Devon Energy (DVN) Updated Valuation - May 5

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Devon Energy (DVN) Updated Valuation - May 5

Post by dan_s »

DVN is currently trading at $25.16.

I have updated my forecast/valuation model for Devon Energy and it will be posted to the EPG website under the Sweet 16 tab this afternoon.
DVN moves to the upper half of the "Elite Eight" for safety, dividend growth and upside potential.
I am raising my valuation by $9 to $45 per share.
Why?
> Q1 results beat my forecast
> Now that the merger with WPX has been completed and Devon has provided detailed guidance, I have a higher level of confidence in my forecast model.
> Q2 production will be up ~50,000 BOE per day from Q1. Rebound from winter storm Uri and full quarter of WPX production.
> Guidance shows steady production growth in 2H 2021
> Increasing production + rising realized commodity prices = increasing dividends
> Free Cash Flow from operations should exceed $2.5 Billion this year.
> Balance Sheet is in good shape today and will be in great shape by year-end.
> The only negative is some "Bad Hedges", the worst of which will be gone by the end of June, 2021.
Dan Steffens
Energy Prospectus Group
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