10-Q

Part I. Financial Information

Item 1. Financial Statements

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS


	Three Months Ended June 30,					Six Months Ended June 30,
	2025			2024		2025			2024
	(Unaudited)
Oil, gas and NGL sales	$	2,710		$	2,796	$	5,836		$	5,425
Oil, gas and NGL derivatives		236			23		138			(122	)
Marketing and midstream revenues		1,338			1,098		2,762			2,210
Total revenues		4,284			3,917		8,736			7,513
Production expenses		899			788		1,811			1,539
Exploration expenses		20			3		30			12
Marketing and midstream expenses		1,357			1,108		2,793			2,241
Depreciation, depletion and amortization		914			768		1,826			1,490
Asset impairments		—			—		254			—
Asset dispositions		(307	)		15		(305	)		16
General and administrative expenses		113			114		243			228
Financing costs, net		116			76		239			152
Other, net		11			5		38			27
Total expenses		3,123			2,877		6,929			5,705
Earnings before income taxes		1,161			1,040		1,807			1,808
Income tax expense		244			185		381			344
Net earnings		917			855		1,426			1,464
Net earnings attributable to noncontrolling interests		18			11		33			24
Net earnings attributable to Devon	$	899		$	844	$	1,393		$	1,440
Net earnings per share:
Basic net earnings per share	$	1.42		$	1.35	$	2.18		$	2.29
Diluted net earnings per share	$	1.41		$	1.34	$	2.17		$	2.29
Comprehensive earnings:
Net earnings	$	917		$	855	$	1,426		$	1,464
Other comprehensive earnings, net of tax:
Pension and postretirement plans		1			1		2			2
Other comprehensive earnings, net of tax		1			1		2			2
Comprehensive earnings:	$	918		$	856	$	1,428		$	1,466
Comprehensive earnings attributable to noncontrolling interests		18			11		33			24
Comprehensive earnings attributable to Devon	$	900		$	845	$	1,395		$	1,442

See accompanying notes to consolidated financial statements.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	June 30, 2025			December 31, 2024
	(Unaudited)
ASSETS
Current assets:
Cash, cash equivalents and restricted cash	$	1,759		$	846
Accounts receivable		1,853			1,972
Inventory		327			294
Other current assets		384			315
Total current assets		4,323			3,427
Oil and gas property and equipment, based on successful efforts accounting, net		23,428			23,198
Other property and equipment, net ($203 million and $178 million related to CDM in 2025 and 2024, respectively)		1,687			1,813
Total property and equipment, net		25,115			25,011
Goodwill		753			753
Right-of-use assets		185			303
Investments		640			727
Other long-term assets		374			268
Total assets	$	31,390		$	30,489
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	885		$	806
Revenues and royalties payable		1,440			1,432
Short-term debt		485			485
Income taxes payable		190			23
Other current liabilities		537			563
Total current liabilities		3,537			3,309
Long-term debt		8,393			8,398
Lease liabilities		113			320
Asset retirement obligations		839			770
Other long-term liabilities		1,008			840
Deferred income taxes		2,208			2,148
Stockholders' equity:
Common stock, $0.10 par value. Authorized 1.0 billion shares; issued 636 million and 651 million shares in 2025 and 2024, respectively		64			65
Additional paid-in capital		5,864			6,387
Retained earnings		9,252			8,166
Accumulated other comprehensive loss		(120	)		(122	)
Total stockholders’ equity attributable to Devon		15,060			14,496
Noncontrolling interests		232			208
Total equity		15,292			14,704
Total liabilities and equity	$	31,390		$	30,489

