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Supplemental Information on Oil and Gas Operations (Unaudited) | 12 Months Ended
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Dec. 31, 2024
Oil and Gas Disclosure [Abstract] |
Supplemental Information on Oil and Gas Operations (Unaudited) | Supplemental Information on Oil and Gas Operations (Unaudited) Supplemental unaudited information regarding Devon’s oil and gas activities is presented in this note. All of Devon’s reserves are located within the U.S. Costs Incurred The following table reflects the costs incurred in oil and gas property acquisition, exploration and development activities.
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Property acquisition costs: |  |  |  |  |  |  |  |  |
Proved properties |  | $ | 3,058 |  |  | $ | 2 |  |  | $ | 1,760 |
Unproved properties |  |  | 1,949 |  |  |  | 63 |  |  |  | 803 |
Exploration costs |  |  | 690 |  |  |  | 534 |  |  |  | 472 |
Development costs |  |  | 2,856 |  |  |  | 3,160 |  |  |  | 2,132 |
Costs incurred |  | $ | 8,553 |  |  | $ | 3,759 |  |  | $ | 5,167 |
Acquisition costs for 2024 in the table above relate primarily to the Grayson Mill acquisition which closed in the third quarter of 2024. Acquisition costs for 2022 relate primarily to Eagle Ford and Williston Basin acquisitions which closed in the third quarter of 2022. Development costs in the table above includes additions and revisions to Devon’s asset retirement obligations. Results of Operations The following table includes revenues and expenses associated with Devon’s oil and gas producing activities. It does not include any allocation of Devon’s interest costs or general corporate overhead and, therefore, is not necessarily indicative of the contribution to net earnings of Devon’s oil and gas operations. Income tax expense has been calculated using statutory income tax rates, and then giving effect to permanent differences associated with oil and gas producing activities.
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Oil, gas and NGL sales |  | $ | 11,176 |  |  | $ | 10,791 |  |  | $ | 14,082 |
Production expenses |  |  | (3,183 | ) |  |  | (2,928 | ) |  |  | (2,797 | )
Exploration expenses |  |  | (28 | ) |  |  | (20 | ) |  |  | (29 | )
Depreciation, depletion and amortization |  |  | (3,156 | ) |  |  | (2,464 | ) |  |  | (2,119 | )
Asset dispositions |  |  | (15 | ) |  |  | (33 | ) |  |  | 43 |
Accretion of asset retirement obligations |  |  | (39 | ) |  |  | (29 | ) |  |  | (25 | )
Income tax expense |  |  | (972 | ) |  |  | (1,044 | ) |  |  | (2,041 | )
Results of operations |  | $ | 3,783 |  |  | $ | 4,273 |  |  | $ | 7,114 |
Depreciation, depletion and amortization per Boe |  | $ | 11.70 |  |  | $ | 10.27 |  |  | $ | 9.52 |
Proved Reserves The following table presents Devon’s estimated proved reserves by product.
