Exhibit 99.1

EX-99.1 2 d225097dex991.htm EXHIBIT 99.1 Exhibit 99.1


		Devon Energy Corporation
		333 West Sheridan Avenue
		Oklahoma City, OK 73102-5015

EXHIBIT 99.1

NEWS RELEASE

Devon Energy Reports Second-Quarter 2016 Results

OKLAHOMA CITY - Aug. 2, 2016 - Devon Energy Corp. (NYSE: DVN) today reported operational and financial results for the second quarter of 2016 and provided guidance for the third quarter and full-year 2016.

Highlights

•

Exceeded production expectations in U.S. resource plays

•

Raised 2016 production guidance for retained assets by 3 percent

•

Reduced lease operating expenses 26 percent year over year

•

Improved operating and G&A expense outlook

•

Completed asset divestiture program with proceeds totaling $3.2 billion

•

Increased E&P capital investment by $200 million in 2016

“Devon Energy’s strategy of operating in North America’s best resource plays, coupled with a focus on delivering best-in-class execution, led to another quarter of excellent operational results,” said Dave Hager, president and CEO. “Production from our U.S. resource plays once again exceeded guidance expectations and we were able to deliver this outperformance with dramatically lower costs. With the cost savings achieved year to date, we are now on pace to reduce operating and G&A expenses by nearly $1 billion in 2016.

“In addition to our strong operating performance, we were able to significantly improve our financial strength over the past several months with the timely completion of our non-core asset divestiture program,” Hager said. “Total divestitures reached $3.2 billion and surpassed the top end of our $2 billion to $3 billion guidance range. The majority of the sales proceeds will be utilized to reduce debt and position us to further accelerate investment in our best-in-class U.S. resource plays, led by the STACK and Delaware Basin.”

Production Exceeds Expectations in U.S. Resource Plays

Devon’s reported net production averaged 644,000 oil-equivalent barrels (Boe) per day during the second quarter of 2016. Of this amount, 545,000 Boe per day was attributable to the Company’s core assets, where investment will be directed going forward. Production from core assets exceeded the mid-point of guidance by 6,000 Boe per day, driven entirely by Devon’s U.S. resource plays.

Within the Company’s U.S. resource plays, production averaged 419,000 Boe per day. This performance was highlighted by strong results from the STACK and Delaware Basin where aggregate production increased 27 percent year over year. Light-oil production from U.S. resource plays, which is Devon’s highest margin product, averaged 110,000 barrels per day. This result exceeded the top end of guidance by 2,000 barrels per day.

In Canada, net oil production from Devon’s heavy-oil projects averaged 121,000 barrels per day in the second quarter. Driven by the industry-leading performance of the Jackfish 3 facility, Canadian oil production increased 24 percent compared to the second quarter of 2015. Scheduled maintenance at the Company’s Jackfish 2 facility curtailed production by 11,000 barrels per day in the quarter.

Page 1 of 17

Retained Midland Assets Enhances 2016 Production Outlook

With the earlier than expected completion of Devon’s asset divestiture program, the Company is updating its third quarter and full-year 2016 production expectations for its retained, go-forward asset base. The most significant change to previous guidance is Devon’s decision to retain select assets in the Midland Basin that were previously categorized as non-core. These legacy Midland Basin assets have extremely low declines and are expected to produce approximately 15,000 Boe per day in the second half of 2016.

Due to the retention of Midland assets and other minor operating interests, Devon is raising the mid-point of its 2016 production guidance from its retained, go-forward asset base by 18,000 Boe per day, or 3 percent. The largest portion of this production raise is attributable to oil, where 2016 mid-point guidance increased by 4 percent or 10,000 barrels per day.

Lease Operating Expenses Decline 26 Percent; Additional Savings Expected

The Company has several cost-reduction initiatives underway that positively impacted second-quarter results. The most significant operating cost savings came from lease operating expenses (LOE), which is Devon’s largest field-level cost. LOE declined 26 percent compared to the second quarter of 2015 to $416 million, and was 5 percent below the low end of guidance. The decrease in LOE was primarily driven by improved power and water-handling infrastructure, declining labor expense and lower supply chain costs.

