Devon Energy Cana

Source: Devon Energy Corp. 

Shares of Devon Energy Corp (NYSE:DVN) are up 30% in the past year. That's solid outperformance, as the broader market is up just 20% over that same time frame. Shares, however, could have even more room to rise as Devon Energy has three compelling drivers that could boost the stock in the years to come.

The Eagle Ford shale is bigger than expected

On last quarter's conference call, Chief Operating Officer Dave Hager wanted investors to know that the company's recently acquired Eagle Ford shale position is turning out to be better than expected. He specifically noted that the company has "identified several promising opportunities" that could boost the company's drilling inventory in the play. The biggest opportunity is found in the Upper Eagle Ford, which is an area the company didn't consider as part of the value proposition when it acquired its position in the area.

However, as the following slide notes, some of the thickest oil-rich Upper Eagle Ford rocks are underneath Devon Energy's acreage in DeWitt County, Texas.

Devon Energy Corp Upper Eagle Ford Shale

Source: Devon Energy Corp Investor Presentation. 

As the above slide notes, industry peers have drilled very solid wells in close proximity to Devon Energy's acreage. However, the real test will be the results from the Medina 2H well, which Devon Energy recently started drilling. If this test, and others to follow, prove that Devon Energy's acreage is prospective for the Upper Eagle Ford, then it could significantly enhance the value of the company's acreage position and could cause shares to rise.

Drop-downs to EnLink Midstream unlock value

Devon Energy recently completed the construction of two midstream assets that are prime dropdown candidates for its MLP EnLink Midstream Partners LP (NYSE:ENLK). The first asset is the wholly owned Victoria Express Pipeline in the Eagle Ford. Devon Energy has invested about $70 million on the asset to date. In dropping down that asset to EnLink Midstream Partners, Devon Energy would likely recoup more than its invested capital, which would unlock the asset's full value.

The other asset is the 50% owned Access Pipeline that serves Devon Energy's oil sands operations in Canada. To date, a billion dollars has been invested into the project; however, it has expansion opportunities that would require additional capital. Devon Energy could avoid these capital expenses by selling its share in the asset to EnLink at a price that would likely be more than its invested capital. Again, a dropdown would unlock the full value of the asset and provide Devon Energy with additional funds to invest in its high rate of return drilling program -- or that cash could be returned to shareholders.

Emerging oil plays graduate to core positions

The final area that could fuel a rising stock price at Devon Energy is its emerging oil plays in the Rockies and Mississippian-Woodford. Of the two, the most compelling one to watch is the Rockies oil play. As the following slide notes, this play has stacked oil targets that are delivering strong initial returns.

Devon Energy Corp Rockies Oil

Source: Devon Energy Corp Investor Presentation. 

As illustrated above, Devon Energy's acreage position appears to be most prospective for the Parkman play. However, there are several additional oil targets that could emerge in the future. Next year, the company expects to accelerate its development activity, which if successful could provide the fuel the stock needs to continue rising.

Investor takeaway

Devon Energy has focused much of the past few years upgrading its portfolio. The company shed non-core natural gas assets in North America and used the sale proceeds to pick up what appears to be a world-class position in the Eagle Ford shale. In addition to that, the company has unlocked the value of its midstream assets while it has focused on exploring for new sources of oil. As Devon Energy continues these pursuits, it has the potential to fuel its stock price higher in the years ahead. 

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Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of Devon Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.