false DEVON ENERGY CORP/DE 0001090012 --12-31 Q3 0 0 0.5165 P2Y10M20D P2Y6M P1Y10M24D 0001090012 2021-01-01 2021-09-30 xbrli:shares 0001090012 2021-10-20 iso4217:USD 0001090012 dvn:OilGasAndNGLSalesMember 2021-07-01 2021-09-30 0001090012 dvn:OilGasAndNGLSalesMember 2020-07-01 2020-09-30 0001090012 dvn:OilGasAndNGLSalesMember 2021-01-01 2021-09-30 0001090012 dvn:OilGasAndNGLSalesMember 2020-01-01 2020-09-30 0001090012 2021-07-01 2021-09-30 0001090012 2020-07-01 2020-09-30 0001090012 2020-01-01 2020-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember 2021-07-01 2021-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember 2020-07-01 2020-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember 2021-01-01 2021-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember 2020-01-01 2020-09-30 0001090012 dvn:MarketingAndMidstreamExpensesMember 2021-07-01 2021-09-30 0001090012 dvn:MarketingAndMidstreamExpensesMember 2020-07-01 2020-09-30 0001090012 dvn:MarketingAndMidstreamExpensesMember 2021-01-01 2021-09-30 0001090012 dvn:MarketingAndMidstreamExpensesMember 2020-01-01 2020-09-30 iso4217:USD xbrli:shares 0001090012 2021-06-30 0001090012 2020-06-30 0001090012 2020-12-31 0001090012 2019-12-31 0001090012 2021-09-30 0001090012 2020-09-30 0001090012 dvn:CottonDrawMidstreamMember 2021-09-30 0001090012 dvn:CottonDrawMidstreamMember 2020-12-31 0001090012 us-gaap:CommonStockMember 2021-06-30 0001090012 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001090012 us-gaap:RetainedEarningsMember 2021-06-30 0001090012 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30 0001090012 us-gaap:NoncontrollingInterestMember 2021-06-30 0001090012 us-gaap:RetainedEarningsMember 2021-07-01 2021-09-30 0001090012 us-gaap:NoncontrollingInterestMember 2021-07-01 2021-09-30 0001090012 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-07-01 2021-09-30 0001090012 us-gaap:AdditionalPaidInCapitalMember 2021-07-01 2021-09-30 0001090012 us-gaap:TreasuryStockMember 2021-07-01 2021-09-30 0001090012 us-gaap:CommonStockMember 2021-09-30 0001090012 us-gaap:AdditionalPaidInCapitalMember 2021-09-30 0001090012 us-gaap:RetainedEarningsMember 2021-09-30 0001090012 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-09-30 0001090012 us-gaap:NoncontrollingInterestMember 2021-09-30 0001090012 us-gaap:CommonStockMember 2020-06-30 0001090012 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0001090012 us-gaap:RetainedEarningsMember 2020-06-30 0001090012 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0001090012 us-gaap:NoncontrollingInterestMember 2020-06-30 0001090012 us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0001090012 us-gaap:NoncontrollingInterestMember 2020-07-01 2020-09-30 0001090012 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-07-01 2020-09-30 0001090012 us-gaap:TreasuryStockMember 2020-07-01 2020-09-30 0001090012 us-gaap:AdditionalPaidInCapitalMember 2020-07-01 2020-09-30 0001090012 us-gaap:CommonStockMember 2020-09-30 0001090012 us-gaap:AdditionalPaidInCapitalMember 2020-09-30 0001090012 us-gaap:RetainedEarningsMember 2020-09-30 0001090012 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-30 0001090012 us-gaap:NoncontrollingInterestMember 2020-09-30 0001090012 us-gaap:CommonStockMember 2020-12-31 0001090012 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001090012 us-gaap:RetainedEarningsMember 2020-12-31 0001090012 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001090012 us-gaap:NoncontrollingInterestMember 2020-12-31 0001090012 us-gaap:RetainedEarningsMember 2021-01-01 2021-09-30 0001090012 us-gaap:NoncontrollingInterestMember 2021-01-01 2021-09-30 0001090012 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-09-30 0001090012 us-gaap:CommonStockMember 2021-01-01 2021-09-30 0001090012 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-09-30 0001090012 us-gaap:TreasuryStockMember 2021-01-01 2021-09-30 0001090012 us-gaap:CommonStockMember 2019-12-31 0001090012 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001090012 us-gaap:RetainedEarningsMember 2019-12-31 0001090012 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001090012 us-gaap:NoncontrollingInterestMember 2019-12-31 0001090012 us-gaap:RetainedEarningsMember 2020-01-01 2020-09-30 0001090012 us-gaap:NoncontrollingInterestMember 2020-01-01 2020-09-30 0001090012 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-09-30 0001090012 us-gaap:CommonStockMember 2020-01-01 2020-09-30 0001090012 us-gaap:TreasuryStockMember 2020-01-01 2020-09-30 0001090012 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-09-30 0001090012 dvn:DevonAndWPXAgreementMember 2021-01-01 2021-09-30 0001090012 dvn:WPXMember 2021-01-01 2021-09-30 0001090012 dvn:DevonAndWPXAgreementMember 2021-01-06 2021-01-07 xbrli:pure 0001090012 dvn:BarnettShaleMember 2021-09-30 0001090012 dvn:BarnettShaleMember 2021-07-01 2021-09-30 0001090012 dvn:WPXAndHowardEnergyPartnersAgreementMember 2021-09-30 utr:acre 0001090012 dvn:CatalystMember 2021-09-30 0001090012 dvn:OilGasAndNGLSalesMember dvn:OilMember 2021-07-01 2021-09-30 0001090012 dvn:OilGasAndNGLSalesMember dvn:OilMember 2020-07-01 2020-09-30 0001090012 dvn:OilGasAndNGLSalesMember dvn:OilMember 2021-01-01 2021-09-30 0001090012 dvn:OilGasAndNGLSalesMember dvn:OilMember 2020-01-01 2020-09-30 0001090012 dvn:OilGasAndNGLSalesMember dvn:GasMember 2021-07-01 2021-09-30 0001090012 dvn:OilGasAndNGLSalesMember dvn:GasMember 2020-07-01 2020-09-30 0001090012 dvn:OilGasAndNGLSalesMember dvn:GasMember 2021-01-01 2021-09-30 0001090012 dvn:OilGasAndNGLSalesMember dvn:GasMember 2020-01-01 2020-09-30 0001090012 dvn:OilGasAndNGLSalesMember dvn:NGLMember 2021-07-01 2021-09-30 0001090012 dvn:OilGasAndNGLSalesMember dvn:NGLMember 2020-07-01 2020-09-30 0001090012 dvn:OilGasAndNGLSalesMember dvn:NGLMember 2021-01-01 2021-09-30 0001090012 dvn:OilGasAndNGLSalesMember dvn:NGLMember 2020-01-01 2020-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember dvn:OilMember 2021-07-01 2021-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember dvn:OilMember 2020-07-01 2020-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember dvn:OilMember 2021-01-01 2021-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember dvn:OilMember 2020-01-01 2020-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember dvn:GasMember 2021-07-01 2021-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember dvn:GasMember 2020-07-01 2020-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember dvn:GasMember 2021-01-01 2021-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember dvn:GasMember 2020-01-01 2020-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember dvn:NGLMember 2021-07-01 2021-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember dvn:NGLMember 2020-07-01 2020-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember dvn:NGLMember 2021-01-01 2021-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember dvn:NGLMember 2020-01-01 2020-09-30 0001090012 dvn:DevonAndWPXAgreementMember 2021-09-30 0001090012 dvn:WPXMember 2021-09-30 0001090012 dvn:WPXMember 2021-07-01 2021-09-30 0001090012 dvn:WPXMember 2021-01-01 2021-09-30 0001090012 dvn:DevonAndWPXAgreementMember srt:ProFormaMember 2021-07-01 2021-09-30 0001090012 dvn:DevonAndWPXAgreementMember srt:ProFormaMember 2021-01-01 2021-09-30 0001090012 dvn:NonCoreAssetsMember 2021-01-01 2021-03-31 utr:MMBoe 0001090012 dvn:BarnettShaleMember dvn:BanpuKalninVenturesMember 2020-10-01 2020-12-31 iso4217:USD utr:MMBTU iso4217:USD utr:bbl 0001090012 dvn:BarnettShaleMember dvn:BanpuKalninVenturesMember srt:ScenarioForecastMember 2021-01-01 2024-12-31 0001090012 dvn:BarnettShaleMember dvn:BanpuKalninVenturesMember us-gaap:OtherCurrentAssetsMember 2021-01-01 2021-09-30 0001090012 dvn:BarnettShaleMember dvn:BanpuKalninVenturesMember us-gaap:OtherNoncurrentAssetsMember 2021-01-01 2021-09-30 0001090012 dvn:BarnettShaleMember dvn:BanpuKalninVenturesMember 2021-01-01 2021-09-30 utr:bbl 0001090012 dvn:NYMEXWestTexasIntermediatePriceSwapsOilQ42021Member 2021-01-01 2021-09-30 0001090012 dvn:NYMEXWestTexasIntermediatePriceSwapsOilQ1Q42022Member 2021-01-01 2021-09-30 0001090012 dvn:NYMEXWestTexasIntermediatePriceSwapsOilQ42021Member 2021-09-30 0001090012 dvn:NYMEXWestTexasIntermediatePriceSwapsOilQ1Q42022Member 2021-09-30 0001090012 dvn:NYMEXWestTexasIntermediatePriceSwaptionsOilQ1Q42022Member 2021-01-01 2021-09-30 0001090012 dvn:NYMEXWestTexasIntermediatePriceSwaptionsOilQ1Q42022Member 2021-09-30 0001090012 dvn:NYMEXWestTexasIntermediatePriceCollarsOilQ42021Member 2021-01-01 2021-09-30 0001090012 dvn:NYMEXWestTexasIntermediatePriceCollarsOilQ1Q42021Member 2021-01-01 2021-09-30 0001090012 dvn:NYMEXWestTexasIntermediatePriceCollarsOilQ42021Member 2021-09-30 0001090012 dvn:NYMEXWestTexasIntermediatePriceCollarsOilQ1Q42021Member 2021-09-30 0001090012 dvn:NYMEXWestTexasIntermediateCallOptionsSoldOilQ42021Member 2021-01-01 2021-09-30 0001090012 dvn:NYMEXWestTexasIntermediateCallOptionsSoldOilQ42021Member 2021-09-30 0001090012 dvn:MidlandSweetBasisSwapsOilQ42021Member 2021-01-01 2021-09-30 0001090012 dvn:GuernseyLightBasisSweetBasicSwapsOilQ42021Member 2021-01-01 2021-09-30 0001090012 dvn:BRENTBasisSwapsOilQ42021Member 2021-01-01 2021-09-30 0001090012 dvn:NYMEXRollBasisSwapsOilQ42021Member 2021-01-01 2021-09-30 0001090012 dvn:BRENTBasisSwapsOilQ1Q42022Member 2021-01-01 2021-09-30 0001090012 dvn:NYMEXRollBasisSwapsOilQ1Q42022Member 2021-01-01 2021-09-30 utr:MMBTU 0001090012 dvn:FERCHenryHubPriceSwapsNaturalGasQ42021Member 2021-01-01 2021-09-30 0001090012 dvn:FERCHenryHubPriceSwapsNaturalGas1Q1Q42022Member 2021-01-01 2021-09-30 0001090012 dvn:FERCHenryHubPriceSwapsNaturalGasQ42021Member 2021-09-30 0001090012 dvn:FERCHenryHubPriceSwapsNaturalGas1Q1Q42022Member 2021-09-30 0001090012 dvn:FERCHenryHubPriceSwaptionsNaturalGasQ1Q42022Member 2021-01-01 2021-09-30 0001090012 dvn:FERCHenryHubPriceSwaptionsNaturalGasQ1Q42022Member 2021-09-30 0001090012 dvn:FERCHenryHubPriceCollarsNaturalGasQ42021Member 2021-01-01 2021-09-30 0001090012 dvn:FERCHenryHubPriceCollarsNaturalGasQ1Q42022Member 2021-01-01 2021-09-30 0001090012 dvn:FERCHenryHubPriceCollarsNaturalGasQ1Q42023Member 2021-01-01 2021-09-30 0001090012 dvn:FERCHenryHubPriceCollarsNaturalGasQ42021Member 2021-09-30 0001090012 dvn:FERCHenryHubPriceCollarsNaturalGasQ1Q42022Member 2021-09-30 0001090012 dvn:FERCHenryHubPriceCollarsNaturalGasQ1Q42023Member 2021-09-30 0001090012 dvn:FERCHenryHubCallOptionsSoldNaturalGasQ42021Member 2021-01-01 2021-09-30 0001090012 dvn:FERCHenryHubCallOptionsSoldNaturalGasQ42021Member 2021-09-30 0001090012 dvn:FERCHenryHubNaturalGasMember 2021-01-01 2021-09-30 0001090012 dvn:FERCHenryHubNaturalGasMember 2021-09-30 0001090012 dvn:NYMEXWestTexasIntermediateMember 2021-01-01 2021-09-30 0001090012 dvn:NYMEXWestTexasIntermediateMember 2021-09-30 0001090012 dvn:ElPasoNaturalGasBasisSwapsQ42021Member 2021-01-01 2021-09-30 0001090012 dvn:WAHANaturalGasBasisSwapsQ42021Member 2021-01-01 2021-09-30 0001090012 dvn:WAHANaturalGasBasisSwapsQ1Q42022Member 2021-01-01 2021-09-30 0001090012 dvn:WAHANaturalGasBasisSwapsQ1Q42023Member 2021-01-01 2021-09-30 0001090012 dvn:WAHANaturalGasBasisSwapsQ1Q42024Member 2021-01-01 2021-09-30 0001090012 dvn:OPISMontBelvieuTexasNaturalGasolinePriceSwapsNGLQ42021Member 2021-01-01 2021-09-30 0001090012 dvn:OPISMontBelvieuTexasNormalButanePriceSwapsNGLQ42021Member 2021-01-01 2021-09-30 0001090012 dvn:OPISMontBelvieuTexasPropanePriceSwapsNGLQ42021Member 2021-01-01 2021-09-30 0001090012 dvn:OPISMontBelvieuTexasNaturalGasolinePriceSwapsNGLQ42021Member 2021-09-30 0001090012 dvn:OPISMontBelvieuTexasNormalButanePriceSwapsNGLQ42021Member 2021-09-30 0001090012 dvn:OPISMontBelvieuTexasPropanePriceSwapsNGLQ42021Member 2021-09-30 0001090012 dvn:ShortTermDerivativeAssetMember 2021-09-30 0001090012 dvn:ShortTermDerivativeLiabilityMember 2021-09-30 0001090012 dvn:LongTermDerivativeLiabilityMember 2021-09-30 0001090012 dvn:ShortTermDerivativeAssetMember 2020-12-31 0001090012 dvn:LongTermDerivativeAssetMember 2020-12-31 0001090012 dvn:ShortTermDerivativeLiabilityMember 2020-12-31 0001090012 dvn:LongTermDerivativeLiabilityMember 2020-12-31 0001090012 dvn:ShortTermDerivativeAssetMember 2021-01-01 2021-09-30 0001090012 dvn:LongTermDerivativeAssetMember 2021-01-01 2021-09-30 0001090012 dvn:ShortTermDerivativeLiabilityMember 2021-01-01 2021-09-30 0001090012 dvn:LongTermDerivativeLiabilityMember 2021-01-01 2021-09-30 0001090012 us-gaap:GeneralAndAdministrativeExpenseMember 2021-01-01 2021-09-30 0001090012 us-gaap:GeneralAndAdministrativeExpenseMember 2020-01-01 2020-09-30 0001090012 dvn:ExplorationExpensesMember 2021-01-01 2021-09-30 0001090012 dvn:ExplorationExpensesMember 2020-01-01 2020-09-30 0001090012 us-gaap:RestructuringChargesMember 2021-01-01 2021-09-30 0001090012 us-gaap:RestructuringChargesMember 2020-01-01 2020-09-30 0001090012 us-gaap:RestrictedStockUnitsRSUMember 2020-12-31 0001090012 us-gaap:RestrictedStockUnitsRSUMember 2021-01-01 2021-09-30 0001090012 us-gaap:RestrictedStockUnitsRSUMember 2021-09-30 0001090012 dvn:PerformanceBasedRestrictedStockAwardsMember 2020-12-31 0001090012 dvn:PerformanceBasedRestrictedStockAwardsMember 2021-01-01 2021-09-30 0001090012 us-gaap:PerformanceSharesMember 2020-12-31 0001090012 us-gaap:PerformanceSharesMember 2021-01-01 2021-09-30 0001090012 us-gaap:PerformanceSharesMember 2021-09-30 0001090012 srt:MaximumMember us-gaap:PerformanceSharesMember 2021-01-01 2021-09-30 0001090012 dvn:ProvedOilAndGasAssetsMember 2020-01-01 2020-09-30 0001090012 us-gaap:OtherAssetsMember 2020-01-01 2020-09-30 0001090012 dvn:UnprovedOilAndGasAssetsMember 2021-07-01 2021-09-30 0001090012 dvn:UnprovedOilAndGasAssetsMember 2020-07-01 2020-09-30 0001090012 dvn:UnprovedOilAndGasAssetsMember 2021-01-01 2021-09-30 0001090012 dvn:UnprovedOilAndGasAssetsMember 2020-01-01 2020-09-30 0001090012 dvn:ProvedAssetImpairmentsMember 2020-01-01 2020-03-31 0001090012 dvn:ProductLineFillImpairmentsMember 2020-01-01 2020-03-31 0001090012 us-gaap:OtherRestructuringMember 2021-07-01 2021-09-30 0001090012 us-gaap:OtherRestructuringMember 2020-07-01 2020-09-30 0001090012 us-gaap:OtherRestructuringMember 2021-01-01 2021-09-30 0001090012 us-gaap:OtherRestructuringMember 2020-01-01 2020-09-30 0001090012 dvn:TransactionCostsMember 2021-07-01 2021-09-30 0001090012 dvn:TransactionCostsMember 2021-01-01 2021-09-30 0001090012 dvn:CostReductionPlanMember 2021-01-01 2021-09-30 0001090012 dvn:ReductionOfWorkforceMember 2021-01-01 2021-09-30 0001090012 dvn:ReductionOfWorkforceMember dvn:PensionAndPostretirementDefinedBenefitSettlementsMember 2021-01-01 2021-09-30 0001090012 dvn:TransactionCostsMember 2021-09-30 0001090012 dvn:CostReductionPlanMember 2020-07-01 2020-09-30 0001090012 us-gaap:OtherCurrentLiabilitiesMember 2020-12-31 0001090012 us-gaap:OtherNoncurrentLiabilitiesMember 2020-12-31 0001090012 us-gaap:OtherCurrentLiabilitiesMember dvn:MergerIntegrationMember 2021-01-01 2021-09-30 0001090012 dvn:MergerIntegrationMember 2021-01-01 2021-09-30 0001090012 us-gaap:OtherCurrentLiabilitiesMember dvn:PriorYearsRestructuringsMember 2021-01-01 2021-09-30 0001090012 us-gaap:OtherNoncurrentLiabilitiesMember dvn:PriorYearsRestructuringsMember 2021-01-01 2021-09-30 0001090012 dvn:PriorYearsRestructuringsMember 2021-01-01 2021-09-30 0001090012 us-gaap:OtherCurrentLiabilitiesMember 2021-09-30 0001090012 us-gaap:OtherNoncurrentLiabilitiesMember 2021-09-30 0001090012 us-gaap:OtherCurrentLiabilitiesMember 2019-12-31 0001090012 us-gaap:OtherNoncurrentLiabilitiesMember 2019-12-31 0001090012 us-gaap:OtherCurrentLiabilitiesMember dvn:PriorYearsRestructuringsMember 2020-01-01 2020-09-30 0001090012 dvn:PriorYearsRestructuringsMember 2020-01-01 2020-09-30 0001090012 us-gaap:OtherCurrentLiabilitiesMember 2020-09-30 0001090012 us-gaap:OtherNoncurrentLiabilitiesMember 2020-09-30 0001090012 dvn:WPXMergerMember 2021-09-30 0001090012 us-gaap:DomesticCountryMember 2021-09-30 0001090012 dvn:TotalPropertyAndEquipmentNetAndAccountsPayableMember 2021-09-30 0001090012 dvn:TotalPropertyAndEquipmentNetAndAccountsPayableMember 2020-12-31 0001090012 us-gaap:AccountsPayableMember dvn:WPXMember 2021-01-07 0001090012 dvn:OilGasAndNGLSalesMember 2021-09-30 0001090012 dvn:OilGasAndNGLSalesMember 2020-12-31 0001090012 dvn:MarketingAndMidstreamRevenuesMember 2021-09-30 0001090012 dvn:MarketingAndMidstreamRevenuesMember 2020-12-31 0001090012 dvn:EightPointTwoFivePercentDueAugustOneTwoThousandTwentyThreeMember 2021-09-30 0001090012 dvn:FivePointTwoFivePercentDueSeptemberFifteenTwoThousandTwentyFourMember 2021-09-30 0001090012 dvn:FivePointEightFivePercentDueDecemberFifteenthTwoThousandTwentyFiveMember 2021-09-30 0001090012 dvn:FivePointEightFivePercentDueDecemberFifteenthTwoThousandTwentyFiveMember 2020-12-31 0001090012 dvn:SevenPointFiveZeroPercentDueSeptemberFifteenthTwoThousandAndTwentySevenMember 2021-09-30 0001090012 dvn:SevenPointFiveZeroPercentDueSeptemberFifteenthTwoThousandAndTwentySevenMember 2020-12-31 0001090012 dvn:FivePointTwoFivePercentDueOctoberFifteenTwoThousandTwentySevenMember 2021-09-30 0001090012 dvn:FivePointEightSevenFiveDueJuneFifteenTwoThousandTwentyEightMember 2021-09-30 0001090012 dvn:FourPointFiveZeroPercentDueJanuaryFifteenTwoThousandThirtyMember 2021-09-30 0001090012 dvn:SevenPointEightSevenFivePercentDueSeptemberThirtiethTwoThousandAndThirtyOneMember 2021-09-30 0001090012 dvn:SevenPointEightSevenFivePercentDueSeptemberThirtiethTwoThousandAndThirtyOneMember 2020-12-31 0001090012 dvn:SevenPointNineFivePercentDueAprilFifteenthTwoThousandAndThirtyTwoMember 2021-09-30 0001090012 dvn:SevenPointNineFivePercentDueAprilFifteenthTwoThousandAndThirtyTwoMember 2020-12-31 0001090012 dvn:FivePointSixZeroPercentDueJulyFifteenthTwoThousandAndFortyOneMember 2021-09-30 0001090012 dvn:FivePointSixZeroPercentDueJulyFifteenthTwoThousandAndFortyOneMember 2020-12-31 0001090012 dvn:FourPointSevenFivePercentDueMayFifteenthTwoThousandFortyTwoMember 2021-09-30 0001090012 dvn:FourPointSevenFivePercentDueMayFifteenthTwoThousandFortyTwoMember 2020-12-31 0001090012 dvn:FivePointZeroZeroPercentDueJuneFifteenTwoThousandAndFortyFiveMember 2021-09-30 0001090012 dvn:FivePointZeroZeroPercentDueJuneFifteenTwoThousandAndFortyFiveMember 2020-12-31 0001090012 dvn:EightPointTwoFivePercentDueAugustOneTwoThousandTwentyThreeMember 2020-12-31 0001090012 dvn:EightPointTwoFivePercentDueAugustOneTwoThousandTwentyThreeMember 2021-01-01 2021-09-30 0001090012 dvn:FivePointTwoFivePercentDueSeptemberFifteenTwoThousandTwentyFourMember 2020-12-31 0001090012 dvn:FivePointTwoFivePercentDueSeptemberFifteenTwoThousandTwentyFourMember 2021-01-01 2021-09-30 0001090012 dvn:FivePointEightFivePercentDueDecemberFifteenthTwoThousandTwentyFiveMember 2021-01-01 2021-09-30 0001090012 dvn:SevenPointFiveZeroPercentDueSeptemberFifteenthTwoThousandAndTwentySevenMember 2021-01-01 2021-09-30 0001090012 dvn:FivePointTwoFivePercentDueOctoberFifteenTwoThousandTwentySevenMember 2020-12-31 0001090012 dvn:FivePointTwoFivePercentDueOctoberFifteenTwoThousandTwentySevenMember 2021-01-01 2021-09-30 0001090012 dvn:FivePointEightSevenFiveDueJuneFifteenTwoThousandTwentyEightMember 2020-12-31 0001090012 dvn:FivePointEightSevenFiveDueJuneFifteenTwoThousandTwentyEightMember 2021-01-01 2021-09-30 0001090012 dvn:FourPointFiveZeroPercentDueJanuaryFifteenTwoThousandThirtyMember 2020-12-31 0001090012 dvn:FourPointFiveZeroPercentDueJanuaryFifteenTwoThousandThirtyMember 2021-01-01 2021-09-30 0001090012 dvn:SevenPointEightSevenFivePercentDueSeptemberThirtiethTwoThousandAndThirtyOneMember 2021-01-01 2021-09-30 0001090012 dvn:SevenPointNineFivePercentDueAprilFifteenthTwoThousandAndThirtyTwoMember 2021-01-01 2021-09-30 0001090012 dvn:FivePointSixZeroPercentDueJulyFifteenthTwoThousandAndFortyOneMember 2021-01-01 2021-09-30 0001090012 dvn:FourPointSevenFivePercentDueMayFifteenthTwoThousandFortyTwoMember 2021-01-01 2021-09-30 0001090012 dvn:FivePointZeroZeroPercentDueJuneFifteenTwoThousandAndFortyFiveMember 2021-01-01 2021-09-30 0001090012 dvn:SixPointThreeZeroPercentDueJanuaryFifteenthTwoThousandAndNineteenMember dvn:WPXMember 2021-09-30 0001090012 dvn:EightPointTwoFivePercentDueAugustOneTwoThousandTwentyThreeMember dvn:WPXMember 2021-09-30 0001090012 dvn:FivePointTwoFivePercentDueSeptemberFifteenTwoThousandTwentyFourMember dvn:WPXMember 2021-09-30 0001090012 dvn:FivePointSevenFivePercentDueJuneOneTwoThousandTwentySixMember dvn:WPXMember 2021-09-30 0001090012 dvn:FivePointTwoFivePercentDueOctoberFifteenTwoThousandTwentySevenMember dvn:WPXMember 2021-09-30 0001090012 dvn:FivePointEightSevenFiveDueJuneFifteenTwoThousandTwentyEightMember dvn:WPXMember 2021-09-30 0001090012 dvn:FourPointFiveZeroPercentDueJanuaryFifteenTwoThousandThirtyMember dvn:WPXMember 2021-09-30 0001090012 dvn:EightPointTwoFivePercentDueAugustOneTwoThousandTwentyThreeMember dvn:WPXMember 2021-01-01 2021-09-30 0001090012 dvn:FivePointTwoFivePercentDueSeptemberFifteenTwoThousandTwentyFourMember dvn:WPXMember 2021-01-01 2021-09-30 0001090012 dvn:FivePointSevenFivePercentDueJuneOneTwoThousandTwentySixMember dvn:WPXMember 2021-01-01 2021-09-30 0001090012 dvn:FivePointTwoFivePercentDueOctoberFifteenTwoThousandTwentySevenMember dvn:WPXMember 2021-01-01 2021-09-30 0001090012 dvn:FivePointEightSevenFiveDueJuneFifteenTwoThousandTwentyEightMember dvn:WPXMember 2021-01-01 2021-09-30 0001090012 dvn:FourPointFiveZeroPercentDueJanuaryFifteenTwoThousandThirtyMember dvn:WPXMember 2021-01-01 2021-09-30 0001090012 dvn:SixPointZeroZeroPercentDueTwoThousandAndTwentyTwoMember us-gaap:SeniorNotesMember 2021-01-01 2021-09-30 0001090012 dvn:SixPointZeroZeroPercentDueTwoThousandAndTwentyTwoMember us-gaap:SeniorNotesMember 2021-09-30 0001090012 dvn:FivePointEightSevenFivePercentDueTwoThousandAndTwentyEightMember us-gaap:SeniorNotesMember 2021-01-01 2021-09-30 0001090012 dvn:FivePointEightSevenFivePercentDueTwoThousandAndTwentyEightMember us-gaap:SeniorNotesMember 2021-09-30 0001090012 dvn:FourPointFivePercentDueTwoThousandAndThirtyMember us-gaap:SeniorNotesMember 2021-01-01 2021-09-30 0001090012 dvn:FourPointFivePercentDueTwoThousandAndThirtyMember us-gaap:SeniorNotesMember 2021-09-30 0001090012 dvn:FivePointTwoFivePercentDueTwoThousandAndTwentySevenMember us-gaap:SeniorNotesMember 2021-01-01 2021-09-30 0001090012 dvn:FivePointTwoFivePercentDueTwoThousandAndTwentySevenMember us-gaap:SeniorNotesMember 2021-09-30 0001090012 dvn:FivePointSevenFivePercentDueJuneOneTwoThousandTwentySixMember us-gaap:SeniorNotesMember 2021-01-01 2021-09-30 0001090012 dvn:FivePointSevenFivePercentDueJuneOneTwoThousandTwentySixMember us-gaap:SeniorNotesMember 2021-09-30 0001090012 us-gaap:SeniorNotesMember 2021-01-01 2021-09-30 0001090012 us-gaap:LineOfCreditMember 2021-09-30 0001090012 us-gaap:LineOfCreditMember srt:MaximumMember 2021-09-30 0001090012 2021-01-06 2021-01-07 0001090012 dvn:DevonAndWPXAgreementMember 2021-01-07 0001090012 dvn:FirstQuarter2020ShareRepurchaseProgramMember 2020-01-01 2020-03-31 0001090012 2020-01-01 2020-03-31 0001090012 us-gaap:SubsequentEventMember 2021-11-02 0001090012 us-gaap:SubsequentEventMember 2021-11-02 2021-11-02 0001090012 dvn:FixedDividendMember 2021-01-01 2021-03-31 0001090012 dvn:FixedDividendMember 2021-04-01 2021-06-30 0001090012 dvn:FixedDividendMember 2021-07-01 2021-09-30 0001090012 dvn:FixedDividendMember 2021-01-01 2021-09-30 0001090012 dvn:FixedDividendMember 2020-01-01 2020-03-31 0001090012 dvn:FixedDividendMember 2020-04-01 2020-06-30 0001090012 dvn:FixedDividendMember 2020-07-01 2020-09-30 0001090012 dvn:FixedDividendMember 2020-01-01 2020-09-30 0001090012 dvn:VariableDividendMember 2021-01-01 2021-03-31 0001090012 dvn:VariableDividendMember 2021-04-01 2021-06-30 0001090012 dvn:VariableDividendMember 2021-07-01 2021-09-30 0001090012 dvn:VariableDividendMember 2021-01-01 2021-09-30 0001090012 2021-01-01 2021-03-31 0001090012 2021-04-01 2021-06-30 0001090012 2020-04-01 2020-06-30 0001090012 us-gaap:SubsequentEventMember dvn:FixedDividendMember 2021-11-02 0001090012 us-gaap:SubsequentEventMember dvn:FixedDividendMember 2021-11-02 2021-11-02 0001090012 us-gaap:SubsequentEventMember dvn:VariableDividendMember 2021-11-02 0001090012 dvn:BanpuKalninVenturesMember dvn:BarnettShaleMember 2020-10-01 2020-10-01 0001090012 srt:ScenarioForecastMember srt:MaximumMember dvn:BanpuKalninVenturesMember dvn:BarnettShaleMember 2021-01-01 2024-12-31 0001090012 dvn:BanpuKalninVenturesMember dvn:BarnettShaleMember 2021-01-01 2021-09-30 0001090012 dvn:BarnettShaleDiscontinuedOperationsMember 2020-01-01 2020-09-30 0001090012 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2021-09-30 0001090012 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2021-09-30 0001090012 us-gaap:FairValueInputsLevel1Member 2021-09-30 0001090012 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:CommodityContractMember 2021-09-30 0001090012 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:CommodityContractMember 2021-09-30 0001090012 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel2Member 2021-09-30 0001090012 us-gaap:FairValueInputsLevel2Member 2021-09-30 0001090012 us-gaap:FairValueInputsLevel3Member 2021-09-30 0001090012 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2020-12-31 0001090012 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-12-31 0001090012 us-gaap:FairValueInputsLevel1Member 2020-12-31 0001090012 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:CommodityContractMember 2020-12-31 0001090012 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:CommodityContractMember 2020-12-31 0001090012 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel2Member 2020-12-31 0001090012 us-gaap:FairValueInputsLevel2Member 2020-12-31 0001090012 us-gaap:FairValueInputsLevel3Member 2020-12-31

