Devon Energy Corporation: quarterly profit doubled on merger and hedging, but debt rose by $2.5 billion

4 августа Devon Energy Corporation раскрыла результаты за второй квартал 2026 года: выручка выросла на 19,0% год к году до 5 100 млн долл., EBITDA – на 83,1% до 3 800 млн, чистая прибыль – на 111,3% до 1 900 млн. Рост во многом обеспечен слиянием с Coterra и переоценкой деривативов, тогда как долг за квартал увеличился на 2,5 млрд долл. Акции выглядят скорее привлекательно: мультипликаторы ниже собственной истории, но модель портала указывает на потенциал снижения.

Key takeaways

— Выручка выросла на 19% за счёт слияния с Coterra и высоких цен на нефть

— EBITDA-маржа удвоилась до 74,5% благодаря разовым эффектам от деривативов и слияния

— Чистая прибыль выросла более чем вдвое, но значительная часть – бумажная

— Операционный денежный поток вырос до 3 700 млн, но капзатраты поглотили 36%

— Долг вырос на 2,5 млрд за квартал из-за финансирования слияния

— Дивидендная доходность 2,1% – ниже исторической, но выплаты подкреплены денежным потоком

— Оценка: P/E 11,7 и EV/EBITDA 5,8 – ниже средних за 3 года, но модель портала даёт -67%

Attractiveness

Key figures, USD bn

Revenue grew 19% on the Coterra merger and higher oil prices

In Q2 2026, Devon Energy Corporation's revenue reached $5,100 million, up 19.0% year-over-year. The main driver was the merger with Coterra completed on May 7, 2026: oil production rose from 387 to 503 thousand barrels per day, and total production in oil equivalent from 841 to 1,359 thousand barrels per day. Higher oil prices also contributed: the average WTI price in Q2 was $92.47 per barrel versus $63.95 a year earlier.

Revenue growth accelerated after two quarters of decline: in Q4 2025 revenue fell 6.4% YoY, and in Q1 2026 by 14.5%. In Q2 2026 growth reached 19.0%, reflecting both the Coterra consolidation and favorable pricing.

EBITDA margin doubled to 74.5% on one-off derivative and merger effects

EBITDA in Q2 2026 reached $3,800 million, up 83.1% YoY. The EBITDA margin rose to 74.5% from 48.4% a year earlier. This jump is explained not only by operational efficiency but also by one-off items: derivative gains were $414 million versus $236 million a year earlier, as well as merger effects including asset revaluation.

Excluding these factors, operating profit rose from $1,161 to $2,384 million, also reflecting higher prices and volumes. However, the sustainability of the 74.5% margin is questionable: in Q1 2026 the EBITDA margin was only 28.1% ($1,070 million EBITDA on $3,807 million revenue), indicating volatility.

Net profit more than doubled, but a significant part is paper

Net profit in Q2 2026 reached $1,900 million, up 111.3% YoY ($899 million a year earlier). Growth was driven by operating results and derivative revaluation: the fair value of financial instruments rose by $530 million pre-tax. Excluding these and other one-off items, core earnings were $1,479 million, or $1.57 per share.

In Q1 2026 net profit was only $120 million due to a derivative loss of $701 million. Thus, quarterly profit dynamics are highly dependent on market volatility, and Q2 figures should not be extrapolated to the full year.

Operating cash flow rose to $3,700 million, but capex absorbed 36%

Operating cash flow in Q2 2026 was $3,700 million versus $1,545 million a year earlier. Growth is related to higher profits and Coterra consolidation. Capital expenditures rose to $1,318 million from $956 million a year earlier, reflecting expanded operations after the merger. Free cash flow (OCF minus capex) was $2,382 million.

Over the last twelve months, operating cash flow was $6,700 million with capital expenditures of about $4,000 million (sum of quarterly values), yielding free cash flow of roughly $2,700 million. The company directs a significant portion of cash flow to dividends and buybacks: in Q2 dividends were $366 million and buybacks $197 million.

Debt rose by $2.5 billion in the quarter due to merger financing

Net debt at the end of Q2 2026 was $10,388 million, up $2,457 million from the end of Q1 ($7,931 million). The increase is related to financing the Coterra merger: the company raised debt and spent $2,729 million on acquisitions. Total debt rose from $8,386 to $11,388 million, while cash fell from $1,815 to $1,009 million.

The ratio of net debt to EBITDA over the last twelve months was 1.05, a moderate level for an oil and gas company. However, given rising debt and potentially lower oil prices, this metric could deteriorate. The company retains an investment-grade rating and access to capital markets.

Dividend yield of 2.1% is below historical, but payments are backed by cash flow

Over the last twelve months, Devon Energy Corporation paid dividends yielding 2.12% on the current share price. In Q2 2026 dividends were $366 million, roughly $0.39 per share. The company pays a fixed dividend plus a variable dividend tied to free cash flow.

At the current price of $44.57 per share and a dividend yield of 2.1%, payments look moderate. However, given free cash flow of about $2,700 million over the last twelve months and dividend payments of roughly $800 million over the same period, the coverage ratio exceeds 3 times. This leaves room to maintain or increase dividends if oil prices remain at current levels.

Valuation: P/E 11.7 and EV/EBITDA 5.8 – below 3-year averages, but portal model gives -67%

Current multiples for Devon Energy Corporation: P/E over the last twelve months is 11.7, EV/EBITDA is 5.8. The three-year average EV/EBITDA is 5.3, meaning the current multiple is 9% above its own history. P/E also looks moderate, but given one-off items in profit, the adjusted P/E may be higher.

The portal's model, which re-prices EBITDA at current commodity prices and target EV/EBITDA, shows a potential downside of 67% from the current price. This implies the market is already pricing in high oil prices, and any decline could lead to a significant correction. The shares look rather attractive against their own history, but with caution given the portal model.

Valuation on the latest reported figures

Bottom line

The Q2 2026 report showed strong results: revenue and profit more than doubled YoY, driven by the Coterra merger and high oil prices. However, a significant part of profit is paper, related to derivative revaluation, and debt rose by $2.5 billion to finance the deal. Dividends are covered by free cash flow with a margin, but the yield of 2.1% is modest. At the current price, shares trade below their three-year average multiples, but the portal model indicates downside potential. Verdict – rather attractive: growth is backed by real assets, but investors should watch oil prices and the company's ability to reduce debt.