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Devon Energy (DVN) Down 2.2% 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 2.2% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Devon Energy Q2 Earnings Beat Estimates, '24 View Raised
Devon Energy Corp. reported second-quarter 2024 earnings per share of $1.41, outpacing the Zacks Consensus Estimate of $1.29 by 9.3%. Strong production volumes and efficient cost management allowed the company to enjoy the benefit of rising oil prices in the quarter.
GAAP earnings per share in the reported quarter were $1.34 compared with $1.07 in the year-ago quarter. The difference between GAAP and operating earnings in the second quarter was due to a 4-cent impact of fair value changes in financial instruments, 2 cents related to assets dispositions and one cent related to referred tax asset valuation allowance.
Revenues
Total revenues for the quarter were $3.91 billion, which surpassed the Zacks Consensus Estimate of $3.87 billion by 1.1%. The top line increased 13.4% from the year-ago quarter’s figure.
Production
Net production for the second quarter totaled 707,000 barrels of oil equivalent per day (Boe/d), up 7% year over year. Actual production volume exceeded the guided range of 670,000- 690,000 Boe/d. Strong performance from Delaware Basin, Eagle Ford and Williston Basin boosted year-over-year production volumes.
Natural gas liquids production increased 10.9% year over year to 182,000 barrels per day (Bbl/d). Oil production amounted to 335,000 Bbl/d, up 3.7% on a year-over-year basis, attributed to a strong contribution from the Delaware Basin.
Realized Prices
Realized oil prices (including cash settlements) for the quarter were $78.95 per barrel, up 10.05% from $71.74 a year ago. Realized prices for natural gas liquids were $19.71 per barrel, up 10.8% from $17.79 in the prior-year quarter.
Realized gas prices were $1.10 per thousand cubic feet, reflecting a 33.7% decline from $1.66 a year ago. Total oil equivalent realized prices, including cash settlements, were $44.29 per barrel of oil equivalent, up nearly 5.5% year over year.
Other Highlights
Total production expenses in second-quarter 2024 were $788 million, up 9.6% year over year.
Devon has repurchased 5.2 million shares at a total cost of $256 million in the second quarter from its $3 billion share-repurchase program. Since the inception of the buyback program in late 2021, the company has repurchased 54.7 million shares at a total cost of $2.7 billion.
Given this substantial progress and the expected free cash flow accretion from the recent Grayson Mill acquisition, Devon’s management has increased its share-repurchase authorization by 67% to $5 billion. The expanded authorization extends through mid-year 2026.
Production costs, including taxes, averaged $12.25 per barrels of oil equivalent (Boe) in the quarter, a decline of 1% from the prior period. This low-cost structure, coupled with the benefits of high-margin production, resulted in field-level cash margins of $31.19 per Boe in the reported quarter.
Management declared a fixed-plus-variable dividend of 44 cents per share. This resulted in an annualized dividend of $1.76.
Financial Highlights
As of Jun 30, 2024, the company had cash and cash equivalents (including restricted cash) of $1.16 billion compared with $0.87 billion as of Dec 31, 2023.
As of Jun 30, 2024, long-term debt amounted to $5.66 billion, down from $5.67 billion as of Dec 31, 2023. Devon’s net cash from operating activities was $1.53 billion in the second quarter compared with $1.40 billion a year ago. Capital expenditures totaled $948 million, down 12.1% from the previous year quarter.
Guidance
Third-quarter production is expected in the range of 670,000-690,000 Boe per day and capital spending is estimated in the band of $870-$930 million. Courtesy of strong first-half results, Devon is increasing its full-year 2024 production forecast to a range of 677,000-688,000 Boe per day from the prior guided range of 655,000-675,000 Boe/d. This incremental production in 2024 is expected to be delivered without an increase in capital.
Devon reiterated its capital expenditure in the band of $3.3-$3.6 billion for 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -5.5% due to these changes.
VGM Scores
Currently, Devon Energy has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Coterra Energy (CTRA - Free Report) , has gained 0.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Cabot reported revenues of $1.27 billion in the last reported quarter, representing a year-over-year change of +7.3%. EPS of $0.37 for the same period compares with $0.39 a year ago.
For the current quarter, Cabot is expected to post earnings of $0.49 per share, indicating a change of -2% from the year-ago quarter. The Zacks Consensus Estimate has changed -4% over the last 30 days.
