(MENAFN- Baystreet) Devon Energy Corp (NYSE: DVN) raised its production guidance for 2024 after topping first-quarter earnings estimates as its production exceeded expectations and more than offset weak natural gas prices.
The shale producer, which has focused its drilling program on the Delaware basin in the Permian, reported $730 million, or $1.16 per diluted share, in core earnings for Q1, adjusted for items analysts typically exclude from estimates. The earnings per share exceeded the average analyst estimate of $1.11 per share, according to LSEG data.
Devon Energy's operating cash flow totaled $1.7 billion in the first quarter, rising by 4% compared to the year-ago period. This level of cash flow funded all the company's capital requirements and resulted in $844 million of free cash flow for the first quarter of 2024.
“This success was showcased by excellent well productivity and efficiency gains from our Delaware-focused program that drove volumes above guidance by a wide margin,” Devon Energy's president and CEO Rick Muncrief said in a statement.
“Furthermore, our operating margins benefitted from the team's efforts to drive per-unit costs lower than plan, allowing us to capture the full benefit of rising oil prices during the quarter.”
As a result of the momentum in Q1 and the higher-than-expected production, Devon raised its second-quarter and full-year 2024 guidance.
Devon is increasing its full-year 2024 production forecast by 2% to a range of 655,000 to 675,000 barrels of oil equivalent per day (boepd). The company expects to deliver this improved production outlook with capital spending in a range of $3.3 billion to $3.6 billion, down by 10% compared to 2023.
The improved outlook is underpinned by improved well productivity in the Delaware basin, high-graded activity in the Williston basin, and enhanced efficiencies in the Eagle Ford, Devon said.
“This improved outlook raises production targets and increases free cash flow projections, which will enhance our ability to accelerate the return of capital to shareholders,” CEO Muncrief noted.
By Tsvetana Paraskova for Oilprice
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