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Devon Energy Completes High-Grading Process, Free Cash Flows Remain Elusive

publication date: Dec 20, 2019
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Image Shown: An overview of Devon Energy Corporation’s remaining asset base, which consists of upstream oil and gas operations spread across four major unconventional plays in the US. Image Source: Devon Energy Corporation – December 2019 IR Presentation. 

Times are tough in the oil & gas patch, especially for upstream producers of raw energy resources like Devon Energy Corp. Not only are global oil prices low, which drags down natural gas liquids pricing for products like propane and butane, but North American natural gas supplies are trading at rock-bottom prices as well. Devon Energy has attempted to cope by divesting less economical assets and shifting all of its focus towards its best well locations, a process known as high-grading. Due to the recent strength in WTI, shares of DVN have started to march towards the upper end of our fair value range estimate and currently yield 1.4% as of this writing. Devon Energy is placing a great focus on developing “liquids-rich” plays, which refers to developing well locations with high crude oil and natural gas liquids production mixes.


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