UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-32318

 

DEVON ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	73-1567067
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer identification No.)
333 West Sheridan Avenue, Oklahoma City, Oklahoma	73102-5015
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (405) 235-3611

Former name, address and former fiscal year, if changed from last report: Not applicable

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.10 per share	DVN	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

On April 18, 2024, 632.0 million shares of common stock were outstanding.

DEVON ENERGY CORPORATION

FORM 10-Q

TABLE OF CONTENTS

Part I. Financial Information
Item 1.	Financial Statements	6
	Consolidated Statements of Comprehensive Earnings	6
	Consolidated Balance Sheets	7
	Consolidated Statements of Cash Flows	8
	Consolidated Statements of Equity	9
	Notes to Consolidated Financial Statements	10
	Note 1 – Summary of Significant Accounting Policies	10
	Note 2 – Acquisitions and Divestitures	11
	Note 3 – Derivative Financial Instruments	12
	Note 4 – Share-Based Compensation	14
	Note 5 – Income Taxes	15
	Note 6 – Net Earnings Per Share	15
	Note 7 – Other Comprehensive Earnings (Loss)	15
	Note 8 – Supplemental Information to Statements of Cash Flows	16
	Note 9 – Accounts Receivable	16
	Note 10 – Property, Plant and Equipment	16
	Note 11 – Debt and Related Expenses	17
	Note 12 – Leases	18
	Note 13 – Asset Retirement Obligations	18
	Note 14 – Stockholders’ Equity	19
	Note 15 – Commitments and Contingencies	19
	Note 16 – Fair Value Measurements	21
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
	Executive Overview	22
	Results of Operations	23
	Capital Resources, Uses and Liquidity	30
	Critical Accounting Estimates	33
	Non-GAAP Measures	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
Part II. Other Information
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
Signatures		37

2

DEFINITIONS

Unless the context otherwise indicates, references to “us,” “we,” “our,” “ours,” “Devon,” the “Company” and “Registrant” refer to Devon Energy Corporation and its consolidated subsidiaries. All monetary values, other than per unit and per share amounts, are stated in millions of U.S. dollars unless otherwise specified. In addition, the following are other abbreviations and definitions of certain terms used within this Quarterly Report on Form 10-Q:

“2018 Senior Credit Facility” means Devon’s syndicated unsecured revolving line of credit, effective as of October 5, 2018.

“2023 Senior Credit Facility” means Devon’s syndicated unsecured revolving line of credit, effective as of March 24, 2023.

“ASU” means Accounting Standards Update.

“Bbl” or “Bbls” means barrel or barrels.

“Boe” means barrel of oil equivalent. Gas proved reserves and production are converted to Boe, at the pressure and temperature base standard of each respective state in which the gas is produced, at the rate of six Mcf of gas per Bbl of oil, based upon the approximate relative energy content of gas and oil. NGL proved reserves and production are converted to Boe on a one-to-one basis with oil.

“Btu” means British thermal units, a measure of heating value.

“Catalyst” means Catalyst Midstream Partners, LLC.

“CDM” means Cotton Draw Midstream, L.L.C.

“DD&A” means depreciation, depletion and amortization expenses.

“ESG” means environmental, social and governance.

"FASB" means Financial Accounting Standards Board.

“Fervo” means Fervo Energy Company.

“G&A” means general and administrative expenses.

“GAAP” means U.S. generally accepted accounting principles.

“Inside FERC” refers to the publication Inside FERC’s Gas Market Report.

“LOE” means lease operating expenses.

“Matterhorn” refers to Matterhorn Express Pipeline, LLC and, as applicable, its direct parent, MXP Parent, LLC.

“MBbls” means thousand barrels.

“MBoe” means thousand Boe.

“Mcf” means thousand cubic feet.

"MMBoe" means million Boe.

“MMBtu” means million Btu.

“MMcf” means million cubic feet.

“N/M” means not meaningful.

3

“NCI” means noncontrolling interests.

“NGL” or “NGLs” means natural gas liquids.

“NYMEX” means New York Mercantile Exchange.

“SEC” means United States Securities and Exchange Commission.

“TSR” means total shareholder return.

“U.S.” means United States of America.

“VIE” means variable interest entity.

“Water JV” means NDB Midstream L.L.C.

“WTI” means West Texas Intermediate.

“/Bbl” means per barrel.

“/d” means per day.

“/MMBtu” means per MMBtu.

4

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This report includes “forward-looking statements” as defined by the SEC. Such statements include those concerning 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 this report 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 and uncertainties, 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 NGL prices;

•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 our hedging 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 and risks 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 stockholder activism;

•our ability to successfully complete mergers, acquisitions and divestitures;

•our ability to pay dividends and make share repurchases; and

•any of the other risks and uncertainties discussed in this report, our 2023 Annual Report on Form 10-K and our other filings with the SEC.

The forward-looking statements included in this filing speak only as of the date of this report, represent management’s current reasonable expectations as of the date of this filing and are subject to the risks and uncertainties identified above as well as those described elsewhere in this report and in other documents we file 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 this report 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 in their 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.

5

Part I. Financial Information

Item 1. Financial Statements

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

	Three Months Ended March 31,
	2024			2023
	(Unaudited)
Oil, gas and NGL sales	$	2,629		$	2,679
Oil, gas and NGL derivatives		(145	)		64
Marketing and midstream revenues		1,112			1,080
Total revenues		3,596			3,823
Production expenses		751			693
Exploration expenses		9			3
Marketing and midstream expenses		1,133			1,105
Depreciation, depletion and amortization		722			615
Asset dispositions		1			—
General and administrative expenses		114			106
Financing costs, net		76			72
Other, net		22			5
Total expenses		2,828			2,599
Earnings before income taxes		768			1,224
Income tax expense		159			221
Net earnings		609			1,003
Net earnings attributable to noncontrolling interests		13			8
Net earnings attributable to Devon	$	596		$	995
Net earnings per share:
Basic net earnings per share	$	0.95		$	1.53
Diluted net earnings per share	$	0.94		$	1.53
Comprehensive earnings:
Net earnings	$	609		$	1,003
Other comprehensive earnings, net of tax:
Pension and postretirement plans		1			1
Other comprehensive earnings, net of tax		1			1
Comprehensive earnings:		610			1,004
Comprehensive earnings attributable to noncontrolling interests		13			8
Comprehensive earnings attributable to Devon	$	597		$	996

See accompanying notes to consolidated financial statements.

6

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31, 2024			December 31, 2023
	(Unaudited)
ASSETS
Current assets:
Cash, cash equivalents and restricted cash	$	1,149		$	875
Accounts receivable		1,670			1,573
Inventory		234			249
Other current assets		345			460
Total current assets		3,398			3,157
Oil and gas property and equipment, based on successful efforts accounting, net		18,033			17,825
Other property and equipment, net ($154 million and $136 million related to CDM in    2024 and 2023, respectively)		1,551			1,503
Total property and equipment, net		19,584			19,328
Goodwill		753			753
Right-of-use assets		276			267
Investments		713			666
Other long-term assets		254			319
Total assets	$	24,978		$	24,490
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	879		$	760
Revenues and royalties payable		1,268			1,222
Short-term debt		479			483
Income taxes payable		189			67
Other current liabilities		451			417
Total current liabilities		3,266			2,949
Long-term debt		5,668			5,672
Lease liabilities		301			295
Asset retirement obligations		683			643
Other long-term liabilities		841			876
Deferred income taxes		1,878			1,838
Stockholders' equity:
Common stock, $0.10 par value. Authorized 1.0 billion shares; issued    633 million and 636 million shares in 2024 and 2023, respectively		63			64
Additional paid-in capital		5,718			5,939
Retained earnings		6,509			6,195
Accumulated other comprehensive loss		(123	)		(124	)
Treasury stock, at cost, 0.3 million shares in 2023		—			(13	)
Total stockholders’ equity attributable to Devon		12,167			12,061
Noncontrolling interests		174			156
Total equity		12,341			12,217
Total liabilities and equity	$	24,978		$	24,490

See accompanying notes to consolidated financial statements.

7

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended March 31,
	2024			2023
	(Unaudited)
Cash flows from operating activities:
Net earnings	$	609		$	1,003
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation, depletion and amortization		722			615
Amortization of liabilities		—			(7	)
Total (gains) losses on commodity derivatives		145			(64	)
Cash settlements on commodity derivatives		24			13
Gains on asset dispositions		1			—
Deferred income tax expense		40			80
Share-based compensation		24			23
Other		3			2
Changes in assets and liabilities, net		170			12
Net cash from operating activities		1,738			1,677
Cash flows from investing activities:
Capital expenditures		(894	)		(1,012	)
Acquisitions of property and equipment		(8	)		(13	)
Divestitures of property and equipment		17			21
Distributions from investments		11			8
Contributions to investments and other		(47	)		(37	)
Net cash from investing activities		(921	)		(1,033	)
Cash flows from financing activities:
Repurchases of common stock		(205	)		(517	)
Dividends paid on common stock		(299	)		(596	)
Contributions from noncontrolling interests		12			—
Distributions to noncontrolling interests		(7	)		(11	)
Shares exchanged for tax withholdings and other		(42	)		(87	)
Net cash from financing activities		(541	)		(1,211	)
Effect of exchange rate changes on cash		(2	)		—
Net change in cash, cash equivalents and restricted cash		274			(567	)
Cash, cash equivalents and restricted cash at beginning of period		875			1,454
Cash, cash equivalents and restricted cash at end of period	$	1,149		$	887
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	1,126		$	761
Restricted cash		23			126
Total cash, cash equivalents and restricted cash	$	1,149		$	887

See accompanying notes to consolidated financial statements.

