8-K
Devon Energy Corp/De (DVN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 1, 2024
Devon Energy Corporation
(Exact name of registrant as specified in its charter)
| DELAWARE | 001-32318 | 73-1567067 |
|---|---|---|
| (State or other jurisdiction<br> <br>of incorporation) | (Commission<br> <br>File Number) | (IRS Employer<br> <br>Identification No.) |
| 333 W. SHERIDAN AVE.,<br> <br>OKLAHOMA CITY, OKLAHOMA | 73102-5015 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (405) 235-3611
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br>Symbol(s) | Name of each exchange<br>on which registered |
|---|---|---|
| Common Stock, par value $0.10 per share | DVN | The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On May 1, 2024, Devon Energy Corporation (the “Company”) announced its financial and operational results for the quarterly period ended March 31, 2024. In connection with this announcement, the Company provided an earnings release and certain supplemental financial information (including guidance and hedging information). Copies of these documents are furnished as Exhibits 99.1 and 99.2, respectively, to this report and, along with certain other materials, will be available on the Company’s website at www.devonenergy.com.
The information contained in this report and the exhibits hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be incorporated by reference into any filings made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
|---|---|
| (d) | Exhibits |
| --- | --- |
| Exhibit<br>No. | Description of Exhibits |
| --- | --- |
| 99.1 | Earnings release, dated May 1, 2024. |
| 99.2 | Supplemental financial information (including guidance and hedging information). |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DEVON ENERGY CORPORATION | |
|---|---|
| By: | /s/ Jeffrey L. Ritenour |
| Jeffrey L. Ritenour | |
| Executive Vice President and Chief Financial Officer |
Date: May 1, 2024
EX-99.1
Exhibit 99.1
| Devon Energy Corporation |
|---|
| 333 West Sheridan Avenue |
| Oklahoma City, OK 73102-5015 |
Devon Energy Reports First-Quarter 2024 Results and Declares Quarterly Dividend
OKLAHOMA CITY – May 1, 2024 – Devon Energy Corp. (NYSE: DVN) today reported financial and operational results for the first-quarter 2024. Supplemental financial tables and forward-looking guidance are available on the company’s website at www.devonenergy.com.
KEY FINANCIAL AND OPERATIONAL HIGHLIGHTS
| • | First quarter production averaged 664,000 oil-equivalent barrels per day,<br>exceeding guidance by 4 percent |
|---|---|
| • | Delaware Basin production increased 5 percent year over year, driving results that were favorable to<br>guidance |
| --- | --- |
| • | Capital activity highlighted by 20 percent-plus improvement in Delaware Basin well productivity year over year<br> |
| --- | --- |
| • | Operating cash flow totaled $1.7 billion and free cash flow reached $844 million in the first quarter<br>of 2024 |
| --- | --- |
| • | Repurchased 4.7 million shares of common stock at a total cost of $205 million in the first quarter<br> |
| --- | --- |
| • | Declared fixed-plus-variable dividend payout of $0.35 per share based on first quarter results<br> |
| --- | --- |
| • | Balance sheet continued to strengthen with cash balances increasing $274 million to a total of<br>$1.1 billion |
| --- | --- |
| • | Year-to-date operating<br>performance drives improved production and financial outlook in 2024 |
| --- | --- |
CEO PERSPECTIVE
“By all measures, Devon delivered an outstanding set of results in the first quarter that demonstrated the comprehensive execution we achieved across every element of our disciplined strategy,” said Rick Muncrief, president and CEO.
“This success was showcased by excellent well productivity and efficiency gains from our Delaware-focused program that drove volumes above guidance by a wide margin. Furthermore, our operating margins benefitted from the team’s efforts to drive per-unit costs lower than plan, allowing us to capture the full benefit of rising oil prices during the quarter.
“Based on the impressive operating momentum we have established year to date, we have raised our second quarter and full-year 2024 guidance. This improved outlook raises production targets and increases free cash flow projections, which will enhance our ability to accelerate the return of capital to shareholders,” Muncrief added.
FINANCIAL RESULTS
Devon reported net earnings of $596 million, or $0.94 per diluted share, in the first quarter of 2024. Adjusting for items analysts typically exclude from estimates, the company’s core earnings were $730 million, or $1.16 per diluted share.
Devon’s operating cash flow totaled $1.7 billion in the first quarter, a 4 percent increase versus the year-ago period. This level of cash flow funded all the company’s capital requirements and resulted in $844 million of free cash flow for the quarter.
The company’s investment-grade financial position continued to strengthen in the first quarter with cash balances increasing by $274 million to a total of $1.1 billion. The company exited the quarter with outstanding debt of $6.1 billion and a net debt-to-EBITDAX ratio of 0.7 times.
RETURN OF CAPITAL
Based on the first quarter financial performance, Devon declared a fixed-plus-variable dividend of $0.35 per share, payable on June 28, 2024, to shareholders of record at the close of business on June 14, 2024. The dividend payout consists of the fixed dividend at $0.22 per share and a variable distribution of $0.13 per share.
1
The company also returned capital to shareholders through the continued execution of its share repurchase program. In the first quarter, Devon repurchased 4.7 million shares at a total cost of $205 million. Since program inception in late 2021, the company has repurchased 49.5 million shares, at a total cost of $2.5 billion.
OPERATING RESULTS
Devon’s capital activity in the first quarter averaged 24 operated drilling rigs and 7 completion crews across its asset portfolio. This level of activity resulted in 102 gross operated wells being placed online, with an average lateral length of 9,300 feet.
Production averaged 664,000 oil-equivalent barrels (Boe) per day in the first quarter, exceeding the company’s guidance by 4 percent. Results were driven by better-than-planned well productivity, cycle time improvements that brought forward activity and the easing of infrastructure constraints in the Delaware Basin. Devon’s oil production totaled 319,000 barrels per day in the quarter, which was 48 percent of total volumes.
Upstream capital spending was at the bottom end of the company’s guidance range in the first quarter totaling $842 million. This represents a 3 percent decrease in upstream spending compared to the fourth quarter of 2023. Midstream, carbon and corporate capital totaled $95 million in the quarter.
Devon’s first quarter operating performance was driven by its Delaware Basin asset, which accounted for 66 percent of companywide volumes at 437,000 Boe per day. This production result represents a growth rate of 5 percent compared to the year-ago period, driven by 59 gross operated wells being placed online during the quarter. Average 30-day production rates from this activity reached 3,200 Boe per day, representing a 20 percent-plus improvement in well productivity versus the year ago period.
Production costs, including taxes, averaged $12.43 per Boe in the first quarter. This low-cost structure, coupled with the benefits of high-margin production resulted in field-level cash margins of $31.09 per Boe.
2024 OUTLOOK
Based on the strength of first quarter results, Devon is increasing its full-year 2024 production forecast by 2 percent to a range of 655,000 to 675,000 Boe per day. This incremental production in 2024 is expected to be delivered without an increase in capital spending. The company expects to deliver this improved production outlook with capital spending in a range of $3.3 billion to $3.6 billion, a 10 percent decline versus 2023.