Due to the operating cost performance achieved year to date and the impact of recently announced asset divestitures, the Company is lowering its full-year 2016 LOE outlook by $150 million to a range of $1.6 billion to $1.7 billion. With this improved outlook, Devon is now on track to reduce LOE and production taxes by nearly $600 million compared to 2015.

G&A Cost Savings Initiatives Ahead of Schedule

Devon also realized substantial general and administrative (G&A) cost savings in the second quarter. G&A expenses totaled $147 million, a 30 percent improvement compared to the second quarter of 2015. The significantly lower overhead costs were driven by reduced personnel expenses.

The Company now anticipates G&A expenses to decline to a range of $600 million to $650 million for the full-year 2016. Combined with reductions in capitalized G&A, Devon projects its total overhead costs to decline by approximately $400 million compared to 2015.

Accelerating Upstream Investment Activity

Devon continued to effectively control capital costs during the second quarter. Devon’s accrued upstream capital spending, which accounts for activity that was incurred during the reporting period, amounted to $221 million in the quarter. This result was $29 million below the low end of the Company’s guidance range.

As previously announced in June, Devon expects its full-year 2016 upstream capital program to range between $1.1 billion and $1.3 billion, an increase of $200 million from previous guidance. The incremental capital will be deployed in the STACK and Delaware Basin, with the potential to add as many as 7 operated rigs between these prolific plays in the second half of 2016. The additional capital investment is expected to deliver incremental production in early 2017.

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Second-Quarter 2016 Operations Report

For additional details on Devon’s E&P operations, please refer to the Company’s second-quarter 2016 operations report at www.devonenergy.com. Highlights from the report include:

•

Record-setting Meramec oil well brought online

•

Successful spacing tests in STACK

•

Bone Spring development wells outperform type curve

•

Another high-rate well in the Leonard Shale

•

Significant free cash flow generation in Eagle Ford

•

Jackfish complex production exceeds nameplate capacity by 9 percent

Divestiture Program Complete and Exceeds Expectations

In the second quarter of 2016, Devon announced multiple agreements to monetize $2 billion of non-core upstream assets in the U.S. Several of these transactions have closed and the Company expects the remaining transactions to close in the third quarter. The Company expects to incur minimal cash taxes associated with these divestitures.

Subsequent to quarter end, the Company announced an agreement to sell its 50 percent interest in the Access Pipeline for CAD $1.4 billion, or USD $1.1 billion. This transaction is expected to close in the third quarter of 2016. With the announced sale of Access Pipeline, Devon’s divestiture program is now complete reaching $3.2 billion, exceeding the top end of the Company’s $2 billion to $3 billion guidance range. At least two-thirds of the sales proceeds are expected to be utilized for debt reduction, while the remaining amount will be reinvested in the Company’s U.S. resource plays.

Significant Liquidity and Financial Strength

Devon exited the second quarter with $1.7 billion of cash on hand. Pro-forma for the recent asset sales, cash balances will increase to $4.6 billion and the Company had no borrowings on its $3 billion senior credit facility.

The Company’s consolidated debt was $12.7 billion at the end of the second quarter. Adjusted for asset sales, Devon’s net debt, which excludes non-recourse EnLink obligations, declines to $4.7 billion. The Company’s ownership in EnLink is valued at greater than $3 billion and is expected to generate cash distributions of $270 million in 2016.

Cash Inflow Exceeds $800 Million

In the second quarter of 2016 Devon had a reported net loss of $1.6 billion, or $3.04 per share. Adjusting for items that securities analysts typically exclude from their published estimates, Devon’s core earnings totaled $33 million, or $0.06 per share.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) reached $649 million in the second quarter of 2016. The closing of the Company’s non-core Mississippian assets added approximately $200 million of additional cash flow in the second quarter of 2016, bringing cash inflows to more than $800 million.

Non-GAAP Reconciliations

Pursuant to regulatory disclosure requirements, Devon is required to reconcile non-GAAP (generally accepted accounting principles) financial measures to the related GAAP information. Net debt, adjusted net debt, core earnings, core earnings per share and adjusted EBITDA referenced within the commentary of this release are non-GAAP financial measures. Reconciliations of these non-GAAP measures are provided within the tables of this release.