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2021

or

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

Commission File Number 001-32318

DEVON ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

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)

Registrant’s telephone number, including area code: (405) 235-3611

Former name, address and former fiscal year, if changed from last report: Not applicable

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

On October 20, 2021, 677.0 million shares of common stock were outstanding.

Table of Contents

DEVON ENERGY CORPORATION

FORM 10-Q

TABLE OF CONTENTS

Part I. Financial Information |
Item 1. |  | Financial Statements | 6
|  | Consolidated Statements of Comprehensive Earnings | 6
|  | Consolidated Statements of Cash Flows | 7
|  | Consolidated Balance Sheets | 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 | 13
|  | Note 4 – Share-Based Compensation | 15
|  | Note 5 – Asset Impairments | 16
|  | Note 6 – Restructuring and Transaction Costs | 17
|  | Note 7 – Income Taxes | 18
|  | Note 8 – Net Earnings (Loss) Per Share From Continuing Operations | 19
|  | Note 9 – Other Comprehensive Earnings (Loss) | 19
|  | Note 10 – Supplemental Information to Statements of Cash Flows | 20
|  | Note 11 – Accounts Receivable | 20
|  | Note 12 – Property, Plant and Equipment | 20
|  | Note 13 – Debt and Related Expenses | 21
|  | Note 14 – Leases | 22
|  | Note 15 – Asset Retirement Obligations | 23
|  | Note 16 – Stockholders’ Equity | 23
|  | Note 17 – Discontinued Operations | 24
|  | Note 18 – Commitments and Contingencies | 25
|  | Note 19 – Fair Value Measurements | 26
Item 2. |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28
|  | Executive Overview | 28
|  | Results of Operations | 30
|  | Capital Resources, Uses and Liquidity | 37
|  | Critical Accounting Estimates | 40
|  | Non-GAAP Measures | 41
Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk | 44
Item 4. |  | Controls and Procedures | 44
Part II. Other Information |
Item 1. |  | Legal Proceedings | 45
Item 1A. |  | Risk Factors | 45
Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds | 45
Item 3. |  | Defaults Upon Senior Securities | 45
Item 4. |  | Mine Safety Disclosures | 45
Item 5. |  | Other Information | 45
Item 6. |  | Exhibits | 46
Signatures |  |  | 47

2

Table of Contents

DEFINITIONS

Unless the context otherwise indicates, references to “us,” “we,” “our,” “ours,” “Devon,” the “Company” and “Registrant” refer to Devon Energy Corporation and its consolidated subsidiaries. All monetary values, other than per unit and per share amounts, are stated in millions of U.S. dollars unless otherwise specified. In addition, the following are other abbreviations and definitions of certain terms used within this Quarterly Report on Form 10-Q:

“Bbl” or “Bbls” means barrel or barrels.

“BKV” means Banpu Kalnin Ventures.

“Boe” means barrel of oil equivalent. Gas proved reserves and production are converted to Boe, at the pressure and temperature base standard of each respective state in which the gas is produced, at the rate of six Mcf of gas per Bbl of oil, based upon the approximate relative energy content of gas and oil. NGL proved reserves and production are converted to Boe on a one-to-one basis with oil.

“Btu” means British thermal units, a measure of heating value.

“Canada” means the division of Devon encompassing oil and gas properties located in Canada. On June 27, 2019, all of Devon’s Canadian operating assets and operations were divested. All dollar amounts associated with Canada are in U.S. dollars, unless stated otherwise.

“Catalyst” means Catalyst Midstream Partners, LLC.

“CDM” means Cotton Draw Midstream, L.L.C.

“DD&A” means depreciation, depletion and amortization expenses.

“ESG” means environmental, social and governance.

“G&A” means general and administrative expenses.

“GAAP” means U.S. generally accepted accounting principles.

“Inside FERC” refers to the publication Inside FERC’s Gas Market Report.

“LOE” means lease operating expenses.

“MBbls” means thousand barrels.

“MBoe” means thousand Boe.

“Mcf” means thousand cubic feet.

“Merger” means the merger of Merger Sub with and into WPX, with WPX continuing as the surviving corporation and a wholly-owned subsidiary of the Company, pursuant to the terms of the Merger Agreement.

“Merger Agreement” means that certain Agreement and Plan of Merger, dated September 26, 2020, by and among the Company, Merger Sub and WPX.

“Merger Sub” means East Merger Sub, Inc., a wholly-owned subsidiary of the Company.

“MMBoe” means million Boe.

“MMBtu” means million Btu.

“MMcf” means million cubic feet.

3

Table of Contents

“N/M” means not meaningful.

“NGL” or “NGLs” means natural gas liquids.

“NYMEX” means New York Mercantile Exchange.

“OPEC” means Organization of the Petroleum Exporting Countries.

“SEC” means United States Securities and Exchange Commission.

“Senior Credit Facility” means Devon’s syndicated unsecured revolving line of credit, effective as of October 5, 2018.

“TSR” means total shareholder return.

“U.S.” means United States of America.

“VIE” means variable interest entity.

“WPX” means WPX Energy, Inc.

“WTI” means West Texas Intermediate.

“/Bbl” means per barrel.

“/d” means per day.

“/Mcf” means per Mcf.

“/MMBtu” means per MMBtu.

4

Table of Contents

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This report includes “forward-looking statements” as defined by the SEC. Such statements include those concerning strategic plans, our expectations and objectives for future operations, as well as other future events or conditions, and are often identified by use of the words and phrases “expects,” “believes,” “will,” “would,” “could,” “continue,” “may,” “aims,” “likely to be,” “intends,” “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 report that address activities, events or developments that Devon 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 our control. Consequently, actual future results could differ materially and adversely from our expectations due to a number of factors, including, but not limited to:

| • | the volatility of oil, gas and NGL prices;

| • | risks relating to the COVID-19 pandemic or other future pandemics;

| • | uncertainties inherent in estimating oil, gas and NGL reserves;

| • | the extent to which we are successful in acquiring and discovering additional reserves;

| • | regulatory restrictions, compliance costs and other risks relating to governmental regulation, including with respect to environmental matters;

| • | risks related to regulatory, social and market efforts to address climate change;

| • | the uncertainties, costs and risks involved in our operations, including as a result of employee misconduct;

| • | risks related to our hedging activities;

| • | counterparty credit risks;

| • | risks relating to our indebtedness;

| • | cyberattack risks;

| • | our limited control over third parties who operate some of our oil and gas properties;

| • | midstream capacity constraints and potential interruptions in production;

| • | the extent to which insurance covers any losses we may experience;

| • | competition for assets, materials, people and capital;

| • | risks related to investors attempting to effect change;

| • | our ability to successfully complete mergers, acquisitions and divestitures;

| • | risks related to the Merger, including the risk that we may not realize the anticipated benefits of the Merger or successfully integrate the two legacy businesses; and

| • | any of the other risks and uncertainties discussed in this report, our 2020 Annual Report on Form 10-K and our other filings with the SEC.