Due to the addition of a fourth Delaware completion crew in January, the company’s capital program in 2024 is expected to be weighted towards the first half of the year. As a result of this activity timing, second quarter production is expected to increase to a range of 670,000 to 690,000 Boe per day and capital spending is estimated to approximate $950 million for the quarter.
Additional details of Devon’s forward-looking guidance for the second quarter and full-year 2024 are available on the company’s website at www.devonenergy.com.
CONFERENCE CALL WEBCAST AND SUPPLEMENTAL EARNINGS MATERIALS
Also provided with today’s release is the company’s detailed earnings presentation that is available on the company’s website at www.devonenergy.com. The company’s first-quarter conference call will be held at 10:00 a.m. Central (11:00 a.m. Eastern) on Thursday, May 2, 2024, and will serve primarily as a forum for analyst and investor questions and answers.
ABOUT DEVON ENERGY
Devon Energy is a leading oil and gas producer in the U.S. with a premier multi-basin portfolio headlined by a world-class acreage position in the Delaware Basin. Devon’s disciplined cash-return business model is designed to achieve strong returns, generate free cash flow and return capital to shareholders, while focusing on safe and sustainable operations. For more information, please visit www.devonenergy.com.
| Investor Contacts | Media Contact |
|---|---|
| Scott Coody, 405-552-4735 | Brooke Baum, 405-552-3448 |
| Chris Carr, 405-228-2496 |
2
NON-GAAP DISCLOSURES
This press release includes non-GAAP (generally accepted accounting principles) financial measures. Such non-GAAP measures are not alternatives to GAAP measures, and you should not consider these non-GAAP measures in isolation or as a substitute for analysis of results asreported under GAAP. Reconciliations of these non-GAAP measures and other disclosures are provided within the supplemental financial tables that are available on the company’s website and in the relatedForm 10-Q filed with the Securities and Exchange Commission (the “SEC”).
FORWARD LOOKING STATEMENTS
This press release includes “forward-looking statements” within the meaning of the federal securities laws. Such statements include thoseconcerning strategic plans, our expectations and objectives for future operations, as well as other future events or conditions, and are often identified by use of the words and phrases “expects,” “believes,” “will,”“would,” “could,” “continue,” “may,” “aims,” “likely to be,” “intends,” “forecasts,” “projections,” “estimates,” “plans,”“expectations,” “targets,” “opportunities,” “potential,” “anticipates,” “outlook” and other similar terminology. All statements, other than statements of historical facts, included in thispress release that address activities, events or developments that Devon expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks anduncertainties, many of which are beyond our control. Consequently, actual future results could differ materially and adversely from our expectations due to a number of factors, including, but not limited to: the volatility of oil, gas and NGLprices; uncertainties inherent in estimating oil, gas and NGL reserves; the extent to which we are successful in acquiring and discovering additional reserves; the uncertainties, costs and risks involved in our operations; risks related to ourhedging activities; our limited control over third parties who operate some of our oil and gas properties; midstream capacity constraints and potential interruptions in production, including from limits to the build out of midstream infrastructure;competition for assets, materials, people and capital; regulatory restrictions, compliance costs and other risks relating to governmental regulation, including with respect to federal lands, environmental matters and seismicity; climate change andrisks related to regulatory, social and market efforts to address climate change; governmental interventions in energy markets; counterparty credit risks; risks relating to our indebtedness; cybersecurity risks; risks relating to global pandemics;the extent to which insurance covers any losses we may experience; risks related to shareholder activism; our ability to successfully complete mergers, acquisitions and divestitures; our ability to pay dividends and make share repurchases; and anyof the other risks and uncertainties discussed in Devon’s 2023 Annual Report on Form 10-K (the “2023 Form 10-K”) or other filings with the SEC.
The forward-looking statements included in this press release speak only as of the date of this press release, represent management’s currentreasonable expectations as of the date of this press release and are subject to the risks and uncertainties identified above as well as those described elsewhere in the 2023 Form 10-K and in other documents wefile from time to time with the SEC. We cannot guarantee the accuracy of our forward-looking statements, and readers are urged to carefully review and consider the various disclosures made in the 2023 Form10-K and in other documents we file from time to time with the SEC. All subsequent written and oral forward-looking statements attributable to Devon, or persons acting on its behalf, are expressly qualified intheir entirety by the cautionary statements above. We do not undertake, and expressly disclaim, any duty to update or revise our forward-looking statements based on new information, future events or otherwise.