8

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

													Other
							Additional						Comprehensive
	Common Stock						Paid-In			Retained			Earnings			Treasury			Noncontrolling			Total
	Shares			Amount			Capital			Earnings			(Loss)			Stock			Interests			Equity
	(Unaudited)
Three Months Ended March 31, 2024
Balance as of December 31, 2023		636		$	64		$	5,939		$	6,195		$	(124	)	$	(13	)	$	156		$	12,217
Net earnings		—			—			—			596			—			—			13			609
Other comprehensive earnings, net of tax		—			—			—			—			1			—			—			1
Restricted stock grants, net of cancellations		2			—			—			—			—			—			—			—
Common stock repurchased		—			—			(1	)		—			—			(232	)		—			(233	)
Common stock retired		(6	)		(1	)		(244	)		—			—			245			—			—
Common stock dividends		—			—			—			(282	)		—			—			—			(282	)
Share-based compensation		1			—			24			—			—			—			—			24
Contributions from noncontrolling interests		—			—			—			—			—			—			12			12
Distributions to noncontrolling interests		—			—			—			—			—			—			(7	)		(7	)
Balance as of March 31, 2024		633		$	63		$	5,718		$	6,509		$	(123	)	$	—		$	174		$	12,341
Three Months Ended March 31, 2023
Balance as of December 31, 2022		653		$	65		$	6,921		$	4,297		$	(116	)	$	—		$	129		$	11,296
Net earnings		—			—			—			995			—			—			8			1,003
Other comprehensive earnings, net of tax		—			—			—			—			1			—			—			1
Restricted stock grants, net of cancellations		2			—			—			—			—			—			—			—
Common stock repurchased		—			—			(4	)		—			—			(625	)		—			(629	)
Common stock retired		(11	)		(1	)		(596	)		—			—			597			—			—
Common stock dividends		—			—			—			(580	)		—			—			—			(580	)
Share-based compensation		1			—			23			—			—			—			—			23
Distributions to noncontrolling interests		—			—			—			—			—			—			(11	)		(11	)
Balance as of March 31, 2023		645		$	64		$	6,344		$	4,712		$	(115	)	$	(28	)	$	126		$	11,103

See accompanying notes to consolidated financial statements.

9

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.Summary of Significant Accounting Policies

The accompanying unaudited interim financial statements and notes of Devon have been prepared pursuant to the rules and regulations of the SEC. Pursuant to such rules and regulations, certain disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted. The accompanying unaudited interim financial statements and notes should be read in conjunction with the financial statements and notes included in Devon’s 2023 Annual Report on Form 10-K. The accompanying unaudited interim financial statements in this report reflect all adjustments that are, in the opinion of management, necessary for a fair statement of Devon’s results of operations and cash flows for the three-month periods ended March 31, 2024 and 2023 and Devon’s financial position as of March 31, 2024.

Variable Interest Entity

CDM is a joint venture entity formed by Devon and an affiliate of QL Capital Partners, LP. CDM provides gathering, compression and dehydration services for natural gas production in the Cotton Draw area of the Delaware Basin. Devon holds a controlling interest in CDM and the portions of CDM’s net earnings and equity not attributable to Devon’s controlling interest are shown separately as noncontrolling interests in the accompanying consolidated statements of comprehensive earnings and consolidated balance sheets. CDM is considered a VIE to Devon. The assets of CDM cannot be used by Devon for general corporate purposes and are included in, and disclosed parenthetically, on Devon's consolidated balance sheets. The carrying amount of liabilities related to CDM for which the creditors do not have recourse to Devon's assets are also included in, and disclosed parenthetically, if material, on Devon's consolidated balance sheets.

Investments

The following table presents Devon's investments.

		Carrying Amount
Investments	% Interest	March 31, 2024		December 31, 2023
Catalyst	50%	$	300	$	311
Water JV	30%		217		216
Matterhorn	12.5%		90		90
Fervo	12%		57		—
Other	Various		49		49
Total		$	713	$	666

Devon has an interest in Catalyst, which is a joint venture with an affiliate of Howard Energy Partners, LLC (“HEP”) and certain other investors, to develop oil gathering and natural gas processing infrastructure in the Stateline area of the Delaware Basin. Under the terms of the arrangement, Devon and a holding company owned by the other joint venture investors each have a 50% voting interest in the joint venture legal entity, and HEP serves as the operator. Through 2038, Devon’s production from 50,000 net acres in the Stateline area of the Delaware Basin has been dedicated to Catalyst subject to fixed-fee oil gathering and natural gas processing agreements. Devon accounts for the investment in Catalyst as an equity method investment. Devon's investment in Catalyst is shown within investments on the consolidated balance sheets and Devon's share of Catalyst earnings are reflected as a component of other, net in the accompanying consolidated statements of comprehensive earnings.

In the second quarter of 2023, Devon made an investment in the Water JV, a joint venture entity formed with an affiliate of WaterBridge NDB LLC (“WaterBridge”), for the purpose of providing increased capacity and flexibility in disposing of produced water in the Delaware Basin and Eagle Ford. Under terms of the arrangement, Devon contributed water infrastructure assets and committed to a water gathering and disposal dedication to the Water JV through 2038, in exchange for a 30% voting interest in the joint venture legal entity. WaterBridge contributed water infrastructure assets to the Water JV, in exchange for a 70% voting interest in the joint venture legal entity and will serve as the operator. In the second quarter of 2023, Devon recognized a $64 million gain in asset dispositions in the consolidated statements of comprehensive earnings, which represented the excess of the estimated fair value of Devon's interest in the Water JV over the carrying value of the water infrastructure assets Devon contributed to the Water JV. Devon accounts for the investment in the Water JV as an equity method investment. Devon's investment in the Water JV is shown within investments on the consolidated balance sheets and Devon's share of the Water JV earnings are reflected as a component of other, net in the accompanying consolidated statements of comprehensive earnings.

10

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Matterhorn is a joint venture entity and was formed for the purpose of constructing a natural gas pipeline that will transport natural gas from the Permian Basin to the Katy, Texas area. Devon's investment in Matterhorn does not give it the ability to exercise significant influence over Matterhorn.

In the first quarter of 2024, Devon committed to invest approximately $100 million in Fervo, a company that generates energy from geothermal wells. As of March 31, 2024, Devon has funded approximately $55 million of the commitment and expects to fund the remaining $45 million commitment throughout 2024. The investment in Fervo allows Devon to exercise significant influence over Fervo, and the investment is accounted for under the equity method of accounting. Devon's investment in Fervo is shown within investments on the consolidated balance sheets and Devon's share of Fervo earnings are reflected as a component of other, net in the accompanying consolidated statements of comprehensive earnings.

Disaggregation of Revenue

The following table presents revenue from contracts with customers that are disaggregated based on the type of good or service.

	Three Months Ended March 31,
	2024		2023
Oil	$	2,189	$	2,143
Gas		128		213
NGL		312		323
Oil, gas and NGL sales		2,629		2,679
Oil		807		730
Gas		121		152
NGL		184		198
Marketing and midstream revenues		1,112		1,080
Total revenues from contracts with customers	$	3,741	$	3,759

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. ASU 2023-09 intends to provide investors with enhanced information about an entity’s income taxes by requiring disclosure of items such as disaggregation of the effective tax rate reconciliation as well as information regarding income taxes paid. This ASU is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued. Devon is evaluating the impact this ASU will have on the disclosures that accompany its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segments Disclosures. Under this ASU, the scope and frequency of segment disclosures is increased to provide investors with additional detail about information utilized by an entity’s “Chief Operating Decision Maker.” This ASU is effective for Devon beginning with our 2024 annual reporting and interim periods beginning in 2025. Devon is evaluating the impact this ASU will have on the disclosures that accompany its consolidated financial statements.

2. Acquisitions and Divestitures

Devon is entitled to contingent earnout payments associated with the sale of its Barnett Shale assets in 2020 with upside participation beginning at a $2.75 Henry Hub natural gas price or a $50 WTI oil price. The contingent payment period commenced on January 1, 2021 and has a term of four years. Devon received $20 million in contingent earnout payments related to this transaction in the first quarter of 2024 and $65 million in the first quarter of 2023. Devon could also receive up to an additional $65 million in contingent earnout payments for the remaining performance period depending on future commodity prices. The valuation of the future contingent earnout payment included within other current assets in the March 31, 2024 consolidated balance sheet was approximately $35 million. This value was derived utilizing a Monte Carlo valuation model and qualifies as a level 3 fair value measurement.

Devon also received $4 million in contingent earnout payments in the first quarter of 2023 related to the sale of non-core assets in the Rockies.

11

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

3.Derivative Financial Instruments

Objectives and Strategies

Devon enters into derivative financial instruments with respect to a portion of its oil, gas and NGL production to hedge future prices received. Additionally, Devon periodically enters into derivative financial instruments with respect to a portion of its oil, gas and NGL marketing activities. These commodity derivative financial instruments include financial price swaps, basis swaps and costless price collars.