All subsequent written and oral forward-looking statements attributable to Devon, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements above. We assume no duty to update or revise our forward-looking statements based on new information, future events or otherwise.

5

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
|  | (Unaudited) |
Oil, gas and NGL sales |  | $ | 2,635 |  |  | $ | 678 |  |  | $ | 6,546 |  |  | $ | 1,909 |
Oil, gas and NGL derivatives |  |  | (335 | ) |  |  | (87 | ) |  |  | (1,566 | ) |  |  | 272 |
Marketing and midstream revenues |  |  | 1,166 |  |  |  | 476 |  |  |  | 2,953 |  |  |  | 1,367 |
Total revenues |  |  | 3,466 |  |  |  | 1,067 |  |  |  | 7,933 |  |  |  | 3,548 |
Production expenses |  |  | 555 |  |  |  | 271 |  |  |  | 1,526 |  |  |  | 852 |
Exploration expenses |  |  | 3 |  |  |  | 39 |  |  |  | 9 |  |  |  | 163 |
Marketing and midstream expenses |  |  | 1,165 |  |  |  | 478 |  |  |  | 2,972 |  |  |  | 1,395 |
Depreciation, depletion and amortization |  |  | 578 |  |  |  | 299 |  |  |  | 1,581 |  |  |  | 999 |
Asset impairments |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,666 |
Asset dispositions |  |  | — |  |  |  | — |  |  |  | (119 | ) |  |  | — |
General and administrative expenses |  |  | 95 |  |  |  | 75 |  |  |  | 296 |  |  |  | 256 |
Financing costs, net |  |  | 86 |  |  |  | 66 |  |  |  | 243 |  |  |  | 200 |
Restructuring and transaction costs |  |  | 18 |  |  |  | 32 |  |  |  | 230 |  |  |  | 32 |
Other, net |  |  | 2 |  |  |  | — |  |  |  | (41 | ) |  |  | (35 | )
Total expenses |  |  | 2,502 |  |  |  | 1,260 |  |  |  | 6,697 |  |  |  | 6,528 |
Earnings (loss) from continuing operations before income taxes |  |  | 964 |  |  |  | (193 | ) |  |  | 1,236 |  |  |  | (2,980 | )
Income tax expense (benefit) |  |  | 120 |  |  |  | (90 | ) |  |  | (85 | ) |  |  | (510 | )
Net earnings (loss) from continuing operations |  |  | 844 |  |  |  | (103 | ) |  |  | 1,321 |  |  |  | (2,470 | )
Net earnings (loss) from discontinued operations, net of income taxes |  |  | — |  |  |  | 13 |  |  |  | — |  |  |  | (103 | )
Net earnings (loss) |  |  | 844 |  |  |  | (90 | ) |  |  | 1,321 |  |  |  | (2,573 | )
Net earnings attributable to noncontrolling interests |  |  | 6 |  |  |  | 2 |  |  |  | 14 |  |  |  | 5 |
Net earnings (loss) attributable to Devon |  | $ | 838 |  |  | $ | (92 | ) |  | $ | 1,307 |  |  | $ | (2,578 | )
Basic net earnings (loss) per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic earnings (loss) from continuing operations per share |  | $ | 1.24 |  |  | $ | (0.29 | ) |  | $ | 1.95 |  |  | $ | (6.58 | )
Basic earnings (loss) from discontinued operations per share |  |  | — |  |  |  | 0.04 |  |  |  | — |  |  |  | (0.27 | )
Basic net earnings (loss) per share |  | $ | 1.24 |  |  | $ | (0.25 | ) |  | $ | 1.95 |  |  | $ | (6.85 | )
Diluted net earnings (loss) per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Diluted earnings (loss) from continuing operations per share |  | $ | 1.24 |  |  | $ | (0.29 | ) |  | $ | 1.95 |  |  | $ | (6.58 | )
Diluted earnings (loss) from discontinued operations per share |  |  | — |  |  |  | 0.04 |  |  |  | — |  |  |  | (0.27 | )
Diluted net earnings (loss) per share |  | $ | 1.24 |  |  | $ | (0.25 | ) |  | $ | 1.95 |  |  | $ | (6.85 | )
Comprehensive earnings (loss): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net earnings (loss) |  | $ | 844 |  |  | $ | (90 | ) |  | $ | 1,321 |  |  | $ | (2,573 | )
Other comprehensive earnings, net of tax: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pension and postretirement plans |  |  | 1 |  |  |  | 1 |  |  |  | 27 |  |  |  | 3 |
Other comprehensive earnings, net of tax |  |  | 1 |  |  |  | 1 |  |  |  | 27 |  |  |  | 3 |
Comprehensive earnings (loss): |  |  | 845 |  |  |  | (89 | ) |  |  | 1,348 |  |  |  | (2,570 | )
Comprehensive earnings attributable to noncontrolling interests |  |  | 6 |  |  |  | 2 |  |  |  | 14 |  |  |  | 5 |
Comprehensive earnings (loss) attributable to Devon |  | $ | 839 |  |  | $ | (91 | ) |  | $ | 1,334 |  |  | $ | (2,575 | )

See accompanying notes to consolidated financial statements

6

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
|  | (Unaudited) |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net earnings (loss) |  | $ | 844 |  |  | $ | (90 | ) |  | $ | 1,321 |  |  | $ | (2,573 | )
Adjustments to reconcile net earnings (loss) to net cash from operating activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net (earnings) loss from discontinued operations, net of income taxes |  |  | — |  |  |  | (13 | ) |  |  | — |  |  |  | 103 |
Depreciation, depletion and amortization |  |  | 578 |  |  |  | 299 |  |  |  | 1,581 |  |  |  | 999 |
Asset impairments |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,666 |
Leasehold impairments |  |  | 1 |  |  |  | 36 |  |  |  | 3 |  |  |  | 149 |
(Amortization) accretion of liabilities |  |  | (7 | ) |  |  | 8 |  |  |  | (21 | ) |  |  | 24 |
Total (gains) losses on commodity derivatives |  |  | 335 |  |  |  | 87 |  |  |  | 1,566 |  |  |  | (272 | )
Cash settlements on commodity derivatives |  |  | (370 | ) |  |  | 10 |  |  |  | (969 | ) |  |  | 343 |
Gains on asset dispositions |  |  | — |  |  |  | — |  |  |  | (119 | ) |  |  | — |
Deferred income tax expense (benefit) |  |  | 119 |  |  |  | — |  |  |  | (100 | ) |  |  | (311 | )
Share-based compensation |  |  | 19 |  |  |  | 31 |  |  |  | 80 |  |  |  | 70 |
Early retirement of debt |  |  | — |  |  |  | — |  |  |  | (30 | ) |  |  | — |
Other |  |  | 11 |  |  |  | 1 |  |  |  | 13 |  |  |  | 5 |
Changes in assets and liabilities, net |  |  | 68 |  |  |  | 58 |  |  |  | (42 | ) |  |  | (97 | )
Net cash from operating activities - continuing operations |  |  | 1,598 |  |  |  | 427 |  |  |  | 3,283 |  |  |  | 1,106 |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures |  |  | (474 | ) |  |  | (204 | ) |  |  | (1,477 | ) |  |  | (936 | )
Acquisitions of property and equipment |  |  | (10 | ) |  |  | — |  |  |  | (15 | ) |  |  | (5 | )
Divestitures of property and equipment |  |  | 1 |  |  |  | 1 |  |  |  | 65 |  |  |  | 29 |
WPX acquired cash |  |  | — |  |  |  | — |  |  |  | 344 |  |  |  | — |
Distributions from equity method investments |  |  | 9 |  |  |  | — |  |  |  | 27 |  |  |  | — |
Net cash from investing activities - continuing operations |  |  | (474 | ) |  |  | (203 | ) |  |  | (1,056 | ) |  |  | (912 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Repayments of long-term debt |  |  | — |  |  |  | — |  |  |  | (1,243 | ) |  |  | — |
Early retirement of debt |  |  | — |  |  |  | — |  |  |  | (59 | ) |  |  | — |
Repurchases of common stock |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (38 | )
Dividends paid on common stock |  |  | (329 | ) |  |  | (43 | ) |  |  | (761 | ) |  |  | (119 | )
Contributions from noncontrolling interests |  |  | 1 |  |  |  | 1 |  |  |  | 4 |  |  |  | 12 |
Distributions to noncontrolling interests |  |  | (6 | ) |  |  | (4 | ) |  |  | (15 | ) |  |  | (10 | )
Acquisition of noncontrolling interests |  |  | — |  |  |  | — |  |  |  | (24 | ) |  |  | — |
Shares exchanged for tax withholdings and other |  |  | (3 | ) |  |  | — |  |  |  | (45 | ) |  |  | (17 | )
Net cash from financing activities - continuing operations |  |  | (337 | ) |  |  | (46 | ) |  |  | (2,143 | ) |  |  | (172 | )
Effect of exchange rate changes on cash - continuing operations |  |  | (5 | ) |  |  | — |  |  |  | — |  |  |  | — |
Net change in cash, cash equivalents and restricted cash of continuing operations |  |  | 782 |  |  |  | 178 |  |  |  | 84 |  |  |  | 22 |
Cash flows from discontinued operations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating activities |  |  | — |  |  |  | 45 |  |  |  | — |  |  |  | (129 | )
Investing activities |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 171 |
Financing activities |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Effect of exchange rate changes on cash |  |  | — |  |  |  | 4 |  |  |  | — |  |  |  | (11 | )
Net change in cash, cash equivalents and restricted cash of discontinued operations |  |  | — |  |  |  | 50 |  |  |  | — |  |  |  | 31 |
Net change in cash, cash equivalents and restricted cash |  |  | 782 |  |  |  | 228 |  |  |  | 84 |  |  |  | 53 |
Cash, cash equivalents and restricted cash at beginning of period |  |  | 1,539 |  |  |  | 1,669 |  |  |  | 2,237 |  |  |  | 1,844 |
Cash, cash equivalents and restricted cash at end of period |  | $ | 2,321 |  |  | $ | 1,897 |  |  | $ | 2,321 |  |  | $ | 1,897 |
Reconciliation of cash, cash equivalents and restricted cash: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 2,144 |  |  | $ | 1,707 |  |  | $ | 2,144 |  |  | $ | 1,707 |
Restricted cash |  |  | 177 |  |  |  | 190 |  |  |  | 177 |  |  |  | 190 |
Total cash, cash equivalents and restricted cash |  | $ | 2,321 |  |  | $ | 1,897 |  |  | $ | 2,321 |  |  | $ | 1,897 |

See accompanying notes to consolidated financial statements

7

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

|  | September 30, 2021 |  |  | December 31, 2020 |
|  | (Unaudited) |  |  |  |  |
ASSETS |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |
Cash, cash equivalents and restricted cash |  | $ | 2,321 |  |  | $ | 2,237 |
Accounts receivable |  |  | 1,517 |  |  |  | 601 |
Income taxes receivable |  |  | 80 |  |  |  | 174 |
Other current assets |  |  | 309 |  |  |  | 248 |
Total current assets |  |  | 4,227 |  |  |  | 3,260 |
Oil and gas property and equipment, based on successful efforts accounting, net |  |  | 13,613 |  |  |  | 4,436 |
Other property and equipment, net ($106 million and $102 million related to CDM in 2021 and 2020, respectively) |  |  | 1,465 |  |  |  | 957 |
Total property and equipment, net |  |  | 15,078 |  |  |  | 5,393 |
Goodwill |  |  | 753 |  |  |  | 753 |
Right-of-use assets |  |  | 244 |  |  |  | 223 |
Investments |  |  | 388 |  |  |  | 12 |
Other long-term assets |  |  | 367 |  |  |  | 271 |
Total assets |  | $ | 21,057 |  |  | $ | 9,912 |
LIABILITIES AND EQUITY |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |
Accounts payable |  | $ | 537 |  |  | $ | 242 |
Revenues and royalties payable |  |  | 1,443 |  |  |  | 662 |
Other current liabilities |  |  | 1,525 |  |  |  | 536 |
Total current liabilities |  |  | 3,505 |  |  |  | 1,440 |
Long-term debt |  |  | 6,492 |  |  |  | 4,298 |
Lease liabilities |  |  | 256 |  |  |  | 246 |
Asset retirement obligations |  |  | 462 |  |  |  | 358 |
Other long-term liabilities |  |  | 1,281 |  |  |  | 551 |
Stockholders' equity: |  |  |  |  |  |  |  |
Common stock, $0.10 par value. Authorized 1.0 billion shares; issued 677 million and 382 million shares in 2021 and 2020, respectively |  |  | 68 |  |  |  | 38 |
Additional paid-in capital |  |  | 8,206 |  |  |  | 2,766 |
Retained earnings |  |  | 750 |  |  |  | 208 |
Accumulated other comprehensive loss |  |  | (100 | ) |  |  | (127 | )
Total stockholders’ equity attributable to Devon |  |  | 8,924 |  |  |  | 2,885 |
Noncontrolling interests |  |  | 137 |  |  |  | 134 |
Total equity |  |  | 9,061 |  |  |  | 3,019 |
Total liabilities and equity |  | $ | 21,057 |  |  | $ | 9,912 |

See accompanying notes to consolidated financial statements

8

Table of Contents

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 September 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as of June 30, 2021 |  |  | 677 |  |  | $ | 68 |  |  | $ | 8,189 |  |  | $ | 243 |  |  | $ | (101 | ) |  | $ | — |  |  | $ | 136 |  |  | $ | 8,535 |
Net earnings |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 838 |  |  |  | — |  |  |  | — |  |  |  | 6 |  |  |  | 844 |
Other comprehensive earnings, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | 1 |
Restricted stock grants, net of cancellations |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1 | )
Common stock repurchased |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | — |  |  |  | (1 | )
Common stock retired |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | — |
Common stock dividends |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (331 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (331 | )
Share-based compensation |  |  | — |  |  |  | — |  |  |  | 19 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 19 |
Contributions from noncontrolling interests |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 1 |
Distributions to noncontrolling interests |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (6 | ) |  |  | (6 | )
Balance as of September 30, 2021 |  |  | 677 |  |  | $ | 68 |  |  | $ | 8,206 |  |  | $ | 750 |  |  | $ | (100 | ) |  | $ | — |  |  | $ | 137 |  |  | $ | 9,061 |
Three Months Ended September 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as of June 30, 2020 |  |  | 383 |  |  | $ | 38 |  |  | $ | 2,720 |  |  | $ | 586 |  |  | $ | (117 | ) |  | $ | — |  |  | $ | 126 |  |  | $ | 3,353 |
Net earnings (loss) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (92 | ) |  |  | — |  |  |  | — |  |  |  | 2 |  |  |  | (90 | )
Other comprehensive earnings, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | 1 |
Common stock repurchased |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | — |  |  |  | (1 | )
Common stock retired |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | — |
Common stock dividends |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (143 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (143 | )
Share-based compensation |  |  | — |  |  |  | — |  |  |  | 31 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 31 |
Contributions from noncontrolling interests |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 1 |
Distributions to noncontrolling interests |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (4 | ) |  |  | (4 | )
Balance as of September 30, 2020 |  |  | 383 |  |  | $ | 38 |  |  | $ | 2,750 |  |  | $ | 351 |  |  | $ | (116 | ) |  | $ | — |  |  | $ | 125 |  |  | $ | 3,148 |
Nine Months Ended September 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as of December 31, 2020 |  |  | 382 |  |  | $ | 38 |  |  | $ | 2,766 |  |  | $ | 208 |  |  | $ | (127 | ) |  | $ | — |  |  | $ | 134 |  |  | $ | 3,019 |
Net earnings |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,307 |  |  |  | — |  |  |  | — |  |  |  | 14 |  |  |  | 1,321 |
Other comprehensive earnings, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 27 |  |  |  | — |  |  |  | — |  |  |  | 27 |
Restricted stock grants, net of cancellations |  |  | 6 |  |  |  | 1 |  |  |  | (2 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1 | )
Common stock repurchased |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (41 | ) |  |  | — |  |  |  | (41 | )
Common stock retired |  |  | (2 | ) |  |  | — |  |  |  | (41 | ) |  |  | — |  |  |  | — |  |  |  | 41 |  |  |  | — |  |  |  | — |
Common stock dividends |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (765 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (765 | )
Common stock issued |  |  | 290 |  |  |  | 29 |  |  |  | 5,403 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,432 |
Share-based compensation |  |  | 1 |  |  |  | — |  |  |  | 80 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 80 |
Contributions from noncontrolling interests |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3 |  |  |  | 3 |
Distributions to noncontrolling interests |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (14 | ) |  |  | (14 | )
Balance as of September 30, 2021 |  |  | 677 |  |  | $ | 68 |  |  | $ | 8,206 |  |  | $ | 750 |  |  | $ | (100 | ) |  | $ | — |  |  | $ | 137 |  |  | $ | 9,061 |
Nine Months Ended September 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as of December 31, 2019 |  |  | 382 |  |  | $ | 38 |  |  | $ | 2,735 |  |  | $ | 3,148 |  |  | $ | (119 | ) |  | $ | — |  |  | $ | 118 |  |  | $ | 5,920 |
Net earnings (loss) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,578 | ) |  |  | — |  |  |  | — |  |  |  | 5 |  |  |  | (2,573 | )
Other comprehensive earnings, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3 |  |  |  | — |  |  |  | — |  |  |  | 3 |
Restricted stock grants, net of cancellations |  |  | 3 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Common stock repurchased |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (55 | ) |  |  | — |  |  |  | (55 | )
Common stock retired |  |  | (3 | ) |  |  | — |  |  |  | (55 | ) |  |  | — |  |  |  | — |  |  |  | 55 |  |  |  | — |  |  |  | — |
Common stock dividends |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (219 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (219 | )
Share-based compensation |  |  | 1 |  |  |  | — |  |  |  | 70 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 70 |
Contributions from noncontrolling interests |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 12 |  |  |  | 12 |
Distributions to noncontrolling interests |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (10 | ) |  |  | (10 | )
Balance as of September 30, 2020 |  |  | 383 |  |  | $ | 38 |  |  | $ | 2,750 |  |  | $ | 351 |  |  | $ | (116 | ) |  | $ | — |  |  | $ | 125 |  |  | $ | 3,148 |

See accompanying notes to consolidated financial statements

9

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. | 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 2020 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 nine-month periods ended September 30, 2021 and 2020 and Devon’s financial position as of September 30, 2021.

Devon and WPX completed an all-stock merger of equals on January 7, 2021. On the closing date of the Merger, each share of WPX common stock was automatically converted into the right to receive 0.5165 of a share of Devon common stock. The transaction has been accounted for using the acquisition method of accounting, with Devon being treated as the accounting acquirer. See Note 2 for further discussion.

As further discussed in Note 17, Devon closed on the sale of its Barnett Shale assets in October 2020. Prior to December 31, 2020, activity relating to Devon’s Barnett Shale assets is classified as discontinued operations within Devon’s consolidated statements of comprehensive earnings and consolidated statements of cash flows.

As of September 30, 2021, Devon classified approximately $165 million of cash as restricted cash on the consolidated balance sheets for obligations retained related to the Barnett Shale assets and the Canadian business. Cash payments for these charges related to the Barnett assets and Canada business total approximately $10 million per quarter.

Variable Interest Entity

Cotton Draw Midstream, L.L.C. (“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.

