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Debt And Related Expenses
 12 Months Ended
Dec. 31, 2022
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, 2022

 

 

December 31, 2021

 

8.25% due August 1, 2023 (1)

 

$

242

 

 

$

242

 

5.25% due September 15, 2024 (1)

 

 

472

 

 

 

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

 

 

 

390

 

5.875% due June 15, 2028 (1)

 

 

325

 

 

 

325

 

4.50% due January 15, 2030 (1)

 

 

585

 

 

 

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 on debentures and notes

 

 

103

 

 

 

149

 

Debt issuance costs

 

 

(26

)

 

 

(30

)

Total debt

 

$

6,440

 

 

$

6,482

 

Less amount classified as short-term debt

 

 

251

 

 

 

—

 

Total long-term debt

 

$

6,189

 

 

$

6,482

 

 

(1)
These instruments were assumed by Devon in January 2021 in conjunction with the Merger. Approximately $50 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, 2022, excluding debt issuance costs, premiums and discounts, are as follows:

 

 

 

Total

 

2023

 

$

242

 

2024

 

 

472

 

2025

 

 

485

 

2026

 

 

—

 

2027

 

 

463

 

Thereafter

 

 

4,701

 

Total

 

$

6,363

 

 

On or after the dates in the following schedule, Devon has 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 the indenture documents governing the notes to be redeemed. At any time prior to the dates in the following schedule, Devon has the option to redeem some or all of the notes at a specified "make whole" premium as described in such documents. Other than with respect to the notes identified in

the schedule below, Devon's senior notes generally include more limited redemption provisions, such as "par call" rights near the maturity date or "make whole" redemption rights.

 

 

 

Optional Redemption

5.25% due October 15, 2027

 

October 15, 2022

5.875% due June 15, 2028

 

June 15, 2023

4.50% due January 15, 2030

 

January 15, 2025

 

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, 2022, 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, 2022. The Senior Credit Facility matures on October 5, 2024, with the options to extend the maturity date by two additional one-year periods subject to lender consent. 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 approximately $5 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, 2022, Devon was in compliance with this covenant with a debt-to-capitalization ratio of 23%.

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, 2022, Devon had no outstanding commercial paper borrowings.

Net Financing Costs

The following schedule includes the components of net financing costs.

 

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Interest based on debt outstanding

 

$

370

 

 

$

388

 

 

$

259

 

Gain on early retirement of debt

 

 

—

 

 

 

(30

)

 

 

—

 

Interest income

 

 

(38

)

 

 

(2

)

 

 

(12

)

Other

 

 

(23

)

 

 

(27

)

 

 

23

 

Total net financing costs

 

$

309

 

 

$

329

 

 

$

270