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Devon Energy (DVN) Q4 Earnings Lag Estimates, Revenues Beat

Zacks Equity Research

Devon Energy Corp. DVN reported fourth-quarter 2018 adjusted earnings per share of 10 cents, which lagged the Zacks Consensus Estimate of 31 cents by 67.7%.

However, quarterly revenues of $3,708 million outpaced the Zacks Consensus Estimate of $1,966 million by a whopping 88.6%. Moreover, total revenues were up 55.8% from the year-ago figure of $2,380 million.

This improvement in revenues can be attributed to solid contribution from upstream businesses.

Devon Energy Corporation Price, Consensus and EPS Surprise

Devon Energy Corporation Price, Consensus and EPS Surprise | Devon Energy Corporation Quote

Highlights of the Release

Total production in fourth-quarter 2018 touched 532,000 barrels of oil equivalent per day (Boe/d). Notably, the actual production was within the company’s expected range of 515,000-543,000 Boe/d. Devon Energy’s strong production is attributable to growth in the company’s four key oil assets: Delaware Basin, STACK, Powder River Basin and Eagle Ford.

In 2018, Devon Energy’s oil-driven capital programs in the United States added 232 million Boe of reserves (extensions and discoveries). This represents a reserve replacement rate of nearly 150% in the United States.

During the reported quarter, total expenses decreased 4.7% year over year to $2,224 million.
The company continues to advance its $5-billion share repurchase plan. The company has repurchased 90 million shares under the program, and the entire fund, when utilized, will reduce the total share count by 30%. This, in turn, will have a positive impact on its earnings.

Realized Prices

Realized oil prices in the quarter were $34.58 per barrel, down 18.1% from $42.21 in the year-ago period. Realized prices for natural gas were up 4.8% to $2.20 per thousand cubic feet from $2.48 in the prior-year quarter.

Total realized prices, including cash settlements, were $25.93 per Boe, down 6.7% year over year.

Financial Health

As of Dec 31, 2018, the company generated cash and cash equivalents of $2,414 million, down from $2,642 million recorded in the corresponding period of 2017. As of Dec 31, 2018, long-term debt amounted to $5,785 million, down from $6,749 million on Dec 31, 2017.

Devon Energy’s cash flow from operating activities in 2018 was $2,228 million compared with $2,209 million a year ago.

Devon Energy estimates total production from its assets in the first quarter of 2019 within 478,000-514,000 Boe/d, while the same for 2019 is expected to average 496,000-514,000 Boe/d.
E&P capital expenditure for 2019 is expected within $2,050-$2,310 million, while $530-$605 million is anticipated to be invested in the first quarter.

Other Releases

Anadarko Petroleum Corporation’s APC fourth-quarter 2018 adjusted earnings of 38 cents per share missed the Zacks Consensus Estimate of 57 cents by 33.33%.

Noble Energy NBL delivered adjusted earnings of 12 cents per share in fourth-quarter 2018, surpassing the Zacks Consensus Estimate of 11 cents by 9%.

Murphy Oil Corporation MUR delivered fourth-quarter 2018 adjusted earnings of 31 cents per share, beating the Zacks Consensus Estimate of 26 cents by 19.2%.

Zacks Rank

Devon Energy currently carries a Zacks Rank #3 (Hold). You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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