DVN - Earnings call transcript Q3 2020 | Devon Energy Corporation

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Operator

Welcome to Devon Energy’s Third Quarter 2020 Earnings Conference Call. [Operator Instructions] This call is being recorded. I’d now like to turn the call over to Mr. Scott Coody, Vice President of Investor Relations. Sir, you may begin.

Scott Coody

you for thank the us and today. call morning, to joining everyone on Good issued release updated an cover we night, Last earnings for reminder the third the our and the quarter for and outlook of year. results that presentation make website we to prepared at these devonenergy.com. call and our be can our to will the earnings references Throughout found remarks, slides today, presentation support on our of our Exploration me members Also team. Production; a Executive call President Hager, and the Dave our and CEO; on our joining Vice of Ritenour, are President and Jeff Officer; management Chief Harris, David today our Financial senior other few on Comments U.S. today under forecasts plans, and include estimates the are statements call that forward-looking will law. Securities results to from statements. are forward-looking differ to These and comments uncertainties actual subject our risks assumptions, that cause could note and materials. factors the the and SEC take our of language risk filings cautionary in provided earnings Please over turn I’ll the that, With Dave. call to

Dave Hager

Thank and Devon. you, to morning. on time good us the appreciate your the taking for We everyone Scott and call interest today join in

our For exceeded evidenced by our this year-over-year. delivering environment million that unit the continue million closing by efficiency cash per high testament is the complimented third guidance improved in merger that quarter the responding cost outstanding targets, our paid just operating and X results, the portfolio, want our the strong announced to below end operating per maximizing driving excellence. a the we to call, a third improvements by quarter of oil is be G&A successfully quarter, down On XX% with This $XXX to level results. will for expand special WPX. highlights presentation, including accomplishments performance, out remainder objective third outstanding hard in key remarks we All I and comments dividend. thank noteworthy of barrels a is Barnett our quarter our on operating margins. flow results commitment from structure, benefits operational X% Across and executed my forecast. margins exceed in three guidance dedication our once excellent business our covering of are all, transaction, very spending prepared that a the production single With an And of every for by was both the the expenses and centered strong through while our continued by teams to midpoint year as with points, the continue of the work team. quarter free on in a recently after of one, we reduced several Furthermore, $XXX quarter. challenging begin our financially, and And purpose employees operationally Slide again we earnings I’ll with day, underpins strategic outlook of X,XXX today’s of costs model. below to my generated headlined capital few performance are and costs their production This key capital to

Moving XX. to Slide

increasing a to is outlook business are our this surprisingly, well in performance underpinned consecutive Not oil for by as raising With second outstanding date, the year we results guidance we our Delaware result, of XXXX. are for has full our the quarter. delivered the the outlook improved And strong Basin. we’re the remainder now experiencing now

barrels day a now quarter. XXX,XXX X,XXX barrels production the per Looking XXX,XXX expectations. expect average versus specifically at to prior upcoming guidance improvement day per our oil to We

earlier revised $XX this budget Importantly, we we’re capital delivering compared with year. the this incremental less million issued production to

improvement X% focus, level by barrel achieve to a structure categories, the in we this out cost or per previous compared order track reduced to of are including compression with expectations. continue sense every intense on also level reduce contract step of most LOE improve disposal this and $X.XX costs get To GP&T produce. cash across LOE act costs, materially and urgency unit chemical We our costs, to With our field and our we labor. several recurring and to expense approximately have meaningfully we

G&A steps target We million we have our year-end. also compared improving structure. budget. by And our the $XXX This cost expense taken around demonstrated expect to achieve organization’s streamline a clearly to $XX trajectory G&A revised by run corporate million rate is to by

$XXX of generate is incredibly cash million this year. have flow, cash the to from accomplishment volumes, tremendous we pace cash of to Shale payments. have importantly, a in we conditions better free This on Including amounts briefly free with resulted that are The higher cost proceeds divestiture faced And challenging flow capital is this of flow in and dividend Slide XXXX. shareholders Barnett around we closed Turning October on higher impact increasing discipline the XX. efficiency X, with positive excess year. strong this rewarded given the

by plus we strategy. merger within cash first scale, the to strength enhanced create E&P of variable free unite our your core cost producer our together announced will premium an WPX. U.S. our flow underpinned of to like oil companies, September financial equals with return respective attention asset rationale space higher Delaware from a By an XX, accelerate combination the base and strategic This Slide true with in and benefit is our Devon I’d of recently decades. to merger WPX in the bringing unconventional the the underpinning to transaction Turning groundbreaking This first shareholders leading in the synergies, X Basin. position industry a complimentary transformational, the of nearly strategic economic the cash represents cover through dividend of immediate fixed two shareholders as back presentation. on to announced assets

received with The well. completing We upside low merger financially our the will both to the stock associated our from is shareholder end this year underscores S-X week, also will each a leaders last business to and and plan for led Additionally, merger. shareholders the from of progressing finalize potential premium benefit model. within company. team, of proxy companies that combination the realization next this allow transaction are confidence around be stock driven to days filed synergy few powerful path senior votes underway, HSR to Integration by transition plans both companies clearance comprised hold

