DVN - Earnings call transcript Q1 2022 | Devon Energy Corporation

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Operator

Welcome to Devon Energy's First Quarter 2022 Conference Call. At this time all participants are in listen-only mode. This call is being recorded. I'd now like to turn the call over to 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 outlook. an cover we night, Last earnings for quarter our and the and updated results that presentation references Throughout today, support remarks, our these the and on earnings can found we make prepared be call slides website. presentation to will to the of CEO; our me Chief members Operating our on are senior Chief Also few Gaspar, Officer; our call joining a Rick Muncrief, Jeff Ritenour, team. Clay today the our Financial and President and management Officer; other Comments include statements will plans, today that forecasts are under and forward-looking estimates U.S. securities law. assumptions, These comments are and could subject differ forward-looking to cause to actual statements. from our risks results that uncertainties of note in filings materials. take our Please SEC earnings cautionary factors language and risk and provided the With that, I'll turn the Rick. to call over

Rick Muncrief

be taking here appreciate on to We us join Great the to call morning. everyone today. the this Scott. you, time Thank

extraordinary As in past months. we time over the world, been know, the it's energy markets few all an including

could of role safe at We nation, one understands in no energy our pride have team importance or Devon the geopolitical timing the to reliable, security great assure providing that providing take can and our of recent a While cost-advantaged I of the source energy. the our wide-ranging you predicted impact in deeply accurately U.S. the events,

another The dedication yet quarter here first operational resolve results example and at the of are to Devon. our mission

I tough team defines and very the cost-effective a what This meet the to want some conditions. quarter. resilient only winter inflation able fought and done the the through also keep challenging not for job a exceed targets right getting to extreme supply is and performance bouts Devon the lid weather way congratulate to people very of volumes of chain type multiple entire on were us, these Our overcame challenges in of oil amid deliver and We tight a for but production way.

turning to Now Slide X.

plan resulted execution that flow and versus of quarter cash in was key impressive operating growing our to yet This convey earnings financial rates of I healthy disciplined want The Devon's is results. another at message the first by highlighted quarter. last double-digit

and our record in Our XX% grew share. to with capital free a quarterly We over our cash payout increased dividend prior the our of $X.XX period. new was flow high per line plan

Our my on we results are achieving balance benefits message staying active budgeted growth per continue hard activity, program only to buyback true further share our of business maximize second our to power U.S. today our key operated the operators game and are On disciplined growing plan cash and that solid our Devon amplified framework. and well of the margins team production. of is demonstrate strengthen. earlier we to year and cash to X, our the the return our is for rock XXXX. out With objectives our way Slide XX rigs in one our focus These with the to model, capital investment-grade running, most our is continued sheet laid this working differentiated

largest the delivered reliably delivering of output more market we on essential BOE us to for focused level day as projected and year positions makes one the to per our and produce manner. the on As in This full volumes to plan capital-efficient the in XXXX. U.S., quarter, laser XXX,XXX I execution to a market in earlier, us of of touched in XXX,XXX the first we're these the producers than strong barrels

continued consistent as we believe to that impact real very prices, want market of strategy. ongoing geopolitical higher does and fundamentals. there's influences X% pricing, we challenges heightened emphasize from the evaluate efficiencies Even through best events current strategy recent and growth no our our moderates simply capital geopolitical how stewards continue allocation are to to zero be excellent thoughtful we'll year. year, foundational I this I landscape as from how activity given on the change any uncertainty today's must with in To consider that our principle, the is ensure the beyond cycle closely can pricing the Ukraine. Devon's backwardation manage steep in crisis to the Today's not fairly business. we much from economic assure resulting looking will returns. execute you production the Now we capital, and chain optimize supply disciplined strip pathway up the To to in

our driven the want attractive make this reward offers to This is of to to fixed price Slide yield shareholders designed variable is constructive equity cash The market. today with on with higher in Devon's environment. policy of financially compared dividend is third I plus strategy X segments the other point demonstrated that key returns

and also as as change you see dividend culture do. higher the of among at quarterly over Xx family a the in With market-leading our investors. is fact, evidence our In pricing, employees yield today's seen to look forward past to payout, dividend-oriented much we're that quarters even the benefit tremendous seen have value that's dividend shareholder by our Index. we funds, check than growth beginning our a and all significant offices, this to several average retail, S&P stock XXX base investors, the company represented attracting who of pensions, just Furthermore, own we've

to is Now another by our shareholders way we're stock. repurchasing returning cash

November, that have trading This X, see the levels. program we cost at we you count has As repurchases. share by a about of activity reduced Slide basis current on our is below outstanding share $XXX commenced since XX% million executed X% can last

be XX%, Board rest share expanding the by buyers of stock to our our throughout $X can up active repurchase this the program billion, of year. now we With

you start at and current advantage disciplined value opportunities, of will levels, a but into for we pullbacks are multiple we buyback and any At thoughtful, will creation take that to assure that buy for We shareholders. are this full that true equity be the convicted our and activity, dips. I of look can expansion especially fundamentally we for should translate feel undervalued with

inventory, expect that been for of we to the and comes and possess. rock-solid product mix the strong confidence depth sheet the delivering by to return Turning key you our diversity operational reinforced of the portfolio, My competitive XX. years come sustainable have is cash have we balance and a to quality for we Slide the discipline be transparent team to our These from instituted further the our commitment we framework talented cycle, we through asset of are the today financial advantages final performance assembled. unwavering have by our message capital

market has an with increasing trades advantaged for price and rewarding been the agrees Now over view the this us year. share importantly, with the past

the very investors early this However, to strong new with are structural is performance we long-term is by it This COVID the bounce many that the stock believe generational evidenced to lows average to only energy's market. over in XX%. of during we Devon of a past back S&P story, crisis. in experienced possibly the XXX Index year closer the largely compared our from bull is waiting still X%

price discover all to and more attractive see be we investment catalyst profile will on believe the unique Devon's our return you As and the Clay our will and with to for our the call now benefit investors Furthermore, broader Clay? our another fronts. appreciation cover we that, quarter. And the the market share compared with for operational box to turn have geographic valuation right, mix the more over as can to diversity, past proposition. commodity I on highlights ability to

