DEVON ENERGY CORPDE
For the period ended Dec 31, 2024. Filed Feb 19, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 19, 2025
DVN$42.21-1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-28.
0000950170-24-021781
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-19.
0000950170-25-022844
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 124 previous paragraphs and 134 current paragraphs.
74 unchanged; 43 reworded; 17 added; 6 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 20 previous and 20 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
On September 27, 2024, we acquired 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. The acquisition will allow us to efficiently expand our oil production and operating scale, creating immediate and long-term, sustainable value to shareholders over time.
Current report
Retired $472 million of senior notes.
Current report
Generated $6.6 billion of operating cash flow.
Current report
Due to the Grayson Mill acquisition and increased activity across our portfolio, we expect volumes to increase in 2025 and range from approximately 805 to 825 MBoe/d.
Current report
LOE and gathering, processing and transportation and production taxes increased primarily due to increased activity and the Grayson Mill acquisition in the Rockies.
Current report
DD&A increased in 2024 primarily due to higher volumes as well as an increase in the oil and gas DD&A rate. The primary contributor to the higher DD&A rate was our 2023 drilling and development activity.
Current report
G&A increased in 2024 primarily due to higher employee compensation, driven in part by inflationary adjustments and the Grayson Mill acquisition. We also had an increase in non-labor costs which were primarily related to technology system upgrade projects.
Current report
During the third quarter of 2024, we issued $3.25 billion of debt to partially fund the Grayson Mill acquisition. Additionally, we retired $472 million of debt in the third quarter of 2024. The net impact of this debt activity is expected to increase our annual net financing costs by approximately $180 million. For additional information, see Note 13 in "Part I. Financial Information - Item 1. Financial Statements" in this report.
Current report
In 2024, Devon issued $1.25 billion of 5.20% senior notes due 2034 and $1.0 billion of 5.75% senior notes due 2054. Additionally, in 2024, Devon borrowed $1.0 billion from the Term Loan. These debt issuances helped fund the Grayson Mill acquisition. During 2024, we repaid $472 million of senior notes at maturity.
Current report
On September 27, 2024, Devon acquired the Williston Basin business of Grayson Mill. This acquisition adds a high-margin production mix that enhances our position and efficiently expands our operating scale and production. The acquisition delivers sustainable accretion to earnings and free cash flow further supporting our cash-return business model, which moderates growth, emphasizes capital efficiencies and prioritizes cash returns to shareholders.
Current report
In February 2025, we raised our fixed dividend by 9%, to $0.24 per share, beginning in the first quarter of 2025. The dividend is payable in the first quarter of 2025 and is expected to total approximately $156 million.
Current report
Tax Contingencies
Current report
As we are regularly audited by tax authorities, we have and will continue to have our tax positions challenged. Certain tax authorities require material cash deposits be made to further dispute and respond to any of our challenged tax positions.
Current report
Purchase Accounting
Current report
Periodically, we acquire assets and assume liabilities in transactions accounted for as business combinations, such as the acquisition of the Williston Basin business of Grayson Mill. In connection with the acquisition, we allocated the $5.0 billion of purchase price consideration to the assets acquired and liabilities assumed based on estimated fair values as of the date of the acquisition. 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.
Current report
We made a number of assumptions in estimating the fair value of assets acquired and liabilities assumed in the acquisition. The most significant assumptions relate to the estimated fair values of proved and unproved oil and gas properties. Since sufficient market data was not available regarding the fair values of proved and unproved oil and gas properties, we prepared estimates and engaged third-party valuation experts. Significant judgments and assumptions are inherent in these estimates and include, among other things, estimates of reserve quantities, estimates of future commodity prices, drilling plans, expected development costs, lease operating costs, reserve risk adjustment factors and an estimate of an applicable market participant discount rate that reflects the risk of the underlying cash flow estimates.
Current report
Estimated fair values ascribed to assets acquired can have a significant impact on future results of operations presented in our financial statements. A higher fair value ascribed to a property results in higher DD&A expense, which results in lower net earnings. Fair values are based on estimates of future commodity prices, reserve quantities, development costs and operating costs. In the event that future commodity prices or reserve quantities are lower than those used as inputs to determine estimates of acquisition date fair values, the likelihood increases that certain costs may be determined to not be recoverable.
