Devon Energy Dips After Q3 Earnings Beat, Dividend Cut | Whuff News


Energy stocks Devon Power (DVN) Q3 earnings came in ahead of expectations after the market closed on Tuesday. DVN stock ended Tuesday’s regular session on a buying cup-with-handle base. Shares were down 0.9% in after-hours trading.




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Oklahoma City-based oil and natural gas explorer Devon has major interests in the Delaware Basin area of ​​the Permian Basin in West Texas. It also has acreage in the Eagle Ford basin in Texas, the Williston Basin in the northern US, the Anadarko Basin in Oklahoma and the Powder River Basin in Wyoming.

Devon is the third largest company, measured by market capitalization, in the US group of explorers/producers, at 50.24 billion dollars. That puts it behind Pioneering Natural Resources (PXD) at $60.92 billion and Benefits of EOG (EOG) at $70.49 billion.

All are still a fraction of the size of similar companies Exxon Mobil (XOM), at $461.8 billion, and Chevron (CVX), with a market capitalization of $354.1 billion.

Devon is the leader in the US exploration/production team, taking the top 10 out of 197 IBD teams.

Earnings hit again, but it’s split getting a trim

The Devon reporter projected third-quarter EPS of $2.18. The FactSet consensus estimate called for earnings of $2.12. and $4.15 billion in sales – up 96% and 20%, respectively. Earnings kept the oil producer’s pace above 100%, but still marked a sharp slowdown from the three-fold record highs recorded in the past six quarters.

The oil producer has a history of beating EPS estimates, with Q2 beating by more than 12%, Q1 beating by more than 7%, and Q4 2021 by more than 12%.

Management announced a quarterly dividend of $1.35, down from the second quarter’s $1.55 payout, although 61% more than a year ago.

The acquisition adds to the Ford Eagle and Williston Basin

The 51-year-old company has recently expanded through acquisitions. Devon announced the acquisition of Validus Energy and operations in the Eagle Ford, on September 28, 2022, for approximately $1.8 billion in cash. The purchase adds 42,000 net acres to the existing Devon lease area in the basin. Valdius produces about 35,000 barrels of oil equivalent per day and is expected to increase to an average of 40,000 Boe per day next year.

On July 28, Devon announced its acquisition of Rimrock Oil & Gas in the Williston Basin in a cash deal of $865 million, less adjustments. This acquisition adds 38,000 acres to Devon’s existing footprint. Devon expects production from the new asset to increase to an average of 20,000 Boe per day next year.

In January 2021, Devon doubled its size – paying $5.8 billion to acquire WPX Energy.

Analysts See Big Growth in Energy Assets

Piper Sandler analyst Mark Lear expects full-year sales of $13.20 billion and $15.84 billion in 2023, vs. $8.08 billion by 2021.

Mizuho cut Devon’s price target to 86 but maintains a buy rating. Piper Sandler has high expectations, and has raised its price to a target of 96 and an overweight rating. Raymond James maintained a strong buy on the energy stock, but lowered his price target to 83.

Devon has an EPS rating of 82, dragged down by lower revenue reports, including a loss in September 2020.

Devon has the highest possible composite score of 99. The company has a high return of 39% on equity, well exceeding the minimum 17% set in the CAN SLIM investment plan.

Devon’s debt equals 70%, vs. 30% for Pioneer and 23% for EOG.

Power Stocks in Buy Zone Ahead of Earnings

Devon shares ended Monday in a 5% buy position after hitting the 75.37 buy point shown on the MarketSmith chart. The buy point reaches 79.14. The stock was within 2% of its 52-week high.

Shares rose more than 2% in premarket trading on Tuesday, showing an open above 79.

The energy stock holds a 97 Relative Strength Rating, meaning it beats 97% of stocks in the IBD database.

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