DVN - Earnings call transcript Q2 2022 | Devon Energy Corporation

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Operator

Welcome to Devon Energy's Second Quarter 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. begin. may you Sir,

Scott Coody

to securities Please under and Rick. cause quarter thank earnings CEO; to today. that everyone comments forward-looking factors here an on everyone statements. forward-looking earnings to Thank U.S. Clay Devon Last that subject and make for are and and call our be that, turn momentum. our the measures, Throughout a results on we build on our our cautionary morning, another performance the you, Financial our materials. our provided Richard uncertainties the the actual these Scott. law. was that me excellent call to today, and be on and appreciate to today business in It's for Comments assumptions, and earnings joining found support taking as I'll today. filings joining and Muncrief, Chief the great we could and SEC presentation today management language will join include time can senior to strengthen all By Muncrief the this results Officer; take slides President our the call of few continued night, These to us Operating plans, over call estimates Also risk cover note and our updated risks call Gaspar, from the second to With statements quarter you Chief are differ morning, our of outlook. for the Jeff the to references forecasts Rick are us release website. and team. presentation Good will we remarks, other issued Ritenour, members and Officer; prepared

to guidance record results Capital expanded cash above payouts we highlighted plan below paid and delivered Delaware-focused high by budget, was operating our Our shareholders. our that expectations. quarterly were margins production

systemic execution strengthen to become of All cash the of attention the was systematic and to our to I'd accustomed and your steps Slide important we took of have quality are. with, return asset X, X that To depth begin turn which to. portfolio. tenets it across shareholders all, quarter in also We describes like model who and business our another

We a returns invested cash to high company financially attractive share disciplined are growth delivering capital, large returns shareholders. per and on

depth our capital contributing competitive to While framework want critical on foundational asset X Devon's another strong highlight our allocation Slide to is advantage to financial portfolio. of success, and that quality is the our disciplined results also

can both base Devon's asset, diversified across oil our As is netbacks cost Slide on the plays also with on asset long you liquids-rich see X, with portfolio flexibility that us duration portfolio, opportunities, the commodity a we Basin possess the low-cost to Furthermore, resource very have exposure best graded by affording curve. world-class the and returns U.S. the high anchored through and cycle. pursue gas we to this highest Delaware

we detail us to what are smart accomplished While strong complacent are we repeatable the for future, not to will asset of for and cover multi-basin efficiency our this leasehold for acquisition greater ways Williston And along our deliver call. results premier development. optimize and foreseeable positions in transactions looking the recent the these exactly is base. always RimRock's Basin this capital portfolio strengthen with trades later in series our of assets in with that in the a acreage Delaware future high-impact Clay

accretions of transactions shareholders. up further the portfolio of emphasize to quality additions to from that return step immediate the and in allow complementary our to these acreage these want I are existing financial highly cash to inventory unlock footprint. core the They However, do tactically the play us

very unveiled shareholders. of impressive simple. have increasing we cash is for our Now in our of while our the base the message delivered industry's creation record very execution our track moving asset strategy financial first we strategy, an value to Slide consistently investment-grade The Since late and resulted of return X. combination shareholders here return key amounts has to our cash on to in framework, steadily WPX upon merger improving strength. XXXX, The

As months. merger, value of only you cumulatively of since can the in the $X.X have see on closing XX shareholders billion the chart, to we returned

of at XXXX. this unbelievable. Jumping time perspective, than guidance are the expectations the the we the XXX% the strong to value For operational capitalization companies of performance ahead Slide full of merger combined exceeds year-to-date, announcement, achieved With raising for a more market X of X. year

of see us production impact puts outlook year-to-date a and targets can X% due repurchase outlook BOE positive day. for XXXX XXX,XXX to top share a to our a contributor our the higher key of benefits acquisition to you the on this improved from increased volume performance left, Williston bolt-on on production accounting program, our the in XXX,XXX is Basin. year. per very the this deliver are of healthy this share well to As After X% rate These range per recent growth expectations track better-than-expected by to

low-cost improvement that free is assumptions We updated incremental and are prior $X.X this in acquisition a capital key outlook $XXX the winning here resulting cost the prices pressures approximately incorporates billion. inflationary capital additional associated guidance higher underpinned XX% against benefits asset budget of at with to capturing environment. the to Overall, of commodity higher compared and our that of is flow includes battle base The in This from also pressures. million pricing, Williston range adjusting billion our $X.X generation inflationary commodity original a price expectations. the guidance plus to billion is updated cash this upstream our our current of $X.X versus takeaway

of yield benchmarks compared in a Slide other financial estimated how on translates free XXXX we've I comparison our To common XXXX showcase cash point, want Now a markets. equity simple X. yield. flow the compelling cash improved briefly this to into outlook our to free flow demonstrate included in

As Xx this broader to Devon. like higher XX% you rediscover today's as flow pricing, valuation see correct I investors the at gap, names highly X expect free charts from yield cash historically is which is value-oriented and Devon's profitable in can to up the at attractive levels wide of market.

