Devon Energy (DVN) 15 Feb 232022 Q4 Earnings call transcript

Welcome to Devon Energy’s Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. This call is being recorded.

I would now like to turn the call over to Mr. Scott Coody, Vice President of Investor Relations. begin. may you Sir,

quarter thank make our today. Also slides President everyone an joining our Officer; Last remarks, that other prepared and call for management found and And in for be on senior Throughout to XXXX. support are earnings joining the the presentation the the results Gaspar, our can call night Rick CEO; team. a our and today we and these cover our Muncrief, on Clay you morning. Chief outlook me Jeff our for Devon Chief to will the Ritenour, few to today, call website. Financial us release of and references on Operating members our Good we presentation issued earnings Officer;

Comments materially our could forecasts include U.S. and law. estimates These forward-looking assumptions, are actual are cause plans, results uncertainties securities that from risks statements subject forward-looking differ to statements. under comments that today will and to

take turn Please and that, cautionary With factors risk to materials. earnings SEC and I'll in language our call provided filings over Rick. of the note the

to Thank us. We appreciate time It's this here morning. you, taking the great Scott. everyone to be join

three key year. XXXX, the today, will for production the upcoming our cadence and in I On strong of record-setting performance the call in outlook and topics: cover the XXXX, have we our capital

X, which results I'd with, begin our like to X turn cover to and to the Now attention past your for year. Slide

XX-year to best steps plan. And Devon objectives the depth important financial our during with accomplishments. achieved capital asset We quality As of delivered the Energy, associated company's portfolio. in took the was our we outstanding of operating disciplined all you XXXX year and prestigious performance can see, strengthen another history. for year our the We

of a show This course and by over resulted doubled timely stock great XXXX from acquisitions than per on visualization has that we XXXX. slides X oil Slide of growth advanced production buybacks. X% record solid more the the year-over-year. combination execution since The of accretive Production a delivered to share

captured commodity the streamlined a S&P than on favorable of substantial This of structure record XX% for margin, capital impressive expanding and cost unit Our year-over-year. a year. cash return doubling the flow previous by per translated benefit Returns employed at set capital year. an new margins billion high XXX full company into outpaced the efficiency profile in strong a reaching more prices, XXXX, this all-time $X free

the at operational premier accomplishments in for Devon congratulate to type as differentiates want team of one performance excellence and Devon of financial entire the these I XXXX. the U.S. This in companies energy

other for market. On versus highlight Slide we the in our year key have around total included cash XX% returns comparison reached for investors. market-leading to the Another deliver a cash of that we X, was payout the XXXX opportunities

can see the red of As and of than in sector in more XXX. you the sector Devon's vastly double that portion the to every bar, the superior was dividend S&P payout energy

discount repurchase share shares by count program. we By buyback the growth for just we high-yielding share through execution $X also However, that investors during since program authorization inception a upsizing I be and billion year, reduced our quick X% share are add as want a compounding to our dividend this we the twice of substantial story, are levels. outstanding not current per security trading to to

accretive best Ford complementary in valuation oil were fields. top-tier our supplemented portion of taking also highly prolific growth capture toward excess attractive deploying and part These acreage, met and Eagle the and acquisitions by cash these M&A of unique in a we XXXX to in the resource Williston share our We an existing per secured advantage opportunities. of and and

plan our While successfully shareholders. demonstrate transactions can value these to come way, another by, for tough create

shift value focus strategy. we not driven that At as per want our we Devon, the there's share our to XXXX, are XX, disciplined by be creation, to volumes. I no Slide to pursuit change clear On produced of

For program cash production, sustain the capital high generate flow have on and significant returns be free a for upcoming to employed designed deliver consistent that year, harvested capital we can shareholders.

two through the outlook. to volumes is of day on Now track highlights a reach half XXXX the of share we on XXXX. let's of production, share our for Beginning run tailwinds BOE well-timed growth deliver oil. approximately rate our our build which to per an once to year, expect an throughout from basis per repurchases Combined full average some volumes in to are the again of XXX,XXX high single-digit with with and XXXX, acquisitions, attractive XXX,XXX

range showcases capital This investment billion in XXXX to from level The the $X.X oil self-funded free $X.X higher capital at with as Xx requirements as levels deliver as WTI expected funding of as and with is production billion flow key in a low durability price. to cash yield this indices these breakeven than pricing screens that profile the low model an attractive $XX required being other to positions our market. much business us

this strong the payout to an in fixed dividend, cash includes our prioritize XX% March. hike free of With beginning our which dividend continue flow, funding to we will

after steps cash also balance sheet. take plenty will buybacks further We dividend have our share to of to the or opportunistic improve excess evaluate

today's and like Lastly, trajectory on the key comments I as to XXXX. end profile on through Slide production progress few a we thoughts capital with would our of XX, spending

Delaware by midyear, elevated of is be expected be elevated to wrapped half addition spending Basin. over frac due of to resulting up with spending fourth planned for XXXX. first half we activity Beginning slightly the second the of This Delaware in a completion the temporary capital in reduced to in the the in year capital, crew the

volumes specifically first Looking at production, BOE per XXX,XXX expect we quarter to approximate day.

