Devon Energy: From E&P Conglomerate to Core: A Path to Re-Rating Through Portfolio Streamlining

Research evidence excerpt

Devon Energy: From E&P Conglomerate to Core: A Path to Re-Rating Through Portfolio Streamlining

Arun Jayaram AC North America Equity Research

(1-212) 622-8541 04 August 2026 J P M O R G A N

arun.jayaram@jpmchase.com

synergies), how the market views the assets, and the strategic fit within the broader

portfolio.

• FCF profile by asset. We have undertaken a bottom-up build of the company's FCF

profile and analyzed the FCF profile by asset, layering in production, asset-specific

pricing hubs, and the cost structure by basin (including LOE, GP&T, G&A, and cash

taxes) to arrive at a FCF estimate for each individual asset on an after-tax basis. Our

analysis shows that the Delaware Basin is the clear engine of the combined entity,

generating $4,911mm/$4,921mm of FCF in 2027/2028, followed by the Marcellus at

$941mm/$1,098mm and the Rockies at $919mm/$888mm, while the Anadarko

($390mm/$421mm) and Eagle Ford ($325mm/$280mm) assets contribute more

modestly to the consolidated FCF stream. Importantly, while we have allocated corporate

G&A on a per Boe basis by asset in our FCF calculations, we note that asset sales typically

do not carry a significant G&A component, such that the FCF attributable to any divested

asset would likely screen higher in a transaction context than our modeled figures. In

addition, our calculations are expressed on an after-tax basis. Please note that our analysis

includes corporate G&A costs by basin, but does not take into account interest or

exploration related costs.

• Asset valuation and implied multiples. We believe the market is increasingly focused

on whether the company can monetize one or more of its non-core assets to streamline

its portfolio. We would view this as positive to the story as investors would get greater