EX-99.2

EX-99.2 3 d727187dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

Devon Energy Second-Quarter 2022

Supplemental Tables


TABLE OF CONTENTS:	PAGE:

Consolidated Statements of Earnings		2

Supplemental Information for Consolidated Statements of Earnings		3

Consolidated Statements of Cash Flows		4

Consolidated Balance Sheets		5

Production		6

Capital Expenditures and Supplemental Information for Capital Expenditures		7

Realized Pricing		8

Asset Margins		9

Core Earnings		10

EBITDAX, Net Debt, Net Debt-to-EBITDAX and Free Cash Flow		11

Reinvestment Rate and Variable Dividend		12

CONSOLIDATED STATEMENTS OF EARNINGS


	2022						2021
(in millions, except per share amounts)	Quarter 2			Quarter 1			Quarter 4			Quarter 3			Quarter 2
Oil, gas and NGL sales	$	4,100		$	3,175		$	2,985		$	2,635		$	2,154
Oil, gas and NGL derivatives ⁽¹⁾		(170	)		(683	)		22			(335	)		(703	)
Marketing and midstream revenues		1,696			1,320			1,266			1,166			966

Total revenues		5,626			3,812			4,273			3,466			2,417

Production expenses ⁽²⁾		729			618			605			555			513
Exploration expenses		10			2			5			3			3
Marketing and midstream expenses		1,700			1,324			1,266			1,165			965
Depreciation, depletion and amortization		528			489			577			578			536
Asset dispositions		(14	)		(1	)		(49	)		—			(87	)
General and administrative expenses		84			94			95			95			94
Financing costs, net ⁽³⁾		84			85			86			86			80
Restructuring and transaction costs		—			—			28			18			23
Other, net		10			(61	)		(2	)		2			(14	)

Total expenses		3,131			2,550			2,611			2,502			2,113

Earnings before income taxes		2,495			1,262			1,662			964			304
Income tax expense ⁽⁴⁾		557			267			150			120			43

Net earnings		1,938			995			1,512			844			261
Net earnings attributable to noncontrolling interests		6			6			6			6			5

Net earnings attributable to Devon	$	1,932		$	989		$	1,506		$	838		$	256

Net earnings per share:
Basic net earnings per share	$	2.94		$	1.48		$	2.24		$	1.24		$	0.38
Diluted net earnings per share	$	2.93		$	1.48		$	2.23		$	1.24		$	0.38
Weighted average common shares outstanding:
Basic		658			663			671			677			677
Diluted		660			665			673			679			679

SUPPLEMENTAL INFORMATION FOR CONSLIDATED STATEMENTS OF EARNINGS

(1) OIL, GAS AND NGL DERIVATIVES


	2022						2021
(in millions)	Quarter 2			Quarter 1			Quarter 4			Quarter 3			Quarter 2
Derivative cash settlements	$	(472	)	$	(344	)	$	(493	)	$	(370	)	$	(367	)
Derivative valuation changes		302			(339	)		515			35			(336	)

Oil, gas and NGL derivatives	$	(170	)	$	(683	)	$	22		$	(335	)	$	(703	)

(2) PRODUCTION EXPENSES


	2022				2021
(in millions)	Quarter 2		Quarter 1		Quarter 4		Quarter 3		Quarter 2
Lease operating expense	$	255	$	224	$	235	$	215	$	210
Gathering, processing & transportation		177		161		173		157		147
Production taxes		278		214		197		176		143
Property taxes		19		19		—		7		13

Production expenses	$	729	$	618	$	605	$	555	$	513

(3) FINANCING COSTS, NET


	2022						2021
(in millions)	Quarter 2			Quarter 1			Quarter 4			Quarter 3			Quarter 2
Interest based on outstanding debt	$	93		$	92		$	92		$	93		$	98
Gain on early retirement of debt		—			—			—			—			(10	)
Interest income		(2	)		(1	)		—			(1	)		—
Other		(7	)		(6	)		(6	)		(6	)		(8	)

