Devon Energy Corp Q4 2024 Earnings Call Summary

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

Question: Scott Hanold - RBC Capital Markets - Analyst : Strong quarter. And Rick, congrats on the retirement and play on the promotion. Maybe I'm going to start with the Grayson Mill. It seems like there's been some strong outperformance here over the last couple of quarters. And it seems like you've got a lot of focus on that asset here in 2025. Could you remind us the inventory duration you see within the Grayson Mill asset and sort of how that compares with your sort of legacy, boxing.

Question: Scott Hanold - RBC Capital Markets - Analyst : Appreciate that. And my follow-up question, it's going to be on the Eagle Ford split with BPX. Could you give us a little bit of color on some of the background regarding that? How did you all think about splitting the assets? And did you guys, I guess, look for more inventory versus PDP? Could you just tell us how that allocation back and forth went?

Question: Neal Dingmann - Truist Securities, Inc. - Analyst : Again, Rick, just congrats on the stellar clear, and Clay, look forward to continuing to run the ship. And guys, my first question really just a little bit was asked earlier on the Bakken and I guess what you're calling the Rockies now specifically, Clay, I've noticed, appropriately, you've stepped up the CapEx a little bit. I think you were saying around $1 billion with 4 rigs. And I'm just wondering, given your planned focus here on Grayson Mill and I think the continued operational efficiencies, do you anticipate potentially seeing more growth here later in the year? Or is the plan just to kind of to keep things stable? What ideally would you like to see here?

Question: Neal Dingmann - Truist Securities, Inc. - Analyst : No. I'd love to hear it and look forward to seeing what you're going to do there. And then secondly, just on the Delaware operate specifically, you all continue. I think it's demonstrated how efficient the program continues to be there. I'm just wondering what's noticeable is versus maybe some others is that your midstream infrastructure situation appears to continue to be very strong with no takeaway issues. So I'm just wondering, is this performance largely due to contracts? I know you've got some good surface acreage that you've taken care of in the past. What is -- again, been able to efficiently drive this premier takeaway?

Question: Neal Dingmann - Truist Securities, Inc. - Analyst : Guys, great quarter.

Question: Neil Mehta - Goldman Sachs Group, Inc. - Analyst : Yes. And Rick, congrats on an amazing 45-year career. And Clay, congratulations to you. And Clay, maybe that's a good place to kick off. A couple of times in the prepared remarks, you talked about the organic opportunity set. Are we reading into your early strategy as you step into the CEO role to really pursue more of an organic versus an M&A-focused strategy and that the optimal thing to be buying back here is your own stock versus incremental assets?

Question: Neil Mehta - Goldman Sachs Group, Inc. - Analyst : That's very clear. And then just a follow-up on slide 4 -- slide 4 and to it, particularly in the Eagle Ford. Can you just talk about why you think, ultimately, the partnership dissolution makes sense, How we should think about the uplift in value and where does it ultimately come from? Is it from volumes? Is it from capital efficiency? And -- or is it about how you ultimately prosecute this acreage?

Question: Arun Jayaram - JPMorgan Chase & Co - Analyst : Good morning, gentlemen. I was wondering if you could maybe highlight -- I wanted to see if you could highlight the strong sequential performance in the Eagle Ford, I think your volumes were up over 20% sequentially. The well count didn't seem like that was the driver. So maybe just help us understand kind of what drove that and thoughts on kind of sustaining that above 90 MBoe per day kind of a figure as we think about 2025 because it was the key driver, I think, of the beat, as you highlighted

Question: Arun Jayaram - JPMorgan Chase & Co - Analyst : Great. Great. Maybe a follow-up for Jeff. Jeff, if we do the math around, call it, $250 million of buybacks per quarter, maybe up to $300 million. Based on your $3 billion free cash flow number that you put in the deck, that would imply returning somewhere between 53% to 60% of your free cash flow. Understanding that you use buybacks, maybe to be -- opportunistically. But is it the intention to maybe return a little bit or to focus a little bit on the balance sheet versus cash return in 2025? Just going through the math around 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. FEBRUARY 19, 2025 / 4:00PM, DVN.N - Q4 2024 Devon Energy Corp Earnings Call

Question: Arun Jayaram - JPMorgan Chase & Co - Analyst : Rick, I wanted to wish you the best as you approach retirement. I've enjoyed all the war stories with you over the years and hearing about how the industry has evolved. And Clay, it's also great to see you in the CEO seat and remember our time together as we used to follow Anadarko, but best wishes to both of you.

Question: Paul Cheng - Scotiabank Global Banking and Markets - Analyst : Can you just -- trying to understand that when you dissolved the JV with [DP], you're saying that you're going to save the cost by about $2 million per well. And from a design standpoint, I mean, as a JV, you are the partner. And is there any maybe bottleneck or hurdle that this allow you to achieve those savings all along? I'm trying to understand that, I mean, exactly how that -- why just dissolving in all the sudden debt, we will be able to see the $2 million saving? The second question is on the (technical difficulty) well. I think last year that you did about 230 wells and then before then, like 200 -- a little bit less than 240 wells. So you're now doing 250 to 270. One would think that as a result, your production for 2025 maybe is going to be higher than what you suggest in the guidance. Is it the -- I mean, can you tell us that the cadence on the well coming on stream? Is it leaning more towards the end of the year, that's why we're not seeing the full benefit this year? Or that's because it's the multizone and then you looking at a lot of the secondary bandages. So as a result, the production on those wells may be somewhat lower, even though the return is good? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 4:00PM, DVN.N - Q4 2024 Devon Energy Corp Earnings Call

Question: Paul Cheng - Scotiabank Global Banking and Markets - Analyst : Thank you.