Clay Gaspar

those Thanks, call on today. our to Rick, in and listening thanks

want on today's believe foundation and we work to deliveries issued This that is harder the of of keep recipe our from challenging operations That results flow level and is portfolio. the our all plan. you higher margins structure technically to pressure a nearly of commodity the these inflationary steady team through drive success efforts XQ delivered is to pass life built across full every level should accomplishments operational highest prices this last the allowed our in a these additional thoughtful and midpoint see don't field improvements directly foundation This I their And by of of deliver brought the that portfolio for as productivity day. steady team easy. to well articulated to to exceed drove production that As the strong is future. valiant by guide, stress for a X to granted generate nor people. continues guided will does can the again, quarter, you make on The round line in another a execution operational with our the for cash to comprehensive business provides results. team continue year them Slide the mitigate that operating Once I Devon the our diminish towards. I phases take decade. hard-working cost incredibly get consistent look that success to high-quality night, across in course model, while it regular that impressive a us business to for that allowed

At with oil out this these to today's a completed year-over-year aggregate, was XX, net online the average year an first Delaware pay cut basis. with growth to across turn Avalon, well the of a quarter, BOE that volume driven wells from In In an over let's of growth these on where the increased than per discuss day can $X.X program Wolfcamp outstanding Delaware brought on in at Spring wells diversified achieved around average X,XXX targets This Slide Bone XX-day Basin. we are Now XX million wells less of franchise rates formations. returns in our high-impact overall and XX%. of strip XX% by in many asset pricing. the production the well, per track average cost were from

graph with Turning left, expansion to was efficiency our phase operations. in delivered efficiencies improvement achieve Slide margin the gains continue we highlight across quarter. XX, Beginning the another with Delaware of on the and the to each associated operational we activity in the

I basin ever the WPX XXXX quarter only the in acquisition time spud of that quarter, progress drilling a the that of of great release Directing XXX% evaluating of and recent fact, the to At brought comparison, few the well attention days. execution side team along years of metrics with to X improvements ago. drive slide. with team the Wolfcamp continued your right a occurring reached drilled days. most in rig per respectively Upper our this great during also greater and pace just development XX% high per remember spud results than of release completed These from can the Completion steadily times partners In to feet advanced day our service entire our resource. a to example efficiencies improve point basin record clearly and the accomplishments a completed best across fastest with into with this done our day. work company to demonstrate have the to planning A in is XX point as that of our X,XXX feet our the rig

in We control quarter also keeping lease costs unit expense a effectively on LOE the our year-over-year basis. operating flat essentially by per

margin plan, on Our offset manage purchasing value power leverage consistent maximize allows enhance this of costs focus this us and and environment. the to operating inflationary of production relentless technology, rising in and

significant see you As cost on the previous year-over-year in compared margin expansion to a can strong and quarter basis. this both performance resulted

chain stay As a top and I continue us ahead supply pressure to performance, of high maintain is inflationary ahead to priority level this look to for disruptions.

challenges and tightened, services. the activity bulk due purchasing and we and substantial experiencing materials, is shortages, thoughtful cost through scale. We continued to increases uncommon products operating technology, these labor As in raw across scarcity our upfront power planning, doing combat possessed consistent levels, market numerous with we’re

XX% XQ year. thus only our our Our by effectiveness capital at evidenced full upstream of coming as spending far in

our as look full we As guide. year

year, control team out I out confidence rest our of and inflation. As our and chain forward process to look the to in to is exposure the supply mitigate I disruptions have of

We will our if top the of closely, these our this watch year. the trends gravitate but capital to guidance continue, half could towards for spend continue range

surface the in cost the will to the of environment a higher display Delaware year. the of sand owned is recent this we mine loving its commencement basin Basin company Turning that up is of catalyst requirements to us the mine help our combat profit XX% acreage XX, sand mobile a county. in kind and is This in first own on Slide expected

basin of well mine experiencing the XXX,XXX as per to providing we supply, could drawing the the us is a important, and the it certainty benefits sand associated eliminates up supply Equally mine processes. rising trucks has save and picks combustion this this need also prices up And road. for in the due tightened. In environmental relative sand on to normal are spot the to activity across safety emissions significant that related with mining fewer to occurs addition

is to Stateline chain field another supply of operational of baseline solution this critical purchase creative an the acres certainty. incredibly market of this This crunch we supply the made in controlling of from is in XX,XXX Finally, investment service in XXXX. current a to valuable land benefit

this our identified operations Anadarko With concept the our already River portfolio example from the to sourcing great success to team’s approach for to of expand about continuous project, innovative excited Powder we both our for early this This areas in Basins. to another and improvement. other opportunities drive potential the with completion are serves as sand

