Devon Energy aims to boost annual pretax cash flow by $1 billion through a series of cost-reduction efforts.
Oklahoma City-based Devon plans to streamline upstream field operations, decrease D&C costs and improve operating margins, the company announced April 22.
“Given the challenging market and shifting competitive landscape, this is the right moment to focus internally and improve our profitability,” said Devon President and CEO Clay Gaspar.
Devon aims to save $300 million per year through capital efficiencies, including optimizing well designs, reducing cycle times and standardizing facilities and vendor management.
The company aims to save another $250 million per year by optimizing upstream production with advanced analytics, reducing downtime and flattening production declines.
Enhancing midstream commercial contracts, increasing realizations and lowering its GP&T cost structure will be used to cut another $300 million.
Another $150 million in savings will stem from reducing interest expenses and corporate costs.
Plans are expected to be fully realized by the end of 2026, with 30% of the savings achieved by year-end 2025.
Hart Energy has reached out to Devon for more information on its cost reduction efforts.
The company said it will update investors on its optimization plans with the release of its first-quarter earnings on May 7.
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Shifting strategies
Gaspar recently took the helm at Devon from outgoing CEO Rick Muncrief, who retired at the beginning of March.
Muncrief grew Devon through large-scale M&A. Last year, Devon completed a $5 billion acquisition of Grayson Mill Energy in the Williston Basin.
Previously CEO of WPX Energy, Muncrief became president and CEO at Devon after merging the two companies in 2021 in a $5.75 billion combination. The WPX deal gave Devon a stronger footprint in the Permian’s Delaware Basin.
Gaspar, for his part, is more focused on improving Devon’s current assets, Siebert Williams Shank & Co. Managing Director Gabriele Sorbara told Hart Energy.
The firm sensed that Devon was “taking a pause on M&A as it focuses on improving its portfolio of assets (including improving the base decline, extending its inventory organically, lowering corporate costs and improving capital efficiencies),” Sorbara noted in an April 14 report.
Devon announced several other changes to its leadership structure earlier this year.
John Raines, previously Devon’s Delaware Basin leader, was promoted to senior vice president of E&P asset management.
Trey Lowe, previously vice president and chief technology officer, was elevated to senior vice president and CTO.
Devon hired Tom Hellman as senior vice president of E&P operations. Hellman most recently served as operations vice president for Marathon Oil’s Permian and Oklahoma portfolios.
The Delaware and Williston are Devon’s two largest operating areas today. Of the 270 MMboe Devon produced in 2024, 170 MMboe (63%) came from the Delaware and 32 MMboe (12%) came from the Williston.
The company also has smaller footprints in the Eagle Ford, Anadarko and Powder River basins.
During the first quarter, Devon announced dissolving a legacy Eagle Ford joint venture (JV) with BPX Energy.
The JV covered the Blackhawk Field in South Texas, which holds around 550 of Devon’s 700 undrilled Eagle Ford locations, Gaspar said in fourth-quarter earnings.
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Oil hunkers down
Oil producers big and small are working to reduce costs amid a collapse in commodity prices.
WTI crude averaged $61.24/bbl during the week ended April 11, down 16% since the start of the year, per U.S. Energy Information Administration data.
Tariff uncertainty from the Trump administration, plus OPEC’s acceleration of production cuts, have weighed on commodity prices.
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Oil markets are “now probably set for a period of weakness, probably more weakness than where we are today,” Diamondback Energy President Kaes Van’t Hof said April 15 at the World Oilman’s Mineral & Royalty Conference in Houston.
“You’ve really got to hunker down,” said Scott Sheffield, former Pioneer Natural Resources CEO, during a Bloomberg Television interview at the CERAWeek by S&P Global conference last month.
In February, Chevron announced plans to lay off 15% to 20% of its global workforce by the end of 2026.
Exxon Mobil and ConocoPhillips both made staff reductions after closing their respective acquisitions of Pioneer Natural Resources and Marathon Oil.
Last year, European supermajor Shell announced plans to lay off 20% of its oil and gas exploration and development staff by 20%.
Permian producer Matador Resources sold a small package of non-core Eagle Ford assets and entered into additional hedges “in preparation for these turbulent times,” CEO Joe Foran said earlier this month.
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