Devon does not intend to hold or issue derivative financial instruments for speculative trading purposes and has elected not to designate any of its derivative instruments for hedge accounting treatment.

Counterparty Credit Risk

By using derivative financial instruments, Devon is exposed to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, the hedging instruments are placed with a number of counterparties whom Devon believes are acceptable credit risks. It is Devon’s policy to enter into derivative contracts only with investment-grade rated counterparties deemed by management to be competent and competitive market makers. Additionally, Devon’s derivative contracts generally contain provisions that provide for collateral payments if Devon’s or its counterparty’s credit rating falls below certain credit rating levels. As of March 31, 2024, Devon neither held cash collateral of its counterparties nor posted cash collateral to its counterparties.

Commodity Derivatives

As of March 31, 2024, Devon had the following open oil derivative positions. The first table presents Devon’s oil derivatives that settle against the average of the prompt month NYMEX WTI futures price. The second table presents Devon’s oil derivatives that settle against the respective indices noted within the table.

	Price Swaps				Price Collars
Period	Volume (Bbls/d)		Weighted Average Price ($/Bbl)		Volume (Bbls/d)		Weighted Average Floor Price ($/Bbl)		Weighted Average Ceiling Price ($/Bbl)
Q2-Q4 2024		27,451	$	78.98		71,691	$	66.95	$	84.59
Q1-Q4 2025		3,468	$	72.75		992	$	70.00	$	77.40

	Oil Basis Swaps
Period	Index	Volume (Bbls/d)		Weighted Average Differential to WTI ($/Bbl)
Q2-Q4 2024	Midland Sweet		67,184	$	1.17
Q2-Q4 2024	NYMEX Roll		26,000	$	0.82
Q1-Q4 2025	Midland Sweet		63,000	$	1.00
Q1-Q4 2026	Midland Sweet		7,000	$	1.14

As of March 31, 2024, Devon had the following open natural gas derivative positions. The first table presents Devon’s natural gas derivatives that settle against the Inside FERC first of the month Henry Hub index. The second table presents Devon’s natural gas derivatives that settle against the respective indices noted within the table.

	Price Swaps				Price Collars
Period	Volume (MMBtu/d)		Weighted Average Price ($/MMBtu)		Volume (MMBtu/d)		Weighted Average Floor Price ($/MMBtu)		Weighted Average Ceiling Price ($/MMBtu)
Q2-Q4 2024		244,935	$	3.20		18,531	$	3.91	$	6.19
Q1-Q4 2025		75,537	$	3.04		—		—		—

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

	Natural Gas Basis Swaps
Period	Index	Volume (MMBtu/d)		Weighted Average Differential to Henry Hub ($/MMBtu)
Q2-Q4 2024	El Paso Natural Gas		26,545	$	(0.92	)
Q2-Q4 2024	Houston Ship Channel		110,000	$	(0.24	)
Q2-Q4 2024	WAHA		63,309	$	(0.61	)
Q1-Q4 2025	WAHA		10,000	$	(0.63	)

As of March 31, 2024, Devon had the following open NGL derivative positions. Devon's NGL positions settle against the average of the prompt month OPIS Mont Belvieu, Texas index.

		Price Swaps
Period	Product	Volume (Bbls/d)		Weighted Average Price ($/Bbl)
Q2-Q4 2024	Natural Gasoline		3,000	$	69.11
Q2-Q4 2024	Normal Butane		3,350	$	37.58
Q2-Q4 2024	Propane		5,032	$	32.97

Financial Statement Presentation

All derivative financial instruments are recognized at their current fair value as either assets or liabilities in the consolidated balance sheets. Amounts related to contracts allowed to be netted upon payment subject to a master netting arrangement with the same counterparty are reported on a net basis in the consolidated balance sheets. The tables below present a summary of these positions as of March 31, 2024 and December 31, 2023.

	March 31, 2024									December 31, 2023
	Gross Fair Value			Amounts Netted			Net Fair Value			Gross Fair Value			Amounts Netted			Net Fair Value			Balance Sheet Classification
Commodity derivatives:
Short-term derivative asset	$	82		$	(8	)	$	74		$	213		$	(5	)	$	208		Other current assets
Long-term derivative asset		1			(1	)		—			—			—			—		Other long-term assets
Short-term derivative liability		(46	)		8			(38	)		(7	)		5			(2	)	Other current liabilities
Long-term derivative liability		(7	)		1			(6	)		(7	)		—			(7	)	Other long-term liabilities
Total derivative asset	$	30		$	—		$	30		$	199		$	—		$	199

13

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

4.Share-Based Compensation

The table below presents the share-based compensation expense included in Devon’s accompanying consolidated statements of comprehensive earnings.

	Three Months Ended March 31,
	2024		2023
G&A	$	24	$	23
Related income tax benefit	$	9	$	20

Under its approved long-term incentive plan, Devon grants share-based awards to its employees. The following table presents a summary of Devon’s unvested restricted stock awards and units and performance share units granted under the plan.

	Restricted Stock Awards & Units					Performance Share Units
	Awards/Units			Weighted Average Grant-Date Fair Value		Units				Weighted Average Grant-Date Fair Value
	(Thousands, except fair value data)
Unvested at 12/31/23		4,033		$	42.10		1,547			$	43.25
Granted		1,815		$	42.29		858			$	40.41
Vested		(1,277	)	$	38.64		(1,226	)		$	18.08
Forfeited		(25	)	$	44.84		—			$	—
Unvested at 3/31/24		4,546		$	43.13		1,179		(1)	$	67.38

(1)A maximum of 2.4 million common shares could be awarded based upon Devon’s final TSR ranking.

The following table presents the assumptions related to the performance share units granted in 2024, as indicated in the previous summary table. The grants in the previous summary table also include the impacts of performance share units granted in a prior year that vested higher than 100% of target due to Devon's TSR performance compared to our peers.

	2024
Grant-date fair value	$	56.99
Risk-free interest rate		4.28	%
Volatility factor		46.03	%
Contractual term (years)		2.89

The following table presents a summary of the unrecognized compensation cost and the related weighted average recognition period associated with unvested awards and units as of March 31, 2024.

	Restricted Stock		Performance
	Awards/Units		Share Units
Unrecognized compensation cost	$	143	$	39
Weighted average period for recognition (years)		2.9		2.0

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

5. Income Taxes

The following table presents Devon’s total income tax expense and a reconciliation of its effective income tax rate to the U.S. statutory income tax rate.

	Three Months Ended March 31,
	2024			2023
Earnings before income taxes	$	768		$	1,224
Current income tax expense	$	119		$	141
Deferred income tax expense		40			80
Total income tax expense	$	159		$	221
U.S. statutory income tax rate		21	%		21	%
State income taxes		1	%		1	%
Income tax credits		(1	%)		(3	%)
Other		—			(1	%)
Effective income tax rate		21	%		18	%

In the first quarter of 2024 and 2023, Devon recognized income tax credits associated with its qualified research activities.

6.Net Earnings Per Share

The following table reconciles net earnings available to common shareholders and weighted-average common shares outstanding used in the calculations of basic and diluted net earnings per share.

	Three Months Ended March 31,
	2024		2023
Net earnings available to common shareholders - basic and diluted	$	596	$	987
Common shares:
Average common shares outstanding - basic		629		645
Dilutive effect of potential common shares issuable		3		2
Average common shares outstanding - diluted		632		647
Net earnings per share available to common shareholders:
Basic	$	0.95	$	1.53
Diluted	$	0.94	$	1.53

7. Other Comprehensive Earnings (Loss)

Components of other comprehensive earnings (loss) consist of the following:

	Three Months Ended March 31,
	2024			2023
Pension and postretirement benefit plans:
Beginning accumulated pension and postretirement benefits	$	(124	)	$	(116	)
Recognition of net actuarial loss and prior service cost in earnings (1)		1			1
Accumulated other comprehensive loss, net of tax	$	(123	)	$	(115	)

(1)Recognition of net actuarial loss and prior service cost are included in the computation of net periodic benefit cost, which is

15

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

a component of other, net in the accompanying consolidated statements of comprehensive earnings.

8.Supplemental Information to Statements of Cash Flows

	Three Months Ended March 31,
	2024			2023
Changes in assets and liabilities, net:
Accounts receivable	$	(96	)	$	150
Other current assets		(23	)		16
Other long-term assets		49			31
Accounts payable and revenues and royalties payable		143			(165	)
Other current liabilities		116			(3	)
Other long-term liabilities		(19	)		(17	)
Total	$	170		$	12
Supplementary cash flow data:
Interest paid	$	63		$	101
Income taxes refunded	$	(4	)	$	—

9.Accounts Receivable

Components of accounts receivable include the following:

	March 31, 2024			December 31, 2023
Oil, gas and NGL sales	$	1,013		$	965
Joint interest billings		246			251
Marketing and midstream revenues		394			342
Other		24			22
Gross accounts receivable		1,677			1,580
Allowance for doubtful accounts		(7	)		(7	)
Net accounts receivable	$	1,670		$	1,573

10. Property, Plant and Equipment

The following table presents the aggregate capitalized costs related to Devon’s oil and gas and non-oil and gas activities.