This amount year. expected timing be online first, to quarter. factors: the expect the activity, will first wells temporarily be lowest to production gross-operated in the Our quarterly the around we by to quarter limited during due is of our three bring XX for

more up the ramp over XX% from the roughly wells However, first with quarter per of online activity quarter. remainder compared to XXXX here does

due in a near-term around Another first a impacting estimate area. some is volumes quarter third-party the outage We limit BOE compressor with by per these factor area, to temporary Basin in Stateline station production infrastructure will at outages the Delaware interruptions XX,XXX along minor midstream in the day. downtime

we However, the the and resolve by expect to these resume issues quarter. operation fully end of

quarter. is across limit expected also our facilities we BOE ethane forecast volumes is the reject quarter. during to by This at per processing roughly Lastly, assuming portfolio elect to that our first the in XX,XXX several day

roughly of due BOE that remaining fully quarter expect first an is and our of here will back to be we do XXX,XXX to activity and infrastructure, increase quarters few takeaway timing key day. over average production held recover volumes while to per a The bit XXXX of the

XXXX summary, to value tremendous XXXX the industry's shareholders. since XXXX for first our cash be record amount in XXXX, was a for we very and great return have first for created in another year, year excellent of So one is pointing shaping unveiled mark up we was late Devon. books the

U.S. and and grow a economies production, generational among demand sanctions low anchored still The outlook of our rise belief energy beyond multiyear my in discipline products a decade XXXX as inevitable the in post-COVID. capacity, conviction the normalize are underinvestment, is of This ongoing from also upcycle. a exceptionally supplying in on for constraints global by is producers bright that stages OPEC early given fiscal spare Russian we global

favorable I up appreciation demand more fully another or rediscover and set Devon. expect this for equity catalyst like as supply highly our be and names profitable to appreciation energy investors value-oriented

XXXX. to to now a I activity Clay in the cover will that, regarding over results operational turn call With details Clay? and more our capital few

Thank you, morning, Rick, everyone. good and

In operational Devon as to also XXXX our of well. run addition execution a financial strong results, continued strong

including several new production evidenced all-time another XX, that high for well this productivity underpinned year As in accomplishments of on you a can noteworthy see was Delaware. Slide the world-class by was by oil

low-cost our Devon's and record over oil-weighted production to rates XX% flow. low us cash capture allowed maintain margins mix, asset just base, coupled of reinvestment of with

with year. We and drilling combination efficiently two the our of through integrating property seamlessly resource acquisitions in XX% reserves also advancing XXXX proved the during strong expanded results by base

XX. Slide to Flipping

these this that and space. us the entire results can the You also operating 'XX echelon top in efficiency crowded see for industry, competitive strong in Devon of capital in place differentiating

demonstrate capital the achievements the to and power operational the most extract success every value process rigorous through of these our These asset of allocation portfolio, of advantaged of our out the Devon's business assets phase the execution. people across quality of superior

prepared I For of of plan the 'XX remarks, objectives catalyst and to our capital remainder plan. operating key my the discuss

maintain very full in acquired compared to Eagle with Ford. as fourth activity the quarter a similar of we the 'XX, first which 'XX, assets level and recently our was operations plan of to Basin quarter Williston For the

placed online XXXX. consistently year, run Overall, resulting approximately the in XXX wells rigs XX we throughout new to plan in

plan, our Turning our operate funded this across the of year. the the on our Eddy will portfolio, XX XX% representing To the acreage and sweet the in to this Lea total of we roughly for be Stateline receiving Basin again, in XX. Slide spots Southern most in with top capital of execute will Once funding. Counties footprint Texas, area Delaware budget asset rigs

Wolfcamp Approximately XX% Spring our in remaining of that our in and basin. delineating inventory deeper upside while the high-return and depth development XX% Wolfcamp be allocated quality will the in the to will opportunities add Bone activity towards towards a allocated capital Upper will be of the

high-quality the from we productivity this we brought wells the program few online to Importantly, be past have well years. consistent with expect over very overall

across Delaware points marketing an of of We upcoming diversifying maximize us year. are basin. to production outlets the the allowing and constraints multiple for to in in our sales also done team the avoid takeaway excellent transportation many well value for the job has positioned The

of the -- from protected Brent of Oak's free and Christi. gas to flow combined with Coast drive oil premium strong by we from GP&T expect is low by XX% basis swaps. around This firm margins year With gas in access pricing our either pricing, Pin plus Delaware LOE structure our takeaway contracts, benefit this revenue me, Corpus to regional per in at specifically constraints advanced another of export will Looking approximately production, Gulf the cost excellent BOE franchise excuse cash or volumes, terminal $X through asset.

And this provide would first to infrastructure a the downtime Delaware. slide, our in thoughts I like more on quarter lastly, few on

damaged late area [DI] electrical on and in a map, we severely compressor the unit. out the system of in the our stations Stateline that at January, pointed had one the As fire

The cubic per the of day to component station a compressor our in in is operations lift gas the centralized facility area. key basin with our and XX capacity is largest operated feet million surrounding

We the repairing first of impact production on we XX,XXX necessary the disruption other replacement facility. site expect the in the have third-party a per in team BOE midstream currently With negative and is area, downtime this equipment have secured and to quarter. day

and safety we production have this the on With the fully production affected any expect expect not into focus recovery, reaction and by quick up time the do drag and second mid-March, the quarter. team's restored to facility negative back to we and impacts have

moving and job XX quarter fourth Slide operations has on BOE to production resulting to integrating into doubling XX,XXX Ford. the great our Turning acquisition the per Validus nearly a to day. The Eagle in our done team

the just accounting for capital this role of Ford a our will capital bigger the total scale, allocation With increased Eagle year, our in over in XX% play spend. much upcoming

acquired remaining During to of in JV with our X-rig our a deployed the XX% County in recently the in program [WPX] DeWitt we the Karnes invested acreage towards year, County. steady plan with partner, run developing capital activity

