Earnings call transcript Q1 2023

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Operator

Welcome to Devon Energy's First Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. This call is being recorded.

I'd now like to turn the call over to Mr. Scott Coody, Vice President, Investor Relations. begin. may you Sir,

Scott Coody

first thank today. everyone an Last that for and and on Throughout earnings be our we call website. found joining earnings the to presentation the results on our will call night, of cover and you and morning, for remarks, the today, support to to our us the release quarter Good we prepared outlook references these remainder for presentation the XXXX. make slides can issued

call the CEO; Law. senior on to few me filings are our our Chief from Rick cautionary of Officer; include US are could and language comments joining factors Also that of our uncertainties management a and under President note assumptions, our in today materials. today and are statements. actual will Officer statements results plans, SEC Clay differ subject cause Operating risk the and Please our Muncrief, Comments earnings other members take and our forecasts Gaspar, forward-looking Securities team. to that risks Chief and Jeff forward-looking materially Ritenour, Financial These provided estimates

that, to I'll over Rick. turn With the call

Rick Muncrief

join It's everyone be We to a taking Scott. here morning. time this you, Thank pleasure to us. appreciate

three today's at important I to For this key our point. focusing I'll discussion, believe be on shareholders that topics are most

First, I plan to cover our execution. solid first quarter

insights plan effectively momentum share the to return to of the and to gain we've how capital is bolster will And rest I throughout taken the shareholders. third, through of costs Second, I steps run our year. control to the positioned on business

on several slide turn to let's had first X, highlights. we where start results quarter key to off, So our

the of barrels ago in at our was XX-year midpoint our oil growth representing exceeded level history. company's the year period. production oil to compared a guidance production per of XXX,XXX highest XX% day, This total First, rate

Basin also Eagle Basin well Williston provided contributor quarter. and result, volumes in again assets, was recently-acquired The the a strong higher once Ford Our the our key in Delaware productivity and this to us

the on call, one that well million equivalent. more our few are ability track quality, over productivity touch on is to depth well will with highlight the historic do years, trends Clay in placed I our the recoveries of average but detail in right line online oil quarter in to demonstrating recover past want later than to base. in greater strong across resource results deliver These the barrels and our sustainable the

quarter our coming expectations demonstrated by expenditures was Another This this first in effective costs was percent. outlook, capital the our topic achieve in the this objectives cost detail I'll to notable than our and by with fewer operating our puts better achievement to with cover later a line in from dollars in spend year. in in the but XXXX management. great few position start call guidance year potentially to the team's greater positive being a for us capital

sector meaningful the the free ranging as resulting in through $XXX variety of amounts a the capital first our as cash With in durability a This low S&P a this generated conditions, flow, to business our XXth we as levels free across quarter to barrel. with free from row value of quarter to flow. oil reinvestment cash barrel rates over of any create a cycle ability over prudent in flow $XXX returns to and as capital deliver $XX marks has showcasing employed with plan is example that strategic This prices of Devon's the a XXX. -- high flow our limited great generate time cash million compete cash activity, market on of further

most recent dividends this cash through return well between which in framework, our and balanced shareholders to reward quarter. was the free flow, cash With stock we continue buybacks

exceeds slide shown a around of first opportunities from market. Nearly XX% which total the in of yield payout half distinctive consistent significantly three other the our years from X, shareholder-friendly the available As formulaic of XXX variable plus reached quarter, annualized initiatives on of rate derived began was implementation. allowed offer framework. the the groundbreaking almost the cash yields which This in an the fixed approach, dividend ago to its Devon payout since sectors entire highest S&P this one has

Now turning slide X. to

we In believe payout, to progress advancing intrinsic $XXX capitalize by to million this shares program see on significant in discount our our shares, we addition dividend continue attractive our our year-to-date. value. traded made opportunity, strong buyback to To value repurchasing repurchasing of substantial a compelling we which

In addition to conviction have our our by open also the few in Devon's included, months. the in myself stock proposition team, management corporate value over their of buyback activity, purchasing multiple market past members demonstrated

stock With year. billion, of $X buyers to company the Directors upsizing of our program the by the of our over well of course Board our the repurchase approving XX%, up the equipped to active capacity be of is

XX. slide to moving Now

to is out of remainder Looking change year. laid you this operating we disciplined the plan there to no our earlier XXXX, for

operational to Delaware grow our Now place the of remainder over is wells online, ramping to infrastructure fully and production year. the that actively expect more our we

This year-over-year made track translates just not BOE X% our capital, outlook healthy approximately per to basis. revisions of of a year. $X.X momentum for the to a any share With places on we've per XXX,XXX right which day $X.X on billion into to this growth billion average over us production year,

rate to this reminder, assumes a capital cash low-single-digit rate. for XXXX compared a exit inflation our As

signs goods slowdown overall in experience and to – stock first services However, availability and in an the first stability see many price began of quarters, service due did we in increased for industry activity. to the service of quarter, we time

the see later with duration over occurs terms as contract several for contract partners well continue, next this positioned pressure service agreements, to year With into shorter downward now much quarters. we service costs work If and XXXX. frequent these we're book potential on for trends towards our our shifting more refreshment of better

summarizing believe this XX, on a job Lastly, in competitiveness our of outlook of XXXX. good slide I does the chart

laid a price. that free return cash at plan, cash $XX plan most the the to With this well-positioned XXXX, possess oil disciplined to our execute we've one continue self-funded in flow and to significant entire the aspects another of year Devon continue making us. model, all generate is WTI programs of we out, capital-efficient is industry With for successful

I that, call with over will turn operational Clay our the cover Now now highlights. to Clay? to