we Devon to Slide Now U.S. as around powerful With entire X. market. our funding our X%, at year, of framework, track on places variable one free cash per first share more the going stream in formulaic this plus is pay $X than call free With and flow our fixed yield of stocks which the of to predictive which the dividend. out this unchanged, of this means cash remain is are a the flow, highest-yielding on priorities

high-yielding However, be growth dividend we We're I our add per not share just story. are that to opportunistically want a also by repurchasing our bolstering quick stock. to

up our With at to be outstanding we what shares X% intrinsic substantial the share a trading of on repurchase at believe discount program, retire to track value. we are to our to

on to the to I on expect for end upcoming year. thoughts from see provides and on a what And XX, allocation can left as cycle. we a you through strengthen create few transparent plan even cash payout, our avenues you cash right, This excess balance finally, my flow can still with for framework capital large Devon us over want we value sheet. remarks multiple with balanced have the shareholders As the further our investment-grade Slide to

too still a can premature will While capital tell no it our provide formal for is you targets there to shift XXXX, and to bit production that I be strategy.

pursuit not of the flow to free and financial We per top cash will growth. volume growth, share prioritize continue line

supply cover optimize exceptionally We we low positioned levels are designing of cost and tight to in certainty this finally, over pursue steady delivering recent our that plan quarter. recent to outsized volatility market execution chain track And with returns. build consistent navigate the cash our our remain with Clay of and and turn that, market. operational the funding levels, highlights for well to call activity I upon most breakeven this to And will record to

Clay Gaspar

good everyone. Rick, morning, Thanks, and

the not what process I Last culture the the but uncertainty. systems our we we're this running organizational continuing the we've on the we're that's still systems, just very In the past rebuilding incredibly back, challenge with and on at inflation engine we're and the very accomplished. factors months I'm closed to year the deep who, ways, how chain XX of and were but This while proud quarter, improving of As some year, work of company. hard culture, but building merger, important the race. also design supply answering of focused since we've into the never-ending reflect external well like last ran time, we keenly answering processes

Devon fully attention an level. from confident and something we real execute a are and once I'm again pack to differentiate challenges team's these exceptionally to, our ability also in lot While the high on of dedicate

perfect a The of second are to this example related this focus. quarter product results

organization, I creating that displayed simply As numbing margins since makes the as into The of and the IP as these exemplifies on cycle. by of our the held be the XX, easy company upon every for balance our these margins you progress of per and results factors that we are know and talented designed which the between framework a bit a the WPX field key the the And is throughout can key our $XX-plus X,XXX beyond. listen, the rate is entire culture XX% well BOE and and historical financial highest a day production These strategic in we've of to of results solid an growth steady impressive congratulate unit strong perpetually portfolio, average will the efficiency the together. expansion incredibly summary level want vision beat Devon are when in that decade. corporate it them disciplined optimize special better-than-forecasted build together per I Slide look accomplishments well, level to they the share per and when results results a investment we're high-caliber than for to capital XX-day returns our and values. of merger the a more a year factors: per put assets, team I'm entire that operating mind as X through confident showcases context. have. delivered reinvestment we outflow But team a

to turning XX. Now Slide

in from the was exceptional Basin wells brought net growing and Delaware quarter. Stateline diversified across Mexico This engine area. Our high capital-efficient on XX asset basis. footprint Delaware the second New The operational growth rapidly, in increase production Devon's outperformance a acreage by was were our continued the that that -- margin to XX% year-over-year the drove growth online was exceptional driven Texas

results the across County, the we recoveries achieve well, X,XXX achieved The where example top we a Todd charged oil million developed This team production prolific from we highly Upper thick BOEs of project thematic at this XX-well of Wolfcamp a on theme Looking while with detail, consistent the our development development takeaways level of execution in per a great well per Eddy in Wolfcamp. was rates the XX-day was outstanding programs. area initial to barrels track well exceed X.X this and the -- equivalent. average oriented

With this upfront coupled package strong pay than favorable is of wells with out months. environment, experiencing, we're price recoveries the X to commodity the in track less on

in to how rates I low project Next, million The the had landing development the successfully different Mr. sands Bone Potato our given Upper as where the portion and Third we well. from of the the Basin came success $X.X this BOE want averaged the in activity costs per depths as Potato Head Spring, in XX-day initial shallower multi-zone zones: play, Wolfcamp. codeveloped per our The and XY drilling cover X recent X,XXX D&C day that

positive Potato And our activity area. the the point allocate 'XX this to also in beyond, brought valuable slide, on lastly, this online future the pads for opportunity another and data capital further our as activity acreage, look tranche optimize achieving resource CBR conviction area. serve by much high-return on predrill we we BOE rates development result X the Adding outperformed deepen and several as As will to in expectations of Basin recent to with as pads per and XX% was capital the well Stateline of our X,XXX top this prolific in of by our long-term X highlighted high success day. as record XX-day track as that

trade these a position impactful to the quarter in this recent to addition acreage added us wells, that area. In was Stateline great event for our completed another

Turning XX. Slide to

in completed see State this can map a the X,XXX-acre we You of critical zoomed-in that Line Basin Delaware trade field.

