Devon (DVN) Q2 Loss Narrower Than Expected, Revenues Miss

Devon Energy Corp. DVN reported second-quarter 2020 adjusted loss per share of 18 cents, narrower than the Zacks Consensus Estimate of a loss of 26 cents. In the year-ago quarter, the company reported earnings of 43 cents per share.

Revenues

Total revenues of $394 million lagged the Zacks Consensus Estimate of $1,322 million by 70.2%. Moreover, the top line declined 81.1% from the year-ago figure due to a decline in commodity prices.

Highlights of the Release

Total net production for second-quarter 2020 touched 325,000 barrels of oil equivalent per day (Boe/d), which came in at the upper end of the guided range of 302,000-328,000 Boe/d and was in line with second-quarter 2019 levels. Oil production averaged 153,000 barrels per day, which increased 6.3% on a year-over-year basis due to better-than-expected base production performance in the Eagle Ford and Anadarko Basin, supported by strong contribution from the Delaware Basin.

Total production expenses for the second quarter were $263 million, increasing 11.1% year over year. Financing cost for the quarter was $69 million, up 4.5% from the year-ago period.

Devon Energy and Banpu Kalnin Ventures plan to accelerate the scheduled closing date of the Barnett Shale asset sale to Oct 1, 2020 from the previously arranged date of Dec 31, 2020. The company expects to receive a net cash payment of more than $300 million at the closing of the transaction.

Devon Energy Corporation Price, Consensus and EPS Surprise

Devon Energy Corporation price-consensus-eps-surprise-chart | Devon Energy Corporation Quote

Realized Prices

Realized oil prices for the quarter were $36.50 per barrel, down 35.6% from $56.70 in the year-ago period. Realized prices for natural gas were down 8.7% to $1.57 per thousand cubic feet from $1.72 in the prior-year quarter.

Total oil equivalent realized prices — including cash settlements — were $22.20 per Boe, down 31.9% year over year.

Financial Highlights

As of Jun 30, 2020, the company had cash and cash equivalents of $1,474 million, up from $1,464 million on Dec 31, 2019. It exited the second quarter with $4.7 billion of liquidity and no debt maturities till 2025.

As of Jun 30, 2020, long-term debt amounted to $4,296 million, up from $4,294 million on Dec 31, 2019.

Devon’s net cash from operating activities for second-quarter 2020 was $150 million, down 65.3% from the year-ago period.

Guidance

Devon estimates total production for third-quarter 2020 in the range of 301,000-318,000 Boe/d. The same for 2020 is expected in the range of 314,000-331,000 Boe/d.  The company raised its 2020 oil production view by 2,500 barrels of oil per day (Bbld) to the range of 148,000-152,000 Bbld, primarily due to strong base production.

Capital expenditure for 2020 is expected within $950-$1,000 million, which reflects a $25 million reduction from the previous midpoint. For the third quarter, it anticipates to invest within $175-$225 million.

Through several initiatives, Devon expects to deliver cost savings of $300 million by year-end 2020.

The company — through strategic initiatives — is expected to generate more than $2 billion in free cash flow, which will be utilized to lower leverage, pay normal dividend and also a special dividend, if approved by the board of directors.

Other Releases

WPX Energy Inc.’s WPX second-quarter 2020 earnings of 12 cents per share beat the Zacks Consensus Estimate by a whopping 500%.

CNX Resources Corporation CNX reported second-quarter 2020 adjusted earnings of 13 cents per share, which surpassed the Zacks Consensus Estimate of 3 cents by a whopping 333.3%.

Noble Energy, Inc. NBL reported second-quarter adjusted loss of 24 cents per share, narrower than the Zacks Consensus Estimate of a loss of 39 cents.

Zacks Rank

Devon 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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