Removed paragraphs (6)
Previous report
Generated $6.5 billion of operating cash flow.
Previous report
LOE expenses and LOE per BOE increased primarily due to acquisitions in the Eagle Ford and Williston Basin that both closed in the third quarter of 2022, along with inflation and higher volumes resulting from increased activity in the Delaware Basin and Anadarko Basin. This is partially offset by decreased production taxes due to lower commodity prices.
Previous report
DD&A and our oil and gas per BOE rate both increased in 2023 primarily due to acquisitions in the Eagle Ford and Williston Basin which both closed in the third quarter of 2022. Increased activity in the Delaware Basin and Anadarko Basin also led to an increase in DD&A.
Previous report
In February 2024, Devon raised its fixed dividend by 10%, to $0.22 per share, and announced a cash dividend in the amount of $0.44 per share payable in the first quarter of 2024. The dividend consists of a fixed quarterly dividend in the amount of approximately $140 million (or $0.22 per share) and a variable dividend in the amount of approximately $140 million (or $0.22 per share).
Previous report
In February 2024, Devon committed to invest approximately $90 million in a geothermal technology company and expects to fund the commitment throughout 2024.
Previous report
On August 16, 2022, the IRA was signed into law and included various income tax related provisions with an effective date beginning in 2023. Among the enacted provisions are a 15% CAMT and several new and expanded clean energy credits and incentives. The CAMT will be assessed on applicable corporations with an average annual AFSI that exceeds $1 billion for the preceding three consecutive years. We have made an accounting policy election to not consider the effects of the CAMT on the realizability of our deferred tax assets, carryforwards and other tax credits and will instead account for any such effects as a period cost when they arise. We believe we are subject to the CAMT as we had an average annual AFSI that exceeded $1 billion for the three-year period ended December 31, 2022. Incremental taxes attributable to the CAMT are possible and such taxes may be significant.
Reworded paragraphs (43)
Previous wording
We are a leading independent oil and natural gas exploration and production company whose operations are focused onshore in the United States. Our operations are currently focused in five core areas: the Delaware Basin, Eagle Ford, Anadarko Basin, Williston Basin and Powder River Basin. Our asset base is underpinned by premium acreage in the economic core of the Delaware Basin and our diverse, top-tier resource plays provide a deep inventory of opportunities for years to come. In the third quarter of 2022, we acquired additional producing properties and leasehold interests in both the Williston Basin and Eagle Ford that were complementary to our existing acreage, offered operational synergies and added additional high-quality inventory to our portfolio. Moving forward into 2024, we plan to refine our capital allocation by further concentrating investment in the Delaware Basin. By shifting more capital to the core of this world-class basin and high-grading activity across the rest of our diversified portfolio, we anticipate delivering meaningful improvements to our capital efficiency which will position us to generate growth in free cash flow which can be returned to shareholders.
Current wording
We are a leading independent oil and natural gas exploration and production company whose operations are focused onshore in the United States. Our operations are currently focused in four core areas: the Delaware Basin, Rockies, Eagle Ford and Anadarko. Our asset base is underpinned by premium acreage in the economic core of the Delaware Basin and our diverse, top-tier resource plays provide a deep inventory of opportunities for years to come.
Previous wording
We remain focused on building economic value by executing on our strategic priorities of moderating production growth, emphasizing capital and operational efficiencies, optimizing reinvestment rates to maximize free cash flow, maintaining low leverage, delivering cash returns to our shareholders and pursuing ESG excellence. Our recent performance highlights for these priorities include the following items for 2023:
Current wording
As evidenced by this acquisition, we remain focused on building economic value by executing on our strategic priorities of moderating production growth, emphasizing capital and operational efficiencies, optimizing reinvestment rates to maximize free cash flow, maintaining low leverage, delivering cash returns to our shareholders and pursuing operational excellence. Our recent performance highlights for these priorities include the following items for 2024:
Previous wording
Oil production totaled 320 MBbls/d, which is a 7% increase year over year.