XXXX. Overall, maintain in activity production designed this development-oriented is to steady

asset trajectory, production will tighter a of this and upcoming upside from in resource the beyond redevelopment the key appraisal be refracs. the catalyst for continued spacing Looking year

results play time. from more prolific lot oil be this recovered indicate a there's over Early to

expect important the data in catalyst more resource points, I get expansion we near this to commentary provide on As future. more

approach Dow. larger with to million well XXXX, returns the $XXX Moving and completions of Anadarko design Basin. the In the spacing delivered consistently with team's benefit triple-digit of our wider carry

and the the allowing projects once these co-development condensate in harvesting program operated profile we ahead returns plan throughout the carried expected the amounts us value by placed expect to of result creation new formations XXXX, as in once of play. Dow. The look of the window steady Woodford continued cash Meramec be to significant program online, XX very around flow. to of focused to the I is of again steady primarily while deploy This a we year on a maintain free wells rigs As X will carried strong, again production

acknowledging by both our I Williston few the Powder River the For begin through and in did Basins, extremely weather to the fighting challenging the conditions field job tremendous over months. want personnel past

averaging production in the and artic While Basin. due the Powder resilient, quarter operations XX,XXX certainly these business in assets collectively the was conditions, fourth BOE per slowed from between River to the Williston were the these day

plays XX% across XXXX, the capital this of evaluate drilling, asset of to approximately to handful infill million Approximately at In the these around low-risk Basin. year. XXXX, in spend and with wells deployed XX the capital during will Williston for flow placed a through be X/X in will today's ahead two new the are our of capital refrac online approximately Looking Rockies efficiently reside test, activity objectives resource production sustain cash generate of pricing. upside $XXX resulting

but pilots zones In also success taking in landing only spacing the the not completion our X These from to upon would us the progression help designs. tests designed next help build of objective the the up is lateral better Powder, step optimal inform last wells by and to Niobrara year spacing unit. us of X-mile per understand with

that here the is providing we XXX,XXX-acre net growth one takeaway Powder important Devon a in of emerging future. an North fairway the of the for and few position in the key is America, oil plays have The oil oil core catalyst

Overall, have deliver up lined our top-tier we're with programs we accustomed for the capital refresh year, the to XXXX. the add well believe expect as and these depth XXXX. also I about we continue in investors execute of very projects efficiency to high-quality of become that prospects on inventory We're to to. in slate have we upcoming positioned excited

won't previous through reminder the two visual I've want key of so topic I upside today, and potential during emphasize depth length of on this good is slide. Slide do takeaways but go calls, details I XX. Devon's at A this from to covered inventory

not roughly at to identified I development highlight year the of to have us end XX. we does inventory this at mid-cycle that high-return deliver competitive results First, cliff a XX future. of positions years off And evaluated for inventory This prices. highly want foreseeable inventory fall the secondly,

that refresh diverse the derisk our many We over upside expect to exist systematically this time as assets. set of characterize opportunities inventory and we successfully across

as side Slide on recently well the lastly, long-term significant This of outlined towards report meaningful in And meeting strides XX, including details on are make these targets. mid- aggressive right performance ESG highlighted environmental we've as Devon's the those as to taken and continuing targets, we our sustainability report. steps our that comprehensive published slide

in in our way, to commitment operations. on really providing Our the long-term carbon critical to actions intensity first, demonstrate the mandates: the have second, we and proud right of reduction the and balancing which conscious sustainable the way. power investors; of placed priority economy; world's third, energy do compelling three I'm team's of environmentally provide this means returns to doing our an all business

of You continue can on expect these the imperatives. raise to all three bar to Devon

for With Jeff that, I'll turn Jeff? the the financial to call review. over

as today Thanks, of financial discussing flow head we priorities XXXX allocation Clay. cash to XXXX. the my our like time our performance into I'd the spend in highlights free and capital for

operating versus billion all of in cash period. ago flow and $X.X fourth in financial XX% an A where increase the performance, quarter, good the of place of totaled level This is year free flow funded the a review for cash requirements start flow quarter. XXXX with Devon's resulted to capital cash billion $X.X

model year results the $X return can business a cash billion, has is is financial the XXXX, our in For of free example reached full powerful highest ever which the a delivered cash amount year flow and Devon deliver.

