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Acquisition and Divestitures | 9 Months Ended
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Sep. 30, 2024
Business Combinations [Abstract] |
Acquisition and Divestitures | 2. Acquisitions and Dive stitures Acquisition On September 27, 2024, Devon completed its acquisition of the Williston Basin business of Grayson Mill for total consideration of approximately $5.0 billion, consisting of $3.5 billion of cash and approximately 37.3 million shares of Devon common stock, including purchase price adjustments. Devon funded the cash portion of the purchase price through cash on hand and debt financing. For additional information regarding the debt financing, see Note 11. Purchase Price Allocation This transaction has been accounted for using the acquisition method of accounting. Under the acquisition method of accounting, the assets and liabilities of Grayson Mill and its subsidiaries have been recorded at their respective fair values as of the date of completion of the acquisition and added to Devon’s. The preliminary purchase price assessment remains an ongoing process and is subject to change for up to one year subsequent to the closing date of the acquisition. Determining the fair value of the assets and liabilities of Grayson Mill requires judgment and certain assumptions to be made, the most significant of these being related to the valuation of Grayson Mill’s oil and gas properties. The inputs and assumptions related to the oil and gas properties are categorized as level 3 in the fair value hierarchy. The following table represents the preliminary allocation of the total purchase price of Grayson Mill to the identifiable assets acquired and the liabilities assumed based on the fair values as of the acquisition date.
|  | Preliminary Purchase |
|  | Price Allocation |
|  | as of September 27, 2024 |
Consideration: |  |  |
Devon common stock issued |  |  | 37.3 |
Devon closing price on September 27, 2024 |  | $ | 38.96 |
Total common equity consideration |  | $ | 1,455 |
Cash consideration |  |  | 3,567 |
Total consideration |  | $ | 5,022 |
Assets acquired: |  |  |
Cash, cash equivalents and restricted cash |  | $ | 147 |
Accounts receivable |  |  | 226 |
Inventory |  |  | 38 |
Other current assets |  |  | 9 |
Proved oil and gas property and equipment |  |  | 2,931 |
Unproved oil and gas property and equipment |  |  | 1,905 |
Other property and equipment, net |  |  | 210 |
Right-of-use assets |  |  | 29 |
Total assets acquired |  | $ | 5,495 |
Liabilities assumed: |  |  |
Accounts payable |  | $ | 155 |
Revenue and royalties payable |  |  | 209 |
Other current liabilities |  |  | 16 |
Asset retirement obligations |  |  | 75 |
Lease liabilities |  |  | 18 |
Total liabilities assumed |  |  | 473 |
Net assets acquired |  | $ | 5,022 |
Grayson Mill Revenues and Earnings From the date of the acquisition through September 30, 2024, revenues and net earnings included in Devon's consolidated statements of comprehensive earnings associated with these assets totaled $28 million and $4 million, respectively. Pro Forma Financial Information The following unaudited pro forma financial information is based on our historical consolidated financial statements adjusted to reflect as if the Grayson Mill acquisition had occurred on January 1, 2023. The information below reflects pro forma adjustments to conform Grayson Mill's historical financial information to Devon’s financial statement presentation. The unaudited pro forma financial information is not necessarily indicative of what would have occurred if the acquisition had been completed as of the beginning of the periods presented, nor is it indicative of future results.
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Total revenues |  | $ | 4,691 |  |  | $ | 4,553 |  |  | $ | 13,563 |  |  | $ | 12,679 |
Net earnings |  | $ | 895 |  |  | $ | 1,044 |  |  | $ | 2,524 |  |  | $ | 2,827 |
Contingent Earnout Payments Devon is entitled to contingent earnout payments associated with the sale of its Barnett Shale assets in 2020 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 $20 million in contingent earnout payments related to this transaction in the first quarter of 2024 and $65 million in the first quarter of 2023. Devon could also receive up to an additional $65 million in contingent earnout payments for the remaining performance period depending on future commodity prices. The valuation of the future contingent earnout payment included within other current assets in the September 30, 2024 consolidated balance sheet was approximately $20 million. This value was derived utilizing a Monte Carlo valuation model and qualifies as a level 3 fair value measurement. Devon also received $4 million in contingent earnout payments in the first quarter of 2023 related to the sale of non-core assets in the Rockies.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent + Details
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