Devon Energy (DVN -0.89%) is a leader in the U.S. oil and gas industry. However, like most companies in the sector, it can see the writing on the wall. The global economy is moving toward lower-carbon fuel sources. It needs to head in that direction if it wants to have a future.

That's leading the company to follow its peers in launching a new energy ventures investment strategy. Devon recently made an investment in a geothermal company, which could give the company a lower carbon energy growth driver in the future.

Drilling down into the investment

Devon Energy recently made a $10 million strategic investment in Fervo Energy, an innovator in the geothermal energy sector. Geothermal taps into hot water resources underground to produce energy from heat. 

Fervo Energy is using a novel approach to producing geothermal energy. It's the first company to successfully drill and complete a horizontal well pair to produce commercial geothermal energy. This method makes geothermal power accessible in many more places. It could significantly enhance the potential of geothermal to become a more meaningful energy source.

That technological approach makes it a good strategic fit for Devon, a horizontal drilling leader. Fervo hopes to leverage Devon's expertise and skills to help unleash to power of carbon-free geothermal energy.

Investing in the future

The Fervo investment is one of several notable ones Devon has made outside its core oil and gas production business over the past several months. Last September, the company entered a liquefied natural gas (LNG) export partnership with Delfin Midstream. Devon signed an agreement to take at least 1 million tons of liquefaction capacity per year, with the potential for up to 2 million tons. In addition, Devon Energy made a strategic investment in Delfin. The strategic partnership will enable Devon to export some of its natural gas and gain access to global LNG pricing. 

Devon Energy also partnered with several other energy companies to invest $60 million into developing a hub for energy technology start-ups. They will provide energy start-ups with seed money, office space, and expertise. Meanwhile, the hub will provide Devon and its partners with access to advanced technologies and creative talent. 

Devon's investments outside of oil and gas production could eventually help fuel its long-term growth. Many of its rivals have already identified areas where they can leverage their expertise to capture significant expansion opportunities in a lower-carbon world.

For example, Occidental Petroleum (OXY -0.09%) and ExxonMobil (XOM 0.02%) have extensive expertise in transporting and utilizing carbon dioxide for enhanced oil recovery. They also have significant experience working in underground formations. That lends itself to carbon capture and sequestration. Both companies are investing heavily in the technology, which could be a big-time moneymaker. Occidental and Exxon believe carbon capture could eventually supply them with as much revenue as they currently produce from oil and gas. 

Devon may have found a similar opportunity in geothermal. While the market potential is smaller than carbon capture and storage, geothermal could play an important role in supplying the electric grid with baseload power from a carbon-free energy source. It could eventually become a notable growth driver for Devon if it starts investing in drilling wells to produce geothermal power. 

An interesting investment to watch

Devon Energy invests billions of dollars each year to drill horizontal oil and gas wells. That makes its investment in Fervo a drop in the bucket. 

However, it's still a good match for the company as it aligns with its strategy to invest in new energies and fits within its area of expertise. It will be an interesting opportunity for investors to monitor in hopes it could help fuel lower carbon energy growth for Devon in the future.