See accompanying notes to consolidated financial statements.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
	(Unaudited)
Cash flows from operating activities:
Net earnings	$	917		$	855		$	1,426		$	1,464
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation, depletion and amortization		914			768			1,826			1,490
Asset impairments		—			—			254			—
Leasehold impairments		7			1			12			1
Accretion of liabilities		3			—			9			—
Total (gains) losses on commodity derivatives		(236	)		(23	)		(138	)		122
Cash settlements on commodity derivatives		67			54			57			78
(Gains) losses on asset dispositions		(307	)		15			(305	)		16
Deferred income tax expense		18			39			59			79
Share-based compensation		23			27			53			51
Other		5			—			(17	)		3
Changes in assets and liabilities, net		134			(201	)		251			(31	)
Net cash from operating activities		1,545			1,535			3,487			3,273
Cash flows from investing activities:
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
Distributions from investments		11			11			20			22
Contributions to investments and other		(8	)		(1	)		(10	)		(48	)
Net cash from investing activities		(597	)		(1,019	)		(1,399	)		(1,940	)
Cash flows from financing activities:
Repurchases of common stock		(249	)		(256	)		(550	)		(461	)
Dividends paid on common stock		(156	)		(223	)		(319	)		(522	)
Contributions from noncontrolling interests		—			12			14			24
Distributions to noncontrolling interests		(14	)		(19	)		(23	)		(26	)
Repayment of finance lease		—			—			(274	)		—
Shares exchanged for tax withholdings and other		(5	)		(9	)		(24	)		(51	)
Net cash from financing activities		(424	)		(495	)		(1,176	)		(1,036	)
Effect of exchange rate changes on cash		1			(1	)		1			(3	)
Net change in cash, cash equivalents and restricted cash		525			20			913			294
Cash, cash equivalents and restricted cash at beginning of period		1,234			1,149			846			875
Cash, cash equivalents and restricted cash at end of period	$	1,759		$	1,169		$	1,759		$	1,169

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	1,713		$	1,140		$	1,713		$	1,140
Restricted cash		46			29			46			29
Total cash, cash equivalents and restricted cash	$	1,759		$	1,169		$	1,759		$	1,169

See accompanying notes to consolidated financial statements.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY


													Other
							Additional						Comprehensive
	Common Stock						Paid-In			Retained			Earnings			Treasury			Noncontrolling			Total
	Shares			Amount			Capital			Earnings			(Loss)			Stock			Interests			Equity
	(Unaudited)
Three Months Ended June 30, 2025
Balance as of March 31, 2025		644		$	64		$	6,096		$	8,506		$	(121	)	$	—		$	228		$	14,773
Net earnings		—			—			—			899			—			—			18			917
Other comprehensive earnings, net of tax		—			—			—			—			1			—			—			1
Common stock repurchased		—			—			(1	)		—			—			(254	)		—			(255	)
Common stock retired		(8	)		—			(254	)		—			—			254			—			—
Common stock dividends		—			—			—			(153	)		—			—			—			(153	)
Share-based compensation		—			—			23			—			—			—			—			23
Distributions to noncontrolling interests		—			—			—			—			—			—			(14	)		(14	)
Balance as of June 30, 2025		636		$	64		$	5,864		$	9,252		$	(120	)	$	—		$	232		$	15,292
Three Months Ended June 30, 2024
Balance as of March 31, 2024		633		$	63		$	5,718		$	6,509		$	(123	)	$	—		$	174		$	12,341
Net earnings		—			—			—			844			—			—			11			855
Other comprehensive earnings, net of tax		—			—			—			—			1			—			—			1
Common stock repurchased		—			—			(3	)		—			—			(264	)		—			(267	)
Common stock retired		(5	)		—			(264	)		—			—			264			—			—
Common stock dividends		—			—			—			(221	)		—			—			—			(221	)
Share-based compensation		—			—			27			—			—			—			—			27
Contributions from noncontrolling interests		—			—			—			—			—			—			12			12
Distributions to noncontrolling interests		—			—			—			—			—			—			(19	)		(19	)
Balance as of June 30, 2024		628		$	63		$	5,478		$	7,132		$	(122	)	$	—		$	178		$	12,729
Six Months Ended June 30, 2025
Balance as of December 31, 2024		651		$	65		$	6,387		$	8,166		$	(122	)	$	—		$	208		$	14,704
Net earnings		—			—			—			1,393			—			—			33			1,426
Other comprehensive earnings, net of tax		—			—			—			—			2			—			—			2
Restricted stock grants, net of cancellations		2			—			—			—			—			—			—			—
Common stock repurchased		—			—			(4	)		—			—			(573	)		—			(577	)
Common stock retired		(17	)		(1	)		(572	)		—			—			573			—			—
Common stock dividends		—			—			—			(307	)		—			—			—			(307	)
Share-based compensation		—			—			53			—			—			—			—			53
Contributions from noncontrolling interests		—			—			—			—			—			—			14			14
Distributions to noncontrolling interests		—			—			—			—			—			—			(23	)		(23	)
Balance as of June 30, 2025		636		$	64		$	5,864		$	9,252		$	(120	)	$	—		$	232		$	15,292
Six Months Ended June 30, 2024
Balance as of December 31, 2023		636		$	64		$	5,939		$	6,195		$	(124	)	$	(13	)	$	156		$	12,217
Net earnings		—			—			—			1,440			—			—			24			1,464
Other comprehensive earnings, net of tax		—			—			—			—			2			—			—			2
Restricted stock grants, net of cancellations		2			—			—			—			—			—			—			—
Common stock repurchased		—			—			(4	)		—			—			(496	)		—			(500	)
Common stock retired		(11	)		(1	)		(508	)		—			—			509			—			—
Common stock dividends		—			—			—			(503	)		—			—			—			(503	)
Share-based compensation		1			—			51			—			—			—			—			51
Contributions from noncontrolling interests		—			—			—			—			—			—			24			24
Distributions to noncontrolling interests		—			—			—			—			—			—			(26	)		(26	)
Balance as of June 30, 2024		628		$	63		$	5,478		$	7,132		$	(122	)	$	—		$	178		$	12,729

