Devon Energy Corp (NYSE:DVN)

Doing great and making money with energy being so high.

High natural gas supplies will keep price down. Less profit.

A lot of potencial to outperform and growth.

A low PE and potential buy out target make this oil and gas company attractive in what should be a good market for energy for awhile.

I believe that this stock will lag in the next several weeks as the buyout news will fade and the oil/nat gas prices will fall as well. In the long term, DVN and CHK are big winners.

DVN has lots of reserves in the ground. The price of oil will remain high.

Demand for Natural Gas and Crude Oil expected to continue to tighten over time frame mentioned.

unless there is an oil crisis, or a takeover bid, expect DVN to remain flat till DEC2007 at least

Off-the-shelf Gulf strike should begin producing around 2009. Location of reserves (domestic) decreases risk. Increase to risk is possible add'l Gov't reg of offshore drilling.

Seasonal nature of the business.

big oil find in gulf and stock has not really made a move yet. Once they start producing oil its going to be a good long term play

Company increased production in the 4th quarter by 7% and added 489 million barrels of oil to its reserves; 78% of added reserves came from finding new oil and gas

Devon Energy formed with a merger of Devon and Ocean Energy in 2003, is one of the largest independent energy company, primarily engaged in the exploration and production of oil and gas. The company’s major operations of exploration are located in U.S and Canada with properties in Permian Basin, Mid-Continent, and the Rocky Mountains. Its product mix involves over 60% of the natural gas production, while the rest involves crude oil with estimated proven oil reserves of over 2 billion barrels.

Oil and gas prices effect immensely on the performance of players like Davon. A negative fluctuation in the prices can deeply hamper the results. The prices of crude oil continue to remain volatile. In 2006 crude prices hovered around the all time highs, though the above average winter temperatures in U.S., the biggest consumer of crude oil, led to prices falling to 20 month low levels. Looking ahead colder temperatures, announcement of further production cuts by Saudi Arabia and ongoing political concerns in Nigeria will continue to drive the prices to higher levels, benefiting companies like Davon.

Davon financials are looking strong, with revenues and net profit inching upwards, backed by increase in sales of oil and natural gas liquids and rise in marketing and midstream revenues. The trimming of portfolio by selling some potion of the proven oil and gas reserves, is also aiding to bring the debt quotient down. The future of Davon seems attractive as the company is one of the largest stake holders at promising Gulf of Mexico properties and has carried out the first successful production test at the location. Moreover, looking at the short term point of view, the steam-assisted gravity drilling project, Jackfish and projects in Brazil and Azerbaijan, with over 50,000 barrels of oil production per day, are expected to start rolling in second half of 2007, having a likely impact on company’s results. Further, considering the strong industry outlook and growing prices of oil and gas, investing in Devon could prove a right decision.

Great oil reserves, and super nat gas and oil play. Strong performer.

Has a large interest in recent oil and gas discovery in the Gulf. Until we can develope hydrogen, oil will just keep going up.

Company leadership and time-tested methods... What could be better? Add the possibility of a buy-out by one of the

OIL

Oil stock pills for the future.

Natural Gas price increasing steadily and as per longer term trend by Morningstar analysis in the range of 6-7$ per mcf, and long term benchmark oil prices around $50, this stock has only growth on the upside. Naturally, if the oil/gas price increases, the fair value will increase too. Though the dividend is scanty, the growth potential from all the acquisition is really attractive even for a value investor. While the P/E ratio for industry is approx 12, DVN has a p/e about 9.7 and Price/Book at 1.8, which for industry is 3.1. All shows that this stock is currently undervalued.
The risk side is oil and natural gas as commodity, which IMHO is not going to go down very much from where it is now. Another risk is the deep water exploration challenge for Devon, which should be a manageable risk with the improving exploration technologies in future. Even if those exploration are delayed, the profit potential is delayed, not eliminated.