DEVON ENERGY CORP/DE has recently released its 10-Q report. Devon Energy Corporation is an independent U.S. oil and natural gas producer focused on exploration, development and production of oil, natural gas and natural gas liquids. Its operations are centered in the Delaware Basin, Eagle Ford, Anadarko Basin, Williston Basin and Powder River Basin, and the company was founded in 1971 and is headquartered in Houston, Texas.
Management said the second quarter of 2026 was shaped by the May 7, 2026 closing of its all-stock merger of equals with Coterra. The combined company reported second-quarter production of 1,359 MBoe/d, including 503 MBbls/d of oil, and said Coterra legacy assets contributed about 488 MBoe/d in the quarter. Devon reported $1.9 billion of earnings attributable to the company, or $2.03 per diluted share, versus $120 million in first-quarter 2026 net earnings.
Operating cash flow for the quarter was $3.7 billion, and Devon ended the period with $4.0 billion of liquidity, including $1.0 billion of cash. The company retired $500 million of debt, paid $366 million of dividends, and said it had repurchased about 4.4 million shares for roughly $202 million, or $45.48 per share, under its new $8.0 billion buyback program. It also acquired about 16,300 net acres for approximately $2.6 billion in a federal lease sale, expanding its Permian Basin position.
Devon said it remains on track to capture $1.0 billion of annual pre-tax merger synergies by year-end 2027, with about $600 million expected in 2027. For the third quarter, the company expects combined production of about 1,660 to 1,690 MBoe/d, driven by a full quarter of production from the Coterra assets.
Quarterly results improved sharply from first quarter to second quarter 2026. The company said the volume increase added $1.2 billion to earnings, while realized prices added another $918 million. Oil production rose to 503 MBbls/d from 387 MBbls/d, gas production increased to 3,252 MMcf/d from 1,373 MMcf/d, and NGL output rose to 314 MBbls/d from 218 MBbls/d.
Commodity pricing was mixed. Devon’s realized oil price with hedges was $88.09 per barrel in the second quarter, up from $67.94 in the first quarter. Realized gas price with hedges fell to $1.05 per Mcf from $1.68, while realized NGL price with hedges increased to $22.70 per barrel from $17.80. The company said gas pricing was pressured by lower Henry Hub prices and wider Permian differentials, including negative spot pricing at Waha, while oil hedge cash settlements reduced the benefit of higher crude prices.
Hedge settlements totaled a $116 million cash loss in the second quarter, compared with a $57 million loss in the first quarter. Oil settlements were a $321 million loss, while natural gas settlements were a $205 million gain. Devon said it had hedged about 30% of its remaining anticipated 2026 oil production and 25% of gas production, with 2027 hedges covering about 15% of oil and 10% of gas.
Production expenses rose to $1.393 billion from $894 million in the prior quarter. Lease operating expense was $626 million, gathering, processing and transportation costs were $391 million, production taxes were $357 million, and property taxes were $19 million. On a per-unit basis, LOE fell to $5.06 per Boe from $6.48, while gathering, processing and transportation costs rose to $3.16 per Boe from $2.54.
Depreciation, depletion and amortization increased to $1.416 billion from $904 million, driven by merger-related volume growth. General and administrative expense rose to $175 million from $125 million, though G&A per Boe declined to $1.41 from $1.67. Restructuring and transaction costs tied to the merger were $246 million in the quarter.
For the first six months of 2026, Devon reported net earnings of $2.0 billion, up from $1.4 billion in the first half of 2025. Average oil production for the period was 445 MBbls/d, compared with 388 MBbls/d a year earlier, and gas production averaged 1,627 MMcf/d, up from 1,103 MMcf/d. Following these announcements, the company's shares moved -2.58%, and are now trading at a price of $42.915. If you want to know more, read the company's complete 10-Q report here.