Clay Gaspar

Thank and you, good everyone. morning, Rick,

on this the for create first earlier, did also also but the quarter derisking and our us R&D the effective great quarter cost the that coming will will coming Rick As numbers that team touched of quarters. for projects delivering Remember, targets progression opportunities development solid we're and focused job operational well year, benefit meeting upcoming throughout through over of on the years management productivity, a just and coming the in decade. value not investing steady

put to Basin. start significant We're our making the in in great This for momentum our corporate XXXX. fronts. to success year the to all us great achieve in of position positive to contributor throughout and A asset the objectives Delaware franchise progress build the was course continue on this three the year quarter

of intervals in resulted focused With the of the activity oil of targeting another in XX with online frac slide growth of allowing us quarter. consistent deployed can As volume basin, this the XX, XX run roughly the program wells year-over-year, see of this XX% crews with was on and quarter to program drilling level a XX% the development prolific in our and completion this capital you rigs quarter, representing mix. majority high-impact Wolfcamp. brought we to Upper four activity, This of in product new

quarter the with highly This While New the X-mile performance we laterals area headlined Exotic X-well Wolfcamp. productivity our Raider across targeted a in had in our great during Upper Cat position, located Lea was County, acreage by pad productive our project. Mexico,

barrels track Devon oil flowed Individual are over the projects to day best wells per X,XXX and million has online recoveries this this -- BOE Cat basin. equivalent. at flow ever per activity brought well exceed in rank two from pad from at well the The among very Exotic rates rate of on

of slide, eight was replacement to repair this on and Thanks the operations lastly, compressor key the quarter team's possible. this This in Stateline the facility. our personnel station. during at to efforts safely us securing And for timely critical was the event resumption equipment another

work expect any not repair the our that field limit the in of confident production we part disruptions we and temporarily of quarter, this nature. this do are issue further during did we Although this resolved this

going us forward. Furthermore, commenced providing we even region also operations flexibility cubic Stateline at and compressor another more XX XX of the in throughput feet station, our million

slide XX. to Turning

high-quality Overall, to of the remainder operators that resource margin. coupled build past And well the in the chart competitive upon of As with results of Basin. performance inventory, this advantage further of first as positioned we well ahead the we the year over plan shown to XXX in to consistent online bring Delaware Delaware, context, we the online with to achieved to be I few productivity very is the the with asset our look solid expect we wells quarter. position top the basin, plays the brought the years. the base the would a by the for long this on this wells the not in and underscores right, impressive top only our a This surpass in US the productivity noteworthy among well would sustainability runway, high-value performance, well a but in Delaware other Devon also level world-class year, shale

XX. slide to Turning

on today funded Eagle Another is I'd second-highest to our in asset, time Ford, the asset spend some is XXXX. like which

measured from few scientific Over thoughtful prolific to and learning's development generated next approach in significant in refine goal and these we appraisal where field is refrac free disciplined harvest have the the current and efficiently we've a and the the The work. sustain momentum this to evident profile pursuing past program, of years, taken cash through production our infill active flow. tighter steady capital program, spacing are with phase

heals conceived this decade we plan spud spacing with tighter with redeveloping we on drilling opportunity year, high much wells, XX entered majority the than ago. a infield focused We play to originally of This to first when the significantly a this us targeting XX acreage attributed over wells in permeability. XX unique unit Ford. combination pressure, multiple the activity network This tighter to with pursue spacing, landing across allows Eagle that low quickly per and redevelopment but zones consistent reservoir fractured to

returns. are competitive These million barrels per also leverage bolsters us provides well, In oil-weighted of unique years Ford inventory. exceed reservoir and with play that highly X.X Eagle drilling characteristics to the the in many ability recoveries our in to infrastructure existing favorable this the of addition projected benefit to the

date, in in well resource, steady productivity an successful successfully have also immediate program that untapped The accessed To team online than the productivity the our XX%. progress achieving more consistent, older wells. by has roughly have has we the Eagle well reserves resulting that expanded to Ford, of refrac restimulating on refracs made uplift XX and per

and refracs the identified several XX In hundred future. XXXX, candidates we've around we plan to field the in high-return pursue to execute across

we play. progress upside While made meaningful recoveries and improving refracs, in there's have significant on resource this infill we believe still spacing through

create as data A well to is by as area accelerate to of effectiveness fund techniques learning's County, shale and by the objective via in our EOR. this Energy. is a US monitoring us study grant improve recoveries of Zgabay this stimulation for laboratory both help supported collecting pilot the new grant critical of enhance an The production field from is testing our in which Department to catalyst initial as refracking underground and DeWitt recoveries to and

These to in our more still not operations. in the us to we learnings positive have incorporated learnings in Eagle the interpreting the expect footprint gathering on of future. topic While this in have stages this project, our data but of we're will resources, only updates the I enable across Ford, recovery into from optimize broader already and the day-to-day US early

XX, also key to delivered we're on And positive other assets slide across portfolio. finally, the I'm about on results our talk excited seeing

we've graphic work see the areas scale the good to operating up the by production opportunistically X%. year, and As you over build can to right, increase on in some these past the done

we've this River That done drove the Williston operational in Powder quality in RimRock Basin. that oil partnership, the Basin, momentum were future. the has our for us helped the helped in factors acquisition in the assessment the main growth build play Anadarko Niobrara which and regain the The us work Dow JV

such pace and I into to shareholders. flow In growth, on team's hard to we inventory. future other strategic and can meaningful to priorities solid capital derisking free of as effort return goes cash addition key the a group is the near-term that to this of production diversified deploy flow the appreciate work also valuable generate tranche assets of delivering that cash

the review. turn I'll Jeff that, call With a to over for Jeff? financial

Jeff Ritenour

I'll also of rest drivers my quarter financial results, the outlook key some insights Thanks, Clay. the the I'll our provide spend today for our covering time and first year. of into

across our of guidance XXX,XXX quarter for performance total the the in due asset midpoint performance the production, to averaged portfolio. volumes exceeded per BOE quarter first This better-than-forecasted our with day. Beginning our well