3
EX-99.2
Exhibit 99.2
Devon Energy First-Quarter 2024
Supplemental Tables
| TABLE OF CONTENTS: | PAGE: | |
|---|---|---|
| Consolidated Statements of Earnings | 2 | |
| Supplemental Information for Consolidated Statements of Earnings | 3 | |
| Consolidated Balance Sheets | 4 | |
| Consolidated Statements of Cash Flows | 5 | |
| Production | 6 | |
| Capital Expenditures and Supplemental Information for Capital Expenditures | 7 | |
| Realized Pricing | 8 | |
| Asset Margins | 9 | |
| Core Earnings and EBITDAX | 10 | |
| Net Debt, Net<br>Debt-to-EBITDAX, Free Cash Flow, Adjusted Free Cash Flow and Reinvestment Rate | 11 |
1
CONSOLIDATED STATEMENTS OF EARNINGS
| (in millions, except per share amounts) | 2024 | 2023 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | |||||||||
| Oil, gas and NGL sales | $ | 2,629 | $ | 2,737 | $ | 2,882 | $ | 2,493 | $ | 2,679 | |||
| Oil, gas and NGL derivatives ^(1)^ | (145 | ) | 324 | (194 | ) | (76 | ) | 64 | |||||
| Marketing and midstream revenues | 1,112 | 1,084 | 1,148 | 1,037 | 1,080 | ||||||||
| Total revenues | 3,596 | 4,145 | 3,836 | 3,454 | 3,823 | ||||||||
| Production expenses ^(2)^ | 751 | 759 | 757 | 719 | 693 | ||||||||
| Exploration expenses | 9 | 4 | 3 | 10 | 3 | ||||||||
| Marketing and midstream expenses | 1,133 | 1,093 | 1,160 | 1,051 | 1,105 | ||||||||
| Depreciation, depletion and amortization | 722 | 650 | 651 | 638 | 615 | ||||||||
| Asset dispositions | 1 | 11 | — | (41 | ) | — | |||||||
| General and administrative expenses | 114 | 111 | 99 | 92 | 106 | ||||||||
| Financing costs, net ^(3)^ | 76 | 77 | 81 | 78 | 72 | ||||||||
| Other, net | 22 | 10 | 13 | 10 | 5 | ||||||||
| Total expenses | 2,828 | 2,715 | 2,764 | 2,557 | 2,599 | ||||||||
| Earnings before income taxes | 768 | 1,430 | 1,072 | 897 | 1,224 | ||||||||
| Income tax expense ^(4)^ | 159 | 269 | 152 | 199 | 221 | ||||||||
| Net earnings | 609 | 1,161 | 920 | 698 | 1,003 | ||||||||
| Net earnings attributable to noncontrolling interests | 13 | 9 | 10 | 8 | 8 | ||||||||
| Net earnings attributable to Devon | $ | 596 | $ | 1,152 | $ | 910 | $ | 690 | $ | 995 | |||
| Net earnings per share: | |||||||||||||
| Basic net earnings per share | $ | 0.95 | $ | 1.81 | $ | 1.43 | $ | 1.08 | $ | 1.53 | |||
| Diluted net earnings per share | $ | 0.94 | $ | 1.81 | $ | 1.42 | $ | 1.07 | $ | 1.53 | |||
| Weighted average common shares outstanding: | |||||||||||||
| Basic | 629 | 635 | 637 | 638 | 645 | ||||||||
| Diluted | 632 | 638 | 639 | 639 | 647 |
2
SUPPLEMENTAL INFORMATION FOR CONSOLIDATED STATEMENTS OF EARNINGS
(1) OIL, GAS AND NGL DERIVATIVES
| (in millions) | 2024 | 2023 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | |||||||||
| Derivative cash settlements | $ | 24 | $ | 8 | $ | (11 | ) | $ | 37 | $ | 13 | ||
| Derivative valuation changes | (169 | ) | 316 | (183 | ) | (113 | ) | 51 | |||||
| Oil, gas and NGL derivatives | $ | (145 | ) | $ | 324 | $ | (194 | ) | $ | (76 | ) | $ | 64 |
(2) PRODUCTION EXPENSES
| (in millions) | 2024 | 2023 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||
| Lease operating expense | $ | 380 | $ | 381 | $ | 367 | $ | 353 | $ | 327 |
| Gathering, processing & transportation | 180 | 181 | 178 | 177 | 166 | |||||
| Production taxes | 175 | 182 | 191 | 165 | 175 | |||||
| Property taxes | 16 | 15 | 21 | 24 | 25 | |||||
| Production expenses | $ | 751 | $ | 759 | $ | 757 | $ | 719 | $ | 693 |
(3) FINANCING COSTS, NET
| (in millions) | 2024 | 2023 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | |||||||||||
| Interest based on outstanding debt | $ | 87 | $ | 87 | $ | 93 | $ | 96 | $ | 93 | |||||
| Interest income | (13 | ) | (12 | ) | (11 | ) | (15 | ) | (17 | ) | |||||
| Other | 2 | 2 | (1 | ) | (3 | ) | (4 | ) | |||||||
| Financing costs, net | $ | 76 | $ | 77 | $ | 81 | $ | 78 | $ | 72 |
(4) INCOME TAX EXPENSE
| (in millions) | 2024 | 2023 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||
| Current expense | $ | 119 | $ | 105 | $ | 139 | $ | 80 | $ | 141 |
| Deferred expense | 40 | 164 | 13 | 119 | 80 | |||||
| Income tax expense | $ | 159 | $ | 269 | $ | 152 | $ | 199 | $ | 221 |
3
CONSOLIDATED BALANCE SHEETS
| (in millions) | 2024 | 2023 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | |||||||||||
| Current assets: | |||||||||||||||
| Cash, cash equivalents and restricted cash | $ | 1,149 | $ | 875 | $ | 761 | $ | 488 | $ | 887 | |||||
| Accounts receivable | 1,670 | 1,573 | 1,853 | 1,519 | 1,615 | ||||||||||
| Inventory | 234 | 249 | 233 | 201 | 212 | ||||||||||
| Other current assets | 345 | 460 | 365 | 397 | 475 | ||||||||||
| Total current assets | 3,398 | 3,157 | 3,212 | 2,605 | 3,189 | ||||||||||
| Oil and gas property and equipment, based on successful efforts accounting, net | 18,033 | 17,825 | 17,563 | 17,317 | 16,932 | ||||||||||
| Other property and equipment, net | 1,551 | 1,503 | 1,468 | 1,446 | 1,583 | ||||||||||
| Total property and equipment, net | 19,584 | 19,328 | 19,031 | 18,763 | 18,515 | ||||||||||
| Goodwill | 753 | 753 | 753 | 753 | 753 | ||||||||||
| Right-of-use<br>assets | 276 | 267 | 261 | 266 | 219 | ||||||||||
| Investments | 713 | 666 | 671 | 675 | 469 | ||||||||||
| Other long-term assets | 254 | 319 | 313 | 293 | 275 | ||||||||||
| Total assets | $ | 24,978 | $ | 24,490 | $ | 24,241 | $ | 23,355 | $ | 23,420 | |||||
| Current liabilities: | |||||||||||||||
| Accounts payable | $ | 879 | $ | 760 | $ | 812 | $ | 843 | $ | 935 | |||||
| Revenues and royalties payable | 1,268 | 1,222 | 1,434 | 1,199 | 1,266 | ||||||||||
