Devon Energy (DVN) Beats Q2 Earnings Estimates, Revises View

Devon Energy Corp. DVN reported second-quarter 2019 adjusted earnings per share of 43 cents, which surpassed the Zacks Consensus Estimate of 36 cents by 19.4%.
 
Revenues

Quarterly revenues of $1,921 million lagged the Zacks Consensus Estimate of $2,216 million by 13.3%. Total revenues were in line with the year-ago figure.

The top-line performance reflects higher contribution from its Upstream segment, offset by lower contribution from marketing businesses.

Devon Energy Corporation Price, Consensus and EPS Surprise

Devon Energy Corporation Price, Consensus and EPS Surprise

Devon Energy Corporation price-consensus-eps-surprise-chart | Devon Energy Corporation Quote

Highlights of the Release

During the quarter, the company completed the sale of the Canadian business. It is also planning to sale Barnett Shale gas assets in north Texas to focus on the high-return U.S. oil business.

Total production in second-quarter 2019 touched 521,000 barrels of oil equivalent per day (Boe/d), in line with the year-ago figure. Notably, production from Devon Energy’s retained oil assets in the United States was 142,000 barrels per day, which increased 13% from second-quarter 2018 output.

During the second quarter, the company continued to progress via improving operating and corporate cost structure. Its largest field-level cost, lease operating expense, was $133 million compared with $154 million in the year-ago quarter.

The company is targeting annual cost savings of at least $780 million through cost-management initiatives. The measures undertaken by Devon Energy so far will help it achieve nearly 70% of its targeted savings by 2019-end.

During the reported quarter, total expenses decreased nearly 30% year over year to $1,684 million.
 
The company continues to advance the $5-billion share repurchase plan. Devon Energy repurchased an aggregate of 128 million shares under the program for $4.4 billion. It expects to complete the repurchase program by the end of this year, which will surely have a positive impact on earnings.

Realized Prices

Realized oil prices in the quarter were $56.68 per barrel, up 5% from $53.98 in the year-ago period. Realized prices of natural gas were down 16.2% to $1.81 per thousand cubic feet from $2.16 in the prior-year quarter.

Total realized prices, including cash settlements, were $27.84 per Boe, down 1.6% year over year.

Financial Health

As of Jun 30, 2019, the company generated cash and cash equivalents of $3,470 million, up from $2,414 million recorded on Dec 31, 2018. As of Jun 30, 2019, its long-term debt amounted to $4,294 million, almost in line with $4,292 million on Dec 31, 2018.

Devon Energy’s cash flow from operating activities in the first half of 2019 was $999 million compared with $1,309 million in the comparable year-ago period.
 
Guidance

Devon Energy estimates total oil production from retained assets for the third quarter of 2019 within 141,000-147,000 barrels per day.

It also expects 2019 U.S. oil production growth to reach 19%, indicating a 400-basis point improvement from original expectation.

The company lowered its E&P capital expenditure guidance for 2019. The metric is expected within $ 1.8-$1.9 billion versus earlier expectation of $1.8-$2 billion. The reduced investment is driven primarily by drilling and completion efficiencies realized on a year-to-date basis.

Other Releases

Anadarko Petroleum APC came out with quarterly earnings of 51 cents per share, beating the Zacks Consensus Estimate of 46 cents.
 
Occidental Petroleum Corporation OXY reported second-quarter 2019 earnings of 97 cents per share, surpassing the Zacks Consensus Estimate of 91 cents by 6.6%.

Eni S.p.A. E reported second-quarter 2019 adjusted earnings per share of 36 cents, lagging the Zacks Consensus Estimate of 65 cents by 44.6%.

Zacks Rank

Devon Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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