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BEST COMPANIES 2015  Devon Energy

<p class="p1">Devon Energy is an oil industry giant, bringing in revenues of $7.7 billion annually. Despite the company’s heft, employees describe a work environment that is friendly with an almost small-town feel. Workers are on a first-name basis with executives, and the company headquarters features an on-site gym and a medical facility that’s open to employees and their families. Employees are encouraged to volunteer, an example set by the CEO himself who plays an annual concert to raise money for children’s music lessons, and are rewarded for giving of their time. “The company values a good work-life balance and gives meaningful work to all of its employees,” said one worker. “I definitely feel that I can add value to the company every time I step into the building.” <a style="color:#ec412e;" href="http://us.greatrated.com/devon-energy" target="_blank">Read the Great Place to Work review.</a></p>

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Devon Energy is an independent U.S. exploration and production company that extracts oil, natural gas, and natural gas liquids. The shale powerhouse is focused in five main areas: the Delaware Basin located in southeast New Mexico and west Texas, the Eagle Ford in south Texas, the Anadarko Basin in western Oklahoma, the Williston Basin in North Dakota, and the Powder River Basin in Wyoming. Devon was founded in 1971.

Q2 2026

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Devon Energy (DVN): Company Profile, Stock Price, News, Rankings

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Devon Energy

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Welcome to Devon Energy's Second Quarter twenty twenty five Conference Call. At this time, all participants are in listen only mode. This call is being recorded. I'd now like to turn the call over to Mrs. Rosie Zuclick, Vice President of Investor Relations. You may begin.

Good morning, and thank you for joining us on the call today. Last night, we issued Devon's second quarter earnings release and presentation materials. Throughout the call today, we will make references to these materials to support prepared remarks. The release and slides can be found in the Investors section of the Devon website. Joining me on the call today are Clay Gaspar, President and Chief Executive Officer Jeffret Nauer, Chief Financial Officer John Raines, SVP, Asset Management Tom Hellman, SVP, E and P Operations and Trey Lowe, SVP, Technology and Chief Technology Officer.

As a reminder, this conference call will include forward looking statements as defined under U. S. Securities laws. These statements involve risks and uncertainties that may cause actual results to differ materially from our forecast. Please refer to the cautionary language and risk factors provided in our SEC filings and earnings materials. With that, I'll turn the call over to Clay.

Thank you, Rosie. Good morning, everyone. Thank you for joining us today. Devon delivered another quarter of production outperformance, capital reduction and improved 2025 outlook, driven by our unwavering commitment to operational excellence and financial discipline. Our strategic priorities on slide three remain steadfast operational excellence, advantaged asset portfolio, maintaining financial strength, delivering value to shareholders and cultivating a culture to succeed.

Amid market volatility, our veteran leadership team is not distracted by the headline or tweet du jour. We keep our eyes focused on the larger macro signals and we've guided our team's energy towards controlling the controllables. As you will hear, during the quarter, we avoided the distractions and have made significant progress towards our business optimization goals of making Devon a more efficient value creation machine. Our optimization plan will create an incremental $1,000,000,000 of annual free cash flow by the end of next year. While cost cutting is part of the strategy, our focus is on driving value to the bottom line.

Many of the wins are tied to production enhancements, inciting a culture of continuous improvement and a heavy dose of technology. Only four months into this initiative, our team has already captured 40% of our target. As I sit here today, I'm highly confident in our ability to achieve our $1,000,000,000 target on time and as a result create significant and sustainable value for our shareholders. Consistent with our strategy to enhance our asset portfolio, we completed the sale of the Matterhorn pipeline in Q2. Then on August 1, we acquired the remaining non controlling interest in Cottondraw Midstream.

These transactions are value enhancing and strengthen our financial position to support future growth. By optimizing our Midstream holding, these deals bolster our E and P operations and give us long term value creation for our shareholders. Let's turn to Slide four and discuss our quarterly highlights. The second quarter demonstrated the strength of our capital program and diversified portfolio. As I mentioned, our second quarter production exceeded the top end of our guidance.

