Amid recent macro uncertainty and rising energy prices, shares of oil and gas producer Devon Energy, Corp. (DVN) have surged 30.7% so far this year. Devon’s recent fourth-quarter performance was better than the Street’s estimates on both its top-line and bottom-line fronts.
Revenue jumped 233.8% year-over-year to $4.27 billion, significantly outperforming estimates by $1.04 billion. Earnings per share at $1.39 beat consensus by $0.15. This performance was driven by production growth in the Delaware basin and an expansion in margins. During the quarter, the company’s total production averaged at 611 thousand oil-equivalent barrels (Boe) per day.
Importantly, its estimated proved reserves on a pro forma basis increased 15% to 1.6 billion Boe at the end of 2021. Additionally, Devon recently partnered with Omnia Midstream to integrate renewable energy into Devon’s Delaware basin operations.
With these developments in mind, let us take a look at the changes in Devon’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, Devon’s top risk category is Finance & Corporate, contributing 9 of the total 18 risks identified for the stock, compared to a sector average of 12 risk factors under the same category.
In its recent report, the company has added one key risk factor under the Finance & Corporate risk category.
Devon highlighted that dividend distribution and stock buybacks are authorized and determined by the sole discretion of its board. Additionally, dividends and stock buybacks are dependent on a number of factors including Devon’s cash position, future plans, and financial performance.
Devon acknowledged that there can be no assurance regarding continuation in dividend payments or authorization of stock buybacks at the current rate or at all. At the same time, the risk remains that if the company eliminates or scales down dividends or buybacks, then its share price could be adversely impacted.
Hedge Fund Activity
According to TipRanks data, the Wall Street’s top hedge funds have increased holdings in Devon Energy by 408.4 thousand shares in the last quarter, indicating a very positive hedge fund confidence signal in the stock based on activities of 14 hedge funds. Notably, Ken Fisher’s Fisher Asset Management has a holding worth $175.43 million in Devon.
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