Investments

In conjunction with the Merger, Devon acquired an interest in Catalyst which is a joint venture established between WPX and Howard Energy Partners (“HEP”) to develop oil gathering and natural gas processing infrastructure in the Stateline area of the Delaware Basin. Under the terms of the arrangement, Devon and HEP each have a 50 percent voting interest in the joint venture legal entity, and HEP serves as the operator. Through 2038, Devon’s production from 50,000 net acres in the Stateline area of the Delaware Basin has been dedicated to Catalyst subject to fixed-fee oil gathering and natural gas processing agreements. The agreements do not include any minimum volume commitments. Devon accounts for the investment in Catalyst as an equity method investment. Devon’s investment in Catalyst is shown within investments on the consolidated balance sheet and Devon’s share of Catalyst earnings are reflected as a component of other, net in the accompanying consolidated statements of comprehensive earnings.

10

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

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 September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Oil |  | $ | 1,900 |  |  | $ | 504 |  |  | $ | 4,917 |  |  | $ | 1,462 |
Gas |  |  | 309 |  |  |  | 79 |  |  |  | 699 |  |  |  | 221 |
NGL |  |  | 426 |  |  |  | 95 |  |  |  | 930 |  |  |  | 226 |
Oil, gas and NGL sales |  |  | 2,635 |  |  |  | 678 |  |  |  | 6,546 |  |  |  | 1,909 |
Oil |  |  | 649 |  |  |  | 233 |  |  |  | 1,758 |  |  |  | 702 |
Gas |  |  | 196 |  |  |  | 100 |  |  |  | 477 |  |  |  | 275 |
NGL |  |  | 321 |  |  |  | 143 |  |  |  | 718 |  |  |  | 390 |
Marketing and midstream revenues |  |  | 1,166 |  |  |  | 476 |  |  |  | 2,953 |  |  |  | 1,367 |
Total revenues from contracts with customers |  | $ | 3,801 |  |  | $ | 1,154 |  |  | $ | 9,499 |  |  | $ | 3,276 |

2.Acquisitions and Divestitures

WPX Merger

On January 7, 2021, Devon and WPX completed an all-stock merger of equals. WPX was an oil and gas exploration and production company with assets in the Delaware Basin in Texas and New Mexico and the Williston Basin in North Dakota. On the closing date of the Merger, each share of WPX common stock was automatically converted into the right to receive 0.5165 of a share of Devon common stock. No fractional shares of Devon’s common stock were issued in the Merger, and holders of WPX common stock instead received cash in lieu of fractional shares of Devon common stock, if any. Based on the closing price of Devon’s common stock on January 7, 2021, the total value of Devon common stock issued to holders of WPX common stock as part of this transaction was approximately $5.4 billion. The Merger was structured as a tax-free reorganization for United States federal income tax purposes.

Purchase Price Allocation

The transaction has been accounted for using the acquisition method of accounting, with Devon being treated as the accounting acquirer. Under the acquisition method of accounting, the assets and liabilities of WPX and its subsidiaries have been recorded at their respective fair values as of the date of completion of the Merger and added to Devon’s. The preliminary purchase price assessment remains an ongoing process and is subject to change for up to one year subsequent to the closing date of the Merger. Determining the fair value of the assets and liabilities of WPX requires judgment and certain assumptions to be made, the most significant of these being related to the valuation of WPX’s oil and gas properties. The inputs and assumptions related to the oil and gas properties are categorized as level 3 in the fair value hierarchy.

11

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

The following table represents the preliminary allocation of the total purchase price of WPX to the identifiable assets acquired and the liabilities assumed based on the fair values as of the acquisition date.

|  | Preliminary Purchase |
|  | Price Allocation |
|  | as of September 30, 2021 |
Consideration: |  |  |  |
WPX Common Stock outstanding |  |  | 561.2 |
Exchange Ratio |  |  | 0.5165 |
Devon common stock issued |  |  | 289.9 |
Devon closing price on January 7, 2021 |  | $ | 18.57 |
Total common equity consideration |  |  | 5,383 |
Share-based replacement awards |  |  | 49 |
Total consideration |  | $ | 5,432 |
Assets acquired: |  |  |  |
Cash, cash equivalents and restricted cash |  | $ | 344 |
Accounts receivable |  |  | 425 |
Other current assets |  |  | 49 |
Right-of-use assets |  |  | 38 |
Proved oil and gas property and equipment |  |  | 7,017 |
Unproved and properties under development |  |  | 2,362 |
Other property and equipment |  |  | 485 |
Investments |  |  | 400 |
Other long-term assets |  |  | 43 |
Total assets acquired |  | $ | 11,163 |
Liabilities assumed: |  |  |  |
Accounts payable |  | $ | 346 |
Revenue and royalties payable |  |  | 223 |
Other current liabilities |  |  | 454 |
Debt |  |  | 3,562 |
Lease liabilities |  |  | 38 |
Asset retirement obligations |  |  | 94 |
Deferred income taxes |  |  | 249 |
Other long-term liabilities |  |  | 765 |
Total liabilities assumed |  |  | 5,731 |
Net assets acquired |  | $ | 5,432 |

WPX Revenues and Earnings

The following table represents WPX’s revenues and earnings included in Devon’s consolidated statements of comprehensive earnings subsequent to the closing date of the Merger.

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2021 |
Total revenues |  | $ | 1,564 |  |  | $ | 3,977 |
Net earnings |  | $ | 414 |  |  | $ | 969 |

Pro Forma Financial Information

Due to the Merger closing on January 7, 2021, all activity in the first nine months of 2021 except for the first six days of January is included in Devon’s consolidated statements of comprehensive earnings for the nine months ended September 30, 2021. The following unaudited pro forma financial information for the three and nine months ended September 30, 2020 is based on our historical consolidated financial statements adjusted to reflect as if the Merger had occurred on January 1, 2020. The information below reflects pro forma adjustments to conform WPX’s historical financial information to Devon’s financial statement presentation.

12

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

The unaudited pro forma financial information is not necessarily indicative of what would have occurred if the Merger had been completed as of the beginning of the periods presented, nor is it indicative of future results.

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
Continuing operations: |  | 2020 |  |  | 2020 |
Total revenues |  | $ | 1,540 |  |  | $ | 5,452 |
Net loss |  | $ | (281 | ) |  | $ | (3,247 | )
Basic net loss per share |  | $ | (0.42 | ) |  | $ | (4.87 | )

Divestitures

In the first quarter of 2021, Devon completed the sale of non-core assets in the Rockies for proceeds of $9 million, net of purchase price adjustments, and recognized a $35 million gain related to the sale. The transaction includes contingent earnout payments of up to $8 million. The total estimated proved reserves associated with these divested assets was approximately 3 MMBoe. As of December 31, 2020, the associated assets and liabilities were classified as assets held for sale and included in other current assets and other current liabilities, respectively.

In the fourth quarter of 2020, Devon completed the sale of its Barnett Shale assets to BKV for proceeds, net of purchase price adjustments, of $490 million. The agreement with BKV also 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 commenced on January 1, 2021 and has a term of four years. The valuation of the future contingent earnout payments included within other current assets and other long-term assets in the September 30, 2021 consolidated balance sheet was $46 million and $85 million, respectively. During the first nine months of 2021, Devon recorded a $65 million increase to the fair value within asset dispositions on the consolidated statements of comprehensive earnings. The value was derived utilizing a Monte Carlo valuation model and qualifies as a level 3 fair value measurement. Additional information can be found in Note 17.

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, price swaptions, basis swaps, costless price collars and call options. Devon periodically enters into interest rate swaps to manage its exposure to interest rate volatility. As of September 30, 2021, Devon did not have any open interest rate swap contracts.

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 September 30, 2021, Devon neither held cash collateral of its counterparties nor posted cash collateral to its counterparties.

13

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Commodity Derivatives

As of September 30, 2021, 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.

|  | Price Swaps |  |  | Price Swaptions |  |  | Price Collars |  |  | Call Options Sold |
Period |  | Volume (Bbls/d) |  |  | Weighted Average Price ($/Bbl) |  |  | Volume (Bbls/d) |  |  | Weighted Average Price ($/Bbl) |  |  | Volume (Bbls/d) |  |  | Weighted Average Floor Price ($/Bbl) |  |  | Weighted Average Ceiling Price ($/Bbl) |  |  | Volume (Bbls/d) |  |  | Weighted Average Price ($/Bbl) |
Q4 2021 |  |  | 66,460 |  |  | $ | 41.24 |  |  |  | — |  |  | $ | — |  |  |  | 48,250 |  |  | $ | 38.82 |  |  | $ | 48.82 |  |  |  | 5,000 |  |  | $ | 39.50 |
Q1-Q4 2022 |  |  | 26,112 |  |  | $ | 43.75 |  |  |  | 10,000 |  |  | $ | 46.67 |  |  |  | 20,233 |  |  | $ | 46.41 |  |  | $ | 56.41 |  |  |  | — |  |  | $ | — |

|  | Oil Basis Swaps |
Period |  | Index |  | Volume (Bbls/d) |  |  | Weighted Average Differential to WTI ($/Bbl) |
Q4 2021 |  | Midland Sweet |  |  | 23,000 |  |  | $ | 0.84 |
Q4 2021 |  | Guernsey Light Sweet |  |  | 4,000 |  |  | $ | (1.49 | )
Q4 2021 |  | BRENT |  |  | 1,000 |  |  | $ | (8.00 | )
Q4 2021 |  | NYMEX Roll |  |  | 13,000 |  |  | $ | 0.39 |
Q1-Q4 2022 |  | BRENT |  |  | 1,000 |  |  | $ | (7.75 | )
Q1-Q4 2022 |  | NYMEX Roll |  |  | 29,000 |  |  | $ | 0.45 |

As of September 30, 2021, 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 and the end of month NYMEX index. The second table presents Devon’s natural gas derivatives that settle against the respective indices noted within the table.

|  | Price Swaps (1) |  |  | Price Swaptions (2) |  |  | Price Collars (2) |  |  | Call Options Sold (2) |
Period |  | Volume (MMBtu/d) |  |  | Weighted Average Price ($/MMBtu) |  |  | Volume (MMBtu/d) |  |  | Weighted Average Price ($/MMBtu) |  |  | Volume (MMBtu/d) |  |  | Weighted Average Floor Price ($/MMBtu) |  |  | Weighted Average Ceiling Price ($/MMBtu) |  |  | Volume (MMBtu/d) |  |  | Weighted Average Price ($/MMBtu) |
Q4 2021 |  |  | 254,000 |  |  | $ | 2.63 |  |  |  | — |  |  | $ | — |  |  |  | 133,000 |  |  | $ | 2.55 |  |  | $ | 3.05 |  |  |  | 50,000 |  |  | $ | 2.68 |
Q1-Q4 2022 |  |  | 3,452 |  |  | $ | 2.85 |  |  |  | 100,000 |  |  | $ | 2.70 |  |  |  | 145,507 |  |  | $ | 2.69 |  |  | $ | 3.40 |  |  |  | — |  |  | $ | — |
Q1-Q4 2023 |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |  |  |  | 10,603 |  |  | $ | 3.11 |  |  | $ | 4.56 |  |  |  | — |  |  | $ | — |

| (1) | Related to the 2021 open positions, 14,000 MMBtu/d settle against the Inside FERC first of month Henry Hub index at an average price of $2.85 and 240,000 MMBtu/d settle against the end of month NYMEX index at an average price of $2.62. All 2022 open positions settle against the Inside FERC first of month Henry Hub index.

| (2) | Price swaptions and call options settle against end of month NYMEX index. Price collars settle against the Inside FERC first of month Henry Hub Index.

|  | Natural Gas Basis Swaps |
Period |  | Index |  | Volume (MMBtu/d) |  |  | Weighted Average Differential to Henry Hub ($/MMBtu) |
Q4 2021 |  | El Paso Natural Gas |  |  | 35,000 |  |  | $ | (0.92 | )
Q4 2021 |  | WAHA |  |  | 80,000 |  |  | $ | (0.65 | )
Q1-Q4 2022 |  | WAHA |  |  | 70,000 |  |  | $ | (0.57 | )
Q1-Q4 2023 |  | WAHA |  |  | 70,000 |  |  | $ | (0.51 | )
Q1-Q4 2024 |  | WAHA |  |  | 40,000 |  |  | $ | (0.51 | )

14

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

As of September 30, 2021, 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) |
Q4 2021 |  | Natural Gasoline |  |  | 1,000 |  |  | $ | 47.57 |
Q4 2021 |  | Normal Butane |  |  | 1,000 |  |  | $ | 31.40 |
Q4 2021 |  | Propane |  |  | 1,000 |  |  | $ | 27.88 |

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 tables below present a summary of these positions as of September 30, 2021 and December 31, 2020.

| September 30, 2021 |  |  | December 31, 2020 |  |  |
| 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 | $ | 3 |  |  | $ | (1 | ) |  | $ | 2 |  |  | $ | 23 |  |  | $ | (18 | ) |  | $ | 5 |  |  | Other current assets
Long-term derivative asset |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 1 |  |  | Other long-term assets
Short-term derivative liability |  | (984 | ) |  |  | 1 |  |  |  | (983 | ) |  |  | (161 | ) |  |  | 18 |  |  |  | (143 | ) |  | Other current liabilities
Long-term derivative liability |  | (103 | ) |  |  | — |  |  |  | (103 | ) |  |  | (5 | ) |  |  | — |  |  |  | (5 | ) |  | Other long-term liabilities
Total derivative liability | $ | (1,084 | ) |  | $ | — |  |  | $ | (1,084 | ) |  | $ | (142 | ) |  | $ | — |  |  | $ | (142 | ) |  |

4.Share-Based Compensation

The table below presents the share-based compensation expense included in Devon’s accompanying consolidated statements of comprehensive earnings. The vesting for certain share-based awards was accelerated in conjunction with the reduction of workforce described in Note 6 and is included in restructuring and transaction costs in the accompanying consolidated statements of comprehensive earnings.

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |
G&A |  | $ | 58 |  |  | $ | 58 |
Exploration expenses |  |  | 1 |  |  |  | 1 |
Restructuring and transaction costs |  |  | 21 |  |  |  | 11 |
Total |  | $ | 80 |  |  | $ | 70 |
Related income tax benefit |  | $ | 8 |  |  | $ | — |

15

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Under its approved long-term incentive plan, Devon grants share-based awards to certain employees. The following table presents a summary of Devon’s unvested restricted stock awards and units, performance-based restricted stock awards and performance share units granted under the plan.

|  |  |  |  | Performance-Based |  |  | Performance |
|  | Restricted Stock Awards & Units |  |  | Restricted Stock Awards |  |  | Share Units |
|  | Awards/Units |  |  |  |  | Weighted Average Grant-Date Fair Value |  |  | Awards |  |  | Weighted Average Grant-Date Fair Value |  |  | Units |  |  |  |  | Weighted Average Grant-Date Fair Value |
|  | (Thousands, except fair value data) |
Unvested at 12/31/20 |  |  | 5,316 |  |  |  |  | $ | 25.82 |  |  |  | 44 |  |  | $ | 44.70 |  |  |  | 1,994 |  |  |  |  | $ | 31.89 |
Granted |  |  | 7,711 |  |  | (1 | ) | $ | 19.69 |  |  |  | — |  |  | $ | — |  |  |  | 861 |  |  |  |  | $ | 18.08 |
Vested |  |  | (5,006 | ) |  |  |  | $ | 22.35 |  |  |  | (44 | ) |  | $ | 44.70 |  |  |  | (754 | ) |  |  |  | $ | 37.40 |
Forfeited |  |  | (126 | ) |  |  |  | $ | 23.21 |  |  |  | — |  |  | $ | — |  |  |  | (25 | ) |  |  |  | $ | 36.04 |
Unvested at 9/30/21 |  |  | 7,895 |  |  |  |  | $ | 22.08 |  |  |  | — |  |  | $ | — |  |  |  | 2,076 |  |  | (2 | ) | $ | 24.12 |

| (1) | Due to the closing of the Merger, each share of WPX common stock was automatically converted into the right to receive 0.5165 of a share of Devon common stock. As a result, approximately 4.9 million awards relate to the conversion of WPX equity awards to Devon equity awards.

| (2) | A maximum of 4.2 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 2021, as indicated in the previous summary table.

|  | 2021 |
Grant-date fair value |  | $ | 18.08 |
Risk-free interest rate |  | 0.18% |
Volatility factor |  | 67.8% |
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 September 30, 2021.

|  | Restricted Stock |  |  | Performance |
|  | Awards/Units |  |  | Share Units |
Unrecognized compensation cost |  | $ | 97 |  |  | $ | 15 |
Weighted average period for recognition (years) |  |  | 2.5 |  |  |  | 1.9 |

5.Asset Impairments

The following table presents a summary of Devon’s asset impairments. Unproved impairments shown below are included in exploration expenses in the consolidated statements of comprehensive earnings.

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Proved oil and gas assets |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,664 |
Other assets |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2 |
Total asset impairments |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,666 |
Unproved impairments |  | $ | 1 |  |  | $ | 36 |  |  | $ | 3 |  |  | $ | 149 |

16

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Proved Oil and Gas and Other Asset Impairments

Due to the reduced demand from the COVID-19 pandemic causing an unprecedented downturn in the price of oil and reductions in near-term capital investment, Devon recognized approximately $2.7 billion of proved asset impairments during the first quarter of 2020. These impairments related to the Anadarko Basin and Rockies fields in which the cost basis included acquisitions completed in 2016 and 2015, respectively, when commodity prices were much higher. During the first quarter of 2020, Devon also recognized $2 million of product line fill impairments.

Unproved Impairments

Due to the downturn in the commodity price environment and reduced near-term investment as discussed above, Devon also recognized $149 million of unproved impairments during the first nine months of 2020, primarily in the Rockies field.

6.Restructuring and Transaction Costs

The following table summarizes Devon’s restructuring and transaction costs.

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Restructuring costs |  | $ | 16 |  |  | $ | 32 |  |  | $ | 182 |  |  | $ | 32 |
Transaction costs |  |  | 2 |  |  |  | — |  |  |  | 48 |  |  |  | — |
Total costs |  | $ | 18 |  |  | $ | 32 |  |  | $ | 230 |  |  | $ | 32 |

In conjunction with the Merger closing, Devon recognized $182 million of restructuring expenses during the first nine months of 2021 related to employee severance and termination benefits, settlements and curtailments from defined retirement benefits and contract terminations. Of these expenses, $65 million related to non-cash charges which primarily consisted of settlements and curtailments of defined retirement benefits of $40 million and the accelerated vesting of share-based grants of $21 million. Additionally, in conjunction primarily with the Merger closing, Devon recognized $48 million of transaction costs primarily comprised of bank, legal and accounting fees.

In the third quarter of 2020, Devon recognized $32 million of restructuring expenses. Of these expenses, $11 million resulted from the accelerated vesting of share-based grants, which are non-cash charges.

