HIGHLIGHTS
- Targeting $1 billion in annual pre-tax free cash flow improvements
- Business optimization plan underway to improve margins and capital efficiency
- Plan includes improvements to base production performance, midstream commercial terms and corporate costs
- Expected to be completed by the end of 2026, with 30 percent achieved by year-end 2025
Devon Energy has announced its business optimization plan to improve margins and capital efficiency, growing free cash flow generation and driving significant shareholder value.
'I’m excited to announce the details of our business optimization plan, set to enhance margins and deliver $1 billion in annual pre-tax free cash flow improvements by year end 2026,' said Clay Gaspar, president and CEO. 'This milestone reflects the commitment, ingenuity, and talent of our employees, whose hard work and ongoing efforts continue to drive Devon’s success. This is an opportune time for us to take on this initiative, as we leverage recent leadership changes across the organization, bringing fresh perspectives and new ideas. Given the challenging market and shifting competitive landscape, this is the right moment to focus internally and improve our profitability. Importantly, this effort will create significant shareholder value by expanding our free cash flow generation and enhancing the durability of our business.'
'Our organization has been diligently advancing this initiative and has already secured marketing agreements to drive a material margin improvement through year-end 2026. Concurrently, we have implemented technological advancements, including advanced analytics and process automation, that are further enhancing our operating performance. These combined efforts are anticipated to achieve approximately $300 million of cash flow uplift by the end of 2025, reinforcing our financial resilience. We have clear visibility into the remaining objectives and are highly confident in our ability to execute this plan effectively,' Gaspar added.
PLAN PATHWAY AND TIMING TO DELIVER
Devon is committed to improving its pre-tax free cash flow generation by taking steps to deliver $1.0 billion in annual improvements. The plan includes actions to achieve more efficient field-level operations and improvements in drilling and completion costs while improving operating margins and corporate costs. Approximately 30 percent of the estimated improvements are expected to be accomplished by year-end 2025, with the remaining savings realized by year-end 2026.
The business optimization plan includes improvements in the following categories:
Capital Efficiency – $300 million
Capture efficiencies through design optimization, cycle time reductions, facility standardization and vendor management.
Production Optimization –$250 million
Use advanced analytics to minimize maintenance events, reduce downtime, flatten production declines and optimize operating cost structure.
Commercial Opportunities – $300 million
Leverage scale to enhance commercial contracts to increase realizations, improve recoveries and lower GP&T cost structure.
Corporate Cost Reductions – $150 million
Reduce interest expense and streamline corporate cost structure.
'We are committed to transparency and accountability and will provide stakeholders with periodic updates on our progress,' Gaspar concluded.
The company will provide additional details around the optimization plan during its scheduled first-quarter 2025 earnings conference call on Wednesday, May 7, 2025, at 10 a.m. CDT (11 a.m. EDT). Also provided with today’s release is a supplemental presentation, which is available on the company’s website at www.devonenergy.com. Click here
Source: Devon Energy
