Devon Energy Corporation (DVN): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

By
A A A

Summary:
Devon Energy Corporation's third-quarter 2014 earnings per share and revenues beat estimates despite the slide in global oil price, primarily on solid production from its high quality assets and improving gas prices. The company's strategy of divesting non-core assets in the U.S. and Canada, and focusing on reserve-rich onshore U.S. assets is yielding results. Retained North American assets contributed to its strong third-quarter performance. Devon is using the proceeds from non-core asset sales to pay its debts. We expect the company's cash generating capacity and the declining debt level to strengthen its financial position. However, volatile crude oil prices , and cyclical demand for oil, natural gas and natural gas liquids (NGL) could weigh on its profitability. Therefore, we maintain our Neutral recommendation on the stock.

Overview:

Oklahoma City, OK-based Devon Energy Corporation is an independent energy company engaged primarily in the exploration, development and production of oil and natural gas. The company's oil and gas operations are mainly concentrated in the onshore areas of North America, including the U.S. and Canada.

Besides the exploration and production (E&P) business, Devon has marketing and midstream operations, primarily in North America. The marketing and midstream business includes selling gas, crude oil and natural gas liquids (NGL) constructing and operating pipelines storage and treating facilities and natural gas processing plants. These midstream facilities are used to transport oil, gas, and NGLs and process natural gas. Over the last few years, Devon's capital spending has primarily been directed towards expanding and developing its oil and liquid-rich assets to achieve a more balanced portfolio.

Earlier, Devon reported its financials under the two segments: U.S. and Canada. With creation of EnLink in first-quarter 2014, the company considered EnLink as an operating segment. Currently, Devon has three reporting segments U.S., Canada and EnLink.


The U.S. operations are spread in the Permian Basin, Mid-Continent, Rocky Mountains and Gulf Coast.

The Canadian holdings are located in the central and southern plains of Alberta and Saskatchewan, northwestern Alberta and northeastern British Columbia, Lloydminster region, the Horn River basin and the Deep Basin.

The EnLink segment is engaged in midstream activities. It is a combination of all the U.S. midstream assets of Devon and the properties of the former Crosstex Energy, Inc. and Crosstex Energy, L.P. The segment consists of two entities EnLink Midstream, LLC and EnLink Midstream Partners, LP, and is collectively known as EnLink Midstream. The segment has operations in the Barnett, Permian Basin, Cana and Arkoma Woodford, Eagle Ford, Haynesville, Gulf Coast, Utica and Marcellus Shales. It has wide array of asset base, including around 7,300 miles of gathering and transportation pipelines, 12 processing plants and 6 fractionators. EnLink segment also has barge and rail terminals and product storage facilities.

At the end of 2013, Devon had proved reserves of approximately 2.96 billion barrels of oil equivalent (BOE), of which about 52% were natural gas and the rest were liquids. Of the total reserves, 87% belonged to the company's core and emerging properties and the rest to non-core properties. In 2013, Devon's combined production volume was 692.9 thousand BOE per day, 2% higher than the 2012 level.

Source: Company


Devon Energy Corporation (DVN): Read the Full Research Report
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

DEVON ENERGY (DVN): Free Stock Analysis Report

To read this article on Zacks.com click here.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: NGL , BOE , DVN

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

50%
100%
75%

Most Active by Volume

100,376,898
  • $17.62 ▲ 0.51%
83,231,837
  • $25.62 ▲ 1.91%
75,739,329
  • $111.78 ▼ 0.77%
65,297,937
  • $36.37 ▼ 1.76%
59,053,093
  • $47.66 ▲ 0.29%
53,482,350
  • $2.59 ▼ 0.38%
51,504,284
  • $7.34 ▲ 2.37%
51,434,656
  • $8.14 ▲ 6.96%
As of 12/19/2014, 04:15 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com