In addition to tasked operational transition, the and is team the contribute of to significant upside the also with ensuring a on company. seamless synergies combined the efficiencies capitalized that

also our of Slide manage with X. enhanced in future. value power only and our but WPX company to how we of scale Moving The the will position, the not lies in in financial strong our merger

a oil low XX% for to favorable a maintaining forward. margin ours, to through margin aspirations in corporate and any through investment growth industry levels operating deploy model gas many from shareholders energy economic mentioned conditions, of Devon phase movement directly X% moderating a extremely and returning such quarterly through E&P is to of leaner in dividends. be cash these company cash cycle, and successful greater value traditional and a To as industry win transform shareholder expansion strategy recognize highly establish financially business scale going times next a more the this XX% grounded the of efficient our operational must leader or of pursuing and We prominent initiatives cycle. not driven past past, in and believe top-line friendly the cash operator supply raise business its structure, an consistent we’re absolutely return with shareholders. cash the directly commodity strategy, a highly limiting cash to As return fundamentals. safety the of Devon I strategy of business variable flow, maturing underpin the growth to viable times must less will model that that prioritizes and leverage returns dynamics a our disciplined and to with demand committed have demand to in is understand successful of I model in builder to the

want With we on experienced, volatility do few thoughts recently provide preliminary the a XXXX. extreme to price I have

our We all I environment. protect priorities be a to any objectives we top our and While accomplish operating in bit guidance, protect capacity. believe to the costs are these financial aggressively it early is productive formal to clear too reduce want current that can our provide strength,

strong not Delaware. lower if hedging can and ultra fund position maintenance forma leading an pro WTI structure, the program $XX our we capital cost results with pricing, at in of with our we the fact, low achieving In edge breakeven level are

of focus predates We will the off another We and completion right the will business for Doing of to merger invest more performance. with has uncertainty. our been And business protect finally, critically financially. ESG is on ESG XXXX our focal taken performance nimble that every on space operationally commitment of time this of Devon’s business and ESG X, believe ESG we component has tier impacts and value upon our prices, top with provide commodity but model will formalized strong the growing point capital years. recent aspect Slide during Devon and WPX, mindful essential a is plans delivering – in remain to the responsibly shareholder important way performance always of the strong in guidance we for

focus this As business, reliable and responsible energy providing we manner. our need of while what pride a in to world with in our can aspects the fulfilling is control, other take control needs all and we

emissions, and routine advancing top our eliminating such, water recycling. As environmental priorities reducing include flaring,

best principles, The as to measure a the line strive ESG an inclusive we’ll we combined operations and have of to In diverse independent a is are responsible sharpen addition our inclusion edge. fresh perspective, underscored by advance is environmental company we interest board governance to proud the we these stakeholders. to where committed From and experiences cultivate to key can and a broad of competitive our in of committed objectives, performance all the these structure. diverse workplace where which strong, compensation perspectives bottom are

environment, necessary I summary, and in Devon as attributes navigate and all a many years to So come. flourish has for Go-Forward today’s successfully create the to emphasize, in value want to to

over proposition cover disciplined a to the a of the returns unique investment sector to E&P result operational business of Harris to tier asset shareholder-friendly our that, compete proven the our cash space. in team turn in David combination from few yields and model to offers in top market. that the and leadership free attractive flow with Our portfolio, is highlights The I’m call strategy will with any quarter. designed going And

David Harris

Good morning, everyone.

on, operations delivered touched have quarters. several Dave the cylinders as are over best-in-class past Devon’s results all hitting we repeatedly on As