XXX a several so prior the me to trade incredible executed of company drilling water X,XXX This when time evaluation. the recycling uplift expect economic and acreage the trades Howard than or team further quarters, Energy. today of incremental locations allocation And framework. ownership, is about Stateline $XXX constrained capital more these to potential allowed the bringing and how value the not with previously the land consider Also and would we're far, lower line surface net enhances development million we that of out brag typically million that that $XXX these extended this net of JV significantly than pushed year in list, that of Delaware. these that Wolfcamp You've Each With within Devon the heard present highlighting the execute were is levers to and from. We developments. X to is unlocks us the area not results trade scalable getting our Devon Devon's trades creates operators in every of high on to the acres of more on with have the we margin efficiencies and significant was value. create in capital on play of a us, our company-owned Devon uplift transaction acreage projects infrastructure with sand disposal with dozens are present the The importantly, importantly, priority come either mile trades. benefit front enhanced midstream this to to had we reach X wet grading around other core over

Moving to Slide XX.

for BOE for XXX tribe Devon's strong Williston the expect the we This June, X our acquisition accretive activity strong of County day. In consolidates production adds this leasehold. the Dunn Xx announced RimRock's contiguous to year, This we also drilling at Williston come. the competency cash valuation we enhanced the we bolt-on in highly the on inventory in acquisition the perspective, where Fort offsetting area overlapping directly exceptional pro and technical with the BOE of XX,XXX half Indian the Tier of position was Basin. of with This the production quality only XX,XXX than around an free cash also in Williston have reservation, net positioning our Another per flow. assets a to depth acres, undrilled production to Berthold existing not economic XX,XXX level but acreage maintain the assets our forma day, and acquisition highly relationships adds With locations, from more to completion the around high-margin community. for flow second years of up the the per assets exit and lined acquired year increasing of around

results Our as our cash Williston continues These consistent Slide delivered within continuing to I'm operating reload finally, critical corporate XX, to results. these continued that thrilled success high the also our fulfill many at and great the and call of set perform headlines assets the assets as and their out have opportunity generating of strong this on sustainability strategy. And for importance Delaware model. like team role to to free flow exceptionally of level, not business but may our that I'm an proud Basin, execution are capture teams I'd

in financial the to up with year. the forward I'll I Jeff? activity second of Jeff our call. providing half another commodity by year price. As very cash efficiencies, across than you can billion this pace and about that, completion on costs each for These November $X the update slide, high-quality flow call base at review. to driving these look assets the today's operating optimizing by ramping over see production X solid to XX% turn grow our low. are keeping to the plays on of greater by capital With And

Jeffrey Ritenour

Thanks, across drivers production also for year. my total the production, for Clay. Delaware of XXX,XXX all the in time the results of financial volumes of the beat X%. covering outlook productivity per quarter I'll the our some guidance our BOE key to exceeding midpoint the quarter, well strong and second Basin. This in day, another averaged today our strong by into due products the was quarter I'll Beginning our spend provide of with insights rest

with our full around volumes touched Rick to As we expect XXXX XXX year points date, to ahead original expectations. budgeted be earlier, on our the of for performance now basis our

we timing growth For strongest the year, the the the the occur driven of half completion fourth oil second in expect of by to quarter activity.

Moving to expenses.

acquisition. from supply moderate level field cost well variable Our announced last were due a September. we a of XX% was end record operating the XX% fixed our our categories. cash our for was cash lease highest share in to value our the announced is per that dividend for dividend flow result delivered and funding our high bottom $X.XX to flow margin core we from with financial Xth second quarter free earnings into cash production, operating benefit results, pricing to several $X.X business to coupled and service and Devon dividend raise BOE, of momentum to costs represents has share. the conjunction free a Basin example This increase billion This capital of increase fixed the a $XX.XX $X.XX GP&T in returns includes generated earnings in BOE. top of model per flow XX% and is the result a the quarter. $X.XX that payout free This a quarter elevated activity at The workover our a is This $X.X recent of priority across translated of deliver. with row compared structure, can represents the in billion plus cash line, quarter. powerful and our and to exposure quarter. expanded per flow Cutting per the report, cash forecast of slightly earnings Williston Devon's cash a higher generation payable the of Overall, to our level last cost increased quarter our funding pressures with ever program, in the higher After

to repurchased retired Since our second quarter. by payout, of we $XXX In lowering the X%. strong also Devon last XX addition share count outstanding shares, the million dividend we've stock nearly million in the program initiated November,

believe cash buying a of flow free yield to equity continue unique We offers the opportunity us. for our double-digit

our million strengthen $X.X net increasing briefly Based And Devon of offers low took a employed call with return some to profile, the XX% to I debt-to-EBITDA to outstanding year, our With with opportunity unique and with returns XXXX. capital closing the execution our Devon performance back that, in our for today. outlook cash opportunities liquidity, market total the With year-to-date in on the strategy of the further steps in return framework, also to employed. turn of versus $XXX disciplined to combined this our quarter comments. a on investment financial We for in cash other increased the I'll This ratio reinforces quarter excellent exited on our now position balances capital and want lastly, remainder expect I exceed billion. further highlight return Rick resulting that are the X.Xx.