Slide to XX. Moving

job assets efficiencies, support growth costs quality working the Basin capital engine several low assets our steadily base environmental Delaware U.S. doing of keep improving plays. in an teams clearly these incredible and resource that production, the Devon, optimized high is drive the top While have for also are to footprint. we The operating

our the you this pricing. extremely I’m what see by the on review. turn that objectives, efforts assets to I high within at call and at for around cash pace and these team’s work year billion grow level financial portfolio. to Jeff? these As of executing proud $X.X slide go this over can important into about critical I'll hard are Jeff XX% by that, delivering, fulfilling are by flow the today’s these And appreciate with to assets role on

Jeff Ritenour

volumes provide quarter. insights strong into spend I’ll I’ll drivers also outlook time the our the Clay. for today of key results Beginning Thanks, some for year. And covering our rest my the of well the financial strong productivity total our the another Basin. day. of our the per production, quarter XXX,XXX Boe quarter in in with performance the exceeded due first average midpoint Delaware This to of guidance

Boe production to reduce the day. first our year to volumes per expect that production due be XX,XXX lowest weather quarter We downtime quarter winter of by

to and curtailments X% upcoming Boe production, the we these expect more to in around With volumes back initiate XX first XXX,XXX development wells nearly Devon’s day than online scheduled to by increase quarter. per

field cost performance This operating hold guidance our below allowed to level and category in expectations Moving $X.XX essentially to largest cost strong totaled and quarter. versus ago Boe cost cost per lease was quarter. expenses, per the flat us X% the our year unit transportation

our cost higher team’s cost pressure year-to-date. value has Devon’s mitigated to Overall, cost are nearly proactive with we several pricing moderate these Although experiencing couple planning across and thoughtful production service pressures strong performance per supply and cash to field expanded management Boe. categories, margin inflation quarter-over-quarter exposure this level by XX% $XX

control X% tax financing to help to the the continue Current In inflationary non-recurring cost. to G&A and we resilient also XX% program. debt aggregate, We as margins These company’s improvements quarter. ongoing related through the our reduction merger first remain items year. synergies declined corporate will structural adjusted progress costs for and was pressures due year-over-year during

the increasing translated A into the year. commodity flow $X.X are level approach now capital amount Cutting prices of in higher free is full for to per we shareholders. this to ever of to the core row the improvements earnings the our of increase momentum free by flow, for This highest lower driven key generated the to maintenance With Given, delivered of level priority quarter over is the of cash line, we flow, we depreciation efficiency the bottom in contributor seventh expect our which return $X.XX to growth earnings XX% rates capital experiencing, $X.X is flow capital several to past cash this top a share. a Devon’s years. Devon quarter. After has in cash funding accelerate cash this operating our quarter. fourth program, billion disciplined billion of free

benefit in excess of $X.XX financial from increased payout This call per on As the at by quarter the in past, we’ve will and quarter. the includes our share communicated Based on cash of contingency share. dividend. fixed the be $X.XX to is per our the payments funding variable first XX% performance, received distribution divestiture our dividend our June plus paid the first we earlier end strong

of is million ongoing execution cash for share bought another stock. program. our repurchase Year-to-date, use the we’ve $XXX critical of our back Another free

touched on shares share since million X%. initiated over Rick program the retired we driving basis by last XX earlier, growth per on As we’ve a November,

repurchase to billion Board progress expanding expect $X over opportunistically the just billion, have the With buy as remaining now our this program $X stock share back authorization and continue year. to through we we on to

towards sheet. total a substantial our shareholders flow Devon’s end. expect become The the this Even value our next first million with retire to step net $XXX financial debt a not we We improve leverage our strong improvement. also quarter, we debt October this capabilities, profile is in that push balance balance billion. of generating in reduction to callable fully million zero efforts this the to cash more and to With are of of returned making done plan increased have our year. balances $XXX advantaged liquidity notes XXXX by by $X.X In cash position, than year through to the

closing on year, strategy evidence broader employed of disciplined comments. the further XXXX. I differentiated expect to We outlook of that And that, turn followed on XXXX another call delivering today, now our places capital capital in retire note debt will return With in results. June I a some for in This $XXX Based call providing of by maturity to XXXX echelon lastly, I’ll to outstanding in upper and want we’re us the the the another the million return employed opportunity notes exceed Rick of the generating. our returns is in working profile highlight to remainder have August. our that the XX% with our on return the for market cash of back

Rick Muncrief

a heard today reiterating Jeff. of to financial no like things. you’ve you, few execution Number Number just close strategy change is our Great that. two, delivering three, are And impressive there’s one, I’d the job. years by results game Number we cash rewarding to number can plan continually XXXX. high performance shareholders of or we and in this come. disciplined for payouts. deliver kind sustainably four, we’re Thank with record confident

clear and accepted the how nation. crisis a team, we any to delivering acknowledged needs that our regions of are meet energy in multi-decade from certain ideologies amounts to of an physics globe energy they I like will require experiencing stark reliable rather and reiterate work the up this committed and a gas This matters policy cost, Oil defeat once leadership. a produce responsibly part for for over we’re I’d to platitudes sources energy how results doing in economics world’s to and transition critical provide we’re remain and energy. demand. will of nation’s with energy and if discussions. growing all misstep great our a Devon, energy am to low available have natural decades time. time, clean policy The and and reminder to energy enormous day policy but is ensure is not global Lastly, to core is be transition security the it Energy event again, of the our proud U.S. endeavor this to to At will the come. across we showing consistent reliable And and untethered every by source

American public will and infrastructure, Q&A. investments now providing paying live families. in to turn for to jobs call you. I and the in supporting we over work dedicated education, the by Thank back communities Scott by bettering also healthcare, which to We’re high

Scott Coody

question on to questions and allows operator, to open Q&A. that, call more to yourself us Rick. your With one to our a today. question. now the we’ll limit first take the We’ll will get Thanks, This follow-up. Please call of

Operator

question Our from Instructions] first of Morgan. [Operator J.P. Jayaram you. Arun Thank is

go line open. Your Please is now ahead.