These results were driven by our franchise asset, the Delaware Basin, and strong performance across our other assets. Continued efficiency gains and effective supply chain management allowed us to outperform expectations with capital spending coming in 7% below guidance. The impressive performance on both capital and production generated significant Q2 free cash flow of $589,000,000 and further strengthened our financial foundation. Approximately 70% of the free cash flow was returned to shareholders via dividends and share repurchases underscoring our reinvestment strategy and commitment to delivering meaningful long term shareholder returns. Let's take a closer look at some of our operational metrics.

Slide five showcases the significant operational efficiencies we are achieving across our portfolio. In the Delaware, our teams have continued to push the envelope in both drilling and completions. By leveraging our existing or excuse me, our extensive data streams and our proprietary infrac and in drill AI agents, we're able to capture operational enhancements in real time and drive efficiency in our critical operations. In parallel to this real time operational assistance, we're also leveraging design improvements, simul frac implementation and relentless focus on safety and execution. These enhancements have resulted in another 12% year over year improvement in drilling costs and a 15% improvement in completion costs.

These are not just one time gains. They reflect the ongoing commitment of our teams to drive meaningful long term improvements in how we operate. We are seeing similar momentum in the Williston where our innovative approach has delivered $1,000,000 in savings per well since the Grayson Mill acquisition last year. We've reduced total well costs through design enhancements, improved drilling and completion practices and by leveraging technology. Finally, in the Eagle Ford, I'm pleased to report that we've fully captured the 2,700,000 in savings per well that we set out to achieve as part of the dissolution of the JV in April.

Overall, the operational highlights demonstrate how our teams are continuously seeking new ways to drive efficiency and deliver value. Let's turn to slide six. You can see how these operational improvements are driving real capital efficiency gains. Since November, we've reduced our 2025 capital guidance by 10% or $400,000,000 We've achieved these capital reductions while regularly increasing our next quarter production guide and maintaining a strong 2026 production outlook. This outcome is a direct result of disciplined capital allocation, ongoing operational improvements and importantly our commitment to leveraging technology across the business.

Our proprietary AI tools, agents and models are embedded throughout our operations from drilling and completions to real time production optimization. These technologies enable us to quickly source and analyze vast amounts of data, make informed decisions faster and continuously refine our workflows. As I mentioned before, we're not just cutting costs. We are optimizing well performance, reducing cycle times and streamlining field operations, all while delivering production performance and strengthening our financial position. These are sustainable structural gains that will translate into more efficient capital deployment, stronger free cash flow, and long term value. With that, I'll hand the call over to Jeff.

Thanks, Clay. Turning to slide seven, where we highlight another quarter of strong financial performance for Devon. In the second quarter, we delivered core earnings of $0.84 per share, EBITDAX of $1,800,000,000 and operating cash flow of $1,500,000,000 After funding our capital requirements, we generated $589,000,000 in free cash flow. This was driven by production exceeding the top end of our guidance reflecting the excellent operating performance highlighted by Clay, disciplined capital investment resulting in a 7% outperformance versus expectations and production cost improving 5% from the prior period due to reduced downtime, lower workover expenses, and lower production taxes. In addition to strong organic free cash flow, we closed the $372,000,000 divestiture of our equity interest in the Matterhorn pipeline, resulting in $307,000,000 pretax gain.

With the associated taxes from this divestiture, our current tax rate was approximately 21% for the quarter above our recent run rate. With this robust cash generation, we delivered significant value to shareholders, paying $156,000,000 in dividends and allocating $249,000,000 to share repurchases. We remain firmly committed to our capital allocation framework, balancing high return investments with substantial cash returns to shareholders. Moving to slide eight, our financial strength and liquidity position remain a clear differentiator for Devon. We exited the quarter with $4,800,000,000 in total liquidity, including $1,800,000,000 in cash on hand.

