| Will Cost Savings Help Devon to Get over Price Fall Blues? | |
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On Nov 23, 2015, we issued an updated research report on Devon Energy Corporation DVN. This independent oil and gas company has suffered from the freefall in oil prices. The company is presently following a disciplined capital investment program and implementing cost saving measures to withstand the challenges.
Devon Energy reported mixed results in third-quarter 2015, wherein earnings per share beat the Zacks Consensus Estimate, while revenues lagged the same. Like other oil and gas operators, Devon too had to pay the price of cheap oil.
Devon’s focus on North American properties has led to increased oil output for five quarters in a row. Production was strong at its Eagle Ford assets averaging 113,000 Boe per day in the third quarter of 2015, a 43% increase year over year. Production at its Delaware Basin asset increased 32% from the year-ago quarter to 61,000 Boe per day. The company raised the midpoint of the 2015 daily total production guidance by 2% to 678,000 boe from 666,500 Boe.
However, persistently soft oil and gas prices are a matter of concern. Despite a 1.3% year-over-year rise in production in the third quarter, the ongoing volatility in global oil prices is impacting the company’s operating results. Devon’s performance depends on the sale of crude oil for a considerable portion of its revenues. In the third quarter of 2015, oil, gas and NGL sales contributed nearly 37% of total revenues, which was significantly lower than the 49% contribution in the year-ago quarter.
Devon Energy operates in a highly competitive oil and gas industry. Some of the competitors in this industry are financially stronger than Devon with more resources at their disposal. This might limit its capacity to apply for new drilling rights or acquire properties.
Devon has planned to lower its capital expenditure going forward, without scarifying on production levels. Devon’s 2015 E&P budget is in the range of $3.8 billion to $4.0 billion, down $100 million at both ends from the previous guidance and down $500 million at both ends from its original guidance issued in Feb 2015. Devon expects its E&P budget to be in the range of $2 billion to $2.5 billion in 2016. In addition, cost-saving initiatives will lead to savings of nearly $550 million in 2016.
Devon currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the oil and gas E&P space are Cobalt International Energy, Inc. CIE, Apache Corp. APA and Matador Resources Company MTDR. All three stocks presently hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report DEVON ENERGY (DVN): Free Stock Analysis Report APACHE CORP (APA): Free Stock Analysis Report COBALT INTL EGY (CIE): Free Stock Analysis Report MATADOR RESOURC (MTDR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
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Devon Energy Corporation
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CODE : DVN |
ISIN : US25179M1036 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Devon Energy is a and oil producing company based in United states of america. Devon Energy holds various exploration projects in Canada. Its main exploration property is JACKFISH OIL SANDS PROJECT in Canada. Devon Energy is listed in United States of America. Its market capitalisation is US$ 21.5 billions as of today (€ 19.3 billions). Its stock quote reached its lowest recent point on August 18, 1995 at US$ 10.00, and its highest recent level on February 22, 2008 at US$ 99.19. Devon Energy has 525 000 000 shares outstanding. |