Arun Jayaram

buyback balance My morning. would at return. over then, uses dividends billion authorization. over question two and which cash outlook Slide just share of $X just $X.XX left call cash, it, first good on highlighted the per The on $X sheet of the on to And Yes, be updated years you is next couple for is the billion X. potential

to Rick debt return how this this through Jeff, – that full year, you what deliver up fair the is around is on So cash $XXX say to cash given to year? in outlined enough million buyback or it maybe reduction there

Jeff Ritenour

short Hi, is Yes, yes. is absolutely, answer Arun. This Jeff. the

laid well, Board. continue know financial Street detail great And discussed kind so as obviously that it The quarter in each to you our out with and to of evaluate we framework we've the

is first We're Our priority feel with the leverage in comfortable sheet. to always there. shape great in we sure balance make the

with really level billion we're see our As next we're remarks, my back I XXXX then we'll trading right dividend we the but this to variable prepared made. current by just million then the $XXX think as and into to the the we is opportunity take mentioned future. some now, balance And of year. our that, $X.X focused that We so how take we value kind choose, And in look broader we've sheet, real we'll there year given versus back not real that way option XXXX, another beyond shares. fixed create we've versus the of frankly, buying our debt down a $XXX work and beyond have got to if given you have commitment out million shares our incredibly buy out strength if that on delivering another on excited market. that But peers, into we're in later that we and the

way added And to good behavior, year the going continually added a record hopefully as that to is our so each track pretty ability we've you're indicator work our to and that see to go after capacity through into which to our and we continue quarter the our that. lean and us is of

Arun Jayaram

pipeline over believe. couple on season takeaway Whistler gone seen the announced, and I has yesterday, KMI Permian last have gas being FID we week follow-up, or projects the of a so, reached my just And Great. open

in what terms production basin. challenges just So talk you about have growth of type of I in next if given mitigating the takeaway risk in was could of dilutions year wondering mind gas does the Devon

Jeff Ritenour

Yes.

Arun. bet, You

discussed the last think question as call and you quarterly on I well. I this

takeaway our setup Basin with reminder currently in have and Just about production we of move volumes as to firm the with and Delaware, XX% a production current out Gulf of the those that our control we own Delaware the and our Coast. out Delaware of – the

remaining of have that the about remaining the of deals sale firm out actually today sits capacity on our With XX%, we takeaway as counterparties basin term that, the in production half to sell XX% then actually well actually of there basin. and

current And that's so the construct.

the market that, the concern do For around XXXX. we does that the you share of broader as takeaway for XXXX gas into and basin out move

So evaluating basin more again, the standpoint, way to actively to proposition our we if makes out that. opportunities sense of are we From work gas different a our price of move value as production differentials to XX% Coast been is our trying hedging any manage XX%, of the the we've And other mitigate that program. then that getting through pricing. Gulf way to impact and is

this production in basin, and So last our pricing. that's in-basin significant we that get in year amount a we have well hedging We've into of you'll see actually night, for our outlined disclosure that hedged XXXX.

Arun Jayaram

Thanks, Jeff.

Operator

next Dingmann is Securities. Neal Our of Truist from question

Your line Please open. is ahead. go now

Neal Dingmann

morning Good guys.

is question just investor recognition. for Rick, a First, on you

suggest investors not I'm might or just areas XX other rewarding What fully talking you year. last you appreciated wondering, talk be all it think S&P outsized in know that yet? you I one think where how is are to think if in the dividends. Specifically, you about done well rewarded that other you and would Clay still particularly do I well remember appropriately areas seem you number to months, the stock for being given guys And now

Rick Muncrief

the think of what to dividend – that's – it's prepared transparency it's Well, our and the I investors mentioned And years. is we're fundamentally think, – still been that. framework, we're and it I believe think you people returns we've at undervalued – us that I when for multiples the at only rewarded several to think that that to think not reward fundamentally, with this are looking to the when that is from still doing. start are we're I company. us, I going our I degree not just I the execution going continue strategy especially over us But the us, you predictability, look and next of but see remarks something in but not that the

sector think be think what other thinking our market it multiples just setup. we you going Clay ideas give heard in the of our of what only a to expectations are I when – ideas, We're to standpoint, we're with great virtually change needs doing and all fundamental there real relative issues. I to a not us some a supply some broader you of on examples creativity consider any on was chain addressing – from

You've heard the Jeff we've takeaway. talk about some gas things done on

that So challenges, problematic and we're that always ahead competition going – for think way step us. only a we many of to be these the the it's our issues could not be of to competition, but that coming are

being anything all and think transparent, that and keep do else? going fine. to it's is just add need just delivering, we think to ourselves want keep So you Clay, to I out do being I work

Clay Gaspar

that. Yes. Neal, I to would just add

of undervalued one splash. the is just repeatability. kind in what think story I This quarter a is not the is

remember the with messes still and few a to over will the and a of a be was, issued very I as think quality sustainable able that way, the depth yes, our think I I positive we data quarters give to of then ago variable our a I a us a portfolio very repeatability to think, little return business model of those how consensus the model, the the there comes our portfolio the time. create tangible dividend, line we portfolio, a through in shareholder business in – draw was year reaction, but first points.

