Devon Energy has reported financial and operational results for the second-quarter 2024.

KEY FINANCIAL AND OPERATIONAL HIGHLIGHTS

• Net earnings of $844 million, or $1.34 per diluted share; core earnings of $885 million, or $1.41 per diluted share
• Second quarter oil production reached an all-time high of 335,000 barrels per day, exceeding guidance by 3 percent
• Delivered second quarter operating cash flow of $1.5 billion and free cash flow of $587 million 
• Strengthened the balance sheet with cash balances reaching $1.2 billion
• Declared fixed-plus-variable dividend payout of $0.44 per share based on second quarter results
• Repurchased 5.2 million shares of common stock at a total cost of $256 million in the second quarter 
• Raised full-year 2024 production outlook for second consecutive quarter
• Board of directors increased share-repurchase authorization by 67 percent to $5 billion
• Announced strategic acquisition on July 8, enhancing scale and transforming Williston Basin business

“Devon delivered a strong second quarter driven by record oil production and effective cost management,” said Rick Muncrief, president and CEO. “Our outstanding operational performance was highlighted by excellent well productivity in the Delaware. We also saw improved cycle times across the entire company, setting multiple drilling and completion records. 

“Based on our solid performance for the first half of 2024, we now expect our full-year 2024 production guidance to be 5 percent higher than our original outlook. This improved production outlook coupled with our disciplined capital plan strengthens our free cash flow generation capabilities. 

“In July, we took an important step to further strengthen the quality and depth of our portfolio with the acquisition of Grayson Mill in the Williston Basin. These assets are an excellent addition to Devon, expanding our oil production, project inventory and operating scale. 

“Importantly, as a result of our improved outlook and recent acquisition, we expanded our share-repurchase authorization by 67 percent to $5 billion. This upsized program provides us additional runway to further compound per-share growth as we continue to execute on the tenets of our disciplined business model,” Muncrief added.

FINANCIAL RESULTS

Devon reported net earnings of $844 million, or $1.34 per diluted share, in the second quarter of 2024. Adjusting for items analysts typically exclude from estimates, the company’s core earnings were $885 million, or $1.41 per diluted share. 

Devon’s operating cash flow totaled $1.5 billion in the second quarter, a 9 percent increase versus the year-ago period. The company funded its capital requirements and had $587 million of free cash flow for the quarter. 

The company’s investment-grade financial position continued to strengthen in the second quarter with cash balances reaching $1.2 billion. Devon exited the quarter with outstanding debt of $6.1 billion and a net debt-to-EBITDAX ratio of 0.6 times.

RETURN OF CAPITAL 

Based on the second quarter financial performance, Devon declared a fixed-plus-variable dividend of $0.44 per share, payable on Sept. 30, 2024, to shareholders of record at the close of business on Sept. 13, 2024. The dividend payout consists of the fixed dividend at $0.22 per share and a variable distribution of $0.22 per share. 

The company also returned capital to shareholders through the continued execution of its share repurchase program. In the second quarter, Devon repurchased 5.2 million shares at a total cost of $256 million. Since program inception in late 2021, the company has repurchased 54.7 million shares, at a total cost of $2.7 billion. 

Given this substantial progress and the expected free cash flow accretion from the recent Grayson Mill acquisition, the company has increased its share-repurchase authorization by 67 percent to $5 billion. The expanded authorization extends through mid-year 2026.

OPERATING RESULTS 

Devon’s capital activity in the second quarter averaged 22 operated drilling rigs and 6 completion crews across its asset portfolio. This level of activity resulted in 114 gross operated wells being placed online, with an average lateral length of 9,300 feet. 

Upstream capital spending in the second quarter totaled $828 million. This level of investment was below guidance expectations and represents a 14 percent decrease in upstream spending compared to the second quarter of 2023. Midstream, carbon and corporate capital totaled $62 million in the quarter. The company also executed $81 million in multiple leasehold transactions across its portfolio, including the Delaware Basin. 

Devon’s oil production in the second quarter reached an all-time high of 335,000 barrels per day, exceeding guidance by 3 percent. Total companywide production averaged 707,000 oil-equivalent barrels (Boe) per day in the second quarter. This represents a 7 percent increase in production compared to the year-ago period. 

Devon’s growth in the second quarter was driven by its Delaware Basin asset, which accounted for 65 percent of companywide volumes at 461,000 Boe per day. This production result represents a growth rate of 5 percent quarter-over-quarter, driven by 62 gross operated wells being placed online during the quarter. 

Additionally, the company achieved notable operational efficiencies year-to-date in the Delaware. Drilled and completed feet per day metrics improved 12 percent and 6 percent year-to-date compared to 2023, respectively. 

Production costs, including taxes, averaged $12.25 per Boe in the second quarter, a decline of 1 percent from the prior period. This low-cost structure, coupled with the benefits of higher commodity prices, expanded field-level cash margins by 6 percent year-over year to $31.19 per Boe.

2024 OUTLOOK 

Devon is raising its full-year 2024 production forecast for the second time this year to a range of 677,000 to 688,000 Boe per day. The updated volume outlook is due to better-than-expected well performance year-to-date and improving cycle times. The company maintains its full-year capital range of $3.3 billion to $3.6 billion but expects to be in the upper half due to efficiency gains bringing activity forward. 

In the third quarter, Devon expects capital spending to approximate $900 million, and its oil production to average 319,000 to 325,000 barrels per day.

STRATEGIC ACQUISITION IN THE WILLISTON BASIN 

On July 8, 2024, Devon announced that it had entered into a definitive purchase agreement to acquire the Williston Basin business of Grayson Mill Energy in a transaction valued at $5 billion, consisting of $3.25 billion of cash and $1.75 billion of stock to the seller. 

The acquisition will add a high-margin production mix that positions Devon as one of the largest oil producers in the U.S. upon closing of the transaction. The acquisition will also transform the company’s Williston Basin business, with the addition of 307,000 net acres and approximately 100,000 Boe per day. The transaction is subject to customary terms and conditions and is expected to close by the end of the third quarter of 2024.

KeyFacts Energy: Devon Energy US country profile