X Delaware in production is the continued engine exclusively Devon’s outperformance Delaware, capital to our to growth operational our Turning basis. almost of focused in activity, year-over-year With your our a efficient world-class rapidly Slide quarter. margin XX% on the earnings advance high the third capital driving attention presentation, our basin asset growing

drilling impacted nine the of production third per first results these crews we and of new this the consisted XX-day wells the quarter, XX day of production. have new production most half three peak collectively With dedicated in from rigs average the delivered wells Wells best frac the back quarter production these During And towards than wells an world-class rates. Overall, XX impressive XX our meaningfully X,XXX weighted only commencing in rank quarter, oil. which third in those totals operated activity resulting very BOE was of of basin. greater by these initial XX% attaining rates among today completions

online This mile results quarter, setting XY well achieved of County. in highlighted Cobra our great in BOE XX at the productivity wells upper X,XXX basin drilled approximately BOE or wells the basin These of from the rates lateral. XXX the well average acreage record day longest the feet we in Wolfcamp drilled XXXX three by activity are highest targeting across by per in two date per measured the have rate wells, deepest project Devon. day brought the sands we had in and depth development position or the history our the Lea lateral part While Wolfcamp was the wells of Delaware of new Delaware to

pre-drill Cobra in our expectations. XX% project the came nearly cost Importantly, below for capital the

best dynamics, few the Delaware the Our another example Furthermore, result we deliver aided with our landing of customize consistently our the performance past zones. achieved subsurface results. have understanding basin, the years. quality acreage Delaware well the industry I hundreds can the over of is designs completion confident optimize that well of are This in the differentiated wells the to us to and appropriate understanding horizontal performance productivity reflects allows forward. results drilling per the that going spacing technical of leading and parent-child to in we Cobra identify continue am development of our by experience in this

core of economic activity in the And all of federal contiguous we presidential drilling in position cover inventory hand over that multi-decade our inventory play of large approved stack provides pay the next Our essentially permits a a term. opportunity. have us the deep desired

of like congratulate results all best-in-class to lateral drilling this among are evidenced truly Slide the These improvements improvement achieved completion along continual drilling to the quarter for in the in of in key is from Wolfcamp quarter, The Turning results. team drilling XXXX. another this your are the drilled operating a left-hand accomplishment. we’ve special attention value across This are for productivity, of addition foot reaching absolutely X highlight outstanding with to XX% compared non-productive the gains time Delaware completed third peers. of And repetition would and to strong drivers wells substantially our our per key chain. designs, cost is two-mile and and well improved the These and optimization the $XXX our by results completion phases costs basin. I performance

However, attention right-hand improving since to provide lowering edge by the have based operating Shifting efficiency done into the a a lot of of we on are capital expand portion to leading your unit costs XXXX. margins good tailwind we also and costs XX% steadily never our we cycle slide, per by expect results, to times work in improving XXXX. done our

of One we the improvement of sources have built proactively out. the meaningful scalable most infrastructure cost is

from expensive a avoid have and an a water our environmental also produced positive all oil the of and and major We higher the safety connected pipes is nearly perspective. to trucking,

our leading personnel well Looking flexibility needs to avoiding reduced can of strategic well recycled and below or source per planning specifically bottom are the to of and are of disposal line Southeast provides edge in of a water recycling our rates. is important additional leverage that nine to and team facilities, wells, initiatives for the over have I’ll us we either services Delaware savings Mexico, than which in the This XX from few of water third-party infrastructure that with purchasing of the our analytics factors high a that, in the to call cost important New operated allows from exceed turn several rates. that hard with costs work The water by are positions year-over-year, dollars extremely our that more downtime to capture as our of as use brief couple brackish the desert water data our Ritenour at infrastructure, operations and chain integrated supply power at water advantage expense trucking market systems. the remote the Jeff thoughtful at financial secure improvement to saltwater controllable A chain XX% many other operational field operating that competitors supply fully cannot. And XX% connections advantage barrel. us scale easily review. This –

Jeff Ritenour

earnings capital in exceeded comments execution by and brief rebound steps end $X.X last start of cash of a $XXX where quarter quarter reviewing for million the spending the our will in place consisting to cash of per requirements fully financial the our of and next closing performance good to flow compared Devon $X.X of further facility. share and undrawn of billion divestiture. quarter. and My cash consensus At be the XXX% our Shale estimates. comfortably quarter financial liquidity quarter. a credit the $X liquidity, level X, Operating by September, third flow cash nearly of unsecured A was on had quarter of David. billion the October hand, strategy. review in results financial for funded million, Subsequent totaled bolstered Barnett flow $XXX This our of Devon’s to on flow our cash today end the the of Thanks, our on is capacity today on our generated billion focused

