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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30,
2025
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 July 23, 2025,
634.8
million shares of common stock were outstanding.
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:
“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.
“EPA” means the United States Environmental Protection Agency.
“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.
“Grayson Mill” means Grayson Mill Intermediate HoldCo II, LLC and Grayson Mill Intermediate HoldCo III, LLC.
“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.
This report includes “forward-looking statements” within the meaning of the federal securities laws. 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, including from changes in trade relations and policies, such as the imposition of tariffs by the U.S., China or other countries;
•
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 and investments;
•
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, which can be exacerbated by supply chain disruptions, including as a result of tariffs or other changes in trade policy;
•
regulatory restrictions, compliance costs and other risks relating to governmental regulation, including with respect to federal lands, environmental matters and water disposal;
•
climate change and risks related to regulatory, social and market efforts to address climate change;
•
risks relating to our ESG initiatives;
•
claims, audits and other proceedings impacting our business, including with respect to historic and legacy operations;
•
governmental interventions in energy markets;
•
counterparty credit risks;
•
risks relating to our indebtedness;
•
cybersecurity risks;
•
the extent to which insurance covers any losses we may experience;
•
risks related to shareholder activism;
•
our ability to successfully complete mergers, acquisitions and divestitures;
•
our ability to pay dividends and make share repurchases; and
•
any of the other risks and uncertainties discussed in this report, our
2024 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.
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
2024 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 and six-month periods ended June 30, 2025 and 2024 and Devon’s financial position as of June 30, 2025.
On September 27, 2024, Devon acquired the Williston Basin business of Grayson Mill for total consideration of approximately $
5.0
billion, consisting of $
3.5
billion of cash and approximately
37.3
million shares of Devon common stock, including purchase price adjustments. The transaction was accounted for using the acquisition method of accounting. See
Note 2
for further discussion.
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.
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 June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Oil
$
2,174
$
2,413
$
4,588
$
4,602
Gas
178
57
487
185
NGL
358
326
761
638
Oil, gas and NGL sales
2,710
2,796
5,836
5,425
Oil
859
801
1,777
1,608
Gas
246
100
517
221
NGL
233
197
468
381
Marketing and midstream revenues
1,338
1,098
2,762
2,210
Total revenues from contracts with customers
$
4,048
$
3,894
$
8,598
$
7,635
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 will result in additional disclosures for annual reporting periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued. This ASU will result in additional disclosures for Devon beginning with our 2025 annual reporting and interim periods beginning in 2026.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. ASU 2024-03 requires disclosures about specific types of expenses included in the expense captions presented on the face of the statement of operations as well as disclosures about selling expenses. This ASU is effective for Devon beginning with its 2027 annual reporting and interim periods beginning in 2028. Devon is evaluating the impact this ASU will have on the disclosures that accompany its consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
2.
Acquisitions and Dive
stitures
Grayson Mill Acquisition
On September 27, 2024, Devon completed its acquisition of the Williston Basin business of Grayson Mill for total consideration of approximately $
5.0
billion, consisting of $
3.5
billion of cash and approximately
37.3
million shares of Devon common stock, including purchase price adjustments. Devon funded the cash portion of the purchase price through cash on hand and debt financing. For additional information regarding the debt financing, see
Note 13
.
Purchase Price Allocation
This transaction was accounted for using the acquisition method of accounting. Under the acquisition method of accounting, the assets and liabilities of Grayson Mill and its subsidiaries were recorded at their respective fair values as of the date of completion of the acquisition and added to Devon’s. Determining the fair value of the assets and liabilities of Grayson Mill required judgment and certain assumptions to be made, the most significant of these being related to the valuation of Grayson Mill’s oil and gas properties. The inputs and assumptions related to the oil and gas properties were categorized as level 3 in the fair value hierarchy.
The following table represents the allocation of the total purchase price of Grayson Mill to the identifiable assets acquired and the liabilities assumed based on the fair values as of the acquisition date.
Final Purchase
Price Allocation
Consideration:
Devon common stock issued
37.3
Devon closing price on September 27, 2024
$
38.96
Total common equity consideration
$
1,455
Cash consideration
3,567
Total consideration
$
5,022
Assets acquired:
Cash, cash equivalents and restricted cash
$
147
Accounts receivable
219
Inventory
44
Other current assets
9
Proved oil and gas property and equipment
3,056
Unproved oil and gas property and equipment
1,771
Other property and equipment, net
210
Right-of-use assets
29
Total assets acquired
$
5,485
Liabilities assumed:
Accounts payable
$
145
Revenue and royalties payable
209
Other current liabilities
16
Asset retirement obligations
75
Lease liabilities
18
Total liabilities assumed
463
Net assets acquired
$
5,022
Asset Exchange
On April 1, 2025, Devon and BPX Energy dissolved their partnership and divided their acreage in the Eagle Ford Blackhawk field located in Texas' DeWitt County, resulting in increased operational flexibility for both parties. The assets exchanged were in close proximity and shared similar geological characteristics. The transaction was accounted for as an equal, non-monetary exchange, as it did not result in a significant change to the risks, expected future cash flows or the timing of those cash flows, and therefore was determined to lack commercial substance. As a result, the new acreage and underlying property costs were recorded at the historical cost of the assets exchanged.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
Divestiture of Matterhorn Investment
During the second quarter of 2025, Devon sold its investment in Matterhorn for $
372
million and recognized a pre-tax gain of $
307
million ($
239
million, net of tax), which was recorded to asset dispositions on the accompanying consolidated statements of comprehensive earnings. For additional information, see
Note 12
.
Contingent Earnout Payments
Devon was 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 had a term of four years.
Devon received $
20
million in contingent earnout payments related to this transaction in the first six months of both 2025 and 2024.
3.
Derivative Fin
ancial 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 June 30, 2025, Devon neither held cash collateral of its counterparties
no
r posted cash collateral to its counterparties.