Current wording
Oil production totaled 347 MBbls/d, an 8% increase year over year.
Previous wording
Through 2023, completed approximately 77% of our authorized $3.0 billion share repurchase program, with approximately 45 million of our common shares repurchased for approximately $2.3 billion, or $51.05 per share, since inception of the plan.
Current wording
Through 2024, completed approximately 67% of our authorized $5.0 billion share repurchase program, with approximately 69 million of our common shares repurchased for approximately $3.3 billion, or $48.46 per share, since inception of the plan.
Previous wording
Exited with $3.9 billion of liquidity, including $0.9 billion of cash.
Current wording
Exited with $3.8 billion of liquidity, including $0.8 billion of cash.
Previous wording
Including variable dividends, paid dividends of approximately $1.9 billion.
Current wording
Including variable dividends, paid dividends of $937 million.
Previous wording
Earnings attributable to Devon were $3.7 billion, or $5.84 per diluted share.
Current wording
Earnings attributable to Devon were $2.9 billion, or $4.56 per diluted share.
Previous wording
Core earnings (Non-GAAP) were $3.7 billion, or $5.71 per diluted share.
Current wording
Core earnings (Non-GAAP) were $3.1 billion, or $4.82 per diluted share.
Previous wording
We remain committed to capital discipline and delivering the objectives that underpin our current plan. Those objectives prioritize value creation through moderated capital investment and production growth, particularly with a view of the volatility in commodity prices, supply chain constraints and the economic uncertainty arising from inflation and geopolitical events. Our cash-return objectives remain focused on opportunistic share repurchases, funding our fixed and variable dividends, repaying debt at upcoming maturities and building cash balances.
Current wording
We remain committed to capital discipline and delivering the objectives that underpin our current plan. Those objectives prioritize value creation through moderated capital investment and production growth, particularly with a view of the volatility in commodity prices, supply chain constraints and the economic uncertainty arising from inflation and geopolitical events. Our cash-return objectives remain focused on opportunistic share repurchases, funding our dividends, repaying debt at upcoming maturities and building cash balances.
Previous wording
Our net earnings and operating cash flow are highly dependent upon oil, gas and NGL prices which can be incredibly volatile due to several varying factors. Commodity prices strengthened during 2022 as the continued recovery from the COVID-19 pandemic increased demand for oil and gas commodities, while economic sanctions imposed on Russia and restraint from OPEC+ on production growth both simultaneously impacted the supply of these commodities. In 2023, commodity prices weakened primarily due to economic uncertainty surrounding inflation and increased interest rates as well as certain geopolitical events. The graphs below show the trends in commodity prices over the past three years and their related impact on our net earnings, operating cash flow and capital investments.
Current wording
Our net earnings and operating cash flow are highly dependent upon oil, gas and NGL prices which can be incredibly volatile due to several varying factors. Commodity prices were strong during 2022 as the continued recovery from the COVID-19 pandemic increased demand for oil and gas commodities, while economic sanctions imposed on Russia and restraint from OPEC+ on production growth both simultaneously impacted the supply of these commodities. In 2023, commodity prices weakened primarily due to economic uncertainty surrounding inflation and increased interest rates as well as certain geopolitical events. During 2024, oil and NGL prices remained stable from the prior year while gas prices decreased primarily due to warmer weather impacts and excess supply. The graphs below show the trends in commodity prices over the past three years and their related impact on our net earnings, operating cash flow and capital investments.
Previous wording
As we dependably generate strong cash flow results as shown above, we will continue to prioritize delivering cash returns to shareholders through share repurchases and our fixed plus variable dividend strategy while maintaining a strong liquidity position. Since the inception of our authorized $3.0 billion share repurchase program, we have repurchased approximately 45 million common shares for approximately $2.3 billion, or $51.05 per share. We also returned value to shareholders by paying dividends of approximately $1.9 billion during 2023. We exited 2023 with $3.9 billion of liquidity, comprised of $0.9 billion of cash and $3.0 billion of available credit under our 2023 Senior Credit Facility. We currently have $6.2 billion of debt outstanding, of which approximately $483 million is classified as short-term. Additionally, to help mitigate the volatility of commodity prices and protect ourselves from downside risk, we currently have approximately 30% and 20% of our anticipated 2024 oil and gas production hedged, respectively.
