- Devon Energy's Eagle Ford operations will grow its company-wide oil production by at least 6.9% this year.
- Exploration upside in the Upper and Lower intervals in the Eagle Ford could yield a bigger drilling inventory and more resource potential.
- In Q3, Devon spud its first well targeting the Upper Eagle Ford interval.
- Next time Devon updates investors, look for the production data from its first three wells targeting the Upper Eagle Ford.
Devon Energy: Enhanced Permian Operations Equals Better Drilling Economics
- Early results from Devon Energy's new completion design in the Bone Spring formation are very promising.
- 30-day IP rates were on average 56.5% above previous type curve estimates, which management noted will most likely translate into higher EUR rates.
- As Devon boosts its EUR and 30-day IP rates, it's enhancing its drilling economics in the Permian.
- Downspacing tests in the first half of 2015 could grow Devon's huge drilling inventory in the play.
- The business mix of the company gives it an edge in the current market conditions.
- The diversification of the revenue mix decreases the dependence on the commodity prices.
- The midstream and marketing segment has been growing exceptionally, which should give it some protection against falling crude prices.
- Strong hedge position is needed for any company to weather this short-term storm in the commodities market.
- Devon Energy's stock price has fallen right alongside oil prices, but strong oil production growth this year makes this E&P player a good buy.
- Ramping up production at its Jackfish 3 facility will account for roughly half of Devon's oil production growth this year.
- Each SAGD operation could produce at the peak rate of 35,000 bo/d for over two decades.
- It's possible that Devon will produce more oil than expected from its Canadian operations, as its Jackfish 1 facility is exceeding "name-plate" capacity.
- A decent hedging program combined with over two decades of production will allow Devon to ride out low oil prices this year.
Despite Plunging Energy Prices, Devon Energy Is Still A Buy
- Devon has locked in both oil and natural gas production through 2015 at prices well above current levels, which will help ensure profitability going forward.
- Devon is still planning 20%-25% production increases in its Permian Basin and Eagle Ford acreages. Devon's additional Eagle Ford acreage purchase is looking like a real steal at this point.
- Devon continued to divest itself of non-core assets in 2014 to focus on North American oil production.
- Fundamentally, Devon still appears relatively cheap compared to peers and the broader market based on P/E, P/B, and PEG ratio measures.
Is Devon Energy Executing Its Strategy Efficiently?
- The company has been able to grow its production impressively due to the acquisitions.
- Higher realized prices have resulted in impressive growth in revenues.
- An efficient hedging strategy has allowed the company to get better prices when the overall sector is under pressure due to the falling crude prices.
- Majority of the rise in the revenues have come from the increase production, which shows that the growth strategy has been paying off.
- Devon’s stock price recently jumped by approximately $7 per share. The increase was primarily attributed to the better than expected quarterly results.
- The company also completed its portfolio transformation. With the successful transformation, the company’s asset portfolio is now focused on rich resource plays in North America.
- The company has been successfully curtailing its costs. It reduced its total expenses as a percentage of revenues to only 66.7 percent from the previous year’s 73 percent.
- Devon had a great Q3 with revenues nearly doubling year over year and margins improving by 20%.
- Devon also increased Q4 production guidance by another 3%.
- With a forward P/E of 11, a P/B of 1.2 and a PEG ratio of 0.80, Devon remains undervalued relative to peers.
Devon Should Benefit From The Demand For Midstream Assets
- The combination of midstream assets with Crosstex will allow the company to have stable income in the medium-long term.
- The demand for midstream infrastructure is growing rapidly, which should allow Enlink Midstream to do well.
- Falling crude prices have created some uncertainty in the short-term, but the long-term prospects of the sector are good.
- Devon Energy has dropped almost 30% as oil prices have slid towards $80 but the company's fundamentally strong profile remains.
- The company continues to increase higher margin oil production and that will support forecasted revenue and earnings growth.
- The stock currently trades near book value and sports a PEG ratio of just 0.68.
- If oil prices begin moving back towards $100, Devon could return to its recent highs of $80 - a 30% upside from here.
- A slowing global economy will put a downward pressure on demand for the oil sector.
- Weakened demand and strong supply will continue to lower oil prices in the short run.
- No unexpected increase is anticipated in dividends, as well as share repurchases.
- For short term investors, I’d recommend shorting the stock.
Devon Energy And Cimarex Energy Drive Cana's Strong Comeback
- The new completion formula is redefining drilling returns and expanding economic boundaries in the Cana-Woodford play.