been the question it – ability line. deliver pretty about to has of to phases can now I our we longevity extrapolate well. and what our cycle, think soon And line that as in show from will is think continuing I portfolio that I repeatability more talk And does how to as various come be remaining valued think far we established. we're that the

Neal Dingmann

But well. capital the is I'm just just think entire considered of Or Yes, second allocation given lastly, agree Permian asset just are. Clay, how the the wondering maybe still the talked Anadarko? that allocated natural low-cost more guys. any returns about talk don't towards not repeatability. specifically, question, gas the I you is good you could strip, move your in of as again? consideration even being I know competing about on

have. So that a over again, nice sort in any – outlook to there? challenge it's wondering how just of I'm

Clay Gaspar

is Yes. big what up. it there and a I'm Mid-Con Thanks of team doing. for bringing the fan

program. I think of we are really the significantly that derisking moving

going see think to from the year. to as they dollars see don't we'll very away it material wholesale moving Delaware. in continue way I this I changes are a

We inside it the depth that of surface drive Delaware, always XX% that the Delaware investment there, gas scratched – gassier Remember, have We we you at gas reallocate shakes Basin. relative the of deeper and different but inside oil is to ways. we We the end. test a continues to what the the to ballpark of out on. of some portfolio have and barely high most move options Delaware have number incredible happens in stress that's may inventory

Delaware a wholesale significant portfolio, So Basin see it's the – but around focused being I change there's from us upside organization. of a predominantly a don't lot

Neal Dingmann

Thanks Well guys. said.

Clay Gaspar

Neal. Thanks,

Operator

is from question next Barclays. Wai of Jeanine Our

Your now open. ahead. Please is line go

Jeanine Wai

taking for everyone. good morning Thanks Hi, questions. our

Rick Muncrief

Good morning, Jeanine.

Jeanine Wai

gas. just global the role a up market. on recently good talk lot of some following the of gas natural the in the about – Maybe up U.S. on Maybe of other heard following natural of questions just We've on some morning.

of XXX the got is a day amount. out which Permian, coming a You've good

know not seeing call announced. of XX% going given Permian look There's market? a gas from has potential the morning good had you and How you don't economics inventory in export of the Devon's that we long now. global We already Gulf peer kind right got short-term that Coast a FTE. that's really participation runway But for additional capacity. your heard mentioned it's a FTE LNG getting this to You are the that of LNG so

for about wondering just how Devon? So thinking you're that

Jeff Ritenour

question. This Yes, is Yes, Jeanine. the Jeff. Hi, absolutely. thanks for

and a nailed under just portfolio a a of highlighted obviously, significant You it got Bcf we've gas, day. that

a to realized better dynamic. there's our term think opportunities it's price think lot So we gas capture for be something longer We LNG the about. a given to do going

Don't makes the we more that's us actively sense. in into today, what the about. as are determine and something get and certainly future we to announce further about that hear evaluating those you'll anything but most opportunities thinking So have something from

Jeanine Wai

strategic maybe our XXXX. paying a sheet. on year-end some great. as getting over if the off you pretty follow-up also as a XXXX then and past is but sheet hold net of mentioned obvious done It's to in early been balance couple Jeff, years not the you're zero Okay, advantage. And balance debt debt strong by prices

you net buyback to with something that healthy the down even getting getting variable there is end you're program. to line? We comfortable and actually XXXX, a with So have the of maybe cash closer

So comfortable think do really too sheet? is you of something goal? either you. Thank that it's a you're cash inefficient Or use net Is with? ultimately balance the

Jeff Ritenour

bet, you I more get want more we to Yes, and back cash Jeanine. No. to shareholders. mean, fundamentally,

creative ways finding to think ways quarter-to-quarter. I do with we've that framework that, on from that to do pretty our and clear been

mantra that cash. fussed seat, us think be see continue behavior and From my I'm you'll with the pursue. never building the I that So will us to for

we're happy the that always on given But could and flexibility that certainly we're execute in. of productive do. environment is our Sitting not certainly, and lot I'm gives the we plan. cautious about inflationary a So cash most us game probably as we thing optionality

more actively shareholders. different that those and in cash So with opportunities we're different evaluating of to debating ways more always as and our back Board how to the ways get to

over to continue evolve you'll consistent past. think see certainly we've framework in our the time outlined I what be will but – that – with So and

Jeanine Wai

you. thank Great,

Operator

Our James. Freeman Raymond John of from question is next

is line go now open. Your ahead. Please

John Freeman

morning everyone. Good

Rick Muncrief

Good John. morning,

John Freeman

sort maybe commodity supply any that with to would a we And this of have the than advance. experienced to in sensitive swings side if past? state of given look in in have there's further the the sort season, chain if the talk of and securing dealing The is plan if of you contracts, the it's that everyone sort of I'm changes service maybe this, about things, about maybe issues the and willingness to longer-term as that with any all going having tightness maybe at go things. isn't maybe – past level activity of would steady first sort earnings maybe materials, raw sort everybody curious through And you hearing service of we've way been maybe just the question, and caused side either that of

