Devon Energy Provides Revised 2020 Capital Expenditure Outlook and Hedge Update
March 30 2020 - 6:55AM
Devon Energy Corp. (NYSE: DVN) today provided updates to its 2020
capital expenditure outlook and hedge position. Based on current
market conditions, Devon has elected to further reduce its capital
expenditures by an additional $300 million for the full-year 2020.
The revised capital outlook of approximately $1 billion represents
a reduction of nearly 45 percent compared to the company’s original
2020 capital budget.
The $300 million of incremental capital reductions will be
driven by the deferral of activity in the Eagle Ford, improved
capital efficiencies in the Delaware Basin and lower service-cost
pricing attained across the company’s asset portfolio. With the
revised capital plan, Devon now expects to fund its 2020 capital
program within operating cash flow at current strip pricing. Beyond
the spending cuts announced today, Devon is prepared to further
reduce capital activity should commodity prices remain weak to
protect its financial strength.
“Our top priority in this environment is to protect Devon’s
financial strength and liquidity,” said Dave Hager, president and
CEO. “Our decisive actions to date have allowed us to rapidly
recalibrate drilling and completion activity to ensure we can fund
all our 2020 capital requirements within cash flow. We will
continue to assess market conditions and adjust activity levels as
necessary to ensure the long-term viability of our business.”
Updated Regional Basis Hedge Position
The company has also entered into regional basis swaps in an
effort to provide additional protection against lower commodity
prices across its asset portfolio. For details on Devon’s updated
regional basis hedge position, please see the tables below:
Oil Basis Swaps |
|
|
|
|
|
|
|
|
|
|
Period |
|
Index |
|
Volume (Bbls/d) |
|
|
Weighted Average Differential to WTI ($/Bbl) |
|
Q1-Q4 2020 |
|
Argus MEH |
|
|
40,679 |
|
|
$ |
0.63 |
|
|
Q1-Q4
2020 |
|
Midland
Sweet |
|
|
23,835 |
|
|
$ |
(1.23 |
) |
|
Natural
Gas Basis Swaps |
|
|
|
|
|
|
|
|
Period |
|
Index |
|
Volume (MMBtu/d) |
|
|
Weighted Average Differential to Henry Hub ($/MMBtu) |
|
Q1-Q4 2020 |
|
Panhandle Eastern Pipe Line |
|
|
30,000 |
|
|
$ |
(0.47 |
) |
Q1-Q4 2020 |
|
El Paso
Natural Gas |
|
|
60,000 |
|
|
$ |
(0.76 |
) |
Q1-Q4 2020 |
|
Houston
Ship Channel |
|
|
26,703 |
|
|
$ |
(0.02 |
) |
As previously disclosed on March 19, 2020, the company has
approximately 80 percent of its estimated oil production in 2020
protected at an average floor price of nearly $45 WTI.
Additionally, Devon has secured hedges on approximately 40 percent
of its estimated natural gas production in 2020 at an average Henry
Hub protected floor price of $2.35 per million cubic feet. For
additional details see the tables below:
|
|
WTI Oil Price Swaps |
|
|
WTI Oil Price Collars |
|
Period |
|
Volume (Bbls/d) |
|
|
Weighted Average Price ($/Bbl) |
|
|
Volume (Bbls/d) |
|
|
Weighted Average Floor Price ($/Bbl) |
|
|
Weighted Average Ceiling Price ($/Bbl) |
|
Q1-Q4 2020 |
|
|
66,625 |
|
|
$ |
38.57 |
|
|
|
54,750 |
|
|
$ |
51.47 |
|
|
$ |
61.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry Hub Gas Price Swaps |
|
|
Henry Hub Gas Price Collars |
|
Period |
|
Volume (MMBtu/d) |
|
|
Weighted Average Price ($/MMBtu) |
|
|
Volume (MMBtu/d) |
|
|
Weighted Average Floor Price ($/MMBtu) |
|
|
Weighted Average Ceiling Price ($/MMBtu) |
|
Q1-Q4 2020 |
|
|
81,600 |
|
|
$ |
2.77 |
|
|
|
132,750 |
|
|
$ |
2.09 |
|
|
$ |
2.52 |
|
The company will provide detailed production, operating cost and
capital expenditure updates in conjunction with first-quarter
reporting.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws. Such statements are
subject to a number of assumptions, risks and uncertainties, many
of which are beyond the control of the company. These risks
include, but are not limited to: the risk of continued or increased
commodity price volatility, which could adversely impact the
company’s liquidity, capital plans and actual production and other
results for 2020; the risk that our hedging activities will limit
our participation in any commodity price increases; and the other
risks identified in the Company’s Annual Report on Form 10-K and
its other filings with the Securities and Exchange
Commission. Investors are cautioned that any such statements
are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the
forward-looking statements. The forward-looking statements in this
press release are made as of the date hereof, and the company does
not undertake any obligation to update the forward-looking
statements as a result of new information, future events or
otherwise.
About Devon Energy
Devon Energy is a leading independent energy company engaged in
finding and producing oil and natural gas. Based in Oklahoma City
and included in the S&P 500, Devon operates in several of the
most prolific oil and natural gas plays in the U.S. with an
emphasis on achieving strong corporate-level returns and
capital-efficient cash-flow growth. For more information, please
visit www.devonenergy.com and see our related Form 10-K.
|
|
|
Investor
Contacts Scott Coody, 405-552-4735 Chris Carr,
405-228-2496 |
|
Media
ContactJohn Porretto, 405-228-7506 |
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