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Devon Energy Corp. posted a net income of $920 million for the third quarter, rising some 31.8 percent over the previous quarter this year.
The company said in a media release that its average daily production went up eight percent year over year.
However, looking at the net earnings of $1.89 billion for the third quarter of 2022, the company’s profit more than halved.
“Devon’s performance once again demonstrates the strength of our disciplined operating strategy, leading to another quarter of strong financial growth”, said Rick Muncrief, president and CEO. “This growth was highlighted by production per share increasing 10 percent over the past year and we more than doubled our free cash flow during the quarter, reaching our highest level of the year”.
“Looking ahead to 2024, we plan to refine our capital allocation by further concentrating investment in the Delaware Basin”, Muncrief commented. “By shifting more capital to the core of this world-class basin and high-grading activity across our diversified portfolio, we expect to deliver a step-change improvement in capital efficiency, and we are well positioned to generate growth in free cash flow that can once again be harvested for shareholders”.
Production averaged 665,000 barrels of oil equivalent barrels per day (boepd) in the third quarter, representing an increase of eight percent year over year. This result was one percent below midpoint expectations due to select well performance in the Williston Basin and temporary constraints in the Delaware Basin. Oil totaled 321,000 barrels per day in the quarter, which was 48 percent of total volumes, it said.
In the third quarter, the company said it took steps to strengthen its financial position by retiring $242 million of outstanding debt. The company also increased its cash on hand by $273 million in the quarter to a total of $761 million. Outstanding debt declined to $6.2 billion and the company’s net debt-to-EBITDAX ratio was 0.7 times, according to the statement.
Capital spending excluding acquisitions totaled $896 million in the third quarter, a 12 percent decrease from the previous quarter. The decline in capital was driven by the timing of completions in the Delaware Basin, where the company temporarily reduced activity to three completion crews for the second half of the year.
Looking ahead, Devon expects its fourth quarter capital to range from $870 million to $930 million. With this level of investment, the company expects to bring online around 100 gross operated wells during the quarter. Fourth-quarter production is expected to range from 640,000 to 660,000 boepd, with oil production approximating 315,000 barrels per day. This decrease in production from the third quarter is driven by declines in the Williston Basin and timing of completions in the Delaware Basin, Devon said.
In 2024, the company plans to sustain oil production at around 315,000 barrels per day, with total volumes approximating 650,000 boepd. Capital requirements are expected to decline approximately 10 percent from 2023 levels to a range of $3.3 billion to $3.6 billion. This program is estimated to be funded at pricing levels below $40 per barrel, the company said.
To contact the author, email andreson.n.paul@gmail.com
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