Richard Muncrief

per as of of XXXX, capture planning for Devon sustainability ensuring portfolio four, and and like to momentum the for proving steps depth outlook, reiterating processes company, Number Great quality Thank opportunistically three, I we've improved model. our resource, taken we the premier in I'd begin per energy record-setting cash is of while from our X call: owners Number our lastly, our this long-term quarter value the share strengthening change can strategy. our pursuit by accretion, Number after payouts I one, two, key there in team to performance. back to outstanding Number resulting messages share over established assure results to the turn by of the Q&A. company. our has manifesting you, quarter is operational is business We're you not our is an the the now and financial growth and call for of higher job. with Scott volumes. no our Jeff. today driven a will close

Scott Coody

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

Operator

Instructions]. [Operator

question first Jeanine from Our from Wai Barclays. comes

Jeanine Wai

on is first our on is question -- first our question -- Our is on discipline. question

conversations discipline view they conversations cost that returns You would discipline presumably providers. could to based on inflation high how I argue as are, growth production your get the we're define mark-to-market have And But on updated what do shaped has easily your you on pretty is as the side? those CapEx being pretty on high 'XX? you mentioned for the how guess, really you inflation, that And getting make clear recent And with XXXX how defines at it's to pretty returns that side. unattractive. the market budget

Clay Gaspar

X% I'll if categories kind the strategy is Jeanine, Clay. free Slide growth. a do is metrics. have strategy about We lot to of Slide also the remains the take of on The X% same. related we X, But this back some refer the one. this to On you we talk of The XX, one of to focus margins. flow. cash

spending or the And so are much focus result. It's we now capital just is are we production making. not much that flow-through how how the

so excited rate. the that goal today, to have we're the really really excited somewhere we're And while reinvestment rate, about margins on be below stated reinvestment XX% XX% a and we about

us continue headwinds with the seeing to of inflation flexibility built strategy and real allowing So we're today. in of even a the on there's lot very the

Jeanine Wai

cash then morning. Okay. been moving maybe There's to this Great. a talk buybacks of And on lot returns.

buybacks about X that past that you the quarters, authorization has increased Devon did For share amount quarter. the the of by during buyback

quarter, kept the at Board This the $X flat billion. authorization

wondering, quarter particular we're the just you prior that's than in this quarters? so driving And is differently anything authorization to treat there

Jeffrey Ritenour

quarter we talked blacked the the to share the biggest given relates happened Jeanine, repurchase we've is us quarter that of here second Jeff. was were transaction for question. as the it bulk that Yes, out program, Yes, the this RimRock Thanks for about. the thing our at

with done just to didn't as we much over that authorization would us. as left available $XXX of quite have get So we us still liked million to,

back near back plenty per over make cash got strategy. here to in hope felt to we share go of year. this course, Board line the to the component if as we've the on like we of half growth as very next return progress execute front mentioned, all And And And in that much much critical items. absolutely quarter so as that on we repurchase. It's share to term, go accomplish reload authorization we're of Clay on our on our more we'll and focused a hear

Operator

The comes Arun JPMorgan. Jayaram next question from from

Arun Jayaram

is My activity, look first question Clay. for at if half perhaps we first

sells guys Basin. a You to bit XXX about little wells, XX%, tried over XXX Delaware in the

are activity We a some spud little basins. more other seeing bit your in or of activity drilling

give broad So sense I the the mix was maybe us could little basin TILs help on XQ wondering just on of if a a you XXX, for bit mix? a level, of

Clay Gaspar

Arun, Yes, We're activity. dominated question. by be obviously to going for still thanks the Delaware

coming in, work well. would Delaware, other -- wells in, areas. quarter, number or in in I other say, interesting particular, But some the the basins of in so, for other the have We at as third some least coming it's consider XX%

of Basin going will on lever interest activity, see related productivity, lot and but have capital We're the to weighted we back-end online throughout with flow some the relates of turn-in-line an of working also the to more the We've that we on number also a flows ebb wells the of of a contribution. as number well. the the definitely You're to that the bring that year. Delaware higher gotten the capital kind also numbers higher the flow productivity questions of the to also

Arun Jayaram

a last couple things guys Rick. a Delaware one the on of And of broader niche portfolio renewal to That's I in was Great. over you opportunistic? renewal? these of this address RimRock Rick, plus RimRock maybe you just is quarter, announced call helpful. the kind portfolio part some strategy, it of Or if trades wondering kind a view the acquisitions acreage for one-off of as

Richard Muncrief

us, think question. when talked those pretty get buying RimRock acreage very like industrial for Xx opportunities bit. logic. that's fits about. story in trade about always that consistent -- unique and Well, the of couple that at answer our be for years, say cash And like and Clay We'll continue And look been your afforded this last time, we opportunities. a the I I'll that Arun, quite with we have a the in will really think something to and it looking good day also We flow you've there's is attractive this something got you for with

serial us that haul. think lot, company, per and long XXth multi-decade. waving to purchaser I our year, we I se. that our say the that does, asset but a that. exercise. a hear I we'll don't So term base and opportunities looking a we company's be be will build to always to expect to but strengthen ever continue we as -- We earlier mentioned are this for Devon anniversary celebrated not arm about about really just We When an it's truly talk committed for it,

Operator

Leggate Doug from America. next comes of from question The Bank

Doug Leggate

maybe, look annualize 'XX. a the in or RimRock like half think but run the of is wonder next CapEx handle that might of of implications second there's some we what also I think XXXX could part about How of to as I ask Can second about there. half the we if should year? rate. Jeff, that, CapEx and you spending kind Rick, Obviously, we midstream get

