Devon Energy (DVN) continues to build on internal value creation initiatives and also from a "handful of new gains" that are in addition to its $1 billion optimization program and appear similar in scale, RBC Capital Markets said in a note emailed Thursday.

Investors have "not fully reflected those gains at this point, but that could change as 2026 nears and the impact becomes more evident," RBC said.

Devon has already captured 40% of the $1 billion goal in the first four months as "savings achieved are progressing as expected," the note said.

The company's "FCF visibility" was also boosted by other projects and savings like the $372 million Matterhorn sale, $50 million in annual savings via the Cotton Draw Midstream acquisition, normal cost deflation, and an about $300 million annual cash tax benefit, RBC said.

Meanwhile, AI and tech-related projects are "also showing promise and could further add to production optimization and costs reduction efforts," the note said.

RBC has a sector perform rating on Devon and $38 price target.

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