| Short-term debt | 479 | 483 | 487 | 244 | 247 | ||||||||||
| Income taxes payable | 189 | 67 | 58 | 1 | 154 | ||||||||||
| Other current liabilities | 451 | 417 | 539 | 382 | 329 | ||||||||||
| Total current liabilities | 3,266 | 2,949 | 3,330 | 2,669 | 2,931 | ||||||||||
| Long-term debt | 5,668 | 5,672 | 5,675 | 6,169 | 6,175 | ||||||||||
| Lease liabilities | 301 | 295 | 290 | 299 | 256 | ||||||||||
| Asset retirement obligations | 683 | 643 | 641 | 548 | 546 | ||||||||||
| Other long-term liabilities | 841 | 876 | 850 | 858 | 866 | ||||||||||
| Deferred income taxes | 1,878 | 1,838 | 1,676 | 1,662 | 1,543 | ||||||||||
| Stockholders’ equity: | |||||||||||||||
| Common stock | 63 | 64 | 64 | 64 | 64 | ||||||||||
| Additional paid-in capital | 5,718 | 5,939 | 6,153 | 6,131 | 6,344 | ||||||||||
| Retained earnings | 6,509 | 6,195 | 5,535 | 4,940 | 4,712 | ||||||||||
| Accumulated other comprehensive loss | (123 | ) | (124 | ) | (113 | ) | (114 | ) | (115 | ) | |||||
| Treasury stock | — | (13 | ) | — | — | (28 | ) | ||||||||
| Total stockholders’ equity attributable to Devon | 12,167 | 12,061 | 11,639 | 11,021 | 10,977 | ||||||||||
| Noncontrolling interests | 174 | 156 | 140 | 129 | 126 | ||||||||||
| Total equity | 12,341 | 12,217 | 11,779 | 11,150 | 11,103 | ||||||||||
| Total liabilities and equity | $ | 24,978 | $ | 24,490 | $ | 24,241 | $ | 23,355 | $ | 23,420 |
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
| (in millions) | 2024 | 2023 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | |||||||||||
| Cash flows from operating activities: | |||||||||||||||
| Net earnings | $ | 609 | $ | 1,161 | $ | 920 | $ | 698 | $ | 1,003 | |||||
| Adjustments to reconcile net earnings to net cash from operating activities: | |||||||||||||||
| Depreciation, depletion and amortization | 722 | 650 | 651 | 638 | 615 | ||||||||||
| Leasehold impairments | — | 1 | 1 | 3 | — | ||||||||||
| Accretion (amortization) of liabilities | — | 1 | (2 | ) | (8 | ) | (7 | ) | |||||||
| Total (gains) losses on commodity derivatives | 145 | (324 | ) | 194 | 76 | (64 | ) | ||||||||
| Cash settlements on commodity derivatives | 24 | 8 | (11 | ) | 37 | 13 | |||||||||
| (Gains) losses on asset dispositions | 1 | 11 | — | (41 | ) | — | |||||||||
| Deferred income tax expense | 40 | 164 | 13 | 119 | 80 | ||||||||||
| Share-based compensation | 24 | 23 | 22 | 25 | 23 | ||||||||||
| Other | 3 | (3 | ) | (2 | ) | (2 | ) | 2 | |||||||
| Changes in assets and liabilities, net | 170 | 45 | (61 | ) | (140 | ) | 12 | ||||||||
| Net cash from operating activities | 1,738 | 1,737 | 1,725 | 1,405 | 1,677 | ||||||||||
| Cash flows from investing activities: | |||||||||||||||
| Capital expenditures | (894 | ) | (910 | ) | (882 | ) | (1,079 | ) | (1,012 | ) | |||||
| Acquisitions of property and equipment | (8 | ) | (10 | ) | (23 | ) | (18 | ) | (13 | ) | |||||
| Divestitures of property and equipment | 17 | 3 | 1 | 1 | 21 | ||||||||||
| Distributions from investments | 11 | 8 | 7 | 9 | 8 | ||||||||||
| Contributions to investments and other | (47 | ) | (1 | ) | — | (15 | ) | (37 | ) | ||||||
| Net cash from investing activities | (921 | ) | (910 | ) | (897 | ) | (1,102 | ) | (1,033 | ) | |||||
| Cash flows from financing activities: | |||||||||||||||
| Repayments of long-term debt | — | — | (242 | ) | — | — | |||||||||
| Repurchases of common stock | (205 | ) | (234 | ) | — | (228 | ) | (517 | ) | ||||||
| Dividends paid on common stock | (299 | ) | (488 | ) | (312 | ) | (462 | ) | (596 | ) | |||||
| Contributions from noncontrolling interests | 12 | 19 | 10 | 8 | — | ||||||||||
| Distributions to noncontrolling interests | (7 | ) | (12 | ) | (9 | ) | (13 | ) | (11 | ) | |||||
| Shares exchanged for tax withholdings and other | (42 | ) | (1 | ) | — | (9 | ) | (87 | ) | ||||||
| Net cash from financing activities | (541 | ) | (716 | ) | (553 | ) | (704 | ) | (1,211 | ) | |||||
| Effect of exchange rate changes on cash | (2 | ) | 3 | (2 | ) | 2 | — | ||||||||
| Net change in cash, cash equivalents and restricted cash | 274 | 114 | 273 | (399 | ) | (567 | ) | ||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 875 | 761 | 488 | 887 | 1,454 | ||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 1,149 | $ | 875 | $ | 761 | $ | 488 | $ | 887 | |||||
| Reconciliation of cash, cash equivalents and restricted cash: | |||||||||||||||
| Cash and cash equivalents | $ | 1,126 | $ | 853 | $ | 654 | $ | 372 | $ | 761 | |||||
| Restricted cash | 23 | 22 | 107 | 116 | 126 | ||||||||||
| Total cash, cash equivalents and restricted cash | $ | 1,149 | $ | 875 | $ | 761 | $ | 488 | $ | 887 |
5
PRODUCTION
| 2024 | 2023 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||
| Oil (MBbls/d) | ||||||||||
| Delaware Basin | 208 | 208 | 215 | 209 | 211 | |||||
| Eagle Ford | 43 | 43 | 40 | 45 | 40 | |||||
| Anadarko Basin | 11 | 13 | 14 | 15 | 15 | |||||
| Williston Basin | 40 | 36 | 35 | 36 | 36 | |||||
| Powder River Basin | 13 | 13 | 13 | 14 | 14 | |||||
| Other | 4 | 4 | 4 | 4 | 4 | |||||
| Total | 319 | 317 | 321 | 323 | 320 | |||||
| Natural gas liquids (MBbls/d) | ||||||||||
| Delaware Basin | 113 | 112 | 112 | 105 | 97 | |||||
| Eagle Ford | 14 | 15 | 15 | 16 | 15 | |||||
| Anadarko Basin | 26 | 29 | 27 | 31 | 26 | |||||
| Williston Basin | 10 | 10 | 9 | 9 | 8 | |||||
| Powder River Basin | 2 | 3 | 2 | 2 | 2 | |||||
| Other | — | — | 1 | 1 | 1 | |||||
| Total | 165 | 169 | 166 | 164 | 149 | |||||
| Gas (MMcf/d) | ||||||||||
