Devon Energy’s Crude Oil Production Increased in 1Q17
Devon Energy’s production mix
As seen in the chart below, Devon Energy’s production mix in 1Q17 was ~46% crude oil, ~17% natural gas liquids, and ~36% natural gas. This means that Devon Energy (DVN) is more tilted toward liquids production. Its total liquids production is ~64%.
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1Q17 crude oil production
In 1Q17, Devon Energy’s (DVN) crude oil percentage in its production mix increased 4% when compared with 1Q16. In 1Q17, Devon Energy produced 261,000 barrels per day of crude oil, which is 5,000 barrels per day higher than its 1Q17 crude oil production guidance.
DVN’s 1Q17 crude oil production is ~7% higher when compared sequentially with 4Q16. Devon Energy’s crude oil production includes 123,000 barrels per day of crude oil from US core assets and 138,000 barrels per day of heavy oil from Canada.
Why Devon Energy’s capex is directed toward crude oil
According to Devon Energy’s operations report, crude oil is its highest margin product. As a result, DVN’s fiscal 2017 capital program is directed toward increasing its oil production. In the last six years, DVN’s quarterly crude oil percentage in its production mix increased from ~18% in 1Q11 to ~46% in 1Q17.
Typically, upstream companies with more liquids production have better operating margins. Other upstream companies from the S&P 500 (SPY) that have higher liquids percentage in their production mix include Occidental Petroleum (OXY) and Murphy Oil (MUR). OXY and MUR contain ~77% and ~62% liquids in their respective production mixes.