Richard Muncrief

of say Doug, said a going this, level. We're Yes. as it's comments, strategy I'd our for you maintenance give with our to detail. we in spending to granular continue little type prepared stick us early to

You expansion. some spending, talked do we about the midstream have asset

numbers. production the out gas want any that, million very laying XXXX for to to we're be train. that very, got in if is day that's And well. We but Paul. too still weigh going kind know there. where have But of plant full, now, to joint working to partners JV and handle expand the Jeff We're right so our We've be to XXX early Clay I we'll at venture. third That there a cryo is us or our on don't building be our going with

Doug Leggate

Okay. Rick, I guess my follow-up would be on gas.

reset us are and deck of least for at wondering on looks mind depending then portfolio. the kind I've of in of some portfolio, if got the outlook it. economics in got some here, I'm to a obviously, normal. lot is guys is, obviously, Mid-Con, maybe obviously, just what has new gas You what the U.S. across allocation gas in And your that talk has you variability a been it the could capital to in particular. about

Richard Muncrief

about that's We a can commodity you, that really was get diversity a think they I people than a us it you're for tell think bit. great portfolio $X.XX I quite more we you're I did -- question. have. when it when And back -- gas price at enjoy we Doug, gas, with we it's the a that listen and talked looking Yes. $X this to price,

so that us expect change you're Delaware -- of And production you'll Basin, that do deal recall to change us, program don't because a we in our have for our see I allocation great capital there. going know gas to

So the assessment returns really a thing work some here running bit rigs type in And wonderful great returns. that little the is there, Basin your there. Anadarko do more We to we some do seeing some to point. ideas X We're have we want one have. that

asset. be we'll But with it's And very that. measured so a wonderful

a great have position. acreage We

very returns well. with phenomenal about great be partner, going is a about joint to it. We're have we We some measured, with which We're it. Dow. very talked going very JV And the venture generating thoughtful

significant mix. So have I changes allocation capital our wouldn't expect to us in

Operator

Markets. comes question Hanold Scott next from RBC The from Capital

Scott Hanold

Yes.

higher give intrinsic is get as the Can How what get value view of us around aggressive going is. your my of buybacks? And value. you to kind around first interesting question your on activity, part the of stock your ratio there another Or a some maybe to to keeping than sense variable that really buybacks you is be intrinsic plan? move that? Devon's arms thoughts payout for hear how will flexibility and discussion, is on continued bolt-on you -- Just of optionality it XX% dividend just be would the if M&A your

Jeffrey Ritenour

of Yes, part all for hit above. we're Maybe believers Thanks Scott, Jeff. big is question. first, this which the the is second I'll in the

financial expect in level the We business provides and critical opportunity see you the about out we've So the mentioned. the deliver near share us threshold that to variable and framework really the of as those are change for in for repurchases, that out. dividend that. we've that plus the Don't operating on to fixed dividend. about laid the feel components really think model good We laid variable from then an term. all Feel XX% good a

As for, you to provides point balance repurchases debt of last do, flexibility we've out back want that we mapped to some it We've us sheet the calls. to strength cash on bring execute balance out, over we couple which of is the here to sheet. next any obviously, And on important can we billion, $X on that, our years, which think repurchase got our over do of to the financial X we can initiative. top then us maintain the share that

how calculating think how you like discount we value intrinsic X, got rates that your to price our look around XX run just sensitivities decks, and that of think share business, different we've different and question that guys, kind first we X, we X, financially, about evaluate value. we're and So intrinsic models we repurchase, the about core at operationally different when

We and generating equity, now. quarter when pretty comparisons, also it, our with look outstanding right doing otherwise. to case all cut forward. we at result. for a second rolled of outputs us some right, been lot that's time. any point, you be we and we standpoint the going that that clear exactly be It's line Bottom business an in do value is what the a shares that When and ought to think -- we've to we're together, that model And out the are buying market have folks our which going we're put multiple way from

on approach Board I to as additional for to $XXX the upside. authorization expect later execute this current and we've million the year over remaining earlier, So got go mentioned

Scott Hanold

versus still cost unit my And -- us about Do for a is RimRock. do just stuff think I scale per think of That's is is have to right scale? just great efficient color. company? for to you used you basis? activity, and scale bolt-ons looking Devon But you sense question buying follow-up rather mean than term with efficiency portfolio for you about renewal. better a very per on some be the a acquisition you there's renewal advantages -- for give think Can that how you portfolio renewal a of talked the I opportunistic at Or

Richard Muncrief

this. I'll Well, say

a I XXX, think have opportunities things. drill contemplate of of number we're wells Number going to the inventory. X a that to will, you XXX we our see way continue to that We renewal, is come if year.