| Delaware Basin | 695 | 673 | 680 | 636 | 640 | |||||
| Eagle Ford | 79 | 81 | 78 | 86 | 82 | |||||
| Anadarko Basin | 223 | 225 | 235 | 254 | 237 | |||||
| Williston Basin | 63 | 61 | 58 | 59 | 54 | |||||
| Powder River Basin | 18 | 20 | 18 | 18 | 16 | |||||
| Other | 1 | 1 | 1 | 1 | 1 | |||||
| Total | 1,079 | 1,061 | 1,070 | 1,054 | 1,030 | |||||
| Total oil equivalent (MBoe/d) | ||||||||||
| Delaware Basin | 437 | 433 | 440 | 420 | 415 | |||||
| Eagle Ford | 70 | 72 | 68 | 74 | 68 | |||||
| Anadarko Basin | 74 | 79 | 80 | 89 | 81 | |||||
| Williston Basin | 61 | 55 | 54 | 56 | 53 | |||||
| Powder River Basin | 18 | 19 | 19 | 19 | 19 | |||||
| Other | 4 | 4 | 4 | 4 | 5 | |||||
| Total | 664 | 662 | 665 | 662 | 641 |
6
CAPITAL EXPENDITURES
| (in millions) | 2024 | 2023 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||
| Delaware Basin | $ | 555 | $ | 506 | $ | 503 | $ | 583 | $ | 572 |
| Eagle Ford | 156 | 194 | 198 | 179 | 188 | |||||
| Anadarko Basin | 59 | 51 | 13 | 67 | 66 | |||||
| Williston Basin | 27 | 55 | 69 | 89 | 73 | |||||
| Powder River Basin | 43 | 55 | 45 | 39 | 32 | |||||
| Other | 2 | 3 | 2 | 1 | 2 | |||||
| Total upstream capital | $ | 842 | $ | 864 | $ | 830 | $ | 958 | $ | 933 |
| Carbon capital | 32 | 31 | 25 | 30 | 27 | |||||
| Midstream and Corporate | 63 | 45 | 41 | 30 | 28 | |||||
| Acquisitions | 8 | 11 | 23 | 18 | 13 | |||||
| Total capital | $ | 945 | $ | 951 | $ | 919 | $ | 1,036 | $ | 1,001 |
SUPPLEMENTAL INFORMATION FOR CAPITAL EXPENDITURES
GROSS OPERATED SPUDS
| 2024 | 2023 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||
| Delaware Basin | 76 | 60 | 64 | 65 | 60 | |||||
| Eagle Ford | 30 | 26 | 28 | 18 | 23 | |||||
| Anadarko Basin | 4 | 17 | 10 | 9 | 19 | |||||
| Williston Basin | 1 | — | 7 | 8 | 6 | |||||
| Powder River Basin | 3 | 5 | 4 | 3 | 3 | |||||
| Total | 114 | 108 | 113 | 103 | 111 |
GROSS OPERATED WELLS TIED-IN
| 2024 | 2023 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||
| Delaware Basin | 59 | 62 | 59 | 76 | 42 | |||||
| Eagle Ford | 26 | 24 | 13 | 29 | 26 | |||||
| Anadarko Basin | 5 | 4 | — | 16 | 7 | |||||
| Williston Basin | 10 | 6 | 6 | 8 | 17 | |||||
| Powder River Basin | 2 | 4 | 3 | 2 | 5 | |||||
| Total | 102 | 100 | 81 | 131 | 97 |
NET OPERATED WELLS TIED-IN
| 2024 | 2023 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||
| Delaware Basin | 50 | 47 | 49 | 61 | 40 | |||||
| Eagle Ford | 21 | 20 | 12 | 25 | 18 | |||||
| Anadarko Basin | 2 | 1 | — | 7 | 3 | |||||
| Williston Basin | 10 | 3 | 4 | 6 | 15 | |||||
| Powder River Basin | 2 | 4 | 3 | 2 | 4 | |||||
| Total | 85 | 75 | 68 | 101 | 80 |
AVERAGE LATERAL LENGTH
| (based on wells tied-in) | 2024 | 2023 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||
| Delaware Basin | 10,300’ | 10,300’ | 9,700’ | 10,100’ | 9,900’ | |||||
| Eagle Ford | 6,700’ | 7,900’ | 5,000’ | 6,200’ | 6,700’ | |||||
| Anadarko Basin | 10,000’ | 12,500’ | — | 9,100’ | 9,300’ | |||||
| Williston Basin | 9,600’ | 12,300’ | 12,300’ | 10,000’ | 11,500’ | |||||
| Powder River Basin | 9,600’ | 9,600’ | 13,300’ | 15,000’ | 10,700’ | |||||
| Total | 9,300’ | 9,900’ | 9,300’ | 9,200’ | 9,300’ |
7
REALIZED PRICING
| BENCHMARK PRICES | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (average prices) | 2024 | 2023 | ||||||||||||
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||
| Oil ($/Bbl) - West Texas Intermediate (Cushing) | $ | 77.01 | $ | 78.48 | $ | 82.06 | $ | 73.76 | $ | 76.17 | ||||
| Natural Gas ($/Mcf) - Henry Hub | $ | 2.25 | $ | 2.88 | $ | 2.54 | $ | 2.09 | $ | 3.44 | ||||
| NGL ($/Bbl) - Mont Belvieu Blended | $ | 27.51 | $ | 25.52 | $ | 26.62 | $ | 23.99 | $ | 29.48 | ||||
| REALIZED PRICES | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||
| Oil (Per Bbl) | ||||||||||||||
| Delaware Basin | $ | 76.23 | $ | 77.75 | $ | 80.72 | $ | 71.86 | $ | 74.43 | ||||
| Eagle Ford | 76.51 | 78.51 | 80.85 | 72.36 | 74.06 | |||||||||
| Anadarko Basin | 74.91 | 77.09 | 79.86 | 71.52 | 74.14 | |||||||||
| Williston Basin | 71.13 | 74.26 | 79.50 | 70.80 | 74.09 | |||||||||
| Powder River Basin | 71.93 | 74.58 | 78.51 | 70.75 | 74.30 | |||||||||
| Realized price without hedges | 75.40 | 77.32 | 80.48 | 71.74 | 74.32 | |||||||||
| Cash settlements | (0.25 | ) | (0.34 | ) | (0.67 | ) | — | (0.10 | ) | |||||
| Realized price, including cash settlements | $ | 75.15 | $ | 76.98 | $ | 79.81 | $ | 71.74 | $ | 74.22 | ||||
| Natural gas liquids (Per Bbl) | ||||||||||||||
| Delaware Basin | $ | 20.55 | $ | 19.93 | $ | 20.76 | $ | 18.07 | $ | 23.72 | ||||
| Eagle Ford | 23.67 | 22.67 | 23.70 | 20.22 | 26.18 | |||||||||
| Anadarko Basin | 24.77 | 21.44 | 23.37 | 19.42 | 27.88 | |||||||||
| Williston Basin | 6.27 | 2.95 | 4.09 | 2.52 | 8.97 | |||||||||
| Powder River Basin | 32.91 | 28.80 | 29.63 | 24.52 | 35.72 | |||||||||
| Realized price without hedges | 20.81 | 19.67 | 20.72 | 17.79 | 24.12 | |||||||||
| Cash settlements | (0.08 | ) | — | — | — | — | ||||||||
| Realized price, including cash settlements | $ | 20.73 | $ | 19.67 | $ | 20.72 | $ | 17.79 | $ | 24.12 | ||||
| Gas (Per Mcf) | ||||||||||||||
| Delaware Basin | $ | 1.19 | $ | 1.76 | $ | 1.94 | $ | 1.18 | $ | 1.90 | ||||
| Eagle Ford | 1.89 | 2.44 | 2.31 | 1.80 | 2.99 | |||||||||
| Anadarko Basin | 1.92 | 2.38 | 2.17 | 1.72 | 3.14 | |||||||||
| Williston Basin | N/M | N/M | N/M | N/M | 1.57 | |||||||||
| Powder River Basin | 2.29 | 2.52 | 2.53 | 2.41 | 4.25 | |||||||||
| Realized price without hedges | 1.30 | 1.83 | 1.92 | 1.27 | 2.29 | |||||||||