Page 3 of 17

Conference Call Webcast and Supplemental Earnings Materials

Please note that as soon as practicable today, Devon will post an operations report to its website at www.devonenergy.com. The Company’s second-quarter conference call will be held at 10 a.m. Central (11 a.m. Eastern) on Wednesday, Aug. 3, 2016, and will serve primarily as a forum for analyst and investor questions and answers.

Forward-Looking Statements

This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission (SEC). Such statements include those concerning strategic plans, expectations and objectives for future operations, and are often identified by use of the words “expects,” “believes,” “will,” “would,” “could,” “forecasts,” “projections,” “estimates,” “plans,” “expectations,” “targets,” “opportunities,” “potential,” “anticipates,” “outlook” and other similar terminology. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. Statements regarding our business and operations are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to: the volatility of oil, gas and NGL prices, including the currently depressed commodity price environment; uncertainties inherent in estimating oil, gas and NGL reserves; the extent to which we are successful in acquiring and discovering additional reserves; the uncertainties, costs and risks involved in exploration and development activities; risks related to our hedging activities; counterparty credit risks; regulatory restrictions, compliance costs and other risks relating to governmental regulation, including with respect to environmental matters; risks relating to our indebtedness; our ability to successfully complete mergers, acquisitions and divestitures; the extent to which insurance covers any losses we may experience; our limited control over third parties who operate our oil and gas properties; midstream capacity constraints and potential interruptions in production; competition for leases, materials, people and capital; cyberattacks targeting our systems and infrastructure; and any of the other risks and uncertainties identified in our Form 10-K and our other filings with the SEC. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this press release are made as of the date of this press release, even if subsequently made available by Devon on its website or otherwise. Devon does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.

The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC’s definitions for such terms, and price and cost sensitivities for such reserves, and prohibits disclosure of resources that do not constitute such reserves. This release may contain certain terms, such as resource potential and exploration target size. These estimates are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being actually realized. The SEC guidelines strictly prohibit us from including these estimates in filings with the SEC. Investors are urged to consider closely the disclosure in our Form 10-K, available at www.devonenergy.com. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or from the SEC’s website at www.sec.gov.

Page 4 of 17

About Devon Energy

Devon Energy is a leading independent energy company engaged in finding and producing oil and natural gas. Based in Oklahoma City and included in the S&P 500, Devon operates in several of the most prolific oil and natural gas plays in the U.S. and Canada with an emphasis on a balanced portfolio. The Company is the second-largest oil producer among North American onshore independents. For more information, please visit www.devonenergy.com.

Investor Contacts

Howard Thill, 405-552-3693

Scott Coody, 405-552-4735

Chris Carr, 405-228-2496

Media Contact

John Porretto, 405-228-7506

Page 5 of 17

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION


PRODUCTION NET OF ROYALTIES	Quarter Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015

Oil and bitumen (MBbls/d)
U. S. - Core		110		131		119		129
Heavy Oil		121		98		124		101

Core assets		231		229		243		230
Other		28		41		29		41

Total		259		270		272		271

Natural gas liquids (MBbls/d)
U. S. - Core		103		100		105		102
Other		28		34		29		34

Total		131		134		134		136

Gas (MMcf/d)
U. S. - Core		1,239		1,288		1,267		1,296
Heavy Oil		28		20		22		24

Core assets		1,267		1,308		1,289		1,320
Other		260		319		265		316

Total		1,527		1,627		1,554		1,636

Oil equivalent (MBoe/d)
U. S. - Core		419		446		436		448
Heavy Oil		126		101		127		105

Core assets		545		547		563		553
Other		99		127		102		126

Total		644		674		665		679


KEY OPERATING STATISTICS BY REGION
	Quarter Ended June 30, 2016
	Avg. Production (MBoe/d)		Gross Wells Drilled		Operated Rigs at June 30, 2016
STACK		91		24		2
Delaware Basin		65		14		—
Eagle Ford		75		6		—
Rockies Oil		21		—		—
Heavy Oil		126		—		—
Barnett Shale		167		—		—

Core assets		545		44		2

Page 6 of 17

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION


PRODUCTION TREND	2015						2016
	Quarter 2		Quarter 3		Quarter 4		Quarter 1		Quarter 2

