Devon Energy targets $1 billion free cash flow boost by 2026
April 22 (Reuters) - Devon Energy (DVN.N), opens new tab said on Tuesday it plans to boost its annual free cash flow by $1 billion by the end of 2026, sending its shares up 3.5% in premarket trading.
The U.S. oil and gas producer aims to achieve this by reducing drilling and completion costs and improving operating margins.
The Reuters Power Up newsletter provides everything you need to know about the global energy industry. Sign up here.
"Given the challenging market and shifting competitive landscape, this is the right moment to focus internally and improve our profitability," CEO Clay Gaspar said in a statement.
Devon expects to save $300 million through capital efficiency, another $250 million by cutting production and operating costs and an additional $300 million through enhancing commercial contracts.
"The plan itself doesn't come as a surprise, but we think the size is probably a bit larger than the Street has been expecting. Meaningful (free cash flow) uplift potential, so this looks to be more than just window dressing," said Phillips Johnston, analyst at Capital One Securities.
Nearly 30% of the estimated improvements are expected to be achieved by the end of this year and the remaining by the end of 2026, the company said.
"We expect a positive reaction to the significant 'self-help' initiatives outlined by new CEO Clay Gaspar... while we sensed elevated expectations ahead of the print (1Q25), we think the plan...will be favorably received by the buyside" said J.P. Morgan analyst Arun Jayaram.
Devon scheduled to report first-quarter results on May 6 after markets close.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
an hour ago
- Reuters
South African rand shrugs off weak manufacturing data
JOHANNESBURG, June 10 (Reuters) - The South African rand strengthened on Tuesday despite a sharp contraction in local manufacturing output, as investors waited for more clarity on U.S.-China trade talks. At 1415 GMT, the rand traded at 17.69 against the dollar , about 0.2% stronger than Monday's closing level. South Africa's manufacturing output (ZAMAN=ECI), opens new tab fell 6.3% year on year in April, the sixth consecutive monthly decline, statistics agency data showed on Tuesday. Analysts polled by Reuters had expected a drop of 3.9%. Weakness in the manufacturing sector was one factor behind the first quarter's sluggish growth of just 0.1%(ZAGDPN=ECI), opens new tab, offsetting a strong performance by agriculture. The rand was also supported on Tuesday by a stronger global gold price and by a weaker U.S. dollar . The Johannesburg Stock Exchange's Top-40 index (.JTOPI), opens new tab was last up 0.6%. The benchmark 2035 government bond was stronger, as the yield fell 4 basis points to 10.095%.
Reuters
2 hours ago
- Reuters
Kenya central bank cuts main lending rate to 9.75%
NAIROBI, June 10 (Reuters) - Kenya's central bank cut its benchmark lending rate (KECBIR=ECI), opens new tab to 9.75% on Tuesday from 10.00% previously, the bank's Monetary Policy Committee said. It was the sixth monetary policy meeting in a row that the Central Bank of Kenya has lowered the rate. "There was scope for a further easing of the monetary policy stance to augment the previous policy actions aimed at stimulating lending by banks to the private sector and supporting economic activity," the bank said in a statement. Economists polled by Reuters had been divided on what the central bank's decision would be. Out of seven forecasts three were for a cut, three for no change in the policy rate and one for a hike.
Reuters
2 hours ago
- Reuters
Modest UK economic growth to lead Bank of England to cut rates gradually: Reuters poll
BENGALURU, June 10 (Reuters) - The British economy will grow a mild 1% this year with the Bank of England set to cut interest rates two more times in 2025, according to economists polled by Reuters, little changed from previous projections despite tariff uncertainty. The survey was completed before finance minister Rachel Reeves' planned comprehensive spending review on June 11, with the biggest increases expected to focus on health and defence. Median expectations in the June 5-10 poll of 52 economists showed the economy growing 1.0% this year - a view largely unchanged since February - and accelerating slightly next year to 1.2%. That compares with a 1.1% expansion in 2024. Poll forecasts match the Office for Budget Responsibility's latest projections. The UK economy grew 0.7% in the first quarter, topping expectations, but growth is expected to slow to 0.1% this quarter and 0.2% in the third quarter, followed by a 0.3% rise in the final three months of 2025. "Fundamentally we haven't changed our growth forecast for 2025 for the past few months because tariffs won't have a huge impact on the economy. The car industry, steel, pharmaceuticals are in the firing line but as a proportion of GDP, UK goods exports to the U.S. are only about 2%," said James Smith, economist at ING. Britain is the only major economy to have agreed a trade deal with the U.S., exempting it from President Donald Trump's increased tariffs on steel and aluminium imports for now, but a 10% goods levy remains in place. The Bank of England is forecast to keep its Bank Rate on hold at 4.25% next week, followed by a likely one quarter-point rate cut in August and another in the final three months of the year to 3.75%, according to a large majority of the 59 economists polled. Markets are also pricing in two further rate cuts this year after official data on Tuesday showed a slight rise in the jobless rate and a slowdown in wage inflation. The central bank's Monetary Policy Committee may be more confident now about sticking to its gradual easing path, economists said. "Today's weak jobs and slower pay growth may tip the balance in favour of an August cut," noted Elizabeth Martins, senior UK economist at HSBC. "Certainly, market pricing for such an outcome has increased." Overall, inflation was expected to remain elevated at an average 3.4% this quarter and 3.3% the next, before easing below 3.0% early next year, poll medians showed. (Other stories from the Reuters global economic poll)
