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Devon Energy Corp.: The Recent Weakness Is An Opportunity

Dec. 01, 2021 6:33 PM ETDevon Energy Corporation (DVN)33 Comments


  • The company announced better-than-expected adjusted earnings of $1.08 compared to a loss of $0.04 per share in the year-ago quarter.
  • Devon Energy produced a record of 608K Boep/d in the third quarter, or 7.2% higher than the 2Q21.
  • For the third quarter of 2021, the total dividend payment is $0.84 per share.
  • I recommend buying DVN below $41.
  • Looking for a helping hand in the market? Members of The Gold And Oil Corner get exclusive ideas and guidance to navigate any climate. Learn More »

View of the pumpjack in the oil well of the oil field. The arrangement is commonly used for onshore wells producing little oil. Pumpjacks are common in oil-rich areas.

Funtay/iStock via Getty Images


The Oklahoma City-based Devon Energy Corp. (NYSE: NYSE:DVN) reported third quarter 2021 earnings on November 2, 2021.

1 - Q3 Snapshot

The company announced better-than-expected adjusted earnings of $1.08 compared to a loss of $0.04 per

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in DVN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (33)

banmate6 profile picture
Here is my DVN investment.

DVN shares total price $/share

7-Nov-2014 100 $6,466.95 $64.6100
31-Dec-2014 0.394 $24.00 $60.9613
31-Mar-2015 0.401 $24.09 $60.0973
30-Jun-2015 0.398 $24.19 $60.7936
30-Sep-2015 0.632 $24.29 $38.4129
31-Dec-2015 0.771 $24.44 $31.7000
31-Mar-2016 0.957 $24.62 $25.7300
30-Jun-2016 0.183 $6.21 $33.9300
30-Sep-2016 0.163 $6.22 $38.2585
30-Dec-2016 0.133 $6.23 $46.8082
31-Mar-2017 0.158 $6.24 $39.3987
30-Jun-2017 0.204 $6.25 $30.6850
29-Sep-2017 0.169 $3.59 $36.9380
29-Dec-2017 0.149 $6.27 $42.0255
29-Mar-2018 0.195 $6.28 $32.1998
29-Jun-2018 0.191 $8.39 $43.8642
28-Sep-2018 0.207 $8.41 $40.5431
28-Dec-2018 0.395 $8.42 $21.3082
29-Mar-2019 0.27 $10.41 $31.3531
28-Jun-2019 0.331 $9.54 $28.8441
27-Sep-2019 0.39 $9.57 $24.5578
27-Dec-2019 0.363 $9.60 $26.4582
31-Mar-2020 1.496 $9.63 $6.4359
1-Jul-2020 1.0205 $11.94 $11.7000
1-Oct-2020 1.2892 $12.05 $9.3500
31-Dec-2020 0.7645 $12.19 $15.9500
1-Apr-2021 0.5384 $12.28 $22.8100
1-Jul-2021 0.4128 $12.34 $29.8930
1-Oct-2021 0.3404 $12.38 $36.3662

A $6,466.95 basis is now worth $4,514.37, a -30.19% return on -4.89% CAGR. This has been no doubt a terrible investment. I bought on a so called North American energy renaissance, in a number of fossil fuel companies.

Bad mistake. I was ignorant of the cyclicality, an especially dishonest sector, and a secular turn against fossil fuels. I've sold out, with DVN the last of it. I lost about 30% of a total of $65k committed. Mistakes I won't make again.

So what should I do with DVN? I ask this occasionally but haven't found conviction to move. Can I ever really break even, without committing more money to what I still see as a dishonest industry?
Fun Trading profile picture

You need to understand cyclicity and adopt a trading strategy that fits the sector. Without a proper understanding of the issue, you are bound to repeat your mistakes and lose your money. How on earth do you believe selling the sector with a 30% loss can be justified in such a short period? Paper loss is just an inherent part of the cycle. Please, contact your CFA to get some structural advice.
@banmate6 I lost 100% of my ESV/VAL stock in that same period. (well after they declared Ch11).
30% loss isn't bad in the oil sector in my opinion. The dividends you'll collect this year and next should chip away at the loss assuming you don't DRIP. I would love to have had your portfolio.

BTW. Buying DVN at 9bucks in Oct 2020...was a steal!

Nothing's a guarantee, but I honestly think you're in good hands with their capital return policy and even lower hedge book next year (oil and gas).
Fun Trading profile picture

Agree, it is a good long-term bet on the energy sector. This company has no risk of bankruptcy and a secured dividend. Realizing a loss on such stock is nonsensical.
Great management. So glad I bought this stock well over a year ago.
I totally agree with their dividend strategy but I do not think most investors out there know that DVN is an 8 % payer.
Fun Trading profile picture

Yes, DVN is not widely known, and the way they decide the quarterly dividend lets the stock pass through the radar without being noticed.
Quiberon Bay profile picture
@PEAK AUTOS Definitely correct. It's not one of the better known issues. And, the way many brokerages report dividend yield info skews the reality. Seeking Alpha *does* annualize the 84¢ payout and show a yield of 8.08% at the moment, but my brokerage accounts do not.
Quiberon Bay profile picture
One of my best performers. Was fortunate to start accumulating at $24 and I still like it under $42. Get in this week and you're picking up an 8% dividend (annualized) to boot. What's not to like? We can all see from the immediate past that $DVN doesn't need $80 oil to do quite well.
Fun Trading profile picture
@Quiberon Bay

Good comment thank you and congrats on your investment in DVN.
@Quiberon Bay Snap. I bought at $24.

I bought the first time at $19, sold calls (stupid) and lost them at $23. Saw it zoom up to $30, then there was a freakish pull back to $24 where I swapped into $DVN from $WMB and never looked back.
Quiberon Bay profile picture
@Tambo210 We’ve all done things we regret in the covered call universe.
I bought a little at 42 - will try to add a bit more. Have the same amount in EOG, which has dropped more than Devon recently.
Fun Trading profile picture

Good choices in the sector. I like both DVN and EOG.
@Fun Trading That's reassuring. I picked up a bit more of each this morning, so to qualify for the upcoming large special dividends.
Excellent article as it rationalizes my "confirmation bias" towards DVN. I am long, and think that it will outperform for the next several years. The FCF yield, and discipline growth while still being very shareholder friendly make me put it at the top of my holding list, above AR and MRO.
Fun Trading profile picture

Thank you Simon, I think it is a good choice. Best of luck!
U may also wanna look at some recent upgrades and divincreases. IF Biden and this stimulus are to be believed, infrastructure should be a good spot... not recently.
NS-NEW PTs21-22 160div11.5%
Ceqp... PR 32... 250div10%
MMP...DIV UP $4.25ish 9+%
My best performer.
I traded out of $WMB and into this at $25.
I still want to own both.
Fun Trading profile picture

Glad you like this company.
@Tambo210 Why on earth would trade out of WMB? Just own both like I do. I own OKE too. I highly recommend all three.
@G-man$$ Can't afford both. I try to buy 1k shares of each (nice round number to sell calls when I need to).
( I know you're going to say, halve my DVN holding and put it into $WMB).
I believe $DVN will be $60 at some point next year as more hedges roll off (pegged to $45 at the moment). Even if Oil drops to $60, we're still banking more cash. Whether of not DVN will announce in Jan, their 2022 Capex which involves more drilling, remains to be seen. But for now, I'm happy with holding $DVN. If one of my other holdings recovers, then I'll buy into $WMB.

As a side note, I wouldn't own $KMI for now. $WMB just has a better management IMHO.
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