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Devon (DVN) Gains From Multi-Basin Assets & Debt Management
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Devon Energy Corp. (DVN - Free Report) has been reaping the benefits of strong production volumes from its multi- basin assets spread in the United States. Devon is managing its debt efficiently and using every opportunity to lower its debt burden, which is boosting the company’s margins.
Devon currently has a Zacks Rank #4 (Sell). Volatile commodity prices, still-high interest rates and highly competitive oil and gas industry can have an adverse impact on its operations.
Tailwinds
DVN has a diverse commodity mix, with a balanced exposure to oil, natural gas and natural gas liquids production volumes. Courtesy of ongoing investments in higher-margin, multi- basin U.S. oil-producing regions and solid base production, management expects first-quarter 2024 total production in the range of 630,000-650,000 barrels of oil equivalent per day (Boe/d). The company is making strategic investments to upgrade and expand its assets, and plans to invest in the range of $3.3-$3.6 billion in 2024.
Devon continues to manage costs to boost margins. The company has been reducing its costs by selling higher-cost assets and bringing new lower-cost production assets online. It is also working to reduce its drilling and completion costs, and is better aligning personnel with the go-forward business.
The company is managing its debt efficiently and using every opportunity to lower its debt burden. Its long-term debt as of Dec 31, 2023, was $5.67 billion, which reflected an 8.3% decline from $6.2 billion as of Dec 31, 2022. Total current liabilities as of Dec 31, 2023, were $2.94 billion, down from $3.1 billion as of Dec 31, 2022. Devon's total liquidity, as of Dec 31, 2023, was $3.9 billion, sufficient to meet its near-term debt obligations.
Headwinds
Volatility in commodity prices and the way it will trade in the future could have a significant impact on the company's business. Despite hedges, commodity prices might keep fluctuating for various reasons that are beyond its control and can impact Devon’s expected free cash flow generation capability.
It operates in a highly competitive oil and gas industry. Some of the competitors in this industry are financially stronger than DVN with more resources at their disposal. This might limit its capacity to apply for new drilling rights or acquire properties.
Price Performance
Devon’s shares have gained 6% in the past three months compared with its industry’s growth of 2.5%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks worth considering in the same sector are RPC Inc. (RES - Free Report) , Murphy USA (MUSA - Free Report) and Nextracker Inc. (NXT - Free Report) , each sporting a Zacks Rank#1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for RES’ 2024 earnings per share (EPS) indicates an increase of 6.1% in the past 60 days. It reported earnings surprise of 58.3% in the last reported quarter.
The Zacks Consensus Estimate for MUSA’s 2024 EPS indicates a rise of 4.3% in the past 60 days. It reported average earnings surprise of 13.63% in the last four quarters.
The Zacks Consensus Estimate for NXT’s fiscal 2024 EPS indicates an improvement of 21% in the past 60 days. It reported average earnings surprise of 56.3% in the last four quarters.
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Devon (DVN) Gains From Multi-Basin Assets & Debt Management
Devon Energy Corp. (DVN - Free Report) has been reaping the benefits of strong production volumes from its multi- basin assets spread in the United States. Devon is managing its debt efficiently and using every opportunity to lower its debt burden, which is boosting the company’s margins.
Devon currently has a Zacks Rank #4 (Sell). Volatile commodity prices, still-high interest rates and highly competitive oil and gas industry can have an adverse impact on its operations.
Tailwinds
DVN has a diverse commodity mix, with a balanced exposure to oil, natural gas and natural gas liquids production volumes. Courtesy of ongoing investments in higher-margin, multi- basin U.S. oil-producing regions and solid base production, management expects first-quarter 2024 total production in the range of 630,000-650,000 barrels of oil equivalent per day (Boe/d). The company is making strategic investments to upgrade and expand its assets, and plans to invest in the range of $3.3-$3.6 billion in 2024.
Devon continues to manage costs to boost margins. The company has been reducing its costs by selling higher-cost assets and bringing new lower-cost production assets online. It is also working to reduce its drilling and completion costs, and is better aligning personnel with the go-forward business.
The company is managing its debt efficiently and using every opportunity to lower its debt burden. Its long-term debt as of Dec 31, 2023, was $5.67 billion, which reflected an 8.3% decline from $6.2 billion as of Dec 31, 2022. Total current liabilities as of Dec 31, 2023, were $2.94 billion, down from $3.1 billion as of Dec 31, 2022. Devon's total liquidity, as of Dec 31, 2023, was $3.9 billion, sufficient to meet its near-term debt obligations.
Headwinds
Volatility in commodity prices and the way it will trade in the future could have a significant impact on the company's business. Despite hedges, commodity prices might keep fluctuating for various reasons that are beyond its control and can impact Devon’s expected free cash flow generation capability.
It operates in a highly competitive oil and gas industry. Some of the competitors in this industry are financially stronger than DVN with more resources at their disposal. This might limit its capacity to apply for new drilling rights or acquire properties.
Price Performance
Devon’s shares have gained 6% in the past three months compared with its industry’s growth of 2.5%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks worth considering in the same sector are RPC Inc. (RES - Free Report) , Murphy USA (MUSA - Free Report) and Nextracker Inc. (NXT - Free Report) , each sporting a Zacks Rank#1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for RES’ 2024 earnings per share (EPS) indicates an increase of 6.1% in the past 60 days. It reported earnings surprise of 58.3% in the last reported quarter.
The Zacks Consensus Estimate for MUSA’s 2024 EPS indicates a rise of 4.3% in the past 60 days. It reported average earnings surprise of 13.63% in the last four quarters.
The Zacks Consensus Estimate for NXT’s fiscal 2024 EPS indicates an improvement of 21% in the past 60 days. It reported average earnings surprise of 56.3% in the last four quarters.