Analysts Build Bearish Sentiment On Devon Energy's Q4 Miss, Softer FY23 Outlook

Shale oil producer Devon Energy Corp's DVN Q4 missed consensus estimates for profit due to a hit to production from severe cold weather in the U.S.
For 2023, the company forecasted production of 643,000 to 663,000 barrels of oil equivalent per day. The company's output averaged 636,000 boe per day in Q4.
Devon said its expenses increased by 1% in 2022, driven by higher personnel costs in the reported quarter.
It also expects total capital investment between $3.6 billion and $3.8 billion in 2023, with higher spending in the first half due to a temporary fourth frac crew in the Delaware Basin.
The company also hiked its quarterly dividend by 11%.
Excluding hedges, Devon said its realized price slightly rose to $53.66 from $53.12 for Q4.
RBC Capital Markets says softer than expected outlook, particularly in 1H23, a meaningfully lower sequential dividend declaration, and lower stock buybacks could weigh on Devon's shares. Production estimates fall short of RBC's forecast of 670 MMboe/day.
Mizuho writes that DVN repurchased ~$700 million in 2022. It only bought around $57 million in 4Q22.
With another $700 million remaining, the analyst would look for thoughts on how the company would allocate FCF above the fixed-plus-variable dividend between share repurchases and net debt reduction.
Raymond James writes that earnings metrics came up shy of its estimates, with EBITDA and EPS falling ~2% and ~5%. 4Q22 capex was in-line at $874 million. However, FY23 guidance has capex ~6% above RJ/Street and FY23 production ~1% below RJ/Street due to weaker 1Q23.
Price Action: DVN shares are down 13.20% at $55.51 on the last check Wednesday.

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