Devon Energy (DVN)

[dan_s]

I have updated my forecast/valuation model for Devon Energy. It will be posted to the EPG website late today.

I have increased my valuation by $1.00/share to $64.00. This compares to First Call's price target of $52.80.

Devon has not yet issued official guidance for 2017, so I remain a bit "guarded" in my production forecast. The big production and proven reserve growth should come this year in STACK where Devon may have the best position of all the companies in the play. Continental Resources (CLR) and Devon are joint venture partners in many STACK wells and they both have aggressive drilling programs underway in the play. Well level economics are FANTASTIC in STACK.

If Devon confirms the production volumes that I'm using in my 2017 forecast, the value of the stock will go higher.

I have now completed updating all of the Sweet 16 forecast/valuation models, breaking out 2017 by quarter and adding my initial forecast for 2018. My valuations are based on what I believe are reasonable multiples of their operating cash flow per share. EPG members can view the forecast models on the website or download them to Excel. Once in Excel, you can change forecast production volumes and commodity prices in the forecast periods and the models will update automatically (they are all macro driven). The forecast models on the EPG website are valuable tools. Take the time to learn how to use them.

For those of you seeking high yield, check out our recent profile on EnLink Midstream LP (ENLK). Current yield is ~8.8%. EnLink is a midstream MLP that is controlled by Devon.