Financing costs, net	$	84		$	85		$	86		$	86		$	80

(4) INCOME TAX EXPENSE


	2022				2021
(in millions)	Quarter 2		Quarter 1		Quarter 4		Quarter 3		Quarter 2
Current expense	$	252	$	103	$	1	$	1	$	19
Deferred expense		305		164		149		119		24

Income tax expense	$	557	$	267	$	150	$	120	$	43

CONSOLIDATED STATEMENTS OF CASH FLOWS


	2022						2021
(in millions)	Quarter 2			Quarter 1			Quarter 4			Quarter 3			Quarter 2
Cash flows from operating activities:
Net earnings	$	1,938		$	995		$	1,512		$	844		$	261
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation, depletion and amortization		528			489			577			578			536
Leasehold impairments		7			1			1			1			1
Amortization of liabilities		(9	)		(6	)		(6	)		(7	)		(7	)
Total (gains) losses on commodity derivatives		170			683			(22	)		335			703
Cash settlements on commodity derivatives		(472	)		(344	)		(493	)		(370	)		(367	)
Gains on asset dispositions		(14	)		(1	)		(49	)		—			(87	)
Deferred income tax expense		305			164			149			119			24
Share-based compensation		23			20			19			19			20
Early retirement of debt		—			—			—			—			(10	)
Other		4			(21	)		2			11			2
Changes in assets and liabilities, net		198			(143	)		(74	)		68			17

Net cash from operating activities		2,678			1,837			1,616			1,598			1,093

Cash flows from investing activities:
Capital expenditures		(573	)		(537	)		(512	)		(474	)		(504	)
Acquisitions of property and equipment		(100	)⁽¹⁾		(1	)		(3	)		(10	)		(5	)
Divestitures of property and equipment		9			26			14			1			49
Distributions from equity method investments		15			8			8			9			8
Contributions to equity method investments		(21	)		(22	)		(25	)		—			—

Net cash from investing activities		(670	)		(526	)		(518	)		(474	)		(452	)

Cash flows from financing activities:
Repayments of long-term debt		—			—			—			—			(710	)
Early retirement of debt		—			—			—			—			(32	)
Repurchases of common stock		(324	)		(211	)		(589	)		—			—
Dividends paid on common stock		(830	)		(667	)		(554	)		(329	)		(229	)
Contributions from noncontrolling interests		—			—			—			1			3
Distributions to noncontrolling interests		(5	)		(8	)		(6	)		(6	)		(5	)
Shares exchanged for tax withholdings and other		(12	)		(73	)		—			(3	)		(9	)

Net cash from financing activities		(1,171	)		(959	)		(1,149	)		(337	)		(982	)

Effect of exchange rate changes on cash		(5	)		2			1			(5	)		2

Net change in cash, cash equivalents and restricted cash		832			354			(50	)		782			(339	)
Cash, cash equivalents and restricted cash at beginning of period		2,625			2,271			2,321			1,539			1,878

Cash, cash equivalents and restricted cash at end of period	$	3,457		$	2,625		$	2,271		$	2,321		$	1,539

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	3,300		$	2,459		$	2,099		$	2,144		$	1,348
Restricted cash		157			166			172			177			191

Total cash, cash equivalents and restricted cash	$	3,457		$	2,625		$	2,271		$	2,321		$	1,539

(1)

Primarily relates to deposit associated with the RimRock acquisition.

CONSOLIDATED BALANCE SHEETS


(in millions)	June 30, 2022			December 31, 2021
Current assets:
Cash, cash equivalents and restricted cash	$	3,457		$	2,271
Accounts receivable		2,348			1,543
Other current assets		546			435

Total current assets		6,351			4,249
Oil and gas property and equipment, based on successful efforts accounting, net		13,588			13,536
Other property and equipment, net		1,525			1,472

Total property and equipment, net		15,113			15,008
Goodwill		753			753
Right-of-use assets		236			235
Investments		423			402
Other long-term assets		318			378

Total assets	$	23,194		$	21,025

Current liabilities:
Accounts payable	$	668		$	500
Revenues and royalties payable		2,108			1,456
Other current liabilities		1,318			1,131

