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A month has gone by since the last earnings report for Devon Energy (DVN). Shares have lost about 9.3% 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's Q3 Earnings and Revenues Beat Estimates
Devon Energy Corp. reported third-quarter 2024 earnings per share (EPS) of $2.51, outpacing the Zacks Consensus Estimate of $2.47 by 1.6%.
GAAP earnings per share in the reported quarter were $1.30 compared with $1.34 in the year-ago quarter. The difference between GAAP and operating earnings in the third quarter was due to an impact of 20 cents from fair value changes in financial instruments, 1 cent from deferred tax asset valuation allowance, and 1 cent from restructuring and transaction costs.
Revenues
Total revenues for the quarter were $4.02 billion, which surpassed the Zacks Consensus Estimate of $3.75 billion by 7.2%. Strong production volumes from the Delaware Basin boosted performance, offset marginally by the drop in realized prices of the commodities.
The top line increased 4.9% from the year-ago quarter’s figure.
Production
Net production for the third quarter totaled 728,000 barrels of oil equivalent per day (Boe/d), up 9.5% year over year. Actual production volume exceeded the guided range of 670,000-690,000 Boe/d. Strong performance from the Delaware Basin and Powder River Basin boosted year-over-year production volumes.
Natural gas liquids production increased 16.9% year over year to 194,000 barrels per day (Bbl/d). Oil production amounted to 335,000 Bbl/d, up 4.4% 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 $74.26 per barrel, down 6.95% from $79.81 a year ago. Realized prices for natural gas liquids were $19.36 per barrel, down 6.6% from $20.72 in the prior-year quarter.
Realized gas prices were 84 cents per thousand cubic feet, reflecting a 58.2% decline from $2.01 a year ago.
Total oil equivalent realized prices, including cash settlements, were $40.71 per barrel of oil equivalent, down nearly 13.2% year over year.
Other Highlights
Total production expenses in third-quarter 2024 were $763 million, up 0.8% year over year.
Devon repurchased shares worth $295 million in the third quarter from its $3 billion share-repurchase program. Since the inception of the buyback program in late 2021, the company has repurchased shares worth $3 billion.
Due to a year-over-year decline in realized price in the reported quarter and an increase in gathering, processing and transportation expenses, it resulted in field-level cash margins of $28.41 per Boe in the reported quarter, down 18.2% year-over-year.
Devon declared its fixed quarterly cash dividend of 22 cents per share, payable on Dec. 30, 2024, to shareholders of record at the close of business on Dec. 13, 2024. With the recent pullback in commodity prices and equities, as well as the additional leverage taken on by the company, Devon’s management has decided not to declare a variable dividend in the current quarter. Devon’s capital allocation will now focus on strengthening the balance sheet and returning capital to shareholders through the fixed dividend and share buybacks.