DEVON ENERGY CORP/DE
DE
OK
false
0001090012
0001090012
2024-05-01
2024-05-01
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 1, 2024
Devon Energy Corporation
(Exact name of registrant as specified in its charter)
DELAWARE 001-32318 73-1567067
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
333 W. SHERIDAN AVE. 73102-5015
,
OKLAHOMA CITY
,
OKLAHOMA
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(405)
235-3611
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form
8-K
filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule
14a-12
under the Exchange Act (17 CFR
240.14a-12)
Pre-commencement
communications pursuant to Rule
14d-2(b)
under the Exchange Act (17 CFR
240.14d-2(b))
Pre-commencement
communications pursuant to Rule
13e-4(c)
under the Exchange Act (17 CFR
240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Name of each exchange
Symbol(s) on which registered
Common Stock, par value $0.10 per share DVN The New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 ((s) 230.405 of this
chapter) or Rule
12b-2
of the Securities Exchange Act of 1934
((s) 240.12b-2
of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act.
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Item 2.02 Results of Operations and Financial Condition.
On May 1, 2024, Devon Energy Corporation (the "Company") announced its
financial and operational results for the quarterly period ended March 31,
2024. In connection with this announcement, the Company provided an earnings
release and certain supplemental financial information (including guidance and
hedging information). Copies of these documents are furnished as Exhibits 99.1
and 99.2, respectively, to this report and, along with certain other
materials, will be available on the Company's website at www.devonenergy.com.
The information contained in this report and the exhibits hereto shall not be
deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and shall not be incorporated by
reference into any filings made by the Company under the Securities Act of
1933, as amended, or the Exchange Act, except as may be expressly set forth by
specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description of Exhibits
No.
99.1 Earnings release, dated May 1, 2024.
99.2 Supplemental financial information (including guidance and hedging information).
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DEVON ENERGY CORPORATION
By: /s/ Jeffrey L. Ritenour
Jeffrey L. Ritenour
Executive Vice President and Chief Financial Officer
Date: May 1, 2024
Exhibit 99.1
Devon Energy Corporation
333 West Sheridan Avenue
Oklahoma City, OK 73102-5015
Devon Energy Reports First-Quarter 2024 Results and Declares Quarterly Dividend
OKLAHOMA CITY - May
1, 2024
- Devon Energy Corp. (NYSE: DVN) today reported financial and operational
results for thefirst-quarter 2024. Supplemental financial tables and
forward-looking guidance are available on the company's website at
www.devonenergy.com
.
KEY FINANCIAL AND OPERATIONAL HIGHLIGHTS
. First quarter production averaged 664,000
oil-equivalent
barrels per day,exceeding guidance by 4 percent
. Delaware Basin production increased 5 percent year over year, driving results that were favorable toguidance
. Capital activity highlighted by 20 percent-plus improvement in Delaware Basin well productivity year over year
. Operating cash flow totaled $1.7 billion and free cash flow reached $844 million in the first quarterof 2024
. Repurchased 4.7 million shares of common stock at a total cost of $205 million in the first quarter
. Declared fixed-plus-variable dividend payout of $0.35 per share based on first quarter results
. Balance sheet continued to strengthen with cash balances increasing $274 million to a total of$1.1 billion
. Year-to-date
operatingperformance drives improved production and financial outlook in 2024
CEO PERSPECTIVE
"By all measures, Devon delivered an outstanding set of results in the first
quarter that demonstrated the comprehensive execution we achieved acrossevery
element of our disciplined strategy," said Rick Muncrief, president and CEO.
"This success was showcased by excellent well productivityand efficiency gains
from our Delaware-focused program that drove volumes above guidance by a wide
margin. Furthermore, our operating margins benefitted from the team's efforts
to drive
per-unit
costslower than plan, allowing us to capture the full benefit of rising oil
prices during the quarter.
"Based on the impressive operating momentum wehave established year to date,
we have raised our second quarter and full-year 2024 guidance. This improved
outlook raises production targets and increases free cash flow projections,
which will enhance our ability to accelerate the return ofcapital to
shareholders," Muncrief added.
FINANCIAL RESULTS
Devon reported net earnings of $596 million, or $0.94 per diluted share, in
the first quarter of 2024. Adjusting for items analysts typically exclude
fromestimates, the company's core earnings were $730 million, or $1.16 per
diluted share.
Devon's operating cash flow totaled$1.7 billion in the first quarter, a 4
percent increase versus the
year-ago
period. This level of cash flow funded all the company's capital requirements
and resulted in $844 million offree cash flow for the quarter.
The company's investment-grade financial position continued to strengthen in
the first quarter with cash balancesincreasing by $274 million to a total of
$1.1 billion. The company exited the quarter with outstanding debt of $6.1
billion and a net
debt-to-EBITDAX
ratio of 0.7 times.
RETURN OF CAPITAL
Based on thefirst quarter financial performance, Devon declared a
fixed-plus-variable dividend of $0.35 per share, payable on June 28, 2024, to
shareholders of record at the close of business on June 14, 2024. The dividend
payout consists of the fixeddividend at $0.22 per share and a variable
distribution of $0.13 per share.