Total current liabilities		4,094			3,087
Long-term debt		6,461			6,482
Lease liabilities		259			252
Asset retirement obligations		452			468
Other long-term liabilities		949			1,050
Deferred income taxes		753			287
Stockholders’ equity:
Common stock		66			66
Additional paid-in capital		7,060			7,636
Retained earnings		3,107			1,692
Accumulated other comprehensive loss		(130	)		(132	)
Treasury stock, at cost, 0.2 million shares in 2022		(13	)		—

Total stockholders’ equity attributable to Devon		10,090			9,262
Noncontrolling interests		136			137

Total equity		10,226			9,399

Total liabilities and equity	$	23,194		$	21,025

Common shares outstanding		656			663

PRODUCTION


	2022				2021
	Quarter 2		Quarter 1		Quarter 4		Quarter 3		Quarter 2
Oil (MBbls/d)
Delaware Basin		222		209		213		213		191
Anadarko Basin		14		14		14		14		17
Williston Basin		27		32		36		39		46
Eagle Ford		19		17		19		20		18
Powder River Basin		14		12		14		14		16
Other		4		4		4		3		3

Total		300		288		300		303		291

Natural gas liquids (MBbls/d)
Delaware Basin		111		92		107		100		82
Anadarko Basin		25		25		27		25		26
Williston Basin		9		8		9		9		9
Eagle Ford		9		9		9		11		9
Powder River Basin		2		2		2		3		3
Other		—		—		—		—		—

Total		156		136		154		148		129

Gas (MMcf/d)
Delaware Basin		618		561		577		578		513
Anadarko Basin		212		210		222		219		225
Williston Basin		52		54		64		59		61
Eagle Ford		60		61		60		67		59
Powder River Basin		18		19		19		19		21
Other		1		1		1		1		2

Total		961		906		943		943		881

Total oil equivalent (MBoe/d)
Delaware Basin		436		394		416		409		358
Anadarko Basin		74		75		78		75		80
Williston Basin		45		48		55		58		66
Eagle Ford		38		36		38		42		37
Powder River Basin		19		18		19		20		22
Other		4		4		5		4		4

Total		616		575		611		608		567

CAPITAL EXPENDITURES


	2022				2021
(in millions)	Quarter 2		Quarter 1		Quarter 4		Quarter 3		Quarter 2
Delaware Basin	$	374	$	413	$	392	$	363	$	394
Anadarko Basin		42		16		19		15		11
Williston Basin		21		17		25		13		19
Eagle Ford		37		27		21		34		36
Powder River Basin		37		27		27		15		5
Other		2		1		2		2		2

Total upstream capital	$	513	$	501	$	486	$	442	$	467

Environmental ⁽¹⁾		22		16		—		—		—
Midstream		10		32		14		11		22
Other		35		15		21		28		20

Total capital	$	580	$	564	$	521	$	481	$	509

(1)	Devon began tracking environmental capital separately in 2022.

SUPPLEMENTAL INFORMATION FOR CAPITAL EXPENDITURES

GROSS OPERATED SPUDS


	2022				2021
	Quarter 2		Quarter 1		Quarter 4		Quarter 3		Quarter 2
Delaware Basin		46		59		54		50		55
Anadarko Basin		14		13		6		9		8
Williston Basin		5		—		9		—		—
Eagle Ford		4		11		9		10		11
Powder River Basin		1		—		4		9		1

Total		70		83		82		78		75

GROSS OPERATED WELLS TIED-IN


	2022				2021
	Quarter 2		Quarter 1		Quarter 4		Quarter 3		Quarter 2
Delaware Basin		52		52		65		52		88
Anadarko Basin		1		—		12		4		6
Williston Basin		—		—		—		4		13
Eagle Ford		14		8		7		19		9
Powder River Basin		—		4		2		2		—

Total		67		64		86		81		116

AVERAGE LATERAL LENGTH

(based on wells tied-in)

2022

2021

Quarter 2

Quarter 1

Quarter 4

Quarter 3

Quarter 2

Delaware Basin

9,100’

8,900’

10,100’

9,700’

10,000’

Anadarko Basin

10,100’

