Devon Energy (DVN) topped Q2 oil production and earnings estimates, but its second-half 2026 outlook could disappoint investors, TPH Energy Research said in a Wednesday note.
Devon reported production of 1.359 million barrels of oil equivalent per day, topping the Street's 1.344 million boe/d but slightly below TPH's 1.363 million boe/d, according to the note.
Oil production reached 503,000 barrels per day, exceeding TPH's 502,100 b/d and the Street's 497,300 b/d, while capital spending totaled $1.269 billion, below both forecasts, TPH said.
Adjusted earnings before interest, taxes, depreciation, amortization and exploration expenses reached $3.48 billion, topping TPH's $3.47 billion and the Street's $3.36 billion, according to the note.
Adjusted free cash flow totaled $1.66 billion, broadly matching expectations, while clean earnings rose to $1.57 per share from TPH's $1.48 estimate and the Street's $1.40, TPH said.
TPH expects a muted market reaction because Devon announced no asset sales, although the firm still expects multiple transactions before the end of 2026.
The firm added elevated investor expectations could overshadow the second-half outlook, even as management has taken a conservative approach in recent quarters.
TPH expects seasonal factors and project timing to support stronger Q3 activity before operations slow in Q4, partly because of fewer net turned-in-line wells.
Devon repurchased $197 million of shares at an average price of $46 per share during the seven weeks after the merger closed and reduced debt by $1.25 billion through early third quarter, according to TPH.
For Q3, Devon expects production of 1.660 million boe/d to 1.690 million boe/d, including 550,000 b/d to 560,000 b/d of oil, with capital spending of $1.4 billion to $1.5 billion, the note said.
TPH forecasts Q3 production of 1.7 million boe/d, 568,300 b/d of oil and $1.389 billion of capital spending, while the Street estimates 1.666 million boe/d, 560,900 b/d and $1.407 billion, respectively.
For the second half of 2026, Devon expects production of 1.630 million boe/d to 1.690 million boe/d, oil output of 550,000 b/d to 560,000 b/d and capital spending of $2.7 billion to $2.8 billion, according to TPH.
TPH projects second-half production of 1.718 million boe/d, 572,000 b/d of oil output and $2.72 billion of capital spending, compared with Street estimates of 1.672 million boe/d, 562,200 b/d and $2.79 billion.
Devon also guided for 240 to 260 net turned-in-line wells during the second half, below TPH's forecast of 271, according to the research note.
Price: $42.44, Change: $-1.61, Percent Change: -3.65%