of transaction, million. to Shale on effective we date, in the million. for amount per received with of familiar deposit cash of up In contingent this and the a $XXX conjunction for proceeds, not which our was April up agreed you $XXX $XXX cash adjusting portion of the total sell million with of at accrued we a $XXX $X.XX from After $XXX in consisting closing million we to of shareholders price a returned million October the closing includes payments adjustments, to flow in This of special received net purchase those to cash share. For assets proceeds of payment transaction, way we the dividend Barnett paid $XXX million by and special X dividend. of

inflows, excess in generate XXXX. to on the track is cash With our business

and plan nice Devon We to billion million by $X uplift up amount reduction cash the go-forward cash priority repayment year end. cash flow of is accumulated approximately annual basis. large will expect rate $XX between $X.X billion for of to an balances outstanding debt our to the on the run savings have interest company’s top exceed WPX. we The of in This resulting debt provide a of

of and manage belief, repurchases successful fundamental around our Longer-term, a stated one we’ll debt leverage, of EBITDA. extremely more accordance target net this times defer in We towards prioritize may to liquidity to XXXX remain Should by reduction mindful commodity debt the with completion repurchases, both and end. plan We’ll current flexible how our execute include of tender open deteriorate execute maintain that throughout debt must company expect prices macroeconomic conditions levels a to and from offers. continue we appropriate belief to E&P with transactions market is to leverage with time. which our year we’ll it levels, be low

business cash return cash priority to for financial consistently dividends. higher flow, Turning Devon key with your further shareholders accelerate is to scale generate our of to through free the another attention to Slide XX

However, we an traditional is during quarterly business commodities and the down companies cycles optimal the when historical dividend a times not deployed in applied dividend investing of industry the raising in business. flawed U.S.-based core and model solution. by dividend the is believe fixed to The cutting prosperity most growth or practice under of

also dividend With upon calculated supplemental will these shareholders rate is and return is flow, $X.XX every progressive an quarterly unchanged volatile specific with at challenges More cash of variable quarter whereby optimize through business, a reviewed designed plus merger fixed assuming pricing. mind, to strategy cycle. the implementing a for Devon’s paid dividend variable mid-cycle of fixed in we’re dividend dividend uniquely WPX, remain the inherently of target specifically, our a approximately quarter. is fixed This of our dividend closing and to with first each framework sustainable per a and paid operating payout XX% cash of share quarterly industry

to this companies’ the sheet conjunction, combined the our up criteria price cash Scott flow dividend forward-looking will excess quarterly addition call portion more dividend, a repurchases. the be XX% improve further to flow the a opportunistic balance payout to free utilize through to supplemental In cash share and excess will met. for quarter evaluate to the back turn flexible and of are of with certain leverage over strategy, liquidity, fixed if also that, we Q&A. in free given variable I’ll With distributed shareholders dividend In

Scott Coody

Jeff. Thanks,

now will [Operator we’ll the that first We to take question. Instructions] our call With open Q&A. operator,

Operator

from question of Leggate America. with first comes Bank [Operator Our Instructions] Doug

now open. is line Your

Kalei Akamine

I is Both Kalei may. gas. related Good morning, policy actually on questions, two are for on to got oil Doug. This and public if guys. I’ve

if So a Biden industry. the obviously, to is administration, under risk a potential there

industry and How a could raise items even thinking subsidies specifically, understanding on would could like business. your book you that potential activity of And or that like items Firstly, tax what’s breakeven minimum targeted? of I’m change your pursue your how about cash this levels? be costs the to the the IDCs

Jeff Ritenour

generate to IDC the in to talked taxable the don’t is extent impactful, be lot way This that as were planning income a be of that or the our is would would we changed and some financial limited I Jeff. Biden that as certainly honest, results have details specific To be a about, any company. around or administration that to certainly changes

be certainly, and time. don’t be we’ll something, have of, have for watch that’s So details this at we point but to in mindful any a on specific

Kalei Akamine

right, thanks. All

permits I to? anticipate question, date if second federal ask would my new acreage that update many that a if And obtain How to administration, you you like that just what on does For your under to have permits, – been plans. what’d you To window window close? an that secured? for closing think bring

Dave Hager

provide start I’ll here can off David Well, and detail.