The following table summarizes Devon’s restructuring liabilities.

|  | Other |  |  | Other |  |  |  |  |
|  | Current |  |  | Long-term |  |  |  |  |
|  | Liabilities |  |  | Liabilities |  |  | Total |
Balance as of December 31, 2020 |  | $ | 35 |  |  | $ | 137 |  |  | $ | 172 |
Changes related to 2021 merger integration |  |  | 27 |  |  |  | — |  |  |  | 27 |
Changes related to prior years' restructurings |  |  | (8 | ) |  |  | (18 | ) |  |  | (26 | )
Balance as of September 30, 2021 |  | $ | 54 |  |  | $ | 119 |  |  | $ | 173 |
Balance as of December 31, 2019 |  | $ | 20 |  |  | $ | 1 |  |  | $ | 21 |
Changes related to prior years' restructurings |  |  | (3 | ) |  |  | — |  |  |  | (3 | )
Balance as of September 30, 2020 |  | $ | 17 |  |  | $ | 1 |  |  | $ | 18 |

17

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

7.Income Taxes

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

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Earnings (loss) from continuing operations before income taxes |  | $ | 964 |  |  | $ | (193 | ) |  | $ | 1,236 |  |  | $ | (2,980 | )
Current income tax expense (benefit) |  | $ | 1 |  |  | $ | (90 | ) |  | $ | 15 |  |  | $ | (199 | )
Deferred income tax expense (benefit) |  |  | 119 |  |  |  | — |  |  |  | (100 | ) |  |  | (311 | )
Total income tax expense (benefit) |  | $ | 120 |  |  | $ | (90 | ) |  | $ | (85 | ) |  | $ | (510 | )

U.S. statutory income tax rate |  |  | 21 | % |  |  | 21 | % |  |  | 21 | % |  |  | 21 | %
State income taxes |  |  | 0 | % |  |  | 0 | % |  |  | 0 | % |  |  | 1 | %
Unrecognized tax benefits |  |  | 0 | % |  |  | 18 | % |  |  | 0 | % |  |  | 0 | %
Deferred tax asset valuation allowance |  |  | (9 | %) |  |  | 4 | % |  |  | (33 | %) |  |  | (7 | %)
Other |  |  | 0 | % |  |  | 4 | % |  |  | 5 | % |  |  | 2 | %
Effective income tax rate |  |  | 12 | % |  |  | 47 | % |  |  | (7 | %) |  |  | 17 | %

The deferred income tax benefit recognized in the first nine months of 2021 primarily relates to the Merger and a reduced valuation allowance due to increased earnings. As shown in Note 2, Devon recognized $249 million of deferred tax liabilities to account for the Merger. The recognition of these deferred tax liabilities caused a decrease to Devon’s net deferred tax assets and a corresponding decrease to the valuation allowance Devon has recognized on its U.S. Federal deferred tax assets. Additionally, improved commodity prices and post-merger operating performance are causing reductions to Devon’s net operating losses, which also cause corresponding decreases to the associated deferred tax assets and valuation allowance.

As of September 30, 2021, Devon continued to maintain a valuation allowance against certain U.S. deferred tax assets. Devon continues to assess its valuation allowance position every quarter. Subject to any additional objective negative evidence or the addition of subjective evidence such as forecasted income, Devon may continue to adjust the valuation allowance on its deferred tax assets in future periods.

In the fourth quarter of 2020, Devon recorded a deferred tax asset representing the deductible outside basis difference in its investment in a consolidated subsidiary. In the second quarter of 2021, Devon realized this deferred tax asset, increasing its U.S. federal net operating loss carryforwards by $1.8 billion.

18

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

8. | Net Earnings (Loss) Per Share from Continuing Operations

The following table reconciles net earnings (loss) from continuing operations and weighted-average common shares outstanding used in the calculations of basic and diluted net earnings (loss) per share from continuing operations.

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Net earnings (loss) from continuing operations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net earnings (loss) from continuing operations |  | $ | 838 |  |  | $ | (105 | ) |  | $ | 1,307 |  |  | $ | (2,475 | )
Attributable to participating securities |  |  | (6 | ) |  |  | (2 | ) |  |  | (11 | ) |  |  | (3 | )
Basic and diluted earnings (loss) from continuing operations |  | $ | 832 |  |  | $ | (107 | ) |  | $ | 1,296 |  |  | $ | (2,478 | )
Common shares: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common shares outstanding - total |  |  | 677 |  |  |  | 383 |  |  |  | 670 |  |  |  | 383 |
Attributable to participating securities |  |  | (6 | ) |  |  | (6 | ) |  |  | (6 | ) |  |  | (6 | )
Common shares outstanding - basic |  |  | 671 |  |  |  | 377 |  |  |  | 664 |  |  |  | 377 |
Dilutive effect of potential common shares issuable |  |  | 2 |  |  |  | — |  |  |  | 2 |  |  |  | — |
Common shares outstanding - diluted |  |  | 673 |  |  |  | 377 |  |  |  | 666 |  |  |  | 377 |
Net earnings (loss) per share from continuing operations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 1.24 |  |  | $ | (0.29 | ) |  | $ | 1.95 |  |  | $ | (6.58 | )
Diluted |  | $ | 1.24 |  |  | $ | (0.29 | ) |  | $ | 1.95 |  |  | $ | (6.58 | )

9.Other Comprehensive Earnings (Loss)

Components of other comprehensive earnings (loss) consist of the following:

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Pension and postretirement benefit plans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning accumulated pension and postretirement benefits |  | $ | (101 | ) |  | $ | (117 | ) |  | $ | (127 | ) |  | $ | (119 | )
Recognition of net actuarial loss and prior service cost in earnings (1) |  |  | 1 |  |  |  | 1 |  |  |  | 2 |  |  |  | 4 |
Settlement of pension benefits (2) |  |  | — |  |  |  | — |  |  |  | 18 |  |  |  | — |
Income tax expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1 | )
Other (3) |  |  | — |  |  |  | — |  |  |  | 7 |  |  |  | — |
Accumulated other comprehensive loss, net of tax |  | $ | (100 | ) |  | $ | (116 | ) |  | $ | (100 | ) |  | $ | (116 | )

| (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.

| (2) | The Merger triggered settlement payments to certain plan participants, and the expense associated with this settlement is recognized as a component of restructuring and transaction costs in the accompanying consolidated statements of comprehensive earnings.

| (3) | Other includes a remeasurement of the pension obligation due to the Merger, which was partially offset by a change in mortality assumption.

19

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

10. | Supplemental Information to Statements of Cash Flows

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Changes in assets and liabilities, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts receivable |  | $ | (332 | ) |  | $ | 21 |  |  | $ | (495 | ) |  | $ | 339 |
Income tax receivable |  |  | (40 | ) |  |  | — |  |  |  | 94 |  |  |  | (112 | )
Other current assets |  |  | 21 |  |  |  | 18 |  |  |  | (36 | ) |  |  | 10 |
Other long-term assets |  |  | 14 |  |  |  | (9 | ) |  |  | (9 | ) |  |  | (33 | )
Accounts payable and revenues and royalties payable |  |  | 469 |  |  |  | 100 |  |  |  | 557 |  |  |  | (160 | )
Other current liabilities |  |  | (49 | ) |  |  | 15 |  |  |  | (30 | ) |  |  | (82 | )
Other long-term liabilities |  |  | (15 | ) |  |  | (87 | ) |  |  | (123 | ) |  |  | (59 | )
Total |  | $ | 68 |  |  | $ | 58 |  |  | $ | (42 | ) |  | $ | (97 | )
Supplementary cash flow data - total operations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest paid |  | $ | 100 |  |  | $ | 64 |  |  | $ | 319 |  |  | $ | 194 |
Income taxes paid (refunded) |  | $ | (4 | ) |  | $ | (2 | ) |  | $ | (116 | ) |  | $ | 170 |

As of September 30, 2021, Devon had approximately $200 million of accrued capital expenditures included in total property and equipment, net and accounts payable on the consolidated balance sheets. As of December 31, 2020 (pre-merger), Devon had approximately $100 million of accrued capital expenditures in total property and equipment, net and accounts payable on the consolidated balance sheets. As of January 7, 2021 (date of Merger closing), Devon assumed approximately $150 million of accrued capital expenditures included in accounts payable.

11. | Accounts Receivable

Components of accounts receivable include the following:

|  | September 30, 2021 |  |  | December 31, 2020 |
Oil, gas and NGL sales |  | $ | 986 |  |  | $ | 335 |
Joint interest billings |  |  | 150 |  |  |  | 57 |
Marketing and midstream revenues |  |  | 371 |  |  |  | 195 |
Other |  |  | 22 |  |  |  | 25 |
Gross accounts receivable |  |  | 1,529 |  |  |  | 612 |
Allowance for doubtful accounts |  |  | (12 | ) |  |  | (11 | )
Net accounts receivable |  | $ | 1,517 |  |  | $ | 601 |

12.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.

|  | September 30, 2021 |  |  | December 31, 2020 |
Property and equipment: |  |  |  |  |  |  |  |
Proved |  | $ | 36,489 |  |  | $ | 27,589 |
Unproved and properties under development |  |  | 2,169 |  |  |  | 392 |
Total oil and gas |  |  | 38,658 |  |  |  | 27,981 |
Less accumulated DD&A |  |  | (25,045 | ) |  |  | (23,545 | )
Oil and gas property and equipment, net |  |  | 13,613 |  |  |  | 4,436 |
Other property and equipment |  |  | 2,113 |  |  |  | 1,737 |
Less accumulated DD&A |  |  | (648 | ) |  |  | (780 | )
Other property and equipment, net (1) |  |  | 1,465 |  |  |  | 957 |
Property and equipment, net |  | $ | 15,078 |  |  | $ | 5,393 |

| (1) | $106 million and $102 million related to CDM in 2021 and 2020, respectively.

20

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

13. | Debt and Related Expenses

See below for a summary of debt instruments and balances. The notes and debentures are senior, unsecured obligations of Devon.

|  | September 30, 2021 |  |  | December 31, 2020 |
8.25% due August 1, 2023 (1) |  | $ | 242 |  |  | $ | — |
5.25% due September 15, 2024 (1) |  |  | 472 |  |  |  | — |
5.85% due December 15, 2025 |  |  | 485 |  |  |  | 485 |
7.50% due September 15, 2027 |  |  | 73 |  |  |  | 73 |
5.25% due October 15, 2027 (1) |  |  | 390 |  |  |  | — |
5.875% due June 15, 2028 (1) |  |  | 325 |  |  |  | — |
4.50% due January 15, 2030 (1) |  |  | 585 |  |  |  | — |
7.875% due September 30, 2031 |  |  | 675 |  |  |  | 675 |
7.95% due April 15, 2032 |  |  | 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 premium (discount) on debentures and notes |  |  | 160 |  |  |  | (20 | )
Debt issuance costs |  |  | (31 | ) |  |  | (31 | )
Total long-term debt |  | $ | 6,492 |  |  | $ | 4,298 |

| (1) | These instruments were assumed by Devon in January 2021 in conjunction with the Merger. Subsequent to debt retirements and the obligor exchange transaction completed during the first nine months of 2021, approximately $51 million of these instruments remain the unsecured and unsubordinated obligation of WPX, a wholly-owned subsidiary of Devon.

Debt maturities as of September 30, 2021, excluding debt issuance costs, premiums and discounts, are as follows:

|  | Total |
2022 |  | $ | — |
2023 |  |  | 242 |
2024 |  |  | 472 |
2025 |  |  | 485 |
2026 |  |  | — |
Thereafter |  |  | 5,164 |
Total |  | $ | 6,363 |

The following schedule includes the summary of the WPX debt Devon assumed upon closing of the Merger on January 7, 2021.

|  | Face Value |  |  | Fair Value |  |  | Optional Redemption(1)
6.00% due January 15, 2022 |  | $ | 43 |  |  | $ | 44 |  |  |
8.25% due August 1, 2023 |  |  | 242 |  |  |  | 281 |  |  | June 1, 2023
5.25% due September 15, 2024 |  |  | 472 |  |  |  | 530 |  |  | June 15, 2024
5.75% due June 1, 2026 |  |  | 500 |  |  |  | 529 |  |  | June 1, 2021
5.25% due October 15, 2027 |  |  | 600 |  |  |  | 646 |  |  | October 15, 2022
5.875% due June 15, 2028 |  |  | 500 |  |  |  | 554 |  |  | June 15, 2023
4.50% due January 15, 2030 |  |  | 900 |  |  |  | 978 |  |  | January 15, 2025
|  | $ | 3,257 |  |  | $ | 3,562 |  |  |

| (1) | At any time prior to these dates, Devon has or had the option to redeem (i) some or all of the notes at a specified "make whole" premium and (ii) a portion of certain of the notes at applicable redemption prices, in each case as described in the indenture documents governing the notes to be redeemed. On or after these dates, Devon has or had the option to redeem the notes, in whole or in part, at the applicable redemption prices set forth in the indenture documents, plus accrued and unpaid interest thereon to the redemption date as more fully described in such documents.

21

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Retirement of Senior Notes

In the first nine months of 2021, Devon redeemed $43 million of the 6.00% senior notes due 2022, $175 million of the 5.875% senior notes due 2028, $315 million of the 4.50% senior notes due 2030, $210 million of the 5.25% senior notes due 2027 and $500 million of the 5.75% senior notes due 2026. In the first nine months of 2021, Devon recognized $30 million of gains on early retirement of debt, consisting of $89 million of non-cash premium accelerations, partially offset by $59 million of cash retirement costs. The gain on early retirement is included in financing costs, net in the consolidated statements of comprehensive earnings.

Credit Lines

Devon has a $3.0 billion Senior Credit Facility. As of September 30, 2021, Devon had no outstanding borrowings under the Senior Credit Facility and had issued $2 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 September 30, 2021, Devon was in compliance with this covenant with a debt-to-capitalization ratio of 25.1%.

Net Financing Costs

The following schedule includes the components of net financing costs.

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Interest based on debt outstanding |  | $ | 93 |  |  | $ | 65 |  |  | $ | 296 |  |  | $ | 195 |
Gain on early retirement of debt |  |  | — |  |  |  | — |  |  |  | (30 | ) |  |  | — |
Interest income |  |  | (1 | ) |  |  | (5 | ) |  |  | (2 | ) |  |  | (12 | )
Other |  |  | (6 | ) |  |  | 6 |  |  |  | (21 | ) |  |  | 17 |
Total net financing costs |  | $ | 86 |  |  | $ | 66 |  |  | $ | 243 |  |  | $ | 200 |

14.Leases

The following table presents Devon’s right-of-use assets and lease liabilities as of September 30, 2021 and December 31, 2020.

|  | September 30, 2021 |  |  | December 31, 2020 |
|  | Finance |  |  | Operating |  |  | Total |  |  | Finance |  |  | Operating |  |  | Total |
Right-of-use assets |  | $ | 214 |  |  | $ | 30 |  |  | $ | 244 |  |  | $ | 220 |  |  | $ | 3 |  |  | $ | 223 |
Lease liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current lease liabilities (1) |  | $ | 8 |  |  | $ | 20 |  |  | $ | 28 |  |  | $ | 8 |  |  | $ | 1 |  |  | $ | 9 |
Long-term lease liabilities |  |  | 246 |  |  |  | 10 |  |  |  | 256 |  |  |  | 244 |  |  |  | 2 |  |  |  | 246 |
Total lease liabilities |  | $ | 254 |  |  | $ | 30 |  |  | $ | 284 |  |  | $ | 252 |  |  | $ | 3 |  |  | $ | 255 |

(1)Current lease liabilities are included in other current liabilities on the consolidated balance sheets.

Devon’s right-of-use operating lease assets are for certain leases related to real estate, drilling rigs and other equipment related to the exploration, development and production of oil and gas. Devon’s right-of-use financing lease assets are related to real estate.

22

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

15. | Asset Retirement Obligations

The following table presents the changes in Devon’s asset retirement obligations.

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |
Asset retirement obligations as of beginning of period |  | $ | 369 |  |  | $ | 398 |
Assumed WPX obligations |  |  | 98 |  |  |  | — |
Liabilities incurred |  |  | 28 |  |  |  | 15 |
Liabilities settled and divested |  |  | (52 | ) |  |  | (24 | )
Revision of estimated obligation |  |  | 11 |  |  |  | 4 |
Accretion expense on discounted obligation |  |  | 21 |  |  |  | 15 |
Asset retirement obligations as of end of period |  |  | 475 |  |  |  | 408 |
Less current portion |  |  | 13 |  |  |  | 10 |
Asset retirement obligations, long-term |  | $ | 462 |  |  | $ | 398 |

1 6. | Stockholders’ Equity

WPX Merger

On January 7, 2021, Devon and WPX completed an all-stock merger of equals. On the closing date of the Merger, each share of WPX common stock was automatically converted into the right to receive 0.5165 of a share of Devon common stock. Consequently, Devon issued approximately 290 million shares of Devon common stock to holders of WPX common stock to effect the Merger on January 7, 2021.

Share Repurchases

The table below provides information regarding purchases of Devon’s common stock that were made in 2020 under a share repurchase program that expired at the end of 2020 (shares in thousands).

|  | Total Number of Shares Purchased |  |  | Dollar Value of Shares Purchased |  |  | Average Price Paid per Share |
First quarter 2020 |  |  | 2,243 |  |  | $ | 38 |  |  | $ | 16.85 |
Total |  |  | 2,243 |  |  | $ | 38 |  |  | $ | 16.85 |

In November 2021, Devon authorized a share repurchase program to buy up to $1.0 billion of common stock. This program expires December 31, 2022.

23

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Dividends

Upon completion of the Merger, Devon continued its commitment to pay a quarterly dividend at a fixed rate and instituted a variable quarterly dividend, which is dependent on quarterly cash flows, among other factors. The following table summarizes Devon’s fixed and variable dividends for the first nine months of 2021 and 2020, respectively.

| Fixed |  |  | Variable |  |  | Total |  |  | Rate Per Share |
2021: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
First quarter | $ | 76 |  |  | $ | 127 |  |  | $ | 203 |  |  | $ | 0.30 |
Second quarter |  | 75 |  |  |  | 154 |  |  |  | 229 |  |  | $ | 0.34 |
Third quarter |  | 74 |  |  |  | 255 |  |  |  | 329 |  |  | $ | 0.49 |
Total year-to-date | $ | 225 |  |  | $ | 536 |  |  | $ | 761 |  |  |  |  |
2020: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
First quarter | $ | 34 |  |  | $ | — |  |  | $ | 34 |  |  | $ | 0.09 |
Second quarter |  | 42 |  |  |  | — |  |  |  | 42 |  |  | $ | 0.11 |
Third quarter |  | 43 |  |  |  | — |  |  |  | 43 |  |  | $ | 0.11 |
Total year-to-date | $ | 119 |  |  | $ | — |  |  | $ | 119 |  |  |  |  |

In November 2021, Devon announced a cash dividend in the amount of $0.84 per share payable in the fourth quarter of 2021. The dividend consists of a fixed quarterly dividend in the amount of approximately $74 million (or $0.11 per share) and a variable quarterly dividend in the amount of approximately $494 million (or $0.73 per share).

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.

1 7. | Discontinued Operations

On October 1, 2020, Devon completed the sale of its Barnett Shale assets to BKV for proceeds, net of purchase price adjustments, of $490 million. 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 commenced on January 1, 2021 and has a term of four years.

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

| Three Months Ended September 30, 2020 |  |  | Nine Months Ended September 30, 2020 |
Oil, gas and NGL sales | $ | 94 |  |  | $ | 263 |
Total revenues |  | 94 |  |  |  | 263 |
Production expenses |  | 66 |  |  |  | 214 |
Asset impairments (1) |  | 3 |  |  |  | 182 |
Asset dispositions |  | — |  |  |  | (2 | )
General and administrative expenses |  | 2 |  |  |  | 3 |
Financing costs, net |  | (1 | ) |  |  | (3 | )
Other, net |  | 26 |  |  |  | 19 |
Total expenses |  | 96 |  |  |  | 413 |
Loss from discontinued operations before income taxes |  | (2 | ) |  |  | (150 | )
Income tax benefit |  | (15 | ) |  |  | (47 | )
Net earnings (loss) from discontinued operations, net of tax | $ | 13 |  |  | $ | (103 | )

24

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

| (1) | Devon recognized $182 million of asset impairments in the first nine months of 2020 related to the Barnett Shale assets primarily due to the difference between the net carrying value and the purchase price, net of estimated customary purchase price adjustments, which qualified as a level 2 fair value measurement.

