NEW YORK (TheStreet) -- Devon Energy's (DVN) shares haven't performed well in recently, losing 14% of their value in the last three months. The weakness in crude oil prices pressured this stock as well as shares of other leading oil and gas producers such as Chevron (CVX) and Exxon Mobil (XOM) . But Devon Energy still has several strong points that could pull its stock back up in the coming months. Let's examine them.
For one, the company continues to expand its oil output in assets such as the Eagle Ford Shale and the Permian Basin. The Eagle Ford Shale holdings were purchased earlier this year. According to the company's recent earnings report, oil production rose by 33% year over year. This higher output has contributed to the rise in its profitability, as indicated in the chart below.
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Source of data: Devon Energy's Web site
The company has been shifting gears by cutting down on its natural gas operations, which tend to yield lower profit margins than oil and natural gas liquids.
Also, in the company's latest conference call, the management stated that it continues to invest in new designs for its oil well drilling methods in an attempt to increase the yield of its wells. This development could lead, over time, to higher returns per well due to higher output.
The company also reached its quarterly goals as it reached adjusted diluted earnings per share of $1.34 in the past quarter, 12 cents higher than analysts' consensus. This is another boost for confidence in the company's management.
Devon also expects to increase its quarterly output in oil and NGL in the fourth quarter.