Oil and bitumen (MBbls/d)
STACK		6		6		7		14		17
Delaware Basin		41		41		42		38		36
Eagle Ford		67		62		60		59		41
Rockies Oil		16		16		16		17		15
Heavy Oil		98		121		121		126		121
Barnett Shale		1		1		1		1		1

Core assets		229		247		247		255		231
Other		41		35		31		30		28

Total		270		282		278		285		259

Natural gas liquids (MBbls/d)
STACK		16		22		23		29		29
Delaware Basin		10		8		11		12		13
Eagle Ford		24		26		27		24		17
Rockies Oil		1		2		1		1		1
Barnett Shale		49		44		46		42		43

Core assets		100		102		108		108		103
Other		34		32		31		29		28

Total		134		134		139		137		131

Gas (MMcf/d)
STACK		221		216		235		286		267
Delaware Basin		75		70		82		84		99
Eagle Ford		146		154		151		144		103
Rockies Oil		41		41		38		32		31
Heavy Oil		20		16		24		15		28
Barnett Shale		805		788		768		749		739

Core assets		1,308		1,285		1,298		1,310		1,267
Other		319		301		285		271		260

Total		1,627		1,586		1,583		1,581		1,527

Oil equivalent (MBoe/d)
STACK		59		64		70		91		91
Delaware Basin		64		61		66		63		65
Eagle Ford		114		113		111		107		75
Rockies Oil		24		25		23		23		21
Heavy Oil		101		124		126		129		126
Barnett Shale		185		176		175		168		167

Core assets		547		563		571		581		545
Other		127		117		110		104		99

Total		674		680		681		685		644

Page 7 of 17

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION


BENCHMARK PRICES
(average prices)	Quarter 2						June YTD
	2016			2015			2016		2015
Oil ($/Bbl) - West Texas Intermediate (Cushing)	$	45.54		$	57.78		$	39.60	$	53.33
Natural Gas ($/Mcf) - Henry Hub	$	1.95		$	2.65		$	2.02	$	2.82

REALIZED PRICES	Quarter Ended June 30, 2016
	Oil /Bitumen (Per Bbl)			NGL (Per Bbl)			Gas (Per Mcf)		Total (Per Boe)
United States	$	41.56		$	10.14		$	1.40	$	17.68
Canada	$	22.53			N/M			N/M	$	21.85

Realized price without hedges	$	32.64		$	10.14		$	1.40	$	18.50
Cash settlements	$	(2.57	)	$	(0.25	)	$	0.24	$	(0.53	)

Realized price, including cash settlements	$	30.07		$	9.89		$	1.64	$	17.97


	Quarter Ended June 30, 2015
	Oil /Bitumen			NGL			Gas		Total
	(Per Bbl)			(Per Bbl)			(Per Mcf)		(Per Boe)
United States	$	52.52		$	10.31		$	2.13	$	24.18
Canada	$	36.49			N/M			N/M	$	35.33

Realized price without hedges	$	46.69		$	10.31		$	2.13	$	25.86
Cash settlements	$	16.08		$	—		$	0.58	$	7.83

Realized price, including cash settlements	$	62.77		$	10.31		$	2.71	$	33.69


	Six Months Ended June 30, 2016
	Oil /Bitumen			NGL			Gas		Total
	(Per Bbl)			(Per Bbl)			(Per Mcf)		(Per Boe)
United States	$	34.70		$	8.46		$	1.47	$	15.89
Canada	$	15.71			N/M			N/M	$	15.33

Realized price without hedges	$	26.05		$	8.46		$	1.47	$	15.78
Cash settlements	$	(1.23	)	$	(0.13	)	$	0.18	$	(0.10	)

Realized price, including cash settlements	$	24.82		$	8.33		$	1.65	$	15.68


	Six Months Ended June 30, 2015
	Oil /Bitumen			NGL			Gas		Total
	(Per Bbl)			(Per Bbl)			(Per Mcf)		(Per Boe)
United States	$	47.74		$	9.85		$	2.29	$	22.93
Canada	$	29.51			N/M			N/M	$	28.56

Realized price without hedges	$	40.94		$	9.85		$	2.29	$	23.80
Cash settlements	$	18.59		$	—		$	0.55	$	8.72