Looking weighted ahead, period. half our towards second quarter completion the of back activity the is

result, As relatively first. flat the the expect to we volumes a be compared in second to as quarter

the momentum cadence build quarter setting to given to throughout of However, do the highest up the quarter production year. quarter, the the be activity, second we expect third for

front, in the line quarter, On million invested was in we $XXX the capital with first expectations. which

Looking the expect versus flat ahead we to essentially prior to period. quarter, spending capital second the remain

stronger spend of first As half year. production half This completions in of given half capital more in a in XXXX first up the level profile reminder, the Delaware the Basin. of sets to timing a second the the we do the Devon expect investment the in higher for year of

job a in forecast. categories better in the controlling Moving to We several our expenses. coming costs than quarter did with expense good of

Rick and guidance Looking our start we the a we're for cost solid corporate operating ahead, feel ranges and our earlier, across seeing year, cost with to as on plateauing touched pressures full very year expense. with comfortable business,

that After tax. XX% items, for result credit better-than-expected first cash during by quarter. income the was the non-recurring an R&D adjusting was driven were This quarter. in to taken taxes Jumping tax

for tax around year. ahead, of the our to up the XX% cash rate to Looking we expect step remainder

$XXX cash funding per million operating of of the cash earnings the program, top capital to Devon's billion. capital free to was Cutting of this earnings bottom-line, This flow our our With priority or into disciplined we flow free totaled flow, quarter. generated level million of the core $X.X $XXX maintenance in $X.XX After cash accelerate shareholders. to translated share. return

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

of stock the Another our the repurchase highlight intrinsic XXXX. in of remain as far quarter the by confident share in repurchase for $XXX value evidenced equity our was We continued million the our execution so ongoing of program. of

outstanding With growth as our the of share share billion, per our which the we equivalent to have plenty expanding of repurchase through count, to is $X runway program work Board way X% compound share to our year. we

sheet. and exited $XXX facility. billion our billion a of times, low below with target the Moving liquidity, or quarter the $X.X net-to-debt We exited ratio to unsecured one quarter times liquidity, strong of our of on With of balance well the $X undrawn with less. consisting million of cash EBITDA X.X leverage credit this hand capacity mid-cycle on Devon of

sheet plan to as we improve by our ahead, debt retiring balance come Looking maturities due. further additional

XXXX million. with due We'll XXXX in and due comes our maturity coming totaling debt opportunities down well. $XXX pare to year, debt next of Our have in maturities August this additional as

the unpredictable while look our flexibility manage confident financial through creation commodity prices, value that fluctuations effectively of I'm us to As framework for our provides the necessary shareholders. I ahead, optimizing

to cash improve generate and With variable of fixed grow the our buy dividend amounts as flow our strength. our cash over take steps much substantial business plan time, as flow, pay opportunistically additional XX% shares a look via we'll to excess of back out dividend, designed financial free to

the these in peers. possess maximize options to framework versus transparent we for shareholders. any We is flexibility lean differentiated this result Furthermore, to approach and this balanced of within believe to one

call the some With comments. for closing that, I'll now to back Rick turn

Rick Muncrief

key meeting a operational management. a the our superb through the quarter messages. to out Thank you, set solid first targets productivity today in team one, for ourselves Number cost of like close Jeff. by job Great and we few well did job. reiterating I'd effective

returns for disciplined capital. investors the growth Number two, invested seen is high delivering, performance execution in attractive resulted our realized evidenced and company. per cash financial share by on by another strong the the substantial we're This returns

our Number XXXX. signs the well positioned is track flow build start cash business our all plateauing showing now and we the generate capital on as progress we're Inflation in three, momentum to substantial with free of achieve year, through is a of and to solid objectives to year.

depth, the lastly, to to resource are company through sustainable have we capabilities, the financial four, also a Number model continue deliver energy multiyear to disciplined strength business cycle execution premier perfectly positioned and this results and from where upcycle. benefit

And with that, the I'll over turn now Q&A. Scott for back call to

Scott Coody

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

Operator

you. Thank

from Neil, ahead. comes question Sachs. Goldman go Mehta first Neil Our from please

Neil Mehta

Yes, comments is of to the be tracking you time. service the CapEx Rick, that function Appreciate it towards costs. talk and any deflation as that? that as relates end you lower signs of about much. your so in well? of -- guidance thank cost you you Can cost alluded And the a early might

Rick Muncrief

think of Well, watching we're Neil, lot a things. I

see softening out in We'll the really have it a laid change. out softening and our are We alluded how plays his in I no I change. now, out. see prepared as Clay year, market, plays through the there's but no we to, I had we've right do we'll But seeing seen how then but see think as guidance, some on and that in just remarks,

Neil Mehta

results. Is and anything then guide guide, that oil And QX volumes obviously a year? course of the consensus. just And is the timing over bit just of say activity? QX cadence was of follow-up little the completion around the strong the could just QX below around you

Rick Muncrief

Neil. is also weigh I'll strictly And time. color, It Clay Yes. in, more have

Clay Gaspar

pursue is on excuse I the And that second -- original that's right XXX be we quarter band -- we as low somewhere guide, the still be try in that to feel it. or that is our range. band, XXX to that in no, there. excuse But quarter the to flat intact high of expect going our end think on and and think me, the maybe me production, much XXX, of just Neil, Yes. XXX, end we good third about very as

start or you numbers, mean, by definitely As plus affected our really I it's timing. of in, minus X% the dialing

crew. big front-end in other got little a in quarter, the the pad later frac quarter. that You bring with some that We've on things We're fourth going. capital on the loaded early

That but the third see you'll off. see quarter the year kind end So we'll the very biggest of in year, peel of of that tail the kind affects quarter. of the

Neil Mehta

lot guys. Thank a Make of you sense.