Commodity Derivatives
As of June 30, 2025, Devon had the following open oil derivative positions. The first two tables present Devon’s oil derivatives that settle against the average of the prompt month NYMEX WTI futures price. The third table presents Devon’s oil derivatives that settle against the respective indices noted within the table.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
Oil Basis Swaps
Period
Index
Volume
(Bbls/d)
Weighted Average
Differential to WTI
($/Bbl)
Q3-Q4 2025
Midland Sweet
63,000
$
1.00
Q3-Q4 2025
NYMEX Roll
11,484
$
1.04
Q1-Q4 2026
Midland Sweet
46,000
$
1.10
Q1-Q4 2027
Midland Sweet
10,000
$
1.05
As of June 30, 2025, 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)
Q3-Q4 2025
273,500
$
3.45
170,000
$
3.00
$
3.80
Q1-Q4 2026
247,500
$
3.80
160,000
$
3.14
$
4.88
Natural Gas Basis Swaps
Period
Index
Volume
(MMBtu/d)
Weighted Average
Differential to
Henry Hub
($/MMBtu)
Q3-Q4 2025
Houston Ship Channel
230,000
$
(
0.35
)
Q3-Q4 2025
WAHA
200,000
$
(
1.53
)
Q1-Q4 2026
Houston Ship Channel
50,000
$
(
0.29
)
Q1-Q4 2026
WAHA
70,000
$
(
1.76
)
As of June 30, 2025, 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
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 table below presents a summary of these positions as of June 30, 2025 and December 31, 2024.
June 30, 2025
December 31, 2024
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
$
190
$
(
29
)
$
161
$
78
$
(
23
)
$
55
Other current assets
Long-term derivative asset
10
(
5
)
5
5
(
4
)
1
Other long-term assets
Short-term derivative liability
(
55
)
29
(
26
)
(
37
)
23
(
14
)
Other current liabilities
Long-term derivative liability
(
41
)
5
(
36
)
(
23
)
4
(
19
)
Other long-term liabilities
Total derivative asset
$
104
$
—
$
104
$
23
$
—
$
23
4.
Share-Base
d Compensation
The table below presents the share-based compensation expense included in Devon’s accompanying consolidated statements of comprehensive earnings.
Six Months Ended June 30,
2025
2024
G&A
$
46
$
50
Exploration expenses
—
1
Restructuring and transaction costs
7
—
Total
$
53
$
51
Related income tax benefit
$
8
$
18
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 12/31/24
4,107
$
45.31
1,179
$
67.38
Granted
2,530
$
34.17
510
$
45.92
Vested
(
1,690
)
$
40.25
(
272
)
$
68.68
Forfeited
(
127
)
$
40.82
(
110
)
$
66.68
Unvested at 6/30/25
4,820
$
41.35
1,307
(1)
$
58.79
(1)
A maximum of
2.6
million common shares could be awarded based upon Devon’s final TSR ranking.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
The following table presents the assumptions related to the performance share units granted in 2025, as indicated in the previous summary table.
2025
Grant-date fair value
$
45.92
Risk-free interest rate
4.29
%
Volatility factor
38.70
%
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 June 30, 2025.
Restricted Stock
Performance
Awards/Units
Share Units
Unrecognized compensation cost
$
140
$
26
Weighted average period for recognition (years)
2.8
2.2
5.
Asset Impairments
In the first quarter of 2025, Devon rationalized two headquarters-related real estate assets, triggering assets held for sale and recording asset impairments of $
254
million. Both transactions closed in the first quarter of 2025 and generated aggregate sales proceeds of $
120
million.
6.
Inco
me 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 June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Earnings before income taxes
$
1,161
$
1,040
$
1,807
$
1,808
Current income tax expense
$
226
$
146
$
322
$
265
Deferred income tax expense
18
39
59
79
Total income tax expense
$
244
$
185
$
381
$
344
U.S. statutory income tax rate
21
%
21
%
21
%
21
%
State income taxes
1
%
1
%
1
%
1
%
Income tax credits
(
1
%)
(
4
%)
(
1
%)
(
3
%)
Effective income tax rate
21
%
18
%
21
%
19
%
The increase in current income tax expense during the second quarter of 2025 is due to the sale of Devon’s investment in Matterhorn. For additional information, see
Note 12
.
On July 4, 2025, the OBBB was signed into law. The OBBB includes permanent reinstatement of
100
% bonus depreciation and the expensing of domestic research costs. Devon is currently assessing the effects of the OBBB and, based on the enactment date, will recognize the impacts beginning in the third quarter of 2025. Devon anticipates that its current tax rates will be lower for the remainder of 2025 and in future periods.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
7.
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 June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Net earnings
$
899
$
844
$
1,393
$
1,440
Common shares:
Average common shares outstanding - basic
635
626
640
628
Dilutive effect of potential common shares issuable
1
2
1
2
Average common shares outstanding - diluted
636
628
641
630
Net earnings per share available to common shareholders:
Basic
$
1.42
$
1.35
$
2.18
$
2.29
Diluted
$
1.41
$
1.34
$
2.17
$
2.29
8.
Other Comprehensive
Earnings (Loss)
Components of other comprehensive earnings (loss) consist of the following:
Three Months Ended June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Pension and postretirement benefit plans:
Beginning accumulated pension and postretirement benefits
$
(
121
)
$
(
123
)
$
(
122
)
$
(
124
)
Recognition of net actuarial loss and prior service cost in earnings
(1)
2
2
3
3
Income tax expense
(
1
)
(
1
)
(
1
)
(
1
)
Accumulated other comprehensive loss, net of tax
$
(
120
)
$
(
122
)
$
(
120
)
$
(
122
)
(1)
Recognition of net actuarial loss and prior service cost are included in the computation of net periodic benefit cost, which is a component of other, net in the accompanying consolidated statements of comprehensive earnings.
9.
Supplemental Information to Statements of Cash Flows
Three Months Ended June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Changes in assets and liabilities, net:
Accounts receivable
$
183
$
81
$
120
$
(
15
)
Other current assets
15
(
84
)
(
20
)
(
107
)
Other long-term assets
(
16
)
(
16
)
(
101
)
33
Accounts payable and revenues and royalties payable
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
10.
Accounts Receivable
Components of accounts receivable include the following:
June 30, 2025
December 31, 2024
Oil, gas and NGL sales
$
1,048
$
1,130
Joint interest billings
282
341
Marketing and midstream revenues
505
465
Other
25
42
Gross accounts receivable
1,860
1,978
Allowance for doubtful accounts
(
7
)
(
6
)
Net accounts receivable
$
1,853
$
1,972
11.
Property, Plan
t and Equipment
The following table presents the aggregate capitalized costs related to Devon’s oil and gas and non-oil and gas activities.
June 30, 2025
December 31, 2024
Property and equipment:
Proved
$
55,745
$
53,647
Unproved and properties under development
2,733
2,814
Total oil and gas
58,478
56,461
Less accumulated DD&A
(
35,050
)
(
33,263
)
Oil and gas property and equipment, net
23,428
23,198
Other property and equipment
2,565
2,671
Less accumulated DD&A
(
878
)
(
858
)
Other property and equipment, net
(1)
1,687
1,813
Property and equipment, net
$
25,115
$
25,011
(1)
$
203
million and $
178
million related to CDM in 2025 and 2024, respectively.
