Devon Energy Corp. DVN reported second-quarter 2024 earnings per share (EPS) of $1.41, outpacing the Zacks Consensus Estimate of $1.29 by 9.3%. Strong production volumes and efficient cost management allowed the company to enjoy the benefit of rising oil prices in the quarter.
GAAP earnings per share in the reported quarter were $1.34 compared with $1.07 in the year-ago quarter. The difference between GAAP and operating earnings in the second quarter was due to a 4-cent impact of fair value changes in financial instruments, 2 cents related to assets dispositions and one cent related to referred tax asset valuation allowance.
Revenues
Total revenues for the quarter were $3.91 billion, which surpassed the Zacks Consensus Estimate of $3.87 billion by 1.1%.
The top line increased 13.4% from the year-ago quarter’s figure.
Devon Energy Corporation Price, Consensus and EPS Surprise
Devon Energy Corporation price-consensus-eps-surprise-chart | Devon Energy Corporation Quote
Production
Net production for the second quarter totaled 707,000 barrels of oil equivalent per day (Boe/d), up 7% year over year. Actual production volume exceeded the guided range of 670,000- 690,000 Boe/d. Strong performance from Delaware Basin, Eagle Ford and Williston Basin boosted year-over-year production volumes.
Natural gas liquids production increased 10.9% year over year to 182,000 barrels per day (Bbl/d). Oil production amounted to 335,000 Bbl/d, up 3.7% on a year-over-year basis, attributed to a strong contribution from the Delaware Basin.
Realized Prices
Realized oil prices (including cash settlements) for the quarter were $78.95 per barrel, up 10.05% from $71.74 a year ago. Realized prices for natural gas liquids were $19.71 per barrel, up 10.8% from $17.79 in the prior-year quarter.
Realized gas prices were $1.10 per thousand cubic feet, reflecting a 33.7% decline from $1.66 a year ago.
Total oil equivalent realized prices, including cash settlements, were $44.29 per barrel of oil equivalent, up nearly 5.5% year over year.
Other Highlights
Total production expenses in second-quarter 2024 were $788 million, up 9.6% year over year.
Devon has repurchased 5.2 million shares at a total cost of $256 million in the second quarter from its $3 billion share-repurchase program. Since the inception of the buyback program in late 2021, the company has repurchased 54.7 million shares at a total cost of $2.7 billion.
Given this substantial progress and the expected free cash flow accretion from the recent Grayson Mill acquisition, Devon’s management has increased its share-repurchase authorization by 67% to $5 billion. The expanded authorization extends through mid-year 2026.
Production costs, including taxes, averaged $12.25 per barrels of oil equivalent (Boe) in the quarter, a decline of 1% from the prior period. This low-cost structure, coupled with the benefits of high-margin production, resulted in field-level cash margins of $31.19 per Boe in the reported quarter.
Management declared a fixed-plus-variable dividend of 44 cents per share. This resulted in an annualized dividend of $1.76.
Financial Highlights
As of Jun 30, 2024, the company had cash and cash equivalents (including restricted cash) of $1.16 billion compared with $0.87 billion as of Dec 31, 2023.
As of Jun 30, 2024, long-term debt amounted to $5.66 billion, down from $5.67 billion as of Dec 31, 2023.
Devon’s net cash from operating activities was $1.53 billion in the second quarter compared with $1.40 billion a year ago. Capital expenditures totaled $948 million, down 12.1% from the previous year quarter.
Guidance
Third-quarter production is expected in the range of 670,000-690,000 Boe per day and capital spending is estimated in the band of $870-$930 million.
Courtesy of strong first-half results, Devon is increasing its full-year 2024 production forecast to a range of 677,000-688,000 Boe per day from the prior guided range of 655,000-675,000 Boe/d. This incremental production in 2024 is expected to be delivered without an increase in capital.
Devon reiterated its capital expenditure in the band of $3.3-$3.6 billion for 2024.
Zacks Rank
Devon currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Releases
TotalEnergies SE TTE reported second-quarter 2024 operating earnings of $1.98 (€1.85) per share, missing the Zacks Consensus Estimate of $2.11 by 6.2%.
TTE’s long-term (three-to-five years) earnings growth rate is currently pinned at 4.4%. The Zacks Consensus Estimate for 2024 EPS is pegged at $8.94, indicating no change in the last 7 days.
Chevron Corporation CVX reported adjusted second-quarter earnings per share of $2.55, lagging the Zacks Consensus Estimate of $2.88 and declining from the year-ago adjusted profit of $3.08.
CVX’s long-term earnings growth rate is currently pinned at 5%. The Zacks Consensus Estimate for 2024 EPS is pegged at $12.3, indicating a decline of 1.2% in the last 7 days.
Halliburton Company HAL reported second-quarter 2024 adjusted net income per share of 80 cents, in line with the Zacks Consensus Estimate and above the year-ago quarter’s profit of 77 cents (adjusted).
HAL’s long-term earnings growth rate is currently pinned at 9.33%. The Zacks Consensus Estimate for 2024 EPS is pegged at $3.18, indicating no change in the last 7 days.
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