See accompanying notes to consolidated financial statements.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Summary of Significant Accounting Policies

The accompanying unaudited interim financial statements and notes of Devon have been prepared pursuant to the rules and regulations of the SEC. Pursuant to such rules and regulations, certain disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted. The accompanying unaudited interim financial statements and notes should be read in conjunction with the financial statements and notes included in Devon’s 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.

Acquisitions and Divestitures

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.

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.

Derivative Financial Instruments

Objectives and Strategies

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

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

Counterparty Credit Risk

By using derivative financial instruments, Devon is exposed to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, the hedging instruments are placed with a number of counterparties whom Devon believes are acceptable credit risks. It is Devon’s policy to enter into derivative contracts only with investment-grade rated counterparties deemed by management to be competent and competitive market makers. Additionally, Devon’s derivative contracts generally contain provisions that provide for collateral payments if Devon’s or its counterparty’s credit rating falls below certain credit rating levels. As of June 30, 2025, Devon neither held cash collateral of its counterparties nor 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.


	Price Swaps				Price Collars
Period	Volume (Bbls/d)		Weighted Average Price ($/Bbl)		Volume (Bbls/d)		Weighted Average Floor Price ($/Bbl)		Weighted Average Ceiling Price ($/Bbl)
Q3-Q4 2025		9,000	$	71.52		105,000	$	66.35	$	75.36


	Three-Way Price Collars
Period	Volume (Bbls/d)		Weighted Average Floor Sold Price ($/Bbl)		Weighted Average Floor Purchased Price ($/Bbl)		Weighted Average Ceiling Price ($/Bbl)
Q3-Q4 2025		13,000	$	50.77	$	65.00	$	77.37
Q1-Q4 2026		76,984	$	50.23	$	60.39	$	72.82


	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.


		Price Swaps
Period	Product	Volume (Bbls/d)		Weighted Average Price ($/Bbl)
Q3-Q4 2025	Natural Gasoline		3,000	$	63.35
Q3-Q4 2025	Normal Butane		323	$	39.90
Q3-Q4 2025	Propane		3,000	$	32.29

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

Share-Based 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.

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

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.

Income Taxes

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


	Three Months Ended 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.

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

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.

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		(162	)		42			86			185
Other current liabilities		141			(224	)		84			(108	)
Other long-term liabilities		(27	)		—			82			(19	)
Total	$	134		$	(201	)	$	251		$	(31	)
Supplementary cash flow data:
Interest paid	$	101		$	112		$	261		$	175
Income taxes paid	$	152		$	388		$	152		$	384

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, Plant 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

13.

Debt and Related 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.

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.

Leases

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.

15.

Asset Retirement 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.

Stockholders’ 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).


	Total Number of Shares Purchased		Dollar Value of Shares Purchased		Average Price Paid per Share
$5.0 Billion Plan
2021		13,983	$	589	$	42.15
2022		11,708		718	$	61.36
2023		19,350		992	$	51.23
2024:
First quarter		4,428		193	$	43.47
Second quarter		5,188		256	$	49.40
Third quarter		6,675		295	$	44.23
Fourth quarter		7,653		300	$	39.22
2024 Total		23,944		1,044	$	43.61
2025:
First quarter		8,505		301	$	35.33
Second quarter		7,866		249	$	31.78
2025 Total		16,371		550	$	33.62
Total plan		85,356	$	3,893	$	45.62

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.

