Devon Energy executives reported a solid first quarter with the highest margins coming from their Eagle Ford assets. The company’s focus has them on track to produce cost saving of more than $1 billion this year.
Related: Devon Energy to Cut 1,000 Jobs
In the midst of tough conditions, Devon’s ‘lasor-focused’ efforts have delivered significant cost reductions and accelerate efficiency gains. First quarter highlights included a net production of 107,000 Boe per day and operating costs of $58 million, an 18% reduction year over year.
“In spite of the challenging industry conditions, Devon achieved another high-quality operating performance in the first quarter as we continued to take the appropriate steps to deliver significant cost reductions and accelerate efficiency gains across our portfolio. These successful efforts resulted in production exceeding the midpoint of guidance for all products and operating costs declining by more than 20 percent year over year.”
Eagle Ford Operations
Devon’s Eagle Ford operations produced the highest per‐unit margin of any its asset, averaging $13 per Boe, with margins approaching 70% of upstream revenue.The company’s DeWitt County ‘s 50,000 acres are very economical and by far one of the best places to be operating. That asset alone generated $78 million in free cash flow during the first quarter.
Other first quarter highlights include:
- Drilling times improved by >55% compared to the 2014 average
- A record rate of 26 wells per rig line per year achieved this quarter
- Assets generated $78 million of free cash flow and remain on pace to deliver >$250 million of free cash flow in 2016
- Raised full-year production guidance by 3 percent
- Reduced LOE costs by 21 percent year over year
- Lowered 2016 operating cost outlook by $50 million
- Improved balance sheet strength with liquidity increasing to $4.6 billion
“The Eagle Ford has taken a larger – projected to take a larger drop from Q1 of 2016 to Q2 of 2016. But, again, as we bring – we’ve taken a completion holiday there as we bring completion units back into the field in the latter part of Q2, we’ll see that production stabilize from Q2 through Q4 in the Eagle Ford. Month to month, it’s going to be pretty cyclical just depending on the pace of new wells that we bring on.”
Devon has plans to spend $200 million developing the Eagle Ford this year compared to $1 billion on its Eagle Ford asset.
In February, Devon announced layoffs of 20 percent of its workforce, or 1,000 employees company wide.