	March 31, 2024			December 31, 2023
Property and equipment:
Proved	$	47,512		$	46,659
Unproved and properties under development		1,333			1,279
Total oil and gas		48,845			47,938
Less accumulated DD&A		(30,812	)		(30,113	)
Oil and gas property and equipment, net		18,033			17,825
Other property and equipment		2,353			2,289
Less accumulated DD&A		(802	)		(786	)
Other property and equipment, net (1)		1,551			1,503
Property and equipment, net	$	19,584		$	19,328

(1)$154 million and $136 million related to CDM in 2024 and 2023, respectively.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

11.Debt and Related Expenses

See below for a summary of debt instruments and balances. The notes and debentures are senior, unsecured obligations of Devon.

	March 31, 2024			December 31, 2023
5.25% due September 15, 2024	$	472		$	472
5.85% due December 15, 2025		485			485
7.50% due September 15, 2027		73			73
5.25% due October 15, 2027		390			390
5.875% due June 15, 2028		325			325
4.50% due January 15, 2030		585			585
7.875% due September 30, 2031		675			675
7.95% due April 15, 2032		366			366
5.60% due July 15, 2041		1,250			1,250
4.75% due May 15, 2042		750			750
5.00% due June 15, 2045		750			750
Net premium on debentures and notes		57			64
Debt issuance costs		(31	)		(30	)
Total debt	$	6,147		$	6,155
Less amount classified as short-term debt		479			483
Total long-term debt	$	5,668		$	5,672

Retirement of Senior Notes

On August 1, 2023, Devon repaid the $242 million of 8.25% senior notes at maturity.

Credit Lines

In 2023, Devon amended and restated its 2018 Senior Credit Facility to provide for a new $3.0 billion revolving 2023 Senior Credit Facility. In the first quarter of 2024, Devon exercised its option to extend the 2023 Senior Credit Facility maturity date from March 24, 2028 to March 24, 2029. Devon has the option to extend the March 24, 2029 maturity date by two additional one-year periods subject to lender consent. As of March 31, 2024, Devon had no outstanding borrowings under the 2023 Senior Credit Facility and had issued $3 million in outstanding letters of credit under this facility. The 2023 Senior Credit Facility contains only one material financial covenant. This covenant requires Devon’s ratio of total funded debt to total capitalization, as defined in the credit agreement, to be no greater than 65%. Under the terms of the credit agreement, total capitalization is adjusted to add back non-cash financial write-downs such as impairments. As of March 31, 2024, Devon was in compliance with this covenant with a debt-to-capitalization ratio of 21.5%.

Net Financing Costs

The following schedule includes the components of net financing costs.

	Three Months Ended March 31,
	2024			2023
Interest based on debt outstanding	$	87		$	93
Interest income		(13	)		(17	)
Other		2			(4	)
Total net financing costs	$	76		$	72

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

12. Leases

The following table presents Devon’s right-of-use assets and lease liabilities as of March 31, 2024 and December 31, 2023.

	March 31, 2024						December 31, 2023
	Finance		Operating		Total		Finance		Operating		Total
Right-of-use assets	$	244	$	32	$	276	$	246	$	21	$	267
Lease liabilities:
Current lease liabilities (1)	$	22	$	16	$	38	$	21	$	12	$	33
Long-term lease liabilities		285		16		301		286		9		295
Total lease liabilities (2)	$	307	$	32	$	339	$	307	$	21	$	328

(1)Current lease liabilities are included in other current liabilities on the consolidated balance sheets.

(2)Devon has entered into certain leases of equipment related to the exploration, development and production of oil and gas that had terms not yet commenced as of March 31, 2024 and are therefore excluded from the amounts shown above.

Devon’s operating lease right-of-use assets relate to real estate, drilling rigs and other equipment related to the exploration, development and production of oil and gas. Devon’s financing lease right-of-use assets relate to real estate.

13.Asset Retirement Obligations

The following table presents the changes in Devon’s asset retirement obligations.

	Three Months Ended March 31,
	2024			2023
Asset retirement obligations as of beginning of period	$	665		$	529
Liabilities incurred		8			6
Liabilities settled and divested		(8	)		(6	)
Revision of estimated obligation		35			27
Accretion expense on discounted obligation		9			7
Asset retirement obligations as of end of period		709			563
Less current portion		26			17
Asset retirement obligations, long-term	$	683		$	546

During the first quarter of 2024, Devon increased its asset retirement obligations by approximately $35 million primarily due to changes in current cost estimates and future retirement dates for its oil and gas assets. During the first quarter of 2023, Devon increased its asset retirement obligations by approximately $27 million primarily due to inflation-driven increases in current cost estimates.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

14.Stockholders’ Equity

Share Repurchases

Devon's Board of Directors has authorized a $3.0 billion share repurchase program with a December 31, 2024 expiration date. The table below provides information regarding purchases of Devon’s common stock under the $3.0 billion share repurchase program (shares in thousands).

	Total Number of Shares Purchased		Dollar Value of Shares Purchased		Average Price Paid per Share
$3.0 Billion Plan
2021		13,983	$	589	$	42.15
2022		11,708		718		61.36
2023:
First quarter		10,090		545		53.96
Second quarter		3,795		200		52.70
Fourth quarter		5,465		247		45.17
2023 Total		19,350		992		51.23
2024:
First quarter		4,428		193		43.47
Total plan		49,469	$	2,492	$	50.37

Dividends

Devon pays a quarterly dividend which is comprised of a fixed dividend and a variable dividend. The variable dividend is dependent on quarterly cash flows, among other factors. Devon has raised its fixed dividend multiple times over the past two calendar years and most recently raised it by 10% from $0.20 to $0.22 per share in the first quarter of 2024. The following table summarizes Devon’s fixed and variable dividends for the first quarter of 2024 and 2023, respectively.

	Fixed		Variable		Total		Rate Per Share
2024:
First quarter	$	143	$	156	$	299	$	0.44
2023:
First quarter	$	133	$	463	$	596	$	0.89

In May 2024, Devon announced a cash dividend in the amount of $0.35 per share payable in the second quarter of 2024. The dividend consists of a $0.22 per share fixed quarterly dividend and a $0.13 per share variable quarterly dividend and will total approximately $221 million.

Noncontrolling Interests

The noncontrolling interests’ share of CDM’s net earnings and the contributions from and distributions to the noncontrolling interests are presented as components of equity.

15.Commitments and Contingencies

Devon is party to various legal actions arising in connection with its business. Matters that are probable of unfavorable outcome to Devon and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, Devon’s estimates of the outcomes of such matters and its experience in contesting, litigating and settling similar matters. None of the actions are believed by management to likely involve future amounts that would be material to Devon’s financial position or results of operations after consideration of recorded accruals. Actual amounts could differ materially from management’s estimates.

Royalty Matters

Numerous oil and natural gas producers and related parties, including Devon, have been named in various lawsuits alleging royalty underpayments. Devon is currently named as a defendant in a number of such lawsuits, including some lawsuits in which the plaintiffs seek to certify classes of similarly situated plaintiffs. Among the allegations typically asserted in these suits are claims that Devon used below-market prices, made improper deductions, paid royalty proceeds in an untimely manner without including required

19

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

interest, used improper measurement techniques and entered into gas purchase and processing arrangements with affiliates that resulted in underpayment of royalties in connection with oil, natural gas and NGLs produced and sold. Devon is also involved in governmental agency proceedings and royalty audits and is subject to related contracts and regulatory controls in the ordinary course of business, some that may lead to additional royalty claims. As of March 31, 2024, Devon has accrued approximately $50 million in other current liabilities pertaining to such royalty matters.

Environmental and Climate Change Matters

Devon’s business is subject to numerous federal, state, tribal and local laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal fines and penalties, as well as remediation costs. Although Devon believes that it is in substantial compliance with applicable environmental laws and regulations and that continued compliance with existing requirements will not have a material adverse impact on its business, there can be no assurance that this will continue in the future.

Beginning in 2013, various parishes in Louisiana filed suit against numerous oil and gas companies, including Devon, alleging that the companies’ operations and activities in certain fields violated the State and Local Coastal Resource Management Act of 1978, as amended, and caused substantial environmental contamination, subsidence and other environmental damages to land and water bodies located in the coastal zone of Louisiana. The plaintiffs’ claims against Devon relate primarily to the operations of several of Devon’s corporate predecessors. The plaintiffs seek, among other things, payment of the costs necessary to clear, re-vegetate and otherwise restore the allegedly impacted areas. Although Devon cannot predict the ultimate outcome of these matters, Devon denies the allegations in these lawsuits and intends to vigorously defend against these claims.

The State of Delaware and various municipalities and other governmental and private parties in California have filed legal proceedings against numerous oil and gas companies, including Devon, seeking relief to abate alleged impacts of climate change. These proceedings include far-reaching claims for monetary damages and injunctive relief. Although Devon cannot predict the ultimate outcome of these matters, Devon denies the allegations asserted in these lawsuits and intends to vigorously defend against these claims.

