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DEVON ENERGY CORP/DE 8-K Report, Financial Results (Feb 27, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed February 27, 2024
Period End
February 27, 2024
Security
DVN
In the record · 2016–202610-K1210-Q328-K123

DVN filed 12 annual reports (10-K), 32 quarterly reports (10-Q) and 123 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Jul ’19Jul ’19
  2. Deal closed8-K · Feb ’21Feb ’21
  3. Leadership change8-K · Sep ’22Sep ’22
  4. Leadership change8-K · Aug ’26Aug ’26

01—Abstract

Summary

Summary of the 8-K filed February 27, 2024. Cited figures are marked; the original filing is the authoritative source.

Devon Energy reported fourth-quarter and full-year 2023 results on February 27, 2024, delivering production above the top end of guidance and a strong cash-return story.

Q4 production averaged 662,000 Boe per day (317,000 barrels of oil per day), exceeding the top of guidance, and full-year 2023 production rose 8% year over year on record oil volumes. Operating cash flow was $6.5 billiona and free cash flow was $2.7 billion for the full year, with Q4 free cash flow of $827 million. GAAP net earnings were $1.2 billion ($1.81 per diluted share), while core earnings, which exclude items analysts typically strip out, were $902 million ($1.41 per diluted share).

Capital returns were the centerpiece of the release. The board raised the fixed quarterly dividend 10% to $0.22b per share and declared a fixed-plus-variable dividend of $0.44 per share, payable March 28, 2024. Devon repurchased 5.2 million shares for $234 million in Q4, under a $3 billion buyback program that could reduce the share count by up to 9%.

Management cited a roughly 10% cash-return yield for 2023, and the balance sheet remained investment grade, with $6.2 billionc of debt, $875 million of cash, and a net debt-to-EBITDAX ratio of 0.7x. For 2024, Devon reaffirmed guidance of about 650,000 Boe per day total production and about 315,000 barrels of oil per day, with capital requirements expected to fall about 10% to $3.3–$3.6 billion.

First-quarter production is expected to be about 640,000 Boe per day, reduced roughly 2%d by January winter-weather outages, and first-quarter capital is weighted higher due to a fourth Delaware frac crew. Investors will likely focus on whether the capital-efficiency gains materialize and on the durability of the variable dividend.

02—Key points

Key Highlights

  1. Q4 2023 production of 662,000 Boe/d exceeded the top end of guidance; full-year 2023 production rose 8% year over year, driven by record oil volumes.
  2. Full-year 2023 operating cash flow of $6.5 billion and free cash flow of $2.7 billion; Q4 free cash flow was $827 million.
  3. Q4 GAAP net earnings were $1.2 billion ($1.81/diluted share); core (non-GAAP) earnings were $902 million ($1.41/diluted share).
  4. Declared a $0.44/share fixed-plus-variable dividend (fixed portion up 10% to $0.22) and repurchased $234 million of stock in Q4 under a $3 billion program.
  5. Balance sheet remains investment grade: $6.2 billion of debt, $875 million cash, net debt-to-EBITDAX of 0.7x.
  6. 2024 guidance reaffirmed: about 650,000 Boe/d total and 315,000 bbl/d oil, with capital down about 10% to $3.3–$3.6 billion.
  7. Q1 2024 production expected at about 640,000 Boe/d, reduced roughly 2% by January winter-weather outages, which management says will not affect full-year targets.

03—Questions

Frequently Asked Questions

  1. How much did Devon's dividend change, and what is the total payout?

    Devon raised its fixed quarterly dividend by 10% to $0.22 per share and declared a total fixed-plus-variable dividend of $0.44 per share for Q4 2023. The variable component is $0.22 per share. The dividend is payable March 28, 2024, to holders of record on March 15, 2024.

  2. Why is GAAP earnings different from core earnings?

    GAAP net earnings were $1.2 billion ($1.81 per diluted share) in Q4 2023. Core earnings, a non-GAAP measure, were $902 million ($1.41 per diluted share). The difference mainly reflects a $247 million after-NCI fair-value gain on financial instruments, which is excluded from core earnings because it is non-cash and volatile.

  3. What does 2024 look like for production and capital spending?

    Devon reaffirmed 2024 guidance of about 650,000 Boe/d total production, including about 315,000 bbl/d of oil, and expects capital to fall about 10% year over year to $3.3–$3.6 billion. Q1 2024 production is expected at about 640,000 Boe/d after a roughly 2% weather-related reduction, and Q1 capital of $915–$965 million is front-loaded by a fourth Delaware frac crew.

  4. How strong is Devon's balance sheet?

    Devon ended 2023 with $6.2 billion of total debt and $875 million of cash, giving net debt of about $5.3 billion. Its net debt-to-EBITDAX ratio was 0.7x, and the company describes its financial position as investment grade.

  5. How much stock could Devon retire under its buyback program?

    Devon repurchased 5.2 million shares for $234 million in Q4 2023 under a $3 billion program. The company says it is on track to reduce its outstanding share count by up to 9%.

04—Continue

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