Devon posts highest quarterly profit since 2022 on stronger oil prices, Coterra deal

Devon Energy on Tuesday reported its highest quarterly profit since 2022 that also topped Wall Street expectations, benefiting from its merger with Coterra Energy and a surge in global oil prices.

The conflict in the Middle East, now in its sixth month, has disrupted energy supplies, with benchmark Brent crude averaging 19.2% higher at $89.62 per barrel in the second quarter from a year earlier.

Devon's net income more than doubled year-on-year to $1.91 billion, the highest since the second quarter of 2022, when oil prices surged following Russia's invasion of Ukraine.

The Houston-based shale producer posted an adjusted profit of $1.57 per share for the second quarter, beating analysts' expectations of $1.39, according to data compiled by LSEG.

Devon closed its $58 billion acquisition of Coterra Energy in May, driving up quarterly production to 1.36 million barrels of oil equivalent per day (mmboepd) from 841,000 boepd a year earlier. Its average realized price rose nearly 40% to $88.09 per barrel of oil produced.

The merger with Coterra allowed Devon to consolidate overlapping positions in several major U.S. shale formations, including the Delaware portion of the Permian Basin in Texas and New Mexico, as well as in Oklahoma's Anadarko Basin.

In the third quarter, Devon expects total production to average between 1.66-1.69 mmboepd, with oil output averaging 550,000-560,000 barrels per day. It expects capital expenditure to range between $1.4 billion and $1.5 billion.

"Devon delivered a solid quarter, but softer oil production guidance on higher capex and no asset sale announcement could weigh on shares tomorrow," Siebert Williams Shank & Co analyst Gabriele Sorbara said.