Realized price, including cash settlements	$	59.53		$	9.85		$	2.84	$	32.52

Page 8 of 17

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION


CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except per share amounts)	Quarter Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Oil, gas and NGL sales	$	1,085		$	1,587		$	1,910		$	2,926
Oil, gas and NGL derivatives		(142	)		(282	)		(109	)		12
Marketing and midstream revenues		1,545			2,088			2,813			3,720

Total operating revenues		2,488			3,393			4,614			6,658

Lease operating expenses		416			562			860			1,115
Marketing and midstream operating expenses		1,338			1,863			2,404			3,302
General and administrative expenses		147			212			341			463
Production and property taxes		75			116			153			224
Depreciation, depletion and amortization		484			814			1,026			1,744
Asset impairments		1,497			4,168			4,532			9,628
Restructuring and transaction costs		24			—			271			—
Other operating items		4			21			24			40

Total operating expenses		3,985			7,756			9,611			16,516

Operating loss		(1,497	)		(4,363	)		(4,997	)		(9,858	)
Net financing costs		163			125			327			242
Other nonoperating items		85			(9	)		106			3

Loss before income taxes		(1,745	)		(4,479	)		(5,430	)		(10,103	)
Income tax benefit		(182	)		(1,686	)		(399	)		(3,721	)

Net loss		(1,563	)		(2,793	)		(5,031	)		(6,382	)
Net earnings (loss) attributable to noncontrolling interests		7			23			(405	)		33

Net loss attributable to Devon	$	(1,570	)	$	(2,816	)	$	(4,626	)	$	(6,415	)

Net loss per share attributable to Devon:
Basic	$	(3.04	)	$	(6.94	)	$	(9.33	)	$	(15.81	)
Diluted	$	(3.04	)	$	(6.94	)	$	(9.33	)	$	(15.81	)

Weighted average common shares outstanding:
Basic		524			411			502			411
Diluted		524			411			502			411

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DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION


CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
	Quarter Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Cash flows from operating activities:
Net loss	$	(1,563	)	$	(2,793	)	$	(5,031	)	$	(6,382	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation, depletion and amortization		484			814			1,026			1,744
Asset impairments		1,497			4,168			4,532			9,628
Deferred income tax benefit		(179	)		(1,593	)		(386	)		(3,640	)
Derivatives and other financial instruments		223			305			417			(125	)
Cash settlements on derivatives and financial instruments		(44	)		464			(148	)		1,183
Other noncash charges		88			41			21			266
Net change in working capital		(153	)		(189	)		45			26
Change in long-term other assets		(40	)		18			13			159
Change in long-term other liabilities		22			(134	)		(5	)		(110	)

Net cash from operating activities		335			1,101			484			2,749

Cash flows from investing activities:
Capital expenditures		(489	)		(1,432	)		(1,238	)		(3,149	)
Acquisitions of property, equipment and businesses		(11	)		(13	)		(1,638	)		(417	)
Divestitures of property and equipment		191			6			209			8
Other		(26	)		(8	)		(27	)		(5	)

Net cash from investing activities		(335	)		(1,447	)		(2,694	)		(3,563	)

Cash flows from financing activities:
Borrowings of long-term debt, net of issuance costs		450			2,094			846			3,051
Repayments of long-term debt		(290	)		(1,034	)		(549	)		(1,521	)
Net short-term repayments		—			(778	)		(626	)		(763	)
Issuance of common stock		—			—			1,469			—
Sale of subsidiary units		—			85			—			654
Issuance of subsidiary units		49			2			776			4
Dividends paid on common stock		(33	)		(98	)		(158	)		(197	)
Distributions to noncontrolling interests		(74	)		(65	)		(147	)		(118	)
Other		(2	)		4			(2	)		(8	)

Net cash from financing activities		100			210			1,609			1,102

Effect of exchange rate changes on cash		(12	)		3			14			(43	)
Net change in cash and cash equivalents		88			(133	)		(587	)		245
Cash and cash equivalents at beginning of period		1,635			1,858			2,310			1,480

Cash and cash equivalents at end of period	$	1,723		$	1,725		$	1,723		$	1,725

Page 10 of 17

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION


CONSOLIDATED BALANCE SHEETS
(in millions)	June 30,			December 31,
	2016			2015
Current assets:
Cash and cash equivalents	$	1,723		$	2,310
Accounts receivable		1,167			1,105
Assets held for sale		728			—
Other current assets		364			606