Current wording
As we dependably generate strong cash flow results as shown above, we will continue to prioritize delivering cash returns to shareholders through share repurchases and dividends while maintaining a strong liquidity position. Since the inception of our authorized $5.0 billion share repurchase program, we have repurchased approximately 69 million common shares for approximately $3.3 billion, or $48.46 per share. We also returned value to shareholders by paying dividends of $937 million during 2024. We exited 2024 with $3.8 billion of liquidity, comprised of $0.8 billion of cash and $3.0 billion of available credit under our 2023 Senior Credit Facility. We currently have $8.9 billion of debt outstanding, of which approximately $485 million is classified as short-term. Additionally, to help mitigate the volatility of commodity prices and protect ourselves from downside risk, we currently have approximately 30% of our anticipated 2025 oil and gas production hedged.
Previous wording
In 2023, Devon marked its 52nd anniversary in the oil and gas business and its 35th year as a public company. We generated nearly $6.5 billion of operating cash flow in 2023 as a result of the strength of our portfolio of assets and our operational execution. Our portfolio benefited from highly complementary assets that were acquired in 2022. Our 2023 operating cash flow was materially lower than 2022 as commodity prices declined from 2022 highs and cost inflation increased in 2023.
Current wording
In 2024, Devon marked its 53rd anniversary in the oil and gas business and its 36th year as a public company. We generated $6.6 billion of operating cash flow in 2024 as a result of the strength of our portfolio of assets and our operational execution. Our portfolio benefited from the acquisition of Grayson Mill that allowed us to efficiently expand our oil production and operating scale while capturing a meaningful runway of highly economic drilling inventory. The transaction created immediate value within our financial framework by delivering sustainable accretion to earnings and free cash flow. Operating cash flow in 2024 remained consistent with 2023, despite a decline in commodity prices, due to operational outperformance, capital efficiency gains and the positive contributions from our Grayson Mill acquisition.
Previous wording
We remain committed to continuing our track record of industry leading return of capital to our shareholders, underpinned by low capital reinvestment rates and a disciplined, returns-driven strategy which is designed to be successful through economic cycles. In line with this strategy, we returned $2.8 billion of cash to shareholders through fixed and variable cash dividends and share repurchases in 2023. For 2024, we are targeting approximately 70% of our free cash flow to be returned to shareholders through cash dividends and share repurchases.
Current wording
We remain committed to continuing our track record of industry leading return of capital to our shareholders, underpinned by low capital reinvestment rates and a disciplined, returns-driven strategy which is designed to be successful through economic cycles. In 2024, we returned approximately $2.0 billion of cash to shareholders through cash dividends and share repurchases, and will continue to prioritize this shareholder return strategy in 2025.
Previous wording
In 2023, WTI oil prices averaged $77.62 per Bbl versus $94.39 per Bbl in 2022, reflecting a downward trend as oil prices remained volatile even with continued capital discipline by global oil producers. The market price for crude oil is currently expected to be lower in 2024 due to concerns of a global economic slowdown driven by high interest rates and high inflation that could weaken economic activity and oil demand. Additionally, oil prices could remain volatile as uncertainty still exists from the impact of sanctioned Russian oil in the global market, as well as actions taken by OPEC+ countries in supporting a balanced global crude supply. Growing supply from U.S. oil producers could also weigh down prices in 2024 by dampening the impact of OPEC+ supply cuts. Henry Hub natural gas prices fell in 2023, averaging $2.74 per Mcf compared to $6.65 per Mcf in 2022. For 2024, natural gas prices are expected to remain consistent with 2023 prices due to high storage levels from an abundance of supply and milder winter weather, weakening economic conditions in some sectors leading to lower demand, and continued alternative energy diversification. Our 2024 cash flow is partly protected from commodity price volatility due to our current hedge position that covers approximately 30% of our anticipated oil volumes and 20% of our anticipated gas volumes. In order to further insulate our cash flow, we continue to examine and, when appropriate, execute attractive regional basis swap hedges to protect price realizations across our portfolio.
