Devon Energy's (DVN) Q4 Earnings to be Hit by Harsh Weather
Devon Energy Corporation DVN is set to report fourth-quarter earnings on Feb 14, after market close. This oil and gas company delivered an earnings surprise of 2.35% in the last reported quarter.
Let’s discuss the factors that are likely to be reflected in the upcoming quarterly results.
Factors at Play
Devon Energy’s domestic focus and multi-basin, high-quality assets ensure strong production volumes. The acquisition of RimRock Oil and Gas LP in the Williston Basin is likely to be accretive to its fourth-quarter earnings.
However, the severe winter weather in Devon’s service territories adversely impacted production volumes and the Williston Basin operation was most impacted by severe weather conditions. Due to the impact of weather, Devon’s production volumes in fourth-quarter will be lower than the previously expected range of 640,000-660,000 Boe/d.
A high percentage of DVN’s fourth-quarter production volumes are liquids. To safeguard against the sudden fluctuation in commodity prices, Devon has hedged 20% of its production volume, which will safeguard it against price fluctuation.
The Zacks Consensus Estimate for fourth-quarter oil production is pegged at 323,000 barrels of oil equivalent per day (Boe/d). The Zacks Consensus Estimate for fourth-quarter natural gas liquid (NGL) production is pegged at 158,000 Boe/d.
Devon Energy expects total production for the fourth quarter to be 636,000 Boe/d, including 316,000 barrels of oil per day. The company lowered its fourth-quarter production expectation by 2% or 15,000 Boe/d due to the impact of severe winter weather across its operations.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Devon Energy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you will see below.
Devon Energy Corporation Price and EPS Surprise
Devon Energy Corporation price-eps-surprise | Devon Energy Corporation Quote
Earnings ESP: Devon Energy has an Earnings ESP of -3.49%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Devon Energy currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Investors can also consider the following players from the same sector that have the right combination of elements to beat on earnings in this reporting cycle.
ProPetro Holding Corp. PUMP is likely to come out with an earnings surprise when it reports fourth-quarter earnings on Feb 21, 2023. PUMP has an Earnings ESP of +21.3% and sports a Zacks Rank #1.
ProPetro Holding reported an average earnings surprise of 64.03% in the last three quarters. The Zacks Consensus Estimate for 2022 earnings of ProPetro Holding imply year-over-year growth of 160.4%.
Viper Energy Partners LP VNOM is likely to come out with an earnings surprise when it reports fourth-quarter earnings on Feb 21, 2023. VNOM has an Earnings ESP of +3.57% and has a Zacks Rank #3.
Viper Energy Partners reported an average earnings surprise of 51.04% in the last four quarters. The Zacks Consensus Estimate for 2022 earnings of Viper Energy Partners imply year-over-year growth of 227.6%.
Cheniere Energy, Inc. LNG is likely to come out with an earnings surprise when it reports fourth-quarter earnings on Feb 23, 2023. LNG has an Earnings ESP of +18.82% and has a Zacks Rank #3.
Cheniere Energy’s long-term (three- to five-year) earnings growth is 51.67%. The Zacks Consensus Estimate for 2022 earnings of Cheniere Energy imply year-over-year growth of 138.5%.
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Devon Energy Corporation (DVN) : Free Stock Analysis Report
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