- The article highlights value potential of this asset in Devon and Cimarex’s portfolios.
- The Meramec and Springer Shales may open an important new development dimension, adding multi-year drilling inventories.
The Bull Case For Devon Energy Is Getting Stronger
- The exploration & production sector has been a significant underperformer in the market during the 3rd quarter due to falling oil & natural gas prices.
- There are many attractive buying opportunities thanks to the recent decline in front of what is looking to be a cold winter. Devon Energy is one of those opportunities.
- The company is significantly boosting oil production, the stock is cheap given its growth prospects and the bull case for owning this mid-major is very strong right now.
Devon Energy Corporation: An Attractive Oil And Gas Investment
- Devon is one of the leading oil and gas companies with a strong presence in some of the most prolific US oil regions, including Permian Basin and Eagle Ford.
- Devon is well placed to capitalize on the growth in US oil production.
- It managed to generate 79% YOY growth from the US plays during the second quarter of 2014.
- Devon is a financially stable company that is positioning itself for growth by bringing focus to its business.
Devon Energy: Seasonal Trends Indicate Significant Upside From Here
- Exploration & Production companies are down sharply this summer on back of a $10 a barrel decline in oil prices.
- I have been allocating more funds to these beaten down E&P plays as it appears another harsh winter is on the way which will bolster the sector.
- One of these energy concerns is Devon Energy. The stock is well-positioned to deliver 15% to 25% upside by year end given historical trends and production growth.
- Reshuffling in the assets mix has allowed the company to decrease its net debt and enhance its balance sheet.
- Unusual activity in the options market indicates that the stock price of Devon might continue to fall in the short-term.
- Focus on the liquids will result in stable revenues as well as higher margins for the company.
- Devon's efficient well results in key areas point to further growth in production volumes as well as margin improvement.
Why Devon Is Still A Buy As Texas Propels This Company Farther
- Devon sold off assets to help pay for its $6 billion Eagle Ford purchase, and it looks like its splashy purchase could end up being a bargain.
- Through two top Texas shale plays, Devon can keep increasing its cash margins with a more oil weighted production mix.
- Increasing its Permian rig count to 20 from 12 will translate into significant production growth.
- Adding the Wolfcamp to its inventory could increase the number of possible drilling locations Devon has in the Permian by over 1,000.
- Exploring the upper and lower portions of the Eagle Ford could also yield more drilling locations.
Mar. 7, 2014, 2:57 PM| 3 Comments
Mar. 5, 2014, 4:39 PM
Mar. 5, 2014, 10:56 AM
- Crosstex Energy LP (XTEX -1.7%) is downgraded to Hold from Buy with a $33 target price at Wunderlich, as it believes near-term yield compression from synergies and growth development may be limited.
- For investors with higher risk tolerance, the firm prefers to play the story through general partner Crosstex Energy Inc. (XTXI -1.2%), which offers sector-leading dividend growth estimated at 53% in 2014 and 43% in 2015.
- The legacy businesses remain challenged, which could be a risk to 2014 guidance and 2015-16 double-digit distribution growth, the firm adds.
Feb. 24, 2014, 5:48 PM
- Encana (ECA) is working with Royal Bank of Canada to find a buyer for its Bighorn properties in Alberta, Bloomberg reports.
- Bighorn may attract bids of C$2B-C$2.5B if offers are in line with the ~C$30K per flowing barrel that Canadian Natural Resources (CNQ) agreed to spend on Devon Energy’s (DVN) conventional assets in Canada last week, Cormark analyst Todd Kepler says, adding that Exxon Mobil (XOM) may be “a natural” buyer after its purchase of Celtic Exploration last year.
- The properties up for sale are said to produce ~61.5K boe/day, of which 79% is gas.
Feb. 19, 2014, 8:04 AM| Comment!
Feb. 19, 2014, 6:58 AM
- Devon Energy (DVN) has agreed to sell some of its liquids-rich natural-gas assets in Canada and six natural-gas plants for $3.13B to Canadian Natural Resources (CNQ).
- Before royalties, the properties produced the equivalent of 383M cubic feet of natural gas per day, 10,800 bpd of light crude oil and 12,000 bpd of natural gas liquids.
- The transaction doesn't include Devon's Horn River interests in northern British Columbia and heavy oil assets in Alberta.
