Devon's profits beat expectations for the quarter, but forecasts lower production after winter storm

Devon Energy, a U.S. shale producer, narrowly beat Wall Street expectations for the fourth-quarter profits and forecast lower production in the first-quarter after severe winter storms disrupted operations throughout?key producing regions.

Analysts and traders estimate that the winter storm knocked down as much as two million barrels of oil per day in the U.S., or 15% of the national output. Volumes began to recover before the winter storm, which highlights the magnitude of the disruption faced by producers like Devon.

The global crude oil price has been?pressured? by the growing fears of a glut, and the prospect of more Venezuelan barrels coming back to the market.

Devon Energy and Coterra Energy announced earlier this month a $58 Billion merger. The goal was to increase scale and efficiency in the face of a waning oil price.

The companies aim to save $1 billion annually in pre-tax revenue by 2027.

After the bell, shares of Devon dropped 1%.

PRODUCTION HIT

Devon expects its first-quarter oil production to range between 823,000 and 843,000 barrels equivalent per day.

The fourth-quarter production increased to 851,000 boepd from 848,000 a year ago.

In the three-month period ending December 31, average realized prices included cash settlements were $34.52 per barrel of equivalent oil, compared to $40.32 a barrel equivalent oil a year ago.

WTI crude is expected to fall by about 20% between 2025 and 2035,? and by 8% during the quarter of October-December.

Devon has already achieved 85% of the $1 billion target for cost savings and is on track to achieve the entire goal by 2026.

According to LSEG, the?company reported an adjusted 'profit per share of 82 cents compared to the average analyst expectation of 81 cents. (Reporting by Arunima Kumar in Bengaluru; Editing by Sriraj Kalluvila)

(source: Reuters)