Devon Energy Corporation

Welcome to Devon Energy's first quarter 2025 conference call. At this time, all participants are in listen-only mode. This call is being recorded. I'd now like to turn the call over to Mrs. Rosie Zuklik, Vice President of Investor Relations. You may begin.

Good morning, and thank you for joining us on the call today. Last night, we issued Devon's first quarter earnings release and presentation materials. Throughout the call today, we will make references to these materials to support prepared remarks. The release and slides can be found in the investor section of the Devon website. Joining me on the call today are Clay Gaspar, President and Chief Executive Officer, Jeff Rittenhour, Chief Financial Officer, John Raines, SVP Asset Management, Tom Hellman, SVP EMP Operations, and Trey Lowe, SVP Technology and Chief Technology Officer. As a reminder, this conference call will include forward-looking statements as defined under U.S. securities laws. These statements involve risks and uncertainties that may cause actual results to differ materially from our forecast. Please refer to the cautionary language and risk factors provided in our SEC filings and earnings materials. With that, I'll turn the call over to Clay.

Thank you, Rosie. Good morning, everyone, and thank you for joining us. Devon delivered a very strong first quarter driven by a focus on operational excellence and financial discipline. Today we will share how we're accelerating our strategy to drive sustainable shareholder value. Our strategic priorities on slide three are clear. Executing on our high quality portfolio through operational excellence, maintaining financial strength, returning value to our shareholders, and cultivating a culture of success. In a market characterized by dynamic headwinds, Devon stays focused first on what we can control. Leveraging Devon's 50-year history and an experienced leadership team prepared to handle the uncertainty of commodity price cycles, we remain confident in our value creation strategy. We're committed to our capital return framework underpinned by our high-quality portfolio and our robust financial strength. With an investment-grade balance sheet and a $45 corporate break-even, we are well-positioned to generate value even in a low-price environment. With the recent changes in leadership across our organization and the resulting fresh perspectives, we believe that this is an opportune time for us to accelerate our business optimization efforts and deliver an additional billion dollars in annual free cash flow by year-end 26. This undertaking demonstrates the creativity, dedication, and talent of our employees whose continued efforts advanced Devon success. We laid out our targets in our press release last month and look forward to providing additional details on today's call. Our initial expectation was for the material benefits to start to accrue in 2026. We now believe that we can pull forward some progress into this year, and we're cutting 2025 full year capital by $100 million while maintaining our productive capacity for the remainder of the year. Jeff will provide more details on this optimization plan later in our call. In parallel with our business optimization efforts, we will continue to monitor the broader market dynamics and adjust our plans as needed to maintain our financial strength and deliver top-tier returns for our shareholders. Now let's turn to slide four and discuss our quarterly results. Our first quarter results reflect consistent, exceptional performance, showcasing the strength of our diversified portfolio. Oil production exceeded the upper limit of our guidance range, reaching an impressive 388,000 barrels per day. This achievement was largely attributed to stronger than anticipated base performance in the Rockies and outstanding early well results in the Eagleford. From a capital perspective, we also delivered another solid quarter. Effective cost management and reduced infrastructure spending in the Delaware Basin allowed us to keep total capital below our guidance range. Overall, our production performance and capital discipline resulted in a billion dollars of free cash flow generated in Q1. With this significant free cash flow, we returned nearly half to shareholders through dividends and share buybacks. We maintained a sharp focus on discipline capital allocation, balancing high return investments with substantial dividends, and share repurchases to create sustainable value for our shareholders. Moving to slide five, the Delaware Basin continues to deliver exceptional performance driven by operational improvements year after year. The expanded implementation of SimulFrac across the asset has been a key contributor with up to 60% utilization in our 2025 program. This increased adoption has enhanced completion efficiencies by 12% year to date and continues to accelerate our days online. On the drilling front, our teams continue to improve efficiency and optimize our rig fleet, achieving a 7% increase in drilling speeds year to date. These improvements have yielded meaningful operational changes, enabling us to reduce our rig count once again this quarter. As a reminder, we started the year expecting to run 14 rigs across the Delaware position, but now expect to reduce activity to 11 rigs in the second half of the year. Along with this reduction in rigs in the Delaware, we expect to build in some frac gaps both in Delaware and the Willison, given the improvement to our completion efficiency. Importantly, despite the reduction in rigs and frac activity, we're able to maintain our productive capacity and confidence in our production outlook. This plan highlights our commitment to capturing these improvements through capital discipline rather than growing production in a saturated oil market. Now let's turn to slide six and talk about the Eagleford. As announced last quarter, Devon and BPX agreed to dissolve the partnership in the Blackhawk field. I'm pleased to share that this transaction successfully closed on April 1st, 2025. Prior to close, Devon assumed operations of one of the legacy drilling rigs, and our teams have already delivered significant drilling improvements. On our first Devon operated pad, drilling speeds increased by more than 40% compared to recent legacy performance. These efficiencies, coupled with improved well design and supply chain enhancements, have amounted to nearly 50% reduction in costs. With the cost savings seen today, Devon is effectively incurring the same drilling capital with double the working interest in the Blackhawk field. Going forward, we expect to realize $2.7 million per well in savings as completions will commence on our first operated pad here in the second quarter. I have confidence that our team will continue to innovate and drive further improvements as we build operational momentum. With these early results, we are delivering on our plan to significantly enhance returns while providing a material uplift to the value of our position. With that, I'll now hand the call over to Jeff.