Devon is a far bigger producer since the Coterra merger closed May 7, but Devon's second quarter results reflect legacy Devon operations for the full quarter. Q2 oil production for the company came in at the higher end of guidance at 503 Mb/d, with total production at 1.36 MMboe/d. Full year 2026 guidance wasn't increased, but tightened to 495-505 Mb/d for crude oil and 1,364-1,398 Mboe/d for total production (see table below). Looking ahead, Devon is pushing capital toward the Delaware, where roughly 400 federal locations won at the New Mexico lease sale are being permitted for their 2027 drilling program.
Source: DVN
Waha, natural gas prices were deeply negative for the first 6 months of 2026 as associated gas production hit up against takeaway capacity. Kinder Morgan's 570 MMcf/d Gulf Coast Express expansion, running from Waha to the Agua Dulce hub in South Texas, started up in late May and brought much needed relief. However, CFO Shane Young wasn't calling it fixed, stating "as we think into the future, it's an issue that's not going away."
Devon is managing exposure to weak Waha prices in a few different ways. First, more than 70% of gas production is hedged, though some of these hedges will roll off after 2026. Then the firm capacity it has arriving late this year and into early 2027 on Blackcomb, a 2.5 Bcf/d pipeline also running Waha to Agua Dulce, which is expected to alleviate much of the downward pressure on Waha prices. Devon is also one of the few producers using demand inside the basin to mitigate future takeaway capacity constraints. The company will supply Competitive Power Ventures' (CPV) Basin Ranch Energy Center, a 1,350-MW gas-fired power plant in Ward County, Texas, which would take 115 MMcf/d from the combined company starting in late 2028. This follows a trend of other producers using power purchase agreements to avoid gas price volatility such as Diamondback, which is also supplying the same CPV project, and Chevron's massive 2.5 GW (about 375 MMcf/d) deal to supply behind-the-fence power to a Microsoft data center campus.
