On Tuesday, Devon Energy Corp. (NYSE: DVN) reported weak results and cut its dividend by 75%. After markets closed Wednesday the company said it had priced a share offering of 69 million shares at $18.75 per share. The offering was upsized from 60 million. The stock had closed at $20.33, and investors took the stock down about as low as $19.21 in early trading Thursday.

Net proceeds from the offering are expected to be used to boost Devon’s liquidity, lower its debt and fund its capital spending program. Underwriters for the offer have an option to purchase an additional 10.35 million shares.

The 75% dividend cut, to $0.24 per share annually, was accompanied by a 75% cut in the capital budget. Last year Devon spent $5.3 billion on capex and expects to spend $900 million to $1.1 billion this year.

The company also said it would fire about 20% of its workforce in the first quarter. The company expects to realize savings of $400 million to $500 million annually, not including restructuring charges, for this reduction, a 5% workforce reduction last year and expense cuts in its G&A budget.

The low-price offering could be an opportunity for investors to get into a stock that has a more than 50% upside potential to the share price. But that does not appear to be where the sentiment is. Volume had reached more than 4 times the daily average of around 9 million shares in less than one hour of trading Thursday morning.

Shares were down about 5%, at $19.33 in a 52-week range of $18.38 to $70.48. The consensus price target on the stock is $40.79. Devon’s shares have dropped about 70% in the past 12 months, and since the summer of 2014, when they reached a recent high near $80, the shares are down 76%.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.