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Devon Energy (DVN)
NYSE:DVN
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Devon Energy
(NYSE:DVN)77Outperform
Positive Factors
Earnings
Devon stands as the best performing oil-levered E&P with a strong quarter driving an earnings pop.
Leadership and Strategy
Newly appointed CEO, Clay Gaspar, is pitching a pivot towards better run operations, and there’s evidence of early wins.
Negative Factors
Acquisitions
The market may not like the acquisitions of Grayson Mill, RimRock, or Validus, viewing them as expensive or causing an operational pause.
Devon Energy (DVN) vs. S&P 500 (SPY)
Market Cap
$22.23B
Dividend Yield4.23%
Average Volume (3M)9.37M
Price to Earnings (P/E)7.5
Beta (1Y)0.59
Revenue Growth3.00%
EPS Growth-21.63%
CountryUS
Employees2,300
SectorEnergy
Sector Strength57
IndustryFossil Fuels
Share Statistics
EPS (TTM)4.57
Shares Outstanding649,000,000
10 Day Avg. Volume10,674,170
30 Day Avg. Volume9,374,360
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.39
Price to Cash Flow (P/CF)3.30
P/FCF Ratio3.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$48.95Price Target Upside45.42% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering20
Devon Energy Business Overview & Revenue Model
Company DescriptionDevon Energy Corp. engages in the exploration, development, and production of oil and natural gas properties. It operates through the following geographical segments: U.S., Canada, and EnLink. It develops and operates Delaware Basin, Eagle Ford, Heavy Oil, Baarnett Shale, STACK, and Rockies Oil. The company was founded by J. Larry Nichols and John W. Nichols in 1971 and is headquartered in Oklahoma City, OK.
How the Company Makes MoneyDevon Energy generates revenue primarily through the sale of oil, natural gas, and natural gas liquids that it extracts from its operational basins. The company's revenue model is heavily influenced by commodity prices, production volume, and operational efficiency. Key revenue streams include the sale of crude oil, which constitutes the largest portion of its revenues, and the sale of natural gas and natural gas liquids. Devon also engages in hedging activities to mitigate the impact of price volatility in the energy markets. Strategic partnerships and joint ventures in its operational regions further enhance its capacity to optimize production and expand its asset base, thereby contributing to its earnings. Additionally, the company focuses on cost management and technological innovation to improve its margins and drive profitability.
Devon Energy Financial Statement Overview
Summary
Devon Energy shows robust revenue growth and operational efficiency, although rising costs have pressured net profit margins. The balance sheet is healthy but exhibits increased leverage risk. Effective cash flow management supports investments, though future focus should be on maintaining profitability and managing debt.Income Statement
Devon Energy has demonstrated strong revenue growth over the years, with a notable increase from 2023 to 2024. The company boasts a high gross profit margin, indicative of good production efficiency. However, the net profit margin has seen a decline, suggesting rising costs or other financial pressures. EBIT and EBITDA margins are solid, reflecting operational efficiency despite fluctuating net income.78
Positive
Balance Sheet
The balance sheet shows a moderate debt-to-equity ratio, which has increased slightly, potentially indicating growing leverage risks. The return on equity is positive, suggesting effective utilization of equity capital. However, the equity ratio indicates a balanced but not overly conservative capital structure, with room for improvement in equity financing.72
Positive
Cash Flow
Devon Energy has shown consistent free cash flow generation, with a positive growth rate over the recent period. The operating cash flow to net income ratio is strong, indicating effective cash conversion from profits. While the free cash flow to net income ratio is healthy, indicating good cash management, ongoing capital expenditures may affect future cash flows.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 15.94B | 15.14B | 19.17B | 12.21B | 4.83B | Gross Profit |
| 15.94B | 5.20B | 8.37B | 3.68B | 392.00M | EBIT |
| 10.70B | 2.34B | 8.07B | 3.31B | -90.00M | EBITDA |
| 7.37B | 7.57B | 10.38B | 5.42B | -1.36B | Net Income Common Stockholders |
| 2.89B | 3.75B | 6.01B | 2.81B | -2.54B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 846.00M | 875.00M | 1.45B | 2.27B | 2.24B | Total Assets |
| 30.49B | 24.49B | 23.72B | 21.02B | 9.91B | Total Debt |
| 9.20B | 6.48B | 6.70B | 6.73B | 4.54B | Net Debt |
| 8.36B | 5.58B | 5.24B | 4.46B | 2.31B | Total Liabilities |
| 15.79B | 12.27B | 12.43B | 11.63B | 6.89B | Stockholders Equity |
| 14.50B | 12.06B | 11.17B | 9.26B | 2.88B |
| Cash Flow | Free Cash Flow | |||
| 2.96B | 2.60B | 3.40B | 2.89B | 193.00M | Operating Cash Flow |
| 6.60B | 6.54B | 8.53B | 4.90B | 1.35B | Investing Cash Flow |
| -7.33B | -3.94B | -5.12B | -1.57B | -646.00M | Financing Cash Flow |
| 706.00M | -3.18B | -4.21B | -3.29B | -306.00M |
Devon Energy Technical Analysis
Negative
33.66
Price Trends
34.78
Negative
36.38
Negative
40.25
Negative
Market Momentum
-0.07
Positive
41.14
Neutral
15.79
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DVN, the sentiment is Negative. The current price of 33.66 is below the 20-day moving average (MA) of 35.22, below the 50-day MA of 34.78, and below the 200-day MA of 40.25, indicating a bearish trend. The MACD of -0.07 indicates Positive momentum. The RSI at 41.14 is Neutral, neither overbought nor oversold. The STOCH value of 15.79 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DVN.
