Devon Energy: A Turnaround Story In The Making

Ronald Ferrie profile picture
Ronald Ferrie
3.09K Followers
(11min)

Summary

  • Devon Energy is rated a BUY due to its counter-cyclical investment opportunity and significant free cash flow growth from the Grayson Mill acquisition.
  • The market has completely forgotten about the GM acquisition on the eve of the first full quarter operating under DVN.
  • The addition of this high oil cut producer will add $200 million in FCF in Q4 despite the commodity weakness.
  • This, combined with share buybacks, debt retirement, and a well program that continues to beat expectations, will eventually make the market favor Devon Energy.

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Thesis

The entire energy sector faced a rough December, and the upstream side of the business was no exception. However, the timing could not be more perfect for purchasing shares of Devon Energy (NYSE:DVN).

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This article was written by

Ronald Ferrie profile picture
3.09K Followers
I am a Licensed Professional Engineer who works in the Nuclear Power industry. I use my professional working knowledge of the power/energy industries to aid in evaluating potential equities worthy of long-term investment. I invest in income producing equities and rental real estate properties for cash flow and long-term appreciation. My articles are to serve as a platform for presenting the underlying fundamentals and long-term potential of each equity/business.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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