| Cash settlements | 0.32 | 0.19 | 0.09 | 0.39 | 0.18 | |||||||||
| Realized price, including cash settlements | $ | 1.62 | $ | 2.02 | $ | 2.01 | $ | 1.66 | $ | 2.47 | ||||
| Total oil equivalent (Per Boe) | ||||||||||||||
| Delaware Basin | $ | 43.55 | $ | 45.38 | $ | 47.68 | $ | 42.05 | $ | 46.35 | ||||
| Eagle Ford | 53.81 | 54.64 | 55.71 | 49.69 | 52.81 | |||||||||
| Anadarko Basin | 25.48 | 26.96 | 27.88 | 24.04 | 32.16 | |||||||||
| Williston Basin | 47.37 | 47.77 | 52.64 | 45.94 | 52.94 | |||||||||
| Powder River Basin | 57.60 | 57.99 | 62.21 | 56.33 | 63.01 | |||||||||
| Realized price without hedges | 43.52 | 44.93 | 47.10 | 41.39 | 46.44 | |||||||||
| Cash settlements | 0.39 | 0.14 | (0.18 | ) | 0.61 | 0.22 | ||||||||
| Realized price, including cash settlements | $ | 43.91 | $ | 45.07 | $ | 46.92 | $ | 42.00 | $ | 46.66 |
8
ASSET MARGINS
BENCHMARK PRICES
| (average prices) | 2024 | 2023 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||
| Oil ($/Bbl) - West Texas Intermediate (Cushing) | $ | 77.01 | $ | 78.48 | $ | 82.06 | $ | 73.76 | $ | 76.17 |
| Natural Gas ($/Mcf) - Henry Hub | $ | 2.25 | $ | 2.88 | $ | 2.54 | $ | 2.09 | $ | 3.44 |
| NGL ($/Bbl) - Mont Belvieu Blended | $ | 27.51 | $ | 25.52 | $ | 26.62 | $ | 23.99 | $ | 29.48 |
PER-UNIT CASH MARGINBY ASSET (per Boe)
| 2024 | 2023 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | |||||||||||
| Delaware Basin | |||||||||||||||
| Realized price | $ | 43.55 | $ | 45.38 | $ | 47.68 | $ | 42.05 | $ | 46.35 | |||||
| Lease operating expenses | (5.54 | ) | (5.46 | ) | (5.03 | ) | (4.96 | ) | (4.58 | ) | |||||
| Gathering, processing & transportation | (2.79 | ) | (2.75 | ) | (2.63 | ) | (2.63 | ) | (2.63 | ) | |||||
| Production & property taxes | (3.16 | ) | (3.24 | ) | (3.48 | ) | (3.18 | ) | (3.43 | ) | |||||
| Field-level cash margin | $ | 32.06 | $ | 33.93 | $ | 36.54 | $ | 31.28 | $ | 35.71 | |||||
| Eagle Ford | |||||||||||||||
| Realized price | $ | 53.81 | $ | 54.64 | $ | 55.71 | $ | 49.69 | $ | 52.81 | |||||
| Lease operating expenses | (7.59 | ) | (7.05 | ) | (7.52 | ) | (6.18 | ) | (6.32 | ) | |||||
| Gathering, processing & transportation | (1.67 | ) | (1.62 | ) | (1.63 | ) | (1.67 | ) | (1.49 | ) | |||||
| Production & property taxes | (2.73 | ) | (2.95 | ) | (3.18 | ) | (2.97 | ) | (3.25 | ) | |||||
| Field-level cash margin | $ | 41.82 | $ | 43.02 | $ | 43.38 | $ | 38.87 | $ | 41.75 | |||||
| Anadarko Basin | |||||||||||||||
| Realized price | $ | 25.48 | $ | 26.96 | $ | 27.88 | $ | 24.04 | $ | 32.16 | |||||
| Lease operating expenses | (3.33 | ) | (3.26 | ) | (3.43 | ) | (3.13 | ) | (3.41 | ) | |||||
| Gathering, processing & transportation | (6.27 | ) | (5.98 | ) | (6.11 | ) | (5.97 | ) | (5.93 | ) | |||||
| Production & property taxes | (1.24 | ) | (1.40 | ) | (1.36 | ) | (1.22 | ) | (1.73 | ) | |||||
| Field-level cash margin | $ | 14.64 | $ | 16.32 | $ | 16.98 | $ | 13.72 | $ | 21.09 | |||||
| Williston Basin | |||||||||||||||
| Realized price | $ | 47.37 | $ | 47.77 | $ | 52.64 | $ | 45.94 | $ | 52.94 | |||||
| Lease operating expenses | (10.88 | ) | (13.07 | ) | (13.04 | ) | (13.43 | ) | (13.25 | ) | |||||
| Gathering, processing & transportation | (2.03 | ) | (2.34 | ) | (2.31 | ) | (2.29 | ) | (2.19 | ) | |||||
| Production & property taxes | (4.72 | ) | (4.78 | ) | (5.13 | ) | (4.68 | ) | (4.85 | ) | |||||
| Field-level cash margin | $ | 29.74 | $ | 27.58 | $ | 32.16 | $ | 25.54 | $ | 32.65 | |||||
| Powder River Basin | |||||||||||||||
| Realized price | $ | 57.60 | $ | 57.99 | $ | 62.21 | $ | 56.33 | $ | 63.01 | |||||
| Lease operating expenses | (11.66 | ) | (8.65 | ) | (8.45 | ) | (10.03 | ) | (11.07 | ) | |||||
| Gathering, processing & transportation | (3.03 | ) | (3.17 | ) | (3.02 | ) | (2.97 | ) | (2.73 | ) | |||||
| Production & property taxes | (6.91 | ) | (6.75 | ) | (7.45 | ) | (6.79 | ) | (7.78 | ) | |||||
| Field-level cash margin | $ | 36.00 | $ | 39.42 | $ | 43.29 | $ | 36.54 | $ | 41.43 | |||||
| Devon - Total | |||||||||||||||
| Realized price | $ | 43.52 | $ | 44.93 | $ | 47.10 | $ | 41.39 | $ | 46.44 | |||||
| Lease operating expenses | (6.29 | ) | (6.25 | ) | (6.00 | ) | (5.86 | ) | (5.67 | ) | |||||
| Gathering, processing & transportation | (2.98 | ) | (2.97 | ) | (2.91 | ) | (2.94 | ) | (2.88 | ) | |||||
| Production & property taxes | (3.16 | ) | (3.24 | ) | (3.46 | ) | (3.14 | ) | (3.47 | ) | |||||
| Field-level cash margin | $ | 31.09 | $ | 32.47 | $ | 34.73 | $ | 29.45 | $ | 34.42 |
9
NON-GAAP MEASURES
(all monetary values in millions, except per share amounts)
Devon’s earnings materials include non-GAAP financial measures. These non-GAAP measures are not alternatives to GAAP measures, and you should not consider these non-GAAP measures in isolation or as a substitute for analysis of our results as reported under GAAP. Below is additional disclosure regarding each of the non-GAAP measures used in the earnings materials, including reconciliations to their most directly comparable GAAP measure.
The earnings materials may include forward-looking non-GAAP measures. The company is unable to provide reconciliations of these forward-looking non-GAAP measures, because components of the calculations are inherently unpredictable, such as changes to current assets and liabilities, the timing of changes in capital accruals, unknown future events and estimating certain future GAAP measures. The inability to reliably quantify certain components of the calculation would significantly affect the usefulness and accuracy of a reconciliation.
