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Debt And Related Expenses
 12 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
Debt and Related Expenses

14.

Debt and Related Expenses

See below for a summary of debt instruments and balances. The notes and debentures are senior, unsecured obligations of Devon unless otherwise noted in the table below.  

 

 

 

December 31, 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 (2)

 

 

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

 

 

149

 

 

 

(20

)

Debt issuance costs

 

 

(30

)

 

 

(31

)

Total long-term debt

 

$

6,482

 

 

$

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 2021, approximately $51 million of these instruments remain the unsecured and unsubordinated obligation of WPX, a wholly-owned subsidiary of Devon.  

 

(2)

This instrument was assumed by Devon in April 2003 in conjunction with the merger with Ocean Energy. The fair value and effective rate of this note at the time assumed was $169 million and 6.5%, respectively. This instrument is the unsecured and unsubordinated obligation of Devon OEI Operating, L.L.C. and is guaranteed by Devon Energy Production Company, L.P. Each of these entities is a wholly-owned subsidiary of Devon. 

Debt maturities as of December 31, 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

During 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 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 December 31, 2021, Devon had $2 million in outstanding letters of credit under the Senior Credit Facility. There were no borrowings under the Senior Credit Facility as of December 31, 2021.      

Devon entered into an amendment and extension agreement on December 13, 2019 to, among other things, (i) effect the extension of the maturity date of the Senior Credit Facility from October 5, 2023 to October 5, 2024 with respect to the consenting lenders and (ii) modify the maximum number of maturity extension requests during the term of the Senior Credit Facility from two to three. As a result of this amendment, Devon has the option to extend the October 5, 2024 maturity date by two additional one-year periods subject to lender consent, and the maximum borrowing capacity of the Senior Credit Facility becomes $2.8 billion after October 5, 2023. Amounts borrowed under the Senior Credit Facility may, at the election of Devon, bear interest at various fixed rate options for periods of up to twelve months. Such rates are generally less than the prime rate. However, Devon may elect to borrow at the prime rate. The Senior Credit Facility currently provides for an annual facility fee of $6 million.

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%. The credit agreement contains definitions of total funded debt and total capitalization that include adjustments to the respective amounts reported in the accompanying consolidated financial statements. For example, total capitalization is

adjusted to add back certain noncash financial write-downs, such as asset impairments. As of December 31, 2021, Devon was in compliance with this covenant with a debt-to-capitalization ratio of 25%.

Commercial Paper

Devon’s Senior Credit Facility supports its $3.0 billion of short-term credit under its commercial paper program. Commercial paper debt generally has a maturity of between 1 and 90 days, although it can have a maturity of up to 365 days, and bears interest at rates agreed to at the time of the borrowing. As of December 31, 2021, Devon had no outstanding commercial paper borrowings.

Net Financing Costs

The following schedule includes the components of net financing costs.

 

 

 

Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

Interest based on debt outstanding

 

$

388

 

 

$

259

 

 

$

260

 

Gain on early retirement of debt

 

 

(30

)

 

 

—

 

 

 

—

 

Interest income

 

 

(2

)

 

 

(12

)

 

 

(33

)

Other

 

 

(27

)

 

 

23

 

 

 

23

 

Total net financing costs

 

$

329

 

 

$

270

 

 

$

250