Devon Energy not getting the credit it deserves: Barron's


"We've diversified our efforts, cut expenses, and fully concentrated our efforts in North America, selling all but our most important holdings [abroad]," Devon Energy (DVN) CEO John Richels tells Barron's.

Despite these efforts, and despite the company's generally well received move to merge its midstream assets with Crosstex Energy (XTXI) and Crosstex Energy LP (XTEX), Jack Willoughby thinks the market hasn't given the company enough credit.

An interesting statistic cited by Willoughby: DVN "has risen to $60, but [is] down 15% from five years ago. Rival companies are up an average of 72% over that time."

"The market values its 3B or so barrels of proven reserves at $8.50/barrel, the cheapest level of any independent producer and less than half of the $20-$25 figure in recent deals," Barron's continues, citing an analyst at Milwaukee-based Fiduciary Management. The same analyst values the stock at around $81.

See also: Q3 numbers, Q3 summary, CC transcript

For more on the Crosstex deal, see here and here

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Comments (5)
  • rjj1960
    , contributor
    Comments (1471) | Send Message
     
    Been screaming DVN for weeks looking at the likes of PXD,CXO,EOG,CLR, & WLL all go ballistic. This is a great company that plays down the flash. Not like some guy on Cramers show yelling they own land with 8 Bakkens stacked on top of each other. The stock has some ground to make up since it went to 95.00 3 years ago. DVN is also very big up in Canada .
    9 Nov 2013, 09:09 PM Reply Like
  • King Rat
    , contributor
    Comments (1613) | Send Message
     
    Several billion in impairment charges over the past year haven't helped the appearance of the balance sheet. To be honest, the rule on those write downs and whether or not they can be written up again seems confusing. They affect debt/equity and return on equity ratios but not really operations. Their costs don't seem unusually high. Maybe they are a gem in the rough. Maybe the fact that they have underperformed peers significantly over the past year is a fluke... but something doesn't match.
    9 Nov 2013, 09:10 PM Reply Like
  • freed0m
    , contributor
    Comments (1169) | Send Message
     
    For all the north American onshore players, they spend so much money on shale oil/gas, but the return does not look that good. Capex is still much larger than the operating cash flow. No wonder that some people call shale oil/gas a ponzi scheme. At least for offshore oil/gas, they spend a lot of money developing it; after that, huge positive cash flow.

     

    When will we see positive cash flow from north American onshore players?
    9 Nov 2013, 09:33 PM Reply Like
  • User 353732
    , contributor
    Comments (5158) | Send Message
     
    DVN continues to pay for its past poor execution and investor disillusionment.
    It is clearly at a discount from its peers, showing the potency of reputation and image. DVN is doing many things right but it may be another 2 quarters before they earn credibility.
    10 Nov 2013, 05:31 PM Reply Like
  • wapiti
    , contributor
    Comments (711) | Send Message
     
    It all goes back to confidence with $DVN management....or should I say a lack of it... Hard to get investors to believe in your stock when your execution continues to disappoint...I think an activist investor gets involved soon...maybe Icahn??
    11 Nov 2013, 11:50 AM Reply Like
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