Clay Gaspar

It's a what's answer that in John. we've love one out for to question. to X.X? I I Clay. get of what's little slight the more a is X.X If next, the is love how can about Hi, designs. to think internally think the that working, mind the Yes, X.X. is need comes the the modifications being I do change. sticky X.X, kind And about course. of the talked do love is necessity we what's differently. bit Thanks things of I we What number of our here our first innovation. to normal

with As about mind that some hey, In facilities need supply little I may bit this this a way, but X X just just And into idea. is telegraphing did our times X just even our a normal designs. with great And we field a not from practice put XX lead the months. sticky by design and perfect months and that it months we said, we – have brilliant think be or chain, next better. environment, example, more is that if the we we working mean be to what

to cost X.X situation. up this may internally, innovation you end a we That's a just that what change. next of So and a instead don't is, you the of for wait see seeing external, the but on X.X, current make

company great is being aligning whole that into with asking as more own partners you short means our supply partners we're short, mitigating they of who cognizant them aligning and greater constraint are fall we our their chain, of very about and what's service us as thing And so with our and have the and fall chain about, your very suppliers, our vision gives love – how supply questions that supply I sophisticated of if partners have constraint we more that one think confidence potential I'm because other they in talking The those? kind suppliers about thing the importantly, supplier falls apart.

we examples always talk, are several as great rig that about a think contracts are there So – proxy. we

with long-term we supply/demand months of X the what's ask like, what's contractors, company As internally you'll look to a like? rig interfacing talking XX by a about we our kind essentially well-to-well month, contract – curves think get their month, their And company, and look XX feel that for decisions do a of actually so current one significant the stay on short-term, mid-term we're and a in mix we run-ups do we'll contracts, what who short think can And to period. is versus we trying make another. blend and market mitigate in also complement

think supply try things In probably a about course. there's of this really this around So, normal of are the we that I kind has how to dialed up kind just think of hyper downside. supply chain, more of outside, part chain, protect lot things concern XX these and and everything about

John Freeman

to to if Delaware Anadarko XX% mentioned guess well side, doing Thanks, your an great. online Clay. mine of on mine I'd fronts are I and up duplicate in come some sand as sort as of it's expand that the and beyond on That's is those of on if what two the there timing there? opportunities to and Powder. above the appetite and be if supplying of you nice it And sort this sort there's sand interested needs now see then just followed I the operational was quarter the the that

Clay Gaspar

just radar project the a on Yes. an take kind little for we're to of Thanks lot we question. the of that more have under example bit control of a working things This is and of of issue. that major make sure then worries about baseload major, an have a Sand issue nobody a one at until least it's things is those that and it's we supply.

as we opportunity kind an – what surface issues. start-up still the on ramping here. keeping saw of running did up still everyone activity. the And this eye just doing, – got we we've an it's so, else is And still We're owning horizon, the we're thing,

but And significant about to this little so, it's talk as a really, project. a would pleased too about expansion, early say really I

us that As and – then environmentally from help ESG supply boxes. I that think just about saves projects that I the was that checks safer, in all thing world, about do perspective. think chain are that the better, one absolutely This a right are the money

So really it. about excited

As different so about that basin. for talk fields. us situation the much middle pretty of heart It's a of in biggest our each to right we We don't the basins, unique of areas. other in in own luxury surface have other it's one

close a with our bit of sure of that sand or the have to achieve our it. it partnering and – make differently, operations of benefits to still most the partnering this contractors very at heart least associated look little landowners ability with kind even that with you we So at

John Freeman

I Clay. appreciate responses. Thanks, the

Clay Gaspar

bet. You John. Thanks,

Operator

question of next Our from TPH. Portillo is Matthew

Your line Please is now open. go ahead.

Matthew Portillo

my taking all. morning Good Thanks for questions.

to how market here? might continuing was a from current the about compare to pull curious return The time M&A be Rick. feel last just the I transactions the to Rick, right how might one that over couple and for portfolio perspective shareholders spread bid-ask a you've And first impressive cycles through M&A been you years. via to of capital very able the together buybacks at through

Rick Muncrief

Devon shareholders the what’s From time in but bar I asset this with always that the company think you. we’re to just Yes. you've assure have that’s stays you to a it, changes. cash we’ve really, to I real constructive nothing’s even we’ll That’s Matt. why our and on sales. in an returning about and our honest nothing be with about we’re know, value timing, our going of so change question, We Good or so outlook. all the can will some we’ve We kind we’ll shareholders back and our and number market undervalued. of mean speak priority doesn’t is this really returning share a and mean, framework. excited certainly, talk one participate, really heard mean, times the to purchases be – idea high back we really articulated several standpoint, of our And to had valuations. fundamentally program today kind I of repurchase of always have

to have and has we challenging very makes accretive us feel to makes be so sense. more potential that because it And it once that fundamentally to again acquisitions just

changed what last over seen And really. years, you’ve so nothing’s really from several

Matthew Portillo

And a gas, follow-up, just on Perfect. natural then as again.