12.
Investments
The following table presents Devon's investments shown on the consolidated balance sheets.
Carrying Amount
Investments
% Interest
June 30, 2025
December 31, 2024
Catalyst
50
%
$
261
$
273
Water JV
30
%
223
216
Fervo
17
%
108
115
Matterhorn
12.5
%
—
69
Other
Various
48
54
Total
$
640
$
727
During the second quarter of 2025, Devon sold its investment in Matterhorn for $
372
million and recognized a pre-tax gain of $
307
million ($
239
million, net of tax), which was recorded to asset dispositions in the accompanying consolidated statements of comprehensive earnings.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
13.
Debt and Re
lated Expenses
See below for a summary of debt instruments and balances. The notes, debentures and Term Loan reflected below are senior, unsecured obligations of Devon.
June 30, 2025
December 31, 2024
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
5.20
% due
September 15, 2034
1,250
1,250
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
5.75
% due
September 15, 2054
1,000
1,000
Term Loan due
September 25, 2026
1,000
1,000
Net premium on debentures and notes
30
37
Debt issuance costs
(
51
)
(
53
)
Total debt
$
8,878
$
8,883
Less amount classified as short-term debt
485
485
Total long-term debt
$
8,393
$
8,398
Credit Lines
Devon has a $
3.0
billion revolving Senior Credit Facility, and,
in the first quarter of 2025, Devon exercised its option to extend the Senior Credit Facility maturity date from March 24, 2029 to March 24, 2030
. Devon has the option to extend the March 24, 2030 maturity date by an additional year subject to lender consent. As of June 30, 2025, Devon had
no
outstanding borrowings under the Senior Credit Facility and had issued $
4
million in outstanding letters of credit under this facility. The 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 June 30, 2025, Devon was in compliance with this covenant with a debt-to-capitalization ratio of
25.9
%.
Term Loan Credit Agreement
In August 2024, Devon entered into a delayed draw term loan credit agreement (the “Term Loan Credit Agreement”), providing for delayed draw term loans in an aggregate principal amount not to exceed $
2.0
billion, including a 364-day tranche of $
500
million and a two-year tranche of $
1.5
billion. On September 27, 2024, Devon borrowed $
1.0
billion on the two-year tranche (the “Term Loan”) to partially fund the closing of the Grayson Mill acquisition. In connection with the borrowing of the Term Loan, the undrawn commitments under the Term Loan Credit Agreement automatically terminated. The Term Loan bears interest at a rate based on term SOFR plus a spread adjustment that varies based on Devon's credit ratings. The interest rate on the Term Loan was
5.8
% as of June 30, 2025.
The Term Loan
Credit Agreement contains substantially the same financial covenant as the Senior Credit Facility. As of June 30, 2025, Devon was in compliance with this covenant with a debt-to-capitalization ratio of
25.9
%
.
Issuance of Senior Notes
In August 2024, Devon issued $
1.25
billion of
5.20
% senior notes due 2034 and $
1.0
billion of
5.75
% senior notes due 2054. Devon used the net proceeds to partially fund the Grayson Mill acquisition. For additional information, see
Note 2
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
Retirement of Senior Notes
On September 15, 2024, Devon repaid $
472
million of
5.25
% senior notes at maturity.
In September 2025, Devon will early redeem the $
485
million of
5.85
% senior notes due in December 2025 pursuant to the “par-call” rights set forth in the indenture document.
Net Financing Costs
The following schedule includes the components of net financing costs.
Three Months Ended June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Net financing costs:
Interest based on debt outstanding
$
126
$
88
$
253
$
175
Interest income
(
14
)
(
14
)
(
24
)
(
27
)
Other
4
2
10
4
Total net financing costs
$
116
$
76
$
239
$
152
14.
Le
ases
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. As of June 30, 2025, Devon’s financing lease right-of-use assets primarily relate to equipment related to the exploration, development and production of oil and gas. During the first quarter of 2025, Devon extinguished an approximately $
300
million real estate finance lease by making a cash payment of $
274
million and recognized a gain on early lease extinguishment in other, net related to the difference on the accompanying consolidated statement of comprehensive earnings. For additional information, see
Note 5
.
The following table presents Devon’s right-of-use assets and lease liabilities as of June 30, 2025 and December 31, 2024.
June 30, 2025
December 31, 2024
Finance
Operating
Total
Finance
Operating
Total
Right-of-use assets
$
18
$
167
$
185
$
248
$
55
$
303
Lease liabilities:
Current lease liabilities
(1)
$
5
$
67
$
72
$
25
$
28
$
53
Long-term lease liabilities
13
100
113
293
27
320
Total lease liabilities
(2)
$
18
$
167
$
185
$
318
$
55
$
373
(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 June 30, 2025 and are therefore excluded from the amounts shown above.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
15.
Asset Retir
ement Obligations
The following table presents the changes in Devon’s asset retirement obligations.
Six Months Ended June 30,
2025
2024
Asset retirement obligations as of beginning of period
$
807
$
665
Liabilities incurred
21
15
Liabilities settled and divested
(
22
)
(
16
)
Revision and reclassification of estimated obligation
55
35
Accretion expense on discounted obligation
24
18
Asset retirement obligations as of end of period
885
717
Less current portion
46
26
Asset retirement obligations, long-term
$
839
$
691
During the first six months of 2025 and 2024, Devon increased its asset retirement obligations by approximately $
55
million and $
35
million, respectively, primarily due to changes in current cost estimates and future retirement dates for its oil and gas assets.
16.
Stockhol
ders’ Equity
Share Issuance
On September 27, 2024, Devon completed its acquisition of the Williston Basin business of Grayson Mill for total consideration of approximately $
5.0
billion. The transaction consisted of $
3.5
billion of cash and approximately
37.3
million shares of Devon common stock at $
38.96
per share for total equity consideration of approximately $
1.5
billion, including purchase price adjustments.
Share Repurchases
Devon's Board of Directors has authorized a $
5.0
billion share repurchase program with a
June 30, 2026
expiration date.
The table below provides information regarding purchases of Devon’s common stock under the $
5.0
billion share repurchase program (shares in thousands).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
Dividends
Devon pays a quarterly dividend which can be 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
9
% from $
0.22
to $
0.24
per share in the first quarter of 2025.
