You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: Also joining me on the call today are Rick Muncrief, our president and CEO; Clay Gaspar, our chief operating officer; Jeff Ritenour, our chief financial officer; and a few members of our senior management team.
We appreciate everyone taking the time to join us on the call today.
Devon's third quarter results were outstanding.
Once again showcasing the power of our Delaware focused asset portfolio and then the benefits of our financially driven business model.
Our team's unwavering focus on operations excellence has established impressive momentum that has allowed us to capture efficiencies, accelerate free cash flow, reduce leverage, and return of market-leading amount of cash to shareholders.
Simply put, we are delivering on exactly what our shareholder-friendly business model was really designed for, and that is to lead the energy industry in capital discipline and cash returns.
Now moving to Slide 4.
While our strategy is a clear differentiator for Devon, the success of this approach is underpinned by our high-quality asset portfolio that is headlined by our world-class acreage position in the Delaware Basin.
So with this advantaged portfolio, we possess a multi-decade resource opportunity in the best position plays on the U.S. cost curve.
And with this sustainable resource base, we are positioned to win multiple ways with our balanced commodity exposure.
While our production is leveraged to oil, nearly half our volumes come from natural gas and NGLs, providing us with meaningful revenue exposure to these valuable products.
This balance and diversification are critically important to Devon's long-term success.
As you can see on Slide 5, the strength of our operations and the financial benefits of our strategy were on full display with our third quarter results.
This is evidenced by several noteworthy accomplishments, so including: we completed another batch of excellent wells in Delaware Basin that drove volumes 5% above our guidance.
We maintained our capital allocation in a very disciplined way by limiting our reinvestment rates to only 30% of our cash flow.
We're continuing to then the capture synergies and drive per unit cost lower.
We are also achieving a more than eightfold increase in our free cash flow.
We're increasing our fixed and variable dividend payout by 71%.
We're also improving our financial strength by reducing net debt 16% in the quarter.
Overall, it was another tremendous quarter for Devon, and I especially want to congratulate our employees and our investors for these special results.
Now moving to Slide 6.
While 2021 is wrapping up to be a great year for Devon, the investment thesis only gets stronger and as I look ahead to next year.
Although we're now still working to finalize the details of our 2022 plan, I want to emphasize that our strategic framework remains unchanged, and we will continue to prioritize free cash flow generation over the pursuit of volume growth.
As we have stated many times in the past, we have no intention of adding incremental barrels into the market until demand side fundamentals sustainably recover and it becomes evident that OPEC+ spare oil capacity that's effectively absorbed by the world markets.
With this disciplined approach and to sustain our production profile in 2022, we are directionally planning on an upstream capital program in the range of $1.9 billion to $2.2 billion.
Importantly, with the operating efficiency gains and improved economies of scale, we can fund this program at a WTI breakeven price of around $30.
This low breakeven funding level is a testament to the great work the team has done over the past few years to streamline our cost structure and to really optimize capital efficiency.
Being positioned as a low-cost producer provides us with a wide margin of safety to continue to execute on all facets of our cash return model.
With our 2022 outlook, Devon will have one of the most advantaged cash flow growth outlooks in the industry.
At today's prices, with the full benefit of the merger synergies and an improved hedge book, we're positioned for cash flow growth of more than 40% compared to 2021.
And as you can see on the graph, this strong outlook translates into a free cash flow yield of 18% at an $80 WTI price.
The key takeaway here is that 2022 is shaping up to be an excellent year for Devon shareholders.
Now jumping ahead to Slide 8, the top priority of our free cash flow is then fund our fixed plus variable dividend.
This unique dividend policy is specifically designed for our commodity-driven business and provides us the flexibility to return more cash to shareholders than virtually any other opportunity in the markets today.
Now to demonstrate this point, so we've included a simple comparison of our estimated dividend yield in 2022 based on our preliminary guidance.
As you can see, Devon's implied dividend is not only more than double that of the energy sector, but this yield is vastly superior to us in every sector in the S&P 500 index.
In fact, at today's pricing, Devon's yield is more than seven times higher than the average company that is represented in the S&P 500 Index.
Now that's truly something to think about in the yield-starved world we currently live in.
And moving on to Slide 9.