So through you industry it's transactions. just or exploration are even continue whether -- you've you that, though an inventory, to to renew needs of think got deep we a that your inventory,

trades X-mile suddenly your always of will so another of drill those. also come be it I part instead Clay just game returns. into tell to think things I can plan can mentioned hundred other and our But X acreage the mile, that where you, of And supercharges we couple play. there's consider laterals that

ways do of lot that. we'll a there's So

We have land keep high going sorts we great and development do quite a that bar both the enjoy. business a very, because we're we and very currently at of but bar that inventory side, team can we the the have that all to high, look and we of opportunities,

don't always we'll I I it's we'll our have know that could but of that for so say just just that make And us. that part way our do absolutely we'll -- think come plan, game sense opportunities ever

Operator

next comes Neal Truist The from Securities. Dingmann from question

Neal Dingmann

with that in have out. drivers for rather refrain sentiment sure returns specifically, macro Devon, more to would Rick, guys my continue or say, growth, Guys, there year, let's coupled is large you all even maybe going question this overall next paying potentially on and are more to consider large investor return? strategy, But change you shareholder I'll are

Richard Muncrief

be that we The frequently shareholders a and similar get per is with, ours, focused to continues we the to talk on share feedback approach. to engaged and we

growth. per talk when so it's And share we a growth, about

these And is our and see -- XXXX I that numerous We we change ago. your back unless of really like so not in absolutely we've we to that, that do didn't you say, go we we come X big shareholders, program. no in do reason want nearly merger a tweaked out to repurchase the to like look, not strategy And a see fundamentally, and shareholders our this growth -- we strategy. not have announcement dividends. Until model. strategy years since We share September laid we

a talk share And back, board. fixed just we really strengthen, think across the about and so solidified commodity repurchase we did I our I the just deliver consistent. our prices those us our -- dividend few quarters adding bumping that it cash We And go with return did and things option. -- are talk very options also when it -- been across you about we saw adhered think could really all model shareholders those to the and as we've

put getting So to our investors. go I back our like from now and that it us -- a real right change know, long and not certainly don't strategy, completely for just to feedback we're seems

Neal Dingmann

than and area agree. of That put you these current Southern lease into today. on expirations the for just either you activity permits, question, in Yes. Wingfield could second No, maybe I you to currently just potentially the counties And will address have? permits reallocate more Living then I'm and wondering, Mexico New future definitely the specifically, in play Clay Delaware long or entire cause federal or course, activity

Clay Gaspar

kind land, question, Thanks for in it's work of Neil. relate stuff. federal I like It's Yes. -- international the the

good things challenging certain have There's live about rules are by. there it. and You some about it, things to really

I think a on long specifically program. lands with need a you have to view is the federal

You out X be ahead. need to years

for for need that's need You it. the how to need treat to all plan for your your tie-ins, right you plan of ways, contingencies we plan and to you

permits happy working We're XXX-plus of report. We us gives So That of us. with very to the diligently out runway. local ahead BLM plenty have still office.

of to to hard have need successful hard really they people at we well. that think to work what we to asking them us their working what do. do a them helping better want do great understanding D&C do, jobs And I is make

far, would changing. trajectory. to we I long that out We'll so react the a about of I feel us a to front. importantly, that concern vision, the allows think good map But always in most then. say, stay something There's having So is road

diverse of because Northern As the that country is capital accretive to a having great the story. returns basin, the assets does quite having only have around the Rick side to work earlier, portfolio, Texas assets a that total bit mentioned us we're of Delaware the the other amazing in And on team our Currently, areas the on allocating having it. there. of we execute allowing to the

Operator

Freeman from Raymond question James. comes from next The John

John Freeman

kind kind good shorter a forward type if and going that caught sense laterals the the of prior to good is good what bit a but guess, of of side seen are the about but we'll half we've of length or maybe Delaware bit I'm And lateral interesting well highlighted that you what Stateline highlighted a and, of think all the to years. been that Again, shorter do laterals. obviously, acreage first which acreage to good, year just trade the what couple results The continue of, all to I the more lateral guess, better? a, kind be you get kind trying laterals than to quite results, lengths good the maybe did, some it has through look the activity being driven half accustomed move XX,XXX that how of the shorter up I a first we've back on of to the on reach bit than extended toward

Clay Gaspar

John, appreciate Yes, question. the

X-, are really laterals. in in always drill Anadarko Basin laterals striving drill Dakota all to We've X-mile sometimes today over laterals. proficiency And basins well. We in long Basin to the long quite built good sometimes bit is a the multiple Delaware X-mile North as

example, kind on that's relatively little more of And tone do of a allows And set to our the to in can option. land you tell so development, the to first early. I bit established, where X that's it's us development development, miles. a X-mile mature lateral for revert often position once you that, hard

mile X development, of because we trade to allowing high holding had been the be this saw we've really X-mile transaction did, try miles, importance. to get very that X just -- that's X great to those go the able hoped to drilling that all DSUs we You back from completed. avoiding us We

X us So and push miles. you'll continue to see X

model. and of we'll course, XX,XXX necessity the of And X sometimes occasional have out

many delivered. in what that for little the quarter, I bit results seen that X,XXX anomaly. to that up fell we're the push and efficiency actual that always XX,XXX second quarters. many feet at prior take how look as I quarter. wouldn't into to a That's a the capital miles As how keep XX,XXX statistical versus the XX,XXX is high. than shorter stack It's just of we But we've X trying longer

