Devon Earnings: Production Gains Drive Our Fair Value Estimate Boost

Following our review of narrow-moat-rated Devon's first-quarter results, we raise our fair value estimate by roughly 6% to $55. First-quarter production of roughly 664 thousand barrels of oil equivalent per day, or mboe/d, exceeded guidance by some 4%. On the heels of the outperformance in the Delaware Basin, where we expect strong volume growth in 2024, management had sufficient conviction to raise full-year 2024 production to 665 mboe/d at the midpoint, or up roughly 2% versus prior guidance. Our newly expected production nears the high end of the revised range and predominantly drives our revised fair value.