Devon Energy Corp. raised its full-year oil output forecast and beat estimates for quarterly profit on Aug. 6, as the U.S. oil and gas producer drilled more in the Delaware basin and sold it at higher prices while keeping a tight lid on expenses.
The company recorded a 5% rise in prices for oil sold at $56.68 per barrel in the quarter due to better hedging and at a time when U.S. light crude prices averaged about 11.8% lower than a year earlier.
Excluding hedging, the company’s realized price for oil was down nearly 13%. Oil producers typically hedge to lock in a price, guaranteeing a fixed amount for their output.
Devon said it has hedged about 75% of oil and gas that it expects to produce in second-half 2019.
“We see the company being able to continue to grow oil production at a strong rate, while reducing its break-even oil price with aggressive cost-cutting efforts,” Edward Jones analyst Jennifer Rowland said in a note.
The company’s output from the Delaware basin in the oil-rich Permian Basin field surged 58% to 120,000 barrels of oil equivalent per day (boe/d) in the second quarter, while total expenses fell 30% to $1.68 billion in the quarter. Total production fell 3.7% to 512,000 boe/d in the quarter, but beat analysts’ estimates of 509,690 boe/d, according to IBES data from Refinitiv.
The company, which has been divesting non-core assets to pare its debt and become a pure-play U.S. oil producer, also cut its full-year capital expenditure guidance by $50 million to a range of $1.8 billion to $1.9 billion.
The company said the midpoint of its 2019 production outlook now represents an estimated oil growth rate of 19%, up from its previous guidance of 17%, the company said.
Devon’s net income attributable to shareholders was $495 million, or $1.19 per share, in the second quarter ended June. 30, compared with a loss of $425 million, or 83 cents per share, a year earlier.
Adjusting for certain items, the company earned 43 cents per share compared with analysts’ expectation of 34 cents per share.
Recommended Reading
NextDecade Appoints Former Exxon Mobil Executive Tarik Skeik as COO
2024-07-25 - Tarik Skeik will take up NextDecade's COO reins roughly two months after the company disclosed it had doubts about remaining a “going concern.”
Permian’s LandBridge Prices IPO Below Range at $17/Share, Raising $247MM
2024-06-30 - Houston-based LandBridge, which manages some 220,000 surface acres in the Permian Basin, kicked off trading at $19 per share, more than 10% above its listing price.
LandBridge Chair: In-basin Data Centers Coming for Permian NatGas
2024-06-28 - Newly public Delaware Basin surface-owner LandBridge Co. has a 100-year lease agreement with one developer that could result in ground-breaking in two years and 1 GW in demand.
Trio Chairman Robin Ross Named CEO Less Than a Month After Return
2024-07-15 - Robin Ross, who last month returned to Trio Petroleum as board chair, has been named CEO while predecessor Michael Peterson will remain as a consultant.
Five Point Closes Infrastructure Fund with $1.4B in Commitments
2024-09-09 - Five Point Energy, which created newly public Permian Basin company LandBridge, said its Five Point Energy Fund IV was oversubscribed from a target of $1.25 billion.