Cabot has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Devon Energy (DVN) Down 2.2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Devon Energy (DVN - Free Report) . Shares have lost about 2.2% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Devon Energy Q2 Earnings Beat Estimates, '24 View Raised
Devon Energy Corp. reported second-quarter 2024 earnings per share of $1.41, outpacing the Zacks Consensus Estimate of $1.29 by 9.3%. Strong production volumes and efficient cost management allowed the company to enjoy the benefit of rising oil prices in the quarter.
GAAP earnings per share in the reported quarter were $1.34 compared with $1.07 in the year-ago quarter. The difference between GAAP and operating earnings in the second quarter was due to a 4-cent impact of fair value changes in financial instruments, 2 cents related to assets dispositions and one cent related to referred tax asset valuation allowance.
Revenues
Total revenues for the quarter were $3.91 billion, which surpassed the Zacks Consensus Estimate of $3.87 billion by 1.1%. The top line increased 13.4% from the year-ago quarter’s figure.
Production
Net production for the second quarter totaled 707,000 barrels of oil equivalent per day (Boe/d), up 7% year over year. Actual production volume exceeded the guided range of 670,000- 690,000 Boe/d. Strong performance from Delaware Basin, Eagle Ford and Williston Basin boosted year-over-year production volumes.
Natural gas liquids production increased 10.9% year over year to 182,000 barrels per day (Bbl/d). Oil production amounted to 335,000 Bbl/d, up 3.7% on a year-over-year basis, attributed to a strong contribution from the Delaware Basin.
Realized Prices
Realized oil prices (including cash settlements) for the quarter were $78.95 per barrel, up 10.05% from $71.74 a year ago. Realized prices for natural gas liquids were $19.71 per barrel, up 10.8% from $17.79 in the prior-year quarter.
Realized gas prices were $1.10 per thousand cubic feet, reflecting a 33.7% decline from $1.66 a year ago. Total oil equivalent realized prices, including cash settlements, were $44.29 per barrel of oil equivalent, up nearly 5.5% year over year.
Other Highlights
Total production expenses in second-quarter 2024 were $788 million, up 9.6% year over year.
Devon has repurchased 5.2 million shares at a total cost of $256 million in the second quarter from its $3 billion share-repurchase program. Since the inception of the buyback program in late 2021, the company has repurchased 54.7 million shares at a total cost of $2.7 billion.
Given this substantial progress and the expected free cash flow accretion from the recent Grayson Mill acquisition, Devon’s management has increased its share-repurchase authorization by 67% to $5 billion. The expanded authorization extends through mid-year 2026.
Production costs, including taxes, averaged $12.25 per barrels of oil equivalent (Boe) in the quarter, a decline of 1% from the prior period. This low-cost structure, coupled with the benefits of high-margin production, resulted in field-level cash margins of $31.19 per Boe in the reported quarter.
Management declared a fixed-plus-variable dividend of 44 cents per share. This resulted in an annualized dividend of $1.76.
Financial Highlights
As of Jun 30, 2024, the company had cash and cash equivalents (including restricted cash) of $1.16 billion compared with $0.87 billion as of Dec 31, 2023.
As of Jun 30, 2024, long-term debt amounted to $5.66 billion, down from $5.67 billion as of Dec 31, 2023. Devon’s net cash from operating activities was $1.53 billion in the second quarter compared with $1.40 billion a year ago. Capital expenditures totaled $948 million, down 12.1% from the previous year quarter.
Guidance
Third-quarter production is expected in the range of 670,000-690,000 Boe per day and capital spending is estimated in the band of $870-$930 million. Courtesy of strong first-half results, Devon is increasing its full-year 2024 production forecast to a range of 677,000-688,000 Boe per day from the prior guided range of 655,000-675,000 Boe/d. This incremental production in 2024 is expected to be delivered without an increase in capital.
Devon reiterated its capital expenditure in the band of $3.3-$3.6 billion for 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -5.5% due to these changes.
VGM Scores
Currently, Devon Energy has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Coterra Energy (CTRA - Free Report) , has gained 0.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Cabot reported revenues of $1.27 billion in the last reported quarter, representing a year-over-year change of +7.3%. EPS of $0.37 for the same period compares with $0.39 a year ago.
For the current quarter, Cabot is expected to post earnings of $0.49 per share, indicating a change of -2% from the year-ago quarter. The Zacks Consensus Estimate has changed -4% over the last 30 days.
Cabot has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.