Rick Muncrief

Neil. Thanks,

Operator

you. Thank

next Our Arun question go comes from Arun, please from JPMorgan. Jayaram ahead.

Arun Jayaram

those Good Clay, the since provide you of for could seen wondering bit maybe performing some production. assets, former thoughts premier was basis you but morning. expectations? on you Yes. RimRock your to you. latest versus when deals, about the announced on down integration how wondering I a the relative assets and a the little are if could talk if we've Maybe I

Clay Gaspar

and to question. both Arun. integration RimRock, just immediately look from a did kind and Validus gone we I RimRock I'll say, some it, to learned of looking appreciate get back. an Sure, always better. Validus Good -- standpoint, continue applied back little exceptionally and we would they've I We out bit I'll to on because to certainly pan things well.

I've acquisition. Validus side, in that my the in certainly learning to on remarks, additional Specifically upside that even alluded contemplate of didn't we we're some things,

-- for definitely wells of Williston kind that that. all depletion plagued more And things workover some that, have we've impacts US, equipment, so associated about a shut side, late the that with affected frac of we're little the is would is bit the things. Northern out some That to reaching has for, Williston, of of been a kind metrics then we've from complicated not backlog honestly, in these bit the the we've seen them. in so RimRock that. one by offset has there's everyone And But those activity reaching learning by a little same then of innings really wells rigs, the cold pretty for On been of weather. digging or

-- lower that had depletion lateral. So have that little you a part of crosscut well bit -- has a more might a in

and I'm and think do in a asset I wells quarter. first we But of bit coming the We've causing provide things about latest that there. the excited continues factors Devon's already underperform good some and strides clean starting Really online. around are these little right excited interesting how that really we in be the That's But lift. artificial critical some those expectations, quarter piece do of to about see group to all three a have the things to I second such relative pick to how probably out, made second of caused really it wells are second portfolio. that quarter, up, us

Arun Jayaram

like And R&D efforts follow-up, it Clay, sounds unlock on is my Great. the working inventories. team to some

could if wondering and to maybe opportunities perhaps base? inventory you detail was what I grow your exactly testing some So you're

Clay Gaspar

recovery. particular Department industry Texas, of forums. Energy-funded, broadly with lot lot is around we're earliest in Yeah. enhanced South in talking not far we're have shared We're we real design, going that There's -- that we've is stuff the the one a refracking about the EOR, the a around a the completion oil some of just win company knowledge and project, yet, are and so of talking from it but lot in some innings. been Zgabay And then early number getting a pretty something whole pretty that of

very I all some that's So is work. tell very to of activity that can we've encouraging. put already information you refracking exciting. The

work to doesn't then really re-stem, some this an so Talked unique near reservoir ability Ford. the tends well. seen -- wellbore, you wells in it opportunity the to go That we've about figuring the and how other and It upside. a prosecute techniques Eagle has completion Some of the how that And original stay this, pretty out basins. is characteristics really gives the to more to tremendous very that stay of feather there. to very about few or to just

upside to we Validus underwrote acquisition. inventory. that be from of all honest, what is with So most And great of the it, is

Arun Jayaram

you. Thank

Operator

you. Thank

Neal Neal, please next from ahead. comes question go Truist. from Our Dingmann

Neal Dingmann

question morning, are for guys. the is time. first for returns, you on My the of guys. shareholder just Good specifically -- one Thanks Rick

buybacks Just those -- lean divestitures variable had, to continue have to based dips? are there then you like you if mid-cycle to assume of the materially nice under sort certain levels some into prices? where And you'd incremental to continue go continue would

Jeff Ritenour

our Jeff. going question. this see more for see opportunities and us What Yeah, is thanks peers model, the shares well, you're we of to we which the on from our to call, Neal, where and the way. will, intrinsic February Yeah, big a extent the to view with in feet quarter. in both a stock from And we to value was Post first described is trade which back a the same back of in the if bought you jumped negative valuation it relative buy that see certainly certainly the happened basis the we you in way. our saw shares, when on dislocate,

and wherewithal -- which of model, provides it balance those go the the beauty our the flexibility the think our of the that's opportunities. of is to cash and us We advantage take

So that's longer the expect expectation. for trade you on absolutely moving intrinsic forward, to share term, value lean the off dislocate group from stock to If view the over the us program. see relative we our should repurchase our of in or

to up fixed to quarter to XX% the do, then going cash to and the sustain continue to in first our which All to any go plan priority is and the free the variable variable of is our we the -- given feather flow dividend, dividend. grow while, dividend, in

have So model, think three and going continue us forward. that in balance over should well that really flexibility has we we to and years, last served you the that the expect

Neal Dingmann

great. that's Yes,

year, on probably, stepping for to my infrastructure. what handle -- it buildouts the And remainder secondly, if you like growth. handle wondering you all you the sounds now looks place you quarters. I'm that The now, like, Clay, like the infrastructure like look the talk Delaware could It in it all that. coming have or sounded Rick then the You all about type where infrastructure confident, Rick, of question into or now you what want growth in were can needed just to be. the it's of maybe

Rick Muncrief

drove I so mean, the I importantly, Thanks, infrastructure Clay confident in of it. our point. Neil, the from staying and And recovery ahead actually more Yes. Clay home downtime. we've We're we -- mentioned really and -- are

build-out. with, third-party try We well. do, providers that the relationships great you've that's Permian have well. and a And road. down we team a years because the working have that to we to and great year two have when a really got It's year have can work after three need continue the as we it's infrastructure -- and we tendency on then And people down what and I'd going execution you say do, really continued plan out with year sit is after that inventory the you to the to And going year growth.

