Devon sticks to production outlook

May 9, 2023
Like some of their peers, the company’s executives say goods and services inflation is moderating.

Devon Energy Corp., Oklahoma City, plans to “continue to build this thing for the long haul,” president and chief executive officer Rick Muncrief said May 9 after the company reported first-quarter production in line with its forecasts.

In the first 3 months of the year, Devon averaged total oil equivalent production of 641,000 boe/d, an increase of 11% from the same period in 2022. Oil production also rose 11% year over year to 320,000 b/d, driven by Eagle Ford assets the company added last fall through the acquisition of Validus Energy (OGJ Online, Aug. 9, 2022).

Oil production in the company’s core Delaware basin operations averaged 211,000 b/d during the quarter, up from 201,000 late last year and 209,000 in first-quarter 2022. Across the company’s projects in the Anadarko, Williston, and Powder River basins, oil production was 65,000 b/d. In all, the company added 42 wells to its operations during this year's first quarter.

That output, coupled with lower realized prices, translated into net profits of $995 million on total revenues of more than $3.8 billion, with both of those numbers essentially in line with those from early 2022. Operating profits were down slightly to about $1.2 billion with production expenses climbing 12% to $693 million (but shrinking 2% to $12.02 per equivalent barrel) while marketing and midstream spending fell more than 16% to $1.1 billion.

The operator is sticking to its full-year production growth guidance of about 9%, which puts Devon on track to average about 650,000 boe/d for all of 2023. The executives said they still expect full-year capital expenditures of $3.6-3.8 billion—with more spending allocated to first-half 2023 and 60% dedicated to the Delaware basin—but added that they are, like several of their public-company peers, seeing inflationary pressures easing for various goods and services as availability improves.

“We’ll just see how that plays out,” Muncrief told analysts on a conference call when asked if his team’s capex forecast might come down later this year.

Also discussed on the call were Devon’s plans to further develop its Eagle Ford holdings: Chief operating officer Clay Gaspar said the company is more tightly spacing new wells while further developing its refrac program. This year, Devon is looking to spud 90 wells in the basin.

Shares of Devon (Ticker: DVN) were down about 3% to roughly $49.25 in midday trading May 9. Over the past 6 months, shares have lost about a quarter of their value, cutting the company’s market capitalization to about $32 billion.