24 annotations
Number 1 on the list, probably 60% of the outperformance was well productivity. That really drove the outperformance.
Second was the efficiency at which we're bringing them in. We had a couple of more days online here and there. Cumulatively, that adds up.
And then third, very importantly, from a base standpoint, both from a midstream standpoint, from a weather standpoint, just how we're operating our wells, we really outperformed historical performance there.
So thanks for the opportunity to clarify that. Maybe we weren't clear on that.
60% of improvement about well productiity
Transcript
2024 Q1
7 May 24
As you know, a couple of quarters ago, we rolled out a slight change to our framework and leaned in on 70% of our free cash flow is going to go back to shareholders via our fixed dividend, share repo and then the variable. And then also, we made a commitment to building some cash to the balance sheet to manage the maturities that I referenced in my opening comments.
So that continues to be our game plan and our expectations, specific to the share buyback, without question, with the underperformance we saw on a relative and absolute basis last year in the equity market for our shares, and based on all the work that we do internally, all the modeling work we do around intrinsic value, it's pretty clear to us that the best thing that we can be doing with that free cash flow is leaning in on the share buyback.
And so that's what you've seen us do the last couple of quarters, and we would expect that to continue as we walk forward into 2024.
This pace of, call it, $200 million, $275 million a quarter, currently, that feels about right. Obviously, as we work our way through this year and our capital spending will moderate as we talked about in our opening comments, I think there's even a potential for a little incremental leaning on that as well. But we feel really good about the share repurchase program, the results that we've been delivering there and would expect that pace to continue.
priorituzung share buyback
Transcript
2024 Q1
7 May 24
With this free cash flow, we continue to prioritize share repurchases in the first quarter. We repurchased $205 million of stock in the quarter, bringing our total activity to $2.5 billion since the program's inception in late 2021. With a $3 billion authorization in place, we have plenty of runway to compound our per share growth as we work our way through the year.
bought $205 million worth of stock, now ar 2.5bn of 3bn
Transcript
2024 Q1
7 May 24
Looking specifically at the second quarter, we expect this production momentum to continue with volumes increasing to a range of 670,000 to 690,000 BOE per day. This expected growth is driven by higher completion activity in the Delaware Basin, resulting from the fourth frac crew we put to work at the beginning of the year in the core of Southeast New Mexico.
On the capital front, we remain confident in our guidance range for the full year. Spending will be slightly skewed to the first half of the year, roughly 55% of our budget, due primarily to the cadence of Delaware completion activity. This spending will begin to moderate as we move from 4 to 3 frac crews in the Delaware resulting in a lower capital spending profile in the second half of the year.
With regard to pricing, the recent strength in price of oil has provided a meaningful impact to our returns and cash flow generation capabilities.
Q2 guide
Transcript
2024 Q1
7 May 24
Delaware Basin activity, which accounted for 65% of our capital investment for the quarter. We operated a program of 16 rigs and 4 completion crews across our 400,000 net acre position in the play, resulting in a production growth of 5% compared to the same period last year. This volume growth was driven by 59 new wells brought online that predominantly targeted the Wolfcamp formation. In aggregate, these wells impact -- these high-impact wells achieved average initial flow rates of more than 3,200 BOE per day. This performance results in the best well productivity from our Delaware Basin assets in more than 2 years.
delaware basin --50 new wells online of mpre than 3,200 BOe perday
Transcript
2024 Q1
7 May 24
And with the current valuations in this space, the best thing we could do is buy back our stock to capture this value.
stock buybacks
Transcript
2024 Q1
7 May 24
This translates into attractive free cash flow yield of 9%, which is nearly 3x higher than what the broader market can offer. With this growing stream of free cash flow, we remain unwavering in our commitment to capital discipline and will seek to reward shareholders with higher cash returns. With our flexible cash return framework, we will allocate our free cash flow toward the best opportunity, whether that be buybacks or dividends.