Neal Dingmann

that. you, Thank Rick. appreciate I No,

Operator

you. Thank

John from Freeman please James. ahead. comes next go Raymond John, from Our question

John Freeman

Good Thanks morning. lot. a

locations percent the the those you a would of acreage, do the X-milers for success have those wells, six at on sense developments your Looking maybe of Wolfcamp Delaware? did how much what of three-mile undeveloped in of candidates be you those

Clay Gaspar

little it a wing bit. will I John,

I the three-mile laterals. going That's set of the -- of to little bit the think that year we're kind feel be confident two-mile in our flux. It's We're we of most go-to you, laterals. it's opportunities. very XX% trying our always up. drilling acreages the returns tell in this a with about I to always can trade our

a two turn one really I a few really or into into turn turn see to we just think a those it's three, a those ones mile phenomenal opportunities into where economics.

laterals So comfortable drilling today. what I would say operationally, we're three-mile very is

that down. got recipe think I we've

is Xs land it set not where the strictly it's Xs. operationally, a challenge. for and and looking up So it up where It's at is just for set

John Freeman

correctly. Great, follow-up this in the question. sure I'm and of want make then that to just filings, interpreting just I kind my

At payments, million So current remaining Barnett. XQ got remaining 'XX, the XQ at I assume the you 'XX strip? get in the you other current from strip, should the $XX contingency million the $XXX the $XX million

Jeff Ritenour

Yes, John.

exactly You're right.

And $X.XX, oil tiered are receive the the both we price to to standpoint, then up way it the million. As and to above gas. commodity price oil which $XX it it's million. where expect around oil to $XX $XX payments, price, million variability from a and $X.XX we anywhere gas a varies $XX is $XX a would contingency from all relates today, by from And price, there at obviously

you're the where today, strip looked sits the I haven't current -- in at guess. mid-Xs, I somewhere So, would probably

be payment. could would top million $XX oil on that you that receive $XX to So that another or of million expect

John Freeman

great. That’s Thanks lot a guys. Appreciate it.

Jeff Ritenour

you, Thank John.

Operator

Thank you.

Deckelbaum please comes question David, ahead. next go David Cowen. from from Our

David Deckelbaum

guys. for my Thanks taking questions today

Obviously, Just balance on first some of the value sort around this follow a thoughts that are active you're in year? A&D you're you inform year, Does how Devon opportunistically. in last your wanted sort market quarter of year that participant the view further way using was just cash up have would of opportunities the what buybacks seeing seen the and robust of your the but consolidation any last stock? pretty on relative at to looking in less to the than the own on

Rick Muncrief

question. good Dave,

you've the we've -- some heard transactions that us, talked Eagle that those and we bought some think we year, talk additional about we last did in of of the metrics Clay upside two the particularly I down for Ford, when packages the at about seen. the

So very, good very we feel those. about

pulled a little market I think higher. are expectations too, has the back up

them. I probably of packages we'll in the today, look we'll the -- take think Some market at

today. bar. out I high of that some are that in And see that don't market know us active we in But once have packages the you'll again, being a the

makes if see out. is we then for all that it us, strategy, sense once again, how we may that So takeaway bar. our consider. something a high And But plays fits

David Deckelbaum

could I And that. Clay, more little just I about ZGABAY. ask bit if a appreciate

in around more some project, then, long your scope grant basins. DOE active I terms Just re-injection, re-fracs? how Is this the for the the last or total And how would COX? it EOR, of you of and of mostly guess be all to other and are this in scope duration at it the just partnership? looking is gas applied

Clay Gaspar

and Eagle through ended Texas. same great it. project some those was was project that where very Yes. up, some about the do of falling conceived we got being Excellent question, we've through This our love can heads I an say, I in in West a here originally hey, Ford. things talking team opportunity work That think up of

We've right got was set up, taken up. operations, the geology it and the

a these we're interesting rock a network. lot and and work. wellbore. very to volume, any talked to zone horizontal did that took understand core that we individual I stimulated seeing depletion our about on up that fracture really So We healing that means of ultimately, what fractures

where do that think able do where have we're were was, how actually some of do where We've the to information depletion. and what fractures we breakthrough, alter kind stimulation those in we of we the we therefore, recipe So see used design, kind of seeing original actually proppant, do our knowing that.

it's activity. as you these as then, re-fracs, can back And we imagine, a into mechanical go complicated

have You ultimately, run a liner rock. new to go and then stimulate trying in and you're to

really and from information, up been that this to go science stimulate able with well-bores. these reserves, the we incremental and so and recoveries leverage rock really, And new original we've believe, the and in

been project, look in just and kind seeing still early come this gas at works. and scientifically practice, that all really natural a that project When through. That's That's an we not of value huff-and-puff the is understanding model. exciting how about EOR, seeing injecting returns

have subsurface ultimately covering a we watching that gauges to from what how and were more injection fiber and from we lot influencing rock. for monitoring optics really We of are

phenomenal there's conferences. lot The good technical job there. So done a information at out various team presenting at of has a

dig there intel of out So great if into. you're interested, there's further lots to

David Deckelbaum

Clay thanks guys. and time Thanks for your

Clay Gaspar

you, Thank Dave.

Operator

The please comes question Matthew, from you. Thank Portillo go Matthew next TPH. from ahead.