Total current assets		3,982			4,021

Property and equipment, at cost:
Oil and gas, based on full cost accounting:
Subject to amortization		80,066			78,190
Not subject to amortization		3,798			2,584

Total oil and gas		83,864			80,774
Midstream and other		10,243			10,380

Total property and equipment, at cost		94,107			91,154
Less accumulated depreciation, depletion and amortization		(77,292	)		(72,086	)

Property and equipment, net		16,815			19,068

Goodwill		4,159			5,032
Other long-term assets		2,288			1,330

Total assets	$	27,244		$	29,451


Current liabilities:
Accounts payable	$	545		$	906
Revenues and royalties payable		819			763
Short-term debt		350			976
Liabilities held for sale		205			—
Other current liabilities		1,010			650

Total current liabilities		2,929			3,295

Long-term debt		12,357			12,056
Asset retirement obligations		1,473			1,370
Other long-term liabilities		1,011			853
Deferred income taxes		555			888
Stockholders’ equity:
Common stock		52			42
Additional paid-in capital		7,500			4,996
Retained earnings (accumulated deficit)		(2,970	)		1,781
Accumulated other comprehensive earnings		265			230

Total stockholders’ equity attributable to Devon		4,847			7,049
Noncontrolling interests		4,072			3,940

Total stockholders’ equity		8,919			10,989

Total liabilities and stockholders’ equity	$	27,244		$	29,451

Common shares outstanding		524			418

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DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION


CONSOLIDATING STATEMENTS OF OPERATIONS
(in millions)
	Quarter Ended June 30, 2016
	Devon U.S. & Canada			EnLink			Eliminations			Total
Oil, gas and NGL sales	$	1,085		$	—		$	—		$	1,085
Oil, gas and NGL derivatives		(142	)		—			—			(142	)
Marketing and midstream revenues		688			1,033			(176	)		1,545

Total operating revenues		1,631			1,033			(176	)		2,488

Lease operating expenses		416			—			—			416
Marketing and midstream operating expenses		692			822			(176	)		1,338
General and administrative expenses		118			29			—			147
Production and property taxes		64			11			—			75
Depreciation, depletion and amortization		359			125			—			484
Asset impairments		1,497			—			—			1,497
Restructuring and transaction costs		23			1			—			24
Other operating items		4			—			—			4

Total operating expenses		3,173			988			(176	)		3,985

Operating earnings (loss)		(1,542	)		45			—			(1,497	)
Net financing costs		117			46			—			163
Other nonoperating items		85			—			—			85

Loss before income taxes		(1,744	)		(1	)		—			(1,745	)
Income tax benefit		(180	)		(2	)		—			(182	)

Net earnings (loss)		(1,564	)		1			—			(1,563	)
Net earnings attributable to noncontrolling interests		1			6			—			7

Net loss attributable to Devon	$	(1,565	)	$	(5	)	$	—		$	(1,570	)


OTHER KEY STATISTICS
(in millions)	Quarter Ended June 30, 2016
	Devon U.S. & Canada			EnLink			Eliminations		Total
Cash flow statement related items:
Operating cash flow	$	225		$	110		$	—	$	335
Capital expenditures	$	(336	)	$	(153	)	$	—	$	(489	)
Acquisitions of property, equipment and businesses	$	(17	)	$	6		$	—	$	(11	)
EnLink distributions received (paid)	$	66		$	(140	)	$	—	$	(74	)
Issuance of subsidiary units	$	—		$	49		$	—	$	49

Balance sheet statement items:
Net debt⁽¹⁾	$	7,630		$	3,354		$	—	$	10,984

(1)	Net debt is a non-GAAP measure. For a reconciliation of the comparable GAAP measure, see “Non-GAAP Financial Measures” later in this release.

Page 12 of 17

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION


CAPITAL EXPENDITURES
(in millions)
	Quarter Ended June 30, 2016		Six Months Ended June 30, 2016
Exploration and development capital	$	221	$	584
Capitalized G&A and interest		73		160
Acquisitions		12		1,530
Other		7		13

Devon capital expenditures ⁽¹⁾	$	313	$	2,287

(1)	Excludes $139 million and $684 million attributable to EnLink for the second quarter and first six months of 2016, respectively.

