Club holding Devon Energy (DVN) beat sales and earnings forecasts when it reported third-quarter results Tuesday, highlighting the oil-and-gas producer’s capital discipline and ability to generate cash amid a volatile oil market. Total revenue climbed about 57% year-over-year, to $5.43 billion, exceeding analysts’ expectations of $4.95 billion, according to estimates from Refinitiv. Adjusted diluted earnings per share soared more than 100% compared with the year prior, to $2.18 a share, beating the consensus estimate of $2.13, according to Refinitiv. Note: Devon Energy is scheduled to host its post-earnings conference call on Wednesday at 11:00 a.m. ET. We’ll follow up with any relevant information from management after the call. Bottom line We continue to applaud management’s strict adherence to capital discipline and the prioritization of per-share financial growth, steady and consistent exploration-and-production activity, free cash flow generation, and market-leading cash returns to shareholders over production growth at any cost. As a result, Devon remains one of the best oil operators in the country. We continue to rate the company a 2 in the portfolio , meaning we would be buyers on a pullback. Devon shares fell more than 2% in afterhours trading, to roughly $75.51 a share, driven by lower-than-expected production guidance for the fourth quarter, along with higher capex spending estimates than analysts predicted. However, the share price will likely take its cue Wednesday from West Texas Intermediate crude, the U.S. oil benchmark, which closed at $88.37 a barrel Tuesday. 3Q cash flow Operating cash flow for the quarter increased 32% year-over-year, to $2.1 billion, roughly in line with analysts’ estimates of $2.18 billion. Free cash flow grew 31% annually, to $1.48 billion, in line with forecasts of $1.45 billion. Capital expenditures came in at $690 million, which is at the low end of management’s $680 million to $755 million guidance range and below the $727 million predicted by analysts. Capital allocation At the Club, we pay close attention to cash flow metrics. The core of our investment thesis for our oil producers is that their capital discipline, combined with a favorable commodity price environment, will lead to significant cash flow generation, a large percentage of which then gets returned to shareholders via dividends and buybacks. The strong cash flow realized in the third quarter allowed management to announce a fixed-plus-variable dividend of $1.35 a share. That’s down from $1.55 per share in the prior quarter, as oil prices skyrocketed in the second quarter in the wake of Russia’s invasion of Ukraine before plummeting in the third. WTI fell by roughly 25% in the three months ended Sept. 30, though has since rebounded more than 10% on the back of production cuts by the Organization of Petroleum Exporting Countries . Still, Devon’s new payment to shareholders represents a solid 7% dividend yield on an annualized basis, based on Tuesday’s closing price of $77.30. Devon did not aggressively make use of its $2 billion share repurchase program this quarter. The company bought back roughly $126 million worth of shares, putting its year-to-date total at $1.3 billion. We’ll probably hear more about this on earnings conference call Wednesday, but it’s likely the company paused its buyback plan as a result of its $1.8 billion cash acquisition of Validus Energy , a deal that was announced in August and closed in September. Given this financial discipline, Devon expects to end the year with a net debt-to-EBITDAX (earnings before interest, tax, deprecation, amortization, and exploration expense) ratio of 0.5 (on a trailing 12-months basis), down from 0.8 at the end of 2021. Production and pricing Total oil equivalent production for the quarter came in at 614,000 barrels a day, which is above the high end of management’s guidance range of 593,000 to 613,000 barrels a day, and well above analysts’ forecasts for 604,000 barrels a day of total oil equivalent production. The makeup of this output was as follows: Oil: 294,000 barrels a day, compared estimates for 293,600 barrels a day. Natural Gas Liquids: 154,000 barrels a day, versus forecasts for 153,500 barrels a day. Gas: 100,000 cubic feet per day, ahead of the 949,600 cubic feet a day predicted by analysts. Guidance For the fourth quarter, management is targeting a 6% year-over-year increase in production of 640,000 to 660,000 barrels of oil equivalent a day. The 650,000 barrel-a-day midpoint is below analysts’ estimates of about 660,000 barrels a day. Total capital expenditures are expected to be between $845 million and $915 million, above the $783 million forecasted by analysts. This guidance includes $120 million of incremental capital requirements related to recent bolt-on acquisitions in the Eagle Ford and Williston Basin. Free cash flow is expected to increase more than 25% on an annual basis. Considering Devon’s $1.17 billion of free cash flow in the fourth quarter last year, the target implies Devon will grow this figure to at least $1.46 billion, in line with the consensus estimate of $1.46 billion. (Jim Cramer’s Charitable Trust is long DVN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.
