Chart in Focus: Devon Energy’s Cash Flow Estimates

Wall Street analysts expect Devon Energy (DVN) to report cash flow of ~$563 million (or $1.10 per share) in 4Q16, lower than the cash flow of ~$1.1 billion reported in 4Q15. Devon’s estimated 4Q16 cash flow is also lower than the ~$726 million reported in 3Q16.

As we’ve discussed, Devon is expecting 4Q16 capital expenditure of $470 million–$520 million, which means that Devon’s 4Q16 free cash flow will be positive, at around $231 million, or ~$0.44 per share.

As shown in the above chart, Devon Energy has reported lower cash flow since 3Q14, mainly due to lower realized crude oil (USO) and natural gas (UNG) prices. In 1Q15 and 3Q15, Devon’s cash flow rose due to deferred income tax benefits. In 1Q16, Devon Energy reported cash flow of $149 million, its lowest since 1999.

Due to the steep downward trend in energy prices, most S&P 500 (SPY) (SPX-INDEX) energy companies have reported lower cash flow year-over-year. Southwestern Energy (SWN), EOG Resources (EOG), and Range Resources (RRC) reported cash flow of $0.36 per share, $1.39 per share, and $0.18 per share, respectively, in 3Q16. Next, we’ll look at Devon’s institutional activity.