Devon Energy CorporationNYSE
Devon Energy: Deleveraging Is The Top Priority
Richard Zeits • 11 Comments
Richard Zeits • 11 Comments
Thu, Oct. 13, 7:15 PM
- The biggest threat to the rally in oil stocks might be more production from E&P companies drilling in the U.S. shale, Credit Suisse analysts say.
- A clear benefit of the price cycle has been the vastly improved efficiency and productivity of shale, but shale "may ultimately be too productive as WTI approaches $70/bbl," the firm says as it lowers its long-term WTI forecast to $62.50/bbl from $67.50.
- Credit Suisse says names that continue to demonstrate resource improvement at the low-end of the cost curve, namely in the Permian and STACK plays, remain attractive, such as Concho Resources (NYSE:CXO), Devon Energy (NYSE:DVN), Newfield Exploration (NYSE:NFX) and Pioneer Natural Resources (NYSE:PXD).
- The firm downgrades Carrizo Oil & Gas (NASDAQ:CRZO) and Sanchez Energy (NYSE:SN) to Neutral from Outperform, and Laredo Petroleum (NYSE:LPI) to Underperform from Neutral, following relative outperformance vs. peers.
Thu, Oct. 6, 4:56 PM
- Devon Energy (NYSE:DVN) says its divestiture program is done with $3.2B in total proceeds after completing the sale of its 50% ownership in Access Pipeline to Wolf Midstream for $1.1B.
- DVN also has the right to receive an incremental C$150M payment from Wolf with the sanctioning and development of a new thermal oil project on DVN's Pike lease in Alberta.
- DVN says it expects at least two-thirds of the sales proceeds will be utilized for debt reduction, with $1.2B of debt repurchased to date.
Wed, Sep. 28, 3:19 PM
- The energy sector (XLE +4%) bursts to the top of the leaderboard after OPEC announces a planned production cut to 32.5M bbl/day at the informal OPEC meeting in Algiers.
- Among individual energy stocks: XOM +3.8%, CVX +2.7%, RDS.A +2.8%, BP +3.4%, TOT +2.4%, PBR +4.5%, COP +6.4%, MRO +8%, MPC +1.4%, PSX +1.9%, VLO -0.1%, EOG +6.2%, PXD +6.4%, OXY +4.5%, DVN +7.9%, CLR +8.3%, APA +6.2%, NOV +8.1%, SLB +3.3%, BHI +3.6%, HAL +4.3%, KMI +3.4%, ENB +2.6%, EPD +1.9%, ETP +2.9%.
Wed, Sep. 14, 10:55 AM
Tue, Sep. 13, 10:48 AM
- U.S. and Oklahoma state officials are lowering by 22 the number of injection wells ordered to be shut in at an area where a 5.8-magnitude earthquake occurred on Sept. 3.
- State officials say the 27 wastewater wells ordered to be shut compared with the shutdown of 37 wastewater injection wells announced within hours of the quake earlier this month, while the EPA ordered the shut-in of five wells in its area of jurisdiction, down from 17 shut-ins it announced earlier this month.
- The mandatory shut-ins are expected to last at least six months and may become permanent, depending on new data that is collected.
- PetroQuest Energy (NYSE:PQ) reportedly has been the only publicly traded U.S. company among the operators affected by regulators' orders.
- Oklahoma's top oil and gas producers include CLR, CHK, DVN, MRO, NFX, XEC and SD.
Tue, Sep. 6, 3:25 PM
- Devon Energy (DVN -0.6%) is lower after Raymond James downgrades shares to Market Perform from Outperform and withdraws its $46 price target.
- The firm believes that positive catalysts have largely played out for DVN and are now baked into the share price: DVN has greatly improved liquidity on its balance sheet through the successful sale of its 50% interest in the Access Pipeline for $1B in proceeds and divesting $2.1B in upstream assets while retaining its highest quality acreage, and it reported better than expected well results in its prolific STACK acreage.
- Raymond James notes that the market recognized DVN's transformation by sending the stock up 120% off February's lows.
Tue, Sep. 6, 12:39 PM
- A backlash against fracking in Oklahoma could grow following this weekend's 5.6-magnitude, earthquake as the U.S. Geological Survey examines whether the record-breaking tremor was triggered by the underground disposal of wastewater from oil and gas production.
- The USGS says it "cannot currently conclude whether or not this particular earthquake was caused by industrial-related, human activities. However, we do know that many earthquakes in Oklahoma have been triggered by wastewater fluid injection.”
- “They are going to push the industry to come up with some permanent solutions,” says Michael Lynch of Strategic Energy & Economic Research. “It’s hard to believe Oklahoma would move to ban fracking, but I can see where they would say to people that they have to do something else with the wastewater."
- PetroQuest Energy (PQ -3%) was ordered to shut four of its disposal wells in Oklahoma, and was the only publicly traded U.S. company among the operators affected by state regulators' orders to suspend a total of 37 wastewater disposal wells.
- Oklahoma's leading oil and gas producers include CLR, CHK, DVN, MRO, NFX, XEC and SD.
Wed, Aug. 24, 5:45 PM
- Deutsche Bank analysts offer a hopeful view for top oil E&P companies as capital efficiencies continue to improve, and raise their price targets on Pioneer Natural Resources (NYSE:PXD), Devon Energy (NYSE:DVN), Marathon Oil (NYSE:MRO) and EOG Resources (NYSE:EOG).