Dow both program. profile return the JV, Anadarko and has It the You which development like looks a obviously for homerun. have been parties the for juices

inventory and some broadly there form of the more on an of opportunity the of your lighter to pull gas speaking the is the gassy natural potentially as I curious forward some current in your as forward take side. for hydrocarbon NGLs both, Just advantage improvement guess, going and well curve JVs to similar forward streams

Rick Muncrief

something always JV could is Dow it’s And question. nice can tell Matt, for we do, setup a really us. good a That’s the Yes. but I you

returns do to JVs that doesn’t exposure first other of be and have sense the and gas exposure gas, talks lot the that that to most the promoted to makes I gas about would like in right team us. know have Anadarko is When down how in Clay we Really. You place, start a mean, here for areas a JVs there we lot strong. the we getting have basis, seem more of and confident I now. don’t really, strong exposure and Permian. NGL those appetite the just It more tremendous a just you certainly really about a absolutely is mentioned they’re phenomenal. where thinking They’re on

NGL to I juice think, in your liquids focus plus XX%, to developing some get on XX% returns. to you’re the real we’re going that’s the going continue you’re oil where margins high crude where

I having I commodity we think move for great right JV gassy us makes another up. think with type and up got strong a don’t into to see a some don’t these really sense. set So of I prices us there. of a now set appetite kind that base

with really most sense for think probably the now stick right us. makes just have I we’ll we So what

Matthew Portillo

you. Thank

Operator

is question Leggate Doug of of America. next Bank from Our

now is open. Please line Your ahead. go

Doug Leggate

Thank you. morning, everybody. Good

Rick Muncrief

Hi, Doug.

Doug Leggate

Jeff, and inventory Jeff on variable. inventory and one made I talk about on I to morning. got, got good One If I the

don’t if second you So that I’ll do mind. a

opportunities you have X,XXX. up I in X,XXX inventory to you us portfolio. XX, and think another show about, – Slide you in current the talked sorry, remarks, deeper your got So gas the On in X,XXX locations

a is smaller I’m now X,XXX. that’s is years pace the to avoid a sensitivity, the [ph] and current presumably inventory third to does XX-year question question gas I about get the my including How guess So deck? really five from includes your that on Devon trying this being inventory,

Clay Gaspar

one. Doug, take Clay. that I’ll Hey, it’s

So slide the things to around and the remember happening next our today, cost excuse deliver returns a ago give I’d say this competitive to update slide couple the And confident of confidence in there’s we had did If show try decade. running a or I feel structure. very, high I me, one year very one, decade as in as I ability at to very inventory.

me, recall $XX you world. excuse based slide $X that XX, on If is and a a all

as certainly that whole quantification up come so opportunities opportunities those And come of well. as those price the commodity up. of runs And up quality the

looking Now, we’re adds remember, deeper adds inventory. other Powder work the that inventory, that in an in at that still that to we’re as the that to the horizons in example doing Permian the Wolfcamp

with didn’t are the – represented years would and that through things this these the we of as some that there’s expect in upside in I upside. is What march even Some We’ll acquisitions, we of kind doing. that additions what consider that of some then heart a in years path in certainly piece, to look of augment. bolt-on us. great, great a the out in things the we’re done front We’ve right rolling XX

exploration E positions Our these the course, kind to of land trades adds we these numbers a that of under to kind well. bolsters continues positions. as little already job team great do And that also own then of of

price So certainly it’s commodity helps. moving target, a

relying quality higher of the to add commodity quantity price just not this look. and on We’re to portfolio the

Doug Leggate

clarification a just Clay. So

of it, higher read impact commodity my the additional, deck. of that the X,XXX the was So

suggesting X,XXX? So you there’s the are to upside

Clay Gaspar

additional Yes, there upside. is

Doug Leggate

Okay. there’s you of a is, for Thank lot Rick your is or around My been probably Jeff. follow-up stock is undervalued. you you. comment But for think

since but – other You’re dividend will oil be The there’s flat lot from is up the today, price But at XXth obviously, out the the pretty March. your gas variable price on renewable the help on going dividend and your share a June. of of beginning getting of stock or paid things sector. going whole much

equity, dividend is net you off coming your that. that’s but more So for XX%, variable increased balance your your sheet, which than negative by is and even

does erodes how commitment program? for equity really with opposed continued stock buyback our variable the distribution, the around you So the outsized question how is into an to commentary cheap stepping which my as dive is value,

Rick Muncrief

very, I like or some it than the share I us think, felt were cash think investors grapple return we’ve all They last repurchase. of that investors XX, XX honestly, preferred like quite over fundamentally, the it, rather most we and today we is giving with candid feedback. the of very felt just debated questions months either

can As we’ve and more become we’ve tell into that gotten I Doug, convicted. more it, you

come of thing become factor, and not wrong. is that just a it’s a down it’s Board. not do both. debate but Ukraine, just horrible We continue that’s and it’s it’s we’re we’re And driving. And certainly going not backwardated, have paying but for us. aggressively or you with fact, And but curve we the is more an more that this this that’s And third that and we to continue both, sense doing And we’re just share is with – here our the up. debt. It been feel to know it internally make heavily doing fundamentally convicted situation to the Ukraine of just we – see the repurchases matter lot why all either

it’s you valuable. equity, we’re XX this of looking great performance, shareholders. what When disciplined our been the the months. I It done I at yes, the more, And over to we employing. value creates equity all the makes look have start more last think, at So

us people make the all if market, I right? ago. with continue story that at that. makes back like that on excited begun which dividend, able lot very to things what way was implement a goes We the that has just people lot And the runway have that that the perspectives, that’s a chains. companies and of get as that’s And merger but energy. opportunity big a to felt accelerate about – to these why You lot out saw of sense. we were think We set buy equity that’s We’re we, go we fans fundamentally months and fundamentals were that conviction to to gives variable But end the announced the the that of that. the of. us up still it undervalued we XX through the thesis think back managing push we we it synergies, and back ours But day, both push a we is I that that we the to execution, on back. give supply it saw continued And of just feel for our of would –

And thing multi-prong do have I that’s we believe. going the a as so I attack, best think management we’re and can team a to

Doug Leggate

say I than appreciate is last more see will saying the the Rick. of we stuff. prefer I transitory I’m answer, what But think I I permanence guess the to one thing.