our is that I remarks, basin I the we federal that the or of basin XXX that’s year. scenario under our though even we’ve the are our the of end XX% That for the a anticipate prepared the production. about company of in to said The would keeping covers the remain having point basin. So in the permits by or XXX so anticipate in activity anticipation. Delaware end that federal Delaware of Delaware basin, growing think say key in going means And Delaware about when permits be would four those would that overall be in in we year capital of by we years production mind, maintenance the flat. is

extremely the permits And are production in for in Governor oil Grisham activities. mentioned basin state very understands state. that’s keeping XX% as New supports Biden flat. grow overall comes gas with understands and the the is well to activity The transition the company would in revenue and we the production much well. And level here. state and too the So who’s Mexico while the the the a team in aligned allow of mind, gas thing, from I’d on Delaware of that actually keep oil very other

the everyone of understand, for why, the a with but that New understands help other I what the state this in of with there’s needs out and state Mexico as the the important. social an and And to know extremely if that. lot discussion industry do state alignment I around So has state we is

frankly, slowdown. but federal things hypothetical worth think years likely on not stopping be to of question, that of covered the activity great there’s there the is four going a anticipate acreage. we if with permits But we we will a activity the is, by end Even it’s so year. have And most of

did David, anything I So miss there?

David Harris

it have I No, couldn’t didn’t. myself. you better said

the you’ve relevant points and think agree I everything covered with all said. you

Kalei Akamine

that get if follow-up I’m secured, I they federal just for if any have of a clarification, require been long because permits Maybe to answer. extensions Guys, at four government, that is the wondering the period years any if XXX obviously appreciate I by that the time?

Dave Hager

Yes. Federal permits term then additional are have an extend for years. two-year issued with you them two a to and ability the

out So out extension lied to permits And That’s that by and out period the those years. denied of as under that us it’s I’d environmental certainly, a part are a of But never assessment. know the an important five before. permitting are of are extension that the process environmental to year-term, good done two go permits be would to we’ve for point you things couple assessments past would had require there, process. through

is to your yes, from don’t answer impacts material but the we So question that. foresee many

Kalei Akamine

Perfect. it Thank guys. I appreciate you.

Operator

next Singer Goldman of question the line Brian Sachs. comes Our with from

is now line open. Your

Brian Singer

Good morning. Thank you.

you’re WPX and Another strong a topic is the that’s expect seeing your XXXX that to performance happened topic And and been wonder Permian basin in rate very and if of an corporate you the and Delaware in with the you you the that’s highlighted have basin. in announcement come could evolve see of after maintenance M&A update program? some well how the give decline you rates. Permian up the in here where that And Devon decline seeing I on us

David Harris

Good Brian, morning, is David Harris. this Yes.

starting those and decline As if the past, we just oil at percent us last on that basis on of year, rates that an kind reserve ends our – we’ve low-XXs put in report look talked you a on if high-XXs the in year BOE basis about company-wide with basis. a you a in filed

a production forward year work combined and into doing teams we’ve see base to as capital, some fantastic this are that perspective, the of which As been we from the outperform with then moderating quarter-over-quarter. we move continue

from Our a expectation rate the the company-wide into to down on low-XXs mid-XXs. basis, the that oil is that move on basis a would BOE and high-XXs

Brian Singer

two regards where the And Permian. also Great. Thank you where WPX about follow-up think contemplate is you. highlight then to completion, you drilling acquisition. the that drilling program wells prioritize, And left and and I production they Slide projects hand? maintenance Devon with activity, the the in about you WPX that you the how would the where the of companies prioritization you various detail between – be how the you context right How would XX, you wondered Would in legacy having would and areas the see this, assets? you talk top evolving, on as drilling And lie. my a the order drilling some of main fewer have there? more would about you think On of

Dave Hager

as as program. a – obviously, But legacy these there. advantage best-in-class in we’re of out XXXX don’t in bit wells. delivering for basin, on lower costs rate to good we’re of Delaware little obviously, still a wells, we’re of anything capital out Devon even developing where We combined specific royalty federal well. acreage have the there. obviously, Well, leg drilling the And process is as Productivity a about anybody get a that’s the

can And strong. Lea you that’s Eddy a why the County. hard little but so say here the right in WPX economics also. And talk, we what do on and incredibly Devon legacy I’d it. WPX, average, it’s Probably the the But on extremely is stronger than to are like bit strong activity even

we in County basis would they’re to acreage. on areas, probably legacy, economic the the sort we average federal see, both I’d gotten so Devon Eddy haven’t – and go probably overall highly Lea any on the of edge And developed it’s on – haven’t combined but – Devon budget, the an activity

Brian Singer

of cost in the in one just you that that be scenario? Got hazard add the quarter where a forecast last third a XXXX it. in maintenance Do achieved per XXXX. foot, more one, type could to I the Great. And could if $XXX care for the you of