Nick Oxford | Reuters
Club holding Devon Energy (DVN) beat sales and earnings forecasts when it reported third-quarter results Tuesday, highlighting the oil-and-gas producer’s capital discipline and ability to generate cash amid a volatile oil market.
In a bold bid to combat the crippling air pollution crisis in its capital, Delhi, Indian lawmakers have begun high-level discussions about a plan to phase out gas and diesel combustion vehicles by 2035 – a move that could cause a seismic shift in the global EV space and provide a cleaner, greener future for India’s capital.
Long considered one of the world’s most polluted capital cities, Indian capital Delhi is taking drastic steps to cut back pollution with a gas and diesel engine ban coming soon – but they want results faster than that. As such, Delhi is starting with a city-wide ban on refueling vehicles more than 15 years old, and it went into effect earlier this week. (!)
“We are installing gadgets at petrol pumps which will identify vehicles older than 15 years, and no fuel will be provided to them,” said Delhi Environment Minister Manjinder Singh Sirsa … but they’re not stopping there. “Additionally, we will intensify scrutiny of heavy vehicles entering Delhi to ensure they meet prescribed environmental standards before being allowed entry.”
The Economic Times is reporting that discussions are underway to pass laws requiring that all future bus purchases will be required to be electric or “clean fuel” (read: CNG or hydrogen) by the end of this year, with a gas/diesel ban on “three-wheelers and light goods vehicles,” (commercial tuk-tuks and delivery mopeds) potentially coming 2026 to 2027 and a similar ban privately owned and operated cars and bikes coming “between 2030 and 2035.”
Electrek’s Take
Xpeng EV with Turing AI and Bulletproof battery; via XPeng.
Last week, Parker Hannifin launched what they’re calling the industry’s first certified Mobile Electrification Technology Center to train mobile equipment technicians make the transition from conventional diesel engines to modern electric motors.
The electrification of mobile equipment is opening new doors for construction and engineering companies working in indoor, environmentally sensitive, or noise-regulated urban environments – but it also poses a new set of challenges that, while they mirror some of the challenges internal combustion faced a century ago, aren’t yet fully solved. These go beyond just getting energy to the equipment assets’ batteries, and include the integration of hydraulic implements, electronic controls, and the myriad of upfit accessories that have been developed over the last five decades to operate on 12V power.
At the same time, manufacturers and dealers have to ensure the safety of their technicians, which includes providing comprehensive training on the intricacies of high-voltage electric vehicle repair and maintenance – and that’s where Parker’s new mobile equipment training program comes in, helping to accelerate the shift to EVs.
“We are excited to partner with these outstanding distributors at a higher level. Their commitment to designing innovative mobile electrification systems aligns perfectly with our vision to empower machine manufacturers in reducing their environmental footprint while enhancing operational efficiency,” explains Mark Schoessler, VP of sales for Parker’s Motion Systems Group. “Their expertise in designing mobile electrification systems and their capability to deliver integrated solutions will help to maximize the impact of Parker’s expanding METC network.”
Advertisement – scroll for more content
The manufacturing equipment experts at Nott Company were among the first to go through the Parker Hannifin training program, certifying their technicians on Parker’s electric motors, drives, coolers, controllers and control systems.
“We are proud to be recognized for our unwavering dedication to advancing mobile electrification technologies and delivering cutting-edge solutions,” says Nott CEO, Markus Rauchhaus. “This milestone would not have been possible without our incredible partners, customers and the team at Nott Company.”
