Capital Markets | Capital Expenditure | Capex Decrease | Capital Expenditure - 2020

Devon Lowers 2020 Capex by $500MM; STACK, PRB to Take Biggest Hit

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   |    Thursday,March 12,2020

In response to the challenging commodity price environment, Devon Energy has announced an immediate decrease in capital spending of $500 million for the full-year 2020.

The revised capital budget of approximately $1.3 billion represents a decline of nearly 30% compared to its previously announced 2020 capital plan.

Impacts to Development Plan:

• STACK, PRB Affected by Cuts: The $500 million of capital reductions will be diversified across Devon's portfolio, with the STACK and Powder River Basin assets receiving the most substantial cuts proportionally.

• Focus on Eagle Ford, Delaware Basin: To optimize go-forward investment, the company will focus its development activity in the Delaware Basin and Eagle Ford within the economic core of these top-tier plays. The company expects to provide a detailed update to its 2020 guidance in conjunction with first-quarter reporting.

CEO Dave Hager said: "With the challenging industry conditions, we are committed to taking decisive actions to protect our balance sheet and preserve liquidity. We have substantial flexibility with our service contracts, allowing us to quickly recalibrate activity to balance capital investment with cash flow. This advantage, combined with our high-quality asset base and excellent liquidity, positions Devon as well as anyone in the E&P space to navigate through this period of extreme commodity price volatility."

Beyond the immediate spending cuts announced today, Devon is prepared to further tailor capital activity lower throughout the year should commodity prices remain weak.