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Debt And Related Expenses | 9 Months Ended
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Sep. 30, 2021
Debt Disclosure [Abstract] |
Debt and Related Expenses |
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.
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 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (h) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (g) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1E -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (i) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 + Details
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