Latest news with #ClayGaspar
Yahoo
09-05-2025
- Business
- Yahoo
This Top Oil Stock's Smart Plan Puts It in a Stronger Position to Weather Volatile Crude Oil Prices
Devon Energy delivered better-than-expected oil production in the first quarter. The company is becoming a more efficient producer. Its smart business optimization plan will boost its free cash flow by $1 billion by the end of 2026. 10 stocks we like better than Devon Energy › Devon Energy (NYSE: DVN) has spent several years building a larger-scale, low-cost U.S. onshore oil and gas producer. That strategy enables the company to produce more free cash flow. It also puts the company in a better position to withstand lower oil prices. In 2025, it will only need crude oil to average around $45 a barrel to generate enough cash to break even with its funding plan. With crude recently below $60 a barrel, the oil company is in a much better position to handle this year's oil price slump. Meanwhile, its plan to take out an additional $1 billion of costs over the next two years will further enhance its ability to generate cash and weather lower oil prices in the future. Devon Energy's smart strategy of becoming a more efficient oil and gas producer was on full display during the first quarter. The oil company produced an average of 388,000 barrels of oil per day, which exceeded the top end of its production guidance by 5,000 barrels per day. Meanwhile, its total output averaged 815,000 barrels of oil equivalent (BOE) per day. The company benefited from strong base performance in the Rockies and better-than-expected well performance in the Eagle Ford. The company delivered this stronger-than-expected production while investing only $946 million in capital, 5% below the midpoint of its guidance. The company's combination of operational excellence and financial discipline enabled it to produce $1.9 billion in operating cash flow, a 17% increase from the prior quarter, and $1 billion in free cash flow. Devon used its strong free cash flow to reward shareholders and strengthen its balance sheet. The company returned $464 million in cash to investors through its fixed quarterly dividend and $301 million of share repurchases. It also boosted its cash balance by $388 million to $1.2 billion, giving it significant financial flexibility during the current market uncertainty. "Looking ahead, our strategic priorities are clear," stated CEO Clay Gaspar in the earnings press release. Those priorities are "executing on our high-quality portfolio through operating excellence, maintaining financial strength and rewarding our shareholders, and cultivating a culture of success." He continued, "With our focused strategy and dedicated team, we are confident we are well equipped to navigate challenging markets and deliver lasting value." The company's recently announced business optimization plan is one factor driving his confidence. That strategy is on track to deliver $1 billion in annual pre-tax cash flow improvements by the end of next year. The company is pulling forward some progress this year, which is allowing it to reduce its capital spending plan by $100 million, lowering the range to $3.7 billion-$3.9 billion. Despite that spending cut, the company is increasing its production guidance for the year. It expects its oil output to average between 382,000 and 388,000 barrels per day, a 1% increase from its initial outlook. With its capital spending falling and production increasing, Devon will produce more free cash flow this year. That will help mute some of the impact of falling crude prices. Meanwhile, the company's plan will provide an even bigger cash flow boost next year. That will help further mute the effect of lower oil prices in the future while enhancing its upside to higher prices. Devon Energy's strategy of building a highly efficient oil and gas producer is enabling it to produce more oil and free cash flow from less capital. It plans to get even more efficient over the next year, which will put it in a stronger position to navigate the volatile oil market. It makes Devon Energy a high-quality oil stock to own throughout the oil market's cycle. Before you buy stock in Devon Energy, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Devon Energy wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $623,103!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $717,471!* Now, it's worth noting Stock Advisor's total average return is 909% — a market-crushing outperformance compared to 162% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 5, 2025 Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This Top Oil Stock's Smart Plan Puts It in a Stronger Position to Weather Volatile Crude Oil Prices was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
25-04-2025
- Business
- Yahoo
This Top Oil Stock Aims to Get a $1 Billion Boost by the End of 2026
Devon Energy (NYSE: DVN) has become a cash-producing machine in recent years. The energy company has invested heavily to grow its scale across several key U.S. oil and gas production basins to reduce costs and enhance its ability to produce free cash flow. That strategy has paid big dividends for investors. It's producing significant excess free cash flow, to the tune of $3 billion last year, the bulk of which it's returning to shareholders through dividends and repurchases. It returned a total of $2 billion in 2024. However, Devon isn't resting on its laurels. The leading oil stock recently unveiled a bold goal to boost its pre-tax free cash flow by another $1 billion by the end of next year without the benefit of higher oil prices. Here's its strategy to squeeze more cash from its already lucrative oil business. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Devon Energy recently revealed its value-enhancing business optimization plan. That strategy aims to deliver a $1 billion improvement in its pre-tax free cash flow by the end of next year. The company plans to undertake several initiatives to reach its goal. Those steps include: Capital efficiency: Devon expects to capture efficiencies through design optimizations, cycle time reductions, facility standardization, and vendor management to save $300 million. Production optimization: The company plans to use advanced analytics to minimize maintenance events, reduce downtime, flatten production declines, and optimize its cost structure to generate $250 million in savings. Commercial opportunities: It aims to leverage its scale to enhance commercial contracts to increase realizations, improve recoveries, and lower its cost structure. These initiatives should yield a $300 million boost to its cash flow. Corporate cost reductions: Devon plans to reduce its interest expense and streamline its corporate cost structure to save another $150 million. These initiatives are already well under way. In the press release unveiling the plan, CEO Clay Gaspar stated: "Our organization has been diligently advancing this initiative and has already secured marketing agreements to drive a material margin improvement through year-end 2026. Concurrently, we have implemented technological advancements, including advanced analytics and process automation, that are further enhancing our operating