Doug Leggett

Doug Leggett sought clarity on Devon Energy's business optimization program, specifically whether legacy midstream contracts, such as NLink, rolling off beyond the $1 billion target timeline contribute to the remaining $400 million, and if there's further upside from these longer-dated contracts. He also asked for clarification on Devon's free cash flow allocation, questioning if debt reduction is now included in the previously stated 70% shareholder return commitment.

Answer

CEO Clay Gaspar and CFO Jeff Ritenour confirmed that there is upside beyond the 2026 timeframe, with the $1 billion target primarily focused on 2025 and 2026 wins. Jeff Ritenour clarified that the bulk of the commercial opportunities within the $1 billion target relate to reduced fees on gathering, processing, transportation, and fractionation, mainly for gas and NGLs in the Delaware Basin, with additional opportunities beyond 2027. Clay Gaspar affirmed that debt reduction is considered a fundamental part of returning value to shareholders, especially in preparation for a potentially volatile 2026.

Doug Leggett sought clarity on Devon Energy's business optimization, specifically whether legacy midstream contracts like EnLink, which roll off beyond the $1 billion target timeline, represent an upside case. He also asked for clarification on whether Devon's updated presentation deck now includes debt reduction as part of its shareholder returns, moving from a previous 70% free cash flow return commitment.

Answer

CEO Clay Gaspar confirmed potential upside beyond the initial $1 billion target, with additional wins in years three, four, and five, particularly in gas contracts. CFO Jeff Ritenour clarified that the $1 billion target for January 2027 primarily focuses on reduced fees for gathering, processing, transportation, and fractionation of gas and NGLs in the Delaware Basin. Clay Gaspar affirmed that debt reduction is considered a fundamental part of returning value to shareholders, especially to prepare for a potentially choppy 2026, citing the $485 million debt repayment as an example.

Doug Leggett questioned why ExxonMobil's dividend growth rate remains 'pedestrian' despite significant free cash flow growth and a reduced dividend break-even, suggesting it might be holding back market recognition of value. He asked when free cash flow expansion would translate to a more competitive dividend growth rate.

Answer

Kathryn Mikells, Senior Vice President and Chief Financial Officer, highlighted the company's focus on dividend sustainability, competitiveness, and growth, noting positive investor feedback on their approach to dividends and share buybacks. She emphasized their 43 consecutive years of annual dividend growth. Darren Woods, Chairman and Chief Executive Officer, added that the company is mindful of its dividend commitment across commodity cycles.

Doug Leggett questioned why ExxonMobil's dividend growth rate remains 'pedestrian' despite significant free cash flow growth and a reduced dividend break-even, suggesting it might be holding back market recognition of value.

Answer

Kathryn Mikells, Senior Vice President and CFO, stated that the company prioritizes dividend sustainability, competitiveness, and growth, and generally receives positive investor feedback on its approach, which also includes consistent share buybacks. She highlighted ExxonMobil's 43 consecutive years of annual dividend growth, placing it among a small percentage of S&P 500 companies. Darren Woods, Chairman and CEO, added that they are mindful of their dividend commitment across commodity cycles.