1
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The company also returned capital to shareholders through the continued
execution of its share repurchaseprogram. In the first quarter, Devon
repurchased 4.7 million shares at a total cost of $205 million. Since program
inception in late 2021, the company has repurchased 49.5 million shares, at a
total cost of $2.5 billion.
OPERATING RESULTS
Devon's capital activity in thefirst quarter averaged 24 operated drilling
rigs and 7 completion crews across its asset portfolio. This level of activity
resulted in 102 gross operated wells being placed online, with an average
lateral length of 9,300 feet.
Production averaged 664,000
oil-equivalent
barrels (Boe) per day in the first quarter, exceeding the company'sguidance by
4 percent. Results were driven by better-than-planned well productivity, cycle
time improvements that brought forward activity and the easing of
infrastructure constraints in the Delaware Basin. Devon's oil production
totaled319,000 barrels per day in the quarter, which was 48 percent of total
volumes.
Upstream capital spending was at the bottom end of the company'sguidance range
in the first quarter totaling $842 million. This represents a 3 percent
decrease in upstream spending compared to the fourth quarter of 2023.
Midstream, carbon and corporate capital totaled $95 million in the quarter.
Devon's first quarter operating performance was driven by its Delaware Basin
asset, which accounted for 66 percent of companywide volumes at437,000 Boe per
day. This production result represents a growth rate of 5 percent compared to
the
year-ago
period, driven by 59 gross operated wells being placed online during the
quarter. Average
30-day
production rates from this activity reached 3,200 Boe per day, representing a
20 percent-plus improvement in well productivity versus the year ago period.
Production costs, including taxes, averaged $12.43 per Boe in the first
quarter. This
low-cost
structure, coupled withthe benefits of high-margin production resulted in
field-level cash margins of $31.09 per Boe.
2024 OUTLOOK
Based on the strength of first quarter results, Devon is increasing its
full-year 2024 production forecast by 2 percent to a range of 655,000 to
675,000Boe per day. This incremental production in 2024 is expected to be
delivered without an increase in capital spending. The company expects to
deliver this improved production outlook with capital spending in a range of
$3.3 billion to$3.6 billion, a 10 percent decline versus 2023.
Due to the addition of a fourth Delaware completion crew in January, the
company's capitalprogram in 2024 is expected to be weighted towards the first
half of the year. As a result of this activity timing, second quarter
production is expected to increase to a range of 670,000 to 690,000 Boe per
day and capital spending is estimated toapproximate $950 million for the
quarter.
Additional details of Devon's forward-looking guidance for the second quarter
and full-year 2024 areavailable on the company's website at
www.devonenergy.com
.
CONFERENCE CALL WEBCAST AND SUPPLEMENTAL EARNINGS MATERIALS
Also provided with today's release is the company's detailed earnings
presentation that is available on the company's website at
www.devonenergy.com
. The company's first-quarter conference call will be held at 10:00 a.m.
Central (11:00 a.m. Eastern) on Thursday, May 2, 2024, and will serve
primarily as a forum for analyst and investor questions and answers.
ABOUT DEVON ENERGY
Devon Energy is a leading oiland gas producer in the U.S. with a premier
multi-basin portfolio headlined by a world-class acreage position in the
Delaware Basin. Devon's disciplined cash-return business model is designed to
achieve strong returns, generate free cash flowand return capital to
shareholders, while focusing on safe and sustainable operations. For more
information, please visit
www.devonenergy.com
.
Investor Contacts Media Contact
Scott Coody, Brooke Baum,
405-552-4735 405-552-3448
Chris Carr,
405-228-2496
2
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NON-GAAP
DISCLOSURES
This press release includes
non-GAAP
(generally accepted accounting principles) financial measures. Such
non-GAAP
measures are not alternatives to GAAP measures, and you should not consider
these
non-GAAP
measures in isolation or as a substitute for analysis of results asreported
under GAAP. Reconciliations of these
non-GAAP
measures and other disclosures are provided within the supplemental financial
tables that are available on the company's website and in the relatedForm 10-Q
filed with the Securities and Exchange Commission (the "SEC").
FORWARD LOOKING STATEMENTS
This press release includes "forward-looking statements" within the meaning of
the federal securities laws. Such statements include thoseconcerning strategic
plans, our expectations and objectives for future operations, as well as other
future events or conditions, and are often identified by use of the words and
phrases "expects," "believes," "will,""would," "could," "continue," "may,"
"aims," "likely to be," "intends," "forecasts," "projections," "estimates,"
"plans,""expectations," "targets," "opportunities," "potential," "anticipates,"
"outlook" and other similar terminology. All statements, other than statements
of historical facts, included in thispress release that address activities,
events or developments that Devon expects, believes or anticipates will or may
occur in the future are forward-looking statements. Such statements are
subject to a number of assumptions, risks anduncertainties, many of which are
beyond our control. Consequently, actual future results could differ
materially and adversely from our expectations due to a number of factors,
including, but not limited to: the volatility of oil, gas and NGLprices;
uncertainties inherent in estimating oil, gas and NGL reserves; the extent to
which we are successful in acquiring and discovering additional reserves; the
uncertainties, costs and risks involved in our operations; risks related to
ourhedging activities; our limited control over third parties who operate some
of our oil and gas properties; midstream capacity constraints and potential
interruptions in production, including from limits to the build out of
midstream infrastructure;competition for assets, materials, people and
capital; regulatory restrictions, compliance costs and other risks relating to
governmental regulation, including with respect to federal lands,
environmental matters and seismicity; climate change andrisks related to
regulatory, social and market efforts to address climate change; governmental
interventions in energy markets; counterparty credit risks; risks relating to
our indebtedness; cybersecurity risks; risks relating to global pandemics;the
extent to which insurance covers any losses we may experience; risks related
to shareholder activism; our ability to successfully complete mergers,
acquisitions and divestitures; our ability to pay dividends and make share
repurchases; and anyof the other risks and uncertainties discussed in Devon's
2023 Annual Report on Form
10-K
(the "2023 Form
10-K")
or other filings with the SEC.