X. this more our high variable cash cash attention Turning flow, than per shareholders of Devon's dividend stream to this a dividend accelerate return is to our ability free to of record financial to your XXXX framework. the willingness fixed framework, payout share. significant in Slide doubled component With strategy plus unique $X.XX a and through Under our of of

financial fourth announced raise dividend fixed payable the that on XX% strong our benefit performance, includes of $X.XX Based and March per we share fixed-plus-variable a quarter to is dividend. in the our of

that buyback Another year flow can you billion execution well level. this back Slide $X.X our the priority the below cash current we program. authorization share market upsized twice the our X, is and billion for On see at stock repurchase prices during bought free $X of of ongoing we

has to two financial acquisitions past optimize to flexibility. quarters, with our buyback rebuild large our and preference recent associated our the limited given our balances cash outlays the Over activity been cash

head peers. see our buyers especially we XXXX, active be to we to of stock, As into our trading relative expect if we weakness

XX, to of like With billion. only total cash our exited On liquidity, debt-to-EBITDA healthy Slide $XXX Devon net by update I'd X.X ratio a fourth million sheet. a increased to on this very balance the give In improve brief turn. increased the efforts our quarter with to the $X.X balances quarter,

more the provides debt free and Our shareholders on cash strong aggressive return financial reduction. us less to opportunity to position be investment-grade flow

forward, healthy cash it debt comes we'll balance. as look Moving due, to retire utilizing our

maturity due debt in of next comes $XXX August this million. year totaling Our

opportunities down due will additional with maturities to and pare well. We XXXX in coming debt have as XXXX

And finally, capital I'd delivered on like excellent XXXX. return the to employed highlight we in

on a the Rick we As during year. company employed on touched capital earlier, record XX% return achieved

we Importantly, price excess our to financial on with capital fantastic expect highly based guidance current lower returns even today's the the return environment, deliver through on another to pricing. provided deliver with and cycle. strip of our commodity projected of model XX% This in durability showcases competitive employed result

With comments. closing Rick for back that, some turn call now the to I'll

at up Jeff. today, you, wrap our stakeholders, and including prepared our want for reinforce I differentiated in are To results to Great deliver Thank shareholders Devon, unwavering our that our remarks job. employees. we to focus

standards, and invested a delivers per to returns high to financially shareholders. disciplined growth To on attractive with high it begins share be company cash meet all capital, large that commitment these our returns

graded on our cost the high coupled U.S. position best has the energy financial with as depth, To a premier capabilities long-duration base the of company team, deliver plays have curve. a that through us carefully This these can goals, the sustainable results resource execution to cycle. we that resource achieve assembled very

on operating expect merger and with the disciplined we more I XXXX, have to we Since of announcement model in what same in do exactly XXXX. delivered this promised the

will be the communicated slowed year recover outage, another through is business to Devon. pathway a Overall, we defined, bit strengthen really going unfortunate and quarter the only While the an for XXXX the of first to down as is well be go year. good by in we our will trajectory

to And the call back over with that, I now Q&A. for will turn Scott

to follow on call today call. questions Thanks, a one Rick. yourself and get This We'll open limit the of Please to to allows to your more question the now Q&A. us up.

With first that, operator, take our we'll question.

first [Operator Jeanine Instructions] Wai Barclays. Our question from from comes

guess if XXXX I maybe So start we plan. with the could off

wondering to if billion would between of kind billion. $X.X Just could implied kind bridge you QX which XXXX $X.X CapEx the that and have of CapEx to $X.X billion in annualized of the $X.X then billion about budget guide,

Just sustaining inflation, activity was the CapEx forward. related wondering primarily the to if or the of number kind new else? if something is of going increase level And

Good Yes. Thanks, to question, Jeanine. and it. talk about happy

the guided we fourth couple quarter. So months, yes, soft in of our last extrapolating

I higher. very but just think touch notably much is we're a in it line,

are conversations we our incremental so continuing because I inflation the at seeing want it's don't I sense inflation -- and have to the coming as inflation way. that we we to And are define spear, see tip of

bit current older a coming is that What maturing rates. up contracts of a we little have are stale of more kind to

throughout some experienced quarter. that this 'XX. we more in the we'll So of this We're see baking in of fourth assumption

far conservative really that an to 'XX, of what see, steady think what the inflection projection Now maturing half inflation have on second think some may That bit would we contracts. or is maybe little for be including I more rate, say even our the do the little a we're the is inflation, incremental we But second more in half. today. order on our run we wondered any of have a as people experiencing of deflation I just side. I kind can as a on bit of have

expires? the impacted provide that for been some in is to kind Or slowdown QX? authorization be QX more reason. authorization, But that we the remaining Okay. to buyback because up And your just have moving can the end reasonable XXX catch-up in think probably is appreciate of any likely acquisitions. in opportunistic. big, on about pace QX I by buyback thought We by early the Great. in Thank it would you May of QX? which could you, good million the all it the kind But being think was but commentary it reasonable maybe be talked that there you, the Clay. by you I heard detail. of know done to color about maybe you of is can finish Maybe to quarter could it finish you Jeff, when

it Thanks that as the Jeanine. that with you're in related as for bet, certainly quarter right as question. into noise blackouts of you're of towards we're that get the the acquisitions us we you well half cash well aware back Yes, as for difficult the year outlays the leading into we last year-end, exactly Yes, the walked market. period fourth all more on the to time and made during to there

in a wanted financial maximize I we frankly, cash then to just balances opening comments. were build our mentioned to our back as in position where our And flexibility, we

get forward, answer do question way. XXXX, into specific in to your to expect a bigger back Going market the to we

in this highlight, year. authorization wraps kind our As of authorization, that the up to as of quarter it second relates you

where buying today and into half to real be point and from see market a to the trading expectation saw just have getting in the you're aggressive our first on back that's it course, last to Board, to more upon of my days quarter, here the reload authorization will the as of it first we that relates it group, and we the plenty Of forward. is second in time And us in look we'll year relative to as did opportunities pace off quarter where the we're buyback certainly, go moving opportunistic shares last particularly that us as into like and our it expectation build to work our like to the year, you going is back.