The following table summarizes Devon’s dividends for the first six months of 2025 and 2024, respectively.
Dividends
Rate Per Share
2025:
First quarter
$
163
$
0.24
Second quarter
156
$
0.24
Total year-to-date
$
319
2024:
First quarter
$
299
$
0.44
Second quarter
223
$
0.35
Total year-to-date
(1)
$
522
(1)
During the first six months of 2024, Devon paid variable dividends totaling $
241
million in addition to its recurring fixed dividend.
In August 2025, Devon announced a fixed cash dividend in the amount of $
0.24
per share for approximately $
151
million payable in the third quarter of
2025
.
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.
On August 1, 2025, Devon completed the acquisition of all the outstanding noncontrolling interests in CDM for $
260
million. As a result of this transaction, Devon owns
100
% of the equity interests in CDM. The acquisition of the noncontrolling interests will be accounted for as an equity transaction. Accordingly, the difference between the carrying amount of the noncontrolling interests and the consideration paid will be recognized in Devon's additional paid in capital in the consolidated balance sheet.
17.
Com
mitments 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 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 June 30, 2025, Devon has accrued approximately $
40
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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
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.
The Company has previously received separate NOVs from the EPA alleging emissions and permitting violations relating to certain of our historic operations in North Dakota, western Texas and New Mexico, respectively. The Company has been engaging with the EPA to resolve each of these matters, and Devon is actively negotiating a draft consent decree with the EPA and the Department of Justice with respect to the North Dakota NOV matter. If finalized, the consent decree may include monetary sanctions and obligations to complete mitigation projects and implement specific injunctive relief. Given that negotiations of the draft consent decree are ongoing and the uncertainty as to the ultimate result of the North Dakota NOV matter, we are currently unable to provide an estimate of potential loss; however, the costs associated with the resolution of the North Dakota NOV matter or any of the other NOV matters could be significant in amount and may include monetary penalties.
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 has 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 this matter, Devon denies the allegations asserted in this lawsuit 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 America. 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 will likely 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 will also likely be unable to satisfy the eventual decommissioning obligations associated with the East Bay Field.
In March 2025, Devon received an order from the Department of the Interior, Bureau of Safety and Environmental Enforcement to decommission assets located on certain federal leases in the East Bay Field (the “Federal Assets”). As a result, during the first quarter of 2025, Devon recorded a contingent liability of $
125
million within other liabilities in the consolidated balance sheet, reflecting the estimated costs of decommissioning the Federal Assets. The Company expects to be able to access funds available under certain bonds and a cash security account as and when Devon performs and pays these decommissioning obligations. Devon believes the funds will likely cover approximately $
100
million of the estimated decommissioning costs for the Federal Assets. Accordingly, during the first quarter of 2025, Devon recorded an approximately $
100
million receivable related to these sources of funds within other assets in the consolidated balance sheet. The remaining $
25
million difference of the recorded decommissioning obligation and such sources of funds was recognized in the first quarter of 2025 in other, net on the consolidated statement of comprehensive earnings. Devon may also be required to perform or fund decommissioning obligations associated with the East Bay Field under state and federal regulations applicable to predecessor operators beyond amounts accrued. Factors impacting this contingency include, among others: (i) the ultimate outcome of the ongoing bankruptcy proceedings, including with respect to state lease assets included in the East Bay Field, (ii) the actual costs to decommission the Federal Assets relative to the estimates, which are subject to numerous assumptions and uncertainties, and (iii) Devon's ability to successfully access funds under decommissioning bonds and other sources.
As of June 30, 2025, Devon has accrued approximately $
200
million of contingent liabilities related to such decommissioning legacy matters, including liabilities associated with the East Bay Field.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
18.
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 June 30, 2025 and December 31, 2024, 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
June 30, 2025 assets (liabilities):
Cash equivalents
$
1,192
$
1,192
$
1,192
$
—
$
—
Commodity derivatives
$
166
$
166
$
—
$
166
$
—
Commodity derivatives
$
(
62
)
$
(
62
)
$
—
$
(
62
)
$
—
Debt
$
(
8,878
)
$
(
8,600
)
$
—
$
(
8,600
)
$
—
December 31, 2024 assets (liabilities):
Cash equivalents
$
319
$
319
$
319
$
—
$
—
Commodity derivatives
$
56
$
56
$
—
$
56
$
—
Commodity derivatives
$
(
33
)
$
(
33
)
$
—
$
(
33
)
$
—
Debt
$
(
8,883
)
$
(
8,520
)
$
—
$
(
8,520
)
$
—
Contingent earnout payments
$
20
$
20
$
—
$
—
$
20
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 our debt are estimated based on rates available for debt with similar terms and maturity when active trading is not available. Our variable rate debt is non-public and consists of our Term Loan. The fair value of our variable rate debt approximates the carrying value as the underlying SOFR resets every month based on the prevailing market rate.
Level 3 Fair Value Measurements
Contingent Earnout Payments
– Devon had 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 qualified as a level 3 fair value measurement. For additional information, see
Note 2
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)
19.
Reportable Segments
Devon is a leading independent energy company engaged primarily in the exploration, development and production of oil, natural gas and NGLs. Devon’s oil and gas exploration and production activities are solely focused in the U.S. For financial reporting purposes, Devon aggregates its U.S. operating segments into one reporting segment due to the similar nature of these operations.
Devon’s chief operating decision maker is the executive committee, which includes the chief executive officer, chief operating officers and chief financial officer. To assess the performance of our assets, we use net earnings. We believe net earnings provides information useful in assessing our operating and financial performance across periods.
The following table reflects Devon's net earnings, assets and capital expenditures for the time periods presented below.
Three Months Ended June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Total revenues
$
4,284
$
3,917
$
8,736
$
7,513
LOE
483
383
962
763
Gathering, processing & transportation
219
197
423
377
Production and property taxes
197
208
426
399
Total significant expenses
899
788
1,811
1,539
Marketing and midstream expenses
1,357
1,108
2,793
2,241
DD&A
914
768
1,826
1,490
G&A
113
114
243
228
Financing costs, net
116
76
239
152
Income tax expense
244
185
381
344
Other segment items
(1)
(
276
)
23
17
55
Total expenses
3,367
3,062
7,310
6,049
Net earnings
$
917
$
855
$
1,426
$
1,464
Total assets
$
31,390
$
25,162
$
31,390
$
25,162
Capital expenditures, including acquisitions
$
948
$
971
$
1,920
$
1,916
(1)
Other segment items included in segment net earnings are exploration expenses, asset impairments, asset dispositions and other, net.