The forward-looking statements included in this press release speak only as of
the date of this press release, represent management's currentreasonable
expectations as of the date of this press release and are subject to the risks
and uncertainties identified above as well as those described elsewhere in the
2023 Form
10-K
and in other documents wefile from time to time with the SEC. We cannot
guarantee the accuracy of our forward-looking statements, and readers are
urged to carefully review and consider the various disclosures made in the
2023 Form
10-K
and in other documents we file from time to time with the SEC. All subsequent
written and oral forward-looking statements attributable to Devon, or persons
acting on its behalf, are expressly qualified intheir entirety by the
cautionary statements above. We do not undertake, and expressly disclaim, any
duty to update or revise our forward-looking statements based on new
information, future events or otherwise.
3
Exhibit 99.2
Devon Energy First-Quarter 2024
Supplemental Tables
TABLE OF CONTENTS: PAGE:
Consolidated Statements of Earnings 2
Supplemental Information for Consolidated Statements of Earnings 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Production 6
Capital Expenditures and Supplemental Information for Capital Expenditures 7
Realized Pricing 8
Asset Margins 9
Core Earnings and EBITDAX 10
Net Debt, Net 11
Debt-to-EBITDAX,
Free Cash Flow, Adjusted Free Cash Flow and Reinvestment Rate
1
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CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except per share amounts) 2024 2023
Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Oil, gas and NGL sales $ 2,629 $ 2,737 $ 2,882 $ 2,493 $ 2,679
Oil, gas and NGL derivatives (145 ) 324 (194 ) (76 ) 64
(1)
Marketing and midstream revenues 1,112 1,084 1,148 1,037 1,080
Total revenues 3,596 4,145 3,836 3,454 3,823
Production expenses 751 759 757 719 693
(2)
Exploration expenses 9 4 3 10 3
Marketing and midstream expenses 1,133 1,093 1,160 1,051 1,105
Depreciation, depletion and amortization 722 650 651 638 615
Asset dispositions 1 11 -- (41 ) --
General and administrative expenses 114 111 99 92 106
Financing costs, net 76 77 81 78 72
(3)
Other, net 22 10 13 10 5
Total expenses 2,828 2,715 2,764 2,557 2,599
Earnings before income taxes 768 1,430 1,072 897 1,224
Income tax expense 159 269 152 199 221
(4)
Net earnings 609 1,161 920 698 1,003
Net earnings attributable to noncontrolling interests 13 9 10 8 8
Net earnings attributable to Devon $ 596 $ 1,152 $ 910 $ 690 $ 995
Net earnings per share:
Basic net earnings per share $ 0.95 $ 1.81 $ 1.43 $ 1.08 $ 1.53
Diluted net earnings per share $ 0.94 $ 1.81 $ 1.42 $ 1.07 $ 1.53
Weighted average common shares outstanding:
Basic 629 635 637 638 645
Diluted 632 638 639 639 647
2
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SUPPLEMENTAL INFORMATION FOR CONSOLIDATED STATEMENTS OF EARNINGS
(1) OIL, GAS AND NGL DERIVATIVES
(in millions) 2024 2023
Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Derivative cash settlements $ 24 $ 8 $ (11 ) $ 37 $ 13
Derivative valuation changes (169 ) 316 (183 ) (113 ) 51
Oil, gas and NGL derivatives $ (145 ) $ 324 $ (194 ) $ (76 ) $ 64
(2) PRODUCTION EXPENSES
(in millions) 2024 2023
Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Lease operating expense $ 380 $ 381 $ 367 $ 353 $ 327
Gathering, processing & transportation 180 181 178 177 166
Production taxes 175 182 191 165 175
Property taxes 16 15 21 24 25
Production expenses $ 751 $ 759 $ 757 $ 719 $ 693
(3) FINANCING COSTS, NET
(in millions) 2024 2023
Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Interest based on outstanding debt $ 87 $ 87 $ 93 $ 96 $ 93
Interest income (13 ) (12 ) (11 ) (15 ) (17 )
Other 2 2 (1 ) (3 ) (4 )
Financing costs, net $ 76 $ 77 $ 81 $ 78 $ 72
(4) INCOME TAX EXPENSE
(in millions) 2024 2023
Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Current expense $ 119 $ 105 $ 139 $ 80 $ 141
Deferred expense 40 164 13 119 80
Income tax expense $ 159 $ 269 $ 152 $ 199 $ 221
3
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CONSOLIDATED BALANCE SHEETS
