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Devon Energy (DVN) Continues to Gain from Cost Savings
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On Aug 8, 2016, we issued an updated research report on Devon Energy Corporation (DVN - Free Report) . The company is benefiting from its cost-saving initiatives and decision to sell its non-core assets. However, the choppy recovery in oil prices and the competitive oil and gas industry continue to be headwinds.
Devon’s 2016 second-quarter results were better than market expectations, thanks to the company’s cost-saving initiatives and a marginal improvement in commodity prices. Production from its core assets in the second quarter was 545,000 barrels of oil (boe) per day, exceeding the mid-point of the guidance by 6,000 boe per day, driven by solid contribution from STACK, Delaware Basin and Canadian operations.
Devon, intent on building its financial strength and streamlining operations, announced that it will divest non-core assets worth $2 billion to $3 billion in 2016. Year to date, the company has inked asset sale deals of nearly $3.2 billion, surpassing its target. Devon will utilize 67% of divesture proceeds to lower debt levels and strengthen its investment-grade balance sheet, and use the balance to further bolster its position in resource-rich U.S. plays, led by the STACK and Delaware Basin.
Devon has resorted to cost-saving initiatives to support its margins. In 2016, cost-saving initiatives of the company are expected to generate total savings of nearly $1 billion against 2015 levels, a big positive under challenging circumstances.
What holds Devon back in achieving its full potential is the very competitive oil and gas industry. Some of the industry players, who are competitors of Devon, are not only financially stronger but are also powerful with more resources at their disposal. This might limit Devon’s capacity to apply for new drilling rights or acquire properties.
Another check on Devon’s performance is its having limited control of certain properties where it has a stake thereby restraining its role in their future development. The reason is that these properties are operated by third parties leaving Devon out of important decisions.
Devon Energy currently has a Zacks Rank #2 (Buy). Other favorably ranked stocks in the Oil & Gas exploration and production industry, which share the same Zacks Rank with Devon, are Murphy Oil Corporation (MUR - Free Report) , Anadarko Petroleum Corporation and EOG Resources, Inc. (EOG - Free Report) .
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Devon Energy (DVN) Continues to Gain from Cost Savings
On Aug 8, 2016, we issued an updated research report on Devon Energy Corporation (DVN - Free Report) . The company is benefiting from its cost-saving initiatives and decision to sell its non-core assets. However, the choppy recovery in oil prices and the competitive oil and gas industry continue to be headwinds.
Devon’s 2016 second-quarter results were better than market expectations, thanks to the company’s cost-saving initiatives and a marginal improvement in commodity prices. Production from its core assets in the second quarter was 545,000 barrels of oil (boe) per day, exceeding the mid-point of the guidance by 6,000 boe per day, driven by solid contribution from STACK, Delaware Basin and Canadian operations.
Devon, intent on building its financial strength and streamlining operations, announced that it will divest non-core assets worth $2 billion to $3 billion in 2016. Year to date, the company has inked asset sale deals of nearly $3.2 billion, surpassing its target. Devon will utilize 67% of divesture proceeds to lower debt levels and strengthen its investment-grade balance sheet, and use the balance to further bolster its position in resource-rich U.S. plays, led by the STACK and Delaware Basin.
DEVON ENERGY Price
DEVON ENERGY Price | DEVON ENERGY Quote
Devon has resorted to cost-saving initiatives to support its margins. In 2016, cost-saving initiatives of the company are expected to generate total savings of nearly $1 billion against 2015 levels, a big positive under challenging circumstances.
What holds Devon back in achieving its full potential is the very competitive oil and gas industry. Some of the industry players, who are competitors of Devon, are not only financially stronger but are also powerful with more resources at their disposal. This might limit Devon’s capacity to apply for new drilling rights or acquire properties.
Another check on Devon’s performance is its having limited control of certain properties where it has a stake thereby restraining its role in their future development. The reason is that these properties are operated by third parties leaving Devon out of important decisions.
Devon Energy currently has a Zacks Rank #2 (Buy). Other favorably ranked stocks in the Oil & Gas exploration and production industry, which share the same Zacks Rank with Devon, are Murphy Oil Corporation (MUR - Free Report) , Anadarko Petroleum Corporation and EOG Resources, Inc. (EOG - Free Report) .
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>