Other Indemnifications and Legacy Matters

Pursuant to various sale agreements relating to divested businesses and assets, Devon has indemnified various purchasers against liabilities that they may incur with respect to the businesses and assets acquired from Devon. Additionally, federal, state and other laws in areas of former operations may require previous operators (including corporate successors of previous operators) to perform or make payments in certain circumstances where the current operator may no longer be able to satisfy the applicable obligation. Such obligations may include plugging and abandoning wells, removing production facilities, undertaking other restorative actions or performing requirements under surface agreements in existence at the time of disposition. For example, a predecessor entity of a Devon subsidiary previously sold certain private, state and federal oil and gas leases covering properties in shallow waters off the coast of Louisiana in the Gulf of Mexico. These assets are generally referred to as the East Bay Field. The current operator of the East Bay Field has filed for protection under Chapter 11 of the U.S. Bankruptcy Code and may be unable to satisfy the eventual decommissioning obligations associated with the East Bay Field. Other companies in the chain of title of the East Bay Field have also sought bankruptcy protection and may be similarly unable to satisfy the eventual decommissioning obligations associated with the East Bay Field. Depending upon the outcome of these bankruptcy proceedings, amounts available under decommissioning bonds and a cash security account and other factors, Devon may be required to perform or fund certain decommissioning obligations associated with the East Bay Field under state and federal regulations applicable to predecessor operators. As a result of these factors and uncertainties, we are currently unable to provide an estimate of potential loss.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

16.Fair Value Measurements

The following table provides carrying value and fair value measurement information for certain of Devon’s financial assets and liabilities. The carrying values of cash, accounts receivable, other current receivables, accounts payable, other current payables, accrued expenses and lease liabilities included in the accompanying consolidated balance sheets approximated fair value at March 31, 2024 and December 31, 2023, as applicable. Therefore, such financial assets and liabilities are not presented in the following table.

							Fair Value Measurements Using:
	Carrying			Total Fair			Level 1		Level 2			Level 3
	Amount			Value			Inputs		Inputs			Inputs
March 31, 2024 assets (liabilities):
Cash equivalents	$	406		$	406		$	406	$	—		$	—
Commodity derivatives	$	74		$	74		$	—	$	74		$	—
Commodity derivatives	$	(44	)	$	(44	)	$	—	$	(44	)	$	—
Debt	$	(6,147	)	$	(6,047	)	$	—	$	(6,047	)	$	—
Contingent earnout payments	$	35		$	35		$	—	$	—		$	35
December 31, 2023 assets (liabilities):
Cash equivalents	$	306		$	306		$	306	$	—		$	—
Commodity derivatives	$	208		$	208		$	—	$	208		$	—
Commodity derivatives	$	(9	)	$	(9	)	$	—	$	(9	)	$	—
Debt	$	(6,155	)	$	(6,090	)	$	—	$	(6,090	)	$	—
Contingent earnout payments	$	55		$	55		$	—	$	—		$	55

The following methods and assumptions were used to estimate the fair values in the table above.

Level 1 Fair Value Measurements

Cash equivalents – Amounts consist primarily of money market investments and the fair value approximates the carrying value.

Level 2 Fair Value Measurements

Commodity derivatives – The fair value of commodity derivatives is estimated using internal discounted cash flow calculations based upon forward curves and data obtained from independent third parties for contracts with similar terms or data obtained from counterparties to the agreements.

Debt – Devon’s debt instruments do not consistently trade actively in an established market. The fair values of its debt are estimated based on rates available for debt with similar terms and maturity when active trading is not available.

Level 3 Fair Value Measurements

Contingent Earnout Payments – Devon has the right to receive contingent consideration related to the Barnett asset divestiture based on future oil and gas prices. These values were derived using a Monte Carlo valuation model and qualify as a level 3 fair value measurement. For additional information, see Note 2.

21

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis addresses material changes in our results of operations for the three-month period ended March 31, 2024 compared to previous periods, and in our financial condition and liquidity since December 31, 2023. For information regarding our critical accounting policies and estimates, see our 2023 Annual Report on Form 10-K under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Executive Overview

We are a leading independent oil and natural gas exploration and production company whose operations are focused onshore in the United States. Our operations are currently focused in five core areas: the Delaware Basin, Eagle Ford, Anadarko Basin, Williston Basin and Powder River Basin. Our asset base is underpinned by premium acreage in the economic core of the Delaware Basin and our diverse, top-tier resource plays provide a deep inventory of opportunities for years to come.

We remain focused on building economic value by executing on our strategic priorities of moderating production growth, emphasizing capital and operational efficiencies, optimizing reinvestment rates to maximize free cash flow, maintaining low leverage, delivering cash returns to our shareholders and pursuing ESG excellence. Our recent performance highlights for these priorities include the following items for the first quarter of 2024:

•Oil production totaled 319 MBbls/d, exceeding our plan by 4%.

•As of March 31, 2024, completed approximately 83% of our authorized $3.0 billion share repurchase program, with approximately 49.5 million of our common shares repurchased for approximately $2.5 billion, or $50.37 per share since inception of the plan.

•Exited with $4.1 billion of liquidity, including $1.1 billion of cash.

•Generated $1.7 billion of operating cash flow and $6.6 billion for the past twelve trailing months.

•Increased our fixed dividend 10% to $0.22 per share.

•Including variable dividends, paid dividends of $299 million and have declared approximately $221 million of dividends to be paid in the second quarter of 2024.

•Earnings attributable to Devon were $596 million, or $0.94 per diluted share.

•Core earnings (Non-GAAP) were $730 million, or $1.16 per diluted share.

We remain committed to capital discipline and delivering the objectives that underpin our current plan. Those objectives prioritize value creation through moderated capital investment and production growth, particularly with a view of the volatility in commodity prices, supply chain constraints and the economic uncertainty arising from inflation and geopolitical events. Our cash-return objectives remain focused on opportunistic share repurchases, funding our fixed and variable dividends, repaying debt at upcoming maturities and building cash balances.

22

Results of Operations

The following graphs, discussion and analysis are intended to provide an understanding of our results of operations and current financial condition. To facilitate the review, these numbers are being presented before consideration of noncontrolling interests.

Q1 2024 vs. Q4 2023

Our first quarter 2024 and fourth quarter 2023 net earnings were $0.6 billion and $1.2 billion, respectively. The graph below shows the change in net earnings from the fourth quarter of 2023 to the first quarter of 2024. The material changes are further discussed by category on the following pages.

 

Production Volumes

	Q1 2024		% of Total			Q4 2023		Change
Oil (MBbls/d)
Delaware Basin		208		65	%		208		0	%
Eagle Ford		43		14	%		43		0	%
Anadarko Basin		11		3	%		13		-14	%
Williston Basin		40		13	%		36		12	%
Powder River Basin		13		4	%		13		-2	%
Other		4		1	%		4		-1	%
Total		319		100	%		317		1	%

	Q1 2024		% of Total			Q4 2023		Change
Gas (MMcf/d)
Delaware Basin		695		64	%		673		3	%
Eagle Ford		79		7	%		81		-2	%
Anadarko Basin		223		21	%		225		-1	%
Williston Basin		63		6	%		61		2	%
Powder River Basin		18		2	%		20		-9	%
Other		1		0	%		1		-6	%
Total		1,079		100	%		1,061		2	%

	Q1 2024		% of Total			Q4 2023		Change
NGLs (MBbls/d)
Delaware Basin		113		68	%		112		1	%
Eagle Ford		14		9	%		15		-10	%
Anadarko Basin		26		16	%		29		-10	%
Williston Basin		10		6	%		10		5	%
Powder River Basin		2		1	%		3		-19	%
Other		—		0	%		—	N/M
Total		165		100	%		169		-2	%

23

	Q1 2024		% of Total			Q4 2023		Change
Combined (MBoe/d)
Delaware Basin		437		66	%		433		1	%
Eagle Ford		70		10	%		72		-3	%
Anadarko Basin		74		11	%		79		-6	%
Williston Basin		61		9	%		55		9	%
Powder River Basin		18		3	%		19		-6	%
Other		4		1	%		4		-2	%
Total		664		100	%		662		0	%

From the fourth quarter of 2023 to the first quarter of 2024, the change in volumes contributed to an $18 million decrease in earnings. Volumes per day increased slightly primarily due to new well activity in the Delaware Basin and Williston Basin which was partially offset by natural well declines in the Anadarko Basin. However, overall volumes declined slightly due to one less day in the first quarter of 2024 compared to the fourth quarter of 2023.

Realized Prices

	Q1 2024			Realization	Q4 2023			Change
Oil (per Bbl)
WTI index	$	77.01			$	78.48			-2	%
Realized price, unhedged	$	75.40		98%	$	77.32			-2	%
Cash settlements	$	(0.25	)		$	(0.34	)
Realized price, with hedges	$	75.15		98%	$	76.98			-2	%

	Q1 2024		Realization	Q4 2023		Change
Gas (per Mcf)
Henry Hub index	$	2.25		$	2.88		-22	%
Realized price, unhedged	$	1.30	58%	$	1.83		-29	%
Cash settlements	$	0.32		$	0.19
Realized price, with hedges	$	1.62	72%	$	2.02		-20	%

	Q1 2024			Realization	Q4 2023		Change
NGLs (per Bbl)
WTI index	$	77.01			$	78.48		-2	%
Realized price, unhedged	$	20.81		27%	$	19.67		6	%
Cash settlements	$	(0.08	)		$	—
Realized price, with hedges	$	20.73		27%	$	19.67		5	%

	Q1 2024		Q4 2023		Change
Combined (per Boe)
Realized price, unhedged	$	43.52	$	44.93		-3	%
Cash settlements	$	0.39	$	0.14
Realized price, with hedges	$	43.91	$	45.07		-3	%

From the fourth quarter of 2023 to the first quarter of 2024, realized prices contributed to a $90 million decrease in earnings. Unhedged realized oil and gas prices decreased primarily due to lower WTI and Henry Hub index prices. These were partially offset by hedge cash settlements primarily related to gas commodities.