Current wording
In 2024, WTI oil prices averaged $75.79 per Bbl versus $77.62 per Bbl in 2023, reflecting a downward trend as oil prices remained volatile even with continued capital discipline by global oil producers. Oil is expected to remain volatile in 2025 due to geopolitical risks to supply, forecasted stronger non-OPEC supply, and improving global demand growth expectations. Henry Hub natural gas prices fell in 2024, averaging $2.27 per Mcf compared to $2.74 per Mcf in 2023. For 2025, natural gas prices are expected to increase compared with 2024 prices due to increased demand, driven by rising LNG exports, strong powerburn as well as discipline from natural gas producers. Our 2025 cash flow is partly protected from commodity price volatility due to our current hedge position that covers approximately 30% of our anticipated oil and gas volumes. In order to further insulate our cash flow, we continue to examine and, when appropriate, execute attractive regional basis swap hedges to protect price realizations across our portfolio.
Previous wording
Our commitment to capital discipline and capital efficiency remains unchanged with our 2024 capital program. Similar to 2023, the majority of our 2024 capital, or approximately 60%, is expected to be focused on our highest returning oil play, the Delaware Basin. The remainder of our 2024 capital will continue to be deployed to our other core areas of Eagle Ford, Williston Basin, Anadarko Basin and Powder River Basin but with a reduced activity level in some of these areas, particularly the Williston Basin. Our 2024 capital is expected to be approximately 10% lower than 2023 due to this activity reduction and due to other identified cost reductions. Our capital efficiency is expected to improve as lower 2024 capital offsets the impact of lower oil production from reduced 2024 activity. Due to our strategy of spending within cash flow, we expect to continue generating material amounts of free cash flow for 2024.
Current wording
Our commitment to capital discipline and capital efficiency remains unchanged with our 2025 capital program. Similar to 2024, the majority of our 2025 capital, or approximately 55%, is expected to be focused on our highest returning oil play, the Delaware Basin. Our Williston Basin assets will receive additional capital allocation through 2025 as we work to develop the newly acquired Grayson Mill assets. The remainder of our 2025 capital will continue to be deployed to our other core areas of Eagle Ford, Anadarko Basin and Powder River Basin. Our 2025 capital is expected to be approximately 7% higher than 2024 primarily due to increased activity in the Williston Basin. Due to our strategy of spending within cash flow, we expect to continue generating material amounts of free cash flow for 2025.
Previous wording
Our 2023 net earnings were $3.8 billion, compared to net earnings of $6.0 billion for 2022. The graph below shows the change in net earnings from 2022 to 2023. The material changes are further discussed by category on the following pages.
Current wording
Our 2024 net earnings were $2.9 billion, compared to net earnings of $3.8 billion for 2023. The graph below shows the change in net earnings from 2023 to 2024. The material changes are further discussed by category on the following pages.
Previous wording
From 2022 to 2023, the change in volumes contributed to a $1.0 billion increase in earnings. The increase in volumes was primarily due to an acquisition in the Eagle Ford, which closed in the third quarter of 2022, as well as continued development in the Delaware Basin and Anadarko Basin.
Current wording
From 2023 to 2024, the change in volumes contributed to a $1.1 billion increase in earnings. The increase in volumes was primarily due to increased activity in the Delaware Basin and Eagle Ford as well as the Grayson Mill acquisition in the Rockies, which closed in the third quarter of 2024.
Previous wording
From 2022 to 2023, realized prices contributed to a $4.3 billion decrease in earnings. Unhedged realized oil, gas and NGL prices decreased primarily due to lower WTI, Henry Hub and Mont Belvieu index prices. The decrease in index prices was partially offset by hedge cash settlements related to oil and gas commodities.
Current wording
From 2023 to 2024, realized prices contributed to an approximately $700 million decrease in earnings. This decrease was due to lower unhedged realized oil, gas and NGL prices which decreased primarily due to lower WTI and Henry Hub index prices. Additionally, gas prices were impacted by expanded regional gas price differentials in the Delaware Basin driven by infrastructure constraints. Realized prices were strengthened by hedge cash settlements across all commodities.