comes Mizuho. Nitin Kumar question next from from Our

-- think capital of may. I I start to Rick, we're but to today, on cash going if spend lot a with efficiency time I want I to returns, want

more Some is current of variable you the why buybacks away mix this by towards right opportunistic cash your for peers a variable talk about bit in dividend fixed-plus-variable just the the and from your return Can buybacks view? because have talked term. dividends payout about is maybe strategy and of steering Devon the just the

been Yes, Nitin, point that great we've question. debated flexibility. back is admittedly. gives back one always but It's fixed return -- -- getting delivered Number we've proud here decades come we your that dividend variables XXXX merger. transparent framework a shareholders, XX% to internally, the We cash we something starting cash certainly one in Devon when of of announced now the it's method back our very of is very that September where The we were and types of. to of feel all on. this free And us we has

paydown. share still Now, opportunity for us and for what repurchases this it debt we this or approach like is strategy gives about

actually If you'll of retired we first recall, billion year $X.X the debt terms. in merger, the after XXXX, great some at

really, so you when really look move. And and that certainly back pleased

right that plenty repurchases. and of us, think share gives and to to still it do stick is we I for the So we're so with it opportunities for us, this going us feel the framework

group when or from we'll Jeff and that. on just these of longer-term As our dislocations we'll that certainly kind mentioned, you contemplate peer our be outlook, certainly, see moving

to very feel committed framework. So That's why change. this we that's no

improving that as Delaware help technologies I'm have Rick. in peers doing efficiencies? can Ford. new or improve to appreciate you can about in the you in that mentioned test the just Permian. you're basin just you're or I been stuff of talking the your But my doing anything the the the some speak that Eagle productivity And of recovery Delaware in terms that follow-up, well Basin curious, in that, factors

Yes.

longer-term let to it, Delaware. up. the talking in Ford to -- the here. companies the and But of some in see just some Let we well. as -- got and have is well. reality can We longer-term And not an pivot it are I we technical I'm about back-end Devon, and some got me I'm we've as the Clay wrap things. going in assure team unbelievable it's our going start Eagle opportunities see But competitor you that I know opportunities that

Clay I hard more in it. new on, see. can't And as technical inventory all whether this. this the incremental what you're drive assessment And we're to on enough. I'll that's excited really and with of it's just touched develop point to for going and But longevity to the future from what be long company a perspective then to more hear the we're -- do assets. that. this I'm of the from our or So sustainability the resource enhance us. say the term we about over operational excited for to And perspective, the able in really going We're be to we talk doing can to future

to pivot you. I'll So Clay,

I the has relatively I'll The the I been stuff little bit the kind just color. maturing mean you nailed I it. of this about think new is the of think add I we easy brave of frontier as plays. of think think, Rick, done. Yes, easy, a resource land capture, kind

overall next how opportunities, and we do so factors we eke how thinking we are significant recovery these incremental do now there about, are take And opportunity. out where that

truly I mentioned are assets, well you, as tell Ford we things be other the mature our a all couple couple, we're on happen Those as the can we more Eagle continued to geology, two the where a in I those of of the to Williston. development. extrapolatable doing basins understand understand in well. of as things

to We opportunity of have these the approaches. kind feather interesting of in some

I you prime focus for time, is you excitement little we tell would the of into quite clearly but that early as out there's that. it's around on that further So bit think a too portfolio. our a know

question Citigroup. from Gruber next from comes Our Scott

seeing that get case the for year, starting I there to back But for you're the base I inflation end the is Permian. spear, of role. mainly the your at given of a of juncture, in It gas rigs sounds a year. directed this just to where mentioned bid to a the you into case want frac the tip on know are building less is bit comment in the contract like to before the bit you At of inflation. pumps is come on inflation over at? Haynesville the the and some equipment prices more starting course gas that deflation sense And

question, look for point would Yes, at I steady Scott. is I it higher today, current the we a Thanks as the strip. that state than service are say, cost at

down is, me more in into And little or to so steady together. in come things these front price What two tells bit sure pretty of kind converge. well costs we want down. we're we the what get that make clear half as -- will state this, time, a really things we we're will is locked up as year, the come on conditions, of seeing service to come steady have Either state is

absolutely, half you'll way all And from the towards lag a but impact. conversions gas we in activity, a is in and wild 'XX, not have going go, prices to pretty of with a in so benefit something where -- year last honestly, price lagging we've swing will crosswinds seen that we I'm the second in see sure the see six months, the potentially that of over -- again, will commodity that, therefore, net will

from rigs move These basin design. by basin are fungible can pretty to

costs, down Permian. that in continues, will trend if so absolutely the service in see we certainly And coming

conversations. think have steady, from just any of months of baked very of I not was our -- to really too forecast. Now program. it's that having We're the inflation into single-digit to 'XX. some kind it's clear, But bake early the interesting ago, that's page We're really of our tell be to tone vastly kind state, as turn we is encouraging. real-time again, different a steady quarter real can it and as we fourth type than couple in. early very very capital I assuming I you we into bake capital Because think to that 'XX want too

