Devon Energy: Independently Moving Forward

The third largest independent producer of oil and gas in the U.S., Devon Energy Corp., reported that the sale of overseas assets and the spike in crude oil prices has increased their profits by fourfold. This great increase in profits caused their shares to reach even greater levels than expected by analysts. In fact, their shares reached their highest levels in five months. This comes as Devon's share prices have dropped 7.2 % this year alone. Although, the jump in shares amounted to 3.5% which was the largest one day leap of any oil and gas company of the 13 among the S&P 500. Devon sold $10 billion worth of BP Plc., Apache Corp., and in Chinese producer Cnooc Ltd.

I believe that Devon Energy's success is due, in large part, to being in the right place at the right time. While it made many valuable transactions in international asset sales, this, combined with a recently stronger dollar and federal stimulus that will buy $600 billion in government bonds makes Devon's success due to more than simply wise business practices. And, Devon is not the only company to back out of major overseas endeavors in recent days. In a similar move toward more domestic concentration of production, PDVSA sold great stakes it had in US oil deals; although, PDVSA also reinvested some of that into oil companies in Belarus and Syria. Even still, this recent move by Devon does seem to be the right move because the company will have greater control and oversight into its production; enabling much needed boost in productivity.


Sources: Image, Bloomberg, Reuters