Devon Energy Q1 2020 Earnings Report
Key Takeaways
Devon Energy reported first-quarter 2020 results, highlighting oil production exceeding guidance, increased operating cash flow, and a strong financial position. The company is reducing capital investment and improving cost outlook for 2020.
Upstream capital expenditures were 12 percent below midpoint guidance due to efficiencies.
First-quarter oil production exceeded guidance by 3,000 barrels per day.
Operating cash flow increased 21 percent year-over-year to $529 million.
Free cash flow generation reached $104 million.
Devon Energy
Devon Energy
Forward Guidance
Devon Energy has reduced its capital expenditures by $800 million for the full-year 2020. The revised capital outlook of approximately $1 billion represents a reduction of nearly 45 percent compared to the company’s original 2020 capital budget.
Positive Outlook
- Capital investment reduced 45 percent from original plan to $1 billion
- Oil production expected to be essentially flat compared to 2019
- Hedges protect approximately 90 percent of oil volumes at $42 per barrel
- Full-year cost outlook improved by $250 million, includes executive pay reductions
- Barnett Shale asset sale process on track to close by year-end
Challenges Ahead
- Guidance assumes 10,000 barrels per day of oil curtailments in the second quarter
- The COVID-19 pandemic and its related repercussions have created significant volatility, uncertainty and turmoil in the global economy and our industry.
- This turmoil has included an unprecedented supply-and-demand imbalance for oil and other commodities, resulting in a swift and material decline in commodity prices in early 2020.
- Our future actual results could differ materially from the forward-looking statements in this press release due to the COVID-19 pandemic and related impacts, including, by, among other things: contributing to a sustained or further deterioration in commodity prices; causing takeaway capacity constraints for production, resulting in further production shut-ins and additional downward pressure on impacted regional pricing differentials; limiting our ability to access sources of capital due to disruptions in financial markets; increasing the risk of a downgrade from credit rating agencies; exacerbating counterparty credit risks and the risk of supply chain interruptions; and increasing the risk of operational disruptions due to social distancing measures and other changes to business practices.
- The volatility of oil, gas and NGL prices