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Devon Energy (DVN) Down 2.6% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Devon Energy (DVN - Free Report) . Shares have lost about 2.6% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Devon Energy due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Devon Energy Q4 Earnings & Revenues Surpass Estimates

Devon Energy Corp.  reported fourth-quarter 2021 adjusted earnings of $1.39 per share, beating the Zacks Consensus Estimate of $1.21 by 14.9%. In the year-ago quarter, the company reported break-even earnings.

GAAP earnings for the fourth quarter were $2.23 against a loss of 27 cents per share in the year-ago period.

Revenues

Total revenues of $4,273 million surpassed the Zacks Consensus Estimate by 19.9%. The top line also improved 23.3% from the year-ago figure.

Production

Total net production for fourth-quarter 2021 touched 611,000 barrels of oil equivalent per day (Boe/d), up 86.5% year over year. Fourth-quarter production was better than the guided range of 583,000-601,000 Boe/d. Production for the quarter was driven by high-margin production growth in the Delaware Basin.

Oil production averaged 300,000 barrels per day (Bbl/d), which increased 92.3% on a year-over-year basis, primarily due to strong contributions from Delaware and Williston Basin assets. Natural gas liquids production was also up 92.5% year over year to 154,000 BBl/d.

Realized Prices

Realized oil prices for the quarter were $62.22 per barrel, up 63.7% from $38.01 in the year-ago period. Realized prices for natural gas liquids were up 135.9% to $34.82 per barrel from $14.76 in the prior-year quarter.

Realized gas prices were up 66.3% to $3.26 per thousand cubic feet from $1.96 in the prior-year quarter.

Total oil equivalent realized prices — including cash settlements — were $44.34 per Boe, up 79% year over year.

Other Highlights

Total production expenses for the fourth quarter were $605 million, increasing 123.2% year over year.

In the fourth quarter, Devon repurchased 14 million shares at a total cost of $589 million. The board of directors expanded the company’s share-repurchase authorization by 60% to $1.6 billion, which is equivalent to 5% of Devon’s market capitalization.

Devon’s free cash flow for fourth-quarter 2021 was $1.1 billion. Financing costs for the reported quarter were $86 million, up 22.9% from $70 million in the year-ago period.

At 2021-end, Devon had proved reserves of nearly 1,625 million barrels of oil equivalent (MMBOE), up 14.8% from the 2020-end level of 1,415 MMBOE.

Financial Highlights

As of Dec 31, 2021, the company had cash and cash equivalents including restricted cash of $2,271 million, up from $2,237 million in the corresponding period of 2020. Total liquidity as of Dec 31, 2021 was $5,300 million.

As of Dec 31, 2021, long-term debt amounted to $6,482 million, up from $4,298 million in the comparable period of 2020.

Devon Energy’s net cash from operating activities for fourth-quarter 2021 was $1,616 million compared with $358 million in the year-ago period.

Guidance

Devon expects total production for the first quarter in the range of 560,000-580,000 Boe/d. First-quarter capital expenditure is projected in the range of $540-$610 million.

Devon reiterated its 2022 total production guidance in the range of 570,000-600,000 Boe/d and upstream capital investment within $1.9-$2.2 billion. Total capital expenditure for 2022 is expected in the range of $2.06-$2.44 billion.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Devon Energy has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Devon Energy has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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