Devon Energy Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $22.23B | 7.51 | 21.77% | 4.23% | 3.00% | -21.63% | |
75 Outperform | $43.90B | 15.85 | 27.41% | 1.32% | 20.51% | 99.86% | |
74 Outperform | $67.64B | 10.85 | 22.29% | 3.03% | 0.88% | -13.66% | |
68 Neutral | $6.76B | 8.15 | 20.26% | 5.38% | 17.61% | -75.78% | |
57 Neutral | $8.34B | 5.35 | -5.98% | 7.29% | 0.20% | -69.45% |
* Energy Sector Average
Performance Comparison
DVN
Devon Energy
33.66
-10.25
-23.34%
APA
APA
18.54
-11.00
-37.24%
EOG
EOG Resources
121.85
8.57
7.57%
HES
Hess
141.34
0.23
0.16%
Devon Energy Earnings Call Summary
Earnings Call Date: Feb 18, 2025 | % Change Since: -3.50% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
Devon Energy's earnings call highlighted impressive operational and financial performance, with record oil production, robust free cash flow, and strategic asset management, such as the Eagle Ford partnership dissolution. However, challenges remain, including refracs prioritization and potential impacts from steel tariffs. Overall, Devon Energy demonstrates strong growth potential and commitment to shareholder returns.Highlights
Record High Oil Production
Fourth quarter oil production reached an all-time high of 398,000 barrels per day, driven by Eagle Ford wells and Grayson Mill assets.
Strong Free Cash Flow and Shareholder Returns
Devon Energy generated $3 billion in free cash flow for 2024, returning $2 billion to shareholders, including a 9% dividend increase to $0.24 per share.
Operational Efficiency Gains
15% improvement in feet drilled and completed per day metrics in 2024, leading to higher well returns and free cash flow.
Eagle Ford Partnership Dissolution
Devon Energy dissolved its Eagle Ford partnership with BPX, expecting to save more than $2 million in D&C costs per well with improved well design and operational technology.
Increased 2025 Production Guidance
2025 production guidance increased to 815,000 BOE per day, with a $200 million reduction in capital expenditures compared to previous guidance.
Natural Gas Market Opportunities
Significant upside from natural gas resource with over 1.3 billion cubic feet per day production, expected to more than double gas revenue year over year.
Lowlights
Challenges in the Eagle Ford Refracs
The dissolution of the BPX partnership led to a lower priority for refracs, despite their potential value in well productivity improvements.
Lower Working Interest in the Delaware Basin
2025 average working interest in Delaware Basin wells is expected to be 73%, down from 80% in 2024, affecting per-well productivity metrics.
Uncertainty in Steel Tariffs Impact
Potential steel tariffs could impact capital expenditures, although estimated to be less than a 2% increase in overall capital costs.
Company Guidance
In the recent conference call, Devon Energy Corporation provided several key metrics highlighting their strong financial and operational performance for the fourth quarter of 2024 and their outlook for 2025. The company reported $3 billion in free cash flow for the year, with $2 billion returned to shareholders. They achieved a record oil production of 398,000 barrels per day in the fourth quarter, contributing to a 154% proved reserve replacement ratio. For 2025, Devon Energy anticipates production of 815,000 BOE per day, including 383,000 barrels of oil per day, while planning to invest $3.9 billion in capital expenditures. They also announced a 9% increase in their fixed dividend to $0.24 per share. The company expects to generate $300 million in additional free cash flow this year, leveraging operational efficiencies and strategic acquisitions like the Williston Basin assets. Devon also plans to maintain a strong balance sheet, targeting a net debt to EBITDA ratio below one times, and aims to return up to 70% of free cash flow to shareholders through dividends and share repurchases.Devon Energy Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Devon Energy Restructures Management with New Appointments
Neutral
Jan 13, 2025
Devon Energy Corporation announced the appointments of John D. Raines and Thomas J. Hellman as Senior Vice Presidents of E&P Asset Management and E&P Operations, respectively. This strategic restructuring aims to enhance operational efficiency, with both executives bringing extensive experience from their previous roles. Additionally, the company will eliminate the position of Executive Vice President and Chief Corporate Development Officer, leading to the departure of David G. Harris. These changes reflect Devon’s efforts to streamline its management structure and focus on key operational areas.
Executive/Board Changes
Devon Energy Announces Leadership Transition for 2025
Neutral
Dec 9, 2024
Devon Energy Corporation will see a leadership change as Richard E. Muncrief retires from his roles, with Clay M. Gaspar stepping in as President and CEO in March 2025. Gaspar, currently the Executive VP and COO, will receive a $1 million annual salary and a significant bonus and equity package. This transition comes without internal disagreements, and Muncrief will provide advisory support until mid-2025.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.