Devon Energy Corp. issued its Outlook for the rest of the year following its recent merger with Coterra Energy, showing it plans on spending nearly $5 billion in drilling efforts, most in the Permian Basin.
“We are excited to share our initial outlook for the combined company,” said Clay Gaspar, president and CEO. “We are carrying a sense of urgency into all aspects of our business, including integration, execution, and our portfolio review. Today’s guidance underscores the strength of our newly combined platform as one of the largest and most efficient E&P companies. Optimizing our portfolio remains a top priority, and a complete review of our strategic and financial criteria is well underway. We are confident in our ability to translate the power of this combination into durable free cash flow growth and improved shareholder returns.”
Devon leadership indicated the company plans on expenditures of $2.9 billion in the Permian Basin where it has most of its operations. Its guidance includes $275,000 million in the Anadarko Basin which includes drilling in Oklahoma.
Another $875million will be spent in the Rockies.
CAPITAL EXPENDITURES GUIDANCE
Quarter 2 Full Year (in millions)
Permian $2,900
Rockies $875
Eagle Ford $475
Anadarko $275
Marcellus $225
- Combined Production Outlook: Production is expected to average 1.380 million barrels of oil equivalent per day for 2026, including oil volumes of 500,000 barrels per day.
- Capital Investment Plan: Full year 2026 capital spending is expected to total approximately $4.9 billion, with more than 60% allocated to the Permian Basin. The plan reflects a disciplined activity level of 31 rigs and 10 completion crews, with 460 to 480 net wells expected online, optimized for free cash flow generation.
- Enhanced Shareholder Returns: The company is targeting the return of up to 70% of free cash flow to shareholders, through a quarterly fixed dividend of $0.32 per share and the previously announced $8 billion share repurchase authorization.
- Balance Sheet Strength: Maintaining an investment grade balance sheet with ample liquidity to fund the capital program through commodity cycles. We expect to retire $1.25 billion of debt in 2026.
- Portfolio Review Underway: We will provide timely updates as we move expeditiously to concentrate the portfolio around our premier Permian position, enabling improved shareholder returns.
- Synergy Capture: The company is accelerating synergy capture and expects to capture $600 million in 2027 and is on track to deliver $1.0 billion of annual pretax synergies on a run-rate basis by year-end 2027. Shared best practices and technology are driving material progress on capital optimization, operating margin improvements, and corporate cost structure.
- SECOND-QUARTER AND FULL-YEAR 2026 GUIDANCE
Note: Devon’s Q2 and full-year 2026 guidance reflects standalone Devon operations plus Coterra beginning on May 7, 2026. - PRODUCTION GUIDANCE
Quarter 2 Full Year
Low High Low High
Oil (MBbls/d) 485 505 490 510
Natural gas liquids (MBbls/d) 305 315 315 330
Gas (MMcf/d) 3,150 3,250 3,300 3,400
Total oil equivalent (MBoe/d) 1,315 1,360 1,355 1,405 - CAPITAL EXPENDITURES GUIDANCE
Quarter 2 Full Year
(in millions) Low High Low High
Permian $2,900
Rockies $875
Eagle Ford $475
Anadarko $275
Marcellus $225
Upstream capital $ 1,225 $ 1,275 $ 4,675 $ 4,825
Midstream and other capital 25 75 125 175
Total capital $ 1,250 $ 1,350 $ 4,800 $ 5,000
PRICE REALIZATIONS GUIDANCE
Quarter 2 Full Year
Low High Low High
Oil – % of WTI 98% 102% 98% 100%
NGL – % of WTI 21% 25% 24% 26%
Natural gas – % of Henry Hub 10% 20% 40% 50% - OTHER GUIDANCE ITEMS
Quarter 2 Full Year
($ millions, except Boe and %) Low High Low High
LOE per BOE $ 5.00 $ 5.20 $ 5.00 $ 5.20
GP&T per BOE $ 3.20 $ 3.40 $ 3.00 $ 3.20
Production and property taxes as % of upstream sales 6.5% 7.5% 6.5% 7.5%
Exploration expenses $ 10 $ 20 $ 70 $ 90
Depreciation, depletion and amortization per BOE $ 11.50 $ 12.00 $ 11.00 $ 11.50
General and administrative expenses per BOE $ 1.30 $ 1.40 $ 1.35 $ 1.45
Financing costs, net $ 125 $ 135 $ 495 $ 515
INCOME TAX GUIDANCE
Quarter 2 Full Year
(% of pre-tax earnings) Low High Low High
Current income tax rate 19% 21% 13% 15%
Effective income tax rate 23% 25% 22% 24%