—

11,700’

9,200’

9,600’

Williston Basin

—

9,600’

10,000’

Eagle Ford

5,800’

7,500’

7,100’

6,300’

5,600’

Powder River Basin

—

10,400’

9,600’

10,500’

—

Total

8,400’

8,800’

10,100’

8,900’

9,600’

REALIZED PRICING

BENCHMARK PRICES

(average prices)


	2022				2021
	Quarter 2		Quarter 1		Quarter 4		Quarter 3		Quarter 2
Oil ($/Bbl) - West Texas Intermediate (Cushing)	$	108.70	$	94.45	$	76.91	$	70.64	$	66.04
Natural Gas ($/Mcf) - Henry Hub	$	7.17	$	4.96	$	5.84	$	4.02	$	2.83
NGL ($/Bbl) - Mont Belvieu Blended	$	46.44	$	43.99	$	40.39	$	36.85	$	28.54

REALIZED PRICES


	2022						2021
	Quarter 2			Quarter 1			Quarter 4			Quarter 3			Quarter 2
Oil (Per Bbl)
Delaware Basin	$	109.05		$	93.12		$	75.67		$	68.44		$	63.93
Anadarko Basin		108.15			92.70			76.07			69.11			63.51
Williston Basin		109.85			90.87			74.02			66.60			62.00
Eagle Ford		109.77			94.51			75.35			68.32			64.04
Powder River Basin		104.75			92.69			72.86			65.81			62.36

Realized price without hedges		108.93			92.94			75.36			68.19			63.63
Cash settlements		(13.13	)		(11.32	)		(13.14	)		(10.60	)		(13.29	)

Realized price, including cash settlements	$	95.80		$	81.62		$	62.22		$	57.59		$	50.34

Natural gas liquids (Per Bbl)
Delaware Basin	$	40.75		$	38.43		$	35.56		$	31.34		$	23.81
Anadarko Basin		41.64			38.38			35.66			33.20			25.55
Williston Basin		23.88			20.71			24.97			19.36			14.76
Eagle Ford		41.98			39.68			38.17			32.80			25.46
Powder River Basin		55.62			52.49			47.30			40.66			35.46

Realized price without hedges		40.28			37.76			35.36			31.25			23.89
Cash settlements		—			—			(0.54	)		(0.45	)		(0.25	)

Realized price, including cash settlements	$	40.28		$	37.76		$	34.82		$	30.80		$	23.64

Gas (Per Mcf)
Delaware Basin	$	6.41		$	3.83		$	4.60		$	3.58		$	2.31
Anadarko Basin		7.11			4.00			5.37			4.05			3.15
Williston Basin		1.56			0.74			1.53			0.65			(1.60	)
Eagle Ford		7.10			4.91			5.76			4.08			3.25
Powder River Basin		7.93			4.24			6.10			4.15			3.54

Realized price without hedges		6.37			3.77			4.68			3.55			2.35
Cash settlements		(1.31	)		(0.62	)		(1.42	)		(0.78	)		(0.15	)

Realized price, including cash settlements	$	5.06		$	3.15		$	3.26		$	2.77		$	2.20

Total oil equivalent (Per Boe)
Delaware Basin	$	75.02		$	63.75		$	54.28		$	48.29		$	42.84
Anadarko Basin		54.46			42.08			41.39			35.62			30.34
Williston Basin		73.15			63.31			53.44			48.55			43.98
Eagle Ford		75.07			62.74			56.06			47.40			42.84
Powder River Basin		89.84			75.75			63.45			55.93			52.55

Realized price without hedges		73.13			61.40			53.12			47.08			41.75
Cash settlements		(8.43	)		(6.65	)		(8.78	)		(6.60	)		(7.11	)

Realized price, including cash settlements	$	64.70		$	54.75		$	44.34		$	40.48		$	34.64

ASSET MARGINS

BENCHMARK PRICES

(average prices)


