Devon Energy: Record Production and Shareholder Returns Drive Strong Growth in 2025

 

POINT

  • Devon Energy (NYSE: DVN) achieved record oil production in Q4 and full-year 2024.
  • Generated $3 billion in free cash flow (FCF), returning $2 billion to shareholders through dividends and share buybacks.
  • Poised for continued production growth and strong cash flow generation in 2025, ensuring sustained value for investors.

DETAILS: A Record Year

 source : Motley Fool News

Devon Energy reached a new milestone in Q4 2024, producing 398,000 barrels of oil per day, exceeding its guidance by 3%. Including natural gas and natural gas liquids (NGLs), its total output averaged 848,000 barrels of oil equivalent (BOE) per day, a 16% increase compared to the previous quarter.

A major contributor to this growth was the Grayson Mill Energy acquisition, completed in September 2023. This acquisition added 117,000 BOE per day, strengthening Devon’s production base. In particular, Eagle Ford production surged 23% to 92,000 BOE/d, demonstrating the strength of the company’s legacy assets.

This production boost resulted in strong free cash flow generation:

  • Q4 Operating Cash Flow: $1.7 billion
  • Q4 Free Cash Flow (FCF): $738 million
  • Shareholder Returns: $444 million (via dividends and buybacks)

For the full year of 2024, Devon Energy:

  • Produced a record 737,000 BOE/d
  • Generated $6.6 billion in operating cash flow and $3 billion in free cash flow
  • Returned $2 billion to shareholders through dividends and share repurchases
  • Reduced debt by $474 million, ending the year with $846 million in cash and a 1.0 net leverage ratio

Outlook: Strong Growth Expected in 2025

Devon Energy is set for another strong year in 2025, driven by its Grayson Mill acquisition and strategic investments in key assets.

✅ Production Growth Forecast

  • With a full year of Grayson Mill integration, production is expected to average 805,000 to 825,000 BOE/d, a 10% increase from 2024.
  • This is 2% higher than initial guidance, despite lowering capital expenditures, showcasing Devon’s operational efficiency.

✅ Robust Free Cash Flow and Shareholder Returns

  • Expected to generate $3 billion+ in free cash flow (FCF) in 2025 (assuming oil averages $70 per barrel)
  • Up to 70% of FCF will be returned to shareholders
    • 9% dividend increase already announced
    • $200 million to $300 million in quarterly share buybacks planned
  • Remaining excess cash will be used to strengthen the balance sheet, including:
    • $485 million in debt maturing in 2025
    • $1 billion term loan due in 2026

CONCLUSION

Devon Energy’s record production, strong free cash flow, and commitment to shareholder returns position it for another strong year in 2025.

✅ Achieved record production and cash flow in 2024
✅ Projected 10%+ production increase in 2025
✅ Enhanced dividend and aggressive share buyback program

These factors make Devon Energy an attractive investment for long-term investors seeking growth and shareholder returns in the energy sector.

SOURCE

Original Article on The Motley Fool

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