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Devon Energy (DVN) Q3 Loss Narrower Than Expected, View Up

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Devon Energy Corp. (DVN - Free Report) reported third-quarter 2020 adjusted loss per share of 4 cents, narrower than the Zacks Consensus Estimate of a loss of 8 cents. In the year-ago quarter, the company reported earnings of 26 cents per share.

Revenues

Total revenues of $1,097 million were on par with the Zacks Consensus Estimate. The top line declined 38.9% from the year-ago figure due to a decline in commodity prices.

Highlights of the Release

Total net production for third-quarter 2020 touched 326,000 barrels of oil equivalent per day (Boe/d), which exceeded the guided range of 301,000-318,000 Boe/d and was marginally up sequentially. Oil production averaged 146,000 barrels per day, which decreased 3.3% on a year-over-year basis. Overall solid performance for the third quarter was due to strong contribution from the Delaware Basin.

Total production expenses for the third quarter were $271 million, decreasing 7.8% year over year. Financing cost for the quarter was $66 million, up 10% from the year-ago period.

Devon Energy’s completion of divestitures of Canadian Heavy Oil, Enlink Midstream and Barnett Shale assets enhanced its competitive position. The company’s decision to merge with WPX Energy will strengthen its position in the prolific Permian Basin.

Devon Energy Corporation Price, Consensus and EPS Surprise

Devon Energy Corporation Price, Consensus and EPS Surprise

Devon Energy Corporation price-consensus-eps-surprise-chart | Devon Energy Corporation Quote

Realized Prices

Realized oil prices for the quarter were $38.21 per barrel, down 32.5% from $56.58 in the year-ago period. Realized prices for natural gas were down 18.1% to $1.54 per thousand cubic feet from $1.88 in the prior-year quarter.

Total oil equivalent realized prices — including cash settlements — were $22.93 per Boe, down 30.1% year over year.

Financial Highlights

As of Sep 30, 2020, the company had cash and cash equivalents of $1,707 million, up from $1,464 million on Dec 31, 2019. It exited the third quarter with $4.9 billion of liquidity and no debt maturities till 2025.

As of Sep 30, 2020, long-term debt amounted to $4,297 million, up from $4,294 million on Dec 31, 2019.

Devon Energy’s net cash from operating activities for third-quarter 2020 was $427 million, down 28.2% from the year-ago period.

Guidance

It estimates total production for fourth-quarter 2020 in the range of 318,000-334,000 Boe/d. The company raised its 2020 oil production view by 5,500 barrels of oil per day (Bbld) to the range of 152,000-154,000 Bbld, primarily due to strong base production.

Capital expenditure for 2020 is expected within $950-$990 million, which reflects a $30 million reduction from the midpoint of the previous guidance. For the fourth quarter, it anticipates to invest within $160-$200 million.

Through several initiatives and merger with WPX Energy, Devon Energy expects to deliver cost savings of $575 million by year-end 2021.

The company — through strategic initiatives — is expected to generate more than $2 billion in cost savings over the next five-year period.

Upcoming Releases

WPX Energy is scheduled to report third-quarter 2020 results on Nov 2. The Zacks Consensus Estimate for earnings for the quarter is pegged at 6 cents per share.

Murphy Oil Corporation (MUR - Free Report) is scheduled to announce third-quarter 2020 results on Nov 5. The Zacks Consensus Estimate for the bottom line for the quarter to be reported is pegged at a loss of 19 cents per share.

Occidental Petroleum Corporation (OXY - Free Report) is scheduled to report third-quarter 2020 results on Nov 9. The Zacks Consensus Estimate for the bottom line for the quarter is pegged at a loss of 70 cents per share.

Zacks Rank

Devon Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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