Seaport Taps Devon Energy and Permian Resources as Top Upstream Oil Picks

Seaport analyst Vin Lovaglio has identified Devon Energy (NYSE: DVN) and Permian Resources (NYSE: PR) as top investment ideas among oil-weighted upstream operators, initiating coverage with "Buy" ratings for both companies. The selections focus on operators with robust asset bases and clear pathways to creating value through operational improvements and strategic acquisitions, according to a recent analyst note.

Devon's Post-Merger Potential

For Devon Energy, Seaport highlighted the company's opportunity following its asset integration with Coterra Energy. The note states that the combined scale and quality of Devon's assets in the Delaware Basin are now "unmatched" across the sector. Lovaglio believes the market may not have fully priced in the potential synergies from the combined portfolio, which is likely to be streamlined through future divestitures.

Seaport's analysis points to a valuation disconnect that presents a clear catalyst for the stock:

• Devon Energy currently trades at an approximate 5% discount on its 2027 un-levered free cash flow yield compared to peers of a similar production scale.

Ad

The analyst argues that by divesting non-core assets, the company has a clear path to closing this valuation gap with its competitors.

Permian's 'Ground Game' Advantage

Permian Resources was selected for its competitive advantage built on a consistent "ground game" of small-scale acquisitions and successful asset integration. According to Seaport, this repeatable strategy has effectively driven reserve expansion and continuously improved the company's oil capital efficiency.

The note also pointed to the company's balanced development approach across its Delaware Basin acreage, which enhances market confidence in the sustainability of its returns. Lovaglio sees the stock's current valuation, which is in line with the average for small- to mid-cap (SMID-cap) peers, as a floor, suggesting limited downside risk. He also noted that Permian Resources still has the capacity to pursue further low-cost M&A in the basin.