- Capital efficiency should improve through 2017, driven by cost concessions and continued well performance efficiency gains, and while acknowledging some near-term headwinds as rigs continue to be added in the Permian and STACK in H2, the firm says it remains constructive on a tightening market into 2017.
- The firm lifts its price target for PXD to $210 from $180, for DVN to $55 from $45, for MRO to $21 from $20, and for EOG to $105 from $96.
Tue, Aug. 16, 12:44 PM
- Marathon Oil (MRO +2.1%) is higher after BofA/Merrill Lynch upgrades shares to Buy from Neutral with a $21 price target, saying it believes management can resume growth in oil and gas production in 2017 as the addition of the STACK play likely dominating incremental drilling activity starting in H2.
- The firm says MRO is one of the most oil levered large-cap U.S. oil names, which positions the stock for upside to peers based on a binary outcome of higher oil prices; during recent months, MRO also has improved the balance sheet, increased capital flexibility and scooped up PayRock Energy Holdings.
- The MRO move is part of BofA/Merrill's more upbeat outlook for the broader energy sector, noting that when oil has rallied more than 25%, energy has outperformed the market nearly 90% of the time; the firm also upgrades Noble Corp. (NE -2.9%) and Patterson-UTI Energy (PTEN +1.9%) to Neutral from Underperform, and adds Devon Energy (DVN +1.8%) to its US 1 List.
Tue, Aug. 16, 10:30 AM
- Devon Energy (DVN +0.3%) is added to Bank of America's US 1 List with a $60 price target, raised from $56, as the stock provides "unique leverage to an oil recovery."
- DVN’s stock is among the “lowest ‘discounted’ oil prices in the sector,” although the company has the “operational torque and expected incremental portfolio disclosures” needed to support both absolute and relative outperformance over the next 12 months, according to BofA.
- The firm particularly likes DVN's potential to redeploy cash to a portfolio repositioned with material exposure in two of the highest return plays in the continental U.S. - the Delaware Basin and Oklahoma STACK - that can drive a rate of change in cash flow per share.
Mon, Aug. 8, 11:57 AM
- SM Energy’s (SM +7.2%) $980M purchase of drilling rights in the Permian Basin shows that producers are willing to pay a premium for access to one of the few spots where oil exploration still turns a profit, Bloomberg reports.
- SM will pay the equivalent of $39.5K/acre for drilling rights across 24,783 acres in the Permian Basin, will ahead of the $25K-$35K that acreage in the Permian’s Midland Basin section had been fetching as recently as May and almost doubling SM's holdings in the region.
- Other Permian producers also are trading higher, including: PXD +2.2%, CXO +1.8%, XEC +2.1%, CWEI +6.1%, APA +3.8%, FANG +2.1%, PE +1.2%, QEP +3.6%, RSPP +2.4%, APC +2.6%, DVN +3.7%, MTDR +2.3%.
Wed, Aug. 3, 4:49 PM
- Post-earnings comments today from Noble Energy (NYSE:NBL), Devon Energy (NYSE:DVN) and Occidental Petroleum (NYSE:OXY) show U.S. shale oil producers' continuing ability to squeeze more crude from improved well designs and fracking techniques.
- "It's a bit surprising to me how we continue to still see improvements," NBL CEO Dave Stover said of operations in Colorado, where Q2 productivity rose 4% Y/Y; NBL initially expected to get 390K boe/day this year on spending of $1.5B, but now it expects to spend less and produce 415K boe/day (Q2 earnings).
- OXY CEO Vicki Hollub said 2016 production would now be at the high end of its forecast for a 4%-6% increase from 2015 levels of 652K boe/day, without raising planned capex of $3B (Q2 earnings); the CEO also noted in OXY's earnings conference call that "most of our cost reductions are due to our own efficiency gains, not service company unit cost reductions."
- CEO Dave Hager says DVN has cut costs to drill and complete new wells by 40% and plans to cut $1B in costs this year (Q2 earnings).
Tue, Aug. 2, 4:47 PM
Mon, Aug. 1, 5:35 PM
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Mon, Jul. 18, 3:58 PM
- Pioneer Natural Resources (PXD +0.1%), EP Energy (EPE +0.9%), Carrizo Oil & Gas (CRZO +2.8%), Sanchez Energy (SN +2.5%) and Synergy Resources (SYRG -0.1%) are all upgraded to Buy at KLR Group in advance of Q2 earnings reports.
- At the same time, the firm downgrades Devon Energy (DVN -0.4%), Consol Energy (CNX -1.3%) and Continental Resources (CLR +0.4%) to Accumulate from Buy on valuation given their substantial share price appreciation over the past four months.
- KLR expects the U.S. E&P industry's cost intensity to decline another 10% this year as capital spending is rationalized another 45%, but it anticipates spending ultimately will increase ~70% "assuming a substantive recovery in commodity prices."
- The firm's new stock price targets are $218 for PXD, $6.50 for EPE, $49 for CRZO, $9 for SN, $9 for SYRG, $44 for DVN, $20 for CNX and $54 for CLR.
Thu, Jul. 14, 7:15 AM
- Devon Energy (NYSE:DVN) agrees to sell its 50% ownership stake in Access Pipeline to Wolf Midstream for C$1.4B (US$1.1B), confirming earlier reports.
- The agreement also includes the potential for a C$150M payment based on the development of a new thermal oil project on DVN’s Pike lease in Alberta.
- DVN says the sale marks the completion of its divestiture program, with proceeds of $3.2B surpassing the top end of its $2B-$3B guidance range.
- Wolf is a portfolio company of the Canada Pension Plan Investment Board, the country's largest pension plan.