Devon Shares Tumble After Q4 Production Issues

Severe winter weather was a huge drag on Devon’s fourth-quarter financial and operating results. Production came in below the low end of management guidance, capping earnings below Street estimates (EBITDA and adjusted EPS were 3% and 4% respectively, below FactSet consensus estimates). And to make matters worse, management now expects Delaware Basin infrastructure outages and other constraints to crimp first-quarter volumes in the region by 10 thousand barrels of oil equivalent per day (2%). The announcement triggered a 12% decline for Devon shares and probably exacerbated a sectorwide selloff as investors weighed the potential read-through for peers operating in similar areas that have yet to report fourth-quarter results.