Given that the equity market is still heavily discounting valuation to the energy sector, we plan to continue to prioritize share buybacks over the variable dividend to capture the incredible value that Devon offers at these historically low valuations.
prioritize share bybacks due to valuatuin -- good FCF generation
Transcript
2024 Q1
7 May 24
fully funded at ultra-low breakeven of around $40 per barrel, which equates to one of the lowest breakeven levels of any company in the industry.
breakeven at $40 per barrel
Transcript
2024 Q1
7 May 24
our 2024 production target increasing by 15,000 BOE per day or 2% to a range of 655,000 to 675,000 BOE per day.
To reiterate what I touched on earlier, these higher volume expectations are due to the better-than-expected well performance achieved year-to-date and our confidence in the quality slate of projects that we have lined up over the course of this year.
Importantly, we are delivering this incremental production within the confines of our original capital budget of $3.3 billion to $3.6 billion. This level of investment is expected to maintain a steady production profile of about -- for about 10% less capital compared to last year.
upgrade to producton target but with same csapital budget
Transcript
2024 Q1
7 May 24
easing of infrastructure constraints across our Delaware Basin assets. This improvement was directly related to the steps we've taken along with our third-party partners to invest in the build-out of incremental gas processing, compression, water handling and electrification.
3. easing of infrastructure constraints
Transcript
2024 Q1
7 May 24
he improved cycle times we delivered across our drilling and completion operations
2, improved cycle times
Transcript
2024 Q1
7 May 24
most significant contributor to this performance was the excellent well productivity we achieved from the 100-plus wells we placed online during the quarter. On average, these high-impact wells exceeded our top curve expectations with strong well productivity in the Delaware Basin, once again, driving our results. Overall, this activity achieved initial production rates that were more than 20% higher than those that we placed online last year
1. well productivity improvements
Transcript
2024 Q1
7 May 24
Starting with production, our delivered volumes came in about 4% higher than planned for the first quarter, averaging 664,000 BOE per day. This production beat was across all products and driven by 3 key factors.
beat production estimates
Transcript
2024 Q1
7 May 24
mportantly, the activity required to fund this growth is self-funded at a $40 WTI price or approximately half of where we are today and is delivering returns on capital employed greater than 20% at today’s commodity prices.
While once again, it is too early to provide firm guidance for next year. The trajectory of our business sets us up for a strong outlook in 2024 as well.
self funded at $40 wti
Transcript
2023 Q2
5 Sep 23
We also anticipate price movement with pressure pumping, which is our largest cost category in a very near future.
While it’s still somewhat premature to say what and set what our firm outlook for 2024 is, our expectations for deflationary trends should continue.
We have the potential for meaningful savings from peak well costs as pricing improvements gradually flow through our cost structure over the next year or so. With a free cash flow model that our business generated, we had another great quarter of cash returns. We returned $462 million to shareholders through our fixed plus variable dividend which we have paid out now for 12 consecutive quarters.
deflationary trencds in costs
Transcript
2023 Q2
5 Sep 23
As I touched on earlier, the capital spending to drive this growth trajectory was a touch ahead of expectations due to very strong execution from our drilling and completion teams that brought forward activity into the quarter.
capex ahead of plans
Transcript
2023 Q2
5 Sep 23
with oil volumes expected to grow to a range of 322,000 to 330,000 barrels per day in the upcoming quarter.
oil volumes
Transcript
2023 Q2
5 Sep 23
As we head into 2023, we expect to be active buyers of our stock, especially if we see trading weakness relative to our peers.
(No comment added)
Transcript
2022 Q4
24 Feb 23
we upsized this buyback authorization twice during the year and we bought back $1.3 billion of stock at prices well below the current market level
(No comment added)
Transcript
2022 Q4
24 Feb 23
In June, we announced the bolt-on acquisition of RimRock's assets in Dunn County at a highly accretive valuation of around 2x cash flow. This acquisition adds contiguous position of 38,000 net acres
(No comment added)
Transcript
2022 Q2
1 Feb 23