first similar level, drills but more versus versus just color. tills efficiency. this early quick but guys frac year, kind mix expectations fourth And lateral year Delaware factors I on and appreciate up other a few a that length handful all kind in year targeted the the in any looks year? last for just It this you and Can you coming from around running the kind efficiency that impacting pretty operational to are program rigs impact like last in speak wells basin, you of got the a then maybe and crew half. one of overall for of

error. longer When overall Yes. down, at you that working we the getting efficiency interest at looking thinking net regard. Scott. how really very think points time We probably the looking I spend, the for throughout continue encouraging of about look directionally, out, year. efficiency, improvement, working and about started you're in the to see say I when wells a margin It's are same. days, would little when you have crews. lateral varies you're steady Those the of within the as hours pump we're quickly of of on to Thanks as about be well may I bit pan length that, that interest at frac

there marginal a victory, not the type inflation, and that kind When And in look couple is, plays we in the the my remarks, resource what some is would that Ultimately, of kind same when industry honestly. maturation of I standpoint, you productivity efficiency. year-over-year. overall increase little that productivity. of of of from a continue denominator. Certainly, efficiency the erodes from bake to of bit is the And flat numerator a as a of where operational rest see we're of capital you mentioned a at so essentially kind prepared will well yield, in performance, claiming times I say as a

in, baking prepared. that all we're well we're and So

really about we the outstanding. We're an to 'XX when project you outstanding optimistic where margin still we're But at, remaining think about quite results as is the be net financial year. pretty very for

Sachs. comes question from next Mehta from Neil Our Goldman

Rick, first M&A. question to on you is just

relative back like You think to How And what buying talked your stock? incremental in about bolt-ons do two the the could M&A around you about last property set look XXXX. acquisitions activity do you year. balancing think

a that question. really had high is transactions. we've that's for The foundation great on us Neil, always the bar

beauty with that. And If our the about we'll model. the we'll of I you're and had so question compare about an talking that's you share that look contrast makes what saw, transactions. what at We it sense, repurchases. think earlier And

we beauty little can do model a those. our of all is The of

dividends, for And we very able accretive so were cash the acquisitions, pay place, we share two paid some great took repurchases to bolt-ons.

And so combination. I really think a It winning that's is.

Now, space. I to consolidation see do in think that you're continue going our to

And our there's take industry. in to I place, healthy very I'm consolidation that needs for camp. much it's think and

that compete. you about disciplined again, wonderful a to and thoughtful tell think And can I the be continue once got these to going us, something we're be can and We've portfolio. haul. long over For

always at we'll always that we so will -- as And something be an option. look

is for a on the natural outlook just for team And the follow-up gas.

are. comments to market Gas It might a around given shared lot where calibrate uncertain. is supply to inventories your the more markets. need does see oil a order like feel in we the You response

flat gas gas you any So Do respond make program in to perspective the the then approaching to need its changing And the to XXXX. see just in XXXX? is lower margin for price on you macro on Devon changes how is margin the way environment? that the activity

down did. than second two is than as It's winter. And There the Neil, a record Bs surprised of gas of crude somewhat there it's Number lot say it going I actually little Natural actually, still we still it's thing felt start different then lot with up And the I we little this up any was take probably were gas comments. it's parts X milder we fast clean -- little a is by think like cumulative is well. can quite follow-up, would I'll it also day. lost. then little that driven But has you impact capability commodity us, Yes. out thought the export a went one, have price that being ahead as I a Freeport on of as a is come of things. think -- But certainly we're know all where a Jeff got country, weather-dependent. a oil. in year for of the a bit it of itself. I faster I'll and some ago, my a

assure a I at think that's are more we you. as stay long winning oily that to we so looking we're there's appropriate can as But guys as are to going as longer gas And it how Obviously, you continue us, they term? strong combination. some can We Jeff, the think to questions. for just can. for I probably answer there, out

Yes.

echo question. Thanks Rick's I the think for I comments. And You Neil. would bet,

on believe out. to LNG as Obviously, term, increased there's all continue the be that's some still to we out. depending projects going know, going couple of of And market. years be gas that U.S. meantime, be impact are natural weather We Freeport dynamics to like does to other and we're longer the in volatility demand for the the out that susceptible given going a to what that built

also Rick we our oil as of XX% mentioned, are XX%, an view company As around ourselves and revenues oil.

by relates forward driven this focused So to activity no. or and Again, going prices that question, second year hasn't the of we there structure. of the we're see cost of activity? oil-focused our is there. our it is and more changed part for most as all answer Neil, your The To plan game your

result we've change a markets. to plan no what game as of gas So in big natural our the seen

But to that remember may big gassy that of is a is are I actually development some in is here thing have add One Meramec. more even you on the Anadarko. part

that's a of a or than, condensate. Many different day project of of Haynesville-type so an a I'd barrels these IP X,XXX say, wells lot project. kind Appalachia And

what So it. liquid drives what returns. they and are in That's high interest our content that's drives

Doug of America. Our comes Bank from Leggate next question from

go anyway, related I to I guess, may. call. be the to on dividend Well, else And you. they Jeff, have might Two questions, guess I stole so if be for both But with everybody, nice someone guys, variable I'll Jeff, my question, something else.

ago you press year -- $XX. ultra-low yesterday, this your release on talked about A presentation breakeven around about rather. in call, you an And talked

about I breakeven align. really guess, expectations, about seems is $XX, communicate? the a It increase two you those $XX to numbers changed seem what with talked Can to $XX don't trying you're what's that walk You breakeven. through in inflation, moderate