(in millions) 2024 2023
Quarter Quarter Quarter Quarter Quarter
1 4 3 2 1
Current
assets:
Cash, cash equivalents $ 1,149 $ 875 $ 761 $ 488 $ 887
and restricted cash
Accounts 1,670 1,573 1,853 1,519 1,615
receivable
Inventory 234 249 233 201 212
Other current 345 460 365 397 475
assets
Total current 3,398 3,157 3,212 2,605 3,189
assets
Oil and gas property and equipment, based 18,033 17,825 17,563 17,317 16,932
on successful efforts accounting, net
Other property and 1,551 1,503 1,468 1,446 1,583
equipment, net
Total property and 19,584 19,328 19,031 18,763 18,515
equipment, net
Goodwill 753 753 753 753 753
Right-of-use 276 267 261 266 219
assets
Investments 713 666 671 675 469
Other long-term 254 319 313 293 275
assets
Total $ 24,978 $ 24,490 $ 24,241 $ 23,355 $ 23,420
assets
Current
liabilities:
Accounts $ 879 $ 760 $ 812 $ 843 $ 935
payable
Revenues and 1,268 1,222 1,434 1,199 1,266
royalties payable
Short-term 479 483 487 244 247
debt
Income taxes 189 67 58 1 154
payable
Other current 451 417 539 382 329
liabilities
Total current 3,266 2,949 3,330 2,669 2,931
liabilities
Long-term 5,668 5,672 5,675 6,169 6,175
debt
Lease 301 295 290 299 256
liabilities
Asset retirement 683 643 641 548 546
obligations
Other long-term 841 876 850 858 866
liabilities
Deferred 1,878 1,838 1,676 1,662 1,543
income taxes
Stockholders'
equity:
Common 63 64 64 64 64
stock
Additional 5,718 5,939 6,153 6,131 6,344
paid-in
capital
Retained 6,509 6,195 5,535 4,940 4,712
earnings
Accumulated other (123 ) (124 ) (113 ) (114 ) (115 )
comprehensive loss
Treasury -- (13 ) -- -- (28 )
stock
Total stockholders' equity 12,167 12,061 11,639 11,021 10,977
attributable to Devon
Noncontrolling 174 156 140 129 126
interests
Total 12,341 12,217 11,779 11,150 11,103
equity
Total liabilities $ 24,978 $ 24,490 $ 24,241 $ 23,355 $ 23,420
and equity
4
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) 2024 2023
Quarter Quarter Quarter Quarter Quarter
1 4 3 2 1
Cash flows from
operating activities:
Net $ 609 $ 1,161 $ 920 $ 698 $ 1,003
earnings
Adjustments to reconcile net earnings
to net cash from operating activities:
Depreciation, depletion 722 650 651 638 615
and amortization
Leasehold -- 1 1 3 --
impairments
Accretion (amortization) -- 1 (2 ) (8 ) (7 )
of liabilities
Total (gains) losses on 145 (324 ) 194 76 (64 )
commodity derivatives
Cash settlements on 24 8 (11 ) 37 13
commodity derivatives
(Gains) losses on 1 11 -- (41 ) --
asset dispositions
Deferred income 40 164 13 119 80
tax expense
Share-based 24 23 22 25 23
compensation
Other 3 (3 ) (2 ) (2 ) 2
Changes in assets and 170 45 (61 ) (140 ) 12
liabilities, net
Net cash from 1,738 1,737 1,725 1,405 1,677
operating activities
Cash flows from
investing activities:
Capital (894 ) (910 ) (882 ) (1,079 ) (1,012 )
expenditures
Acquisitions of (8 ) (10 ) (23 ) (18 ) (13 )
property and equipment
Divestitures of 17 3 1 1 21
property and equipment
Distributions 11 8 7 9 8
from investments
Contributions to (47 ) (1 ) -- (15 ) (37 )
investments and other
Net cash from (921 ) (910 ) (897 ) (1,102 ) (1,033 )
investing activities
Cash flows from
financing activities:
Repayments of -- -- (242 ) -- --
long-term debt
Repurchases of (205 ) (234 ) -- (228 ) (517 )
common stock
Dividends paid (299 ) (488 ) (312 ) (462 ) (596 )
on common stock
Contributions from 12 19 10 8 --
noncontrolling interests
Distributions to (7 ) (12 ) (9 ) (13 ) (11 )
noncontrolling interests
Shares exchanged for tax (42 ) (1 ) -- (9 ) (87 )
withholdings and other
Net cash from (541 ) (716 ) (553 ) (704 ) (1,211 )
financing activities
Effect of exchange (2 ) 3 (2 ) 2 --
rate changes on cash
Net change in cash, cash 274 114 273 (399 ) (567 )
equivalents and restricted cash
Cash, cash equivalents and restricted 875 761 488 887 1,454
cash at beginning of period
Cash, cash equivalents and $ 1,149 $ 875 $ 761 $ 488 $ 887
restricted cash at end of period
Reconciliation of cash, cash
equivalents and restricted cash:
Cash and cash $ 1,126 $ 853 $ 654 $ 372 $ 761
equivalents
Restricted 23 22 107 116 126
cash
Total cash, cash equivalents $ 1,149 $ 875 $ 761 $ 488 $ 887
and restricted cash
