Is Devon Energy (DVN) the Most Profitable Natural Gas Stock to Invest in?

As the energy sector continues to evolve, investors are increasingly focusing on natural gas stocks as a lucrative investment opportunity. Among the many options available, Devon Energy (DVN) stands out as a strong contender for the most profitable natural gas stock to invest in. This article explores the reasons behind Devon Energy's potential as a top pick in the natural gas sector.

Devon Energy's production growth and cost structure set it apart from its peers. The company has consistently increased its production, with a compound annual growth rate (CAGR) of 12% over the past five years, compared to the industry average of 8%. This growth is driven by Devon's focus on high-return projects and strategic acquisitions, such as the 2019 acquisition of EnLink Midstream, which added significant natural gas reserves and infrastructure to its portfolio.

Devon's cost structure is also competitive, with a total cost of supply (TCS) of $2.50 per thousand cubic feet (Mcf) of natural gas, compared to the industry average of $3.00 Mcf. This lower cost structure is a result of Devon's efficient operations and focus on reducing costs through technology and innovation. The company has consistently reduced its TCS over the past five years, with a CAGR of -3% compared to the industry average of -1%.

Devon Energy's strong production growth and competitive cost structure have translated into robust financial performance. The company's earnings per share (EPS) have grown at a CAGR of 15% over the past five years, compared to the industry average of 10%. Devon's return on equity (ROE) is also higher than the industry average, at 15% compared to 12%.



Devon Energy's recent acquisitions, particularly the acquisition of WPX Energy in 2020, have significantly boosted its production growth and profitability. The deal added high-quality assets in the Delaware Basin and the Permian Basin, which have contributed to Devon's increased oil and natural gas production. In 2021, Devon's oil and natural gas production increased by 17% and 14% year-over-year, respectively, driven largely by the WPX acquisition. The acquisition has also enhanced Devon's financial performance, with the company reporting a 30% increase in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2021 compared to the previous year.

In conclusion, Devon Energy's production growth, cost structure, and financial performance make it a strong contender for the most profitable natural gas stock to invest in. The company's focus on high-return projects, strategic acquisitions, and efficient operations have driven its financial performance and positioned it well for future growth. Investors looking to gain exposure to the natural gas sector should consider Devon Energy as a top pick.