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Devon Energy aims to boost annual pretax cash flow by $1 billion through a series of cost-reduction efforts.
Oklahoma City-based Devon plans to streamline upstream field operations, decrease D&C costs and improve operating margins, the company announced April 22.
“Given the challenging market and shifting competitive landscape, this is the right moment to focus internally and improve our profitability,” said Devon President and CEO Clay Gaspar.
Devon aims to save $300 million per year through capital efficiencies, including optimizing well designs, reducing cycle times and standardizing facilities and vendor management.
The company aims to save another $250 million per year by optimizing upstream production with advanced analytics, reducing downtime and flattening production declines.
Enhancing midstream commercial contracts, increasing realizations and lowering its GP&T cost structure will be used to cut another $300 million.
Another $150 million in savings will stem from reducing interest expenses and corporate costs.
Plans are expected to be fully realized by the end of 2026, with 30% of the savings achieved by year-end 2025.
Hart Energy has reached out to Devon for more information on its cost reduction efforts.
The company said it will update investors on its optimization plans with the release of its first-quarter earnings on May 7.
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Shifting strategies
Gaspar recently took the helm at Devon from outgoing CEO Rick Muncrief, who retired at the beginning of March.
Muncrief grew Devon through large-scale M&A. Last year, Devon completed a $5 billion acquisition of Grayson Mill Energy in the Williston Basin.
Previously CEO of WPX Energy, Muncrief became president and CEO at Devon after merging the two companies in 2021 in a $5.75 billion combination. The WPX deal gave Devon a stronger footprint in the Permian’s Delaware Basin.
Gaspar, for his part, is more focused on improving Devon’s current assets, Siebert Williams Shank & Co. Managing Director Gabriele Sorbara told Hart Energy.
The firm sensed that Devon was “taking a pause on M&A as it focuses on improving its portfolio of assets (including improving the base decline, extending its inventory organically, lowering corporate costs and improving capital efficiencies),” Sorbara noted in an April 14 report.
Devon announced several other changes to its leadership structure earlier this year.
John Raines, previously Devon’s Delaware Basin leader, was promoted to senior vice president of E&P asset management.