5
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PRODUCTION
2024 2023
Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Oil (MBbls/d)
Delaware Basin 208 208 215 209 211
Eagle Ford 43 43 40 45 40
Anadarko Basin 11 13 14 15 15
Williston Basin 40 36 35 36 36
Powder River Basin 13 13 13 14 14
Other 4 4 4 4 4
Total 319 317 321 323 320
Natural gas liquids (MBbls/d)
Delaware Basin 113 112 112 105 97
Eagle Ford 14 15 15 16 15
Anadarko Basin 26 29 27 31 26
Williston Basin 10 10 9 9 8
Powder River Basin 2 3 2 2 2
Other -- -- 1 1 1
Total 165 169 166 164 149
Gas (MMcf/d)
Delaware Basin 695 673 680 636 640
Eagle Ford 79 81 78 86 82
Anadarko Basin 223 225 235 254 237
Williston Basin 63 61 58 59 54
Powder River Basin 18 20 18 18 16
Other 1 1 1 1 1
Total 1,079 1,061 1,070 1,054 1,030
Total oil equivalent (MBoe/d)
Delaware Basin 437 433 440 420 415
Eagle Ford 70 72 68 74 68
Anadarko Basin 74 79 80 89 81
Williston Basin 61 55 54 56 53
Powder River Basin 18 19 19 19 19
Other 4 4 4 4 5
Total 664 662 665 662 641
6
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CAPITAL EXPENDITURES
(in millions) 2024 2023
Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Delaware Basin $ 555 $ 506 $ 503 $ 583 $ 572
Eagle Ford 156 194 198 179 188
Anadarko Basin 59 51 13 67 66
Williston Basin 27 55 69 89 73
Powder River Basin 43 55 45 39 32
Other 2 3 2 1 2
Total upstream capital $ 842 $ 864 $ 830 $ 958 $ 933
Carbon capital 32 31 25 30 27
Midstream and Corporate 63 45 41 30 28
Acquisitions 8 11 23 18 13
Total capital $ 945 $ 951 $ 919 $ 1,036 $ 1,001
SUPPLEMENTAL INFORMATION FOR CAPITAL EXPENDITURES
GROSS OPERATED SPUDS
2024 2023
Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Delaware Basin 76 60 64 65 60
Eagle Ford 30 26 28 18 23
Anadarko Basin 4 17 10 9 19
Williston Basin 1 -- 7 8 6
Powder River Basin 3 5 4 3 3
Total 114 108 113 103 111
GROSS OPERATED WELLS
TIED-IN
2024 2023
Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Delaware Basin 59 62 59 76 42
Eagle Ford 26 24 13 29 26
Anadarko Basin 5 4 -- 16 7
Williston Basin 10 6 6 8 17
Powder River Basin 2 4 3 2 5
Total 102 100 81 131 97
NET OPERATED WELLS
TIED-IN
2024 2023
Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Delaware Basin 50 47 49 61 40
Eagle Ford 21 20 12 25 18
Anadarko Basin 2 1 -- 7 3
Williston Basin 10 3 4 6 15
Powder River Basin 2 4 3 2 4
Total 85 75 68 101 80
AVERAGE LATERAL LENGTH
(based on wells 2024 2023
tied-in)
Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Delaware Basin 10,300' 10,300' 9,700' 10,100' 9,900'
Eagle Ford 6,700' 7,900' 5,000' 6,200' 6,700'
Anadarko Basin 10,000' 12,500' -- 9,100' 9,300'
Williston Basin 9,600' 12,300' 12,300' 10,000' 11,500'
Powder River Basin 9,600' 9,600' 13,300' 15,000' 10,700'
Total 9,300' 9,900' 9,300' 9,200' 9,300'
7
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REALIZED PRICING
BENCHMARK PRICES
(average prices) 2024 2023
Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Oil ($/Bbl) - West Texas Intermediate (Cushing) $ 77.01 $ 78.48 $ 82.06 $ 73.76 $ 76.17
Natural Gas ($/Mcf) - Henry Hub $ 2.25 $ 2.88 $ 2.54 $ 2.09 $ 3.44
NGL ($/Bbl) - Mont Belvieu Blended $ 27.51 $ 25.52 $ 26.62 $ 23.99 $ 29.48
REALIZED PRICES
2024 2023
Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Oil (Per Bbl)
Delaware Basin $ 76.23 $ 77.75 $ 80.72 $ 71.86 $ 74.43
Eagle Ford 76.51 78.51 80.85 72.36 74.06
Anadarko Basin 74.91 77.09 79.86 71.52 74.14
Williston Basin 71.13 74.26 79.50 70.80 74.09
Powder River Basin 71.93 74.58 78.51 70.75 74.30
Realized price without hedges 75.40 77.32 80.48 71.74 74.32
Cash settlements (0.25 ) (0.34 ) (0.67 ) -- (0.10 )
Realized price, including cash settlements $ 75.15 $ 76.98 $ 79.81 $ 71.74 $ 74.22
Natural gas liquids (Per Bbl)
Delaware Basin $ 20.55 $ 19.93 $ 20.76 $ 18.07 $ 23.72
Eagle Ford 23.67 22.67 23.70 20.22 26.18
Anadarko Basin 24.77 21.44 23.37 19.42 27.88
Williston Basin 6.27 2.95 4.09 2.52 8.97
Powder River Basin 32.91 28.80 29.63 24.52 35.72
Realized price without hedges 20.81 19.67 20.72 17.79 24.12
Cash settlements (0.08 ) -- -- -- --
Realized price, including cash settlements $ 20.73 $ 19.67 $ 20.72 $ 17.79 $ 24.12