Commitments and Contingencies

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

Royalty Matters

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

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.

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.

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 Overview

We are a leading independent oil and natural gas exploration and production company whose operations are focused onshore in the United States. Our operations are currently focused in 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.

Results of Operations

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

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.

Production Volumes


	Q2 2025		% of Total			Q1 2025		Change
Oil (MBbls/d)
Delaware Basin		228		59	%		216		5	%
Rockies		104		27	%		112		-7	%
Eagle Ford		39		10	%		45		-12	%
Anadarko Basin		13		3	%		11		9	%
Other		3		1	%		4	N/M
Total		387		100	%		388		0	%


	Q2 2025		% of Total			Q1 2025		Change
Gas (MMcf/d)
Delaware Basin		823		59	%		744		11	%
Rockies		228		16	%		233		-2	%
Eagle Ford		62		5	%		117		-47	%
Anadarko Basin		274		20	%		252		9	%
Other		1		0	%		—	N/M
Total		1,388		100	%		1,346		3	%


	Q2 2025		% of Total			Q1 2025		Change
NGLs (MBbls/d)
Delaware Basin		133		60	%		118		13	%
Rockies		47		21	%		44		6	%
Eagle Ford		11		5	%		15		-29	%
Anadarko Basin		31		14	%		26		21	%
Other		—		0	%		—	N/M
Total		222		100	%		203		9	%


	Q2 2025		% of Total			Q1 2025		Change
Combined (MBoe/d)
Delaware Basin		498		59	%		458		9	%
Rockies		189		23	%		195		-3	%
Eagle Ford		60		7	%		79		-24	%
Anadarko Basin		90		11	%		79		14	%
Other		4		0	%		4	N/M
Total		841		100	%		815		3	%

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.

Hedge Settlements


	Q2 2025		Q1 2025			Change
	Q
Oil	$	45	$	—		N/M
Natural gas		20		(8	)	N/M
NGL		2		(2	)	N/M
Total cash settlements (1)	$	67	$	(10	)	N/M

(1)

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

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

Production Expenses


	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.


	Q2 2025		$ per BOE		Q1 2025		$ per BOE
Field-level cash margin (Non-GAAP)
Delaware Basin	$	1,114	$	24.58	$	1,283	$	31.13
Rockies		369	$	21.45		509	$	29.01
Eagle Ford		197	$	35.84		270	$	37.98
Anadarko Basin		121	$	14.85		136	$	19.13
Other		10	N/M			16	N/M
Total	$	1,811	$	23.68	$	2,214	$	30.16

DD&A and Asset Impairments


	Q2 2025		Q1 2025		Change
Oil and gas per Boe	$	11.63	$	12.07		-4	%

Oil and gas	$	890	$	886		0	%
Other property and equipment		24		26		-9	%
Total DD&A	$	914	$	912		0	%

Asset impairments	$	—	$	254	N/M

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.

Income Taxes


	Q2 2025			Q1 2025
Current expense	$	226		$	96
Deferred expense		18			41
Total expense	$	244		$	137
Current tax rate		19	%		15	%
Deferred tax rate		2	%		6	%
Effective income tax rate		21	%		21	%

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.

June 30, 2025 YTD vs. June 30, 2024 YTD

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.

Production Volumes


	Six Months Ended June 30,
	2025		% of Total			2024		Change
Oil (MBbls/d)
Delaware Basin		222		57	%		215		3	%
Rockies		108		28	%		52		109	%
Eagle Ford		42		11	%		45		-6	%
Anadarko Basin		12		3	%		12		-2	%
Other		4		1	%		3	N/M
Total		388		100	%		327		18	%


	Six Months Ended June 30,
	2025		% of Total			2024		Change
Gas (MMcf/d)
Delaware Basin		784		57	%		703		11	%
Rockies		230		17	%		85		171	%
Eagle Ford		89		7	%		86		4	%
Anadarko Basin		263		19	%		233		13	%
Other		1		0	%		1	N/M
Total		1,367		100	%		1,108		23	%


	Six Months Ended June 30,
	2025		% of Total			2024		Change
NGLs (MBbls/d)
Delaware Basin		126		59	%		117		8	%
Rockies		46		22	%		13		245	%
Eagle Ford		13		6	%		16		-17	%
Anadarko Basin		28		13	%		28		2	%
Other		—		0	%		—	N/M
Total		213		100	%		174		23	%


	Six Months Ended June 30,
	2025		% of Total			2024		Change
Combined (MBoe/d)
Delaware Basin		478		58	%		449		7	%
Rockies		192		23	%		79		143	%
Eagle Ford		70		8	%		75		-7	%
Anadarko Basin		84		10	%		79		7	%
Other		4		1	%		4	N/M
Total		828		100	%		686		21	%

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.

