Devon Energy Corporation: 2Q26 Earnings Preview - First Look At Post-Merger Performance

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Devon Energy Corporation: 2Q26 Earnings Preview - First Look At Post-Merger Performance

E 1.47 1.10 -25 1.46

Anadarko production, we estimate a potential ~$4.0Bn valuation at the midpt. of Q3E 1.70 1.31 -23 1.26

the valuation range for recent transactions. Q4E 1.68 1.55 -8 1.31

12/26E 5.54 4.58 -17 5.31

2H26 Outlook. DVN's new 3Q/2H26 outlook will show a full quarter's impact of 12/27E 7.43 6.29 -15 5.19

the DVN/CTRA combination. 3Q26 production is expected to be slightly lower 12/28E 7.99 7.22 -10 5.58

than 4Q26, owing to DVN's well timing. 3Q/4Q26 quarterly capex is expected to

Josh Silverstein be at a similar level , with DVN operating 31 rigs and 10 frac crews across the

Analyst

combined asset base. josh.silverstein@ubs.com

Capital Allocation. Alongside its release of its updated outlook (note), DVN set +1-212-713 3513

its capital allocation framework to return 70% of its FCF to shareholders through Peyton Dorne

its dividend and buyback. We expect DVN steps into this plan in 2H26, but with Analyst

the $2.6Bn outlay for the NM lease sale (note), model just $250mm in buybacks peyton.dorne@ubs.com

for 2Q26. DVN's $1.0Bn term loan is due in 3Q26, with its repayment to enable +1-212-713 4359

DVN to show visible debt reduction as it further integrates CTRA. William Barber

Associate Analyst

Updating Estimates and PT. We lowered our FY26/FY27 WTI forecast to $79/ william.barber@ubs.com

$71/bbl and our FY26 HH forecast to $3.75. As a result, our FY26/FY27 Adj. +1-212-713 5553

EBITDAX forecasts decrease by 9%/8%. We adjust our PT multiple from 4.25x to

4.5x as we give DVN a higher multiple to account for its above-average forward

Highlights (US$m) 12/23 12/24 12/25 12/26E 12/27E 12/28E 12/29E 12/30E

Revenues 15,258 15,940 17,188 19,633 22,559 23,229 23,536 23,846