XML 37 R15.htm IDEA: XBRL DOCUMENT v3.25.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
6.
Income Taxes

Income Tax Expense

The following table presents Devon’s income tax components.

 

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Current income tax expense (benefit):

 

 

 

 

 

 

 

 

 

U.S. federal

 

$

427

 

 

$

441

 

 

$

501

 

Various states

 

 

32

 

 

 

27

 

 

 

65

 

Canada

 

 

—

 

 

 

(3

)

 

 

(7

)

Total current income tax expense

 

 

459

 

 

 

465

 

 

 

559

 

Deferred income tax expense:

 

 

 

 

 

 

 

 

 

U.S. federal

 

 

267

 

 

 

365

 

 

 

1,090

 

Various states

 

 

44

 

 

 

11

 

 

 

82

 

Canada

 

 

—

 

 

 

—

 

 

 

7

 

Total deferred income tax expense

 

 

311

 

 

 

376

 

 

 

1,179

 

Total income tax expense

 

$

770

 

 

$

841

 

 

$

1,738

 

 

Total income tax expense differed from the amounts computed by applying the U.S. federal income tax rate to earnings before income taxes as a result of the following:

 

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Earnings before income taxes

 

$

3,712

 

 

$

4,623

 

 

$

7,775

 

 

 

 

 

 

 

 

 

 

 

U.S. statutory income tax rate

 

 

21

%

 

 

21

%

 

 

21

%

State income taxes

 

 

2

%

 

 

1

%

 

 

1

%

Income tax credits

 

 

(2

%)

 

 

(3

%)

 

 

—

 

Other

 

 

—

 

 

 

(1

%)

 

 

—

 

Effective income tax rate

 

 

21

%

 

 

18

%

 

 

22

%

In 2024 and 2023, Devon recognized income tax credits associated with its qualified research activities.

Deferred Tax Assets and Liabilities

The following table presents the tax effects of temporary differences that gave rise to Devon’s deferred tax assets and liabilities.

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Capital loss carryforwards

 

$

497

 

 

$

542

 

Net operating loss carryforwards

 

 

428

 

 

 

447

 

Accrued liabilities

 

 

191

 

 

 

194

 

Asset retirement obligation

 

 

181

 

 

 

148

 

Other, including tax credits

 

 

28

 

 

 

25

 

Total deferred tax assets before valuation allowance

 

 

1,325

 

 

 

1,356

 

Less: valuation allowance

 

 

(794

)

 

 

(826

)

Net deferred tax assets

 

 

531

 

 

 

530

 

Deferred tax liabilities:

 

 

 

 

 

 

Property and equipment

 

 

(2,669

)

 

 

(2,304

)

Fair value of derivative financial instruments

 

 

(6

)

 

 

(50

)

Other

 

 

(4

)

 

 

(14

)

Total deferred tax liabilities

 

 

(2,679

)

 

 

(2,368

)

Net deferred tax liability

 

$

(2,148

)

 

$

(1,838

)

At December 31, 2024, Devon has recognized $428 million of deferred tax assets related to various net operating loss carryforwards available to offset future taxable income. Devon has $107 million of U.S. federal net operating loss carryforwards, of which $60 million expires between 2035 and 2036, and $47 million does not expire. Devon has $8 million of Canadian net operating loss carryforwards, all of which are covered by a valuation allowance. Devon also has $313 million of state net operating loss carryforwards, with $149 million expiring between 2025 and 2040, $164 million with no expiration, and $281 million of which are covered by a valuation allowance.

Devon’s remaining $107 million U.S. federal net operating losses were acquired through the merger with WPX. These net operating losses are subject to limitation pursuant to Section 382 of the Internal Revenue Code of 1986, which relates to limitations upon the 50% or greater change of ownership of an entity during any three-year period. The Company anticipates utilizing these net operating losses prior to their expiration.

Devon's remaining Canadian deferred tax assets of $505 million, primarily made up of $489 million of capital losses, are fully covered by a valuation allowance.

Unrecognized Tax Benefits

The following table presents changes in Devon’s unrecognized tax benefits.

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

 

(Millions)

 

Balance at beginning of year

 

$

83

 

 

$

73

 

Tax positions taken in prior periods

 

 

22

 

 

 

10

 

Balance at end of year

 

$

105

 

 

$

83

 

 

Devon's unrecognized tax benefit balance at December 31, 2024 and 2023 included $12 million and $4 million, respectively, of interest. At December 31, 2024 and 2023, there were $105 million and $83 million, respectively, of current unrecognized tax benefits that if recognized would affect the annual effective tax rate.

Included below is a summary of the tax years, by jurisdiction, that remain subject to examination by taxing authorities.

 

Jurisdiction

 

Tax Years Open

U.S. federal

 

2018-2024

Various U.S. states

 

2020-2024

Canada

 

2006-2024

 

Certain statute of limitation expirations are scheduled to occur in the next twelve months. Devon is currently in various stages of the audit and administrative review process for certain open tax years.