This year has been a busy one for Devon Energy (DVN 1.55%). The U.S. oil giant's drilling machine kicked into high gear, enabling it to top the mid-point of its guidance range through the first half of the year. Meanwhile, it sold its midstream business, which gave it the cash to accelerate its share buyback program.

Unfortunately, the company's growth machine needed some extra maintenance during the third quarter, which likely caused production to come in toward the low end of its forecast. That's one of a couple of things investors should expect to see when the company releases its results later this week.

Drilling rigs in the mountains.

Image source: Getty Images.

Expect low-end production results

Heading into the third quarter, Devon Energy anticipated that its output would be in the range of 517,000 to 541,000 BOE/D. While the company has delivered production toward the high end of its guidance range through the first half of the year, investors can expect its third-quarter output to be toward the low end of its forecast range. That's because the company already provided an operational update last month in which it estimated that production averaged around 522,000 BOE/D during the quarter. Driving that low-end result were some additional maintenance activities at its Jackfish facility, which caused production from that facility to miss expectations. 

However, the company more than made up for that miss by delivering stronger-than-expected output in the U.S., which Devon estimated came in 1,000 BOE/D above the top end of its forecast range. The driver was the production of natural gas liquids (NGLs), which came in well above forecast thanks to strong pricing, enabling the company to recover more NGLs from the natural gas it produced during the quarter. That uptick in higher-margin NGLs, when combined with U.S. oil output at the mid-point of its forecast, should have enabled Devon to generate solid earnings and cash flow during the quarter even though it fell short in Canada.

Expect it to keep a firm lid on costs

In addition to providing an update on its production, Devon also gave investors a glimpse at its costs. The company pointed out in that press release that it "effectively controlled capital costs during the third quarter." As a result, its capital spending was $523 million, which was 9% below the midpoint of its guidance range.

That ability to keep a lid on costs means Devon Energy likely won't increase its 2018 capital budget range of $2.2 billion to $2.4 billion. That would be a noteworthy accomplishment since several peers have boosted spending due to cost inflation and a decision to ramp up drilling activities thanks to higher oil prices. U.S. oil giant ConocoPhillips (COP 0.39%), for example, boosted its budget twice, raising it from $5.5 billion up to $6.1 billion. Driving ConocoPhillips' budget increases have been a combination of service cost inflation and an unexpectedly higher level of drilling activities by some of its drilling partners.

Meanwhile, EOG Resources (EOG 1.50%) recently boosted its drilling budget range from $5.4 billion-$5.8 billion up to $5.8 billion-$6 billion because it wanted to retain high-performing service providers in 2019 by keeping them active through the end of this year. That move will enable EOG Resources to maintain its current drilling pace while keeping a lid on future costs since it was able to lock in competitive service rates. However, given Devon's desire to generate free cash flow, it needs to keep a pretty tight lid on its budget.

Expect a solid quarter

Devon Energy has already given investors a good idea of what to expect during the quarter by updating them on its operations last month. While the report shows that the company didn't deliver another production gusher during the quarter, its output was still in line with its guidance range while capital costs came in under budget. Because of that, it doesn't seem like the oil giant will have too many surprises when it announces its full third-quarter results later this week.