Doug. you Yes. bet, No,

had firm structure, to about, kind cost the talking the kind of has given the and higher basis. benefit a did we've been with great XXXX did term. the supply the for teams part better that So of contracts we chain lock work no on question, moved work that year-over-year as the We of in,

earlier. referenced that to see unwind starting You're some of as now Clay

in year. this contract resulted refresh seeing the cost that higher has in so structure And that you're

what's that's And really breakeven higher. driven so that

well. as taxes, Now driving to that XX% walking that's you're well category actually a higher. XX% you these you higher it, XXXX. there I we've When of in kind frankly, about, cost across, been most certainly in year cash But other we we're we've are seen moderate, and anywhere impacts the think talking an I use about impact seen NOLs talking about as aware, some be cost different inflationary choose our the that's this into which would category far I we've of adjective. and is cost what between depending of everybody the and impact know expect categories That's every cost am utilized on word inflation, you're away, tired XXXX. it's But as that

as think second like the of driven side that the I'd other first we've higher. ourselves well to some from quarter that year, in you're of certainly again, refresh benefited And walking breakeven the of and fourth that year, and for contracts bulk last the XXXX. we certainly, impact, this into and seeing protected of of it's quarter But

fourth of deferred higher move as the quarter And and is to question that's versus same be guess the looking yes, and Well, my follow-up, And it Rick, going XXXX. correcting. Jeff, my I clarification. for XXXX I it the versus gas Thanks, fourth for might fourth quarter. you, fourth thanks but oil the the for But basically guess might moderate quite with it of at guess cash the you're it's I Jeff, tax, flow quarter referencing the in correct. quarter. I be your point to the with for looks lower cash that in I'm like flow the free was free price.

-- ago would deferred QX probably tax lower basis, normalized a a than be the if your On year guidance. per moves than

of to say a has. I kind it commodity but has I peaked question is, outside kind free of guess like So cash of it want my call, don't flow feels

about say, to I'll when something an leave inflationary you function of drive flow I outside you of a like so cash do do free expand think value acquisition. there, is do you which flow creating ultimately expansion? What it in there. free And cash an environment, accretion, value how

Yes. I appreciate the question.

efficiency we're and focus referenced control, internally, wells the the right? on on. earlier, mean, the can Obviously, piece we we that I spot the and don't in is of here our this drilling. cost help have that the that that's a focus structure, comments Clay why the That's of around You're his side. productivity lot revenue on

on commodity You're certainly go would to we've that what extent the That us market. frankly count higher, that but to seen to flow that. given prices the we certainly which can't free we happen correct cash in be expect incremental

is cost that the internally control. and efficient what so we're every the things can more day And as we being structure company focused the on a field, in office on our in around

can continuing the inflationary to chart control We're of continuing improvement we we see and what our margins seeing drive it's that space projects, relative to on out of and Gantt each structure good around the to but can front. that's referenced, greater to environment Clay we're as so a the got cost day-to-day that's on be news, And today. on focused white squeeze because we're is how

guess I thinking leave strong appreciate have else's taking I out cost but the got I'll was a I there. M&A, answer, record track of you it about someone Jeff. because

to the that space, we've going believers we seen to would consolidation a as just and us to we're you've in got. to that just of Yes. again, from the how compete past, We on, we've and earlier, a driver continue as the feel got Rick's opportunities. positioned echo in I'll relates that. bring portfolio with high it it take bar the going advantage we what would really assets that is to certainly Well, like happen of and to is be those well Doug, But be to comments add into

those we But as transactions. to the that's -- control can't well timing hard the nature again, of and

to what which we on we're stay is work got doing day. control, we to day So the can focused

Our from Scotiabank. Paul from comes Cheng next question

lateral fourth Is the third other tied length in that just please. questions, is like reasons structural it that, In release, that quarter. the seems your well so the for press press causing your is basin, the -- what's or single reserve related the negative in oil of every that, area lateral negative you barrel And lower? release, lower reason? also be length negative maybe your adjustment for to also happened to quarter, there? Two XX% about in revision. a What's XX there's Clay, end said the a million than what it Or revision that -- up

on target? or net par going target in to based debt you is then that for you have second mentioning would is net to debt a know but term? company do question the pay maturity, debt be medium my a the what longer there a just net And I that say, down you're the gross pay longer-term have a

the in to the Jeff I'll going I'm Clay. jump question, let it's Paul, then on handle and debt question. reserves

really -- question. the I I'm to want this very I So stress appreciate importantly. one,

and a to merger. were reserves actually super this very we another. This at has process the look, world-class the but actually our and booking of WPX from gives quality We've this of is with just look third had line in brand-new much fresh sets one there's just takes, new very, our reserves. and refresh in are had a hidden one take We been confident process, we great brought benefits auditor. both of -- party year, in our inevitably, auditor. -- Devon a which books and

-- The of -- lots there's overbook. general there's disincentive incentive nature no is of There's that strong overbook. to reserves to in to strong we incentives a

a as so And to want conservative make have designed the by SEC. outlook we sure we that

a sometimes rule, up more down. things five-year you that is But move -- with the much there's think around. general likely I that have to phrase go and

assets there the those question, from focus. New rig fall wells that more and focus specifically the some off little so the to hinted in rule. to to rig was in And some Mexico the And bit some you dedications at a Texas oil of movement the five-year of in caused Delaware

