The companies operating in the Zacks Oil and Gas Exploration and Production – United States industry play a vital role in the nation's energy landscape. Its core operations include discovering underground and offshore oil and natural gas reserves, drilling wells and extracting hydrocarbons for processing and distribution. The United States is one of the world's leading producers of oil and natural gas, with key production regions including the Permian Basin, Eagle Ford, Bakken Formation and the Gulf of America. Technological advancements such as hydraulic fracturing and horizontal drilling have significantly boosted domestic production, strengthening the nation's energy security and reducing dependence on imported energy.
Devon Energy Corporation DVN and Diamondback Energy Inc. FANG stand out for their robust operations and strong presence in North America’s different basins. Although the industry presents considerable opportunities, it is navigating rising environmental concerns, stricter regulatory oversight and the global transition toward cleaner energy sources. At the same time, volatile commodity prices continue to shape capital allocation and operational strategies. To stay competitive, U.S. exploration and production (E&P) companies are focusing on improving operational efficiency, lowering emissions and integrating sustainable practices into their business models.
Devon Energy is a leading U.S. onshore oil and gas producer with a diversified portfolio of high-quality assets and a disciplined capital allocation strategy. The company consistently generates strong free cash flow and returns capital to shareholders through its variable dividend program and share repurchases. Backed by a low-cost operating model, a strong balance sheet and a focus on operational efficiency, Devon Energy is well-positioned to benefit from sustained hydrocarbon demand despite global supply uncertainties.
The company’s continued investments in technology and emissions reduction further reinforce its long-term growth strategy. Devon Energy’s merger with Coterra Energy further strengthens its position in the Delaware Basin by creating a larger, high-quality asset base.
Diamondback Energy is a leading pure-play Permian Basin operator recognized for its low-cost production, capital discipline and shareholder-friendly approach. Its high-quality, high-margin asset base enables the company to generate robust free cash flow across commodity cycles. Diamondback enhances shareholder returns through base and variable dividends, complemented by share repurchases. Supported by a strong balance sheet, strategic acquisitions and a commitment to sustainable operations, the company remains well-positioned to deliver consistent growth and create long-term shareholder value.
As two of the leading operators in the U.S. oil and gas E&P industry, Devon Energy and Diamondback Energy share several strengths but also differ in key areas. A closer comparison of their fundamentals can help determine which stock presents the more compelling investment opportunity.
DVN & FANG’s Earnings Growth Projections
The Zacks Consensus Estimate for Devon Energy’s earnings per share indicates a decline of 3.87% in 2026 and a rise of 0.61% in 2027.
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The consensus estimate for Diamondback Energy’s earnings per share indicates an increase of 14.75% and 6.87% in 2026 and 2027, respectively, in the past 60 days.
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Return on Equity
Return on equity is an essential financial indicator that evaluates a company’s efficiency in generating profits from the equity invested by its shareholders. It demonstrates how well management is utilizing the capital provided to increase earnings and deliver value.
DVN’s current ROE is 15.22% compared with FANG’s 7.76%.
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Debt to Capital
The oil and gas industry is capital-intensive. The companies operating in this space need to borrow to fund their capital projects.
Devon Energy’s debt to capital currently stands at 35.22% compared with Diamondback Energy’s 24.58%. It appears Devon Energy is utilizing more debt than Diamondback Energy to run its operation.
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Capital Expenditure Plan
Capital expenditure is critically important in the oil and gas industry as it drives exploration, development and maintenance of energy assets essential for long-term production and revenue growth. The companies invest in infrastructure and technology to improve efficiency and reduce environmental impact. The decline in interest rates and the possibility of further decline in interest rates in the second half of this year will be beneficial for the oil and gas companies.
Devon Energy plans to invest $4.9 billion in 2006 and has been making strategic investments to upgrade and expand assets. Diamondback Energy is expected to invest $3.9 billion in 2026 to expand and strengthen its operations.
Valuation
Devon Energy currently appears to be cheaper compared with Diamondback Energy on trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA).
DVN is currently trading at 5.19X, while FANG is trading at 8.03X.
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DVN & FANG’s Dividend Yield
Dividends are regular payments made by a company to its shareholders and represent a direct way for investors to earn a return on their investment. They are an important indicator of a company’s financial health and stability, often signaling strong cash flow and consistent earnings.
Currently, the dividend yield for Devon Energy is 2.99%, while that for Diamondback Energy is 2.4%. The dividend yields of both companies are higher than the S&P 500’s yield of 1.42%.
Price Performance
In the past year, Devon Energy’s shares gained 32.1% compared with Diamondback Energy’s rally of 30.7%.
Price Performance (One Year)
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Wrapping Up
Devon Energy has a multi-basin portfolio and focuses on domestic high-margin assets that hold significant long-term growth potential. From its domestically focused assets, Devon Energy gains from established supply chains, lower transportation costs and a stable regulatory environment.
Though both companies carry a Zacks Rank #3 (Hold), we believe Devon Energy is the better investment choice, supported by the diversified multi-basin asset base, more attractive valuation, higher dividend yield, stronger ROE and better share price performance, giving it an edge over Diamondback Energy.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