Matthew Portillo

all. morning Good

Clay Gaspar

Hi Matt.

Matthew Portillo

we thinking allocation NGL it's nice you as you're prices about by out, Just commodity basin with capital the in and strip, downside the like look the guys we to at volatility in to a start as as particular, asset. Curious, the how some have as ANADARKO across the well diversified basins of crude some gas and progress low natural year? through look oil volatility portfolio, given the returns to the to as

Clay Gaspar

this point. we've oil Clay. tested the price. price, and relative question, oil at $X price, was in XX $XX every Great High gas price, XX:X, high is one flavor months, commodity Matt, of of kind it low Hey last

capital materially? really a portfolio allocation of sophisticated when the And that we've our number we shift that does looking in have so we command scenarios for the really model run

opportunities, And We're all of we said Basin. gas-levered still Permian, it was always keep in those oil, the pushing commanding even of the towards still some what interesting ran is, the scenarios Delaware keep towards that pushing first. capital

As mentioned we've up. I it's earlier. places of acquisition as the matured like And with capital, our understanding Eagle Validus, certainly, of Ford, commanding risen it's more the

which like the the things remember, gas become investment preponderance stress on the JV, the Anadarko of is stressed. But condensater. certainly, of our areas we more the is test side, gas gas-prone Dow the As

get high that then in phenomenal economics wells, of -- this condensate us those amount price pretty in even a support carry you So significant commodity really environment. and helps also

watching. always we're margins. a This a look, exercise. is always always stress rerunning you single scenario. making This We're on can once-a-year bet We're we're the this. isn't changes and testing, Now monthly

will few come a opportunity service wells the or We're came to margins. discovered. can for is in we We program decoupled is trade has that what our opportunities on a us new robust, the believe certainly of as year, and is the cost out system a always team few tell pull it's that you price. this a replace commodity consistent service because Maybe today's the way. still today's even cost evolving I our and from very But commodity price very just

Matthew Portillo

in one resource your basins Clay, Great and a portfolio. as for maybe the longer-dated follow-up of then,

progress curious stacking this Just to how thoughts Niobrara it's the so but you've Powder? you'll on are seen curious results well? up and active costs the your not the how in year, Kind know maybe far there particular. continue overly I of as updated

Clay Gaspar

is kind question. it has something proud work talking team the that because Matt, is that It really, of of great I'm love behind-the-scenes. the I really the about Powder done.

On understanding can the Making a deliver. we a front we have end well, it drill what de-risking that of we the that in are basin, the of wherever productivity. good challenge the when is sure

To prove we that We've do I We've can time that tremendous The really the the got on down, so have we structure rock. up the you made able don't return? that. the time can't how and good cost get is we've former, second order you been improve that's if again. me, productivity, and generate anything that's about good exciting. the you -- right tell progress, do to competitive rock,

On drive team the that can well to that tremendous we cost, considerations costs surface in me, in the those be always to time. down to improve a on. confidence Have able

is we've now have and on coming ultimately returns. in years. that a in so ton more a And to of competitive get will But of the It sustainable working something got there. oil we're place inventory its very to day that sun and certainly prone, is the

from the really team progress So there. great

Matthew Portillo

Thank you.

Clay Gaspar

sir. Thanks,

Operator

Thank you.

go Our comes Scott RBC. from from next question ahead. please Scott, Hanold

Scott Hanold

you there left cash $XXX on just of flow, kind sheet, is thanks. and start some working needs the talked curious. thinking Yes, million any the just later all of working incremental is step the helpful. cap capital million, would down color to you what optionality too When due, I Hey, look I -- cash year. balance want really I coming or free But buybacks, balance? quantum know per be was got of cash mean, utilize you about the on to cash. of at And $XXX Jeff, in kind you take you per do about focus back you debt as about this

Jeff Ritenour

Yes.

You bet, It's lot good we've about. and a a Scott. one question been thinking

million historically, of for what balance $X sheet. and It's you it's to we about optimize balance, heard cash cash me think work somewhere on you what the towards. billion try kind our say between to If balance $XXX

seen around kind quarters. over several of You've last us that the hover certainly level,

back on position Moving the with sheet. feel pursuing We our forward, and that been for where comfortable it variable leverage last model we're XX% the is the to three financial balance the focused with to going accruing going to stay we've really years, today. then XX%

that Obviously, there certainly conditions is that, think one back on EBITDA. to times we've of debt and again, We market currently. below of We're we out that the up a depending significantly utilize flex the net got target model, kind is and and would and us then push what back forth generated, a flexibility real it's the cash we did beauty free last to as provides quarters, quarter it quarter program, flow buyback our the which this current right? into previous of or whether

last that benefit this we take along certainly with stock the strength of us we be real year chose So obviously, see. the we've well, balance and to market here really the in that saw, we flexibility advantage the we the opportunities. sheet our of do the rolled quarter. opportunity that to over conditions acquisitions cash future pull or in in Whether And last saw first something really, the model on depending might the of balance. quarter, as That's down of it's it obviously, buyback out, allows we which step the that

Scott Hanold

the spacing in and to and whether it Eagle down. the when eventually Ford and and I maybe aptitude one industry before, When know like is Clay. widening there's go back the tightening always from a tighter for it's That's Permian Eagle and wider Thanks. tightening spacing answer good the seems Ford, you about in to -- this has think an oil gone a we've prices come

of the current you given that the think is tighter lower with it, we speak prices see if oil or spacing strip? do this can resiliency work guys Do kind oil you in to you'll the But stick of around just context prices?

