On December 17, 2019, Devon announced that it had entered into an agreement to sell its Barnett Shale assets to BKV. Devon concluded that the transaction was a strategic shift and classified the results of operations and cash flows related to its Barnett Shale assets as discontinued operations on its consolidated financial statements.

In conjunction with the amended divestiture agreement in April 2020, Devon recognized a $182 million asset impairment related to the Barnett Shale assets in 2020, primarily due to the difference between the net carrying value and the purchase price, net of estimated customary purchase price adjustments, which qualifies as a level 2 fair value measurement.

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. Devon received $65 million in contingent earnout payments related to this transaction in the first quarters of 2023 and 2022 and could receive up to an additional $130 million in contingent earnout payments for the remaining performance periods depending on future commodity prices. The valuation of the future contingent earnout payments included within other current assets and other long-term assets in the December 31, 2022 balance sheet was $65 million and $88 million, respectively. During 2022 and 2021, Devon recorded a $42 million and a $110 million increase, respectively, to the fair value within asset dispositions on the consolidated statements of comprehensive earnings related to these payments. These values were derived utilizing a Monte Carlo valuation model and qualify as a level 3 fair value measurement.

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


Year ended December 31, 2020	Total

Oil, gas and NGL sales	$	263
Total revenues		263
Production expenses		214
Asset impairments		182
Asset dispositions		1
General and administrative expenses		3
Financing costs, net		(3	)
Restructuring and transaction costs		9
Other expenses		9
Total expenses		415
Loss from discontinued operations before income taxes		(152	)
Income tax benefit		(24	)
Loss from discontinued operations, net of tax	$	(128	)