NON-GAAP FINANCIAL MEASURES

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

CORE EARNINGS

Devon’s reported net earnings include items of income and expense that are typically excluded by securities analysts in their published estimates of the Company’s financial results. Accordingly, the Company also uses the measures of core earnings and core earnings per share attributable to Devon. Devon believes these non-GAAP measures facilitate comparisons of its performance to earnings estimates published by securities analysts. Devon also believes these non-GAAP measures can facilitate comparisons of its performance between periods and to the performance of its peers. The following table summarizes the effects of these items on second-quarter 2016 earnings.


(in millions, except per share amounts)	Quarter Ended June 30, 2016
	Before-tax			After-tax			After Noncontrolling Interests			Per Share
Loss attributable to Devon (GAAP)	$	(1,745	)	$	(1,563	)	$	(1,570	)	$	(3.04	)
Adjustments:
Fair value changes in financial instruments and foreign currency		205			134			130			0.25
Restructuring and transaction costs		24			16			16			0.03
Deferred tax asset valuation allowance		—			467			467			0.91
Asset impairments		1,497			990			990			1.91

Core earnings (loss) attributable to Devon (Non-GAAP)	$	(19	)	$	44		$	33		$	0.06

Page 13 of 17

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

ADJUSTED EBITDA

We define Adjusted EBITDA, a non-GAAP financial measure, as EBITDA adjusted for certain items presented in the accompanying reconciliation. We believe that EBITDA is widely used by investors to measure a company’s performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired. In addition, Adjusted EBITDA generally excludes certain other items that management believes affect the comparability of operating results or are not related to Devon’s ongoing operations. Management uses Adjusted EBITDA to evaluate the company’s operational trends and performance relative to other oil and gas companies.


(in millions)	Quarter Ended June 30, 2016
Net loss (GAAP)	$	(1,563	)
Net financing costs		163
Income taxes		(182	)
Depreciation, depletion and amortization and impairments		1,981
Asset retirement obligation accretion		21

EBITDA		420
Restructuring and transaction costs		24
Fair value changes in financial instruments and foreign currency		205

Adjusted EBITDA (Non-GAAP)	$	649

NET DEBT AND ADJUSTED NET DEBT

Devon defines net debt as debt less cash and cash equivalents and net debt attributable to the consolidation of EnLink Midstream as presented in the following table. Adjusted net debt is net debt further adjusted for the estimated proceeds Devon expects to receive from the asset divestitures that have closed or will close in the third quarter of 2016. Devon believes that netting these sources of cash, including the estimated asset sale proceeds, against debt and adjusting for EnLink net debt provides a clearer picture of the future demands on cash from Devon to repay debt.


(in millions)	June 30, 2016
	Devon U.S. & Canada			EnLink			Devon Consolidated
Total debt (GAAP)	$	9,343		$	3,364		$	12,707
Less cash and cash equivalents		(1,713	)		(10	)		(1,723	)

Net debt (non-GAAP)		7,630			3,354			10,984
Proceeds from assets sales		(2,932	)		—			(2,932	)

Adjusted net debt (Non-GAAP)	$	4,698		$	3,354		$	8,052

Page 14 of 17

DEVON ENERGY CORPORATION

FORWARD LOOKING GUIDANCE


PRODUCTION GUIDANCE	Quarter 3				Full Year
	Low		High		Low		High

Oil and bitumen (MBbls/d)
U. S.		106		111		117		122
Heavy Oil		131		136		126		131

Retained assets		237		247		243		253
Divested assets		3		7		8		10

Total		240		254		251		263

Natural gas liquids (MBbls/d)
U. S.		101		105		105		109
Divested assets		5		10		12		14

