Devon’s strategic positioning in premium shale assets, combined with disciplined capital allocation and robust cash generation capabilities, creates a compelling case for investors seeking exposure to North American oil and gas production. Delaware Basin operations continue to exceed production guidance with 19% year-over-year oil production growth in the most recent quarter.
Devon has raised its full-year 2025 oil production outlook while simultaneously reducing capital expenditures. This demonstrates exceptional capital efficiency and operational optimization across its multi-basin portfolio.
DEVON ENERGY CORP. (Symbol DVN on New York; www.devonenergy.com) is a leading oil and gas producer in the U.S. with a diversified multi-basin portfolio led by its position in the Delaware Basin.
Devon continues to use acquisitions to expand operations in its core areas. In 2021, it completed its $8.5 billion merger with WPX Energy to create one of the biggest U.S. shale producers. Also in 2021, the company purchased Validus Energy for about $1.8 billion in cash to expand in the Eagle Ford shale area in South Texas. Then, in 2022, Devon acquired the Williston Basin assets of RimRock Oil & Gas, LP. The deal was for $865 million.
Most recently. In October 2024, Devon completed the acquisition of Grayson Mill Energy for $5 billion. That firm is an oil-and-gas producer in the Williston Basin, in western North Dakota and eastern Montana.
Oklahoma City-based Devon paid $3.25 billion in cash and $1.75 billion in stock to acquire Grayson Mill.
Devon reports that the acquisition will add immediately to its earnings and cash flow as it expands its position in the Williston Basin by more than 307,000 acres. Production from the acquired acreage is expected to hit about 100,000 barrels of oil a day in 2025. That will boost its output to an average of 765,000 barrels of oil equivalent per day from 664,000 barrels.
Meanwhile, Devon has now signed a long-term natural gas sale and purchase agreement (SPA) with Centrica Energy, the trading arm of Centrica.
Centrica is the largest supplier of gas to domestic customers in the U.K., and one of the largest suppliers of electricity, operating under the trading names British Gas in England and Wales, Scottish Gas in Scotland, and Bord Gais Energy in Ireland.
Starting in 2028, Devon Energy will supply Centrica with 50 billion British thermal units per day over a ten-year term, equivalent to approximately five liquefied natural gas (LNG) cargoes annually.
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The agreement is strategically designed to mitigate market price risk in Centrica’s LNG portfolio by linking feed gas pricing to the European gas hub price, or Title Transfer Facility (TTF). This arrangement also gives Devon Energy exposure to international pricing.
Notably, the TTF, Europe’s gas benchmark, trades higher than the lower-priced Henry Hub benchmark in the U.S. And with European and Asian gas prices currently trading at about four times U.S. rates, the spreads create strong incentive for U.S. producers to go global.
Centrica Energy’s U.S. business, which recently established a presence in New York, will manage the physical volumes of the deal within the US, ensuring efficient handling and optimization of the natural gas supply.
Dividend rises along with production and earnings numbers
Meanwhile. in the three months ended June 30, 2025, the company produced an average 841,000 barrels of oil equivalent per day. That output was up 19.0% from 707,000 barrels a year earlier.
Devon earned $1.42 in the latest quarter, up 19.5% from $1.35.
With the March 31, 2025, payment, the company raised its fixed quarterly dividend by 9.1%, to $0.24 from $0.22. That gives the shares a 2.6% yield.
At the same time, Devon aims to pay out as much as 50% of its excess free cash flow in the form of dividends—on top of its fixed dividend.
Recommendation in Power Growth Investor: Devon Energy Corp. is a buy.