	2022				2021
	Quarter 2		Quarter 1		Quarter 4		Quarter 3		Quarter 2
Oil ($/Bbl) - West Texas Intermediate (Cushing)	$	108.70	$	94.45	$	76.91	$	70.64	$	66.04
Natural Gas ($/Mcf) - Henry Hub	$	7.17	$	4.96	$	5.84	$	4.02	$	2.83
NGL ($/Bbl) - Mont Belvieu Blended	$	46.44	$	43.99	$	40.39	$	36.85	$	28.54

PER-UNIT CASH MARGIN BY ASSET (per Boe)


	2022						2021
	Quarter 2			Quarter 1			Quarter 4			Quarter 3			Quarter 2
Delaware Basin
Realized price	$	75.02		$	63.75		$	54.28		$	48.29		$	42.84
Lease operating expenses		(3.98	)		(3.79	)		(4.02	)		(3.52	)		(3.91	)
Gathering, processing & transportation		(2.37	)		(2.32	)		(2.27	)		(2.18	)		(2.06	)
Production & property taxes		(5.35	)		(4.65	)		(3.40	)		(3.31	)		(3.08	)

Field-level cash margin	$	63.32		$	52.99		$	44.59		$	39.28		$	33.79

Anadarko Basin
Realized price	$	54.46		$	42.08		$	41.39		$	35.62		$	30.34
Lease operating expenses		(3.49	)		(2.75	)		(2.70	)		(2.58	)		(2.96	)
Gathering, processing & transportation		(6.65	)		(6.67	)		(6.60	)		(6.14	)		(6.06	)
Production & property taxes		(3.17	)		(2.35	)		(2.44	)		(1.70	)		(1.46	)

Field-level cash margin	$	41.15		$	30.31		$	29.65		$	25.20		$	19.86

Williston Basin
Realized price	$	73.15		$	63.31		$	53.44		$	48.55		$	43.98
Lease operating expenses		(9.40	)		(7.67	)		(5.76	)		(5.83	)		(4.87	)
Gathering, processing & transportation		(2.44	)		(2.32	)		(2.09	)		(2.13	)		(1.86	)
Production & property taxes		(6.75	)		(5.67	)		(4.64	)		(4.47	)		(4.27	)

Field-level cash margin	$	54.56		$	47.65		$	40.95		$	36.12		$	32.98

Eagle Ford
Realized price	$	75.07		$	62.74		$	56.06		$	47.40		$	42.84
Lease operating expenses		(4.98	)		(4.63	)		(3.78	)		(3.43	)		(3.47	)
Gathering, processing & transportation		(6.39	)		(5.67	)		(6.65	)		(4.17	)		(5.56	)
Production & property taxes		(3.99	)		(3.52	)		(2.93	)		(1.99	)		(1.93	)

Field-level cash margin	$	59.71		$	48.92		$	42.70		$	37.81		$	31.88

Powder River Basin
Realized price	$	89.84		$	75.75		$	63.45		$	55.93		$	52.55
Lease operating expenses		(7.04	)		(9.01	)		(7.49	)		(8.09	)		(6.65	)
Gathering, processing & transportation		(3.50	)		(3.19	)		(2.86	)		(2.93	)		(3.02	)
Production & property taxes		(10.89	)		(9.23	)		(7.49	)		(6.73	)		(6.10	)

Field-level cash margin	$	68.41		$	54.32		$	45.61		$	38.18		$	36.78

Devon - Total
Realized price	$	73.13		$	61.40		$	53.12		$	47.08		$	41.75
Lease operating expenses		(4.56	)		(4.33	)		(4.18	)		(3.85	)		(4.06	)
Gathering, processing & transportation		(3.15	)		(3.11	)		(3.08	)		(2.81	)		(2.85	)
Production & property taxes		(5.30	)		(4.51	)		(3.49	)		(3.25	)		(3.05	)

Field-level cash margin	$	60.12		$	49.45		$	42.37		$	37.17		$	31.79

NON-GAAP MEASURES

(all monetary values in millions, except per share amounts)

Devon’s earnings materials include non-GAAP financial measures. These non-GAAP measures are not alternatives to GAAP measures, and you should not consider these non-GAAP measures in isolation or as a substitute for analysis of our results as reported under GAAP. Below is additional disclosure regarding each of the non-GAAP measures used in the earnings materials, including reconciliations to their most directly comparable GAAP measure.