Total		106		115		117		123

Gas (MMcf/d)
U. S.		1,200		1,230		1,245		1,275
Heavy Oil		14		18		15		20

Retained assets		1,214		1,248		1,260		1,295
Divested assets		70		80		120		125

Total		1,284		1,328		1,380		1,420

Oil equivalent (MBoe/d)
U. S.		407		421		430		444
Heavy Oil		133		139		128		134

Retained assets		540		560		558		578
Divested assets		20		30		40		45

Total		560		590		598		623


PRICE REALIZATIONS GUIDANCE	Quarter 3						Full Year
	Low			High			Low			High

Oil and bitumen - % of WTI
U. S.		86	%		96	%		83	%		93	%
Canada		47	%		57	%		38	%		48	%
NGL - realized price	$	8		$	12		$	8		$	12
Natural gas - % of Henry Hub		78	%		88	%		73	%		83	%

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DEVON ENERGY CORPORATION

FORWARD LOOKING GUIDANCE


OTHER GUIDANCE ITEMS	Quarter 3						Full Year
($ millions, except %)	Low			High			Low			High

Marketing & midstream operating profit	$	200		$	220		$	825		$	875
Lease operating expenses	$	380		$	420		$	1,600		$	1,700
General & administrative expenses	$	135		$	155		$	600		$	650
Production and property taxes	$	70		$	80		$	285		$	315
Depreciation, depletion and amortization	$	425		$	475		$	1,900		$	2,100
Other operating items	$	15		$	20		$	50		$	75
Net financing costs ⁽¹⁾	$	160		$	170		$	650		$	700
Current income tax rate		0.0	%		0.0	%		0.0	%		0.0	%
Deferred income tax rate		35.0	%		45.0	%		35.0	%		45.0	%

Total income tax rate		35.0	%		45.0	%		35.0	%		45.0	%


Net earnings attributable to noncontrolling interests	$	—		$	—		$	—		$	—

(1)	Full year 2016 includes $50 million of non-cash accretion on EnLink’s installment purchase obligations.


CAPITAL EXPENDITURES GUIDANCE	Quarter 3				Full Year
(in millions)	Low		High		Low		High

Exploration and development	$	275	$	325	$	1,100	$	1,300
Capitalized G&A		50		60		200		250
Capitalized interest		10		20		40		50
Other		5		15		30		45

Devon capital expenditures ⁽²⁾	$	340	$	420	$	1,370	$	1,645

(2)	Excludes capital expenditures related to EnLink.

Page 16 of 17

DEVON ENERGY CORPORATION

FORWARD LOOKING GUIDANCE


COMMODITY HEDGES
	Oil Commodity Hedges
	Price Swaps				Price Collars						Call Options Sold
Period	Volume (Bbls/d)		Weighted Average Price ($/Bbl)		Volume (Bbls/d)		Weighted Average Floor Price ($/Bbl)		Weighted Average Ceiling Price ($/Bbl)		Volume (Bbls/d)		Weighted Average Price ($/Bbl)
Q3-2016		33,000	$	48.37		65,000	$	40.37	$	46.91		18,500	$	55.00
Q4-2016		30,000	$	48.58		20,000	$	40.85	$	50.85		18,500	$	55.00
Q1-Q4 2017		6,470	$	51.24		10,115	$	46.44	$	56.44		—		—


	Oil Basis Swaps
Period	Index	Volume (Bbls/d)		Weighted Average Differential to WTI ($/Bbl)
Q3-2016	Western Canadian Select		50,000		(13.45	)
Q4-2016	Western Canadian Select		33,000		(13.40	)


	Natural Gas Commodity Hedges
	Price Swaps				Price Collars						Call Options Sold
Period	Volume (MMBtu/d)		Weighted Average Price ($/MMBtu)		Volume (MMBtu/d)		Weighted Average Floor Price ($/MMBtu)		Weighted Average Ceiling Price ($/MMBtu)		Volume (MMBtu/d)		Weighted Average Price ($/MMBtu)
Q3-2016		140,000	$	2.78		105,000	$	2.57	$	2.85		400,000	$	2.80
Q4-2016		155,000	$	2.83		305,000	$	2.71	$	2.92		400,000	$	2.80
Q1-Q4 2017		99,329	$	3.03		62,315	$	3.01	$	3.31		—		—

Devon’s oil derivatives settle against the average of the prompt month NYMEX West Texas Intermediate futures price. Devon’s natural gas derivatives settle against the Inside FERC first of the month Henry Hub index. Commodity hedge positions are shown as of July 27, 2016.

Page 17 of 17