Devon Energy Corp (DVN) Q3 2026 Earnings Call

Thank you, Dan, and good morning, everyone. I'm excited to talk to you this morning. Today we will define Devin's strategy and value proposition, discuss the results of our portfolio review, highlight our 2027 outlook, and outline the three strategic pillars that will create additional value for our shareholders. Shane will discuss the financial results and the guidance and provide an update on our accelerated buyback and shareholder returns plan.

Tomorrow will mark six months since the closing of our Cotera merger.

I'd like to first thank the entire Devin team for the incredible hard work and focus during this very demanding and productive time.

While balancing challenging day jobs, the team has made massive progress on the integration of two very large companies, conducted a rigorous and objective portfolio review, executed a major divestiture of the Eagleford, made a strategic acquisition of core Permian acreage, entered into a value enhancing pipeline agreement, advanced our acreage ground game, and made significant progress.

and capturing synergies. We have not and we will not stand still at Devon.

First, let me define who Devon is because it frames every decision we make. The short version is that Devon is an operations focused technology forward energy powerhouse.

Let's go deeper on what that means. First and foremost, we're operations focused.

Differential value in our business is created by how we find, drill, complete, and produce our assets.

Our teams share best practices and compete for capital, which sends every dollar to its best and most productive use, and pushes each business unit to drive continuous improvement.

Next, technology. Operational and digital technology is our value multiplier. Devon continues to be an industry leader in applying AI to create value.

This includes our proprietary subsurface models, real-time monitoring, smart gas lift, enterprise-wide adoption, and hundreds of homegrown apps. Put together, Devon is an energy powerhouse, one of the largest producers of both oil and natural gas in the United States, with a deep and high-quality inventory, a fortress balance sheet, and industry-leading cost structure built to compete throughout the

Next, I'd like to discuss the results of our post-merger portfolio review.

Leveraging the benefit of two independent perspectives from Devin and Cotera, we ran a comprehensive and objective review of each asset. This review included a rigorous internal analysis, multiple third-party views, and feedback from our shareholders so that we could better understand each competitive positioning and potential role in our portfolio.

As a result of the work, we have defined our assets into two buckets. The Permian Basin is our cornerstone, and the Anadarko, Marcellus, and Rockies play complementary roles. Finally, we saw an opportunity to capture enhanced market value and quickly acted to monetize the Eagleford, resulting in meaningful accretion for our shareholders.

Cornerstone. Let me be clear, the Permian is the gold standard for any resource play on the planet, and our position in the Delaware is truly industry leading. In 2026, we more than doubled our Permian footprint through a series of intentional moves. The first and most significant was the combination with Cotera. Then, just two weeks after we closed, we acquired a once-in-a-generation acreage position via the Federal

lease sale, which is completely untouched from grass to granite, and it boasts some of the highest returns in the industry. Additionally, we were the lead E&P company in making the solitude pipeline a reality, taking a 25% equity stake in firm transportation that will enhance our future natural gas netbacks, moving prolific Permian gas to the premium-priced Gulf Coast region.

We continue to expand our inventory in the basin by delineating new landing zones across our expansive multi-target position, adding locations organically through the application of technology, and executing a ground game acreage of leasing and trades, as well as ongoing exploration in the incredible downhole potential.

We also continue to benefit from our integrated infrastructure model. With our extensive gas gathering and processing, water supersystem, and electrical infrastructure across New Mexico and Texas, we are able to lower our cost of supply and capture more margin across the value chain.

Our complementary assets in the Anadarko, Marcellus, and Rockies provide high-return investment opportunities that generate significant and durable free cash flow at low reinvestment rates. We expect to create meaningful upside from the continued application of technology, operational efficiencies, and synergy capture. Projected well economics in these basins are highly competitive and provide significant optionality

between oil and gas investments. The Eagleford divestiture fits the same logic. Over the past several years, we have created substantial value in Eagleford by lowering costs, increasing productivity, and coring up our acreage position. The market valued the asset meaningfully above our internal view, so we opportunistically chose to divest the position and create immediate shareholder value. This strategic sale actually increases inventory life,

Lowers our break-evens, reduces our base decline, and is accretive to per share, free cash flow, and NAV.

While our post-combination portfolio review is complete, our active portfolio management remains one of our three pillars to enhance go-forward value.

We will not stand pat. We will continue to explore and execute ideas that are in the best interest of our shareholders. High-grading our portfolio has long been a core competency of our strategy, and the multiple actions that we have executed in 2026 have further strengthened the quality, depth, and returns of our portfolio.

Next, I'd like to spend some time discussing our go-forward plans to enhance shareholder value through strong execution and disciplined growth underwritten by our deep, high-quality inventory.

Over the next few years and beyond, we expect to generate low single-digit oil growth with conservative reinvestment rates of 45% to 60% of cash flow. This will result in 5% to 10% annual growth in free cash flow per share, fueling accelerated shareholder returns.

This modest oil growth will be driven by the Permian, where we will direct roughly 75% of our 2027 capital program. Furthermore, as we look ahead, we're excited to get to work on the federal lease sale acreage acquired earlier this year.

We expect to spot our first wells around midyear, and we'll have meaningful production in early 2028, which will provide a noticeable step change in capital efficiency.

Synergies from the Cotera combination compound these gains as we apply shared learnings and leverage our expanded scale and infrastructure across our Delaware and Anadarko positions.

Shareholders should expect sustained multi-year improvement in our capital efficiency.

We are excited to accelerate and enhance our shareholder returns program through buybacks, future dividend increases, and debt reduction. We see substantial value in our equity today, and accelerating buybacks creates immediate and lasting value for our owners.

Finally, I would like to discuss how Devon is fueling our future. As we show on slide

four, we have three pillars that will guide us. Pillar one, make Devon a better Devon.

This is a focus on improving our core business every day through engineering, innovation, and technology. As a top operating company, this means increasing productivity, driving down costs, improving our margins, and never settling for status quo.

Pillar two, organic growth opportunities. Leveraging our differentiated scale and skill set to capture ground floor value-creating opportunities have the potential to deliver the highest risk returns on anything we do. Examples include investing in our leasehold ground game, shale exploration, midstream enhanced value-like solitude.

Pillar three, active portfolio management.

High grading our portfolio has long been a core component of our strategy, and the multiple actions we've executed in 2026 have further strengthened the quality, depth, and returns of the assets we own.

Our leadership team and board remain objective and will not hesitate to explore and execute any future opportunities that are in the best interest of the shareholders.

As I wrote in my letter to shareholders, I'm extremely proud of what the team has accomplished to date, but we are never satisfied. We will not settle for anything less than being the best E&P company.

With that, Shane, I'll let you take us through the numbers.

Thank you, Clay, and good morning, everyone.

The third quarter was our first full quarter as a combined company, and we delivered strong results. Today, I'll focus on how we increased free cash flow during the quarter, accelerated our share buyback program, developed our capital-efficient preliminary outlook for 2027, and how we continued to methodically improve on our fortress balance sheet and our liquidity position.