John Freeman

some of And I'm look for for of as materials do then XXXX things sort activity feel the services. kind the In offer at cost providers sort longer-term maybe contracts we of terms get this used try service environment being could just layer and that or kind and levels past, of through and both you've a in question longer-term just what some in of that too moment if curious willingness if combat size about the me. cost of to terms you of it's contracts prohibitive follow-up -- in of point? is the able to out inflation kind talked of at your And to kind one have consistent for you and to

Clay Gaspar

last it's it's year. important up if question -- year, this XXx appreciate John, was because a it I you important the Yes, bringing

would In the like even as contributing one of of to RimRock to being a factors fact, get that able maybe deal transaction us I point done.

done. having the and of with log us I to Dakota, imagine, casing North to up, and tall various like get a equipment get of As you working degree really a necessary scale basic some break environment allowed drop work design to and It kind basic certainty and in of to And services. have think that jam. order. in is can higher a execution tough pick the try come Even

piece business a been think have was years. I contributing factor. several particular to buy And of We that for trying this

company helps proud It's is up. dialogue thing the partners. consistency. We're they first of lots really So like as the said, have bring service a is incredibly business Number Number ton model, consistency the important. X I scale. with of our X we

top us. cost And on From very contracting, it's bid-ask that go. of kind spread. an from longer their question have appetite going for matter much there's side, just a we to your So service view where is always that on of mind. our Specific side, time to own of our

try that and in out would and say active ourselves I lining of that some So and to market. shorter the as term we to well mid- term the longer kind balance keep of pairing up.

Operator

next Neil Sachs. comes from from Goldman Mehta question The

Neil Mehta

And first Rick, you on macro. is the question for the

How to than really that meeting had earlier good OPEC love a I'd macro hear tomorrow. an laid one view the most just out We're year of call oil perspective better obviously, your U.S. the pieces on the the moving look production on you in OPEC non-OPEC you do forward as this and pieces You've with into then on the calls. bullish behavior. going we the rates cycle. think of and outlook, being demand this about decline up sustainability the moving

Richard Muncrief

going think bump I well -- going to could think, honestly, up they're be very, all Yes, they impact of they're back bump to bump at large Neil, looking to a their the OPEC, because it's a large. a I of great data don't see That's think question. think that quite But the OPEC, rest more they a I of be And I bit The their recession think let's in their fundamentally, think, Saudi be it concerns we would were around I may be close probably represented. to there, measured. productivity. to possible If we'll very been, of little handicap very just I I just they minds, right? getting very, think guess demand be were say, they're with. to I quotas. so they to going some lot specifically, -- if are, we challenged don't somewhat. think very what that like come going us, are for

I So the even don't for strong. in production, going maybe a uptick we that us, maybe about to be Saudi's when but think slight it's UAE, think

see discipline. You continued

I didn't want will the still in mind, side In see. been do price is the a gas see the just gas talked we've But I crude lower it -- environment. That's demand But and WTI it's demand team, pull think believe, stay, on very started kind you'll with increase think -- when have demand, as surprised disciplined going our about approach. too. little still China we our and a storm back think or on commodity is short to it and start think going so but strong. on then a time little to be but going it place until I side, that You world. XXX. a -- I or I've the for we're it's at I do And constructive type not And just what -- you -- to -- here fundamentally, harder you to the both is be there's that at you're do that see we in uncomfortable us, geopolitical that in some pulled greater whether of reopening. growth and think the things, first point they storm it's demand at XX, just some whether gas short see utilities growth it's to of society. not gas. That's this a see the want Uri point-driven, time governments an could we'll thought you north I prices and been That's circumstantial. for is and of net-net some be back

So very we're very, constructive.

well. the We're in really market. the the very I going the on with side We've my of consistent to on and to the both think, some for can, in marketing flows think crude made -- front, chain strong side on ensure, I supply mind, gas reliable best -- moves Neil, staying we we execution. us, pleased and the just we're it's, our top very

we've do. on on we side. the us need oil for to think constructive both gas are done I what And demand, I is that So takeaway we guess the still and

Neil Mehta

profile, That's oil little debates into productivity is shale the really are U.S. that's helpful markets and terms where in oil mode great right maturing the we're the assets of maintenance versus perspective. point U.S. we dive moving could which deeper of U.S. one a more the of in mode. I at are If production growth now whether to

love because more should as perspective view. your base operate macro whether the and be I a of perspective a would more basins. as different unique thinking constructive we a so the growth opposed in mature of have which to base, on would You U.S. many again you support

Richard Muncrief

Yes.

let's I with crude. start think --

think really -- for out we estimates there. I there's us, of are ranges

the 'XX, what of the little of growth are. about think estimates conservative and more back balance some a of we're we half probably than throughout So the

as there. in will not growth half. for on so reasons words, back some bullish And of other number we're there's a be the U.S. as And

Eagle as Ford, lower I in hanging think of but you're lot Bakken, plays, the -- seen we're where at growth. I like particular, far as for volumes really there, the you've where maturation seeing in with are seen places fundamentally, think XX you've the not a the the

did challenged in the we Ford, both but it's basins an be some, grow of to think much. uptick but those I think I Eagle back see will come

Anadarko. I think in you have plays like DJ a we'll place that's and watch. DJ, not We're the the the but

growth you can see some -- going in places be like But be especially to somewhat there. -- aggregate, gas moderate. Anadarko, going it's think, to I going I think to like in the is be,

supply even it the the only with Permian to But impacts be Permian. all start down think the Permian, pinch seeing and the I substantially. you'll And so to others. basin think things the continue I comes that grow like And of will chain

think driven that the have operators the growth. have private of been I ones many the

the last I XX really The say about months. -- first

to think so going I a bit. moderate And little that's

And plays out. so how we'll all see it

little not still people out. forecasted. some to a quite plays growth, have play out it's bit. see as much it think may as I You'll obviously, how going be It but growth We'll see

Operator

is The Portillo from next Matthew from question TPH.

