From the Delaware Basin’s multi-zone development to the Eagle Ford’s high-return wells, Devon continues to set benchmarks for operational efficiency and cost management. As Devon approaches 2025, its focus on maintaining low leverage, enhancing shareholder returns, and increasing production efficiency positions the company well for sustained success in a competitive industry.

Oil & Gas Marketing Lists