Clay Gaspar

an lived excellent It's because and have those point Yes. -- of all we as spectrums, it certainly, included. an myself industry,

So, robust have generally while we a is rather move believe basins, be in we most the right up-spacing commodity withstand fall in would and able price. to returns more

I served again. think that time better and has us time generally

at depleted. how get you maturity that at effectively look we the those do of looking basin, certainly Ford and As resources really remaining we're the Eagle most

Zgabay the work that the we highlight. [ph] of And at of is -- did the a part significant part so

and insight gives best great there. you kind When statistically you're evidence rock, that really what the sampling downhole, for we're good the happening of down-spacing of just that hoping drainage gives into this really very understanding best, how for doing kind of really you wellbore blindly is or that tangible not hoping

always reserve continue But and to continue We're going -- to cautious cost, price, watch right be with the very we real get watch results it. to been the will we've have we smarter. about pleased commodity so Certainly, to service very, far.

Scott Hanold

Fair you. enough. Thank

Operator

you. Thank

Our Doug Doug, from comes please next from Bank of ahead. question go Leggate America.

Doug Leggate

performing taking my the not stock in was Devon best so ago Good stock an Rick, long Thanks. morning questions. extended the best it's -- but performing not for sector not XXX. so Thanks S&P the everyone. it's period, over long only that the

most was recollect. I it think of XXXX, I if

you call I'm you out argue some with wondering, therefore, market break need think tax characterize do the commodity? headwinds benchmarking what a one your has, would beyond to and I'm today? flow perhaps just additional is on given going wondering capacity you the ahead, the to the proposition how could company value cash do of that free combined recognized the What value

Rick Muncrief

documented. great to upon confident Yes, management Doug, ago. it's We and to saw volatility We need this got speak that our we think, to very a just execute. team. just incumbent we've -- or do I That's outperformance the well seen stay assets, strategy. years We some couple I just need of in think real, plan

our appears execution, saw but -- -- and it because what when or numbers. it's to and not, we pullback softness a in softness so a period have you whether And whether or of or weather, whether be not impacted not,

are a that's bit opportunity too shares day, under much and pressure. but in sets maybe of for much shareholders, provides for up so, think for ultimately it. It share the addressing think mind, -- just great at the my how the so us that a and program. our I way repurchase end little And we're that us too We

We're The bottom-line is the we some have got, great the assets. as things. mentioned, inventory. got I doing We've

heard I some technological industry, making, of going around makeup. advancements that's of part I our some and Clay continue. to in you've genetic the think leading examples some think that we're cases, from the That's

have think our I for I we and after And us. it executing. out will work plan and stay confident with so things to keep stay think And just

Doug Leggate

think on follow-up Not target the to I I'm years is I of about the there to to go do X% And that have laid you enough your to know what the look tricky answer, Obviously, is have of capital bolt-ons this but you outcome Okay. to What at thinking year. budget incremental growth. visibility? it's perspective. support time X% the of like merger. necessarily, a out you and the forward? support one appreciate the My that XX And kind got would that? go-forward inventory,

Rick Muncrief

we're we about other, move to first -- each XX not the of you with that the honest near-term the that's will what's realize and Well, off, that's there additional sure -- make that inventory Yes. over years that's we contemplating out when talk we inventory, -- see bucket.

looking And assessment some I across so we work a to the have that start we asset that XX-year doing. we're inventory. way closer of it our of look When the is the have, you at base, entire some ideas

to I think about work continue you we sure making before, and that I have the for talked future.

I extended got runway an think So on we've inventory.

on to -- call looked stuck X% that's huge has a So really up way is, that growth. gun. been getting it laid of the We X% there that not X%, we The to we've to the what at X% out at merger. the time

to share our per So let's on a been basis. continue implement has focus

at you there, so you looking that accretion we of transactions looking when some at start the did, start the And the buybacks.

largest from what think continually shareholders, Doug. our we I that's, hear

haul. focus per this and continue long the Let's metrics for growth on to build those let's share thing

Doug Leggate

Rick Thanks comment. shared like so I much,

Rick Muncrief

you Okay. Thank

Operator

Thank you.

comes Paul Our please question from ahead. go Scotiabank. next from Paul, Cheng

Paul Cheng

that the preferred share Hi, cash back should metrics. variable on good have more Rick, focus per I I standpoint, morning, to everyone. a way the variable to to shareholders to buyback. will and we first be go return dividend you because just and into apologize the buyback want dividend? mentioned the that From

and do variable also, already? the That's And first the been believe or the has you company that years it the for -- given yield at is after your we that question. dividend stock then two looked rewarded have so high more than

Jeff Ritenour

Jeff. this Paul, Yes, is

Rick Muncrief

Yes. follow Go up. ahead, Jeff, and I'll

Jeff Ritenour

in Yes. lot the say a the this to talked and again, above. we of I was Paul, it's all going us, you just about with With past.

on and dividend fixed or to which allows the top not of to buybacks that. got one the time. framework the other. growing We've up So over we've sustainable XX% which for stock delivered dividend on biased variable We're we're then a

term, most sense. makes long Over the we think that the approach balanced

jump our opportunity see do time. to we mentioned extent when shares back that, that to accrete opportunity the share we over to us dislocation in intrinsic an to Rick going we're as has that a versus buy see for Certainly, and earlier, the and growth value, per

balanced return, this total the it's over end this at not term, model right? just buyback, It's the the the results. the just of the the best And about But it's total just we shareholder not longer not and it's will deliver dividend, return. think approach it's price, day, shareholder stock that

number the last shareholder we're quarters. several that last the point it as I'll the years, total company out And one relates includes to and over return two

years in keep delivered think our we from and We're up So that for great confident on now, plan. deliver result when many many, to And and we feel will game have going shareholders. wake game we down our plan. we execute pretty a head

Paul Cheng

Okay.