Our net debt to EBITDAX ratio improved to 0.9 times, reflecting our ongoing focus on maintaining a strong balance sheet. Our $2,500,000,000 debt reduction plan is progressing well with $500,000,000 already retired. Additionally, we plan to accelerate the retirement of our $485,000,000 senior notes maturing in December. Taking advantage of the no penalty call option, we've elected to retire these notes in September, one quarter earlier than originally planned, saving $7,000,000 in interest expense in 2025. Another differentiator for Devon is our success on the midstream and marketing front.

After quarter end, we acquired all outstanding non controlling interest in Cottondraw Midstream for $260,000,000 This transaction gives us a 100% ownership of the asset and full access to its cash flows resulting in savings of over $50,000,000 in projected annual distributions that would have been paid to our partner. These savings are incremental to our $1,000,000,000 business optimization plan announced earlier in the year, further improving our multiyear cash inflows. Full ownership of Cottondraw Midstream strengthens our competitive position in the basin and supports future growth in one of our most prolific areas. Alongside the Matterhorn pipeline divestiture, this acquisition demonstrates our commitment to creating value and enhancing our E and P operations through our strategic midstream investments. With these transactions, we successfully created value as both a buyer and seller of midstream assets.

Moving forward, we remain open to additional opportunities in the midstream space and creating additional value with our investments. On the gas marketing front, we're focused on maximizing realizations and positioning our gas production to benefit from increasing demand driven by LNG expansion and power generation. In the second quarter, we executed two new agreements that advance these objectives and further diversify our natural gas sales portfolio. The first is a ten year gas sales agreement to an LNG counterparty starting in 2028, under which Devon will sell 50,000,000 cubic feet a day of natural gas at a Gulf Coast delivery point with pricing index to international markets. As LNG build out creates additional demand for natural gas, we expect to pursue more opportunities to add exposure to international price markers.

The second is a Permian gas sales agreement with Competitive Power Ventures, Basin Ranch Energy Center to support its proposed 1,350 megawatt power plant. With an expected start in 2028, Devon will supply 65,000,000 cubic feet per day of natural gas for a seven year term with pricing indexed to ERCOT West power prices. This pricing construct further limits Devon's exposure to the Waha price weakness we've seen in the basin for some time. Now turning to slide nine to touch on guidance. For the second consecutive quarter, we're raising our oil production outlook while lowering capital spending.

We now expect full year oil volumes to range from 384,000 to 390,000 barrels per day, reflecting continued strong well productivity and base performance across our portfolio. Total capital guidance is being reduced by $100,000,000 to a range of $3,600,000,000 to $3,800,000,000 Importantly, our breakeven funding level remains highly competitive at less than $45 WTI, including the dividend. At today's strip pricing, this positions us to generate approximately $3,000,000,000 in free cash flow for the year, underscoring the resilience and flexibility of our business model. I'd also like to highlight the positive impact of the recently passed federal legislation, which provides meaningful tax benefits for Devon. These changes are expected to enhance our free cash flow profile in 2025 and beyond, further strengthening our ability to reinvest in the business and return capital to shareholders.

While our tax rate will be somewhat volatile over the next few quarters as we incorporate the new legislation, we now expect our full year 2025 current tax rate to be about to be around 10%, down from our previous estimate of 15%, adding nearly $300,000,000 in projected cash flow for the year. Looking beyond 2025, we expect to no longer be subject to the corporate alternative minimum tax. As a result, we anticipate our ongoing current tax rate will be significantly lower than previous estimates ranging between 510%. This reduction will provide Devon with increased cash flow of approximately $1,000,000,000 over the next three years assuming a similar pricing environment and capital spend. This is in addition to the $1,000,000,000 of incremental free cash flow from our business optimization plan.

Looking ahead to the third quarter, we expect to build on the momentum established in the first half of the year. Our operational execution remains strong, and we anticipate stable production of 387,000 barrels of oil per day. With the capital efficiency improvements and as new wells come online and optimization initiatives take effect, we expect lower capital costs compared to the first two quarters. As our teams continue to deliver on key milestones, we're confident that Devon is well positioned to deliver another quarter of strong results and create additional value for our shareholders. Shifting gears now to talk about the business optimization plan on slide 10.