1 8. | Commitments and Contingencies

Devon is party to various legal proceedings and other matters that may result in future payment obligations or other adverse consequences to its business. Matters that are probable of an unfavorable outcome to Devon and which any related potential payment obligation or other liability 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. While management does not believe any current matter is likely to involve future amounts that would be material to Devon’s financial position or results of operations after consideration of recorded accruals, the ultimate outcome of such matters and the amounts involved 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 defending against a number of such lawsuits, either as a named defendant in the action or pursuant to indemnity obligations for the benefit of a third party. Plaintiffs in some of these lawsuits are seeking class certification. Among the allegations typically asserted in these suits are claims that Devon used below-market prices, made improper deductions, failed to “enhance” the value of gas through processing, used improper measurement techniques, entered into purchase and midstream arrangements with affiliates that resulted in underpayment of royalties or otherwise failed to prudently market oil, natural gas and NGLs produced and sold and pay royalties on the highest obtainable price. 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. Devon does not currently believe that it is subject to material exposure with respect to such royalty matters.

Environmental and Climate Change Matters

Devon’s business is subject to numerous federal, state, local and Native American tribal 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.

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, the 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 believes these claims to be baseless and is vigorously defending against these claims.

The State of Delaware and various municipalities and other governmental and private parties in California have 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 these matters, Devon believes these claims to be baseless and intends to vigorously defend against the proceedings.

Williams’ Former Power Business Matter

Direct and indirect purchasers of natural gas in various states filed individual and class action lawsuits against The Williams Companies, Inc. (“Williams”) and other parties alleging the manipulation of published gas price indices and seeking unspecified amounts of damages. WPX and certain of its subsidiaries, which were then affiliates of Williams, were also named as defendants in these actions.

25

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Devon cannot reasonably estimate a range of potential exposure at this time for these matters. In connection with its spin-off from Williams in 2011, WPX entered into a separation and distribution agreement with Williams, pursuant to which Williams agreed to indemnify and hold WPX and its subsidiaries harmless from any losses arising out of these matters.

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 or performing requirements under surface agreements in existence at the time of disposition.

In November 2020, the Department of the Interior, Bureau of Safety and Environmental Enforcement, ordered several oil and gas operators, including Devon, to perform decommissioning and reclamation activities related to two California offshore oil and gas production platforms and related facilities. The current operator and owner of the platforms contends that it does not have the financial ability to perform these obligations and relinquished the related federal lease in October 2020. In response to the apparent insolvency of the current operator, the government has ordered the former operators and alleged former lease record title owners to decommission the platforms. The government contends that an alleged corporate predecessor of Devon owned a partial interest in the subject lease and platforms. Although Devon cannot predict the ultimate outcome of this matter, Devon denies any obligation to decommission the subject platforms, has appealed the order, and believes any decommissioning obligation related to the subject platforms should be assumed by others.

19. | 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 September 30, 2021 and December 31, 2020, as applicable. Therefore, such financial assets and liabilities are not presented in the following table. Additionally, information regarding the fair values of oil and gas assets is provided in Note 5.

|  |  |  |  |  |  |  |  |  | Fair Value Measurements Using: |
|  | Carrying |  |  | Total Fair |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
|  | Amount |  |  | Value |  |  | Inputs |  |  | Inputs |  |  | Inputs |
September 30, 2021 assets (liabilities): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 1,321 |  |  | $ | 1,321 |  |  | $ | 1,321 |  |  | $ | — |  |  | $ | — |
Commodity derivatives |  | $ | 2 |  |  | $ | 2 |  |  | $ | — |  |  | $ | 2 |  |  | $ | — |
Commodity derivatives |  | $ | (1,086 | ) |  | $ | (1,086 | ) |  | $ | — |  |  | $ | (1,086 | ) |  | $ | — |
Debt |  | $ | (6,492 | ) |  | $ | (7,629 | ) |  | $ | — |  |  | $ | (7,629 | ) |  | $ | — |
Contingent earnout payments |  | $ | 135 |  |  | $ | 135 |  |  | $ | — |  |  | $ | — |  |  | $ | 135 |
December 31, 2020 assets (liabilities): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 1,436 |  |  | $ | 1,436 |  |  | $ | 1,436 |  |  | $ | — |  |  | $ | — |
Commodity derivatives |  | $ | 6 |  |  | $ | 6 |  |  | $ | — |  |  | $ | 6 |  |  | $ | — |
Commodity derivatives |  | $ | (148 | ) |  | $ | (148 | ) |  | $ | — |  |  | $ | (148 | ) |  | $ | — |
Debt |  | $ | (4,298 | ) |  | $ | (5,365 | ) |  | $ | — |  |  | $ | (5,365 | ) |  | $ | — |
Contingent earnout payments |  | $ | 66 |  |  | $ | 66 |  |  | $ | — |  |  | $ | — |  |  | $ | 66 |

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.

26

Table of Contents

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

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 its debt are estimated based on rates available for debt with similar terms and maturity when active trading is not available.

Level 3 Fair Value Measurements

Contingent Earnout Payments – Devon has the right to receive contingent consideration related to the Barnett and non-core Rockies asset divestitures based on future oil and gas prices. These values were derived using a Monte Carlo valuation model and qualify as a level 3 fair value measurement. For additional information, see Note 2.

27

Table of Contents

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 nine-month periods ended September 30, 2021 compared to previous periods and in our financial condition and liquidity since December 31, 2020. To help facilitate comparisons to the three-month period ended June 30, 2021, information regarding our second quarter 2021 financial results can be found in our Second Quarter 2021 Quarterly Report on Form 10-Q . Additionally, for information regarding our critical accounting policies and estimates, see our 2020 Annual Report on Form 10-K under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Executive Overview

On September 26, 2020, we entered into the Merger Agreement, providing for an all-stock merger of equals with WPX which successfully closed on January 7, 2021. The Merger has created a leading unconventional oil producer in the U.S., with an asset base underpinned by premium acreage in the economic core of the Delaware Basin. This strategic combination accelerates our transition to a cash-return business model, including the implementation of a fixed plus variable dividend strategy. We remain focused on building economic value by executing on our strategic priorities of disciplined oil volume growth while capturing operational and corporate synergies, reducing reinvestment rates to maximize free cash flow, maintaining low leverage, delivering cash returns to our shareholders and pursuing ESG excellence. Our recent performance highlights for these priorities include the following items:

| • | Third quarter oil production totaled 303 MBbls/d, exceeding our plan by 3%.

| • | On pace to achieve approximately $600 million in annual cost savings by the end of 2021.

| • | Redeemed approximately $1.2 billion of senior notes in 2021.

| • | Exited the third quarter with $5.3 billion of liquidity, including $2.3 billion of cash, with no debt maturities until 2023.

| • | Generated $3.3 billion of operating cash flow through the first three quarters of 2021.

| • | Including variable dividends, paid dividends of approximately $761 million in the first nine months of 2021 and have declared $568 million of dividends to be paid in the fourth quarter of 2021.

| • | Authorized a $1.0 billion share repurchase program, representing 4% of outstanding shares at the time of announcement.

We operate under a disciplined returns-driven strategy focused on delivering strong operational results, financial strength and value to our shareholders and continuing our commitment to ESG excellence, which provides us with a strong foundation to grow returns, margin and profitability. We continue to execute on our strategy and navigate through various economic environments by protecting our financial strength, maintaining a commitment to capital discipline, improving our cash cost structure and preserving operational continuity.

Commodity prices have strengthened throughout 2021 which has significantly improved our earnings and cash flow generation. The increase in commodity prices has been primarily driven by increased demand resulting from the initial recovery from the COVID-19 pandemic, as well as OPEC+ and other oil and natural gas producers not rapidly increasing current production levels.

Trends of our quarterly earnings, operating cash flow, EBITDAX and capital expenditures are shown below. The quarterly earnings chart and cash flow chart present amounts pertaining to Devon’s continuing operations. “Core earnings” and “EBITDAX” are financial measures not prepared in accordance with GAAP. For a description of these measures, including reconciliations to the comparable GAAP measures, see “Non-GAAP Measures” in this Item 2.

28

Table of Contents

Our earnings increased from the second quarter of 2021 to the third quarter of 2021 primarily due to an increase in overall commodity prices as well as higher sold volumes. Led by a 42% and 7% increase in Henry Hub and WTI from the second quarter of 2021 to the third quarter of 2021, respectively, our unhedged combined realized price rose 13%. Volumes increased due to new well activity in the Delaware Basin and Eagle Ford.

Our net earnings in recent quarters have been significantly impacted by non-cash adjustments to the value of our commodity hedges. Net earnings in the second quarter of 2021, the first quarter of 2021, the fourth quarter of 2020 and the third quarter of 2020 each included a hedge valuation loss, net of tax of $0.3 billion, $0.2 billion, $0.1 billion and $0.1 billion, respectively. Excluding these amounts, our core earnings have been more stable over recent quarters but continue to be heavily influenced by commodity prices.

Like earnings, our operating cash flow is sensitive to volatile commodity prices. Our cash flow and EBITDAX increased during the first, second and third quarters of 2021 primarily due to higher commodity prices and an increase in sold volumes driven by our WPX merger and improved post-merger operating performance.

We exited the third quarter of 2021 with $5.3 billion of liquidity, comprised of $2.3 billion of cash and $3.0 billion of available credit under our Senior Credit Facility. We currently have $6.5 billion of debt outstanding with no maturities until August 2023. We currently have approximately 45% and 50% of our remaining 2021 oil and gas production hedged, respectively, and 20% and 30% of our 2022 oil and gas production hedged, respectively. These contracts consist of collars and swaps based off the WTI oil benchmark and the Henry Hub and NYMEX last day natural gas indices. Additionally, we have entered into regional basis swaps in an effort to protect price realizations across our portfolio.

As commodity prices and our operating performance strengthen and bolster our financial condition, we have authorized opportunistic repurchases of up to $1.0 billion of our common shares through the end of 2022. Additionally, we continue funding our fixed plus variable dividends, which have grown 13%, 44% and 71% over the past three quarters, respectively, including the recently declared dividend payable in the fourth quarter of 2021.

29

Table of Contents

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 earnings attributable to discontinued operations or noncontrolling interests.

Q3 2021 vs. Q2 2021

Our third quarter 2021 net earnings were $844 million, compared to net earnings of $261 million for the second quarter of 2021. The graph below shows the change in net earnings from the second quarter of 2021 to the third quarter of 2021. The material changes are further discussed by category on the following pages.

30

Table of Contents

Production Volumes

|  | Q3 2021 |  |  | % of Total |  |  | Q2 2021 |  |  | Change |
Oil (MBbls/d) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delaware Basin |  |  | 213 |  |  |  | 70 | % |  |  | 191 |  |  |  | +11 | %
Anadarko Basin |  |  | 14 |  |  |  | 5 | % |  |  | 17 |  |  |  | - 15 | %
Williston Basin |  |  | 39 |  |  |  | 13 | % |  |  | 46 |  |  |  | - 15 | %
Eagle Ford |  |  | 20 |  |  |  | 6 | % |  |  | 18 |  |  |  | +11 | %
Powder River Basin |  |  | 14 |  |  |  | 5 | % |  |  | 16 |  |  |  | - 13 | %
Other |  |  | 3 |  |  |  | 1 | % |  |  | 3 |  |  |  | +1 | %
Total |  |  | 303 |  |  |  | 100 | % |  |  | 291 |  |  |  | +4 | %

|  | Q3 2021 |  |  | % of Total |  |  | Q2 2021 |  |  | Change |
Gas (MMcf/d) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delaware Basin |  |  | 578 |  |  |  | 62 | % |  |  | 513 |  |  |  | +13 | %
Anadarko Basin |  |  | 219 |  |  |  | 23 | % |  |  | 225 |  |  |  | - 3 | %
Williston Basin |  |  | 59 |  |  |  | 6 | % |  |  | 61 |  |  |  | - 4 | %
Eagle Ford |  |  | 67 |  |  |  | 7 | % |  |  | 59 |  |  |  | +14 | %
Powder River Basin |  |  | 19 |  |  |  | 2 | % |  |  | 21 |  |  |  | - 10 | %
Other |  |  | 1 |  |  |  | 0 | % |  |  | 2 |  |  |  | - 45 | %
Total |  |  | 943 |  |  |  | 100 | % |  |  | 881 |  |  |  | +7 | %

|  | Q3 2021 |  |  | % of Total |  |  | Q2 2021 |  |  | Change |
NGLs (MBbls/d) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delaware Basin |  |  | 100 |  |  |  | 68 | % |  |  | 82 |  |  |  | +23 | %
Anadarko Basin |  |  | 25 |  |  |  | 17 | % |  |  | 26 |  |  |  | - 4 | %
Williston Basin |  |  | 9 |  |  |  | 6 | % |  |  | 9 |  |  |  | - 3 | %
Eagle Ford |  |  | 11 |  |  |  | 7 | % |  |  | 9 |  |  |  | +25 | %
Powder River Basin |  |  | 3 |  |  |  | 2 | % |  |  | 3 |  |  |  | - 4 | %
Other |  |  | — |  |  |  | 0 | % |  |  | — |  |  | N/M |
Total |  |  | 148 |  |  |  | 100 | % |  |  | 129 |  |  |  | +15 | %

|  | Q3 2021 |  |  | % of Total |  |  | Q2 2021 |  |  | Change |
Combined (MBoe/d) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delaware Basin |  |  | 409 |  |  |  | 67 | % |  |  | 358 |  |  |  | +14 | %
Anadarko Basin |  |  | 75 |  |  |  | 12 | % |  |  | 80 |  |  |  | - 6 | %
Williston Basin |  |  | 58 |  |  |  | 10 | % |  |  | 66 |  |  |  | - 12 | %
Eagle Ford |  |  | 42 |  |  |  | 7 | % |  |  | 37 |  |  |  | +15 | %
Powder River Basin |  |  | 20 |  |  |  | 3 | % |  |  | 22 |  |  |  | - 12 | %
Other |  |  | 4 |  |  |  | 1 | % |  |  | 4 |  |  |  | +0 | %
Total |  |  | 608 |  |  |  | 100 | % |  |  | 567 |  |  |  | +7 | %

From the second quarter of 2021 to the third quarter of 2021, the change in volumes contributed to a $149 million increase in earnings. The increase in volumes was primarily due to new well activity in the Delaware Basin and Eagle Ford which was partially offset by lower volumes in the Anadarko, Williston and Powder River Basins.

Realized Prices

|  | Q3 2021 |  |  | Realization |  |  | Q2 2021 |  |  | Change |
Oil (per Bbl) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
WTI index |  | $ | 70.64 |  |  |  |  |  |  | $ | 66.04 |  |  |  | +7 | %
Realized price, unhedged |  | $ | 68.19 |  |  | 97% |  |  | $ | 63.63 |  |  |  | +7 | %
Cash settlements |  | $ | (10.60 | ) |  |  |  |  |  | $ | (13.29 | ) |  |  |  |
Realized price, with hedges |  | $ | 57.59 |  |  | 82% |  |  | $ | 50.34 |  |  |  | +14 | %

|  | Q3 2021 |  |  | Realization |  |  | Q2 2021 |  |  | Change |
Gas (per Mcf) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Henry Hub index |  | $ | 4.02 |  |  |  |  |  |  | $ | 2.83 |  |  |  | +42 | %
Realized price, unhedged |  | $ | 3.55 |  |  | 88% |  |  | $ | 2.35 |  |  |  | +51 | %
Cash settlements |  | $ | (0.78 | ) |  |  |  |  |  | $ | (0.15 | ) |  |  |  |
Realized price, with hedges |  | $ | 2.77 |  |  | 69% |  |  | $ | 2.20 |  |  |  | +26 | %

|  | Q3 2021 |  |  | Realization |  |  | Q2 2021 |  |  | Change |
NGLs (per Bbl) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
WTI index |  | $ | 70.64 |  |  |  |  |  |  | $ | 66.04 |  |  |  | +7 | %
Realized price, unhedged |  | $ | 31.25 |  |  | 44% |  |  | $ | 23.89 |  |  |  | +31 | %
Cash settlements |  | $ | (0.45 | ) |  |  |  |  |  | $ | (0.25 | ) |  |  |  |
Realized price, with hedges |  | $ | 30.80 |  |  | 44% |  |  | $ | 23.64 |  |  |  | +30 | %

|  | Q3 2021 |  |  | Q2 2021 |  |  | Change |
Combined (per Boe) |  |  |  |  |  |  |  |  |  |  |  |
Realized price, unhedged |  | $ | 47.08 |  |  | $ | 41.75 |  |  |  | +13 | %
Cash settlements |  | $ | (6.60 | ) |  | $ | (7.11 | ) |  |  |  |
Realized price, with hedges |  | $ | 40.48 |  |  | $ | 34.64 |  |  |  | +17 | %

From the second quarter of 2021 to the third quarter of 2021, realized prices contributed to a $332 million increase in earnings. Unhedged realized oil, gas and NGL prices increased primarily due to higher WTI, Henry Hub and Mont Belvieu index prices.

We currently have approximately 45% of our remaining 2021 oil production hedged with an average floor price of $40/Bbl and approximately 50% of our remaining 2021 gas production hedged with an average floor price of $2.60/Mcf. We currently have approximately 20% of our 2022 oil production hedged with an average floor price of $45/Bbl and approximately 30% of our 2022 gas production hedged with an average floor price of $2.70/Mcf.

Hedge Settlements

|  | Q3 2021 |  |  | Q2 2021 |  |  | Change |
|  | Q |  |  |  |  |  |  |  |  |
Oil |  | $ | (296 | ) |  | $ | (352 | ) |  |  | +16 | %
Natural gas |  |  | (68 | ) |  |  | (12 | ) |  | N/M |
NGL |  |  | (6 | ) |  |  | (3 | ) |  |  | - 100 | %
Total cash settlements (1) |  | $ | (370 | ) |  | $ | (367 | ) |  |  | - 1 | %

| (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.

31

Table of Contents

Production Expenses

|  | Q3 2021 |  |  | Q2 2021 |  |  | Change |
LOE |  | $ | 215 |  |  | $ | 210 |  |  |  | +2 | %
Gathering, processing & transportation |  |  | 157 |  |  |  | 147 |  |  |  | +7 | %
Production taxes |  |  | 176 |  |  |  | 143 |  |  |  | +23 | %
Property taxes |  |  | 7 |  |  |  | 13 |  |  |  | - 46 | %
Total |  | $ | 555 |  |  | $ | 513 |  |  |  | +8 | %
Per Boe: |  |  |  |  |  |  |  |  |  |  |  |
LOE |  | $ | 3.85 |  |  | $ | 4.06 |  |  |  | - 5 | %
Gathering, processing & transportation |  | $ | 2.81 |  |  | $ | 2.85 |  |  |  | - 1 | %
Percent of oil, gas and NGL sales: |  |  |  |  |  |  |  |  |  |  |  |
Production taxes |  |  | 6.7 | % |  |  | 6.7 | % |  |  | - 0 | %

Production expenses increased from the second quarter of 2021 to the third quarter of 2021 primarily due to new well activity in the Delaware Basin. Production taxes also increased due to the rise in 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.

|  | Q3 2021 |  |  | $ per BOE |  |  | Q2 2021 |  |  | $ per BOE |
Field-level cash margin (Non-GAAP) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delaware Basin |  | $ | 1,480 |  |  | $ | 39.28 |  |  | $ | 1,102 |  |  | $ | 33.79 |
Anadarko Basin |  |  | 174 |  |  | $ | 25.20 |  |  |  | 145 |  |  | $ | 19.86 |
Williston Basin |  |  | 192 |  |  | $ | 36.12 |  |  |  | 197 |  |  | $ | 32.98 |
Eagle Ford |  |  | 147 |  |  | $ | 37.81 |  |  |  | 106 |  |  | $ | 31.88 |
Powder River Basin |  |  | 69 |  |  | $ | 38.18 |  |  |  | 74 |  |  | $ | 36.78 |
Other |  |  | 18 |  |  | $ | 49.53 |  |  |  | 17 |  |  | $ | 42.85 |
Total |  | $ | 2,080 |  |  | $ | 37.17 |  |  | $ | 1,641 |  |  | $ | 31.79 |

DD&A and Asset Impairments

|  | Q3 2021 |  |  | Q2 2021 |  |  | Change |  |
Oil and gas per Boe |  | $ | 9.85 |  |  | $ | 9.88 |  |  |  | - 0 | % |
Oil and gas |  | $ | 551 |  |  | $ | 510 |  |  |  | +8 | % |
Other property and equipment |  |  | 27 |  |  |  | 26 |  |  |  | +4 | % |
Total |  | $ | 578 |  |  | $ | 536 |  |  |  | +8 | % |

DD&A increased in the third quarter of 2021 primarily due to higher volumes.

