What to Expect from Devon Energy’s Production This Year
Devon’s 2Q17 production
Devon Energy (DVN) reported 2Q17 production of 536 thousand barrels of oil equivalent per day (or Mboed), a decline of 17% compared to 2Q16 volumes and a decline of ~4.8% compared to 1Q17 volumes.
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Lower 2Q17 and 1Q17 volumes in comparison to corresponding 2016 volumes were accredited to the company’s reduced investments this year. DVN plans to invest between $1.9 billion and $2.2 billion in E&P this year compared to $3.1 billion in 2016.
Oil as a percent of DVN’s total production
Oil’s share as a percent of DVN’s total production has risen since 2Q15. However, total production levels since 3Q16 have stayed low compared to prior-quarter levels. While the oil production mix was higher in 2Q17 compared to 2Q16 in absolute terms, DVN’s oil production during these periods was lower. Oil volumes in 2Q17 were 238 Mbbls/d (thousand barrels per day) compared to 259 Mbbls/d in 2Q16. The higher oil production mix in 2Q17 is, therefore, the result of lower total production levels in 2Q17. The drop in total production volumes was mainly driven by a drop in natural gas volumes. Natural gas volumes in 2Q17 were 1,208 million cubic feet per day (MMcf/d) compared to 1,527 MMcf/d in 2Q16.
DVN’s 3Q17 and 2017 production guidance
DVN expects its production in 3Q17 to average between 526 Mboed and 546 Mboed, or 536 Mboed at the midpoint. As we can see in the image above, these production expectations are in line with actual 2Q17 numbers. However, DVN expects to exit 2017 at a rate 18%-23%, higher than year-end 2016 production. Improved well productivity and increased drilling activity are expected to create operational momentum for the company as it enters 2018.
For fiscal 2017, DVN expects its production to average between 539 Mboed and 561 Mboed, or 550 Mboed at the midpoint.