On the right side of the slide, you'll see a scorecard tracking our progress. As we achieve milestones that generate additional cash flow, we'll update this graph to provide clear visibility into the timing impact of these benefits. In the course of only four months, we've achieved 40% of our $1,000,000,000 goal. From the dark blue bars on the graph, you can see the progress we've made by category to date. This quarter, we're reducing 2025 capital by another $100,000,000, roughly $75,000,000 of which is directly attributable to our business optimization efforts with the remaining $25,000,000 resulting from deflationary pressures.

As Clay mentioned, our drilling and completion teams are leveraging artificial intelligence to drive capital efficiency while our production teams continue to innovate lift techniques to sustain production levels. On the corporate cost front, we'll retire our $485,000,000 senior notes this year, resulting in $30,000,000 in annual savings to our run rate cost structure. As a reminder, a $100,000,000 of the $150,000,000 target in corporate costs will be met with debt retirement. We expect to achieve this target in the 2026 with the paydown of the term loan. Finishing our business optimization discussion on Slide 11, As we've said before, our intent is to be open and transparent with this plan, communicating often.

We've included more details here on initiatives underway and milestones achieved. With that, I'll now turn the call back over to Rosie for q and a.

Thank you, Jess. We'll now open the call to q and a. Please limit yourself to one question and a follow-up. With that, operator, please, we'll take the first call.

Thank you. Our first question comes from Neil Mehta with Goldman Sachs. Please go ahead, Neil.

Yes. Thanks so much, team. Appreciate all the color here today. We just love your perspective of on getting on the non oil realizations. So I think it was clear as you're executing very well on oil, the netbacks are good on oil.

NGLs and local gas prices have continued to be a headwind for a lot of producers, including you guys. And so as you think about the back half of this year and into next year and then some even some of marketing agreements that you announced here today, what are you doing to try to capture better on the non oil side of the equation?

Neil, it's Clay. Thanks for the question. And one, the acknowledgment of the good work that our midstream marketing teams are doing every day. We highlighted a couple of deals this quarter, but it's just it's on top of all the other good work that we've done. I'll let Jeff dig in a little bit more on those two particular deals, but I think it's a great opportunity just to us to continue to acknowledge the work that we've been doing in this space for quite some time now.

Yes, Neil. This is Jeff. Yes, again, appreciate the question. And as you know well, we've talked about this for a number of quarters in a row now. Our broader marketing specific to our natural gas and again the bulk of our natural gas production obviously comes out of the Delaware Basin today followed by our Oklahoma gas production.

But specifically in the Delaware, our approach has been to move those molecules away from Waha, right? We talked about the weakness that we've seen in Waha for some time. We've been involved with some of our midstream investments and our broader commitment to firm transportation to move molecules away from Waha and to the demand center, specifically to the Gulf Coast. So where we sit today when we look at our Oahu exposure, less than 15% of our gas actually has direct Oahu exposure in Basin. The rest of that we either hedge our exposure or our firm transportation and our firm sales to our counterparties move those molecules away mostly to the Gulf Coast again.

As we look forward between Matterhorn and our Blackcomb you know, commitment that we've made, the pipeline that will come on later late excuse me, in the second half of next year, we're gonna be approaching over a billion dollars of of transport out of basin. So we feel really good about the work excuse me, billion dollar BCF a day. Sorry. A BCF a day of transport, out of basin, which makes us feel really good about the work the team's done, as as Clay mentioned, to really, limit our exposure to Waha on a go forward basis. On top of that, obviously, with the announcements, that that we mentioned today in our opening remarks, we're always happy to see incremental in basin demand show up.

And so the CPV, you know, power gen opportunity is something that we're excited about. Again, relatively small relative to our our our production profile in the Delaware, but every bit helps. And, you know, particularly like the idea of the, you know, the the the index to the power price, which we're bullish on think and that again provides some real diversity to our gas sales portfolio.

