Debt And Related Expenses

6 Months Ended

Jun. 30, 2019

13.	Debt and Related Expenses

A summary of debt is as follows:

	June 30, 2019			December 31, 2018

6.30% due January 15, 2019	$	—		$	162
5.85% due December 15, 2025		485			485
7.50% due September 15, 2027		73			73
7.875% due September 30, 2031 ⁽¹⁾		675			675
7.95% due April 15, 2032 ⁽¹⁾		366			366
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
Net discount on debentures and notes		(20	)		(21	)
Debt issuance costs		(35	)		(36	)
Total debt		4,294			4,454
Less amount classified as short-term debt		—			162
Total long-term debt	$	4,294		$	4,292

(1)

These senior notes were included in the 2018 tender offer repurchases discussed below.

Credit Lines

Devon has a $3.0 billion Senior Credit Facility. As of June 30, 2019, Devon had no outstanding borrowings under the Senior Credit Facility and had issued $3 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 noncash financial write-downs such as impairments. As of June 30, 2019, Devon was in compliance with this covenant with a debt-to-capitalization ratio of 23.4%.

In connection with the closing of the sale of its Canadian business, Devon reallocated and terminated all Canadian commitments under the Senior Credit Facility in accordance with the terms of the credit agreement governing the Senior Credit Facility. The termination of the Canadian subfacility was effective as of June 27, 2019, and such termination did not decrease the $3.0 billion in total revolving commitments under, or otherwise modify the terms of, the Senior Credit Facility.

Retirement of Senior Notes

In January 2019, Devon repaid the $162 million of 6.30% senior notes at maturity.

In the first quarter of 2018, Devon completed tender offers to repurchase $807 million in aggregate principal amount of debt securities, using cash on hand. This included $384 million of the 7.875% senior notes due September 30, 2031 and $423 million of the 7.95% senior notes due April 15, 2032. Devon recognized a $312 million loss on early retirement of debt, consisting of $304 million in cash retirement costs and $8 million of noncash charges. These costs, along with other charges associated with retiring the debt, are included in net financing costs in the consolidated comprehensive statements of earnings.

Net Financing Costs

The following schedule includes the components of net financing costs.

	Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018			2019			2018
Interest based on debt outstanding	$	65	$	68		$	130		$	151
Early retirement of debt		—		—			—			312
Other		1		(4	)		(4	)		(10	)
Total net financing costs	$	66	$	64		$	126		$	453