We currently have approximately 30% and 25% of our remaining anticipated 2024 oil and gas production hedged, respectively.

Hedge Settlements

	Q1 2024			Q4 2023			Change
	Q
Oil	$	(7	)	$	(10	)		30	%
Natural gas		32			18			78	%
NGL		(1	)		—		N/M
Total cash settlements (1)	$	24		$	8			200	%

(1)Included as a component of oil, gas and NGL derivatives on the consolidated statements of comprehensive earnings.

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Cash settlements as presented in the tables above represent realized gains or losses related to the instruments described in Note 3 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Production Expenses

	Q1 2024			Q4 2023			Change
LOE	$	380		$	381			0	%
Gathering, processing & transportation		180			181			-1	%
Production taxes		175			182			-4	%
Property taxes		16			15			7	%
Total	$	751		$	759			-1	%
Per Boe:
LOE	$	6.29		$	6.25			1	%
Gathering, processing & transportation	$	2.98		$	2.97			0	%
Percent of oil, gas and NGL sales:
Production taxes		6.7	%		6.6	%		0	%

Field-Level Cash Margin

The table below presents the field-level cash margin for each of our operating areas. Field-level cash margin is computed as oil, gas and NGL sales less production expenses and is not a measure defined by GAAP. A reconciliation to the comparable GAAP measures is found in “Non-GAAP Measures” in this Item 2. The changes in production volumes, realized prices and production expenses, shown above, had the following impact on our field-level cash margins by asset.

	Q1 2024		$ per BOE		Q4 2023		$ per BOE
Field-level cash margin (Non-GAAP)
Delaware Basin	$	1,275	$	32.06	$	1,350	$	33.93
Eagle Ford		266	$	41.82		285	$	43.02
Anadarko Basin		98	$	14.64		118	$	16.32
Williston Basin		164	$	29.74		141	$	27.58
Powder River Basin		60	$	36.00		70	$	39.42
Other		15	N/M			14	N/M
Total	$	1,878	$	31.09	$	1,978	$	32.47

DD&A

	Q1 2024		Q4 2023		Change
Oil and gas per Boe	$	11.57	$	10.31		12	%
Oil and gas	$	699	$	628		11	%
Other property and equipment		23		22		3	%
Total	$	722	$	650		11	%

DD&A increased $72 million primarily due to a 12% increase in the oil and gas DD&A rate. The largest contributor to the higher rate was our 2023 drilling and development activity.

G&A

	Q1 2024		Q4 2023		Change
G&A per Boe	$	1.89	$	1.83		3	%
Labor and benefits	$	63	$	53		19	%
Non-labor		51		58		-12	%
Total	$	114	$	111		3	%

G&A increased marginally in the first quarter of 2024 primarily due to higher labor and benefit costs which was partially offset by lower non-labor costs.

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Other Items

	Q1 2024			Q4 2023			Change in earnings
Commodity hedge valuation changes (1)	$	(169	)	$	316		$	(485	)
Marketing and midstream operations		(21	)		(9	)		(12	)
Exploration expenses		9			4			(5	)
Asset dispositions		1			11			10
Net financing costs		76			77			1
Other, net		22			10			(12	)
							$	(503	)

(1)Included as a component of oil, gas and NGL derivatives on the consolidated statements of comprehensive earnings.

We recognize fair value changes on our oil, gas and NGL derivative instruments in each reporting period. The changes in fair value resulted from new positions and settlements that occurred during each period, as well as the relationship between contract prices and the associated forward curves. For additional information, see Note 3 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Income Taxes

	Q1 2024			Q4 2023
Current expense	$	119		$	105
Deferred expense		40			164
Total expense	$	159		$	269
Current tax rate		16	%		7	%
Deferred tax rate		5	%		12	%
Effective income tax rate		21	%		19	%

For discussion on income taxes, see Note 5 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Q1 2024 vs. Q1 2023

Our first quarter 2024 and first quarter 2023 net earnings were $0.6 billion and $1.0 billion, respectively. The graph below shows the change in net earnings from the first quarter of 2023 to the first quarter of 2024. The material changes are further discussed by category on the following pages.

 

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Production Volumes

	Q1 2024		% of Total			Q1 2023		Change
Oil (MBbls/d)
Delaware Basin		208		65	%		211		-1	%
Eagle Ford		43		14	%		40		7	%
Anadarko Basin		11		3	%		15		-29	%
Williston Basin		40		13	%		36		12	%
Powder River Basin		13		4	%		14		-7	%
Other		4		1	%		4		-5	%
Total		319		100	%		320		0	%

	Q1 2024		% of Total			Q1 2023		Change
Gas (MMcf/d)
Delaware Basin		695		64	%		640		9	%
Eagle Ford		79		7	%		82		-3	%
Anadarko Basin		223		21	%		237		-6	%
Williston Basin		63		6	%		54		16	%
Powder River Basin		18		2	%		16		13	%
Other		1		0	%		1		-24	%
Total		1,079		100	%		1,030		5	%

	Q1 2024		% of Total			Q1 2023		Change
NGLs (MBbls/d)
Delaware Basin		113		68	%		97		16	%
Eagle Ford		14		9	%		15		-6	%
Anadarko Basin		26		16	%		26		-1	%
Williston Basin		10		6	%		8		22	%
Powder River Basin		2		1	%		2		1	%
Other		—		0	%		1	N/M
Total		165		100	%		149		11	%

	Q1 2024		% of Total			Q1 2023		Change
Combined (MBoe/d)
Delaware Basin		437		66	%		415		5	%
Eagle Ford		70		10	%		68		2	%
Anadarko Basin		74		11	%		81		-9	%
Williston Basin		61		9	%		53		14	%
Powder River Basin		18		3	%		19		-4	%
Other		4		1	%		5		-9	%
Total		664		100	%		641		4	%

From the first quarter 2023 to the first quarter of 2024, the change in volumes contributed to a $67 million increase in earnings. Volumes increased primarily due to new well activity in the Delaware Basin and Williston Basin which was partially offset by natural well declines in the Anadarko Basin.

Realized Prices

	Q1 2024			Realization	Q1 2023			Change
Oil (per Bbl)
WTI index	$	77.01			$	76.17			1	%
Realized price, unhedged	$	75.40		98%	$	74.32			1	%
Cash settlements	$	(0.25	)		$	(0.10	)
Realized price, with hedges	$	75.15		98%	$	74.22			1	%

	Q1 2024		Realization	Q1 2023		Change
Gas (per Mcf)
Henry Hub index	$	2.25		$	3.44		-35	%
Realized price, unhedged	$	1.30	58%	$	2.29		-43	%
Cash settlements	$	0.32		$	0.18
Realized price, with hedges	$	1.62	72%	$	2.47		-34	%

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	Q1 2024			Realization	Q1 2023		Change
NGLs (per Bbl)
WTI index	$	77.01			$	76.17		1	%
Realized price, unhedged	$	20.81		27%	$	24.12		-14	%
Cash settlements	$	(0.08	)		$	—
Realized price, with hedges	$	20.73		27%	$	24.12		-14	%

	Q1 2024		Q1 2023		Change
Combined (per Boe)
Realized price, unhedged	$	43.52	$	46.44		-6	%
Cash settlements	$	0.39	$	0.22
Realized price, with hedges	$	43.91	$	46.66		-6	%

From the first quarter of 2023 to the first quarter of 2024, realized prices contributed to a $117 million decrease in earnings. This decrease was due to lower unhedged realized gas and NGL prices which decreased primarily due to lower Henry Hub and Mont Belvieu index prices. This decrease was partially offset by a slight increase in unhedged realized oil prices which was primarily due to higher WTI index prices. Realized prices were strengthened by hedge cash settlements related primarily to gas commodities in the first quarter of 2024.

Hedge Settlements

	Q1 2024			Q1 2023			Change
Oil	$	(7	)	$	(3	)		-133	%
Natural gas		32			16			100	%
NGL		(1	)		—		N/M
Total cash settlements (1)	$	24		$	13			85	%

(1)Included as a component of oil, gas and NGL derivatives on the consolidated statements of comprehensive earnings.

Cash settlements as presented in the tables above represent realized gains or losses related to the instruments described in Note 3 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Production Expenses

	Q1 2024			Q1 2023			Change
LOE	$	380		$	327			16	%
Gathering, processing & transportation		180			166			8	%
Production taxes		175			175			0	%
Property taxes		16			25			-36	%
Total	$	751		$	693			8	%
Per Boe:
LOE	$	6.29		$	5.67			11	%
Gathering, processing & transportation	$	2.98		$	2.88			4	%
Percent of oil, gas and NGL sales:
Production taxes		6.7	%		6.5	%		2	%

LOE and gathering, processing and transportation expenses increased in the first quarter of 2024 primarily due to increased activity.

Field-Level Cash Margin

The table below presents the field-level cash margin for each of our operating areas. Field-level cash margin is computed as oil, gas and NGL sales less production expenses and is not a measure defined by GAAP. A reconciliation to the comparable GAAP

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measures is found in “Non-GAAP Measures” in this Item 2. The changes in production volumes, realized prices and production expenses, shown above, had the following impact on our field-level cash margins by asset.

