Devon lifts production guidance 1%, trims capex by $100 million

Executives of Devon Energy Corp., Oklahoma City, have raised their forecast for 2025 oil production by 1% after a better-than-expected first quarter but said they will cut the company’s activity levels should macroeconomic conditions dictate doing so. They also have trimmed the 2025 capital spending budget by $100 million because of efficiency gains that are part of a broader cost-cutting program.

In first-quarter 2025, Devon produced an average 388,000 b/d of oil and 815,000 boe/d from its assets in the Delaware basin, Eagle Ford, Rockies, and Anadarko basin. Oil production was down from 398,000 b/d in fourth-quarter 2024, but up from 319,000 b/d in early 2024 and executives said the Rockies and Eagle Ford operations topped expectations during the quarter.

That production translated into net earnings of $494 million on total revenues of $4.45 billion compared with $596 million and $3.60 billion, respectively, in first-quarter 2024. 

President and chief executive officer Clay Gaspar and his team now expect Devon to average 382,000-388,000 b/d of oil production for all of 2025, an increase of 2,000 b/d from previous guidance. Similarly, the midpoint of total production guidance is now 819,000 boe/d versus 815,000 nearly 3 months ago.

Speaking to analysts and investors on a May 7 call, Gaspar added some details to an efficiency program, rolled out late last month, that aims to generate $1 billion in extra cash flow annually by end-2026. In addition to traditional cost cuts totaling $150 million, leaders also are looking to generate $550 million annually from design optimization, vendor management, less downtime, and flatter production declines, among other things. The field work will look to build on Devon’s efforts in the Delaware, where the operator has roughly maintained output while trimming the rig count to 11 from 16 over several quarters.

Devon is doing these things, Gaspar said, rather than committing to larger capex cuts. But, additional steps could be taken should the price of West Texas Intermediate continue to weaken.

“When the market gets a little closer to the low $50s and we feel like that has some sustainability... we’d be more likely to take more aggressive actions in addition to the maintenance capital mode we’re in now,” Gaspar said.

Having teams focused on the $1 billion plan’s goals means leaders are “not yo-yoing" too much with capex cuts and possible future additions. A longer-term goal, chief financial officer Jeff Ritenour said on the call, is to lower Devon’s maintenance capex budget from 2025's $3.8 billion to 3.4-3.45 billion annually.