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A Deep Dive into Devon Energy’s Operational Performance

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Part 10
A Deep Dive into Devon Energy’s Operational Performance PART 10 OF 15

Devon Energy’s Production Costs and Margins for 1Q17

Devon Energy’s production costs and margins

Excluding hedges, Devon Energy (DVN) reported positive cash margins as well as positive total margins in 1Q17, as shown below in Chart 1.

Devon Energy’s Production Costs and Margins for 1Q17

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Realized gains of ~$8 million on crude oil (USO) and natural gas (UNG) hedges helped Devon Energy increase its cash margin and total margin, as shown below in Chart 2.

Devon Energy’s Production Costs and Margins for 1Q17

For 1Q17, upstream companies like Diamondback Energy (FANG), Pioneer Natural Resources (PXD), Encana (ECA), and EOG Resources (EOG) have also reported positive cash margins. 

Diamondback Energy reported a cash margin of ~$32.32 per boe, including hedging benefits. Diamondback Energy has the majority of its operations in the Permian Basin.

Definitions

Production cash cost = LOE (lease operating expenses) + production and ad valorem taxes + transportation expenses + G&A (general and administration) cash expenses + interest expenses

Total production cost = Cash cost + DD&A (depletion, depreciation and amortization)

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