With our improving free cash flow outlook and strong financial position, I'm excited to announce the next step in our cash return strategy with the authorization of a $1 billion share repurchase program.
This program is an equivalent to approximately 4% of Devon's current market capitalization and is authorized through year-end 2022.
Jeff will cover this topic in greater detail later in the call, but this opportunistic buyback is a great complement to our dividend strategy and provides us with another capital allocation tool to enhance per share results for the shareholders.
Beginning on the far left chart of our business is positioned to generate cash flow growth of more than 20 -- 40% in 2022, which is vastly superior to most other opportunities in the market.
As you can see in the middle chart, this strong growth translates into an 18% free cash flow yield that will be deployed to dividends, buybacks, and the continued improvement of our balance sheet.
And lastly, on the far right chart, and even with all of these outstanding financial attributes, we still trade at a very attractive valuation, especially compared to the broader market indices.
We believe this to be another catalyst for our share price appreciation as more and more of the investors discover Devon's unique investment proposition.
In summary, Devon's third quarter impressive results were the result of tremendous execution across nearly every aspect of our business.
We had wins in environmental and safety performance.
operational improvements, continued cultural alignment, strong well productivity, cost control, significant margin expansion and ultimately, excellent returns on the invested capital.
This recurring trend in our operational excellence while managing significant organizational change and macro stress has now been established over multiple quarters and is a testament to the Devon employees and strong leadership throughout the organization.
As I look forward to '22 and beyond, I believe we're positioned to continue delivering but also take our performance to an even higher level of cohesion and productivity.
Providing the energy to fuel today's modern world is critically important work.
I'm very proud of what we do and how we do it.
As I look forward to Devon's near and also long-term goals, I'm confident in our ability to deliver on society's ever-increasing expectations.
Devon's operational performance in the quarter is once again driven by our world-class Delaware Basin assets, where roughly 80% of our capital was deployed.
With this capital investment, we continue to maintain steady activity levels by running 13 operated rigs and four frac crews, bringing on 52 wells during the quarter.
As you can see in the bottom left of the slide, this is just focused development program translated into another quarter of robust volume growth, and our continued cost performance allowed us to capture the full impact of the higher commodity prices.
Turning your attention to the map on the right side, our well productivity across the basin continue to be outstanding in the quarter with the results headlined by our Boundary Raider project.
Some may recall that this is not the first time we've delivered on impressive results from this well pad.
Back in 2018, our original Boundary Raider project that's developed a good package of Bone Spring wells that set a record for the highest rate wells ever brought online in the Delaware Basin.
Fast forward to today, this addition of the Boundary Raider went further downhole to develop an overpressured section in the Upper Wolfcamp.
This project also delivered exceptionally high rates with our best well delivering an initial 30-day production rates of 7,300 BOE per day, of which more than that -- more than 60% of that was oil.
I call that pretty good for a secondary target.
Moving a bit east into Lea County, another result for this quarter was the Cobra project, where the team executed on a 3 mile Wolfcamp development.
This pad outperformed our predrill expectations by more than 10% with the top well achieving 30-day rates as high as 6,300 BOE per day.
In addition to the strong flow rates, this activity helped us prove the economics of the Wolfcamp inventory in this area to further deepening the resource-rich opportunity we hold in the Delaware.
Turning to Slide 14.
With the strong operating results we delivered this quarter, high-margin oil production in the Delaware Basin continue to expand and rapidly advance, growing 39% year over year.
Importantly, the returns on invested capital to deliver this growth were some of the highest I have seen in my career, bolstered by rising strip prices and our capital efficiency improvements we have delivered this year.
These efficiencies are evidenced on the right-hand chart, where our average D&C costs improved to $554 per lateral foot in the third quarter, a decrease of 41% from just a few years ago.
While we have likely found the bottom of this cycle earlier this year, the team continues to be able to make operational breakthroughs that have thus far fought back most of the inflationary pressure.
We continue to win from a fresh perspective, blending teams and also still relatively -- we're still working to know each other pretty early on.
These accomplishments are clearly demonstrated and the great work our team has done to drive improvements across the entire planning and execution of our resource.
To maintain this high level of performance into 2022, and we are focused on staying out ahead of the inflationary pressures that are impacting not just our industry, but all aspects of the broader society.
