I've been through Devon Energy's
With commodity prices sagging, you'd think that the days of boasting about record production numbers were over. Who cares about cranking out all that extra gas when your price realizations are off 60%, as Devon's were in the quarter? Not me.
It'd be one thing if Devon had masterfully hedged its gas production (which accounted for 65% of the production balance this quarter) like XTO Energy
I appreciate that Devon is gaining drilling efficiencies in the Barnett, even if that means prolonging the downturn in natural gas. But so is everyone else. Devon's just not standing out from the pack.
Look at the firm's improvement in unit costs. That 8% sequential improvement sounds pretty good. Until, of course, you compare that with Anadarko Petroleum's
Of course, that pullback demonstrates that Devon isn't just going full-blast here, like Petrohawk Energy
Bottom line: There's a lot to pay for in a drilling-intensive E&P operation, so Devon needs to keep cranking out cash flow, even when the economic returns evaporate at the bottom of the cycle. (Incidentally, that's why I favor small, debt-free E&Ps than can sit and do nothing until the economics make sense.) My point here is not that Devon is a bad operator. It's just not a beauty like Apache
Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. Chesapeake Energy is an Inside Value selection. The Fool owns shares of Chesapeake and XTO. The Motley Fool has a disclosure policy.