performance." He noted that these efforts already have the company on track to achieve 30% of its target by the end of this year. That will help give the oil company a boost in the current environment, which has seen a significant recent drop in crude oil prices. Meanwhile, the CEO stated, "We have clear visibility into the remaining objectives and are highly confident in our ability to execute this plan effectively." The company's plan to boost its free cash flow by $1 billion by the end of next year is meaningful. It can help significantly cushion the blow of lower oil prices in the future. For example, at $60 West Texas Intermediate, which is right around the recent price, Devon would only produce about $1.5 billion in free cash flow this year, half of what it delivered last year when it realized an average of more than $75 a barrel for its crude. That suggests Devon's optimization plan would have the same impact as around a $10 increase in the price of a barrel of oil. That will help enhance the durability of its business and help cushion the impact of even lower oil prices in the future. Devon's ability to meaningfully boost its free cash flow will directly benefit shareholders. That's because the company continues to target returning 70% of its free cash flow to shareholders through dividends and share repurchases, retaining the other 30% to strengthen its already strong balance sheet. Given that target, its plan to boost its free cash flow positions it to return more money to investors in the future. Devon Energy's new business optimization plan will have a meaningful impact on the company. It will boost its free cash flow by $1 billion, giving it more cash to return to shareholders. The strategy will also help lessen the impact of lower oil prices in the future. These positives add to Devon's appeal as a long-term investment in the oil patch. Before you buy stock in Devon Energy, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Devon Energy wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $561,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $606,106!* Now, it's worth noting Stock Advisor's total average return is 811% — a market-crushing outperformance compared to 153% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 21, 2025 Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This Top Oil Stock Aims to Get a $1 Billion Boost by the End of 2026 was originally published by The Motley Fool
Reuters
22-04-2025
- Business
- Reuters
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 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.
Yahoo
23-02-2025
- Business
- Yahoo
Devon Energy Sent Investors $2 Billion in Cash Last Year and Could Return Even More in 2025
Devon Energy (NYSE: DVN) has rebuilt its oil and gas resource portfolio over the years into one that can generate a lot of cash. It accelerated that transition in late 2020 when the company agreed to a merger of equals with WPX Energy to create a leading oil and gas producer focused on generating free cash flow and returning money to shareholders. Devon has continued that shift ever since. That cash return focus was on full display last year. Devon Energy produced $3 billion in free cash flow, $2 billion of which it returned to shareholders. The oil company is on track to produce even more free cash flow this year, which could allow it to return even more money to investors in 2025. Devon Energy generated $6.6 billion in operating cash flow last year. It used about $3.6 billion for capital expenses to maintain and grow its oil and gas production. That enabled the company to produce $3 billion in free cash flow (FCF). It returned about two-thirds of that to shareholders through dividends ($900 million in four fixed quarterly payments totaling $0.88 per share and three variable dividends totaling $0.57 per share) and share repurchases ($1.1 billion). Devon shifted its capital return strategy away from paying variable dividends in favor of buying back its stock toward the end of the year. In the company's recent earnings call, COO Clay Gaspar said the company bought back $300 million of stock during the fourth quarter -- more than twice as much as it paid out in dividends -- because "we strongly believe that Devon presents a compelling investment opportunity." The main factor driving the decision to ramp up share repurchases has been the decline in its stock price: Meanwhile, Devon used the remaining $1 billion of excess free cash flow to strengthen its balance sheet following its $5 billion acquisition of Grayson Mill Energy (funded by issuing $1.75 billion of stock and paying $3.25 billion of cash via cash on its balance sheet and new debt). Even with that large cash outlay, Devon was able to retire $472 million of notes at maturity and rebuilt its cash balance to $846 million by year-end. Devon Energy expects its capital investments, plus the Grayson Mill Energy deal, to increase its production by more than 10% this year. The company anticipates capital spending will be between $3.8 billion and $4 billion this year, which is $200 million lower than its initial guidance thanks to efficiency gains. At that capital spending rate, Deven estimates that it will produce more than $3 billion in free cash flow this year, assuming crude oil is at $70 per barrel. It averaged $75.79 per barrel last year and was recently above $72.50. CFO Jeff Ritenour laid out the company's cash return plans on the fourth-quarter earnings call. He noted: "For 2025, we're targeting up to 70% cash return payout for shareholders from generated free cash flow at current strip pricing. Our cash returns will be delivered via our growing fixed dividend and share repurchases." That rate suggests the company could return more than $2.1 billion to shareholders. The company announced it was raising its dividend about 9% to $0.24 per share. CEO Rick Muncrief added during the call that "we expect a cadence of about $200 million to $300 million a quarter for share repurchases throughout the year." An analyst on the call highlighted that these numbers imply cash returns will be more in the range of 53% to 60% of its free cash flow. That's because the company initially plans to continue building cash to cover upcoming debt maturities ($485 million this year and a $1 billion term loan in 2026). As its cash balance and free cash flow profile improve, the company will have more flexibility to return additional money to shareholders during the back half of the year. Devon's strategy to create a leading oil and gas company focused on producing cash and returning it to shareholders is paying off. This approach could give it the fuel to deliver strong total returns for its shareholders in the coming years. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $348,579!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $46,554!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $540,990!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon.*Stock Advisor returns as of February 21, 2025 Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Devon Energy Sent Investors $2 Billion in Cash Last Year and Could Return Even More in 2025 was originally published by The Motley Fool Sign in to access your portfolio
