Oklahoma-based Devon Energy (DVN) is a leading independent oil and gas company in the U.S. Its deep and diversified portfolio, primarily comprising unconventional resources, reflects significant long-term growth potential. The company dedicates a substantial part of its capex budget to low-risk development projects in its vast North American assets which provide reliable and repeatable production reserves.
Devon’s marketing and midstream operations, largely located in the vicinity of its core onshore operations in the U.S. and western Canada, complement its E&P business. The unit collects, processes and markets oil, gas and NGL. It also improves margin by maximizing realized prices and optimizing costs.
Devon has shown financial discipline by prudently managing its balance sheet and predominately living within generated cash flows. However, we see the current constrained commodity environment to continue weighing on Devon’s financial performance, at least in the near term.
Going forward, we expect the shares to perform in line with the broader market. We remain cautiously optimistic on Devon and maintain our Neutral recommendation.
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