Gas (Per Mcf)
Delaware Basin $ 1.19 $ 1.76 $ 1.94 $ 1.18 $ 1.90
Eagle Ford 1.89 2.44 2.31 1.80 2.99
Anadarko Basin 1.92 2.38 2.17 1.72 3.14
Williston Basin N/M N/M N/M N/M 1.57
Powder River Basin 2.29 2.52 2.53 2.41 4.25
Realized price without hedges 1.30 1.83 1.92 1.27 2.29
Cash settlements 0.32 0.19 0.09 0.39 0.18
Realized price, including cash settlements $ 1.62 $ 2.02 $ 2.01 $ 1.66 $ 2.47
Total oil equivalent (Per Boe)
Delaware Basin $ 43.55 $ 45.38 $ 47.68 $ 42.05 $ 46.35
Eagle Ford 53.81 54.64 55.71 49.69 52.81
Anadarko Basin 25.48 26.96 27.88 24.04 32.16
Williston Basin 47.37 47.77 52.64 45.94 52.94
Powder River Basin 57.60 57.99 62.21 56.33 63.01
Realized price without hedges 43.52 44.93 47.10 41.39 46.44
Cash settlements 0.39 0.14 (0.18 ) 0.61 0.22
Realized price, including cash settlements $ 43.91 $ 45.07 $ 46.92 $ 42.00 $ 46.66
8
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ASSET MARGINS
BENCHMARK PRICES
(average prices) 2024 2023
Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Oil ($/Bbl) - West Texas Intermediate (Cushing) $ 77.01 $ 78.48 $ 82.06 $ 73.76 $ 76.17
Natural Gas ($/Mcf) - Henry Hub $ 2.25 $ 2.88 $ 2.54 $ 2.09 $ 3.44
NGL ($/Bbl) - Mont Belvieu Blended $ 27.51 $ 25.52 $ 26.62 $ 23.99 $ 29.48
PER-UNIT
CASH MARGINBY ASSET (per Boe)
2024 2023
Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1
Delaware Basin
Realized price $ 43.55 $ 45.38 $ 47.68 $ 42.05 $ 46.35
Lease operating expenses (5.54 ) (5.46 ) (5.03 ) (4.96 ) (4.58 )
Gathering, processing & transportation (2.79 ) (2.75 ) (2.63 ) (2.63 ) (2.63 )
Production & property taxes (3.16 ) (3.24 ) (3.48 ) (3.18 ) (3.43 )
Field-level cash margin $ 32.06 $ 33.93 $ 36.54 $ 31.28 $ 35.71
Eagle Ford
Realized price $ 53.81 $ 54.64 $ 55.71 $ 49.69 $ 52.81
Lease operating expenses (7.59 ) (7.05 ) (7.52 ) (6.18 ) (6.32 )
Gathering, processing & transportation (1.67 ) (1.62 ) (1.63 ) (1.67 ) (1.49 )
Production & property taxes (2.73 ) (2.95 ) (3.18 ) (2.97 ) (3.25 )
Field-level cash margin $ 41.82 $ 43.02 $ 43.38 $ 38.87 $ 41.75
Anadarko Basin
Realized price $ 25.48 $ 26.96 $ 27.88 $ 24.04 $ 32.16
Lease operating expenses (3.33 ) (3.26 ) (3.43 ) (3.13 ) (3.41 )
Gathering, processing & transportation (6.27 ) (5.98 ) (6.11 ) (5.97 ) (5.93 )
Production & property taxes (1.24 ) (1.40 ) (1.36 ) (1.22 ) (1.73 )
Field-level cash margin $ 14.64 $ 16.32 $ 16.98 $ 13.72 $ 21.09
Williston Basin
Realized price $ 47.37 $ 47.77 $ 52.64 $ 45.94 $ 52.94
Lease operating expenses (10.88 ) (13.07 ) (13.04 ) (13.43 ) (13.25 )
Gathering, processing & transportation (2.03 ) (2.34 ) (2.31 ) (2.29 ) (2.19 )
Production & property taxes (4.72 ) (4.78 ) (5.13 ) (4.68 ) (4.85 )
Field-level cash margin $ 29.74 $ 27.58 $ 32.16 $ 25.54 $ 32.65
Powder River Basin
Realized price $ 57.60 $ 57.99 $ 62.21 $ 56.33 $ 63.01
Lease operating expenses (11.66 ) (8.65 ) (8.45 ) (10.03 ) (11.07 )
Gathering, processing & transportation (3.03 ) (3.17 ) (3.02 ) (2.97 ) (2.73 )
Production & property taxes (6.91 ) (6.75 ) (7.45 ) (6.79 ) (7.78 )
Field-level cash margin $ 36.00 $ 39.42 $ 43.29 $ 36.54 $ 41.43
Devon - Total
Realized price $ 43.52 $ 44.93 $ 47.10 $ 41.39 $ 46.44
Lease operating expenses (6.29 ) (6.25 ) (6.00 ) (5.86 ) (5.67 )
Gathering, processing & transportation (2.98 ) (2.97 ) (2.91 ) (2.94 ) (2.88 )
Production & property taxes (3.16 ) (3.24 ) (3.46 ) (3.14 ) (3.47 )
Field-level cash margin $ 31.09 $ 32.47 $ 34.73 $ 29.45 $ 34.42
9
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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 resultsas
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 reconciliationsof 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 includeitems 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 shareattributable to Devon. Devon
believes these
non-GAAP
measures facilitate comparisons of its performance to earnings estimates
published by securities analysts. Devon also believes these
non-GAAP
measures can facilitate comparisons of its performance between periods and to
the performance of its peers. The following table summarizes the effects of
these items on first-quarter 2024 earnings.
