Devon Energy Research Report - Possible Upside
This report reflects the research and analysis I've performed on this company. It is provided for informational purposes only and does not constitute personalized financial advice nor an endorsement or solicitation to purchase stock in this or any other company. Please do your own due diligence or hire a financial advisor before making any investment decisions.- Updates
- None
- DVN:US research report posted: 2007, July 29
- Risk Detail
- Possible Upside
- Competitor Review
- Valuation and Assessment
- Possible upside:
- Largest land position and producer of natural gas in the Texas Barnett Shale play with a target of over 1 BCFE per day by 2009.
- Slew of oil and gas projects scheduled to come online in 2007 (Polvo in Brazil, Jackfish oil sands in Canada, Merganzer/Independence Hub in the Gulf of Mexico).
- Robust prospect pipeline with high visibility prospects in the deepwater Gulf of Mexico (Jack, Kaskida) as well as extension plays in Brazil and Canada.
- 2006/2007 production does not include halted conventional operations in Canada due to high field services costs and the strong Canadian dollar.
- Marketing and midstream operations with operating profit around $400M annually not reflected in stock price and scheduled to be spun off in 3Q 2007.
- Company is nearing completion of its strategic divestiture plan, selling assets in West Africa and Egypt this year. Once completed, Devon’s assets will be located in politically stable regions.
- Despite divestiture plan, the company has managed to grow reserves via acquisitions and through the drill-bit.
- Company’s valuation does not include probable or indicated reserves.
- Solid balance sheet which should get stronger as they use divestiture proceeds to pay off debt. (Debt to equity ratio: 0.26)
Author Disclosure: Author is long this stock.
Part of the 
network.
Copyright © 2007 www.enlightened-american.com. All rights reserved.