In addition to Nott, two other North American distributors (Depatie Fluid Power in Portage, Michigan, and Hydradyne in Fort Worth, Texas) have completed the Parker certification.
Electrek’s Take
T7X all-electric track loader at CES 2022; via Doosan Bobcat.
With the rise of electric equipment assets like Bobcat’s T7X compact track loader and E10e electric excavator that eliminate traditional hydraulics and rely on high-voltage battery systems, specialized electrical systems training is becoming increasingly important. Seasoned, steady hands with decades of diesel and hydraulic systems experience are obsolete, and they’ll need to learn new skills to stay relevant.
Certification programs like Parker’s are working to bridge that skills gap, equipping technicians with the skills to maximize performance while mitigating risks associated with high-voltage systems. Here’s hoping more of these start popping up sooner than later.
Based on a Peterbilt 579 commercial semi truck, the ReVolt EREV hybrid electric semi truck promises 40% better fuel economy and more than twice the torque of a conventional, diesel-powered semi. The concept has promise – and now, it has customers.
Austin, Texas-based ReVolt Motors scored its first win with specialist carrier Page Trucking, who’s rolling the dice on five of the Peterbilt 579-based hybrid big rigs — with another order for 15 more of the modified Petes waiting in the wings if the initial five work out.
The deal will see ReVolt’s “dual-power system” put to the test in real-world conditions, pairing its e-axles’ battery-electric torque with up to 1,200 miles of diesel-extended range.
ReVolt Motors team
ReVolt Motors team; via ReVolt.
The ReVolt team starts off with a Peterbilt, then removes the transmission and drive axle, replacing them with a large genhead and batteries. As the big Pete’s diesel engine runs (that’s right, kids – the engine stays in place), it creates electrical energy that’s stored in the trucks’ batteries. Those electrons then flow to the truck’s 670 hp e-axles, putting down a massive, 3500 lb-ft of Earth-moving torque to the ground at 0 rpm.
Advertisement – scroll for more content
The result is an electrically-driven semi truck that works like a big BMW i3 or other EREV, and packs enough battery capacity to operate as a ZEV (sorry, ZET) in ports and urban clean zones. And, more importantly, allows over-the-road drivers to hotel for up to 34 hours without idling the engine or requiring a grid connection.
That ability to “hotel” in the cab is incredibly important, especially as the national shortage of semi truck parking continues to worsen and the number of goods shipped across America’s roads continues to increase.
And, because the ReVolt trucks can hotel without the noise and emissions of diesel or the loss of range of pure electric, they can immediately “plug in” to existing long-haul routes without the need to wait for a commercial truck charging infrastructure to materialize.
“Drivers should not have to choose between losing their longtime routes because of changing regulatory environments or losing the truck in which they have already made significant investments,” explains Gus Gardner, ReVolt founder and CEO. “American truckers want their trucks to reflect their identity, and our retrofit technology allows them to continue driving the trucks they love while still making a living.”
If all of that sounds familiar, it’s probably because you’ve heard of Hyliion.
In addition to being located in the same town and employing the same idea in the same Peterbilt 579 tractor, ReVolt even employs some of the same key players as Hyliion: both the company’s CTO, Chandra Patil, and its Director of Engineering, Blake Witchie, previously worked at Hyliion’s truck works.
Still, Hyliion made their choice when they shut down their truck business. ReVolt seems to have picked up the ball – and their first customer is eager to run with it.
“Our industry is undergoing a major transition, and fleet owners need practical solutions that make financial sense while reducing our environmental impact,” said Dan Titus, CEO of Page Trucking. “ReVolt’s hybrid drivetrain lowers our fuel costs, providing our drivers with a powerful and efficient truck, all without the need for expensive charging infrastructure or worrying about state compliance mandates. The reduced emissions also enable our customers to reduce their Scope 2 emissions.”
Page Trucking has a fleet of approximately 500 trucks in service, serving the agriculture, hazardous materials, and bulk commodities industries throughout Texas. And, if ReVolt’s EREV semis live up to their promise, expect them to operate a lot more than 20 of ’em.