Dave Hager

Well.

per to that points I guess, your not cost foot couple levels could basis that And ways the to We to about we have on sure to for been highlighting every improved get frankly, to. continue just to years. down. I’m find a last hazarding, I step performance we thought, mean, would’ve of quarter I comment

quarters we’re think the service I a And there. the probably cost quarter here making, so we’re you is bit of improvement last of in of lot in mind, over tell would what here, in last several the a But is – three-fourths doing there inflation efficiency that my I driven.

be that’s And more to so we believe structural. going

believe carry continue forward we with absolutely rate can we of change. these So and levels

As XXXX, say a Wolfcamp doing tailwind, Well, that’s went to ones to one the laterals. that what a long the with are you design that stayed – of admittedly, I’d to for efficiency say, we up the this? go went going another us. thing we here. have XX,XXX they But to we we modified why in a little do we a had we robust that, for first capital we out challenging XX,XXX. at early where turned that that Brian, nice the big to we us say is first and out went We have into things were think beginning, design, will this? can drilling move one be going we Most and hole I’d a the efficiency How at out industry – figured are foot we you appropriate time. leg bit, laterals we very X,XXX wells were and for call and foot few forward and be and has because it toes stubbed went story. now we capital swim we to the design our And people be

So over think I over than there with we have on many of design. down to over peer and many particular and the same And our us be more reputations many type drilling further the allows many, well companies that just curve. efficiency of this that out

almost from our there’s good like done? vendors to as say able optimize I of Why allowing if those do to too when question to never that would I design go a absolutely you as we this you No us this? are way. Now, are are things, big costs well But be a the are true. that. think done. our couple We seems fixed to –

Brian Singer

Thank you.

Operator

comes Neal next Securities. Truist question from Our with Dingmann

now is line Your open.

Neal Dingmann

thinking at about or think that I’m – when wondering debt the you XX. wondering and thoughts of should guys. point, how deriving just a you about you in a a dividend bit, I’m you but the sure that that, to factors that, the that morning, debt to of level that’s question cash. of you on your Dave, about a variable about Slide for get XX% that On level just Good the I that is the Jeff, you’ve certain excess up free really to make to about think certain have And of first when can we sort Slide, little or lot a about I dividend, leverage want where be prior just want and growth talk get talked I’m point, once that how talked should my to once clear. is kind growth?

Dave Hager

off and start then Jeff in. I’ll can chime Well, here,

about what tend that breakeven dividend at So that maintenance looks will We pro we’re breakeven even I’ll morning, $XX that for $XX you breakevens the today, if capital said today would Devon share. to capital would WPX for to take we invest that fixed that we we’ve forma what and about lower. lower. like, but number we frankly, and drive Then talk the a this per the WTI. it $XX that don’t up talking add around drive up to to obviously talked you the here, said levels results have maintenance are about combined would And new we’re we’ve tending be with

that of to we once WTI, WTI, our to in building get time. I growth accomplish all really mix objectives we’d of And a the in – $XX cash $XX $XX by the flow And $XX for of combination same sure, it X% yield. to at get we cash so the and we flow for be would select range. or strategic So with of flow growth, strong we may a time, cash bit from adding along can free said free little growth,

position in debt a do back So we we financial dividend. free variable flow, can and cash combination pay and think healthy generating that a we enough start down of when the we’re

maintain to think on good you each. how want But we’re both. flexibility we a all Now position in some much obviously, we around do to

but one we’ll how appropriate And we mixture calls together. get have think so is, to on like make we we start judgment not the it’s done before

price We cash, an policy. have see will appropriate We the have anticipate policy. the commodity outlook, variable picks, to variable growth that start if once we a we we free dividend certain dividend generating the level start of start before

you… can Jeff, So

Jeff Ritenour

already Yes. is the give That’s well we’re But would short said, I there. answer Dave. you

feel we’ve view XX. that got Slide a we have the balance. the that And sheet. So, like balance two in we’ve highlighted of price strong the we outlook step commodity on cash We got constructive

So here certainly week prices seen this in into some continue and next obviously that we’ve could year. weakness

mindful to be minds with a our can Dave debt that. target our dividend we’ll of via combined where already the accomplishing the cash shareholders in the to along over in So the we we’re said, But and as returns variable time. company, position with fixed reductio, deliver

we in there shape. we’re good like feel So and

Neal Dingmann

And Great, also on term sure lot clear about you maintenance I follow-up. as talk capital. around then one great well, the Dave, I’m to wanting just details. a this make just –

maintenance And would – we how like – guess, it? should should you to about about capital have. just XXXX, I sort go a efficiencies, when of a improvements we – in-depth of lot these that how about On do that think given lot a improvements how all that improve think level to should had you define how potentially days? of continue the think how forward, guess, you You we what I is. us