Quarter Ended March 31, 2024
Before-tax After-tax After NCI Per Diluted
Share
Total
Earnings (GAAP) $ 768 $ 609 $ 596 $ 0.94
Adjustments:
Asset dispositions 1 1 1 --
Deferred tax asset valuation allowance -- (1 ) (1 ) --
Fair value changes in financial instruments 172 134 134 0.22
Core earnings $ 941 $ 743 $ 730 $ 1.16
(Non-GAAP)
EBITDAX
Devon believesEBITDAX provides information useful in assessing operating and
financial performance across periods. Devon computes EBITDAX as net earnings
before financing costs, net; income tax expense; exploration expenses;
depreciation, depletion andamortization; asset disposition gains and losses;
non-cash
share-based compensation;
non-cash
valuation changes for derivatives and financial instruments; accretion
ondiscounted liabilities; and other items not related to normal operations.
EBITDAX as defined by Devon may not be comparable to similarly titled measures
used by other companies.
Q1 `24 Q4 `23 Q3 `23 Q2 `23 TTM Q1 `23
Net earnings (GAAP) $ 609 $ 1,161 $ 920 $ 698 $ 3,388 $ 1,003
Financing costs, net 76 77 81 78 312 72
Income tax expense 159 269 152 199 779 221
Exploration expenses 9 4 3 10 26 3
Depreciation, depletion and amortization 722 650 651 638 2,661 615
Asset dispositions 1 11 -- (41 ) (29 ) --
Share-based compensation 24 22 22 25 93 23
Derivative & financial instrument 169 (316 ) 183 113 149 (51 )
non-cash
val.changes
Accretion on discounted liabilities and other 22 10 13 10 55 5
EBITDAX $ 1,791 $ 1,888 $ 2,025 $ 1,730 $ 7,434 $ 1,891
(Non-GAAP)
10
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NET DEBT
Devon defines net debt as debt (includes short-term and long-term debt) less
cash, cash equivalents and restricted cash. Devon believes that netting
thesesources of cash against debt provides a clearer picture of the future
demands on cash from Devon to repay debt.
Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023
Total debt (GAAP) $ 6,147 $ 6,155 $ 6,162 $ 6,413 $ 6,422
Less:
Cash, cash equivalents and restricted cash (1,149 ) (875 ) (761 ) (488 ) (887 )
Net debt $ 4,998 $ 5,280 $ 5,401 $ 5,925 $ 5,535
(Non-GAAP)
NET
DEBT-TO-EBITDAX
Devon defines net
debt-to-EBITDAX
as net debt divided by an annualized EBITDAXmeasure. Devon believes this ratio
provides information useful to investors in assessing the company's credit
position and debt leverage.
Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023
Net debt $ 4,998 $ 5,280 $ 5,401 $ 5,925 $ 5,535
(Non-GAAP)
EBITDAX $ 7,434 $ 7,534 $ 7,776 $ 8,239 $ 9,342
(Non-GAAP)
(1)
Net 0.7 0.7 0.7 0.7 0.6
debt-to-EBITDAX
(Non-GAAP)
(1) EBITDAX is an annualized measure using a trailing twelve-month calculation.
FREE CASH FLOW
Devon defines free cash flow as totaloperating 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 Quarter Ended Quarter Ended Quarter Ended Quarter Ended
Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023
Total operating cash flow (GAAP) $ 1,738 $ 1,737 $ 1,725 $ 1,405 $ 1,677
Less capital expenditures: (894 ) (910 ) (882 ) (1,079 ) (1,012 )
Free cash flow $ 844 $ 827 $ 843 $ 326 $ 665
(Non-GAAP)
ADJUSTED FREE CASH FLOW
Devon is committed to returning approximately 70% of our adjusted free cash
flow to shareholders through a fixed dividend, variable dividend and
sharerepurchases. Adjusted free cash flow is calculated as total operating
cash flow before balance sheet changes less accrued capital expenditures.
Quarter Ended
Mar. 31, 2024
Total operating cash flow (GAAP) $ 1,738
Changes in assets and liabilities (170 )
Cash flow before balance sheet changes 1,568
(Non-GAAP)
Capital expenditures (Accrued) (945 )
Adjusted free cash flow $ 623
(Non-GAAP)
REINVESTMENT RATE
Devondefines 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 flowgenerated from normal business operations.
Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended
Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023
Capital expenditures (Accrued) $ 945 $ 951 $ 919 $ 1,036 $ 1,001
Operating cash flow $ 1,738 $ 1,737 $ 1,725 $ 1,405 $ 1,677
Reinvestment rate 54 % 55 % 53 % 74 % 60 %
(Non-GAAP)
11
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SECOND-QUARTER AND FULL-YEAR 2024 GUIDANCE
PRODUCTIONGUIDANCE
Quarter 2 Full Year
Low High Low High
Oil (MBbls/d) 321 327 316 322
Natural gas liquids (MBbls/d) 168 174 164 170
Gas (MMcf/d) 1,085 1,135 1,050 1,100
Total oil equivalent (MBoe/d) 670 690 655 675
CAPITAL EXPENDITURES GUIDANCE
Quarter 2 Full Year
(in millions) Low High Low High
Upstream capital $ 850 $ 900 $ 3,050 $ 3,250
Carbon capital 30 40 125 175
Midstream & other capital 35 45 125 175
Total capital $ 915 $ 985 $ 3,300 $ 3,600
PRICE REALIZATIONS GUIDANCE
Quarter 2 Full Year
Low High Low High
Oil - % of WTI 95 % 100 % 95 % 100 %
NGL - % of WTI 20 % 30 % 20 % 30 %
Natural gas - % of Henry Hub 20 % 40 % 50 % 60 %
(1)
(1) Realizations do
not
include impact from natural gas basis swaps.
OTHER GUIDANCE ITEMS
Quarter 2 Full Year
($ millions, except Boe and %) Low High Low High
Marketing & midstream operating profit $ (15 ) $ (5 ) $ (50 ) $ (40 )
LOE & GP&T per BOE $ 9.20 $ 9.40 $ 9.20 $ 9.40
Production & property taxes as % of upstream sales 7.4 % 8.0 % 7.4 % 8.0 %
Exploration expenses $ -- $ 5 $ 15 $ 25
Depreciation, depletion and amortization $ 730 $ 770 $ 2,850 $ 2,950
General & administrative expenses $ 105 $ 115 $ 410 $ 450
Net financing costs, net $ 75 $ 85 $ 310 $ 330
Other expenses $ -- $ 10 $ 30 $ 40
INCOME TAX GUIDANCE
Quarter 2 Full Year
(% of Low High Low High
pre-tax
earnings)
Current income tax rate 14 % 16 % 14 % 16 %
Deferred income tax rate 6 % 8 % 6 % 8 %
Total income tax rate ~22% ~22%
12
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CONTINGENT PAYMENTS FOR BARNETT SHALE DIVESTITURE
(through 2024)
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
2024 & 2025 HEDGING POSITIONS
Oil Commodity Hedges
Price Swaps Price Collars
Period Volume (Bbls/d) Weighted Volume Weighted Weighted
Average Price (Bbls/d) Average Floor Average Ceiling
($/Bbl) Price ($/Bbl) Price ($/Bbl)
Q2 2024 26,341 $ 79.01 67,022 $ 65.98 $ 84.78
Q3 2024 28,000 $ 78.97 79,000 $ 66.92 $ 84.61
Q4 2024 28,000 $ 78.97 69,000 $ 67.93 $ 84.38
Q1-Q4 2025 3,468 $ 72.75 992 $ 70.00 $ 77.40
Oil Basis Swaps
Period Index Volume Weighted Average
(Bbls/d) Differential to WTI
($/Bbl)
Q2 2024 Midland Sweet 62,500 $ 1.17
Q3-Q4 Midland Sweet 69,500 $ 1.17
2024
Q1-Q4 2025 Midland Sweet 63,000 $ 1.00
Natural Gas Commodity Hedges - Henry Hub
Price Swaps Price Collars
Period Volume (MMBtu/d) Weighted Volume Weighted Weighted
Average Price (MMBtu/d) Average Floor Average Ceiling
($/MMBtu) Price ($/ Price
MMBtu) ($/MMBtu)
Q2 2024 263,000 $ 3.21 56,000 $ 3.91 $ 6.19
Q3 2024 263,000 $ 3.21 -- $ -- $ --
Q4 2024 209,000 $ 3.18 -- $ -- $ --
Q1-Q4 2025 75,537 $ 3.04 -- $ -- $ --
Natural Gas Basis Swaps
Period Index Volume (MMBtu/d) Weighted Average
Differential to Henry
Hub ($/MMBtu)
Q2 2024 El Paso Permian 60,000 $ (0.90 )
Q3-Q4 2024 El Paso Permian 10,000 $ (1.00 )
Q2-Q4 2024 Houston Ship Channel 110,000 $ (0.24 )
Q2 2024 WAHA 70,000 $ (0.66 )
Q3-Q4 2024 WAHA 60,000 $ (0.58 )
Q1-Q4 2025 WAHA 10,000 $ (0.63 )
13
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2024 & 2025 HEDGING POSITIONS
(continued)
NGL Commodity Hedges
Price Swaps
Period Product Volume (Bbls/d) Weighted Average
Price ($/Bbl)
Q2-Q4 Natural Gasoline 3,000 $ 69.11
2024
Q2-Q4 Normal Butane 3,350 $ 37.58
2024
Q2 2024 Propane 4,591 $ 32.87
Q3-Q4 2024 Propane 5,250 $ 33.01
Devon's oil derivatives settle against the average of the prompt month NYMEX
West Texas Intermediate futures price.Devon's natural gas derivatives settle
against the Inside FERC end of the month NYMEX index. Devon's NGL derivatives
settle against the average of the prompt month OPIS Mont Belvieu, Texas index.
Commodity hedge positions are shown as ofMarch 31, 2024.
14
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