The earnings materials may include forward-looking non-GAAP measures. The company is unable to provide reconciliations of these forward-looking non-GAAP measures, because components of the calculations are inherently unpredictable, such as changes to current assets and liabilities, the timing of changes in capital accruals, unknown future events and estimating certain future GAAP measures. The inability to reliably quantify certain components of the calculation would significantly affect the usefulness and accuracy of a reconciliation.

CORE EARNINGS

Devon’s reported net earnings include items of income and expense that are typically excluded by securities analysts in their published estimates of the company’s financial results. Accordingly, the company also uses the measures of core earnings and core earnings per share attributable to Devon. Devon believes these non-GAAP measures facilitate comparisons of its performance to earnings estimates published by securities analysts. Devon also believes these non-GAAP measures can facilitate comparisons of its performance between periods and to the performance of its peers. The following table summarizes the effects of these items on second quarter and first quarter 2022 earnings.


	Quarter Ended June 30, 2022
	Before-tax			After-tax			After Noncontrolling Interests			Per Diluted Share
Total
Earnings (GAAP)	$	2,495		$	1,938		$	1,932		$	2.93
Adjustments:
Asset dispositions		(14	)		(11	)		(11	)		(0.02	)
Asset and exploration impairments		8			6			6			0.01
Deferred tax asset valuation allowance		—			10			10			0.02
Fair value changes in financial instruments		(299	)		(230	)		(230	)		(0.35	)

Core earnings (Non-GAAP)	$	2,190		$	1,713		$	1,707		$	2.59


	Quarter Ended March 31, 2022
	Before-tax			After-tax		After Noncontrolling Interests		Per Diluted Share
Total
Earnings (GAAP)	$	1,262		$	995	$	989	$	1.48
Adjustments:
Asset dispositions		(1	)		—		—		—
Deferred tax asset valuation allowance		—			6		6		0.01
Fair value changes in financial instruments		338			260		260		0.39

Core earnings (Non-GAAP)	$	1,599		$	1,261	$	1,255	$	1.88

*	The tax impact for the adjustments to core earnings in the tables above are all deferred.

EBITDAX

Devon believes EBITDAX provides information useful in assessing operating and financial performance across periods. Devon computes EBITDAX as net earnings before income tax expense; financing costs, net; exploration expenses; depreciation, depletion and amortization; 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 normal operations. EBITDAX as defined by Devon may not be comparable to similarly titled measures used by other companies.


	Q2 ‘22			Q1 ‘22			Q4 ‘21			Q3 ‘21			TTM			Q2 ‘21			Q1 ‘21
Net earnings (GAAP)	$	1,938		$	995		$	1,512		$	844		$	5,289		$	261		$	216
Financing costs, net		84			85			86			86			341			80			77
Income tax expense (benefit)		557			267			150			120			1,094			43			(248	)
Exploration expenses		10			2			5			3			20			3			3
Depreciation, depletion and amortization		528			489			577			578			2,172			536			467
Asset dispositions		(14	)		(1	)		(49	)		—			(64	)		(87	)		(32	)
Share-based compensation		22			20			19			18			79			20			20
Derivative and financial instrument non-cash valuation changes		(302	)		339			(515	)		(35	)		(513	)		336			296
Restructuring and transaction costs		—			—			28			18			46			23			189
Accretion on discounted liabilities and other		10			(61	)		(2	)		2			(51	)		(14	)		(29	)

EBITDAX (Non-GAAP)	$	2,833		$	2,135		$	1,811		$	1,634		$	8,413		$	1,201		$	959

Annualized EBITDAX for first-quarter 2021 (Non-GAAP)																			$	3,836

NET DEBT

Devon defines net debt as debt less cash, cash equivalents and cash restricted for discontinued operations. Devon believes that netting these sources of cash against debt provides a clearer picture of the future demands on cash from Devon to repay debt.