I think calling I on Thanks all I think. going untethered [indiscernible] love expression. that [ph] be And much. you we’re to so and platitudes ideologies.

Rick Muncrief

Talk Thanks. soon. Thank you, care. Doug. Take

Operator

Rice. Johnson of Meade Charles from is question next Our

ahead. open. now is Please go line Your

Charles Meade

Rick, morning, the call. the and rest the on Jeff, Good and folks of Clay Devon

Rick Muncrief

Hi, Charles.

Charles Meade

Could or two maybe first be My Gulf ways for question, us perhaps would contrast Permian a guys? across you, Mid-Con, you you. thought what the and [indiscernible] Rockies, this for for for experiencing offer you inflation Coast bottleneck Thank Clay. to be be different may the on yet may emerge you

Rick Muncrief

Clay, to answer you want that?

Clay Gaspar

to, yes. Sure. Happy

term. as operations. to our But importantly of headwind and inflation, think holistic of we I in of can chain supply and people it those it it’s use any manifest one a a kind

let’s a chain, of thinking apart kind little with supply those so bit, inflation. about And start me, breaking excuse

That’s sense a a – more. the manage. bit of one inflation. as to easier it It’s telegraph can component Just little of of little one a rising you prices, that’s ones actually

with inflation mitigate piece component. I’ll kind stick and That’s can sense. a alignment in it pretty You The there’s contracting that of harder maybe of suppliers. part manageable time to a of with is

and also both talent. the experience, the a up have that we’re of exceptionally or When best you, or inflation? you’re and and favorite to component you can that other they How component inflation time potential XX-year you’re little drag. cause in that that, there that good and Maybe can third some in supplier, always what is a get for the is activity you people related. we that the fifth If company do night run dilution at That’s picks look mitigate. We contracting, about We starts people standby into really a talent your think when on favorite of anticipate to work well supplier, of person time having reaching your safety a of of there’s bit drag dilution are a day might go mitigate they’re that for that around That hard the get available. with or component It’s really these make company in an as a up. newness up. do bake things, of people sure no your this one you fourth that. we to are some and always industry. maybe that we or this. longer inflationary There’s Most person, is more available maybe

this is path the piece if is cost on them. ticket of but portion strategy. horsepower, of items, covers This those from it huge big And don’t contracting bit just items some of on right organization, chain have chain. is the that. now be unique us focus of and We of view to standpoint, is a it critical display getting one a really a water, transformer. any little they supply cost the could to steel, that usually about What’s a Turning the as we the long-term a absolutely that equipment what’s about as It one hydraulic be rigs, is could not, structure. big opportunity sand, more inconsequential of think supply exposure

we’re stay equipment And the of. of There’s line have to the and that constraints have could suppliers own the out down can’t inventory quality, I ahead. question up a bit and quantity go can’t of I truckers. Again, to We’ve a our the continuing the suppliers on answered to finally, then on so that trying location. hunt And you about we make earlier try that you are our in staying and be ticket certainly both asking with of and you ahead suppliers, their sure be that. things little little aware individuals we if our built that are. people. out do. Like what People said do popped potential kind more could the truck, we It on where more location, those very

thinking our deeply supply about the so business. team it’s So organization chain complicated this. that’s I especially a commend

really… for working for experienced that that what and state experience Our are Difficulty] maybe or as through like operations you in what XQ, guides team Devon’s is it guys [Technical that storm was but how was – how representative was that average and different? blew

Rick Muncrief

environmental rewind talk blow that manifested But earlier. first back related about it in through to the we getting talk wells Yes, them little sure that during incidents, mitigate, some better any overall. We avoiding was downtime on. had to This that, respond safety associated first to we the more did events really baked better with the we’re I bit results. as just was that. incidents, quarter, the a to didn’t about teams then I’ll weather, four the have quarter protecting course probably and and of get And make first getting events, weather and the quarter Permian into all Mid-Con back

bit wells. over to snow operations, we’re April, inches to that hit of field you The able their second the Powder news a wells, had well. the I’ve it as our to can snow not little to of into monitor We even to the mentioned days. heard shut some you ranges able Williston, the XX but mainly events, As quarter, on in spring, in had remotely to with we the late in month We of just in had were namely in but degree. couple also only a modern the get to do We snowed of fairly is check massive course wells. completely Wyoming, our people good house, can field a certain from XX remote

you going the in to see covered Then going on, what’s can on. feet have see cameras visually of snow. hard location, We if field’s it’s anything’s on even if whole so except

in another we to snow So this and followed on did event teams six job, weekend, had mentioned, mention. to it great And by we downtime, have for next rain of incidents all the all what mentioned, that I a We that’s impact. can the a I I some accounting in event our speak Wyoming. have a no inches in baked the – did but very significant a The just follow you of I significant. Williston, production think larger work of, was it’s safety our about no you, And had don’t great in. and know our we enough – in these to production And for forecast say how weather events XX%, operations. snow the are. tell I then was, environmental great the We field. with some did way overstated can’t of source as weather. baked information mean, guys team I

Scott Coody

Thank questions, at everyone’s any day. see if please the interest a to We of at Investor have appreciate any top you I we’re hesitate right. good And out don’t Devon reach Relations and you team have time. to further today. in hour. the that the All

Operator

concludes for call. you joining. Thank This today’s

You now line. your may disconnect

Devon Energy (DVN) 3 May 222022 Q1 Earnings call transcript