	Q1 2024		$ per BOE		Q1 2023		$ per BOE
Field-level cash margin (Non-GAAP)
Delaware Basin	$	1,275	$	32.06	$	1,334	$	35.71
Eagle Ford		266	$	41.82		257	$	41.75
Anadarko Basin		98	$	14.64		154	$	21.09
Williston Basin		164	$	29.74		156	$	32.65
Powder River Basin		60	$	36.00		70	$	41.43
Other		15	N/M			15	N/M
Total	$	1,878	$	31.09	$	1,986	$	34.42

DD&A

	Q1 2024		Q1 2023		Change
Oil and gas per Boe	$	11.57	$	10.25		13	%
Oil and gas	$	699	$	591		18	%
Other property and equipment		23		24		-5	%
Total	$	722	$	615		17	%

DD&A increased $107 million primarily due to a 13% increase in the oil and gas DD&A rate. The largest contributor to the higher rate was our 2023 drilling and development activity.

G&A

	Q1 2024		Q1 2023		Change
G&A per Boe	$	1.89	$	1.85		2	%
Labor and benefits	$	63	$	56		13	%
Non-labor		51		50		2	%
Total	$	114	$	106		8	%

G&A increased in the first quarter of 2024 due to higher labor and benefit costs.

Other Items

	Q1 2024			Q1 2023			Change in earnings
Commodity hedge valuation changes (1)	$	(169	)	$	51		$	(220	)
Marketing and midstream operations		(21	)		(25	)		4
Exploration expenses		9			3			(6	)
Asset dispositions		1			—			(1	)
Net financing costs		76			72			(4	)
Other, net		22			5			(17	)
							$	(244	)

(1)Included as a component of oil, gas and NGL derivatives on the consolidated statements of comprehensive earnings.

We recognize fair value changes on our oil, gas and NGL derivative instruments in each reporting period. The changes in fair value resulted from new positions and settlements that occurred during each period, as well as the relationship between contract prices and the associated forward curves. For additional information, see Note 3 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

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Income Taxes

	Q1 2024			Q1 2023
Current expense	$	119		$	141
Deferred expense		40			80
Total expense	$	159		$	221
Current tax rate		16	%		12	%
Deferred tax rate		5	%		6	%
Effective income tax rate		21	%		18	%

For discussion on income taxes, see Note 5 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Capital Resources, Uses and Liquidity

Sources and Uses of Cash

The following table presents the major changes in cash and cash equivalents for the three months ended March 31, 2024 and 2023.

	Three Months Ended March 31,
	2024			2023
Operating cash flow	$	1,738		$	1,677
Capital expenditures		(894	)		(1,012	)
Divestitures of property and equipment		17			21
Investment activity, net		(36	)		(29	)
Repurchases of common stock		(205	)		(517	)
Common stock dividends		(299	)		(596	)
Noncontrolling interest activity, net		5			(11	)
Other		(52	)		(100	)
Net change in cash, cash equivalents and restricted cash	$	274		$	(567	)
Cash, cash equivalents and restricted cash at end of period	$	1,149		$	887

Operating Cash Flow

As presented in the table above, net cash provided by operating activities continued to be a significant source of capital and liquidity. Operating cash flow funded all of our capital expenditures, and we continued to return value to our shareholders by utilizing cash flow and cash balances for dividends and share repurchases.

Capital Expenditures

The amounts in the table below reflect cash payments for capital expenditures, including cash paid for capital expenditures incurred in prior periods.

	Three Months Ended March 31,
	2024		2023
Delaware Basin	$	534	$	584
Eagle Ford		157		192
Anadarko Basin		60		62
Williston Basin		42		99
Powder River Basin		33		38
Other		2		1
Total oil and gas		828		976
Midstream		37		16
Other		29		20
Total capital expenditures	$	894	$	1,012

Capital expenditures consist primarily of amounts related to our oil and gas exploration and development operations, midstream operations and other corporate activities. Our capital investment program is driven by a disciplined allocation process focused on

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moderating our production growth and maximizing our returns. As such, our capital expenditures for the first three months of 2024 represented approximately 51% of our operating cash flow.

Divestitures of Property and Equipment

During the first three months of 2024 and 2023, we received contingent earnout payments related to assets previously sold. For additional information, please see Note 2 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Investment Activity

During the first three months of 2024 and 2023, Devon received distributions from our investments of $11 million and $8 million, respectively. Devon contributed $47 million and $37 million to our investments during the first three months of 2024 and 2023, respectively.

Shareholder Distributions and Stock Activity

We repurchased approximately 4.4 million shares of common stock for $193 million and approximately 10.1 million shares of common stock for $545 million, under the share repurchase program authorized by our Board of Directors, in the first three months of 2024 and 2023, respectively. For additional information, see Note 14 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

The following table summarizes our common stock dividends during the first quarter of 2024 and 2023. Devon has raised its fixed dividend multiple times over the past two calendar years and most recently raised it by 10% from $0.20 to $0.22 per share in the first quarter of 2024. In addition to the fixed quarterly dividend, we paid a variable dividend in the first quarter of 2024 and 2023.

	Fixed		Variable		Total		Rate Per Share
2024:
First quarter	$	143	$	156	$	299	$	0.44
2023:
First quarter	$	133	$	463	$	596	$	0.89

Noncontrolling Interest Activity, net

During the first three months of 2024 and 2023, we distributed $7 million and $10 million, respectively, to our noncontrolling interests in CDM. During the first three months of 2024, we received contributions from our noncontrolling interests of $12 million.

Liquidity

The business of exploring for, developing and producing oil and natural gas is capital intensive. Because oil, natural gas and NGL reserves are a depleting resource, we, like all upstream operators, must continually make capital investments to grow and even sustain production. Generally, our capital investments are focused on drilling and completing new wells and maintaining production from existing wells. At opportunistic times, we also acquire operations and properties from other operators or landowners to enhance our existing portfolio of assets.

Historically, our primary sources of capital funding and liquidity have been our operating cash flow, cash on hand and asset divestiture proceeds. Additionally, we maintain a commercial paper program, supported by our revolving line of credit, which can be accessed as needed to supplement operating cash flow and cash balances. If needed, we can also issue debt and equity securities, including through transactions under our shelf registration statement filed with the SEC. We estimate the combination of our sources of capital will continue to be adequate to fund our planned capital requirements as discussed in this section as well as accelerate our cash-return business model.

Operating Cash Flow

Key inputs into determining our planned capital investment are the amount of cash we hold and operating cash flow we expect to generate over the next one to three or more years. At the end of the first quarter of 2024, we held approximately $1.1 billion of cash. Our operating cash flow forecasts are sensitive to many variables and include a measure of uncertainty as actual results may differ from our expectations.

Commodity Prices – The most uncertain and volatile variables for our operating cash flow are the prices of the oil, gas and NGLs we produce and sell. Prices are determined primarily by prevailing market conditions. Regional and worldwide economic

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activity, weather and other highly variable factors influence market conditions for these products. These factors, which are difficult to predict, create volatility in prices and are beyond our control.

To mitigate some of the risk inherent in prices, we utilize various derivative financial instruments to protect a portion of our production against downside price risk. The key terms to our oil, gas and NGL derivative financial instruments as of March 31, 2024 are presented in Note 3 in “Part I. Financial Information – Item 1. Financial Statements” of this report.

Further, when considering the current commodity price environment and our current hedge position, we expect to achieve our capital investment priorities. Additionally, we remain committed to capital discipline and focused on delivering the objectives that underpin our capital plan for 2024. The currently elevated level of cost inflation has eroded, and could continue to erode, our cost efficiencies gained over previous years and pressure our margins for the remainder of 2024. Despite this, we expect to continue generating material amounts of free cash flow at current commodity price levels due to our strategy of spending within cash flow.

Operating Expenses – Commodity prices can also affect our operating cash flow through an indirect effect on operating expenses. Significant commodity price decreases can lead to a decrease in drilling and development activities. As a result, the demand and cost for people, services, equipment and materials may also decrease, causing a positive impact on our cash flow as the prices paid for services and equipment decline. However, the inverse is also generally true during periods of rising commodity prices. We expect to mitigate the impact of cost inflation through efficiencies gained from the scale of our operations as well as by leveraging our long-standing relationships with our suppliers.

Credit Losses – Our operating cash flow is also exposed to credit risk in a variety of ways. This includes the credit risk related to customers who purchase our oil, gas and NGL production, the collection of receivables from our joint interest owners for their proportionate share of expenditures made on projects we operate and counterparties to our derivative financial contracts. We utilize a variety of mechanisms to limit our exposure to the credit risks of our customers, joint interest owners and counterparties. Such mechanisms include, under certain conditions, requiring letters of credit, prepayments or cash collateral postings.

Credit Availability

As of March 31, 2024, we had approximately $3.0 billion of available borrowing capacity under our 2023 Senior Credit Facility. This credit facility supports our $3.0 billion of short-term credit under our commercial paper program. At March 31, 2024, there were no borrowings under our commercial paper program, and we were in compliance with the Senior Credit Facility’s financial covenant.