While our consistency and scale in the Delaware are a huge advantage, the supply chain team is working hard to anticipate issues, mitigate bottlenecks, and work with the asset teams to adjust plans to optimize our cost structure and future capital activity.
Turning to Slide 15.
Another asset I'd like to put in the spotlight today is our position in the Anadarko Basin, where we have a concentrated 300,000 net acre position in the liquids-rich window of the play.
As you may know, Rick and I both have a historical tie to this basin, and we're thrilled to get to see the great work that our teams are doing to unlock this value for investors.
A key objective for us this year in the Anadarko Basin is to reestablish operational continuity by leveraging the drilling carry from our joint venture agreement with Dow.
By way of background, in late 2019, we formed a partnership with Dow in a promoted deal, where Dow earns half of our interest on 133 undrilled locations in exchange for $100 million drilling carry.
With the benefits of this drilling carry, we're drilling around 30 wells this year, and our initial wells from this activity were brought on during the quarter.
The four-well Miller/Miller project is an up-spaced Woodford development in Canadian counter -- County and is off to a great start with both our D&C costs and well productivity outperforming pre-drill expectations.
Initial 30-day rates averaged 2,700 BOE per day, and completed well costs came in under budget at around $8 million per well.
While I'm proud of how well the team hit the ground running now as we get into our processes lined out and efficiencies dialed in, I foresee material improvements in well costs ahead.
The leverage returns from this carried activity will complete -- will compete effectively for capital with any asset in our portfolio.
In fact, the strength of natural gas and NGL pricing, the performance we're also seeing that in the Anadarko Basin will likely command relatively more capital than it did in '21.
Moving to Slide 16.
While the Delaware Basin is clearly the growth engine of our company and we're excited about the upside for the Anadarko, we also have several high-quality assets in the oil fairway of the U.S. that generates substantial free cash flow.
While these assets don't typically grab the headlines, their strong performance is central to this continued success of our strategy.
These teams are doing great work to improve our environmental footprint, drive the capital program, optimize base production, and hopefully, keeping our cost structure low.
As an example, Williston will generate over $700 million of 2021 free cash flow.
Collectively, these assets are on pace to generate nearly $1.5 billion of free cash flow this year.
Lastly, on Slide 17, with our diversified portfolio concentrated in the very best U.S. resource plays, we have a deep inventory of opportunities that underpin the long-term sustainability of our business model.
So, as you may have heard me talk about in prior quarters, we have a brutal capital allocation process in regards to the competitiveness of how we seek the best investment mix for the company.
This is the first step of this process is to make sure that all the teams are working from the same assumptions and inputs.
Since the close of our merger earlier this year, we have undertaken a very disciplined and rigorous approach to characterize risk, force rank the opportunity set across our portfolio.
This inventory disclosure is the result of our detailed subsurface work and evaluation across our portfolio that we converted into a single consolidated platform to ensure consistency.
Turning your attention to the middle bar on the chart.
At the current pace of activity, we possess more than a decade of low-risk and high-return inventory of what we believe to be in a mid-cycle price deck.
As you would expect, about 70% of our inventory resides in the Delaware Basin, providing the depth of inventory to sustain our strong capital efficiency for many years to come.
Let me be clear.
And this exercise, we are focused on compiling a very important slice of our total inventory.
This summary is not meant to convey the full extent of the possible with these incredible resources.
These are really operated, essentially all long lateral up-spaced wells that deliver competitive returns in a $55 oil environment.
Moving to the bar on the far right of the chart, we also expect inventory depth to continue to expand as we capture additional efficiencies, optimize spacing, and further delineate the rich geologic column across our very acreage footprint.
Expect -- we expect a significant portion of the upside opportunities to convert into our derisked inventory over time.
So the examples of this upside include the massive resource potential in the lower Wolfcamp intervals, continued appraisal success in the Powder River Basin and the significant liquids-rich opportunity we possess in the Anadarko Basin.
The bottom line here is that we have that in abundance of high economic opportunity to not only sustain but grow our cash flow per share for many years to come.
I'd like to spend my time today discussing the substantial progress we've made advancing our financial strategy and highlight the next steps we plan to take to increase cash returns to shareholders.
A good place to start is with the review of Devon's financial performance in the third quarter, where Devon's earnings and our cash flow per share growth rapidly expanded and comfortably exceeded consensus estimates.