CORE EARNINGS
Devon’s reported net earnings include items of income and expense that are typically excluded by securities analysts in their published estimates of the company’s financial results. Accordingly, the company also uses the measures of core earnings and core earnings per share attributable to Devon. Devon believes these non-GAAP measures facilitate comparisons of its performance to earnings estimates published by securities analysts. Devon also believes these non-GAAP measures can facilitate comparisons of its performance between periods and to the performance of its peers. The following table summarizes the effects of these items on first-quarter 2024 earnings.
| Quarter Ended March 31, 2024 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Before-tax | After-tax | After NCI | Per DilutedShare | |||||||
| Total | ||||||||||
| Earnings (GAAP) | $ | 768 | $ | 609 | $ | 596 | $ | 0.94 | ||
| Adjustments: | ||||||||||
| Asset dispositions | 1 | 1 | 1 | — | ||||||
| Deferred tax asset valuation allowance | — | (1 | ) | (1 | ) | — | ||||
| Fair value changes in financial instruments | 172 | 134 | 134 | 0.22 | ||||||
| Core earnings (Non-GAAP) | $ | 941 | $ | 743 | $ | 730 | $ | 1.16 |
EBITDAX
Devon believes EBITDAX provides information useful in assessing operating and financial performance across periods. Devon computes EBITDAX as net earnings before financing costs, net; income tax expense; exploration expenses; depreciation, depletion and amortization; asset disposition gains and losses; non-cash share-based compensation; non-cash valuation changes for derivatives and financial instruments; accretion on discounted liabilities; and other items not related to normal operations. EBITDAX as defined by Devon may not be comparable to similarly titled measures used by other companies.
| Q1 ‘24 | Q4 ‘23 | Q3 ‘23 | Q2 ‘23 | TTM | Q1 ‘23 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net earnings (GAAP) | $ | 609 | $ | 1,161 | $ | 920 | $ | 698 | $ | 3,388 | $ | 1,003 | ||||
| Financing costs, net | 76 | 77 | 81 | 78 | 312 | 72 | ||||||||||
| Income tax expense | 159 | 269 | 152 | 199 | 779 | 221 | ||||||||||
| Exploration expenses | 9 | 4 | 3 | 10 | 26 | 3 | ||||||||||
| Depreciation, depletion and amortization | 722 | 650 | 651 | 638 | 2,661 | 615 | ||||||||||
| Asset dispositions | 1 | 11 | — | (41 | ) | (29 | ) | — | ||||||||
| Share-based compensation | 24 | 22 | 22 | 25 | 93 | 23 | ||||||||||
| Derivative & financial instrument non-cash val.<br>changes | 169 | (316 | ) | 183 | 113 | 149 | (51 | ) | ||||||||
| Accretion on discounted liabilities and other | 22 | 10 | 13 | 10 | 55 | 5 | ||||||||||
| EBITDAX (Non-GAAP) | $ | 1,791 | $ | 1,888 | $ | 2,025 | $ | 1,730 | $ | 7,434 | $ | 1,891 |
10
NET DEBT
Devon defines net debt as debt (includes short-term and long-term debt) less cash, cash equivalents and restricted cash. Devon believes that netting these sources of cash against debt provides a clearer picture of the future demands on cash from Devon to repay debt.
| Mar. 31, 2024 | Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total debt (GAAP) | $ | 6,147 | $ | 6,155 | $ | 6,162 | $ | 6,413 | $ | 6,422 | |||||
| Less: | |||||||||||||||
| Cash, cash equivalents and restricted cash | (1,149 | ) | (875 | ) | (761 | ) | (488 | ) | (887 | ) | |||||
| Net debt (Non-GAAP) | $ | 4,998 | $ | 5,280 | $ | 5,401 | $ | 5,925 | $ | 5,535 |
NET DEBT-TO-EBITDAX
Devon defines net debt-to-EBITDAX as net debt divided by an annualized EBITDAX measure. Devon believes this ratio provides information useful to investors in assessing the company’s credit position and debt leverage.
| Mar. 31, 2024 | Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Net debt (Non-GAAP) | $ | 4,998 | $ | 5,280 | $ | 5,401 | $ | 5,925 | $ | 5,535 |
| EBITDAX (Non-GAAP) ^(1)^ | $ | 7,434 | $ | 7,534 | $ | 7,776 | $ | 8,239 | $ | 9,342 |
| Net<br>debt-to-EBITDAX (Non-GAAP) | 0.7 | 0.7 | 0.7 | 0.7 | 0.6 | |||||
| (1) | EBITDAX is an annualized measure using a trailing twelve-month calculation. | |||||||||
| --- | --- |
FREE CASH FLOW
Devon defines free cash flow as total operating cash flow less capital expenditures. Devon believes free cash flow provides a useful measure of available cash generated by operating activities for other investing and financing activities.
| Quarter EndedMar. 31, 2024 | Quarter EndedDec. 31, 2023 | Quarter EndedSep. 30, 2023 | Quarter EndedJun. 30, 2023 | Quarter EndedMar. 31, 2023 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total operating cash flow (GAAP) | $ | 1,738 | $ | 1,737 | $ | 1,725 | $ | 1,405 | $ | 1,677 | |||||
| Less capital expenditures: | (894 | ) | (910 | ) | (882 | ) | (1,079 | ) | (1,012 | ) | |||||
| Free cash flow (Non-GAAP) | $ | 844 | $ | 827 | $ | 843 | $ | 326 | $ | 665 |
ADJUSTED FREE CASH FLOW
Devon is committed to returning approximately 70% of our adjusted free cash flow to shareholders through a fixed dividend, variable dividend and share repurchases. Adjusted free cash flow is calculated as total operating cash flow before balance sheet changes less accrued capital expenditures.
| Quarter EndedMar. 31, 2024 | |||
|---|---|---|---|
| Total operating cash flow (GAAP) | $ | 1,738 | |
| Changes in assets and liabilities | (170 | ) | |
| Cash flow before balance sheet changes (Non-GAAP) | 1,568 | ||
| Capital expenditures (Accrued) | (945 | ) | |
| Adjusted free cash flow (Non-GAAP) | $ | 623 |
REINVESTMENT RATE
Devon defines reinvestment rate as accrued capital expenditures divided by operating cash flow. Devon believes this measure provides useful information to our investors as an indicator of the capital demands of our business relative to the cash flow generated from normal business operations.