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 and six-month periods ended June 30, 2025 compared to previous periods, and in our financial condition and liquidity since December 31, 2024. For information regarding our critical accounting policies and estimates, see our
2024 Annual Report on Form 10-K
under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Executive Over
view
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 four core areas: the Delaware Basin, Rockies, Eagle Ford and Anadarko. Our asset base is underpinned by premium acreage in the economic core of the Delaware Basin and our diverse, top-tier resource plays, providing a deep inventory of opportunities for years to come.
On September 27, 2024, we acquired the Williston Basin business of Grayson Mill for total consideration of approximately $5.0 billion, consisting of $3.5 billion of cash and approximately 37.3 million shares of Devon common stock, including purchase price adjustments. The acquisition has allowed us to efficiently expand our oil production and operating scale, creating immediate and long-term, sustainable value to shareholders.
As evidenced by this acquisition, 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 operational excellence. Our recent performance highlights for these priorities include the following items for the second quarter of 2025:
•
Production totaled 841 MBoe/d, exceeding guidance by 3%.
•
As of June 30, 2025, completed approximately 78% of our authorized $5.0 billion share repurchase program with approximately 85.4 million of our common shares purchased for approximately $3.9 billion, or $45.62 per share since inception of the plan.
•
Exited with $4.8 billion of liquidity, including $1.8 billion of cash.
•
Generated $1.5 billion of operating cash flow and $6.8 billion for the past twelve trailing months.
•
Received $372 million of cash proceeds from the sale of our investment in Matterhorn.
•
Paid dividends of $156 million and have declared approximately $151 million of dividends to be paid in the third quarter of 2025.
•
Earnings attributable to Devon were $899 million, or $1.41 per diluted share.
•
Core earnings (Non-GAAP) were $536 million, or $0.84 per diluted share.
Our net earnings and operating cash flow are highly dependent upon oil, gas and NGL prices which can be volatile due to several varying factors. During the first six months of 2025, commodity prices have experienced heightened volatility and declines, driven primarily by economic uncertainty in global trade arising from geopolitical events and shifting trade policies, such as the imposition of tariffs by the U.S. and planned oil output increases by OPEC+. Despite the potential negative impacts of higher inflation rates and supply chain disruptions created by these developments, we remain committed to capital discipline and delivering the objectives that underpin our current plan. Our disciplined, returns-driven strategy is designed to adapt to market fluctuations by reducing activity when necessary to maximize free cash flow generation. We will continue to 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 dividends, repaying debt at upcoming maturities and building cash balances.
To emphasize our commitment to maximizing free cash flow and creating value for shareholders, we announced a business optimization plan which is anticipated to improve our annual pre-tax cash flow by $1.0 billion. The plan includes actions to achieve more efficient field-level operations and improvements in drilling and completion costs while improving operating margins and corporate costs. These savings are on track to be achieved by the end of 2026 with approximately $400 million expected to be completed by the end of 2025.
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.
Q2 2025 vs. Q1 2025
Our second quarter 2025 and first quarter 2025 net earnings were $917 million and $509 million, respectively. The graph below shows the change in net earnings from the first quarter of 2025 to the second quarter of 2025. The material changes are further discussed by category on the following pages.
From the first quarter of 2025 to the second quarter of 2025, the change in volumes contributed to a $78 million increase in earnings. The increase in volumes was primarily due to new well activity in the Delaware and Anadarko Basins.
Realized Prices
Q2 2025
Realization
Q1 2025
Change
Oil (per Bbl)
WTI index
$
63.95
$
71.50
-11
%
Realized price, unhedged
$
61.70
96%
$
69.13
-11
%
Cash settlements
$
1.27
$
0.02
Realized price, with hedges
$
62.97
98%
$
69.15
-9
%
Q2 2025
Realization
Q1 2025
Change
Gas (per Mcf)
Henry Hub index
$
3.44
$
3.65
-6
%
Realized price, unhedged
$
1.41
41%
$
2.55
-45
%
Cash settlements
$
0.15
$
(0.07
)
Realized price, with hedges
$
1.56
45%
$
2.48
-37
%
Q2 2025
Realization
Q1 2025
Change
NGLs (per Bbl)
WTI index
$
63.95
$
71.50
-11
%
Realized price, unhedged
$
17.71
28%
$
22.03
-20
%
Cash settlements
$
0.11
$
(0.10
)
Realized price, with hedges
$
17.82
28%
$
21.93
-19
%
Q2 2025
Q1 2025
Change
Combined (per Boe)
Realized price, unhedged
$
35.43
$
42.58
-17
%
Cash settlements
$
0.87
$
(0.13
)
Realized price, with hedges
$
36.30
$
42.45
-14
%
From the first quarter of 2025 to the second quarter of 2025, realized prices contributed to a $494 million decrease in earnings. Unhedged oil, gas and NGL prices decreased primarily due to lower WTI, Henry Hub and Mont Belvieu index prices, respectively. The decrease in unhedged prices was partially offset by oil, gas and NGL hedge cash settlements.
We currently have approximately 30% and 35% of our remaining anticipated 2025 oil and gas production hedged, respectively. For 2026, we currently have approximately 20% and 30% of our anticipated oil and gas production hedged, respectively.
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
Q2 2025
Q1 2025
Change
LOE
$
483
$
479
1
%
Gathering, processing & transportation
219
204
7
%
Production taxes
180
212
-15
%
Property taxes
17
17
0
%
Total
$
899
$
912
-1
%
Per Boe:
LOE
$
6.31
$
6.53
-3
%
Gathering, processing & transportation
$
2.86
$
2.78
3
%
Percent of oil, gas and NGL sales:
Production taxes
6.6
%
6.8
%
-2
%
Production expenses decreased in the second quarter of 2025 primarily due to lower production taxes resulting from lower commodity prices.
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.
In the first quarter of 2025, Devon rationalized two headquarters-related real estate assets resulting in total asset impairments of $254 million. See
Note 5
in "Part I. Financial Information – Item 1. Financial Statements" of this report for further discussion.
G&A
Q2 2025
Q1 2025
Change
G&A per Boe
$
1.47
$
1.77
-17
%
Labor and benefits
$
56
$
70
-20
%
Non-labor
57
60
-5
%
Total
$
113
$
130
-13
%
G&A costs were lower in the second quarter of 2025 primarily due to lower labor and benefit costs.
