Devon Energy (DVN) Updated Valuation - Aug 24

[dan_s]

I have updated my forecast/valuation model for Devon Energy.
> My current valuation increases to $102
> My annualized fixed + variable dividend for 2022 increases to $5.73/share for annualized yield of ~8.1%.

DVN closed on Aug 23 at $70.88

Why valuation increase?
> Devon produces close to a Bcf per day of natural gas and ~156,000 bpd of NGLs.
> Devon should close the Validus Acquisition early in Q4 that should add about 35,000 Boepd.
> From 616,000 Boepd in Q2, the Company's production should increase to 655,000 Boepd in Q4.
> Q4 production mix should be approximately 49% crude oil, 26% natural gas and 25% NGLs
> Devon has a super strong balance sheet, lots of high-quality drilling inventory ("running room") and free cash flow should be over $6.5 billion this year.

TipRanks: "In the last 3 months, 16 ranked analysts set 12-month price targets for DVN. The average price target among the analysts is $82.56. Since Devon announced Q2 2022 results, 7 analysts have updated their price targets to a range of $70 to $115 per share."

Bottomline:
DVN is a classic "Growth + Income" stock. If HH ngas stays over $9.00/MMBtu, the stock should be getting a lot of upgrades from the Wall Street Gang in Q4.

My updated forecast/valuation model has been posted to the EPG website.