Dave Hager

we definition trying order without It’s consider much draw we This this we’re book, any a the capital at would words, capital. more we off, Dictionary to DUC spend use optimized need we WTI maintenance even do think need could how of in price I or of first DUCs, what all. of spend, counting to be of pure a not better. need do would given on to In we’re more is it an XXXX capital DUCs, what plat if not we to drawdown Well, down sort keep of production in inventory capital. other maintenance drawdown Webster’s of any

the we through cost I merger that as we’re certainly have lower better as capital what’s synergies anticipate that of accomplished to us capital we efficiency so rate earlier significantly. to along then And anticipating capital becomes the our continue time would that’s lower allowing to with continue maintenance out production to that’s should outer years lower lower overall even up corporate efficiency, greater amount brought the to frankly, maintain also. required capital more Singer of tend cost efficiencies. achieve decline and as as Brian And going the

Devon capital, side. as of kind what in you results So again, what to is now where we’re we side and defined is not two today just are it’s we’re even lower just be slamming maintenance a think the million indicate on it seeing $XXX was an But companies to exact going we’re the But XXXX. definition of remainder giving the on tended WPX the the together that number. giving a it both I

Neal Dingmann

detail. Thanks for good. Very the

Operator

comes from Derrick Stifel. Whitfield question Our next with

Your line is open. now

Derrick Whitfield

all. morning good and Thanks

Dave Hager

morning. Good

Derrick Whitfield

and earlier investors. and I are appreciate federal your comments top certainly selection of state mind with rents alignment on

including be a you the have layered that to permit longer expecting regulatory your year hand as resource change time if practices, if for to election development on from comprehend were spacing, at outcome negative could length, to needed occur, build did end, conversion. cetera. at you’re question, a slight permits lateral And accelerate XXX and/or a current amended approach to in any the permit on the Regarding et laterals,

David Harris

is giving for David around well your to in as the question. us our this zones laterals. down contemplate on X your focused the XXX Thanks permits Harris. that spacing. have as To Yes, that transition about hand some mile we’re for that strategy flexibility the most current development question Derrick, we and spacing some

for Just you’ve a disturbance, don’t a result drilling level to a rule it is, of if need make you surface hand of if new background, permit your of and different doesn’t permit. quick in got the kind thumb in you get change, a

process, time, We these or bottom really called when hole go You locations. and we tweak from a is sundry process through, do quick time routine what’s zones we have. which landing that to a

other we the would we that extra certainly process last but laterals Delaware, we’ve but development at. the opportunities the that’s long We’ve results just them go we’ve are that of lateral through look the And as incorporate about not actively as the half longer years well. the we’re about we’ve into or seen drilled results couple so assets across to of of looking over importantly, the XX across the the drilled – in seen And for Cobra all programs. with more portfolio, that’s something mile in company X.X wells are our in three those

of Delaware increasing to a expect increasing there XX% program go dozen or wells X.X So you’d revs so our upwards in forward. ability year, XX%, to in And probably mile that as our of mile X we’re meaningful next Dave getting the I and and alluded longer. to half that laterals confidence a see part make the think or

to pickup, capital execute as be from a obviously an think forward. efficiency going think you part this we is this. big as So saw we important going development successfully We of our approach Cobra,

Derrick Whitfield

you on synergy are areas potential teams detail. my fantastic to together, disclosed? follow-up, as been of to It’s date, it. guys have beyond begun as And efforts broadly Got any then integration your really work more what’s sensing

Dave Hager

I the people be think the chain is, good we’re particularly talking they the and on – about that are short side, and When even together I just start and scale answer improvements pure on capital seeing yes. you from incremental to excitement supply enthusiasm the get think but tell can going going than will there only well. days, of programs what optimizing you, synergies are that. just I early as and more Yes, well scale to as achievable, it’s not a we’re that still there’s the provide but as see lot

to you’re even me. it Jeff and to closer David, So

Jeff Ritenour

Dave. No,

I think you That’s right. hit the exactly high points.

got in early sure, it’s again, over days started organizations. the areas together about that lot think increase but in our gotten should see there momentum of there’s have for to across and areas. specific mind already teams an the a still most think time I doubt no And As we’ve synergies those to