Yes. That's great color guys. And then slide 10, always helpful to see how you guys are scorecarding across the buckets of business optimization. Just unpack this for us a little bit. How is that 40% that you've achieved in the first four months compared relative to your expectations?

And what's the next key milestone you guys are really focused on here?

Yeah. Thanks for the question. This is Trey. We're really encouraged by all of the advances that we've seen so far. Obviously, we've made a ton of improvements across several of the categories, And we're going to continue to see a lot of the other categories, the ideas that are being implemented today show up in the financials in the coming quarters.

Some of the examples that I would share, we continue to see our teams lean on technology and AI. The way that all of our employees are working today is changing in real time, and we've seen the adoption and investment that we've made over a number of years really take fire, and we're our leadership team has set an expectation and and table stakes really that we expect all of our employees to use these new tools, and that's showing up in a lot of these business optimization initiatives that we have across the company. One that I would highlight is in our in our production space, and we've got a a new analytics, that we've just kinda had a breakthrough in the last quarter of how we're tying all of our real time streaming data from the field into our, AI systems and into our agents and allowed us to come up with a new way of how we're analyzing our production faults across the company. This is gonna result in millions of dollars of savings, and we've got many of those ideas that are being implemented today that we're gonna continue see grow legs and show up in the financials in the coming quarter.

And Neil, I wanted to pile on that. I want to reiterate something that Jeff mentioned in his prepared remarks. The credibility of this program is really, really important to us. When we announced it back in four months or so ago, we knew we weren't going to get an instantaneous credit of $1,000,000,000 of incremental free cash flow baked into our share price that we needed to earn it. And so there are four things that I wanted to point out that we have specifically set aside as incremental to this business optimization, dollars 1,000,000,000 of annual free cash flow.

So last quarter, we talked about the proceeds from Matterhorn. We are not claiming credit for that in our business optimization model. This quarter, we talked about CDM and the benefits associated with $50,000,000 plus of dollars not going out the door that we are not claiming credit. In addition, we've talked before about the deflationary dollars that will not accrue to this, tally as well. And then the really big one this quarter is the taxes.

Obviously, 300 plus million dollars a year will absolutely enhance our free cash flow, but we're not claiming credit, on this business optimization for those four important things. So think of it this way, we're gonna achieve the billion dollars of incremental free cash flow by the end of next year in a sustainable, ratable way each year going forward, plus these other very, very significant items. And so I think the credibility is worth underscoring about three times just to make sure that you guys are hearing us. We're trying to be as transparent and open, as we can on this and really holding ourselves accountable to achieving some really big things. And what I would tell you is that the team is crushing it. So thanks for the question.

Thank you. Our next question comes from Scott Gruber with Citigroup. Please go ahead, Scott.

Yes, good morning. It's nice to see the full year oil volumes ticking higher here. Does the improvement in output drive you to shift higher how you think about the maintenance level of production in 2026 through the new run rate from this year?

Yeah. Thanks for the question, Scott. Look, we are obviously, next year is a little still too early to talk about. We're not, providing guidance yet. But, obviously, we're doing the work.

The work that we do this year really sets up the work for next year. And what we're still doing is goal seeking for that kind of mid March as the right run rate going forward. So don't think of this as a reset. We're going to have some quarters that are little hotter and a little bit lower, but we're still running kind of that mid three eighties as the right oil rate for us. So this is not a reset going forward.

I guess with the production enhancement efforts, would that not kick higher? Kind of why keep it at mid-3.80s? Or is that just kind of baking in some conservatism?

Yes. So obviously, we're thinking a lot about the macro. We feel like the oil market is just generally well supplied. And what that translates into us is that we think maintenance capital is the right approach from an investment standpoint. So as we accrue benefits on the production side, on the capital side, on the LOE side, what we're attempting to do is is accrue those benefits on the cost side of the equation, ultimately, in a reduced capital benefit.

Now it's hard to do that on a quarter to quarter basis. And so you see, like, we've we've got it next quarter to a midpoint of three eighty seven. Yeah. Don't think of that as as a runaway growth. This is just the incredibly good work of the teams.

