v3.26.1
Derivative Financial Instruments
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
3.
Derivative Financial Instruments

Objectives and Strategies

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

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

Counterparty Credit Risk

By using derivative financial instruments, Devon is exposed to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, the hedging instruments are placed with a number of counterparties whom Devon believes are acceptable credit risks. It is Devon’s policy to enter into derivative contracts only with investment-grade rated counterparties deemed by management to be competent and competitive market makers. Additionally, Devon’s derivative contracts generally contain provisions that provide for collateral payments if Devon’s or its counterparty’s credit rating falls below certain credit rating levels. As of March 31, 2026, Devon neither held cash collateral of its counterparties nor posted cash collateral to its counterparties. Given Devon's current credit ratings and the terms of the underlying contracts, Devon is not required to post collateral to its counterparties with respect to its open derivative positions, and we would not be required to post any such collateral as a result of any change to the amount of Devon's net liability for such positions.

Commodity Derivatives

As of March 31, 2026, Devon had the following open oil derivative positions. The first table presents Devon’s oil derivatives that settle against the average of the prompt month NYMEX WTI futures price. The second table presents Devon’s oil derivatives that settle against the respective indices noted within the table.

 

 

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)

 

Q2-Q4 2026

 

 

108,698

 

 

$

49.51

 

 

$

59.59

 

 

$

71.22

 

Q1-Q4 2027

 

 

37,397

 

 

$

45.78

 

 

$

55.78

 

 

$

71.89

 

 

 

 

Oil Basis Swaps

 

Period

 

Index

 

Volume
(Bbls/d)

 

 

Weighted Average
Differential to WTI
($/Bbl)

 

Q2-Q4 2026

 

Midland Sweet

 

 

46,000

 

 

$

1.10

 

Q2-Q4 2026

 

WTI/Brent

 

 

8,625

 

 

$

(5.61

)

Q2-Q4 2026

 

NYMEX Roll

 

 

86,051

 

 

$

1.24

 

Q1-Q4 2027

 

Magellan East Houston

 

 

20,000

 

 

$

1.77

 

Q1-Q4 2027

 

Midland Sweet

 

 

46,000

 

 

$

1.00

 

As of March 31, 2026, Devon had the following open natural gas derivative positions. The first table presents Devon’s natural gas derivatives that settle against the Inside FERC first of the month Henry Hub index. The second table presents Devon’s natural gas derivatives that settle against the respective indices noted within the table.

 

 

Price Swaps

 

 

Price Collars

 

Period

 

Volume (MMBtu/d)

 

 

Weighted Average Price ($/MMBtu)

 

 

Volume (MMBtu/d)

 

 

Weighted Average Floor Price ($/MMBtu)

 

 

Weighted Average
Ceiling Price ($/MMBtu)

 

Q2-Q4 2026

 

 

247,500

 

 

$

3.80

 

 

 

230,000

 

 

$

3.26

 

 

$

4.90

 

Q1-Q4 2027

 

 

—

 

 

$

—

 

 

 

90,000

 

 

$

3.50

 

 

$

4.31

 

 

 

 

Natural Gas Basis Swaps

 

Period

 

Index

 

Volume
(MMBtu/d)

 

 

Weighted Average
Differential to
Henry Hub
($/MMBtu)

 

Q2-Q4 2026

 

Houston Ship Channel

 

 

50,000

 

 

$

(0.29

)

Q2-Q4 2026

 

WAHA

 

 

150,000

 

 

$

(1.79

)

 

Financial Statement Presentation

All derivative financial instruments are recognized at their current fair value as either assets or liabilities on 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 on the consolidated balance sheets. The table below presents a summary of these positions as of March 31, 2026 and December 31, 2025.

 

March 31, 2026

 

December 31, 2025

 

 

 

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

$

126

 

$

(4

)

$

122

 

$

199

 

$

(7

)

$

192

 

Other current assets

Long-term derivative asset

 

4

 

 

—

 

 

4

 

 

2

 

 

—

 

 

2

 

Other long-term assets

Short-term derivative liability

 

(526

)

 

4

 

 

(522

)

 

(8

)

 

7

 

 

(1

)

Other current liabilities

Long-term derivative liability

 

(55

)

 

—

 

 

(55

)

 

—

 

 

—

 

 

—

 

Other long-term liabilities

  Total derivative asset (liability)

$

(451

)

$

—

 

$

(451

)

$

193

 

$

—

 

$

193