Strong exploration will let them prosper

Article Excerpt

DEVON ENERGY CORP. $38.12 (New York symbol DVN; TSINetwork Rating: Extra Risk) (405-235-3611; www.dvn.com; Shares outstanding: 525.5 million; Market cap: $20.0 billion; Dividend yield: 0.6%) is one of the largest explorers and producers of oil and natural gas in the U.S. The production mix for the company’s 19,000 wells is 62% oil and 38% natural gas. Devon’s output averaged 527,000 barrels of oil equivalent per day (both oil and gas) for the third quarter, ended September 30, 2017. That’s down 8.7% from 577,000 a year earlier. However, cash flow per share jumped 29.2%, to $1.46 from $1.13. The gain was mostly due to higher realized oil and gas prices and much lower costs. The company’s long-term debt of $10.4 billion is a somewhat high 51% of its market cap. However, Devon also holds $2.8 billion in cash—none of which is due before 2021. In addition, it plans to raise another $580 million by selling non-core assets. Devon will, however, retain what it sees as…

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