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Analyzing Devon Energy’s 4Q16 Revenue Expectations

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4Q16 revenue estimates

For 4Q16, Wall Street analysts expect Devon Energy (DVN) to report ~2% lower revenue YoY (year-over-year). Additionally, Devon Energy’s 4Q16 revenue expectation is ~2% lower than it was in 3Q16.

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Devon’s 3Q16 revenue performance

In its most recent earnings release on November 1, 2016, Devon Energy beat the 3Q16 revenue estimate of ~$2.7 billion by ~9%. In 3Q16, Devon reported a much steeper fall in revenue growth of ~20% YoY.

A steep decline in production volumes coupled with lower realized prices dragged down Devon’s revenue from oil and gas production sales by ~17% to ~$1.1 billion in 3Q16 from ~$1.3 billion in 3Q15, which impacted Devon’s overall revenue growth.

In 3Q16, Devon Energy’s production (USO) (UNG) volumes fell ~15% to 577 Mboepd (thousand barrels of oil equivalent per day) from 680.4 Mboepd in 3Q15. We’ll study Devon’s production in the next part of this series.

Excluding asset sales and derivative gains, ~40% of Devon’s 3Q16 revenue came from oil (USO) and gas (UNG) production sales and ~60% came from its marketing and midstream business. Peers EOG Resources (EOG), ConocoPhillips (COP), and Marathon Oil (MRO) reported revenue of $2.1 billion, $6.5 billion, and $1.2 billion, respectively, in 3Q16.

Fiscal 2016 revenue estimates

For fiscal 2016, Wall Street analysts expect Devon Energy to report revenue of $10.7 billion, ~19% lower than the ~$13.2 billion reported in 2015. Devon’s yearly revenue has been falling since 2015. Next, let’s take a look at Devon’s production guidance for 4Q16.

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