Other Items
Q2 2025
Q1 2025
Change in earnings
Commodity hedge valuation changes
(1)
$
169
$
(88
)
$
257
Marketing and midstream operations
(19
)
(12
)
(7
)
Exploration expenses
20
10
(10
)
Asset dispositions
(307
)
2
309
Net financing costs
116
123
7
Other, net
11
27
16
$
572
(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.
During the second quarter of 2025, Devon sold its investment in Matterhorn for $372 million and recognized a pre-tax gain of $307 million ($239 million, net of tax), which was recorded to asset dispositions. The monetization of this investment will not change the terms or conditions of Devon's secured capacity on the pipeline. For additional information, see
Note 12
in "Part I. Financial Information - Item 1. Financial Statements" in this report.
Following the enactment of the OBBB on July 4, 2025, we anticipate our current tax rates will be lower beginning in the third quarter of 2025 and will continue through the remainder of 2025 and future periods. For additional information on income taxes, see
Note 6
in “Part I. Financial Information – Item 1. Financial Statements” in this report.
Our six months ended June 30, 2025 net earnings were $1.4 billion, compared to net earnings of $1.5 billion for the first six months ended June 30, 2024. The graph below shows the change in net earnings from the six months ended June 30, 2024 to the six months ended June 30, 2025. The material changes are further discussed by category on the following pages.
From the six months ended June 30, 2024 to the six months ended June 30, 2025, the change in volumes contributed to a $1.0 billion increase in earnings. Volumes increased primarily due to the Grayson Mill acquisition in the Rockies, which closed in the third quarter of 2024, as well as new well activity in the Delaware and Anadarko Basins.
Realized Prices
Six Months Ended June 30,
2025
Realization
2024
Change
Oil (per Bbl)
WTI index
$
67.72
$
78.82
-14
%
Realized price, unhedged
$
65.40
97%
$
77.30
-15
%
Cash settlements
$
0.64
$
(0.20
)
Realized price, with hedges
$
66.04
98%
$
77.10
-14
%
Six Months Ended June 30,
2025
Realization
2024
Change
Gas (per Mcf)
Henry Hub index
$
3.55
$
2.07
71
%
Realized price, unhedged
$
1.97
55%
$
0.92
115
%
Cash settlements
$
0.04
$
0.44
Realized price, with hedges
$
2.01
57%
$
1.36
48
%
Six Months Ended June 30,
2025
Realization
2024
Change
NGLs (per Bbl)
WTI index
$
67.72
$
78.82
-14
%
Realized price, unhedged
$
19.76
29%
$
20.17
-2
%
Cash settlements
$
0.01
$
0.02
Realized price, with hedges
$
19.77
29%
$
20.19
-2
%
Six Months Ended June 30,
2025
2024
Change
Combined (per Boe)
Realized price, unhedged
$
38.93
$
43.48
-10
%
Cash settlements
$
0.38
$
0.62
Realized price, with hedges
$
39.31
$
44.10
-11
%
From the six months ended June 30, 2024 to the six months ended June 30, 2025, realized prices contributed to a $590 million decrease in earnings. This decrease was primarily due to lower unhedged realized oil prices which decreased primarily due to a lower WTI index price. This decrease was partially offset by an increase in unhedged realized gas prices which was primarily due to higher Henry Hub index prices. Realized prices were also positively impacted by oil and gas hedge cash settlements.
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
Six Months Ended June 30,
2025
2024
Change
LOE
$
962
$
763
26
%
Gathering, processing & transportation
423
377
12
%
Production taxes
392
363
8
%
Property taxes
34
36
-6
%
Total
$
1,811
$
1,539
18
%
Per Boe:
LOE
$
6.42
$
6.12
5
%
Gathering, processing & transportation
$
2.82
$
3.02
-7
%
Percent of oil, gas and NGL sales:
Production taxes
6.7
%
6.7
%
0
%
Production expenses increased in the first six months of 2025 primarily due to increased activity in the Rockies related to the Grayson Mill acquisition in addition to new well activity in the Delaware Basin.
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.
DD&A increased in the first six months of 2025 primarily due to higher volumes driven by the Grayson Mill acquisition and new well activity in the Delaware Basin.
In the first quarter of 2025, Devon rationalized two headquarters-related real estate assets resulting in total asset impairments of $254 million. See
Note 5
in "Part I. Financial Information – Item 1. Financial Statements" of this report for further discussion.
G&A
Six Months Ended June 30,
2025
2024
Change
G&A per Boe
$
1.62
$
1.83
-12
%
Labor and benefits
$
126
$
125
1
%
Non-labor
117
103
14
%
Total
$
243
$
228
7
%
While our G&A increased in the first six months of 2025, our G&A per BOE rate has decreased due to the Grayson Mill acquisition efficiently expanding our operating scale and production.
Other Items
Six Months Ended June 30,
2025
2024
Change in earnings
Commodity hedge valuation changes
(1)
$
81
$
(200
)
$
281
Marketing and midstream operations
(31
)
(31
)
-
Exploration expenses
30
12
(18
)
Asset dispositions
(305
)
16
321
Net financing costs
239
152
(87
)
Other, net
38
27
(11
)
$
486
(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.
During the third quarter of 2024, we issued $3.25 billion of debt to partially fund the Grayson Mill acquisition. Additionally, we retired $472 million of debt in the third quarter of 2024. For additional information, see
Note 13
in "Part I. Financial Information - Item 1. Financial Statements" in this report.
During the second quarter of 2025, Devon sold its investment in Matterhorn for $372 million and recognized a pre-tax gain of $307 million ($239 million, net of tax), which was recorded to asset dispositions. The monetization of this investment will not change the terms or conditions of Devon's secured capacity on the pipeline. For additional information, see
Note 12
in "Part I. Financial Information - Item 1. Financial Statements" in this report.
Following the enactment of the OBBB on July 4, 2025, we anticipate our current tax rates will be lower beginning in the third quarter of 2025 and will continue through the remainder of 2025 and future periods. For information on income taxes, see
Note 6
in “Part I. Financial Information – Item 1. Financial Statements” in this report.
The following table presents the major changes in cash and cash equivalents for the three and six months ended June 30, 2025 and 2024.