Operating cash flow for the third quarter totaled $1.6 billion, an impressive increase of 46% compared to last quarter.
This level of cash flow generation comfortably funded our capital spending requirements and generated $1.1 billion of free cash flow in the quarter.
This result represents the highest amount of free cash flow generation Devon has ever delivered in a single quarter and is a powerful example of the financial results in our cash return and that the business model can deliver.
Turning your attention to Slide 7.
With this significant stream of free cash flow, a differentiating component of our financial strategy is our ability and willingness to accelerate the return of cash to shareholders through our fixed plus variable dividend framework.
This dividend strategy has been uniquely designed to provide us the flexibility to optimize the return of cash to shareholders across a variety of market conditions through the cycle.
Under our framework, we pay a fixed dividend every quarter and evaluate a variable distribution of up to 50% of the remaining free cash flow.
So, with the strong financial results we delivered this quarter, the board approved a 71% increase in our dividend payout versus last quarter to $0.84 per share.
This is the fourth quarter in a row we have increased the dividend and is by far the highest quarterly dividend payout in Devon's 50-year history.
As you can see on the chart to the left, at current market prices, we expect our dividend growth story to only strengthen in 2022.
In fact, at today's pricing, we are on pace to nearly double our dividend next year.
Moving to Slide 10.
In addition to higher dividends, we've also returned value to shareholders through our efforts to reduce debt and improve our balance sheet.
So far this year, we've made significant progress toward this initiative by retiring over $1.2 billion of outstanding notes.
In conjunction with this absolute debt reduction, we've also added to our liquidity, building a $2.3 billion cash balance at quarter end.
With this substantial cash build and reduction in debt, we've reached this debt-to-EBITDA leverage target of one turn or less.
Even with this advantaged balance sheet, we're not done making improvements.
We have identified additional opportunities to improve our financial strength by retiring approximately $1.0 billion of premium -- excuse me, low-premium debt in 2022 and 2023.
Importantly, Devon has the flexibility to then execute on this debt reduction with cash already accumulated on the balance sheet.
While the top priority for free cash flow remains the funding of our market-leading dividend yield, we also believe that this buyback authorization provides us another excellent capital allocation tool to enhance per share results for shareholders.
Given the cyclical nature of our business, we'll be very disciplined with this authorization, only transacting when our equity trades at a discounted valuation to historical multiples and in multiple levels of our highest quality peers.
We believe the double-digit free cash flow yield our equity delivers, as outlined on Slide 6, represents a unique buying opportunity.
The reduction in outstanding shares further improves our impressive cash flow per share growth and adds to the variable dividend per share for our shareholders.
With these disciplined criteria, guiding our decision making, we'll look to opportunistically repurchase our equity in the open market once our corporate blackout expires later this week.
So in summary, the financial strategy is working well.
We have excellent liquidity and our business is generating substantial free cash flow.
We're positioned to significantly grow our dividend payout to over the next year.
The go-forward business will have an ultra low leverage ratio of a turn or less, and we'll look to boost per share results is really opportunistically repurchasing our shares.
In closing today, I'd like to highlight a few things.
Number one, Devon is meeting the demands of investors with our capital discipline, earnings and cash flow growth, market-leading dividend payout, debt reduction, and now a share buyback program.
Number two, Devon is also meeting the demands of our market with strong oil production results, great exposure to natural gas and NGLs, along with our consistent execution.
And number three, lastly, Devon is also meeting the demands of society by providing a reliable energy before this pandemic, during the pandemic, and as we emerge from the pandemic.
And so our people throughout the five states where we operate continue to show up for work and work safely.
We didn't overreact with our capital program during the pandemic like many others did.
We actually strengthened the company with a merger.
And finally, we're laser-focused on then achieving the stated short-term, midterm, and long-term ESG targets.
We're proud of the work we've done and look forward to continuing meeting the needs of investors, the market, and society for the foreseeable future.
Devon is a premier energy company, and we're excited about the value we'll be able to consistently provide to our important stakeholders.
We'll now open the call to Q&A.
[Operator instructions] With that, operator, we'll take our first question.

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now expects its production and capital spending to be at the high end of its 2021 guidance range.
in 2022, devon will continue to prioritize free cash flow generation over the pursuit of volume growth.

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