In 2019, Devon announced that it had entered into an agreement to sell its Barnett Shale assets to BKV and subsequently amended the agreement in April 2020. Under the amended terms, Devon has agreed to sell its Barnett Shale assets for $570 million in cash, before purchase price adjustments, at closing, which is scheduled for October 1, 2020. Additionally, the agreement provides for contingent earnout payments to Devon of up to $260 million based upon future commodity prices, with upside participation beginning at a $2.75 Henry Hub natural gas price or a $50 WTI oil price. The contingent payment period commences on January 1, 2021 and has a term of four years. Under the terms of the agreement, Devon received deposit funds of $170 million in April 2020. The deposit is being held by Devon pursuant to the terms of the sale agreement, which only requires Devon to return such funds to BKV in the event the transaction does not close as a result of Devon’s breach of its closing obligations. The deposit is classified as current liabilities associated with discontinued operations on Devon’s consolidated balance sheets.

In connection with the announced sale of its Barnett Shale assets, approximately $88 million of the U.S. reporting unit goodwill was allocated to the Barnett Shale assets. Additionally, Devon ceased depreciation for all property, plant and equipment classified as assets held for sale on the date the sales agreement was approved by the Board of Directors. Devon also recognized a $748 million asset impairment in the fourth quarter of 2019 related to these assets, primarily due to the difference between the net carrying value and the purchase price, net of estimated customary purchase price adjustments. During the first quarter of 2020, Devon adjusted the estimated impairment $179 million, primarily due to the amended agreement terms. The valuation of the future contingent earnout payments included in the March 31, 2020 Barnett Shale impairment computation was $41 million. The value was derived utilizing a Monte Carlo valuation model and qualifies as a level 3 fair value measurement.

As of June 30, 2020, Devon has restricted approximately $20 million of cash to fund obligations in connection with the abandonment of certain gas processing contracts related to divestitures of other Barnett Shale assets that occurred in 2018 and is classified as cash restricted for discontinued operations on the consolidated balance sheets. Cash payments for these charges total approximately $2 million per quarter.

In the second quarter of 2019, Devon completed the sale of its Canadian business for $2.6 billion ($3.4 billion Canadian dollars), net of purchase price adjustments, and recognized a pre-tax gain of $223 million ($425 million net of tax, primarily due to a significant deferred tax benefit) in 2019. Current (cash) income and withholding taxes associated with the Canadian business were

approximately $175 million and were paid in the first half of 2020. The disposition of substantially all of Devon’s Canadian oil and gas assets resulted in Devon releasing its historical cumulative foreign currency translation adjustment of $1.2 billion from accumulated other comprehensive earnings to be included within the gain computation. The historical cumulative foreign currency translation portion of the gain is not taxable.

During the third quarter of 2019, Devon utilized a portion of the sales proceeds to early retire its $500 million of the 4.00% senior notes due July 15, 2021 and $1.0 billion of the 3.25% senior notes due May 15, 2022. Devon recognized a charge on the early retirement of these notes consisting of $52 million in cash retirement costs and $6 million of noncash charges.

As of June 30, 2020, Devon has restricted approximately $175 million of cash to fund obligations retained related to the Canadian business and is classified as cash restricted for discontinued operations on the consolidated balance sheets. The remaining obligations consist of a firm transportation agreement and office leases. Cash payments for these charges total approximately $6 million per quarter.

The following table presents the amounts reported in the consolidated statements of comprehensive earnings as discontinued operations.

	Three Months Ended June 30,								Six Months Ended June 30,
	Barnett Shale		Canada			Total			Barnett Shale			Canada			Total
2020
Oil, gas and NGL sales	$	77	$	—		$	77		$	169		$	—		$	169
Total revenues		77		—			77			169			—			169
Production expenses		74		—			74			148			—			148
Asset impairments		—		—			—			179			—			179
Asset dispositions		—		(2	)		(2	)		—			(2	)		(2	)
General and administrative expenses		—		—			—			—			1			1
Financing costs, net		—		—			—			—			(2	)		(2	)
Other expenses		2		(6	)		(4	)		(11	)		4			(7	)
Total expenses		76		(8	)		68			316			1			317
Earnings (loss) from discontinued operations before income taxes		1		8			9			(147	)		(1	)		(148	)
Income tax benefit		—		—			—			(32	)		—			(32	)
Net earnings (loss) from discontinued operations, net of tax	$	1	$	8		$	9		$	(115	)	$	(1	)	$	(116	)
2019
Oil, gas and NGL sales	$	115	$	379		$	494		$	264		$	730		$	994
Oil, gas and NGL derivatives		—		9			9			—			(95	)		(95	)
Marketing and midstream revenues		—		12			12			—			38			38
Total revenues		115		400			515			264			673			937
Production expenses		76		153			229			157			294			451
Exploration expenses		—		4			4			—			13			13
Marketing and midstream expenses		—		9			9			—			18			18
Depreciation, depletion and amortization		20		49			69			40			128			168
Asset impairments		—		37			37			—			37			37
Asset dispositions		1		(189	)		(188	)		2			(189	)		(187	)
General and administrative expenses		—		13			13			—			31			31
Financing costs, net		—		13			13			—			26			26
Restructuring and transaction costs		—		236			236			—			239			239
Other expenses		—		31			31			6			3			9
Total expenses		97		356			453			205			600			805
Earnings from discontinued operations before income taxes		18		44			62			59			73			132
Income tax expense (benefit)		3		(285	)		(282	)		12			(285	)		(273	)
Net earnings from discontinued operations, net of tax	$	15	$	329		$	344		$	47		$	358		$	405

The following table presents the carrying amounts of the assets and liabilities associated with discontinued operations on the consolidated balance sheets.

	As of June 30, 2020						As of December 31, 2019
	Barnett Shale		Canada		Total		Barnett Shale		Canada		Total
Cash restricted for discontinued operations	$	20	$	175	$	195	$	25	$	355	$	380

Accounts receivable	$	47	$	2	$	49	$	38	$	1	$	39
Other current assets		5		2		7		5		2		7
Oil and gas property and equipment, based on successful efforts accounting, net		593		—		593		751		—		751
Other property and equipment, net		11		—		11		11		—		11
Goodwill		88		—		88		88		—		88
Other long-term assets		—		82		82		—		81		81
Total assets associated with discontinued operations	$	744	$	86	$	830	$	893	$	84	$	977

Accounts payable	$	18	$	3	$	21	$	15	$	4	$	19
Revenues and royalties payable		33		3		36		44		3		47
Other current liabilities		188		53		241		19		233		252
Asset retirement obligations		143		—		143		141		—		141
Other long-term liabilities		15		147		162		16		169		185
Total liabilities associated with discontinued operations	$	397	$	206	$	603	$	235	$	409	$	644