What we're trying to do is make sure that we balance kind of moderating that activity, so we're not running away on production. But at the same time, we're being very thoughtful about trying to be ratable and smooth in that outlook and that's what we're solving for when we're looking at '26 and really beyond. Yeah. John's got one more point.

Yeah. And I I think just to add to Clay's comments, the the downshift in in rig and horsepower count that you saw as announced in q one is reflective of that. So as we have these production optimization gains, a lot of times they show up, in a lot of small ways, and we see it more in real time. And to Clay's point, we see that in the next quarter. And so, that's that's the reason you're seeing a little bit higher guide for the next quarter.

But the behavior, that Clay described really manifest in in q one and q two, and you're seeing those those rig drops, here in the second half of the year, and that's reflective of what I think you'll see us do go forward when we have these production wins.

And think about the benefits of that, Scott. I mean, we are all just cherishing this amazing portfolio that we have. And each time we're able to kind of moderate that activity, flatten that base decline, lower that the amount of maintenance capital that's required, that extends that runway even further. So there's many magnitudes of benefit associated with the good work that we're doing on this business optimization.

Thank you. Our next question comes from John Freeman with Raymond James. John, please go ahead.

Thank you. This morning, Landbridge announced a produced water pore space agreement with you all starting in 02/1927. It looks like y'all are getting out ahead of, you know, what could potentially be an issue in in the Permian. I'm just, hoping y'all could maybe elaborate on that deal and how much runway, you see it providing y'all.

Yeah, John. You're you're, exactly right on on us getting out ahead of it. I would just tell you this deal, is very consistent with our water management strategy in the Delaware Basin, and maybe I'll hit that at a high level. So first, it's probably worth noting, just the magnitude of the water production we have in the Delaware Basin. We're managing at any given time, anywhere from a million to 1.2, 1,300,000 barrels a day.

And so the first call on that water really for us is our water recycle and reuse. You know, depending on how many frac crews we have running at any given time, how much third party water demand may be out there, We can send maybe 25 to 30 per 5%, maybe on a really good day, 40% of our water back to recycle, and we'll reuse that in our operations. But beyond that, we've gotta manage that water, and we've done a couple of things over the past few years to be really proactive in that space. One was our joint venture with Waterbridge, predominantly on the Texas side, of the basin. We've since expanded that partnership a bit, on the New Mexico side.

The the other thing that we've done and more predominantly on the New Mexico side is continue to build out our infrastructure into what we call a super system. And specific to New Mexico, we now have the ability to move water from asset to asset bidirectionally. It gives us a lot of flexibility. And then what we do, on the back end of that is we have a lot of strategic partnerships with third parties, to be able to move that water around. And so the deal that you saw announced this morning is, simply one of those, strategic relationships with a third party.

We've really leveraged our Waterbridge JV, to be allow us to to do that. And so in in 2027, when that deal, really becomes effective, we'll now have the ability to move that water, to a part of the basin, that's much lower in terms of pore pressures in the Delaware Mountain Group. And so I see this as a a strategic advantage for Devon going forward. It's a win win for our partners on the deal, and for Devon.

Appreciate the, the color. And then just following up on the, the new gas marketing agreement with CPV. You've got a competitor that's also participating and they disclosed the right to also purchase power from that facility for their own operations. Do you all have a similar agreement in place?

Yes, John. Appreciate the question. We have not negotiated an agreement to purchase power from them at this point in time, but that's absolutely something that our option, frankly, and John can just speak to this in more detail. We just don't have the load on the Texas side of the border and the need for it at this point in time as maybe compared to what we're doing on the New Mexico side. John, you want to add some color to that? Yes.

I think that's right. I don't have a lot of color to add there. But over on the Texas side, we haven't fully electrified a number of our facilities, and that includes, some of our midstream compression, which would really cause our load demand to be, significantly, higher. To that, we also have dedicated substations on the Texas side, good partnership and relationship with Encore. So on a relative need basis, that's not simply something that we have as much of.