|  | Oil (MMBbls) |  |  | Gas (Bcf) (1) |  |  | NGL (MMBbls) |  |  | Combined (MMBoe) |
Proved developed and undeveloped reserves: |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2021 |  |  | 709 |  |  |  | 2,878 |  |  |  | 437 |  |  |  | 1,625 |
Revisions due to prices |  |  | 15 |  |  |  | 61 |  |  |  | 8 |  |  |  | 34 |
Revisions other than price |  |  | (55 | ) |  |  | 13 |  |  |  | 3 |  |  |  | (49 | )
Extensions and discoveries |  |  | 127 |  |  |  | 449 |  |  |  | 76 |  |  |  | 278 |
Purchase of reserves |  |  | 106 |  |  |  | 137 |  |  |  | 24 |  |  |  | 153 |
Production |  |  | (109 | ) |  |  | (356 | ) |  |  | (54 | ) |  |  | (223 | )
Sale of reserves |  |  | — |  |  |  | (7 | ) |  |  | (1 | ) |  |  | (3 | )
December 31, 2022 |  |  | 793 |  |  |  | 3,175 |  |  |  | 493 |  |  |  | 1,815 |
Revisions due to prices |  |  | (25 | ) |  |  | (189 | ) |  |  | (22 | ) |  |  | (78 | )
Revisions other than price |  |  | (12 | ) |  |  | 58 |  |  |  | 1 |  |  |  | (1 | )
Extensions and discoveries |  |  | 147 |  |  |  | 525 |  |  |  | 87 |  |  |  | 322 |
Production |  |  | (117 | ) |  |  | (385 | ) |  |  | (59 | ) |  |  | (240 | )
Sale of reserves |  |  | — |  |  |  | (2 | ) |  |  | — |  |  |  | (1 | )
December 31, 2023 |  |  | 786 |  |  |  | 3,182 |  |  |  | 500 |  |  |  | 1,817 |
Revisions due to prices |  |  | (9 | ) |  |  | (187 | ) |  |  | (14 | ) |  |  | (54 | )
Revisions other than price |  |  | 3 |  |  |  | 245 |  |  |  | 31 |  |  |  | 75 |
Extensions and discoveries |  |  | 129 |  |  |  | 646 |  |  |  | 104 |  |  |  | 340 |
Purchase of reserves |  |  | 120 |  |  |  | 328 |  |  |  | 73 |  |  |  | 247 |
Production |  |  | (127 | ) |  |  | (438 | ) |  |  | (70 | ) |  |  | (270 | )
December 31, 2024 |  |  | 902 |  |  |  | 3,776 |  |  |  | 624 |  |  |  | 2,155 |
Proved developed reserves: |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2021 |  |  | 544 |  |  |  | 2,361 |  |  |  | 348 |  |  |  | 1,285 |
December 31, 2022 |  |  | 596 |  |  |  | 2,595 |  |  |  | 391 |  |  |  | 1,419 |
December 31, 2023 |  |  | 603 |  |  |  | 2,560 |  |  |  | 395 |  |  |  | 1,425 |
December 31, 2024 |  |  | 706 |  |  |  | 3,057 |  |  |  | 500 |  |  |  | 1,715 |
Proved undeveloped reserves: |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2021 |  |  | 165 |  |  |  | 517 |  |  |  | 89 |  |  |  | 340 |
December 31, 2022 |  |  | 197 |  |  |  | 580 |  |  |  | 102 |  |  |  | 396 |
December 31, 2023 |  |  | 183 |  |  |  | 622 |  |  |  | 105 |  |  |  | 392 |
December 31, 2024 |  |  | 196 |  |  |  | 719 |  |  |  | 124 |  |  |  | 440 |
(1) Gas reserves are converted to Boe at the rate of six Mcf per Bbl of oil, based upon the approximate relative energy content of gas and oil. NGL reserves are converted to Boe on a one-to-one basis with oil. The conversion rates are not necessarily indicative of the relationship of oil, natural gas and NGL prices. Price Revisions Reserves decreased 54 MMBoe in 2024 primarily due to price decreases in the trailing 12-month averages for oil, gas and NGLs. Reserves decreased 78 MMBoe in 2023 primarily due to price decreases in the trailing 12-month averages for oil, gas and NGLs. Reserves increased 34 MMBoe in 2022 primarily due to price increases in the trailing 12-month averages for oil, gas and NGLs. Revisions Other Than Price 2024 – Total revisions other than price (75 MMBoe) are the result of upward revisions due to well performance exceeding previous estimates on proved developed reserves (81 MMBoe) and downward revisions to proved undeveloped reserves (-6 MMBoe) as noted below. In total, each of the operating areas recorded modest upward revisions with the most significant changes being located in the Delaware Basin (55 MMBoe), Anadarko Basin (7 MMBoe) and Powder River Basin (6 MMBoe). 