	Jun. 30, 2022			Mar. 31, 2022			Dec. 31, 2021			Sep. 30, 2021			Jun. 30, 2021			Mar. 31, 2021
Total debt (GAAP)	$	6,461		$	6,471		$	6,482		$	6,492		$	6,502		$	7,268
Less:
Cash, cash equivalents and restricted cash		(3,457	)		(2,625	)		(2,271	)		(2,321	)		(1,539	)		(1,878	)

Net debt (Non-GAAP)	$	3,004		$	3,846		$	4,211		$	4,171		$	4,963		$	5,390

NET DEBT-TO-EBITDAX

Devon defines net debt-to-EBITDAX as net debt divided by an annualized EBITDAX measure. Devon believes this ratio provides information useful to investors in assessing the company’s credit position and debt leverage.


	June 30, 2022		March 31, 2022		December 31, 2021		March 31, 2021
Net debt (Non-GAAP)	$	3,004	$	3,846	$	4,211	$	5,390
EBITDAX (Non-GAAP) ⁽¹⁾	$	8,413	$	6,781	$	5,605	$	3,836
Net debt-to-EBITDAX (Non-GAAP)		0.4		0.6		0.8		1.4

(1)

The second quarter 2022 EBITDAX is an annualized measure using a trailing twelve month calculation. The first quarter 2021 EBITDAX is an annualized measure. See the EBITDAX table above for additional details. Due to the merger with WPX closing in the first quarter of 2021, Devon has shown the first quarter 2021 EBITDAX annualized, divided by net debt to show a more meaningful net debt-to-EBITDAX measure.

FREE CASH FLOW

Devon defines free cash flow as total operating cash flow less capital expenditures. Devon believes free cash flow provides a useful measure of available cash generated by operating activities for other investing and financing activities.


	Quarter Ended Jun. 30, 2022			Quarter Ended Mar. 31, 2022			Quarter Ended Dec. 31, 2021			Quarter Ended Sep. 30, 2021			Quarter Ended Jun. 30, 2021
Total operating cash flow (GAAP)	$	2,678		$	1,837		$	1,616		$	1,598		$	1,093
Less capital expenditures:
Capital expenditures		(573	)		(537	)		(512	)		(474	)		(504	)

Free cash flow (Non-GAAP)	$	2,105		$	1,300		$	1,104		$	1,124		$	589

REINVESTMENT RATE

Devon defines reinvestment rate as accrued capital expenditures divided by operating cash flow. Devon believes this measure provides useful information to our investors as an indicator of the capital demands of our business relative to the cash flow generated from normal business operations.


	Quarter Ended June 30, 2022			Quarter Ended March 31, 2022			Quarter Ended December 31, 2021
Capital expenditures (accrued)	$	580		$	564		$	521
Operating cash flow	$	2,678		$	1,837		$	1,616

Reinvestment rate (Non-GAAP)		22	%		31	%		32	%

VARIABLE DIVIDEND

Devon may pay a variable dividend up to 50 percent of its excess cash flow. Each quarter’s excess cash flow is computed as adjusted cash flow less capital expenditures and the fixed dividend.


	Quarter Ended June 30, 2022
Operating cash flow (GAAP)	$	2,678
Changes in assets and liabilities, net		(198	)

Adjusted cash flow (Non-GAAP)		2,480
Capital expenditures (Accrued)		(580	)

Adjusted free cash flow (Non-GAAP)		1,900
Fixed quarterly dividend		(105	)

Excess free cash flow (Non-GAAP)		1,795
~50% Pay out (Board Discretion: Up to 50%)		50	%

Total variable dividend	$	897

THIRD-QUARTER AND FULL-YEAR 2022 GUIDANCE

PRODUCTION GUIDANCE


	Quarter 3				Full Year
	Low		High		Low		High
Oil (MBbls/d)		287		295		294		299
Natural gas liquids (MBbls/d)		151		156		148		152
Gas (MMcf/d)		930		970		940		960

Total oil equivalent (MBoe/d)		593		613		600		610

Note: Fourth production is estimated to increase ~4% due to timing of activity and higher working interest.