Hedge Settlements


	Six Months Ended June 30,
	2025		2024			Change
Oil	$	45	$	(12	)	N/M
Natural gas		12		89		N/M
NGL		—		1		N/M
Total cash settlements (1)	$	57	$	78			-27	%

(1)

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

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


	Six Months Ended June 30,
	2025		$ per BOE		2024		$ per BOE
Field-level cash margin (Non-GAAP)
Delaware Basin	$	2,397	$	27.70	$	2,621	$	32.09
Rockies		878	$	25.27		448	$	31.14
Eagle Ford		467	$	37.05		570	$	41.99
Anadarko Basin		257	$	16.85		217	$	15.09
Other		26	N/M			30	N/M
Total	$	4,025	$	26.85	$	3,886	$	31.14

DD&A and Asset Impairments


	Six Months Ended June 30,
	2025		2024		Change
Oil and gas per Boe	$	11.85	$	11.56		2	%

Oil and gas	$	1,776	$	1,443		23	%
Other property and equipment		50		47		8	%
Total DD&A	$	1,826	$	1,490		23	%

Asset impairments	$	254	$	—	N/M

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.

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.

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.

Income Taxes


	Six Months Ended June 30,
	2025			2024
Current expense	$	322		$	265
Deferred expense		59			79
Total expense	$	381		$	344
Current tax rate		18	%		15	%
Deferred tax rate		3	%		4	%
Effective income tax rate		21	%		19	%

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.

Capital Resources, Uses and Liquidity

Sources and Uses of Cash

The following table presents the major changes in cash and cash equivalents for the three 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.

Investment Activity

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 Estimates

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.

For additional information regarding our critical accounting policies and estimates, see our 2024 Annual Report on Form 10-K.

Non-GAAP Measures

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


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)


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


Large accelerated filer	☑	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐


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


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


Part I. Financial Information
Item 1.	Financial Statements	6
	Consolidated Statements of Comprehensive Earnings	6
	Consolidated Balance Sheets	7
	Consolidated Statements of Cash Flows	8
	Consolidated Statements of Equity	9
	Notes to Consolidated Financial Statements	10
	Note 1 – Summary of Significant Accounting Policies	10
	Note 2 – Acquisitions and Divestitures	11
	Note 3 – Derivative Financial Instruments	12
	Note 4 – Share-Based Compensation	14
	Note 5 – Asset Impairments	15
	Note 6 – Income Taxes	15
	Note 7 – Net Earnings Per Share	16
	Note 8 – Other Comprehensive Earnings (Loss)	16
	Note 9 – Supplemental Information to Statements of Cash Flows	16
	Note 10 – Accounts Receivable	17
	Note 11 – Property, Plant and Equipment	17
	Note 12 – Investments	17
	Note 13 – Debt and Related Expenses	18
	Note 14 – Leases	19
	Note 15 – Asset Retirement Obligations	20
	Note 16 – Stockholders’ Equity	20
	Note 17 – Commitments and Contingencies	21
	Note 18 – Fair Value Measurements	23
	Note 19 – Reportable Segments	24
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	Executive Overview	25
	Results of Operations	26
	Capital Resources, Uses and Liquidity	36
	Critical Accounting Estimates	39
	Non-GAAP Measures	40
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41

Part II. Other Information
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	43

Signatures		43


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


Exhibit Number		Description

10.1*	2025 Form of Notice of Grant of Restricted Stock Award and Award Agreement under the 2022 Long-Term Incentive Plan between the Company and non-management directors for restricted stock awarded.

10.2*	2025 Form of Notice of Grant of Restricted Stock Unit Award and Award Agreement under the 2022 Long-Term Incentive Plan between the Company and non-management directors for restricted stock units awarded.

31.1	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certification of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certification of principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	Inline XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH	Inline XBRL Taxonomy Extension Schema with Embedded 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.


				DEVON ENERGY CORPORATION

Date: August 6, 2025				/s/ John B. Sherrer
				John B. Sherrer
				Vice President, Accounting and Controller