Matthew Portillo

Perhaps delineation the for -- a Clay question around question for a in Permian.

results in the curious in your asset might play has that Mexico Spring. as was and had over that inventory on time. New You've pretty both you evolved for some work the and the at Stateline mean Bone thinking I outstanding how expansion what

Clay Gaspar

Yes, the might that the for we Yes, noticed results. question. Matt, highlighted in the slide, of you have some thanks

to Spring On Wolfcamp, some on seen Bone of of the we again a that's the Spring, kind side, has area been And about secondary -- Bone lot lot that's which years. Mexico activity on it historically the is then the the little a actually bench, few been the the as New secondary for dominated a bit really talked side, to which Texas last the Wolfcamp. secondary was

As you the from results, results these can exceptional. see are

of kind the individually, ubiquitous X really progress is and Wolfcamp out recipe, making The it of change is that of gives is and -- on teams doesn't try magically finding great Delaware at hidden and having together, It's tremendous the so worked come trick pretty us the solution the staggering, of problem It's this And one confidence right really that. part throughout sequencing compare the Delaware productivity Basin. border. team spacing, and parse on what the that the is this. have notes strong out this right synergies of real

So and answer, that's contribution the certainly you're are today. or we'll that even and ago just much but portfolio do seeing tell never this. significant were our And a results than understanding along we final how the further I we year the understanding X of to can to incredible have a you

Matthew Portillo

updated expanding be that beyond and potential on could Permian. mine curious you follow-up. might forward quick the on you Great. be in And developed your development. cost if this on as sand vertical to highlighted to just going operation then Permian able potentially was lower us expansion integration continue the I just the quarter, a give savings Last thoughts to your from additional mines

Clay Gaspar

you wants makes When that. looking certainly a it. company, deck, around we're slide of that at everybody like some can bet Yes, the the

see a with to but one surface and really case, so we What in it the the the I'll kind is been you starts the creativity And a this of the geology, have it's ownership, organization. Delaware, geology position also of the tell fun excitement logistics. unique the the lot around also in

us a able to use be expand, I'm on of but basins in point same a learning Delaware, line other optimistic able some just but been would to this. it's this to operations. the the being home holes those We're of for our so to and at to not lot, real have And to say execute up cautiously techniques. I run

As trade, up enhances the producing. we're economics already the I that sand mentioned, running have further incredible wet even this that we mine and

margin So leveraging -- is is in the just that especially phenomenal. place of Stateline like pretty is,

So it of see happy time. more due to in

Operator

Kevin from is The MacCurdy next Energy Partners. Pickering question from

Kevin MacCurdy

My that the is now to opportunities your seeing acreage costs on you're further I'm on and you've legacy RimRock curious question what closed any efficiencies. acquisition. compared for

Clay Gaspar

Thanks, say Kevin. I would pretty early. really it's

is consistency speaking, over roughly lot whole make to having the designs don't would of a generally the are any We But say, Best similar. to of the are operations now. some sure we there's do in completion techniques. taking wheels thing fall I process. of just off certainly

some I think see we'll tweaking.

will of want think in certainly, kind I right supply away chain of our to I wells. But the clear. help be round efforts real next

in to our learn taking is from a everybody, fighting RimRock can We are good industry fight We learn. doing. is everyone also just this opportunity as else

side, on up transaction. game own facility as we And from it so the we and exporting picked the to rest there's of to that things take look this every one well. we able our some already as consummate basin were we've an time And we're step of deals mainly deal, when either the up, these opportunity at or to a actually nuggets

Kevin MacCurdy

as of comment activity the from a any follow-up, consistent rate could year at maybe that us steady XQ And and you a color steady levels exit give production can consistent Great. trend on next and and how level? your

Clay Gaspar

or come know would X%. that. growth, takes X% just just it directionally, same move we off When low that strategy, say to so that time zero to I Yes. end

range. say today on end us I to consider where X% of X% low the So would we stand that

line we for through and we you we'll a bit that in that, lower, a but little little you out hope to higher draw see and and As zoom we're little strategy, a -- into quarters 'XX. when our inside you continue plan that a the well are it, quarters, that have

Scott Coody

All our and to, right. questions Well, if have like We a day. didn't everyone's get And of Relations Thank end you, few the time a interest at appreciate out any team good looks Devon. slot the time. it it we at gosh, the looks to like we're Investor in of we're end reach our at there's -- today.

Operator

concludes Thank now lines. today's all This for call. Please your joining. you disconnect

Devon Energy (DVN) 2 Aug 222022 Q2 Earnings call transcript