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Devon Energy (DVN) Q2 Earnings Beat Estimates, Revenues Lag

Devon Energy Corp. DVN reported second-quarter 2017 adjusted earnings per share of 34 cents, beating the Zacks Consensus Estimate of 33 cents by a penny. Notably, the company had reported earnings of 6 cents in the prior-year quarter.

The year-over-year improvement was attributable to higher commodity prices and an improved cost structure.

On a GAAP basis, the company reported earnings of 80 cents per diluted share, while in the year-ago quarter the company reported a loss of $3.04. The difference between operating and GAAP figures in the reported quarter was due to gain from deferred tax valuation allowance of 23 cents and foreign currency adjustments of 21 cents. The gains were also marginally boosted by gain of 1 cent each from asset sales and asset impairments.  

Revenues

Devon’s quarterly revenues of $3,273 million missed the Zacks Consensus Estimate of $3,319 million by 1.4%. Total revenue was up 31.6% from the year-ago figure of $ 2,488 million.

Devon Energy Corporation Price, Consensus and EPS Surprise

Devon Energy Corporation Price, Consensus and EPS Surprise | Devon Energy Corporation Quote

 

Highlights of the Release

In the second quarter of 2017, total production touched 536,000 barrels of oil equivalent (Boe) per day, in line with the guided range of 519,000–540,000 boe per day provided by the company.

At the field level, the company is effectively controlling costs. Thanks to its initiatives, lease operating expenses (LOE) were down 4.1% year over year to $399 million.

Total operating expenses in the reported quarter is $2,731 million, down 31.5% from $3,985 million spent in the prior-year quarter.

Operating income in the reported quarter was $542 million. In the year-ago quarter, the company had incurred operating loss of $1,497 million.

Realized Prices

Realized oil prices in the quarter were $37.92 per barrel, up 26.1% from $30.07 per barrel in the year-ago quarter. Realized prices for natural gas were up 54.9% to $2.54 per thousand cubic feet (Mcf) from $1.64 per Mcf in the year-ago quarter.

Total realized prices in the second quarter, including cash settlements, were $24.94 per boe, up 38.8% year over year due to higher commodities prices.

Financial Health

As of Jun 30, the company had a cash balance of $2,369 million, up from $1,959 million as of Dec 31, 2016.

Long-term debt was $10,558 million compared with $10,154 million as of Dec 31, 2016.

Devon’s cash flow from operating activities in second-quarter 2017 was $810 million compared with $345 million in the year-ago quarter.

Capital expenditure was $721 million, marginally lower than $489 million a year ago.

Guidance

Devon Energy estimates total production from its assets in the third quarter of 2017 and full-year 2017 to be in the range of 526,000–546,000 boe per day and 539,000–561,000 boe per day, respectively.

Capital expenditure (capex) in the third quarter of 2017 and full-year 2017 is expected to be in the range of $630–$705 million and $2,185–$2,590 million, respectively.

Devon Energy has also provided its 2017 third quarter and full-year LOE outlook in the range of $360–$410 million and $1,500–$1,600 million, respectively.

Zacks Rank

Devon Energy currently has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.

Upcoming Peers Releases

Here are a few companies in the oils-energy sector that have the right combination of elements to post an earnings beat this quarter.

Goodrich Petroleum Corporation GDP has an Earnings ESP of +19.36% and a Zacks Rank #3. It is slated to report second-quarter 2017 earnings on Aug 4.

Cheniere Energy, Inc. LNG has an Earnings ESP of +2,200.00% and a Zacks Rank #3. It is slated to report second-quarter 2017 earnings on Aug 8.

Rice Energy Inc. RICE has an Earnings ESP of +9.09% and a Zacks Rank #3. It is slated to report second-quarter 2017 earnings on Aug 2.

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Devon Energy Corporation (DVN): Free Stock Analysis Report
 
Rice Energy Inc. (RICE): Free Stock Analysis Report
 
Cheniere Energy, Inc. (LNG): Free Stock Analysis Report
 
Goodrich Petroleum Corporation (GDP): Free Stock Analysis Report
 
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