Other Items

|  | Q3 2021 |  |  | Q2 2021 |  |  | Change in earnings |
Commodity hedge valuation changes (1) |  | $ | 35 |  |  | $ | (336 | ) |  | $ | 371 |
Marketing and midstream operations |  |  | 1 |  |  |  | 1 |  |  |  | — |
Exploration expenses |  |  | 3 |  |  |  | 3 |  |  |  | — |
Asset dispositions |  |  | — |  |  |  | (87 | ) |  |  | (87 | )
Net financing costs |  |  | 86 |  |  |  | 80 |  |  |  | (6 | )
Restructuring and transaction costs |  |  | 18 |  |  |  | 23 |  |  |  | 5 |
Other, net |  |  | 2 |  |  |  | (14 | ) |  |  | (16 | )
|  |  |  |  |  |  |  |  |  | $ | 267 |

| (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.

Asset dispositions in the second quarter of 2021 includes $65 million related to the re-valuation of contingent earnout payments associated with our divested Barnett Shale assets. For additional information, see Note 2 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Income Taxes

|  | Q3 2021 |  |  | Q2 2021 |
Current expense |  | $ | 1 |  |  | $ | 19 |
Deferred expense |  |  | 119 |  |  |  | 24 |
Total expense |  | $ | 120 |  |  | $ | 43 |
Effective income tax rate |  |  | 12 | % |  |  | 14 | %

For discussion on income taxes, see Note 7 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

32

Table of Contents

September 30, 2021 YTD vs. September 30, 2020 YTD

Our nine months ended September 30, 2021 net earnings were $1.3 billion, compared to a net loss of $2.5 billion (excludes discontinued operations) for the nine months ended September 30, 2020. The graph below shows the change in the net earnings (loss) from the nine months ended September 30, 2020 to the nine months ended September 30, 2021. The material changes are further discussed by category on the following pages.

33

Table of Contents

Production Volumes

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | % of Total |  |  | 2020 |  |  | Change |
Oil (MBbls/d) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delaware Basin |  |  | 192 |  |  |  | 67 | % |  |  | 80 |  |  |  | +140 | %
Anadarko Basin |  |  | 14 |  |  |  | 5 | % |  |  | 21 |  |  |  | - 32 | %
Williston Basin |  |  | 43 |  |  |  | 15 | % |  |  | — |  |  | N/M |
Eagle Ford |  |  | 18 |  |  |  | 6 | % |  |  | 25 |  |  |  | - 29 | %
Powder River Basin |  |  | 16 |  |  |  | 5 | % |  |  | 20 |  |  |  | - 23 | %
Other |  |  | 4 |  |  |  | 2 | % |  |  | 8 |  |  |  | - 42 | %
Total |  |  | 287 |  |  |  | 100 | % |  |  | 154 |  |  |  | +87 | %

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | % of Total |  |  | 2020 |  |  | Change |
Gas (MMcf/d) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delaware Basin |  |  | 521 |  |  |  | 60 | % |  |  | 241 |  |  |  | +116 | %
Anadarko Basin |  |  | 215 |  |  |  | 25 | % |  |  | 258 |  |  |  | - 17 | %
Williston Basin |  |  | 56 |  |  |  | 6 | % |  |  | — |  |  | N/M |
Eagle Ford |  |  | 57 |  |  |  | 7 | % |  |  | 82 |  |  |  | - 30 | %
Powder River Basin |  |  | 21 |  |  |  | 2 | % |  |  | 24 |  |  |  | - 14 | %
Other |  |  | 2 |  |  |  | 0 | % |  |  | 4 |  |  |  | - 48 | %
Total |  |  | 872 |  |  |  | 100 | % |  |  | 609 |  |  |  | +43 | %

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | % of Total |  |  | 2020 |  |  | Change |
NGLs (MBbls/d) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delaware Basin |  |  | 81 |  |  |  | 65 | % |  |  | 35 |  |  |  | +132 | %
Anadarko Basin |  |  | 24 |  |  |  | 19 | % |  |  | 28 |  |  |  | - 16 | %
Williston Basin |  |  | 9 |  |  |  | 7 | % |  |  | — |  |  | N/M |
Eagle Ford |  |  | 9 |  |  |  | 7 | % |  |  | 11 |  |  |  | - 18 | %
Powder River Basin |  |  | 3 |  |  |  | 2 | % |  |  | 3 |  |  |  | +0 | %
Other |  |  | — |  |  |  | 0 | % |  |  | 1 |  |  |  | - 100 | %
Total |  |  | 126 |  |  |  | 100 | % |  |  | 78 |  |  |  | +62 | %

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | % of Total |  |  | 2020 |  |  | Change |
Combined (MBoe/d) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delaware Basin |  |  | 360 |  |  |  | 64 | % |  |  | 155 |  |  |  | +132 | %
Anadarko Basin |  |  | 74 |  |  |  | 13 | % |  |  | 92 |  |  |  | - 20 | %
Williston Basin |  |  | 61 |  |  |  | 11 | % |  |  | — |  |  | N/M |
Eagle Ford |  |  | 36 |  |  |  | 7 | % |  |  | 50 |  |  |  | - 27 | %
Powder River Basin |  |  | 22 |  |  |  | 4 | % |  |  | 27 |  |  |  | - 19 | %
Other |  |  | 5 |  |  |  | 1 | % |  |  | 9 |  |  |  | - 43 | %
Total |  |  | 558 |  |  |  | 100 | % |  |  | 333 |  |  |  | +68 | %

From the nine months ended 2020 to the nine months ended 2021, the change in volumes contributed to a $1.5 billion increase in earnings. Due to the Merger closing on January 7, 2021, volumes now include WPX legacy assets in the Delaware Basin in Texas and New Mexico and the Williston Basin in North Dakota. Volumes associated with these WPX legacy assets were approximately 225 MBoe/d for the nine months ended 2021. Continued development of Devon legacy assets in the Delaware Basin also increased volumes. These increases were partially offset by reduced activity across Devon’s remaining legacy assets.

Realized Prices

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | Realization |  |  | 2020 |  |  | Change |
Oil (per Bbl) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
WTI index |  | $ | 64.85 |  |  |  |  |  |  | $ | 38.57 |  |  |  | +68 | %
Realized price, unhedged |  | $ | 62.69 |  |  | 97% |  |  | $ | 34.63 |  |  |  | +81 | %
Cash settlements |  | $ | (11.06 | ) |  |  |  |  |  | $ | 7.06 |  |  |  |  |
Realized price, with hedges |  | $ | 51.63 |  |  | 80% |  |  | $ | 41.69 |  |  |  | +24 | %

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | Realization |  |  | 2020 |  |  | Change |
Gas (per Mcf) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Henry Hub index |  | $ | 3.19 |  |  |  |  |  |  | $ | 1.88 |  |  |  | +70 | %
Realized price, unhedged |  | $ | 2.93 |  |  | 92% |  |  | $ | 1.32 |  |  |  | +122 | %
Cash settlements |  | $ | (0.38 | ) |  |  |  |  |  | $ | 0.24 |  |  |  |  |
Realized price, with hedges |  | $ | 2.55 |  |  | 80% |  |  | $ | 1.56 |  |  |  | +63 | %

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | Realization |  |  | 2020 |  |  | Change |
NGLs (per Bbl) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
WTI index |  | $ | 64.85 |  |  |  |  |  |  | $ | 38.57 |  |  |  | +68 | %
Realized price, unhedged |  | $ | 27.11 |  |  | 42% |  |  | $ | 10.66 |  |  |  | +154 | %
Cash settlements |  | $ | (0.32 | ) |  |  |  |  |  | $ | 0.25 |  |  |  |  |
Realized price, with hedges |  | $ | 26.79 |  |  | 41% |  |  | $ | 10.91 |  |  |  | +146 | %

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | Change |
Combined (per Boe) |  |  |  |  |  |  |  |  |  |  |  |
Realized price, unhedged |  | $ | 42.94 |  |  | $ | 20.91 |  |  |  | +105 | %
Cash settlements |  | $ | (6.35 | ) |  | $ | 3.76 |  |  |  |  |
Realized price, with hedges |  | $ | 36.59 |  |  | $ | 24.67 |  |  |  | +48 | %

From the nine months ended 2020 to the nine months ended 2021, realized prices contributed to a $3.1 billion increase in earnings. Unhedged realized oil, gas and NGL prices increased primarily due to higher WTI, Henry Hub and Mont Belvieu index prices. The increase in index prices was partially offset by hedge cash settlements related to all products in the first nine months of 2021.

Hedge Settlements

|  | Nine Months Ended September 30,
|  | 2021 |  |  | 2020 |  |  | Change
Oil |  | $ | (868 | ) |  | $ | 298 |  |  | N/M
Natural gas |  |  | (90 | ) |  |  | 40 |  |  | N/M
NGL |  |  | (11 | ) |  |  | 5 |  |  | N/M
Total cash settlements (1) |  | $ | (969 | ) |  | $ | 343 |  |  | 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.

34

Table of Contents

Production Expenses

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | Change |
LOE |  | $ | 624 |  |  | $ | 334 |  |  |  | +87 | %
Gathering, processing & transportation |  |  | 433 |  |  |  | 378 |  |  |  | +15 | %
Production taxes |  |  | 436 |  |  |  | 123 |  |  |  | +254 | %
Property taxes |  |  | 33 |  |  |  | 17 |  |  |  | +94 | %
Total |  | $ | 1,526 |  |  | $ | 852 |  |  |  | +79 | %
Per Boe: |  |  |  |  |  |  |  |  |  |  |  |
LOE |  | $ | 4.09 |  |  | $ | 3.66 |  |  |  | +12 | %
Gathering, processing & transportation |  | $ | 2.84 |  |  | $ | 4.15 |  |  |  | - 31 | %
Percent of oil, gas and NGL sales: |  |  |  |  |  |  |  |  |  |  |  |
Production taxes |  |  | 6.7 | % |  |  | 6.4 | % |  |  | +4 | %

Production expenses increased primarily due to the Merger closing on January 7, 2021. For additional information, see Note 2 in “Part I. Financial Information – Item 1. Financial Statements” in this report. Partially offsetting increases to gathering, processing and transportation costs were approximately $39 million of Anadarko volume commitments which expired at the end of 2020. Production taxes also increased due to the rise in 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.

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | $ per BOE |  |  | 2020 |  |  | $ per BOE |
Field-level cash margin (Non-GAAP) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delaware Basin |  | $ | 3,477 |  |  | $ | 35.41 |  |  | $ | 602 |  |  | $ | 14.16 |
Anadarko Basin |  |  | 404 |  |  | $ | 19.93 |  |  |  | 143 |  |  | $ | 5.62 |
Williston Basin |  |  | 550 |  |  | $ | 32.91 |  |  |  | — |  |  | N/M |
Eagle Ford |  |  | 325 |  |  | $ | 32.74 |  |  |  | 170 |  |  | $ | 12.54 |
Powder River Basin |  |  | 210 |  |  | $ | 35.53 |  |  |  | 121 |  |  | $ | 16.45 |
Other |  |  | 54 |  |  | $ | 37.69 |  |  |  | 21 |  |  | $ | 8.77 |
Total |  | $ | 5,020 |  |  | $ | 32.93 |  |  | $ | 1,057 |  |  | $ | 11.58 |

DD&A and Asset Impairments

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | Change |
Oil and gas per Boe |  | $ | 9.84 |  |  | $ | 10.19 |  |  |  | - 3 | %
Oil and gas |  | $ | 1,500 |  |  | $ | 929 |  |  |  | +61 | %
Other property and equipment |  |  | 81 |  |  |  | 70 |  |  |  | +16 | %
Total |  | $ | 1,581 |  |  | $ | 999 |  |  |  | +58 | %
Asset impairments |  | $ | — |  |  | $ | 2,666 |  |  | N/M |

DD&A increased in 2021 primarily due to the Merger closing on January 7, 2021. For additional information, see Note 2 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Asset impairments were $2.7 billion for the nine months ended 2020 due to significant decreases in commodity prices resulting primarily from the COVID-19 pandemic. For additional information, see Note 5 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

General and Administrative Expense

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | Change |
G&A per Boe |  | $ | 1.94 |  |  | $ | 2.81 |  |  |  | - 31 | %
Labor and benefits |  | $ | 197 |  |  | $ | 157 |  |  |  | +25 | %
Non-labor |  |  | 99 |  |  |  | 99 |  |  |  | +0 | %
Total |  | $ | 296 |  |  | $ | 256 |  |  |  | +16 | %

Labor and benefits increased primarily due to the Merger closing on January 7, 2021. However, Devon’s G&A per Boe rate decreased 31% primarily due to synergies resulting from the Merger.

Other Items

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | Change in earnings |
Commodity hedge valuation changes (1) |  | $ | (597 | ) |  | $ | (71 | ) |  | $ | (526 | )
Marketing and midstream operations |  |  | (19 | ) |  |  | (28 | ) |  |  | 9 |
Exploration expenses |  |  | 9 |  |  |  | 163 |  |  |  | 154 |
Asset dispositions |  |  | (119 | ) |  |  | — |  |  |  | 119 |
Net financing costs |  |  | 243 |  |  |  | 200 |  |  |  | (43 | )
Restructuring and transaction costs |  |  | 230 |  |  |  | 32 |  |  |  | (198 | )
Other, net |  |  | (41 | ) |  |  | (35 | ) |  |  | 6 |
|  |  |  |  |  |  |  |  |  | $ | (479 | )

| (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

35

Table of Contents

information, see Note 3 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Exploration expenses decreased primarily due to unproved asset impairments of $149 million in the first nine months of 2020. For additional information, see Note 5 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Asset dispositions includes $65 million related to the re-valuation of contingent earnout payments associated with our divested Barnett Shale assets and $35 million related to the sale of non-core assets in the Rockies. For additional information, see Note 2 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Net financing costs increased as a result of WPX debt assumed in the Merger, partially offset by a $30 million gain associated with our debt retirements in the first nine months of 2021. For additional information, see Note 13 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Restructuring and transaction costs in 2021 reflect workforce reductions in conjunction with the Merger, as well as various transaction costs related to the Merger. For additional information, see Note 6 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Income Taxes

|  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |
Current expense (benefit) |  | $ | 15 |  |  | $ | (199 | )
Deferred benefit |  |  | (100 | ) |  |  | (311 | )
Total benefit |  | $ | (85 | ) |  | $ | (510 | )
Effective income tax rate |  |  | (7 | %) |  |  | 17 | %

For discussion on income taxes, see Note 7 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

36

Table of Contents

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 nine months ended September 30, 2021 and 2020.

|  | Three Months Ended September 30, |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  |  | 2021 |  |  | 2020 |
Operating cash flow from continuing operations |  | $ | 1,598 |  |  | $ | 427 |  |  |  | $ | 3,283 |  |  | $ | 1,106 |
WPX acquired cash |  |  | — |  |  |  | — |  |  |  |  | 344 |  |  |  | — |
Divestitures of property and equipment |  |  | 1 |  |  |  | 1 |  |  |  |  | 65 |  |  |  | 29 |
Capital expenditures |  |  | (474 | ) |  |  | (204 | ) |  |  |  | (1,477 | ) |  |  | (936 | )
Debt activity, net |  |  | — |  |  |  | — |  |  |  |  | (1,302 | ) |  |  | — |
Repurchases of common stock |  |  | — |  |  |  | — |  |  |  |  | — |  |  |  | (38 | )
Common stock dividends |  |  | (329 | ) |  |  | (43 | ) |  |  |  | (761 | ) |  |  | (119 | )
Noncontrolling interest activity, net |  |  | (5 | ) |  |  | (3 | ) |  |  |  | (35 | ) |  |  | 2 |
Other |  |  | (9 | ) |  |  | — |  |  |  |  | (33 | ) |  |  | (22 | )
Net change in cash, cash equivalents and restricted cash from discontinued operations |  |  | — |  |  |  | 50 |  |  |  |  | — |  |  |  | 31 |
Net change in cash, cash equivalents and restricted cash |  | $ | 782 |  |  | $ | 228 |  |  |  | $ | 84 |  |  | $ | 53 |
Cash, cash equivalents and restricted cash at end of period |  | $ | 2,321 |  |  | $ | 1,897 |  |  |  | $ | 2,321 |  |  | $ | 1,897 |

Operating Cash Flow and WPX Acquired Cash

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 nearly tripled during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. The increase was due to the Merger and prices significantly increasing in the first nine months of 2021. Additionally, despite our portfolio enhancements, aggressive cost reductions and operational advancements, our 2020 financial results were challenged by commodity prices and deterioration of the macro-economic environment resulting from the unprecedented COVID-19 pandemic.

Divestitures of Property and Equipment

During the first nine months of 2021, we sold non-core assets for approximately $65 million, net of customary purchase price adjustments. For additional information, please see Note 2 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

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 September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Delaware Basin |  | $ | 375 |  |  | $ | 147 |  |  | $ | 1,150 |  |  | $ | 560 |
Anadarko Basin |  |  | 11 |  |  |  | 2 |  |  |  | 29 |  |  |  | 20 |
Williston Basin |  |  | 13 |  |  |  | — |  |  |  | 59 |  |  |  | — |
Eagle Ford |  |  | 45 |  |  |  | 17 |  |  |  | 88 |  |  |  | 153 |
Powder River Basin |  |  | 13 |  |  |  | 24 |  |  |  | 53 |  |  |  | 155 |
Other |  |  | 1 |  |  |  | 3 |  |  |  | 1 |  |  |  | 9 |
Total oil and gas |  |  | 458 |  |  |  | 193 |  |  |  | 1,380 |  |  |  | 897 |
Midstream |  |  | 5 |  |  |  | 7 |  |  |  | 53 |  |  |  | 26 |
Other |  |  | 11 |  |  |  | 4 |  |  |  | 44 |  |  |  | 13 |
Total capital expenditures |  | $ | 474 |  |  | $ | 204 |  |  | $ | 1,477 |  |  | $ | 936 |

Capital expenditures consist primarily of amounts related to our oil and gas exploration and development operations, midstream operations and other corporate activities. Capital expenditures increased in 2021 primarily due to the Merger closing on January 7,

37

Table of Contents

2021 and results now includ e activity related to WPX legacy assets in the Delaware Basin in Texas and New Mexico and the Williston Basin in North Dakota. Our capital program is designed to operate within operating cash flow. This is evidenced by our operating cash flow funding all of our capital expenditures for the nine months ended September 3 0, 202 1. Our capital investment program is driven by a disciplined allocation process focused on returns.

Debt Activity

Subsequent to the Merger closing, we redeemed $1.2 billion of senior notes in the first nine months of 2021. We also paid $59 million of cash retirement costs related to these redemptions.