- The deal comes after Devon said in November that it planned to sell all of its Canadian gas assets following years of low prices. (PR)
Feb. 19, 2014, 12:05 AM
Feb. 18, 2014, 5:30 PM
Jan. 24, 2014, 2:45 PM
- As the U.S. freezes and stocks plunge, benchmark U.S. natural gas futures topped $5/mmBtu for the first time since Aug. 2010 on expectations that continued cold weather would keep demand high for the heating fuel.
- Natl gas has moved well into overbought territory during the last few days as consumers have pumped up their thermostats, and the spike may last a while longer given that the cold snap is set to continue all of next week.
- Despite the run-up in prices for Jan. and Feb., longer-dated prices for the spring and summer remain below $4.50/mmBtu, providing little incentive for the likes of Chesapeake (CHK -0.1%), Devon (DVN -0.8%) and EOG (EOG -2%) to switch from oil to gas drilling.
- The shift to backwardation is a big boost to United States Natural Gas Fund (UNG +8.2%) and even bigger to the leveraged VelocityShares 3X Long Natural Gas ETN (UGAZ +24.4%).
- Other ETFs: GAZ, BOIL, DGAZ, UNL, KOLD, NAGS, DCNG.
Jan. 16, 2014, 6:35 PM
- Devon Energy (DVN) names Thomas Mitchell as its new CFO, joining the E&P company from rival Midstates Petroleum (MPO).
- Mitchell is a 30-year veteran of the oil and gas industry, having served with Noble Corp. and Apache as well as MPO.
- Mitchell succeeds Jeff Agosta, who is leaving DVN to pursue other interests; the company says his departure is not related to any issues regarding financial disclosures, accounting matters or other business issues.
Jan. 15, 2014, 7:22 PM
- Exploration and production companies tend to track crude oil prices, J.P. Morgan's Joseph Allman says, so look no further than the current state of the oil futures market for a reason to be bearish on the sector.
- WTI oil futures, which decline every quarter in 2014 and beyond, suggest an off year for the E&P group, Allman writes, noting that the set-up could be similar to 2012, when WTI was down 7% for the year and the S&P was up 13%.
- That doesn’t mean that some oil stocks can’t outperform: Allman likes EOG Resources (EOG) and Noble Energy (NBL) among large caps for their “resource expansion and improved operations.”
- His least favorite stocks in the sector include Anadarko Petroleum (APC), Devon Energy (DVN) and Chesapeake (CHK).
Dec. 23, 2013, 5:35 PM
Dec. 6, 2013, 9:08 AM
- Devon Energy (DVN) is throwing in the towel on its Canadian business and will put most of its Canadian natural gas production up for sale, Financial Post reports.
- When the assets are sold at a price estimated to fetch at least $3B, DVN hopes to emerge as a heavy oil company with interests in Alberta oil sands and cold-flow heavy oil, two growing areas.
- "When we look out a few years, we don't see any major catalyst to move the price of natural gas substantially," Devon Canada president Christopher Seasons says.
Dec. 4, 2013, 10:21 AM
Dec. 3, 2013, 8:58 AM
- Devon Energy (DVN) is upgraded to Buy from Hold with a $70 price target at Argus, citing DVN's planned acquisition of Eagle Ford acreage from GeoSouthern Energy which will accelerate the shift in the production mix toward higher-margin oil production and away from lower-margin natural gas.
- The firm also views the Crosstex merger as a positive development that will unlock shareholder value and provide DVN with capital that may be invested in upstream assets.
- Shares appear attractively valued at 14.1x the firm's 2013 EPS estimate and at 10.8x its 2014 EPS estimate, vs. a five-year historical average of 10.7x-13x.
- DVN +0.6% premarket.
Nov. 20, 2013, 5:30 PM
- Analysts say the $6B deal for GeoSouthern will give Devon Energy (DVN) a better balance between oil and natural gas.
- Canaccord says oil currently accounts for 12% of DVN's total volume, and the deal likely significantly increases DVN's oil production, as GeoSouthern is the fourth largest oil producer in the Eagle Ford.
- "The deal makes them more of an oil company and grows their production," says a Hodges Capital analyst. "A lot of people still have the idea that they are too much of a gas company and this deal will change that right away."
- The investor reaction to the deal was tempered by the high price paid, which Richard Zeits says sets a new record in the Eagle Ford play in terms of price paid per net undeveloped acre in a major transaction; the major beneficiary today was Penn Virginia (PVA), whose shares surged 4% thanks to its strong presence in the area.
DVN vs. ETF Alternatives
Other News & PR