second The Clay. question probably for is

think to the question miles? earlier estimate at three your well that you the answered I three of be risk this you If a XX% on Delaware year saying what X,XXX, percentage do of inventory rough Basin that that of drilled look the number will have be you. Thank miles. we just

Clay Gaspar

going Hey fuzzy Paul, that number. I'm to

I probably the number that's directionally, the about for and forward bit reminder, I inventory. it's probably little lighter say think to But on the number a little this a On as a XX%, would maybe year bit that rougher. same, rough

trades they in kind bit, healthy of a and Remember, make happens that of this runway our number. little of shop lot so a evolves a land extend it's pretty as kind

Our is standard miles. two

in are laterals Delaware the two-mile on Basin phenomenal. returns the Again,

we a is in so That's Delaware. feel But become when I on to our comes standard it the operational again, make it for need fair very a once fairly nice confident the sure And execute numbers in laterals. thing. that ability the way, to team three-mile don't three-mile work. And our

Paul Cheng

just -- of the primarily say, you from, that the basin or two focusing even it that three to up that trade the miles, another can well see is one opportunity opportunity in also -- miles into or there? and make curious And you mile miles three Delaware,

Clay Gaspar

We've Powder least Williston, in XX a drilled concept. years, certainly, ability on of very something this so built we've kind we the at execute our that And the multiple XX is three-mile wells the confident Yes, in three-mile is drilled wells, Niobrara to three-mile in on. basins. wells and feel

And our on feel executing kind three-mile the of we our are laterals in opportunity But and very of performance, wells become again, of actually that's most our where standard. execute presents, comfortable we about two-mile in most general laterals.

Paul Cheng

right. Thank you. you. Thank All

Rick Muncrief

you. Thank

Operator

you. Thank

ahead. Our next please Wells from Fargo. question Roger Read Roger, comes from go

Roger Read

Thanks. Good morning. Yes.

Rick Muncrief

Good morning.

Roger Read

to like questions. of couple to back I'd come the a more operational maybe

it? you're get earlier about maybe an through? flow bigger inflation, seeing idea we point call see sort it, where of Where comments you're Your Where maybe let's maybe of benefits? seeing how should the disinflation to at expect would the, this

Clay Gaspar

this with couple the of want And in the I of really best indicator The more that's more two love you is We Clay. gone. three Roger, leading to gone view, hey, very lines are last quarters ago you-will-take-our-prices-or-you're-not-going-to-get-our-equipment you're I've think -- our conversation. earnings along prices conceding customer. your work but where tone calls, it's my a from And the Yes, we're or about we a something talked favorite aggressive, circa price. on of, to you, little not guys, best

areas really we're I categories. of trying phone in to are of really, calls, a couple some pricing, lots would starting deflation some say and state-of-the-art today but to available. to hang equipment on inbound They're so is to lots starting slip, of see

start materially well categories start as of The kind smaller pipe. headline, in half we're second the see year. starting come And seeing that to then of the to through move of down. to course, some is We're

top took plan fourth I'll for put and inflation numbers, Again, XXXX. in our us you, quarter that's that we on we remind for single-digit particular, about of a how

contracts, three-year the of this still that I that seeing in we're be some going with two in have to contracts offset year that. that up the will think we're and old are We category. line wins still maturing deflationary

moving of say out. to drilling completions couple through phase. a high-grade would crews quicker the better the leveled availability high change continued into our the fact, is a operations, really state-of-the-art and things but has wins wells I ability few translate a grade material We're and in today, equipment, categories, to have seeing in

Roger Read

Okay.

expect across board? So a productivity decline in cost, just we the also would expect high you you improvement as an in not grade should but

Clay Gaspar

we're definitely of quarter capital but Yeah, we're some a seeing one the that's a standpoint a see in things the are from second these days We seeing of And activity being some forward. time, the at second that. few pulled quarter. just already, of in that

Roger Read

money a refrac this, your vintage question just guessing that early follow-up in returns great. a there in days I of gas. put Okay, the should a returns. return of But you my where broad best? about works refrac type as is was then on laid I'm just on capital And well new oil does wells. terms a to the is back or a And program I the over of earlier drilling, the comment, going then know but compare as it's your on question curious, out? how to currently well

Clay Gaspar

Yeah.

ideal Ideally, like that. a the final and string, design good in string, larger That's ancient categories a that an scenario, I off right and what reperforate rock maybe can you that our thinking about ideal we've the candidate. that really when you're think tested casing you're X.X-inch restimulate. that but run and back beyond understimulated, had really inside seal of is was

We said, but results not completion? rock, What what seen we've rock? the the about about there. medium most favorable a ideal more in modern And

imagine, acts can portfolio. you like any up it As

then ones ones we grade little a upfront. continuing can of wells. those contact design have we've on there's the Maybe category, -- to you seen have of new stimulation compete like some that And best best into lots You are push some middle and the those opportunities, we're head-to-head very candidates middle evaluate. of the grade your tweak with those that

facility still -- the with is progress. a in standpoint. is And thing paid efficiency that is the paid So the returns the early again, but help can already the is from and immediacy capital really is for, these days, relatively pleased and beautiful very already an surface for, land place, already this infrastructure

Roger Read

Thank it. Appreciate you.

Clay Gaspar

Thanks Roger.

Scott Coody

at any you for questions, in if at end our like everyone's interest hesitate we're it the out and time Well, Have appreciate slot a Investor day. We team good to have of reach Devon, to further looks time. any the today. Relations please don't

Operator

Thank This you, today. concludes everyone, joining for today's call. us

may You disconnect your lines. now

Devon Energy (DVN) 9 May 232023 Q1 Earnings call transcript