2023 – Total revisions other than price (-1 MMBoe) are the result of upward revisions due to well performance exceeding previous estimates on developed properties (11 MMBoe), which were offset by downward revisions to proved undeveloped reserves (-12 MMBoe) as noted below. In total, we recorded modest upward revisions in the Delaware Basin (7 MMBoe), Eagle Ford (5 MMBoe), Anadarko Basin (4 MMBoe) and Powder River Basin (2 MMBoe) which were offset by downward revisions in the Williston Basin (-19 MMBoe) due to reduced well performance compared to previous estimates. 2022 – Total revisions other than price (-49 MMBoe) were driven by higher operating costs across all areas of operation and revisions to proved undeveloped reserves. These downward revisions were partially offset by upward revisions due to well performance exceeding previous estimates primarily in the Delaware Basin. In total, after accounting for these compensating factors, we recorded negative revisions across each of our operating areas with the most significant changes being located in the Delaware Basin (-33 MMBoe), followed by the Powder River Basin (-5 MMBoe) and the Anadarko Basin (-4 MMBoe). Extensions and Discoveries Each year, Devon’s proved reserves extensions and discoveries consist of adding proved undeveloped reserves to locations classified as undeveloped at year-end and adding proved developed reserves from successful development wells drilled on locations outside the areas classified as proved at the previous year-end. Therefore, it is not uncommon for Devon’s total proved extensions and discoveries to differ from the extensions and discoveries for Devon’s proved undeveloped reserves. Furthermore, because annual additions are classified according to reserve determinations made at the previous year-end and because Devon operates a multi-basin portfolio with assets at varying stages of maturity, extensions and discoveries for proved developed and proved undeveloped reserves can differ significantly in any particular year. 2024 – Of the 340 MMBoe of additions from extensions and discoveries, 252 MMBoe were in the Delaware Basin, 36 MMBoe were in the Williston Basin, 30 MMBoe were in the Anadarko Basin, 16 MMBoe were in Eagle Ford and 6 MMBoe were in the Powder River Basin. 2023 – Of the 322 MMBoe of additions from extensions and discoveries, 212 MMBoe were in the Delaware Basin, 33 MMBoe were in the Anadarko Basin, 32 MMBoe were in Eagle Ford, 26 MMBoe were in the Powder River Basin and 19 MMBoe were in the Williston Basin. 2022 – Of the 278 MMBoe of additions from extensions and discoveries, 255 MMBoe were in the Delaware Basin, 7 MMBoe were in the Powder River Basin, 6 MMBoe were in Eagle Ford, 5 MMBoe were in the Anadarko Basin and 5 MMBoe were in the Williston Basin. Purchase of Reserves During 2024, Devon had reserve additions due to the acquisition of 247 MMBoe in the Williston Basin. For additional information on these asset additions, see Note 2. During 2022, Devon had reserve additions due to the acquisitions of 66 MMBoe in the Williston Basin and 87 MMBoe in the Eagle Ford. For additional information on these asset additions, see Note 2. Proved Undeveloped Reserves The following table presents the changes in Devon’s total proved undeveloped reserves during 2024 (MMBoe).
