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Leases (Tables)

12 Months Ended

Dec. 31, 2023

Schedule of Right-of-use Assets and Lease Liabilities

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. During 2023, Devon's financing lease right-of-use assets and the associated liabilities increased primarily from an amendment of lease terms. Certain of Devon’s lease agreements include variable payments based on usage or rental payments adjusted periodically for inflation. Devon’s financing lease arrangement contains various covenants, including covenants similar to the 2023 Senior Credit Facility.

The following table presents Devon’s right-of-use assets and lease liabilities.


	December 31, 2023						December 31, 2022
	Finance		Operating		Total		Finance		Operating		Total
Right-of-use assets	$	246	$	21	$	267	$	203	$	21	$	224
Lease liabilities:
Current lease liabilities (1)	$	21	$	12	$	33	$	8	$	13	$	21
Long-term lease liabilities		286		9		295		249		8		257
Total lease liabilities (2)	$	307	$	21	$	328	$	257	$	21	$	278

(1)

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

(2)

Devon has entered into certain leases of equipment related to the exploration, development and production of oil and gas that had terms not yet commenced as of December 31, 2023 and are therefore excluded from the amounts shown above.

Schedule of Total Lease Cost

he following table presents Devon’s total lease cost.


		Year Ended December 31,
		2023			2022			2021
Operating lease cost	Property and equipment; LOE; G&A	$	13		$	22		$	25
Short-term lease cost (1)	Property and equipment; LOE; G&A		193			140			89
Financing lease cost:
Amortization of right-of-use assets	DD&A		9			8			8
Interest on lease liabilities	Net financing costs		15			11			11
Variable lease cost	G&A		5			—			(4	)
Lease income	G&A		(10	)		(8	)		(8	)
Net lease cost		$	225		$	173		$	121

(1)

Short-term lease cost excludes leases with terms of one month or less.

Schedule of Additional Lease Information

The following table presents Devon’s additional lease information.


	Year Ended December 31,
	2023						2022
	Finance			Operating			Finance			Operating
Cash outflows for lease liabilities:
Operating cash flows	$	15		$	13		$	8		$	14
Investing cash flows	$	—		$	1		$	—		$	9
Right-of-use assets obtained in exchange for new lease liabilities	$	—		$	13		$	—		$	20
Weighted average remaining lease term (years)		9.4			2.2			5.0			1.7
Weighted average discount rate		6.1	%		4.9	%		4.2	%		2.8	%

Maturities of Lease Liabilities

The following table presents Devon’s maturity analysis as of December 31, 2023 for leases expiring in each of the next 5 years and thereafter.


	Finance			Operating			Total
2024	$	21		$	12		$	33
2025		21			6			27
2026		21			4			25
2027		21			—			21
2028		21			—			21
Thereafter(1)		372			—			372
Total lease payments		477			22			499
Less: interest		(170	)		(1	)		(171	)
Present value of lease liabilities	$	307		$	21		$	328

(1)

Devon has one real estate lease that contains a residual value guarantee. Under the lease terms, the residual value guarantee stipulates that if the lessor were to sell the leased property and receive sale proceeds less than 90% of the lease liability at the time of sale, Devon would be required to make a shortfall payment to the lessor for the difference.

Schedule of Expected Lease Income

Devon rents or subleases certain real estate to third parties. The following table presents Devon’s expected lease income as of December 31, 2023 for each of the next 5 years and thereafter.


	Operating
	Lease Income
2024	$	11
2025		13
2026		13
2027		13
2028		14
Thereafter		61
Total	$	125