Devon again raises 2024 guidance, sticking to capex plan
Devon Energy Corp., Oklahoma City, has joined other publicly-traded US exploration and production companies in reporting better-than-expected production in the second quarter thanks to improved well performance. The company’s leaders also raised guidance for the rest of 2024 as they did after reporting first-quarter earnings.
Total production from Devon’s assets in the Delaware, Eagle Ford, Anadarko, Williston, and Powder River basins was 707,000 boe/d during the second quarter, an increase of nearly 7% year over year and more than 6% from this year's first quarter. In May, the company had projected output to be 670,000-690,000 boe/d.
At the company’s core Delaware basin operations, output grew to 461,000 boe/d versus 420,000 boe/d in the prior-year quarter. Speaking to analysts on an Aug. 7 conference call, chief executive officer Rick Muncrief called his teams’ second quarter performance in the basin “superb” and noted that wells brought online this year are on track to be 10% more efficient than their 2023 counterparts.
Those gains flowed through to spending during the second quarter: Capital spending was $890 million, down from nearly $1.02 billion a year earlier and solidly below the $915-985 million the comapny guided to 3 months ago. For the third quarter, Devon expects spending to be $870-930 million.
Asked about additional cuts given well efficiencies and the potential for demand and the broader economy to soften, both chief operating officer Clay Gaspar—who said Devon is “on the winning side” when it comes to well economics—and Muncrief leaned toward keeping Devon’s momentum rolling.
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“We stuck with our gameplan and exceeded expectation,” Muncrief said. “We did have some discussions around [pulling pack on capex] but we stuck with the gameplan.”
Going forward, that plan will include integration of Williston basin assets of Grayson Mill Energy, for which Devon leaders last month agreed to pay $5 billion (OGJ Online, July 15, 2024). Once completed, the deal will add about 100,000 boe/d in 2025 production and, Gaspar said, grow Devon’s annual capex budget by about $600 million.
Devon’s net income for the 3 months ended June 30 was $844 million, up from $690 million in the same period of last year. Total revenues climbed to $3.92 billion from $3.45 billion.
Shares of Devon (Ticker: DVN) climbed more than 5% to about $44.30 in Aug. 7 trading. They’re now up about 7% over the past 6 months, which has grown the company’s market capitalization to nearly $28 billion.
Geert De Lombaerde | Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.
