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Why Is Devon Energy (DVN) Up 17.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Devon Energy (DVN - Free Report) . Shares have added about 17.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Devon Energy due for a pullback? 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 Q2 Earnings and Revenues Beat Estimates
Devon reported second-quarter 2022 adjusted earnings of $2.59 per share, beating the Zacks Consensus Estimate of $2.38 by 8.8%. Second-quarter earnings were ahead of our estimate of $2.06 per share. Earnings were up 331.7% from the year-ago quarter. The year-over-year improvement was due to the company’s oil-weighted production mix, as well as a recovery in commodity prices.
GAAP earnings for the second quarter were $2.93 compared with 38 cents per share in the year-ago period.
Revenues
Total revenues of $5,626 million surpassed the Zacks Consensus Estimate by 17.3%. Total revenues were better than our estimate of $4,555.3 million. The top line improved 132.8% from the year-ago figure.
Production
Total net production for second-quarter 2022 touched 616,000 barrels of oil equivalent per day (Boe/d), up 8.6% year over year. Second-quarter production exceeded the company’s guidance of 585,000-604,000 Boe/d. Total 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 3.1% on a year-over-year basis primarily due to strong contributions from the Delaware Basin assets. Natural gas liquids production was also up 20.9% year over year to 156,000 BBl/d.
Realized Prices
Realized oil prices for the quarter were $95.80 per barrel, up 90.3% from $50.34 in the year-ago period. Realized prices for natural gas liquids were up 70.4% to $40.28 per barrel from $23.64 in the prior-year quarter.
Realized gas prices were up 130% to $5.06 per thousand cubic feet from $2.2 in the prior-year quarter.
Total oil equivalent realized prices — including cash settlements — were $64.7 per Boe, up 86.7% year over year.
Other Highlights
Total production expenses for the second quarter were $729 million, increasing 42.1% year over year.
Devon Energy’s share-repurchase authorization is $2 billion, which is equivalent to 5% of the company’s market capitalization. The board of directors approved a 13% increase of the fixed quarterly dividend of DVN to 18 cents.
Devon Energy’s free cash flow for second-quarter 2022 was $2.1 billion. Financing costs for the reported quarter were $84 million, up 5% from $80 million in the year-ago period.
Financial Highlights
As of Jun 30, 2022, the company had cash and cash equivalents, including restricted cash, of $3,457 million, up from $2,271 million as of Dec 31, 2021. Total liquidity as of Jun 30, 2022, was $6,500 million, which includes cash of $3.5 billion.
As of Jun 30, 2022, long-term debt amounted to $6,461 million, down from $6,482 million as of Dec 31, 2021.
Devon Energy’s net cash from operating activities for second-quarter 2022 was $2,678 million compared with $1,093 million in the year-ago period. Capital expenditure was $580 million in the second quarter compared with $509 million in the year-ago quarter.
Guidance
Devon Energy expects total production of 593,000-613,000 Boe/d for the third quarter. Third-quarter capital expenditure is projected to be $680-$755 million.
Devon Energy reiterated its 2022 total production guidance at 600,000-610,000 Boe/d and upstream capital investment at $2.2-$2.4 billion. Total capital expenditure for 2022 is expected to be $2.4-$2.64 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -5.24% due to these changes.
VGM Scores
Currently, Devon Energy has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Devon Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Devon Energy is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, Antero Resources (AR - Free Report) , a stock from the same industry, has gained 2.5%. The company reported its results for the quarter ended June 2022 more than a month ago.
Antero Resources reported revenues of $2.2 billion in the last reported quarter, representing a year-over-year change of +349.9%. EPS of $1.69 for the same period compares with $0.14 a year ago.
For the current quarter, Antero Resources is expected to post earnings of $1.81 per share, indicating a change of +852.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.6% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Antero Resources. Also, the stock has a VGM Score of A.
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Why Is Devon Energy (DVN) Up 17.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Devon Energy (DVN - Free Report) . Shares have added about 17.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Devon Energy due for a pullback? 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 Q2 Earnings and Revenues Beat Estimates
Devon reported second-quarter 2022 adjusted earnings of $2.59 per share, beating the Zacks Consensus Estimate of $2.38 by 8.8%. Second-quarter earnings were ahead of our estimate of $2.06 per share. Earnings were up 331.7% from the year-ago quarter. The year-over-year improvement was due to the company’s oil-weighted production mix, as well as a recovery in commodity prices.
GAAP earnings for the second quarter were $2.93 compared with 38 cents per share in the year-ago period.
Revenues
Total revenues of $5,626 million surpassed the Zacks Consensus Estimate by 17.3%. Total revenues were better than our estimate of $4,555.3 million. The top line improved 132.8% from the year-ago figure.
Production
Total net production for second-quarter 2022 touched 616,000 barrels of oil equivalent per day (Boe/d), up 8.6% year over year. Second-quarter production exceeded the company’s guidance of 585,000-604,000 Boe/d. Total 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 3.1% on a year-over-year basis primarily due to strong contributions from the Delaware Basin assets. Natural gas liquids production was also up 20.9% year over year to 156,000 BBl/d.
Realized Prices
Realized oil prices for the quarter were $95.80 per barrel, up 90.3% from $50.34 in the year-ago period. Realized prices for natural gas liquids were up 70.4% to $40.28 per barrel from $23.64 in the prior-year quarter.
Realized gas prices were up 130% to $5.06 per thousand cubic feet from $2.2 in the prior-year quarter.
Total oil equivalent realized prices — including cash settlements — were $64.7 per Boe, up 86.7% year over year.
Other Highlights
Total production expenses for the second quarter were $729 million, increasing 42.1% year over year.
Devon Energy’s share-repurchase authorization is $2 billion, which is equivalent to 5% of the company’s market capitalization. The board of directors approved a 13% increase of the fixed quarterly dividend of DVN to 18 cents.
Devon Energy’s free cash flow for second-quarter 2022 was $2.1 billion. Financing costs for the reported quarter were $84 million, up 5% from $80 million in the year-ago period.
Financial Highlights
As of Jun 30, 2022, the company had cash and cash equivalents, including restricted cash, of $3,457 million, up from $2,271 million as of Dec 31, 2021. Total liquidity as of Jun 30, 2022, was $6,500 million, which includes cash of $3.5 billion.
As of Jun 30, 2022, long-term debt amounted to $6,461 million, down from $6,482 million as of Dec 31, 2021.
Devon Energy’s net cash from operating activities for second-quarter 2022 was $2,678 million compared with $1,093 million in the year-ago period. Capital expenditure was $580 million in the second quarter compared with $509 million in the year-ago quarter.
Guidance
Devon Energy expects total production of 593,000-613,000 Boe/d for the third quarter. Third-quarter capital expenditure is projected to be $680-$755 million.
Devon Energy reiterated its 2022 total production guidance at 600,000-610,000 Boe/d and upstream capital investment at $2.2-$2.4 billion. Total capital expenditure for 2022 is expected to be $2.4-$2.64 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -5.24% due to these changes.
VGM Scores
Currently, Devon Energy has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Devon Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Devon Energy is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, Antero Resources (AR - Free Report) , a stock from the same industry, has gained 2.5%. The company reported its results for the quarter ended June 2022 more than a month ago.
Antero Resources reported revenues of $2.2 billion in the last reported quarter, representing a year-over-year change of +349.9%. EPS of $1.69 for the same period compares with $0.14 a year ago.
For the current quarter, Antero Resources is expected to post earnings of $1.81 per share, indicating a change of +852.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.6% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Antero Resources. Also, the stock has a VGM Score of A.