Question: Roger Read - Wells Fargo Securities - Analyst : Oh, well. Doug's loss, my gain. Good morning, everybody. Anyway, quick congrats to you, Rick. And Clay, we look forward to working with you going forward. So these transitions are always (technical difficulty) but be entertaining nonetheless. I just really wanted to follow up on kind of 1 key question the Eagle Ford. You mentioned the refracs, maybe not the most interesting or exciting, but we're hearing more and more about it. Where do you think you are in terms of working on some of the refracs and how should we think about that from a returns and an impact basis relative to -- just say, baseline operations? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 4:00PM, DVN.N - Q4 2024 Devon Energy Corp Earnings Call

Question: Roger Read - Wells Fargo Securities - Analyst : Appreciate that. Just a quick follow-up. Trump tariffs impacts on some of the materials that are used in wells, how is that reflected in your CapEx guidance? Or is there a plus/minus we should be paying attention to there?

Question: Roger Read - Wells Fargo Securities - Analyst : Yes. Well, given the uncertainty, you can understand why I'd ask you the question instead of coming up with an answer on my own. Thanks guys.

Question: Kevin MacCurdy - Pickering Energy Partners Insights - Analyst : Okay. First, I wanted to say to Rick that we'll miss you on these calls, and I personally appreciate all the answers you've given me over the years at Devon and WPX before that.

Question: Kevin MacCurdy - Pickering Energy Partners Insights - Analyst : Only 1 question for me. I wanted to ask, what changed on your 2025 capital plan over the last several months that you were able to lower your guidance? Was it mostly just a reduction in Permian and Eagle Ford well costs? Or any specifics that you can give us on basin details would help.

Question: Kevin MacCurdy - Pickering Energy Partners Insights - Analyst : Sorry if I cut you off earlier, Rick.

Question: John Freeman - Raymond James & Associates, Inc. - Analyst : Just echoing prior congratulations to both you, Rick and Clay, all the best. The first topic for me, just, obviously, we've seen a dramatic improvement in natural gas prices. Jeff, you did a good job showing on Slide 8 kind of improved all the options you've got on the marketing side, dramatically better realizations on the gas side. And I can appreciate the fact that months goes into coming up with like a 2025 plan. But I'm just curious, having like a diversified asset base like you all do, if there's any potential flexibility in the program, if gas prices remain strong, maybe improve further from here, if there'd be any potential kind of shift in the plan to certain assets that potentially benefit more from the really robust gas price strip we're looking at right now?

Question: John Freeman - Raymond James & Associates, Inc. - Analyst : And then just one quick one for me. The '25 plan, the 22 rigs, how many frac crews does that assume? I was just looking relative to (technical difficulty) in 4Q.

Question: Matthew Portillo - Tudor, Pickering, Holt & Co. Securities - Analyst : Good morning. And I as well, I wanted to pass along congratulations to Rick and Clay in the new role. Maybe just a follow-up there, Clay, on the Anadarko. It's been a while since we've refreshed our thoughts on inventory depth in the basin. Just curious if you might be able to give us some context around how you think about inventory, especially in the context of higher natural gas and NGL prices, as you mentioned, progressing that program through the course of 2025 and beyond? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 4:00PM, DVN.N - Q4 2024 Devon Energy Corp Earnings Call

Question: Matthew Portillo - Tudor, Pickering, Holt & Co. Securities - Analyst : Perfect. And then maybe just a follow-up question on the Permian. You mentioned, obviously, chasing the Wolfcamp B in a bigger program for 2025. I was curious if you could maybe provide some context around how much that program made up in '24, how you're thinking about it in 2025? And then I guess for the Permian as a whole, how should we be thinking about the oil cut? I think you've been averaging around 46%, 47% through the course of the end of last year. Should that mix shift change dramatically? Or should we expect that to be pretty constant going forward?

Question: Paul Cheng - Scotiabank Global Banking and Markets - Analyst : Just a real quick follow-up. Okay, for the CapEx spending, do you have a cadence and also the number of wells coming on stream? Do you have a cadence that how it's going to look for the year? Thank you.

Question: Paul Cheng - Scotiabank Global Banking and Markets - Analyst : That -- actually on all of them, in general, that I mean I think that you guys -- do you expect that it's going to be [pro-rated] throughout the year? Because that your production outlook seems like that's what you suggest. But in terms of actual spending and also the number of wells that you're going to come on stream, is there anything that we should be aware that is not really prorated?

Question: Paul Cheng - Scotiabank Global Banking and Markets - Analyst : Thank you.