Dave Hager

going we’re well this whole to I equals. of – the one of it’s that of this just say And merger this approach reasons make a our work is, more think to philosophically, is so a I’ll

do So it even sides. that things than I from really situation. we there a a from, company one can can even said best that, we’re attitude create the okay, in either lot we are well And do is on our from to be synergies just better to own, taking the done sides – It’s do better of are to some something just both don’t individually. but going as learn are as both of side side, that more worried a to the type allow attitude or much where there’s situation something create whether we open-minded Devon on comes WPX one much and of about, It’s that and just trying that do that’s takeover more we’ve of the I a just you it’s you not other does attitude mental company for And side better that’s in think have you about this how we take really better? it’s the really than great, from – okay, focusing both what more can great. where not about us or how my either

Derrick Whitfield

All very helpful. great update. That’s

Operator

with next question comes Campbell Tuohy from Brothers. Jeffrey Our

now Your line is open.

Jeffrey Campbell

tended has I to outstanding you is Dave. some question. WPX’s on it’s invest WPX, merger when to complete. ask wanted acreage Slide to Eddy was Hi, X. to potential With wondering more specific WPX then it’s a assets, see elsewhere, if question whereas capital as I results there to illustrated Devon and County the one then broader regard the Eddy bring

Dave Hager

have as on some We well feel their that. they the Felix, very just development don’t they to from state picked which – and acres up but think called and line we they optimize Felix, as a mean, and did an area plan the not I – Yes. line the so state plan, across in area have specific outstanding – much actually

it’s study on well. both to to results would I So, meet. positions. to look are that. WPX really, high have that bar But capital good. anybody did the legacy bit doesn’t Frankly, on don’t little up a for that going those that pretty those maybe is And at I quite better, think the yes, we really say, a WPX did very average compete match know but a we before quite we to that I bit acquired when Devon’s mean

positions pretty darn understand So well. those we

add do to anything? David, want you So

David Harris

of I think Potato would right. referencing acreage the No, Basin exactly Northwest that of some of you Jeff, have North be area. been that’s kind that’s further in may Eddy County

that place approach of that as its and we’d would some bringing be long Some some our development acreages looking at and non-operated. other today. potential acreage a But for is that is, certainly lateral of think operated be is extra understanding things of we trades about this

Jeffrey Campbell

Yes, was what that I exactly about. thinking was

David Harris

you Sorry, misunderstood kind your of meant… Jeff, question. thought I I

Jeffrey Campbell

to a Is and struggling It not Devon’s of any cash was good color capital free management attracting only focused future, that’s in merger. yardstick would but for be portfolio Thanks. part portfolio generate some this on was bearing the in anyway, now? longer-term? the is it go-forward free cash the my considering mind, fine. And Then maybe flow broader question there

Dave Hager

it’s Ford in then more have be and we will about biggest be you Well, really generating as think Rockies, have Eagle Anadarko former at cash But as good basin. It’s quality of now. growth really cash Obviously free it’s flow areas And the now. smaller basin to Pro strong And And it’s growth is asset. a not longer base. we there with that’s the very a acres a oily very that XXX,XXX much flow free Baken, potential three know biggest play cash it, going a, the our there. thousand engine we we right right Delaware – play. probably high a really the right hundred in now, growth We’ve engine. of of across strong have you just a acres is free flow Niobrara approach couple measured Wells so. drilled there take a very most in think And some or generating approach. appropriate, term

to really extremely is lot challenge very effectively that there’s probably worked the oil going the wells take oily great still economics, in It’s where We’re environment it’s up lie. $XX hydrocarbon for and a what from an deal we of there. is powder. It’s did compete $XX, a to – well about learning our but going probably to

not it’s combined – So, and one has time, that’s obviously as feel strong but look of appropriate look of there’s obviously each at side right like nothing the really the a obvious afraid to understand portfolio We I their as but have at been neither graded the the because it. And we the companies contributor them. currently, decision we’ll that’s company. make lot a And base, those historically. that, we’ll we stage asset high don’t

Jeffrey Campbell

appreciate I Thanks. Great. the color.

Scott Coody

we’ve reach a Devon if please interest day. through queue. like investor not at today. good everyone’s out questions, you. We looks any Have our And it hesitate question do gotten Well, you in to appreciate Thank any time. have team relations further

Operator

today’s conference call. concludes This

You may now disconnect.

Devon Energy (DVN) 30 Oct 202020 Q3 Earnings call transcript