What is the key to Devon Energy’s (DVN) recent stock market success?
CEO Rick Muncrief told Jim Cramer on a recent episode of "Mad Money" that Devon's acquisition of WPX Energy has been going very well. The merger gave Devon Energy assets in the Williston Basin and the Permian Basin.
Cramer and Muncrief discussed how Devon Energy was the best performing stock in the S&P 500 last year. It’s a stock that still trades for just 10 times earnings. At a time when oil companies face huge environmental challenges and climate change on one side and rising prices on the other, the industry’s performance is mixed.
Devon’s new business model, which includes a variable dividend and a share buyback program, has also been very well received, he told Cramer.
Over on Real Money, Bruce Kamich sees positive stock growth in the future of Devon. "We can see a strong uptrend in the past two years. Prices are trading comfortably above the rising 40-week moving average line," Kamich noted.
Muncrief noted that in years past, oil drillers were compensated for growth, a model which contributed to volatility. But even before the pandemic, oil producers were becoming more disciplined, offering stability and far less volatility. Those trends only accelerated after Covid.
Devon is currently only 25% hedged in 2022, leaving the majority of their oil free to take advantage of continued price increases. Devon is also continuing to realize synergies from their recent merger.
Cramer heard that Devon has a stronger focus on sustainability. Muncrief said they've deployed a lot of new technologies to cut their emissions and reduce flaring, and they will continue to do more every year.
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