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Devon Divests More Assets, Shareholders Continue to Benefit

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Devon Energy Corporation (DVN - Free Report) announced that it has completed the sale of its ownership interests in EnLink Midstream Partners, LP and EnLink Midstream, LLC (ENLC - Free Report) for $3.125 billion to affiliates of Global Infrastructure Partners. The deal was announced on Jun 6, 2018. (Read More: Devon to Monetize Midstream Assets, Buyback More Shares)

The company monetized in excess of $4 billion worth of assets year to date. It is currently in talks with potential buyers to divest assets worth $1 billion to meet its divestiture target of $5 billion for 2018.

Vision 2020

Devon continues to work on its Vision 2020 plan. To this end, the company is introducing advance technology to produce high volumes from wells, proceeding with cost-saving initiatives and generating peer-leading returns on invested capital for its shareholders.

Shareholders Gain

The initiatives undertaken by the company will generate cumulative free cash flow of $2.5 billion through 2020. Also, costs will be lowered by 15% through 2020 from 2017 levels. Devon will utilize these funds not only to expand existing operation but also to increase its shareholder’s worth as well as lower outstanding debts.

Devon’s board of directors authorized a $3-billion increase in Devon’s previously announced $1 billion share-repurchase program. With this increase, the total repurchase program is presently valued at $4 billion. Recently, the company raised its quarterly dividend rate by 33%.

Devon has plans to retire $1 billion debt for strengthening balance sheet and lowering interest expenses.

U.S. Oil Production to Drive Devon

Devon Energy’s focus on the resource-rich Delaware and STACK assets, which are the backbone of its U.S. based production, is likely to drive its performance. Devon expects 2018 oil production to improve 16% (versus earlier expectation of 14%) from 2017 levels. Given the ongoing improvement in oil prices, the prospects of the company are definitely going to get a boost as a result.

Price Movement

Devon Energy has returned 36.8% in the past 12 months, outperforming its industry’s rally of 18.7%.



Zacks Rank & Another Key Pick

Devon currently carries a Zacks Rank #2 (Buy). Another top-ranked stock in the same space is Murphy Oil Corporation (MUR - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy Oil delivered an average positive earnings surprise of 102.4% in the last four quarters. Its 2018 earnings estimates moved up 34.4% in the past 60 days to $1.64 per share.

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