Categories Energy, Markets

Devon Energy’s stock rallies over 8% on asset sales and cost reduction plans

Devon Energy Corp.’s (DVN) stock jumped 8.8% during mid-day trade on Wednesday after the company laid out its transformation plans, which include the separation of a portion of its assets as well as cost reduction efforts.

Devon has decided to either sell or spin off its Canadian and Barnett Shale assets in order to focus more on its high-return US oil assets. This decision is in line with the company’s long-term strategic plan and the process is expected to be complete by the end of 2019.

“New Devon will emerge with a highly focused US asset portfolio and has the ability to substantially increase returns and profitability as we aggressively align our cost structure to expand margins with this top-tier oil business. The New Devon will be able to grow oil volumes at a mid-teens rate while generating free cash flow at pricing above $46 per barrel,” CEO Dave Hager said in a statement.

Kandi Technologies adds to America’s EV lineup, shares jump 40%

Devon increased its total share repurchase program to $5 billion from the previous $4 billion and increased its quarterly dividend by 13% to $0.09 per share. The company is also looking to deliver at least $780 million in annual cost savings by 2021, and expects to achieve around 70% of these reductions by the end of 2019. Devon expects its efforts to drive down per-unit cash costs more than 20% by 2021.

Devon’s highly concentrated US oil business is expected to generate 13-18% oil growth in 2019, with 10% less upstream capital than 2018, and is self-funded at $46 oil prices.


We’re on Flipboard! Follow us to receive the latest stock market, earnings and financial news at your fingertips.

Most Popular

Does Unity Software (U) stock has more room to run?

Last month, the IPO market was in a full swing. IPOs of Snowflake (NYSE: SNOW) and JFROG (NASDAQ: FROG) had an impressive opening day in September, the former creating a

PepsiCo (PEP): Steady snacking habits amid pandemic drive strong quarter for beverage giant

PepsiCo Inc. (NASDAQ: PEP) beat market expectations on both revenue and earnings for the third quarter of 2020. The company saw the momentum continue in its snacks business while the

Does the virus-driven boom make Electronic Arts (EA) a good investment?

With more and more people turning to virtual entertainment sources, amid the virus-related movement restrictions, video game publishers like Electronic Arts (NASDAQ: EA) are witnessing unusually high demand. Not surprisingly,

Leave a Reply

Your email address will not be published. Required fields are marked *

Add Comment

Viewing Highlight