CAPITAL EXPENDITURES GUIDANCE


	Quarter 3⁽¹⁾				Full Year
(in millions)	Low		High		Low		High
Upstream capital	$	640	$	690	$	2,200	$	2,400
Environmental capital		20		30		75		100
Midstream & other capital		20		35		100		140

Total capital	$	680	$	755	$	2,375	$	2,640

(1)

Devon expects to bring online ~100 new wells in the third quarter, driving higher production in the fourth quarter.

PRICE REALIZATIONS GUIDANCE


	Quarter 3						Full Year
	Low			High			Low			High
Oil - % of WTI		95	%		100	%		95	%		100	%
NGL - % of WTI		35	%		40	%		35	%		40	%
Natural gas - % of Henry Hub		80	%		85	%		80	%		85	%

OTHER GUIDANCE ITEMS


	Quarter 3						Full Year
($ millions, except Boe and %)	Low			High			Low			High
Marketing & midstream operating profit	$	(10	)	$	—		$	(25	)	$	(15	)
LOE & GP&T per BOE	$	7.50		$	7.90		$	7.50		$	7.80
Production & property taxes as % of upstream sales		7.0	%		8.0	%		7.0	%		8.0	%
Exploration expenses	$	—		$	5		$	5		$	15
Depreciation, depletion and amortization	$	510		$	560		$	2,050		$	2,150
General & administrative expenses	$	85		$	95		$	340		$	365
Net financing costs, net	$	80		$	90		$	335		$	345
Other expenses	$	—		$	10		$	(50	)	$	(30	)

INCOME TAX GUIDANCE


(% of pre-tax earnings)	Quarter 3			Full Year
Current income tax rate		10	%		10	%
Deferred income tax rate		12	%		12	%

Total income tax rate		22	%		22	%

CONTINGENT PAYMENTS FOR BARNETT SHALE DIVESTITURE (4-year period beginning in 2021)


WTI Threshold		WTI Annual Earnout Amount		Henry Hub Threshold		Henry Hub Annual Earnout Amount
$	50.00	$	10,000,000	$	2.75	$	20,000,000
$	55.00	$	12,500,000	$	3.00	$	25,000,000
$	60.00	$	15,000,000	$	3.25	$	35,000,000
$	65.00	$	20,000,000	$	3.50	$	45,000,000

2022 & 2023 HEDGING POSITIONS

Oil Commodity Hedges


	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)
Q3 2022		35,000	$	44.61		42,500	$	56.11	$	73.82
Q4 2022		35,000	$	44.61		45,500	$	63.32	$	90.33
Q1-Q4 2023		—	$	—		37,193	$	68.55	$	95.92

Oil Basis Swaps


Period	Index	Volume (Bbls/d)		Weighted Average Differential to WTI ($/Bbl)
Q3-Q4 2022	BRENT/WTI Spread		1,000	$	(7.75	)
Q3-Q4 2022	NYMEX Roll		29,000	$	0.45
Q1-Q4 2023	Midland Sweet		12,296	$	0.52

Natural Gas Commodity Hedges - Henry Hub


	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)
Q3 2022		110,000	$	2.79		221,000	$	2.98	$	4.35
Q4 2022		125,000	$	3.34		165,000	$	3.16	$	4.82
Q1-Q4 2023		8,658	$	5.24		106,436	$	3.58	$	7.81

Natural Gas Basis Swaps


Period	Index	Volume (MMBtu/d)		Weighted Average Differential to Henry Hub ($/MMBtu)
Q3-Q4 2022	WAHA		70,000	$	(0.57	)
Q3-Q4 2022	El Paso Permian		50,000	$	(0.85	)
Q3-Q4 2022	Houston Ship Channel		40,000	$	(0.15	)
Q1-Q4 2023	WAHA		70,000	$	(0.51	)
Q1-Q4 2023	El Paso Permian		140,041	$	(1.58	)
Q1-Q4 2023	Houston Ship Channel		50,000	$	(0.13	)

Devon’s oil derivatives settle against the average of the prompt month NYMEX West Texas Intermediate futures price. Devon’s natural gas derivatives settle against the Inside FERC end of the month NYMEX index. Commodity hedge positions are shown as of July 27, 2022.