| Quarter EndedMar. 31, 2024 | Quarter EndedDec. 31, 2023 | Quarter EndedSep. 30, 2023 | Quarter EndedJun. 30, 2023 | Quarter EndedMar. 31, 2023 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Capital expenditures (Accrued) | $ | 945 | $ | 951 | $ | 919 | $ | 1,036 | $ | 1,001 | |||||
| Operating cash flow | $ | 1,738 | $ | 1,737 | $ | 1,725 | $ | 1,405 | $ | 1,677 | |||||
| Reinvestment rate (Non-GAAP) | 54 | % | 55 | % | 53 | % | 74 | % | 60 | % |
11
| SECOND-QUARTER AND FULL-YEAR 2024 GUIDANCE |
|---|
PRODUCTIONGUIDANCE
| Quarter 2 | Full Year | |||||||
|---|---|---|---|---|---|---|---|---|
| Low | High | Low | High | |||||
| Oil (MBbls/d) | 321 | 327 | 316 | 322 | ||||
| Natural gas liquids (MBbls/d) | 168 | 174 | 164 | 170 | ||||
| Gas (MMcf/d) | 1,085 | 1,135 | 1,050 | 1,100 | ||||
| Total oil equivalent (MBoe/d) | 670 | 690 | 655 | 675 |
CAPITAL EXPENDITURES GUIDANCE
| Quarter 2 | Full Year | |||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | Low | High | Low | High | ||||
| Upstream capital | $ | 850 | $ | 900 | $ | 3,050 | $ | 3,250 |
| Carbon capital | 30 | 40 | 125 | 175 | ||||
| Midstream & other capital | 35 | 45 | 125 | 175 | ||||
| Total capital | $ | 915 | $ | 985 | $ | 3,300 | $ | 3,600 |
PRICE REALIZATIONS GUIDANCE
| Quarter 2 | Full Year | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Low | High | Low | High | |||||||||
| Oil - % of WTI | 95 | % | 100 | % | 95 | % | 100 | % | ||||
| NGL - % of WTI | 20 | % | 30 | % | 20 | % | 30 | % | ||||
| Natural gas - % of Henry Hub^(1)^ | 20 | % | 40 | % | 50 | % | 60 | % | ||||
| (1) | Realizations do not include impact from natural gas basis swaps. | |||||||||||
| --- | --- |
OTHER GUIDANCE ITEMS
| Quarter 2 | Full Year | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ millions, except Boe and %) | Low | High | Low | High | ||||||||
| Marketing & midstream operating profit | $ | (15 | ) | $ | (5 | ) | $ | (50 | ) | $ | (40 | ) |
| LOE & GP&T per BOE | $ | 9.20 | $ | 9.40 | $ | 9.20 | $ | 9.40 | ||||
| Production & property taxes as % of upstream sales | 7.4 | % | 8.0 | % | 7.4 | % | 8.0 | % | ||||
| Exploration expenses | $ | — | $ | 5 | $ | 15 | $ | 25 | ||||
| Depreciation, depletion and amortization | $ | 730 | $ | 770 | $ | 2,850 | $ | 2,950 | ||||
| General & administrative expenses | $ | 105 | $ | 115 | $ | 410 | $ | 450 | ||||
| Net financing costs, net | $ | 75 | $ | 85 | $ | 310 | $ | 330 | ||||
| Other expenses | $ | — | $ | 10 | $ | 30 | $ | 40 |
INCOME TAX GUIDANCE
| Quarter 2 | Full Year | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (% of pre-tax earnings) | Low | High | Low | High | ||||||||
| Current income tax rate | 14 | % | 16 | % | 14 | % | 16 | % | ||||
| Deferred income tax rate | 6 | % | 8 | % | 6 | % | 8 | % | ||||
| Total income tax rate | ~22% | ~22% |
12
| CONTINGENT PAYMENTS FOR BARNETT SHALE DIVESTITURE (through 2024) | |||||||
|---|---|---|---|---|---|---|---|
| WTI Threshold | WTI Annual Earnout Amount | Henry Hub Threshold | Henry Hub Annual EarnoutAmount | ||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| $ | 50.00 | $ | 10,000,000 | $ | 2.75 | $ | 20,000,000 |
| $ | 55.00 | $ | 12,500,000 | $ | 3.00 | $ | 25,000,000 |
| $ | 60.00 | $ | 15,000,000 | $ | 3.25 | $ | 35,000,000 |
| $ | 65.00 | $ | 20,000,000 | $ | 3.50 | $ | 45,000,000 |
2024 & 2025 HEDGING POSITIONS
Oil Commodity Hedges
| Price Swaps | Price Collars | ||||||
|---|---|---|---|---|---|---|---|
| Period | Volume (Bbls/d) | WeightedAverage Price(/Bbl) | Volume<br>(Bbls/d) | WeightedAverage FloorPrice (/Bbl) | WeightedAverage CeilingPrice (/Bbl) | ||
| Q2 2024 | 26,341 | 67,022 | |||||
| Q3 2024 | 28,000 | 79,000 | |||||
| Q4 2024 | 28,000 | 69,000 | |||||
| Q1-Q4 2025 | 3,468 | 992 |
All values are in US Dollars.
Oil Basis Swaps
| Period | Index | Volume<br>(Bbls/d) | Weighted AverageDifferential to WTI(/Bbl) | |
|---|---|---|---|---|
| Q2 2024 | Midland Sweet | 62,500 | ||
| Q3-Q4 2024 | Midland Sweet | 69,500 | ||
| Q1-Q4 2025 | Midland Sweet | 63,000 |
All values are in US Dollars.
Natural Gas Commodity Hedges - Henry Hub
| Price Swaps | Price Collars | ||||||
|---|---|---|---|---|---|---|---|
| Period | Volume (MMBtu/d) | WeightedAverage Price(/MMBtu) | Volume<br>(MMBtu/d) | WeightedAverage FloorPrice (/MMBtu) | WeightedAverage CeilingPrice(/MMBtu) | ||
| Q2 2024 | 263,000 | 56,000 | |||||
| Q3 2024 | 263,000 | — | |||||
| Q4 2024 | 209,000 | — | |||||
| Q1-Q4 2025 | 75,537 | — |
All values are in US Dollars.
Natural Gas Basis Swaps
| Period | Index | Volume (MMBtu/d) | Weighted AverageDifferential to HenryHub (/MMBtu) | |
|---|---|---|---|---|
| Q2 2024 | El Paso Permian | 60,000 | ) | |
| Q3–Q4 2024 | El Paso Permian | 10,000 | ) | |
| Q2–Q4 2024 | Houston Ship Channel | 110,000 | ) | |
| Q2 2024 | WAHA | 70,000 | ) | |
| Q3–Q4 2024 | WAHA | 60,000 | ) | |
| Q1–Q4 2025 | WAHA | 10,000 | ) |
All values are in US Dollars.
13
| 2024 & 2025 HEDGING POSITIONS (continued) |
|---|
NGL Commodity Hedges
| Price Swaps | |||
|---|---|---|---|
| Period | Product | Volume (Bbls/d) | Weighted AveragePrice (/Bbl) |
| Q2-Q4 2024 | Natural Gasoline | 3,000 | |
| Q2-Q4 2024 | Normal Butane | 3,350 | |
| Q2 2024 | Propane | 4,591 | |
| Q3-Q4 2024 | Propane | 5,250 |
All values are in US Dollars.
Devon’s oil derivatives settle against the average of the prompt month NYMEX West Texas Intermediate futures price. Devon’s natural gas derivatives settle against the Inside FERC end of the month NYMEX index. Devon’s NGL derivatives settle against the average of the prompt month OPIS Mont Belvieu, Texas index. Commodity hedge positions are shown as of March 31, 2024.
14