Driven by drilling and completion efficiency gains in the Permian’s Delaware sub-basin and in the Midcontinent during the first half of the year, Devon Energy Corp. is trimming its 2017 capital expenditure (capex) budget by $100 million, reflecting an emphasis on returns over growth.

The reduced capex does not mean reduced activity, as the Oklahoma City-based independent is maintaining its drilling plans and is on pace to reach 20 rigs by the end of the year (up from 18 rigs as of June 30), management told analysts during a 2Q2017 conference call Wednesday. Capex costs for the first six months of 2017 came in 17% below the midpoint of guidance, and now Devon expects $1.9-2.2 billion in total capex for the year.

The Delaware and Oklahoma’s STACK (aka the Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties) are at the center of Devon’s plans moving forward, accounting for 90% of current U.S. rig activity. The independent expects Permian and STACK production to achieve 30% year/year growth by the end of 2017, with liquids reaching 65% of the production mix over that period.

Devon’s U.S. resource plays produced 412,000 boe/d during the quarter, with STACK and Delaware production increasing 8% quarter/quarter, pushing U.S. light-oil production above guidance to 116,000 boe/d. Management said it recently had nine high-rate development wells running across the two plays yielding 30-day initial production (IP) rates approaching 2,000 boe/d. In the STACK Devon recently announced a record Meramec well that reached 6,000 boe/d.

CEO Dave Hager said the transition to full-field development in the Delaware and STACK over the next few years should help the company prioritize returns in a low-commodity-price environment.

“We’re on the cusp of really moving into full-field development in the STACK and the Delaware plays, and when we do, these plays are going to be able to absorb and generate very strong returns,” Hager said. “Again, I want to emphasize that we are a return-oriented organization. We’re not just growing for growth’s sake. We think we can generate some very strong returns from those plays in this price environment.”

Besides greater drilling efficiency, Hager said the $100 million capex reduction comes from Devon’s “supply chain initiative, where we’ve decoupled much of the completion activities, where we’re supplying our own sand, our own diesel, and we see significant savings from that.

“Also, through the use of our advanced predictive analytics, artificial intelligence work, we’re finding that not only is it helping deliver” better 90-day IP rates “but it’s also driving our costs lower. So we feel really good about where costs are. We’re confident of the $100 million reduction. There may be some upside to that. We’ll have to see how the second half goes,” the CEO said.

“We do anticipate there may be some increased inflationary pressure in the second half of the year, and so that may drive our costs a little bit higher than they were in the first half. We’ll just have to see how that goes. But we decided it’s appropriate at this time to just take what we’re sure of, which is the $100 million reduction, and then see how things evolve in the second half of the year.”

Devon also is working to divest $1 billion in assets by next year. Earlier in the week it generated estimated proceeds of $340 million toward that goal, driven by a $205 million sale of Eagle Ford Shale assets in Lavaca County, TX, to Penn Virginia Corp.

Asked about possible plans to sell Barnett Shale acreage next, Hager said Devon would “most likely be divesting several billion dollars of assets” through 2020, using the revenue to pay down debt and focus on its full-field development in the Delaware and STACK.

“Certainly, the Barnett or some other assets could figure into that equation…we have a lot of flexibility about how we go about accomplishing this strategic objective, but that’s where we’re going,” he said.

Company-wide production totaled 536,000 boe/d during the quarter (44% weighted to oil), down from 644,000 boe/d in the year-ago quarter and 563,000 boe/d in 1Q2017. Realized prices, including cash settlements, were $37.92/bbl for oil/bitumen, $13.23/bbl for natural gas liquids (NGL) and $2.54/Mcf for natural gas. In 2Q2016 realized prices were $30.07/bbl oil, $9.89/bbl NGLs and $1.64/Mcf for gas.

Revenues for the quarter totaled $3.27 billion, up from $2.49 billion in the year-ago period. Operating expenses fell to $2.73 billion from $3.96 billion. Lease operating expenses were down to $399 million in 2Q2017 from $416 million in the year-ago.

Devon reported a quarterly net income of $425 million (81 cents/share), compared with a net loss of $1.57 billion (minus $3.04) in the year-ago quarter. Devon in 2Q2016 recorded a $1.5 billion asset impairment charge.