|  | Total |
Proved undeveloped reserves as of December 31, 2023 |  |  | 392 |
Extensions and discoveries |  |  | 198 |
Revisions due to prices |  |  | (2 | )
Revisions other than price |  |  | (6 | )
Purchase of reserves |  |  | 47 |
Conversion to proved developed reserves |  |  | (189 | )
Proved undeveloped reserves as of December 31, 2024 |  |  | 440 |
Total proved undeveloped reserves increased 12% from 2023 to 2024 with the year-end 2024 balance representing 20% of total proved reserves. Approximately 75% of the 198 MMBoe in extensions and discoveries were the result of Devon’s drilling and development activities in the Delaware Basin, followed by the Williston Basin (17%), the Powder River Basin (3%), the Anadarko Basin (3%) and Eagle Ford (2%). Conversions to proved developed reserves of 189 MMBoe were driven by development in the Delaware Basin (68%) and Anadarko Basin (17%). Costs incurred in 2024 to develop and convert Devon's proved undeveloped reserves were approximately $1.2 billion. Proved undeveloped reserves revisions other than price (-6 MMBoe) were due to changes in previously adopted development plans (-8 MMBoe) in the Delaware Basin (-6 MMBoe) and Williston Basin (-2 MMBoe), combined with upward revisions (2 MMBoe) caused by continued evaluation of well performance primarily in the Delaware Basin. Standardized Measure The following tables reflect Devon’s standardized measure of discounted future net cash flows from its proved reserves.
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Future cash inflows |  | $ | 82,422 |  |  | $ | 75,734 |  |  | $ | 108,361 |
Future costs: |  |  |  |  |  |  |  |  |
Development |  |  | (6,099 | ) |  |  | (5,241 | ) |  |  | (5,176 | )
Production |  |  | (38,326 | ) |  |  | (31,648 | ) |  |  | (35,264 | )
Future income tax expense |  |  | (5,528 | ) |  |  | (6,644 | ) |  |  | (13,216 | )
Future net cash flow |  |  | 32,469 |  |  |  | 32,201 |  |  |  | 54,705 |
10% discount to reflect timing of cash flows |  |  | (12,699 | ) |  |  | (12,888 | ) |  |  | (23,391 | )
Standardized measure of discounted future net cash flows |  | $ | 19,770 |  |  | $ | 19,313 |  |  | $ | 31,314 |
Future cash inflows, development costs and production costs were computed using the same assumptions for prices and costs that were used to estimate Devon’s proved oil and gas reserves at the end of each year. For 2024 estimates, Devon’s future realized prices were assumed to be $73.65 per Bbl of oil, $0.81 per Mcf of gas and $20.75 per Bbl of NGLs. Of the $6.1 billion of future development costs as of the end of 2024, $2.2 billion, $1.4 billion and $0.5 billion are estimated to be spent in 2025, 2026 and 2027, respectively. Future development costs include not only development costs but also future asset retirement costs. Included as part of the $6.1 billion of future development costs are $1.3 billion of future asset retirement costs. The future income tax expenses have been computed using statutory tax rates, giving effect to allowable tax deductions and tax credits under current laws. The principal changes in Devon’s standardized measure of discounted future net cash flows are as follows:
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Beginning balance |  | $ | 19,313 |  |  | $ | 31,314 |  |  | $ | 19,301 |
Net changes in prices and production costs |  |  | (3,202 | ) |  |  | (16,797 | ) |  |  | 14,081 |
Oil, gas and NGL sales, net of production costs |  |  | (7,993 | ) |  |  | (7,863 | ) |  |  | (11,285 | )
Changes in estimated future development costs |  |  | 806 |  |  |  | 218 |  |  |  | (216 | )
Extensions and discoveries, net of future development costs |  |  | 3,951 |  |  |  | 5,222 |  |  |  | 7,279 |
Purchase of reserves |  |  | 3,123 |  |  |  | — |  |  |  | 4,185 |
Sales of reserves in place |  |  | — |  |  |  | (9 | ) |  |  | (20 | )
Revisions of quantity estimates |  |  | 427 |  |  |  | (747 | ) |  |  | (874 | )
Previously estimated development costs incurred during the period |  |  | 1,269 |  |  |  | 1,567 |  |  |  | 956 |
Accretion of discount |  |  | 1,730 |  |  |  | 2,972 |  |  |  | 2,059 |
Net change in income taxes and other |  |  | 346 |  |  |  | 3,436 |  |  |  | (4,152 | )
Ending balance |  | $ | 19,770 |  |  | $ | 19,313 |  |  | $ | 31,314 |

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