Three Months Ended June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Operating cash flow
$
1,545
$
1,535
$
3,487
$
3,273
Capital expenditures
(956
)
(948
)
(1,890
)
(1,842
)
Acquisitions of property and equipment
(16
)
(82
)
(24
)
(90
)
Divestitures of property, equipment and investments
372
1
505
18
Investment activity, net
3
10
10
(26
)
Repurchases of common stock
(249
)
(256
)
(550
)
(461
)
Common stock dividends
(156
)
(223
)
(319
)
(522
)
Noncontrolling interest activity, net
(14
)
(7
)
(9
)
(2
)
Repayment of finance lease
—
—
(274
)
—
Other
(4
)
(10
)
(23
)
(54
)
Net change in cash, cash equivalents and restricted cash
$
525
$
20
$
913
$
294
Cash, cash equivalents and restricted cash at end of period
$
1,759
$
1,169
$
1,759
$
1,169
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 our capital expenditures, and we continued to return value to our shareholders by utilizing cash flow and cash balances for share repurchases and dividends.
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 June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Delaware Basin
$
488
$
539
$
956
$
1,073
Rockies
233
95
455
170
Eagle Ford
142
202
293
359
Anadarko Basin
39
59
84
119
Other
1
1
2
3
Total oil and gas
903
896
1,790
1,724
Midstream
34
30
66
67
Other
19
22
34
51
Total capital expenditures
$
956
$
948
$
1,890
$
1,842
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 moderating our production growth and maximizing our returns. As such, our capital expenditures for the first six months of 2025 represented approximately 54% of our operating cash flow.
Divestitures of Property, Equipment and Investments
During the first six months of 2025, we generated additional cash flow by monetizing our investment in Matterhorn for $372 million and divesting headquarters-related real estate assets for $134 million as part of our real estate rationalization initiatives. These proceeds will be used to further strengthen our investment-grade financial position. For additional information regarding these divestitures, see
Note 12
and
Note 5
in “Part I. Financial Information – Item 1. Financial Statements” in this report.
During the first six months of 2025 and 2024, we received $20 million in contingent earnout payments related to assets previously sold. For additional information, see
Note 2
in “Part I. Financial Information – Item 1. Financial Statements” in this report.
During the first six months of 2025 and 2024, we received distributions from our investments of $20 million and $22 million, respectively. We contributed $10 million and $48 million to our investments during the first six months of 2025 and 2024, respectively.
Shareholder Distributions and Stock Activity
We repurchased approximately 16.4 million shares of common stock for $550 million and approximately 9.6 million shares of common stock for $449 million under the share repurchase program authorized by our Board of Directors in the first six months of 2025 and 2024, respectively. For additional information, see
Note 16
in “Part I. Financial Information – Item 1. Financial Statements” in this report.
The following table summarizes our common stock dividends during the second quarter and total for the first six months of 2025 and 2024. Devon most recently raised its fixed dividend by 9% from $0.22 to $0.24 per share in the first quarter of 2025.
Dividends
Rate Per Share
2025:
First quarter
$
163
$
0.24
Second quarter
156
$
0.24
Total year-to-date
$
319
2024:
First quarter
$
299
$
0.44
Second quarter
223
$
0.35
Total year-to-date
(1)
$
522
(1)
In the first six months of 2024, Devon paid variable dividends totaling $241 million in addition to its recurring fixed dividend.
Noncontrolling Interest Activity, net
During the first six months of 2025 and 2024, we distributed $23 million and $26 million, respectively, to our noncontrolling interests in CDM. During the first six months of 2025 and 2024, we received $14 million and $24 million, respectively, in contributions from our noncontrolling interests.
Repayment of Finance Lease
During the first six months of 2025, we paid $274 million in cash to extinguish a financing lease related to a headquarters-related real estate asset as part of our real estate rationalization initiatives. For additional information, see
Note 14
in “Part I. Financial Information – Item 1. Financial Statements” in this report.
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.
On September 27, 2024, Devon acquired the Williston Basin business of Grayson Mill. This acquisition added a high-margin production mix that has enhanced our position and efficiently expanded our operating scale and production. The acquisition continues to deliver sustainable accretion to earnings and free cash flow further supporting our cash-return business model, which moderates growth, emphasizes capital efficiencies and prioritizes cash returns to shareholders.
To emphasize our commitment to maximizing free cash flow and creating value for shareholders, we recently announced a business optimization plan which is anticipated to improve our annual pre-tax cash flow by $1.0 billion. These optimization initiatives will be primarily focused on capital efficiencies, production optimization, commercial opportunities and corporate cost reductions. These savings are on track to be achieved by the end of 2026 with approximately $400 million expected to be completed by the end of 2025.
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 return cash to shareholders.
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 second quarter of 2025, we held approximately $1.8 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 activity, weather, changes in public policy, including the imposition of tariffs by the U.S. or other countries, 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 June 30, 2025 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. We remain committed to capital discipline and focused on delivering the objectives that underpin our capital plan for 2025. However, if commodity prices decline further, we will adapt our plan by reducing activity in order to maximize free 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.
Additionally, the economic uncertainty in global trade arising from geopolitical events and shifting trade policies, such as the imposition of tariffs by the U.S., may contribute to higher inflation rates and disrupt supply chains, negatively impacting our cash flow. While we actively work to mitigate the impact of these potential risks through operational efficiencies gained from the scale of our operations as well as by leveraging long-standing relationships with our suppliers, the ultimate impacts remain uncertain.
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 June 30, 2025, we had approximately $3.0 billion of available borrowing capacity under our Senior Credit Facility. This credit facility supports our $3.0 billion of short-term credit under our commercial paper program. At June 30, 2025, 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 our Term Loan or any credit facility borrowings and the ability to economically access debt markets in the future.
Cash Returns to Shareholders
We are committed to returning cash to shareholders through dividends 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. 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 August 2025, Devon announced a cash dividend in the amount of $0.24 per share payable in the third quarter of 2025 and will total approximately $151 million.
Our Board of Directors has authorized a $5.0 billion share repurchase program that expires on June 30, 2026. Through July 2025, we had executed $4.0 billion of the authorized program.
Capital Expenditures
Our capital expenditures budget for the remainder of 2025 is expected to be approximately $1.7 billion to $1.9 billion.
Acquisition of Noncontrolling Interests in CDM
On August 1, 2025, Devon completed the acquisition of all the outstanding noncontrolling interests in CDM for $260 million. Following this transaction, we will no longer distribute a portion of CDM’s cash flows to noncontrolling interest holders.
Critical Accounting Est
imates
Purchase Accounting
Periodically, we acquire assets and assume liabilities in transactions accounted for as business combinations, such as the acquisition of the Williston Basin business of Grayson Mill. In connection with the acquisition, we allocated the $5.0 billion of purchase price consideration to the assets acquired and liabilities assumed based on estimated fair values as of the date of the acquisition.
