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Stock Analysis on Net

Devon Energy Corp. (NYSE:DVN)

This company has been moved to the archive! The financial data has not been updated since November 8, 2023.

Common-Size Income Statement

Devon Energy Corp., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Oil, gas and NGL sales 73.46 78.08 55.82 61.24 58.55
Oil, gas and NGL derivatives -3.43 -12.65 3.21 -7.30 0.00
Marketing and midstream revenues 29.97 34.56 40.97 46.06 41.45
Revenues 100.00% 100.00% 100.00% 100.00% 100.00%
Production expenses -14.59 -17.46 -23.26 -19.24 -20.73
Marketing and midstream expenses -30.15 -34.72 -41.69 -45.21 -40.65
Cost of revenues -44.74% -52.18% -64.95% -64.45% -61.38%
Gross profit 55.26% 47.82% 35.05% 35.55% 38.62%
Exploration expenses -0.15 -0.11 -3.46 -0.93 -1.65
Depreciation, depletion and amortization -11.60 -17.68 -26.93 -24.07 -15.45
Asset impairments 0.00 0.00 -55.78 0.00 -1.45
Asset dispositions 0.23 1.38 0.02 0.77 2.45
General and administrative expenses -2.06 -3.20 -7.00 -7.64 -6.06
Restructuring and transaction costs 0.00 -2.11 -1.01 -1.35 -1.06
Estimated future obligation under a performance guarantee 0.75 0.15 0.00 0.00 0.00
Ukraine charitable pledge -0.10 0.00 0.00 0.00 0.00
Asset retirement obligation accretion -0.13 -0.23 -0.41 -0.34 -0.55
Severance and other non-income tax refunds 0.03 0.32 0.83 0.00 0.00
Other -0.05 0.11 0.29 0.27 -0.75
Other, net 0.50% 0.35% 0.70% -0.06% -1.30%
Operating income (loss) 42.17% 26.44% -58.41% 2.27% 14.10%
Interest based on debt outstanding -1.93 -3.18 -5.36 -4.18 -2.78
Gain (loss) on early retirement of debt 0.00 0.25 0.00 0.00 -2.91
Interest income 0.20 0.02 0.25 0.53 0.00
Other 0.12 0.22 -0.48 -0.37 0.15
Financing costs, net -1.61% -2.70% -5.59% -4.02% -5.53%
Earnings (loss) from continuing operations before income taxes 40.56% 23.74% -64.00% -1.75% 8.57%
Income tax (expense) benefit -9.07 -0.53 11.33 0.48 -1.45
Net earnings (loss) from continuing operations 31.49% 23.21% -52.67% -1.27% 7.12%
Net earnings (loss) from discontinued operations, net of income taxes 0.00 0.00 -2.65 -4.41 22.92
Net earnings (loss) 31.49% 23.21% -55.32% -5.68% 30.04%
Net earnings attributable to noncontrolling interests -0.11 -0.16 -0.19 -0.03 -1.49
Net earnings (loss) attributable to Devon 31.38% 23.05% -55.51% -5.71% 28.54%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

The financial performance from 2018 to 2022 is characterized by significant volatility in profitability, driven primarily by commodity price fluctuations and a major non-cash impairment event in 2020. There is a clear trend toward increased operational efficiency and a shift in the revenue mix toward direct commodity sales.

Revenue Composition and Mix
A structural shift in revenue sources is evident, as oil, gas, and NGL sales increased from 58.55% of total revenues in 2018 to 73.46% in 2022. Conversely, marketing and midstream revenues declined from 41.45% in 2018 to 29.97% in 2022. This suggests a growing reliance on direct production sales relative to midstream services.
Cost Structure and Gross Margins
Gross profit margins showed a marked improvement over the five-year period, rising from 38.62% in 2018 to 55.26% in 2022. This expansion was supported by a reduction in the cost of revenues, which fell from a peak of 64.95% in 2020 to 44.74% in 2022. Production expenses as a percentage of revenue also trended downward, moving from 20.73% in 2018 to 14.59% in 2022.
Operating Expenses and Asset Management
Operating expenses were heavily impacted by a substantial asset impairment in 2020, which represented 55.78% of revenues and was the primary driver of the operating loss that year. Depreciation, depletion, and amortization also peaked in 2020 at 26.93% before declining to 11.60% by 2022. General and administrative expenses demonstrated a consistent downward trend, decreasing from 6.06% of revenues in 2018 to 2.06% in 2022, indicating improved overhead efficiency.
Financing and Interest Costs
Net financing costs as a percentage of revenue decreased steadily from 5.53% in 2018 to 1.61% in 2022. This decline suggests a reduction in the relative burden of debt service, potentially due to debt repayment or the effect of higher revenues against fixed interest obligations.
Net Profitability and Bottom-Line Trends
Net earnings attributable to the company experienced extreme variance, swinging from 28.54% in 2018 to a deficit of 55.51% in 2020, before recovering to 31.38% in 2022. The 2018 result was heavily influenced by discontinued operations, which contributed 22.92% to net earnings. By 2021 and 2022, profitability became driven entirely by continuing operations, reflecting a more stable and streamlined core business model.

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