Debt Ratings

We receive debt ratings from the major ratings agencies in the U.S. In determining our debt ratings, the agencies consider a number of qualitative and quantitative items including, but not limited to, commodity pricing levels, our liquidity, asset quality, reserve mix, debt levels, cost structure, planned asset sales and the size and scale of our production. Our credit rating from Standard and Poor’s Financial Services is BBB with a stable outlook. Our credit rating from Fitch is BBB+ with a stable outlook. Our credit rating from Moody’s Investor Service is Baa2 with a stable outlook. Any rating downgrades may result in additional letters of credit or cash collateral being posted under certain contractual arrangements.

There are no “rating triggers” in any of our contractual debt obligations that would accelerate scheduled maturities should our debt rating fall below a specified level. However, a downgrade could adversely impact our interest rate on any credit facility borrowings and the ability to economically access debt markets in the future.

Cash Returns to Shareholders

We are committed to returning approximately 70% of our free cash flow to shareholders through a fixed dividend, variable dividend and share repurchases. Our Board of Directors will consider a number of factors when setting the quarterly dividend, if any, including a general target of paying out approximately 10% of operating cash flow through the fixed dividend. In addition to the fixed quarterly dividend, we may pay a variable dividend or complete share repurchases. Each quarter’s free cash flow, which is a non-GAAP measure, is computed as operating cash flow (a GAAP measure) before balance sheet changes less capital expenditures. The declaration and payment of any future dividend, whether fixed or variable, will remain at the full discretion of our Board of Directors and will depend on our financial results, cash requirements, future prospects and other factors deemed relevant by the Board.

In May 2024, Devon announced a cash dividend in the amount of $0.35 per share payable in the second quarter of 2024. The dividend consists of a $0.22 per share fixed quarterly dividend and a $0.13 per share variable quarterly dividend and will total approximately $221 million.

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Our Board of Directors has authorized a $3.0 billion share repurchase program that expires December 31, 2024. Through April 2024, we had executed $2.6 billion of the authorized program.

Capital Expenditures

Our capital expenditures budget for the remainder of 2024 is expected to range from approximately $2.4 billion to $2.7 billion.

Critical Accounting Estimates

For information regarding our critical accounting policies and estimates, see our 2023 Annual Report on Form 10-K.

Non-GAAP Measures

We utilize “core earnings attributable to Devon” and “core earnings per share attributable to Devon” that are not required by or presented in accordance with GAAP. These non-GAAP measures are not alternatives to GAAP measures and should not be considered in isolation or as a substitute for analysis of our results reported under GAAP. Core earnings attributable to Devon, as well as the per share amount, represent net earnings excluding certain non-cash and other items that are typically excluded by securities analysts in their published estimates of our financial results. Our non-GAAP measures are typically used as a quarterly performance measure. Amounts excluded relate to asset dispositions, deferred tax asset valuation allowance and fair value changes in derivative financial instruments.

We believe these non-GAAP measures facilitate comparisons of our performance to earnings estimates published by securities analysts. We also believe these non-GAAP measures can facilitate comparisons of our performance between periods and to the performance of our peers.

Below are reconciliations of core earnings and core earnings per share attributable to Devon to comparable GAAP measures.

	Three Months Ended March 31,
	Before Tax			After Tax			After NCI			Per Diluted Share
2024
Earnings attributable to Devon (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 attributable to Devon (Non-GAAP)	$	941		$	743		$	730		$	1.16
2023
Earnings attributable to Devon (GAAP)	$	1,224		$	1,003		$	995		$	1.53
Adjustments:
Deferred tax asset valuation allowance		—			(3	)		(3	)		(0.01	)
Fair value changes in financial instruments		(53	)		(40	)		(40	)		(0.06	)
Core earnings attributable to Devon (Non-GAAP)	$	1,171		$	960		$	952		$	1.46

EBITDAX and Field-Level Cash Margin

To assess the performance of our assets, we use EBITDAX and Field-Level Cash Margin. We compute EBITDAX as net earnings before income tax expense; financing costs, net; exploration expenses; DD&A; asset impairments; asset disposition gains and losses; non-cash share-based compensation; non-cash valuation changes for derivatives and financial instruments; restructuring and transaction costs; accretion on discounted liabilities; and other items not related to our normal operations. Field-Level Cash Margin is computed as oil, gas and NGL sales less production expenses. Production expenses consist of lease operating, gathering, processing and transportation expenses, as well as production and property taxes.

We exclude financing costs from EBITDAX to assess our operating results without regard to our financing methods or capital structure. Exploration expenses and asset disposition gains and losses are excluded from EBITDAX because they generally are not indicators of operating efficiency for a given reporting period. DD&A and impairments are excluded from EBITDAX because capital expenditures are evaluated at the time capital costs are incurred. We exclude share-based compensation, valuation changes,

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restructuring and transaction costs, accretion on discounted liabilities and other items from EBITDAX because they are not considered a measure of asset operating performance.

We believe EBITDAX and Field-Level Cash Margin provide information useful in assessing our operating and financial performance across periods. EBITDAX and Field-Level Cash Margin as defined by Devon may not be comparable to similarly titled measures used by other companies and should be considered in conjunction with net earnings from operations.

Below are reconciliations of net earnings to EBITDAX and a further reconciliation to Field-Level Cash Margin.

	Three Months Ended March 31,
	2024			2023
Net earnings (GAAP)	$	609		$	1,003
Financing costs, net		76			72
Income tax expense		159			221
Exploration expenses		9			3
Depreciation, depletion and amortization		722			615
Asset dispositions		1			—
Share-based compensation		24			23
Derivative and financial instrument non-cash valuation changes		169			(51	)
Accretion on discounted liabilities and other		22			5
EBITDAX (Non-GAAP)		1,791			1,891
Marketing and midstream revenues and expenses, net		21			25
Commodity derivative cash settlements		(24	)		(13	)
General and administrative expenses, cash-based		90			83
Field-level cash margin (Non-GAAP)	$	1,878		$	1,986

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity Price Risk

As of March 31, 2024, we have commodity derivatives that pertain to a portion of our estimated production for the last nine months of 2024, as well as for 2025 and 2026. The key terms to our open oil, gas and NGL derivative financial instruments are presented in Note 3 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

The fair values of our commodity derivatives are largely determined by the forward curves of the relevant price indices. At March 31, 2024, a 10% change in the forward curves associated with our commodity derivative instruments would have changed our net positions by approximately $200 million.

Interest Rate Risk

As of March 31, 2024, we had total debt of $6.1 billion. All of our debt is based on fixed interest rates averaging 5.7%.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We have established disclosure controls and procedures to ensure that material information relating to Devon, including its consolidated subsidiaries, is made known to the officers who certify Devon’s financial reports and to other members of senior management and the Board of Directors.

Based on their evaluation, our principal executive and principal financial officers have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of March 31, 2024 to ensure that the information required to be disclosed by Devon in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. Other Information

Item 1. Legal Proceedings

We are involved in various legal proceedings incidental to our business. However, to our knowledge as of the date of this report and subject to the environmental matters noted in Part I, Item 3. Legal Proceedings of our 2023 Annual Report on Form 10-K, there were no material pending legal proceedings to which we are a party or to which any of our property is subject. For more information on our legal contingencies, see Note 15 in “Part I. Financial Information – Item 1. Financial Statements” of this report.

Please see our 2023 Annual Report on Form 10-K and other SEC filings for additional information.

Item 1A. Risk Factors

There have been no material changes to the information included in Item 1A. “Risk Factors” in our 2023 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information regarding purchases of our common stock that were made by us during the first quarter of 2024 (shares in thousands).

Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs (2)		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
January 1 - January 31		1,965	$	43.11		1,964	$	616
February 1 - February 29		2,856	$	42.57		1,913	$	534
March 1 - March 31		562	$	47.31		551	$	508
Total		5,383	$	43.26		4,428

(1)In addition to shares purchased under the share repurchase program described below these amounts include approximately 1 million shares received by us from employees for the payment of personal income tax withholdings on vesting transactions.

(2)On November 2, 2021, we announced a $1.0 billion share repurchase program that would expire on December 31, 2022. Through subsequent approval, Devon's Board of Directors ultimately expanded the share repurchase program authorization to $3.0 billion, with a December 31, 2024 expiration date. In the first quarter of 2024, we repurchased 4.4 million common shares for $193 million, or $43.47 per share, under this share repurchase program. For additional information, see Note 14 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the three months ended March 31, 2024, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

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Item 6. Exhibits

Exhibit Number		Description
10.1	Extension Agreement, dated as of March 25, 2024, to the Amended and Restated Credit Agreement, dated as of March 24, 2023, among Devon Energy Corporation, as Borrower, Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, and each Lender and L/C Issuer from time to time party thereto, with respect to Borrower’s extension of the maturity date from March 24, 2028 to March 24, 2029.
10.2*	2024 Form of Notice of Grant of Restricted Stock Award and Award Agreement under the 2022 Long-Term Incentive Plan between Devon Energy Corporation and certain officers for restricted stock awarded.
10.3*	2024 Form of Notice of Grant of Performance Share Unit Award and Award Agreement under the 2022 Long-Term Incentive Plan between Devon Energy Corporation and certain officers for performance based restricted share units awarded.
31.1	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema with Embedded Linkbases Document.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
	*Indicates management contract or compensatory plan or arrangement.

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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 thereunto duly authorized.

	DEVON ENERGY CORPORATION
Date: May 2, 2024	/s/ John B. Sherrer
	John B. Sherrer
	Vice President, Accounting and Controller

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