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 Devon’s capital spending budget for the year by $100 million because of efficiency gains that are part of a broader cost-cutting program.
In the first 3 months of 2025, Devon produced an average of 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 the fourth quarter 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 conference 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 the end of 2026. In addition to traditional cost cuts totaling $150 million, Devon 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 the past several quarters.
Devon is doing these things, Gaspar said, rather than committing to larger capex cuts as several peers have done in recent days (see Sidebar at right). But Gaspar added that he’s prepared to take more drastic steps should the price of West Texas Intermediate continue to weaken as it has for more of 2025.
“When the market gets a little closer to the low $50s and we feel like that has some sustainability, I think we’d be more likely to take more aggressive actions in addition to the maintenance capital mode we’re in now,” Gaspar said.
In addition, Gaspar said, having teams focused on the $1 billion plan’s goals means leaders are “not yo-yoing them around too much” with capex cuts and possible future additions. A longer-term goal, chief financial officer Jeff Ritenour said on the conference call, is to lower Devon’s maintenance capex budget from this year’s $3.8 billion to $3.4-3.45 billion annually.
In addition to the earnings note, executives said they agreed to sell their 12.5% stake in the Matterhorn Express Pipeline to a consortium consisting of I Squared, MPLX, and Enbridge. The deal is expected to close by end-June. Devon also has sold two corporate pieces of real estate for total proceeds of $120 million, although two transactions also forced the company to book impairment charges of $254 million.
Shares of Devon (Ticker: DVN) were down about 1% to $30.25 in early-afternoon trading May 7. Over the past 6 months, they have lost more than 20% of their value, which has cut the company’s market capitalization to about $19.5 billion.
Geert De Lombaerde | Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.
