Devon Energy Corp Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Neil Mehta - Goldman Sachs - Analyst : Let's start off with unpacking the cost reductions here on slide 10 and 11 that you talk about, Clay, and to give you an opportunity to kind of talk about your confidence in terms of around achieving it, when we can really see the run rate and help us to really itemize some of these buckets. I think people can kind of understand the corporate cost reductions, but some of the other things like commercial opportunities are a little harder to put our head around. So just kind of flesh it out a bit. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 3:00PM, DVN.N - Q1 2025 Devon Energy Corp Earnings Call

Question: Arun Jayaram - JPMorgan - Analyst : Yeah. Jeff, just to follow up. I just wanted to see if you could just maybe clarify your comments on the lower GP&T rates in the Delaware. Could you maybe give us a sense of what this would do to your broad GP&T cost per unit if we were to translate that into our models in 2026?

Question: Arun Jayaram - JPMorgan - Analyst : Thanks, Jeff. You guys highlighted some divestitures, your interest in Matterhorn and some real estate assets. So wondering, Clay, if you could highlight some of your incremental midstream investments that you have at Devon that could be subject to future monetization?

Question: Paul Cheng - Scotiabank - Analyst : Two questions, please. First, I think Jeff and Clay, you guys talking about on the business optimization. It seems like technology is going to be a big piece of that. Can you give us some understanding that -- I mean how that the adoption now you're doing is different than what you've been doing? And also that how you are different from the rest of your peers in terms of the adoption of the technology? And can you give us some example that what's new adoption versus that what you guys have been doing? That's the first question. Second question is that when we're looking at these in our model, look like the Delaware Basin, comparing to the number of wells that you brought on, the production is a little bit light for us. Wondering that is there some one-off item other than, say, the winter storm. Is it the cadence of the well coming on stream throughout the quarter is different than a more variable or is back-end loaded? Any kind of maybe the colors that you can provide, that would be great. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 3:00PM, DVN.N - Q1 2025 Devon Energy Corp Earnings Call

Question: Scott Hanold - RBC - Analyst : Clay, maybe give your view on sort of the broad macro trends. A lot of your peers have made some cuts to their activity levels, bringing down production relative to prior expectations. And I think part of the effort to is to continue to enhance free cash flow. Can you give us a sense of like how you're looking and thinking about the macro? I mean there were no specifically defined cuts related to weaker oil prices. But what would it take for Devon to sort of reevaluate its plan?

Question: Scott Hanold - RBC - Analyst : Appreciate the comment. And I think this one is for Jeff. You all have pegged roughly, what, $200 million, $300 million per quarter on stock buybacks. And obviously, related to everything we were just talking about, a lot of the equities in energy have come down quite a bit, including Devon as well. Given that you're pulling forward some of this optimization value, you've got -- it sounds like very good visibility on achieving it. Does it make sense to maybe step up buybacks a little bit in the near term and utilize some of that free cash flow opportunistically?

Question: Kalei Akamine - Bank of America - Analyst : Hey, good morning, guys. I want to follow up on the Permian Basin. In the first quarter, you had the bulk of the tills in this year's program here in this quarter. And I have to imagine that there's a few Wolfcamp Bs in there. Can you talk about the productivity that you're seeing so far, i.e., how does it compare to Tier 1 zones like the A bench? And are there any noticeable differences in the oil rates in the oil and gas mix?

Question: Kalei Akamine - Bank of America - Analyst : Got it. I appreciate that color, John. Maybe this one is for Clay. Clay, in your business improvement plan, there's a GP&T piece that you've kind of discussed here on this call. But when you look at your position, particularly in the Delaware, do you see any other opportunities to remove fixed cost on the gathering and transportation side, maybe by buying in certain assets. And whether -- and do you think this could be maybe a good use of the Matterhorn proceeds?

Question: John Freeman - Raymond James - Analyst : Thank you. I like the new presentation format that's in there. I was just looking at slide 4, where you all sort of showed the reinvestment rates you've had the last couple of years have kind of hovered around 60%. And I know in 1Q you got down to 50%. But just based on your outlook for the rest of the year at, call it, $60 oil, it looks like it's implying you'll end up with kind of a pretty similar kind of reinvestment rates what you've had the last couple of years, albeit at a more than $10 lower oil price. And I'm just trying to think about like going forward, like how important the reinvestment rate is when you all come up with budgets. There are some of your peers that kind of target a reinvestment rate to get to their budget. Just maybe if you can kind of speak to that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 3:00PM, DVN.N - Q1 2025 Devon Energy Corp Earnings Call

Question: John Freeman - Raymond James - Analyst : Understood. And then my follow-up question, you all highlighted during -- in the quarter for Q2, at least, that you're expecting $50 million of capital related to multiple land trades in the Delaware that's going to impact over 30 wells. Just curious if that's like a renewed focus for the company or this is just sort of a one-off or a few things kind of dominant during this upcoming quarter?

Question: Betty Jiang - Barclays - Analyst : Good morning. Thank you for taking my question. I want to go back to the cost optimization and maybe ask differently that there are just many moving pieces that manifest in the financials. But it's clear that the benefit is going to accrue to a lower CapEx number. Between the efficiency gains, the production optimization and maybe any leading-edge cost deflation that you're seeing in the market, how much could we see maintenance CapEx coming down over the next couple of years?

Question: Betty Jiang - Barclays - Analyst : Great. No, that's super helpful. I appreciate all that color. And I understand the cost, the service cost deflation is really incremental. Maybe on my follow-up, Clay, you mentioned earlier that you're not looking to take more aggressive action unless prices go to the low $50s. And just acknowledging the momentum that you're seeing across all the basins, Permian, you're doing really well on efficiencies, you go for with the dissolution of the JV. Where -- which asset do you think has more flexibility to slow down? And I know it might be a more difficult question to answer right now but would love to get some color on how you think about it.

Question: Kevin MacCurdy - Pickering Energy Partners - Analyst : od morning, team. You kind of touched on this earlier, but just to confirm, you've lowered your average rig count in the Delaware from 14 to about 12 this year. Your turn-in-line count is still the same. Will that have any impact to your wells in progress at the end of the year or your ability to grow in 2026?

Question: Kevin MacCurdy - Pickering Energy Partners - Analyst : Great. I appreciate the clarification on that. And as a follow-up, as you look out on your portfolio, if oil prices continue to lag and gas stays strong, are there any areas where you would consider shifting activity towards or away from just given commodity mix?

Question: Matthew Portillo - TPH - Analyst : Good morning, all. I just wanted to unpack your capital allocation in the Rockies a bit. Looking at the program this year, I think the plan calls for about 70 to 75 gross wells in the Bakken. And in our math, that would probably translate to around $650 million to REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 3:00PM, DVN.N - Q1 2025 Devon Energy Corp Earnings Call $700 million of capital. I was curious if that's a good number to think about for your Bakken program in 2025. And if you've been able to make any additional cost outs on the program since taking over the Grayson asset.

Question: Matthew Portillo - TPH - Analyst : Great. And then as my follow-up, I think the program for the full year in the Rockies was about $1 billion. That seems to leave about $300 million for the Powder on, call it, 15 to 20 wells. I was curious if you might be able to just help us understand what might be driving the elevated capital in the play this year. And is that potentially a lever you could pull down into 2026 to improve your corporate capital efficiency until the macro environment improves?