Thank you. Our next question comes from Paul Cheng with Scotiabank. Please go ahead, Paul.

Thank you. Good morning. Maybe, Kate, if we can we look at Bakken? Maybe that the data is wrong, but it does look like the well productivity is maybe come down a bit and also from the third party data. So can you give us some idea that are we seeing that it's just a blip or that the deterioration is something that need to work on?

And also whether you have a sufficient scale now after the Graysom acquisition that you think you have? And the second question is that on Eagle Ford that after the dissolve of the joint venture, can you give us some idea that now you reset, I suppose that you reset the base? And how is the cadence on your activity and also your production outlook for that over the next several quarters? Thank you.

Yeah. Paul, I'll this is John. I'll do my best to answer both those questions. So starting in the Williston, really, the phenomenon you're seeing there is, back, in what would be, probably some of the newer public data you're seeing coming from q four. That that was largely our Missouri River pad on the East side of the basin, which is our legacy asset.

Simply put, the geology's higher quality there. You're gonna see, more productive wells. So as we've shifted our activity over to the West side of the basin on the newly acquired Grayson asset, on a relative basis, you're gonna see well productivity, be a bit lower. What I would tell you though relative to our expectations, our well productivity has been, quite good on the West Side of the basin. So very consistent with our expectations and really, no concerns, on our part with with Williston well productivity.

I think second, on your question on the Eagle Ford, if I heard you correctly, yes. There's absolutely been, sort of a a a reset on on our production there. As we closed the BPX dissolution on the first day of the quarter, BPX took a disproportionate amount of the production on that deal while we took more of the upside. And so really, when you look, post BPX dissolution closure, we've got about 55 more wells that we wanna bring on, throughout the course of the year on that asset. That's about 90% in DeWitt, County, on the Blackhawk Field, formerly part of that JV.

And we feel really good, about, our ability to continue to grow production, back to the levels sort of pre split.

Thank you. Our next question comes from Scott Hanold with RBC. Please go ahead, Scott.

Thanks. Hey, Jeff, you kind of mentioned the windfall you all are going to get from the OBBBA. So I think you said

$1,000,000,000 over the next few years. What is the plan on allocating that cash? Like what are you targeting to do with that? Could that be for incremental shareholder returns? Do you would you rather focus on maybe paying off the term loan faster?

But just give me your thoughts on how to allocate that.

Yes, Scott. It's a great question and I appreciate you highlighting the optionality that we're going to have with the incremental free cash flow. Really a great position to be in on a go forward basis. When we look at our financial framework and shareholder return kind of approach, there's as of today, no change to that going forward. So as you know, the priority there is for us to grow and sustain our fixed dividend is kind of the first priority.

We've set out a range on the share repo by quarter of about 200,000,000 to $300,000,000 per quarter. We don't expect to change that at all. And then, of course, as you know, we've got the $2,500,000,000 debt reduction target out in front of us as well. So as we accrue this incremental free cash flow from our business optimization game plan, from the the tax savings that we've seen or expect to see, that will accrue to our balance sheet and will will likely accelerate some of the debt reduction that we have planned here over the course of the next eighteen months or so.

Okay. I appreciate that. My follow-up is on the Anadarko. Paul highlighted, obviously, there's some moving parts both Bakken and Eagle Ford production. But I think the Anadarko stepped up pretty strongly this quarter as well.

Can you tell us where you all are with the JV there and how to think about that production? And obviously, it's got a little bit more of a gas mix. So be interested to hear your kind of thoughts on, you know, investing in that area and and your views on the gas macro.

Yeah. As far as the Anadarko, a lot of what we're doing there is really prosecuting our, Dow JV. So as you recall, that's a a 49 well commitment we kicked off, I believe, here in the second, quarter. And so we've been, prosecuting that activity, with that. The the production growth that you've seen, sort of quarter over quarter there, would have largely been tied to the new well IDs associated with that activity.

Devon Energy (DVN) Q2 2025 Earnings Call Transcript

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