Devon Energy Q2 2020 Earnings Report
Key Takeaways
Devon Energy reported a net loss of $670 million for Q2 2020, impacted by a $593 million unrealized change in the fair value of the company's derivative position. However, the company exceeded oil production guidance, reduced capital expenditures, and improved operating costs. Strategic initiatives include accelerating the Barnett Shale divestiture, declaring a $100 million special dividend, and planning to reduce costs and debt.
Capital expenditures were 10% below guidance at $203 million due to efficiency gains.
Oil production totaled 153,000 barrels per day, exceeding midpoint guidance by 3,000 barrels per day.
Operating costs decreased 14% year-over-year.
The company exited the quarter with $4.7 billion of liquidity, including $1.7 billion in cash.
Devon Energy
Devon Energy
Forward Guidance
Devon is lowering its full-year 2020 E&P capital expenditure guidance to a range of $950 million to $1 billion and is raising its full-year oil production forecast in 2020 to a range of 148,000 to 152,000 barrels per day.
Positive Outlook
- Capital efficiency gains in the Delaware Basin.
- Strong base production performance across its diversified asset portfolio.
- Lower production costs.
- Further reductions in G&A expense.
- Focus on appraisal work in the emerging Niobrara oil play.
Challenges Ahead
- Timing of completion activity is expected to decline oil production to a range of 138,000 to 143,000 barrels per day.
- Volatility of oil, gas and NGL prices.
- Uncertainties inherent in estimating oil, gas and NGL reserves.
- Regulatory restrictions, compliance costs and other risks relating to governmental regulation, including with respect to environmental matters.
- Risks related to regulatory, social and market efforts to address climate change.