Topics Energy Stocks

Devon Energy Corp. $42.17 - New York symbol DVN

DEVON ENERGY CORP. $42.17 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235- 3611; www.dvn.com; Shares outstanding: 523.6 million; Market cap: $21.3 billion; Dividend yield: 0.6%) is one of the largest U.S.-based oil and natural gas explorers and producers. The company’s production mix is 39% natural gas and 61% oil.

Devon’s daily output averaged 644,000 barrels of oil equivalent for the three months ended June 30, 2016. That’s down 4.4% from 674,000 a year earlier. Cash flow per share fell sharply, to $0.93 from $3.14. The decline was the result of the lower output but also lower oil and gas prices.

The company continues to cut costs and strengthen its balance sheet. That should let it quickly raise funds to accelerate drilling when oil and gas prices begin to move higher.

So far this year Devon has sold properties worth $3.2 billion. The company also raised another $1.5 billion by issuing shares.

At the start of this year, Devon’s long-term debt stood at a high $12.1 billion, or 57% of its $21.3 billion market cap. Proceeds from the share issue and asset sales have now taken that debt down to around $7.4 billion. It’s a much more reasonable 35% of the company’s market cap.

Devon has retained what it sees as the best of its properties. Its focus also lets it cut its workforce and improve efficiency. That’s key to future success.

Devon Energy is a buy.

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