Shareholder Distributions and Stock Activity

The following table summarizes our common stock dividends during the third quarter and total for the first nine months of 2021 and 2020. We raised our quarterly dividend by 22% to $0.11 per share in the second quarter of 2020. In addition to the fixed quarterly dividend, we paid a variable dividend in each quarter of 2021.

| Fixed |  |  | Variable |  |  | Total |  |  | Rate Per Share |
2021: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
First quarter | $ | 76 |  |  | $ | 127 |  |  | $ | 203 |  |  | $ | 0.30 |
Second quarter |  | 75 |  |  |  | 154 |  |  |  | 229 |  |  | $ | 0.34 |
Third quarter |  | 74 |  |  |  | 255 |  |  |  | 329 |  |  | $ | 0.49 |
Total year-to-date | $ | 225 |  |  | $ | 536 |  |  | $ | 761 |  |  |  |  |
2020: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
First quarter | $ | 34 |  |  | $ | — |  |  | $ | 34 |  |  | $ | 0.09 |
Second quarter |  | 42 |  |  |  | — |  |  |  | 42 |  |  | $ | 0.11 |
Third quarter |  | 43 |  |  |  | — |  |  |  | 43 |  |  | $ | 0.11 |
Total year-to-date | $ | 119 |  |  | $ | — |  |  | $ | 119 |  |  |  |  |

We repurchased 2.2 million shares of common stock for $38 million in the first nine months of 2020. For additional information, see Note 16 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Noncontrolling Interest Activity, net

During the first nine months of 2021, we received $4 million of contributions from our noncontrolling interests in CDM and distributed $15 million to our noncontrolling interests in CDM. In the first quarter of 2021, we paid $24 million to purchase the noncontrolling interest portion of a partnership that WPX had formed to acquire minerals in the Delaware Basin.

During the first nine months of 2020, we received $12 million in contributions from our noncontrolling interests in CDM and distributed $10 million to our noncontrolling interests in CDM.

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 land owners to enhance our existing portfolio of assets.

On January 7, 2021, Devon and WPX completed an all-stock merger of equals. With the Merger, we accelerated our transition to a cash-return business model, which moderates growth, emphasizes capital efficiencies and prioritizes cash returns to shareholders. These principles will position Devon to be a consistent builder of economic value through the cycle. The post-merger scalability enhanced Devon’s free cash flow, credit profile and decreased the overall cost of capital.

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 post-merger capital requirements as discussed in this section as well as accelerate our cash-return business model.

38

Table of Contents

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 third quarter of 2021, we held approximately $2.3 billion of cash, inclusive of $177 million of cash restricted primarily for retained obligations related to divested assets. Our operating cash flow forecasts are sensitive to many variables and include a measure of uncertainty as these variables 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 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. We hedge our production in a manner that systematically places hedges for several quarters in advance, allowing us to maintain a disciplined risk management program as it relates to commodity price volatility. We supplement the systematic hedging program with discretionary hedges that take advantage of favorable market conditions. The key terms to our oil, gas and NGL derivative financial instruments as of September 30, 2021 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. Additionally, as commodity prices have increased, we remain committed to a maintenance capital program for the foreseeable future. We do not intend to add any growth projects until market fundamentals recover, excess inventory clears up and OPEC+ curtailed volumes are effectively absorbed by the world markets.

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.

Merger Synergies – Cost savings from synergies resulting from the Merger are expected to be attained through cost reductions and efficiencies related to our capital programs, G&A, financing costs and production expenses. We anticipate the planned $600 million reduction of annualized costs will occur by year-end 2021. Approximately 35% of the reduced costs are related to our capital programs and the remainder relate to our operating expenses, including G&A, interest expense and production expenses.

Restructuring and Transaction Related Costs – The majority of the Merger-related restructuring and transaction cost cash outflows were paid in the first nine months of 2021 and the remaining costs will be paid mostly over the remaining three months of 2021. These payments relate to workforce reductions and the associated employee severance benefits, costs to modify or abandon vendor contracts and the acceleration of certain employee benefits triggered by the Merger.

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 partners 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, partners and counterparties. Such mechanisms include, under certain conditions, requiring letters of credit, prepayments or collateral postings.

Assumption and Repayment of WPX Debt

In conjunction with the Merger closing on January 7, 2021, we assumed a principal value of $3.3 billion of WPX debt. Subsequent to the Merger closing, we have reduced our debt by approximately $1.2 billion in the first half of 2021. We expect these redemptions to lower our annual cash net financing costs by approximately $70 million.

Credit Availability

As of September 30, 2021, 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 September 30, 2021, there were no borrowings under our commercial paper program, and we were in compliance with the Senior Credit Facility’s financial covenant.

39

Table of Contents

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 production growth opportunities. Our credit rating from Standard and Poor’s Financial Services is BBB- with a positive outlook. Our credit rating from Fitch is BBB+ with a stable outlook. Our credit rating from Moody’s Investor Service is Ba1 with a positive 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 any credit facility borrowings and the ability to economically access debt markets in the future.

Fixed Plus Variable Dividend

Following the closing of the Merger, we initiated a new “fixed plus variable” dividend strategy. The fixed dividend is currently paid quarterly at a rate of $0.11 per share, and 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 up to 50% of our excess free cash flow, which is a non-GAAP measure. Each quarter’s excess free cash flow is computed as operating cash flow (a GAAP measure) before balance sheet changes, less capital expenditures and the fixed dividend. 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, COVID-19 impacts and other factors deemed relevant by the Board.

In November 2021, Devon announced a cash dividend in the amount of $0.84 per share payable in the fourth quarter of 2021. The dividend consists of a fixed quarterly dividend in the amount of approximately $74 million (or $0.11 per share) and a variable quarterly dividend in the amount of approximately $494 million (or $0.73 per share).

Capital Expenditures

Our 2021 exploration and development budget for the fourth quarter of 2021 is expected to range from approximately $440 million to $490 million.

Share Repurchases

In November 2021, our Board of Directors authorized a $1.0 billion share repurchase program, which expires December 31, 2022.

Critical Accounting Estimates

Income Taxes

The amount of income taxes recorded requires interpretations of complex rules and regulations of federal, state, provincial and foreign tax jurisdictions. We recognize current tax expense based on estimated taxable income for the current period and the applicable statutory tax rates. We routinely assess potential uncertain tax positions and, if required, estimate and establish accruals for such amounts. We have recognized deferred tax assets and liabilities for temporary differences, operating losses and other tax carryforwards. We routinely assess our deferred tax assets and reduce such assets by a valuation allowance if we deem it is more likely than not that some portion or all of the deferred tax assets will not be realized. Due primarily to significant cumulative losses, we recorded a full valuation allowance against U.S. deferred tax assets in 2020 and remain in a partial valuation allowance position at September 30, 2021. Subject to any additional objective negative evidence or the addition of subjective evidence such as forecasted income, Devon may continue to adjust the valuation allowance on its deferred tax assets in future periods.

Further, in the event we were to undergo an “ownership change” (as defined in Section 382 of the Internal Revenue Code of 1986, as amended), our ability to use net operating losses and tax credits generated prior to the ownership change may be limited. Generally, an “ownership change” occurs if one or more shareholders, each of whom owns five percent or more in value of a corporation’s stock, increase their aggregate percentage ownership by more than 50 percent over the lowest percentage of stock owned by those shareholders at any time during the preceding three-year period. Based on currently available information, we do not believe an ownership change has occurred during 2021 for Devon, but the Merger did cause an ownership change for WPX and increased the likelihood Devon could experience an ownership change over the next three years.

40

Table of Contents

Purchase Accounting

Periodically we acquire assets and assume liabilities in transactions accounted for as business combinations, such as the Merger with WPX. In connection with the Merger, as the accounting acquirer, we allocated the $5.4 billion of purchase price consideration to the assets acquired and liabilities assumed based on estimated fair values as of the date of the Merger. The preliminary purchase price assessment remains an ongoing process and is subject to change for up to one year subsequent to the closing date of the Merger.

We made a number of assumptions in estimating the fair value of assets acquired and liabilities assumed in the Merger. 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.

In addition to the fair value of proved and unproved oil and gas properties, other significant fair value assessments for the assets acquired and liabilities assumed in the Merger relate to debt, the equity method investment in Catalyst and out-of-market contract assets and liabilities. The fair value of the assumed WPX publicly traded debt was based on available third party quoted prices. We prepared estimates and engaged third party valuation experts to assist in the valuation of the equity method investment in Catalyst. Significant judgments and assumptions inherent in this estimate included projected Catalyst cash flows, comparable companies cash flow multiples and an estimate of an applicable market participant discount rate. The fair value of assumed out-of-market contract assets and liabilities associated with longer-term marketing, gathering, processing and transportation contracts included significant judgments and assumptions related to determining the market rates, estimates of future reserves and production associated with the respective contracts and applying an applicable market participant discount rate.

For additional information regarding our critical accounting policies and estimates, see our 2020 Annual Report on Form 10-K.

Non-GAAP Measures

We make reference to “core earnings (loss) attributable to Devon” and “core earnings (loss) per share attributable to Devon” in “Overview of 2021 Results” in this Item 2 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 (loss) 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 non-cash unproved asset impairments), deferred tax asset valuation allowance, changes in tax legislation, fair value changes in derivative financial instruments and foreign currency, costs associated with early retirement of debt and restructuring and transaction costs associated with the workforce reductions described further in Note 6.

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.

41

Table of Contents

Below are reconciliations of core earnings and core earnings per share attributable to Devon to comparable GAAP measures.

| Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
| Before Tax |  |  | After Tax |  |  | After Noncontrolling Interests |  |  | Per Diluted Share |  |  | Before Tax |  |  | After Tax |  |  | After Noncontrolling Interests |  |  | Per Diluted Share |
2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Earnings attributable to Devon (GAAP) | $ | 964 |  |  | $ | 844 |  |  | $ | 838 |  |  | $ | 1.24 |  |  | $ | 1,236 |  |  | $ | 1,321 |  |  | $ | 1,307 |  |  | $ | 1.95 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Asset dispositions |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (119 | ) |  |  | (91 | ) |  |  | (91 | ) |  |  | (0.13 | )
Asset and exploration impairments |  | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 0.00 |  |  |  | 3 |  |  |  | 2 |  |  |  | 2 |  |  |  | 0.00 |
Deferred tax asset valuation allowance |  | — |  |  |  | (101 | ) |  |  | (101 | ) |  |  | (0.15 | ) |  |  | — |  |  |  | (479 | ) |  |  | (479 | ) |  |  | (0.71 | )
Change in tax legislation |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 62 |  |  |  | 62 |  |  |  | 0.09 |
Fair value changes in financial instruments and foreign currency |  | (31 | ) |  |  | (23 | ) |  |  | (23 | ) |  |  | (0.04 | ) |  |  | 597 |  |  |  | 460 |  |  |  | 460 |  |  |  | 0.68 |
Restructuring and transaction costs |  | 18 |  |  |  | 18 |  |  |  | 18 |  |  |  | 0.03 |  |  |  | 230 |  |  |  | 201 |  |  |  | 201 |  |  |  | 0.29 |
Early retirement of debt |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (30 | ) |  |  | (23 | ) |  |  | (23 | ) |  |  | (0.03 | )
Core earnings attributable to Devon (Non-GAAP) | $ | 952 |  |  | $ | 739 |  |  | $ | 733 |  |  | $ | 1.08 |  |  | $ | 1,917 |  |  | $ | 1,453 |  |  | $ | 1,439 |  |  | $ | 2.14 |
2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Continuing Operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss attributable to Devon (GAAP) | $ | (193 | ) |  | $ | (103 | ) |  | $ | (105 | ) |  | $ | (0.29 | ) |  | $ | (2,980 | ) |  | $ | (2,470 | ) |  | $ | (2,475 | ) |  | $ | (6.58 | )
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Asset and exploration impairments |  | 36 |  |  |  | 29 |  |  |  | 29 |  |  |  | 0.08 |  |  |  | 2,816 |  |  |  | 2,178 |  |  |  | 2,178 |  |  |  | 5.80 |
Deferred tax asset valuation allowance |  | — |  |  |  | (5 | ) |  |  | (5 | ) |  |  | (0.01 | ) |  |  | — |  |  |  | 252 |  |  |  | 252 |  |  |  | 0.65 |
Fair value changes in financial instruments |  | 97 |  |  |  | 74 |  |  |  | 74 |  |  |  | 0.19 |  |  |  | 71 |  |  |  | 55 |  |  |  | 55 |  |  |  | 0.14 |
Change in tax legislation |  | — |  |  |  | (43 | ) |  |  | (43 | ) |  |  | (0.11 | ) |  |  | — |  |  |  | (105 | ) |  |  | (105 | ) |  |  | (0.27 | )
Restructuring and transaction costs |  | 32 |  |  |  | 25 |  |  |  | 25 |  |  |  | 0.07 |  |  |  | 32 |  |  |  | 25 |  |  |  | 25 |  |  |  | 0.06 |
Core loss attributable to Devon (Non-GAAP) | $ | (28 | ) |  | $ | (23 | ) |  | $ | (25 | ) |  | $ | (0.07 | ) |  | $ | (61 | ) |  | $ | (65 | ) |  | $ | (70 | ) |  | $ | (0.20 | )
Discontinued Operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Earnings (loss) attributable to Devon (GAAP) | $ | (2 | ) |  | $ | 13 |  |  | $ | 13 |  |  | $ | 0.04 |  |  | $ | (150 | ) |  | $ | (103 | ) |  | $ | (103 | ) |  | $ | (0.27 | )
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Asset dispositions |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2 | ) |  |  | (1 | ) |  |  | (1 | ) |  |  | (0.00 | )
Asset impairments |  | 3 |  |  |  | 3 |  |  |  | 3 |  |  |  | 0.00 |  |  |  | 182 |  |  |  | 143 |  |  |  | 143 |  |  |  | 0.37 |
Fair value changes in foreign currency and other |  | (2 | ) |  |  | (3 | ) |  |  | (3 | ) |  |  | (0.01 | ) |  |  | 4 |  |  |  | 2 |  |  |  | 2 |  |  |  | 0.01 |
Core earnings (loss) attributable to Devon (Non-GAAP) | $ | (1 | ) |  | $ | 13 |  |  | $ | 13 |  |  | $ | 0.03 |  |  | $ | 34 |  |  | $ | 41 |  |  | $ | 41 |  |  | $ | 0.11 |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss attributable to Devon (GAAP) | $ | (195 | ) |  | $ | (90 | ) |  | $ | (92 | ) |  | $ | (0.25 | ) |  | $ | (3,130 | ) |  | $ | (2,573 | ) |  | $ | (2,578 | ) |  | $ | (6.85 | )
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Continuing Operations |  | 165 |  |  |  | 80 |  |  |  | 80 |  |  |  | 0.22 |  |  |  | 2,919 |  |  |  | 2,405 |  |  |  | 2,405 |  |  |  | 6.38 |
Discontinued Operations |  | 1 |  |  |  | — |  |  |  | — |  |  |  | (0.01 | ) |  |  | 184 |  |  |  | 144 |  |  |  | 144 |  |  |  | 0.38 |
Core loss attributable to Devon (Non-GAAP) | $ | (29 | ) |  | $ | (10 | ) |  | $ | (12 | ) |  | $ | (0.04 | ) |  | $ | (27 | ) |  | $ | (24 | ) |  | $ | (29 | ) |  | $ | (0.09 | )

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 from continuing operations 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,

42

Table of Contents

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 continuing operations.

Below are reconciliations of net earnings to EBITDAX and a further reconciliation to Field-Level Cash Margin.

| Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
| 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Net earnings (loss) (GAAP) | $ | 844 |  |  | $ | (90 | ) |  | $ | 1,321 |  |  | $ | (2,573 | )
Net (earnings) loss from discontinued operations, net of tax |  | — |  |  |  | (13 | ) |  |  | — |  |  |  | 103 |
Financing costs, net |  | 86 |  |  |  | 66 |  |  |  | 243 |  |  |  | 200 |
Income tax expense (benefit) |  | 120 |  |  |  | (90 | ) |  |  | (85 | ) |  |  | (510 | )
Exploration expenses |  | 3 |  |  |  | 39 |  |  |  | 9 |  |  |  | 163 |
Depreciation, depletion and amortization |  | 578 |  |  |  | 299 |  |  |  | 1,581 |  |  |  | 999 |
Asset impairments |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,666 |
Asset dispositions |  | — |  |  |  | — |  |  |  | (119 | ) |  |  | — |
Share-based compensation |  | 18 |  |  |  | 19 |  |  |  | 58 |  |  |  | 58 |
Derivative and financial instrument non-cash valuation changes |  | (35 | ) |  |  | 97 |  |  |  | 597 |  |  |  | 71 |
Restructuring and transaction costs |  | 18 |  |  |  | 32 |  |  |  | 230 |  |  |  | 32 |
Accretion on discounted liabilities and other |  | 2 |  |  |  | — |  |  |  | (41 | ) |  |  | (35 | )
EBITDAX (Non-GAAP) |  | 1,634 |  |  |  | 359 |  |  |  | 3,794 |  |  |  | 1,174 |
Marketing and midstream revenues and expenses, net |  | (1 | ) |  |  | 2 |  |  |  | 19 |  |  |  | 28 |
Commodity derivative cash settlements |  | 370 |  |  |  | (10 | ) |  |  | 969 |  |  |  | (343 | )
General and administrative expenses, cash-based |  | 77 |  |  |  | 56 |  |  |  | 238 |  |  |  | 198 |
Field-level cash margin (Non-GAAP) | $ | 2,080 |  |  | $ | 407 |  |  | $ | 5,020 |  |  | $ | 1,057 |

43

Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity Price Risk

As of September 30, 2021, we have commodity derivatives that pertain to a portion of our estimated production for the last three months of 2021, as well as for 2022, 2023 and 2024. The key terms to our open oil, gas and NGL derivative financial instruments are presented in Note 3 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

The fair values of our commodity derivatives are largely determined by the forward curves of the relevant price indices. At September 30, 2021, a 10% change in the forward curves associated with our commodity derivative instruments would have changed our net positions by approximately $280 million.

Interest Rate Risk

As of September 30, 2021, we had total debt of $6.5 billion. All of our debt is based on fixed interest rates averaging 5.7%.

Foreign Currency Risk

We had no material foreign currency risk at September 30, 2021.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We have established disclosure controls and procedures to ensure that material information relating to Devon, including its consolidated subsidiaries, is made known to the officers who certify Devon’s financial reports and to other members of senior management and the Board of Directors.

Based on their evaluation, our principal executive and principal financial officers have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of September 30, 2021 to ensure that the information required to be disclosed by Devon in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.

Changes in Internal Control Over Financial Reporting

In conjunction with the Merger closing, we have integrated WPX’s operations into our overall system of internal controls over financial reporting and they are now included in our assessment of the effectiveness of our internal controls over financial reporting. For additional information regarding the Merger, see Note 2 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

There were no other changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

44

Table of Contents

PART II. Other Information

Item 1. Legal Proceedings

We are involved in various legal proceedings incidental to our business. However, to our knowledge as of the date of this report and subject to the environmental matters noted in Part II, Item 1. Legal Proceedings of our Second Quarter 2021 Quarterly Report on Form 10-Q, there were no material pending legal proceedings to which we are a party or to which any of our property is subject.

Please see our 2020 Annual Report on Form 10-K and other SEC filings for additional information.

Item 1A. Risk Factors

There have been no material changes to the information included in Item 1A. “Risk Factors” in our 2020 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information regarding purchases of our common stock that were made by us during the third quarter of 2021 (shares in thousands).

Period |  | Total Number of Shares Purchased (1) |  |  | Average Price Paid per Share |
July 1 - July 31 |  |  | 16 |  |  | $ | 27.64 |
August 1 - August 31 |  |  | 41 |  |  | $ | 25.65 |
September 1 - September 30 |  |  | 18 |  |  | $ | 29.29 |
Total |  |  | 75 |  |  | $ | 26.95 |

| (1) | These amounts reflect the shares received by us from employees for the payment of personal income tax withholding on vesting transactions.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

45

Table of Contents

Item 6. E xhibits

Exhibit Number |  | Description
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 Document.
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

46

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  |  |  | DEVON ENERGY CORPORATION
Date: November 3, 2021 |  |  |  | /s/ Jeremy D. Humphers
|  |  |  | Jeremy D. Humphers
|  |  |  | Senior Vice President and Chief Accounting Officer

47