And other one on so can as they fall of the Obviously, off parts well. in they category. come additions

tends rate. balance. look after cost quality run that to reserves But at look as important really year the you when at, the there's in And of a year, overall development to so hints lots of finding

look about booking, percentage a are about is think those, to feel you very you very, there's kind confident at. think a very of of When If strong very lot conversion We about watch important position. percentage, you of that Devon PUD things all our in PUD reserves.

price and you the first piece important. that's is revisions. other -- thing When one of There's nuance booking reserves you at do you're very looking a

So change price. a you make on

looking into in that second case, like case, LOE and things structure a all you our cost year-over-year, but our start The in particular, reserves, in And of at thing that. our everyone's are a non-price-related revision. case, in ticked up and falls

in higher of so price doesn't due that It's prices, it as inflation result that to but that quite really into it's And bucket. to a category. revision fit

emphasize Jeff to that So there's the and hand reserves it the nuances. interesting let to I'll personally I just has him process. want and confidence talk team in have our that. I some

structural in is reason or any because of lower that one-off Before, a the reasons? third the just also XX% Jeff, about shorter about the Is can than there fourth length you talk lateral quarter. comment -- quarter other it's

then pass length to of Jeff But lateral key I'll for Paul, the it the quick the largely over this driver real is shorter in incorporation is jump Scott. of debt question. the and Validus.

Eagle about you the in Ford, brought wells XX online online Ford. brought You in Eagle

by of trends. largely, that which was of exclude ladder, if in there, drilling X-mile impact, but laterals overall, that configuration a nature previous is the you our line shorter So everything to else close they're

going that's and be the big probably to equal. variance there So all things

should similar that of see given we weighting XXXX. capital have going Jeffrey? for forward plan the very be kind that You planned

of about think net a debt-to-EBITDA EBITDA and externally that. Xx was last that net kind your debt was related Paul, What target. we've targets Yes, to to talked any I question have internally our around historically and we

overall comments, And we're with heard that comfortable, my you well frankly, As very our we're today. in below leverage opening position.

in As investment materials, got we highlighted a we've credit rating. the strong grade

business, feel rating as less to absolute my We where opening given have down our us frankly, be relates allows strength really we that good -- the to I the of the it And agencies. just the positive take conversations really about level. our we are. aggressive mentioned And of core in to debt trying as comments,

wouldn't coming really with maturities the the feel any reduction over expect addition to good mature incremental our two due those up step expectation out here to next, We we'll that. us years, in call as it, they is just and debt to take three

of should the might certainly, conditions multiple lot and to or balance point to and the light view, we whether which generate that one our stock a Now it's cash do our of given even financial certainly and else evaluate change earlier, be flexible balance the that buybacks to something is cash cash mentioned we have some Rick come that's something dividend, beauties variable it change we of are I'll free reiterate market us is expect things, transactions. provides debt of flow adapt model would just reduction,

expect where we'll So the years. next they on we leverage, and maturities over as are just we feel couple of good those really to the come due take

Neal next question Our Truist. from from Dingmann comes

looks this It reinvestment how this year, I'm to towards. because increased that of to the year. think last factors the about My reinvestment sort a should rate of anticipate specifically. trending? what just over other showing I'm versus the And is higher driven rate wondering this trend maybe are there this do rate just determining reinvestment XX% largely XX% rate, has we first going continue like question just to you on potentially bit cost? is Or when

I think us this on right. and and and math natural corporate oil but we've the prices, we Yes, Neal, function the the of been higher would as year well, certainly on for reinvestment to just a costs important of seen is speaking -- know a certainly overall exactly this Yes, gas year-over-year at more commodity the have lower the relates a lower price been then you're a inflation on level, oil rate strip dramatic, as if that basis, suggest result Jeff. to so all that's our last. is to it It's which have

higher reinvestment to And so be out that math just a ratio. works

Okay.

touched Clay, Okay. bit. maybe you just on -- you little secondly, for And then this on a just

Just on prepared mentioned the the the you third-party. and compressor infrastructure, in remarks on

forward this you've Or you think done you guess, you quarter. normal I to there, were help in going be more Were this that new to I or to to less mentioned anything on this contracts changes? going confidence expect back give proprietary happening mitigate next forward? there

I'd say it's maybe a all sure, first want of of injured. We're little make digest -- there a is to really old. weeks really lessons There's kind this early was days, on team team all, location. one one The the no learned. -- of couple too to no of

there's we impact that facilities far, real-time understand that is, on want very a to other There's see didn't lot mechanical that We compressor issues. no address So much glaring deep We anything to moving of see designs. favor. would what had regard. doing in fixing. similar I to The with teams parallel lot pieces. immediate in a anything the worked any of so say And there are our in the was if to now investigation parts,

We will things. learn some

really anything think offset that apply in the don't some right thought off bat operations. there's out will learnings. We the could we stood But that we I improve

you literally expect by play that quarter, said? do you But second normal

I of would that should running middle Yes. we and again production about fully say have time. March, up

I it second feel into quarter. about And the bleed shouldn't really good so that.

at appreciate hour. time. questions, And have any and if further Investor top hesitate you, everyone's the of you the please any Well, I I good to out a Devon the in interest day. Thank Relations at don't reach we're today. team see have to

for call. This you today's concludes joining. Thank

disconnect now lines. may your You