We made a number of assumptions in estimating the fair value of assets acquired and liabilities assumed in the acquisition. The most significant assumptions relate to the estimated fair values of proved and unproved oil and gas properties. Since sufficient market data was not available regarding the fair values of proved and unproved oil and gas properties, we prepared estimates and engaged third-party valuation experts. Significant judgments and assumptions are inherent in these estimates and include, among other things, estimates of reserve quantities, estimates of future commodity prices, drilling plans, expected development costs, lease operating costs, reserve risk adjustment factors and an estimate of an applicable market participant discount rate that reflects the risk of the underlying cash flow estimates.
Estimated fair values ascribed to assets acquired can have a significant impact on future results of operations presented in Devon’s financial statements. A higher fair value ascribed to a property results in higher DD&A expense, which results in lower net earnings. Fair values are based on estimates of future commodity prices, reserve quantities, development costs and operating costs. In the event that future commodity prices or reserve quantities are lower than those used as inputs to determine estimates of acquisition date fair values, the likelihood increases that certain costs may be determined to not be recoverable.
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, non-cash asset impairments (including unproved asset impairments), deferred tax asset valuation allowance, fair value changes in derivative financial instruments and restructuring and transaction costs.
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 June 30,
Six Months Ended June 30,
Before Tax
After Tax
After NCI
Per Diluted Share
Before Tax
After Tax
After NCI
Per Diluted Share
2025:
Earnings attributable to Devon (GAAP)
$
1,161
$
917
$
899
$
1.41
$
1,807
$
1,426
$
1,393
$
2.17
Adjustments:
Asset dispositions
(307
)
(239
)
(239
)
(0.38
)
(305
)
(238
)
(238
)
(0.37
)
Asset and exploration impairments
4
2
2
0.01
263
204
204
0.32
Fair value changes in financial instruments
(172
)
(133
)
(133
)
(0.21
)
(84
)
(65
)
(65
)
(0.10
)
Restructuring and transaction costs
9
7
7
0.01
27
21
21
0.03
Core earnings attributable to Devon (Non-GAAP)
$
695
$
554
$
536
$
0.84
$
1,708
$
1,348
$
1,315
$
2.05
2024:
Earnings attributable to Devon (GAAP)
$
1,040
$
855
$
844
$
1.34
$
1,808
$
1,464
$
1,440
$
2.29
Adjustments:
Asset dispositions
15
11
11
0.02
16
12
12
0.02
Asset and exploration impairments
1
1
1
—
1
1
1
—
Deferred tax asset valuation allowance
—
4
4
0.01
—
3
3
—
Fair value changes in financial instruments
32
25
25
0.04
204
159
159
0.25
Core earnings attributable to Devon (Non-GAAP)
$
1,088
$
896
$
885
$
1.41
$
2,029
$
1,639
$
1,615
$
2.56
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, 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 June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Net earnings (GAAP)
$
917
$
855
$
1,426
$
1,464
Financing costs, net
116
76
239
152
Income tax expense
244
185
381
344
Exploration expenses
20
3
30
12
Depreciation, depletion and amortization
914
768
1,826
1,490
Asset impairments
—
—
254
—
Asset dispositions
(307
)
15
(305
)
16
Share-based compensation
22
26
46
50
Derivative and financial instrument non-cash valuation changes
(169
)
31
(81
)
200
Accretion on discounted liabilities and other
11
5
38
27
EBITDAX (Non-GAAP)
1,768
1,964
3,854
3,755
Marketing and midstream revenues and expenses, net
19
10
31
31
Commodity derivative cash settlements
(67
)
(54
)
(57
)
(78
)
General and administrative expenses, cash-based
91
88
197
178
Field-level cash margin (Non-GAAP)
$
1,811
$
2,008
$
4,025
$
3,886
Item 3.
Quantitative and Qualitati
ve Disclosures About Market Risk
Commodity Price Risk
As of June 30, 2025, we have commodity derivatives that pertain to a portion of our estimated production for the last six months of 2025, as well as for 2026 and 2027. 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 June 30, 2025, a 10% change in the forward curves associated with our commodity derivative instruments would have changed our net positions by approximately $270 million.
Interest Rate Risk
At June 30, 2025, we had total debt of $8.9 billion. Of this debt, $7.9 billion was comprised of debentures and notes that have fixed interest rates which averaged 5.7%. We also have a $1.0 billion Term Loan which has a variable interest rate that is adjusted monthly. The interest rate on the Term Loan was 5.8% at June 30, 2025.
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 June 30, 2025 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.
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
2024 Annual Report on Form 10-K
, including the updates below, 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 17
in “Part I. Financial Information – Item 1. Financial Statements” of this report.
As previously disclosed, we received separate notices of violation from the New Mexico Environment Department (“NMED”) relating to certain alleged violations of New Mexico environmental laws by WPX Energy Permian, LLC, a wholly-owned subsidiary of Devon (“WPX Permian”), and CDM, a joint venture of the Company, respectively. WPX Permian and CDM subsequently entered into separate settlement agreements with the NMED to resolve these respective matters, both of which resulted in a fine or penalty below $300,000.
Item 2.
Unregistered Sales of Equi
ty Securities and Use of Proceeds
The following table provides information regarding purchases of our common stock that were made by us during the second quarter of 2025 (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)
April 1 - April 30
2,719
$
30.14
2,584
$
1,278
May 1 - May 31
2,398
$
32.02
2,396
$
1,201
June 1 - June 30
2,891
$
32.93
2,886
$
1,107
Total
8,008
$
31.71
7,866
(1)
In addition to shares purchased under the share repurchase program described below, these amounts include 142 thousand 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 approvals, including most recently in July 2024, Devon's Board of Directors expanded the share repurchase program authorization to $5.0 billion, with a June 30, 2026 expiration date. In the second quarter of 2025, we repurchased 7.9 million common shares for $249 million, or $31.78 per share, under this share repurchase program. For additional information, see
Note 16
in “Part I. Financial Information – Item 1. Financial Statements” in this report.
Item 3.
Defaults Upo
n Senior Securities
Not applicable.
Item 4.
Mine Saf
ety Disclosures
Not applicable.
Item 5.
Other
Information
During the three months ended June 30, 2025, 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).
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 Linkbase Documents.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*Indicates management contract or compensatory plan or arrangement.
SIGNAT
URES
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.
Insider Ownership of DEVON ENERGY CORP/DE
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