Previous wording
In 2023, asset dispositions include a $64 million gain related to the difference between the fair value and the book value of assets contributed to the Water JV, which was partially offset by a $33 million loss related to the re-valuation of contingent earnout payments associated with divested Barnett assets. In 2022, asset dispositions include a $42 million gain related to the re-valuation of contingent earnout payments associated with divested Barnett Shale assets. For additional information, see Note 2 in “Item 8. Financial Statements and Supplementary Data” of this report.
Current wording
In 2023, asset dispositions include a $64 million gain related to the difference between the fair value and the book value of assets contributed to the Water JV, which was partially offset by a $33 million loss related to the re-valuation of contingent earnout payments associated with divested Barnett assets. For additional information, see Note 2 in “Item 8. Financial Statements and Supplementary Data” of this report.
Previous wording
For discussion on income taxes, see Note 7 in “Item 8. Financial Statements and Supplementary Data” of this report. Our 2023 current rate is below the 15% stated rate in the CAMT due to utilization of tax credits and favorable AFSI adjustments, including depreciation and other items. While our 2023 current income tax rate was 10%, we expect our 2024 income tax rate could approach the mid-teens, depending on commodity prices among other factors.
Current wording
For discussion on income taxes, see Note 6 in “Item 8. Financial Statements and Supplementary Data” of this report.
Previous wording
As presented in the table above, net cash provided by operating activities continued to be a significant source of capital and liquidity. Operating cash flow funded all of our capital expenditures, and we continued to return value to our shareholders by utilizing cash flow and cash balances for dividends, share repurchases and debt repayments.
Current wording
As presented in the table above, net cash provided by operating activities continued to be a significant source of capital and liquidity. Operating cash flow funded our capital expenditures, and we continued to return value to our shareholders by utilizing cash flow and cash balances for dividends and share repurchases.
Previous wording
Capital expenditures consist primarily of amounts related to our oil and gas exploration and development operations, midstream operations and other corporate activities. Our capital investment program is driven by a disciplined allocation process focused on moderating our production growth and maximizing our returns. As such, our capital expenditures for 2023 represent approximately 60% of our operating cash flow.
Current wording
Capital expenditures consist primarily of amounts related to our oil and gas exploration and development operations, midstream operations and other corporate activities. Our capital investment program is driven by a disciplined allocation process focused on moderating our production growth and maximizing our returns. As such, our capital expenditures for 2024 represent approximately 55% of our operating cash flow.
Previous wording
During 2022, we paid $2.6 billion toward acquisitions of producing properties and leasehold interests located in the Eagle Ford and Williston Basin, which were completed in the third quarter of 2022. For additional information, please see Note 2 in “Part II. Item 8. Financial Statements and Supplementary Data” in this report.
Current wording
During the third quarter of 2024, we acquired the Williston Basin business of Grayson Mill. The transaction consisted of $3.5 billion of cash and approximately 37.3 million shares of Devon common stock. For additional information, please see Note 2 in “Part II. Item 8. Financial Statements and Supplementary Data” in this report.
Previous wording
During 2023 and 2022, Devon received distributions from our investments of $32 million and $39 million, respectively. Devon contributed $53 million and $76 million to our investments during 2023 and 2022, respectively.
Current wording
During 2024 and 2023, Devon received distributions from our investments of $68 million and $32 million, respectively. Devon contributed $118 million and $53 million to our investments during 2024 and 2023, respectively.
Previous wording
We repurchased 19.1 million shares of common stock for $979 million in 2023 and 11.7 million shares of common stock for $718 million in 2022 under the share repurchase program authorized by our Board of Directors. For additional information, see Note 17 in “Item 8. Financial Statements and Supplementary Data” in this report.
Current wording
We repurchased 24.2 million shares of common stock for $1.1 billion in 2024 and 19.1 million shares of common stock for $979 million in 2023 under the share repurchase program authorized by our Board of Directors. For additional information, see Note 17 in “Item 8. Financial Statements and Supplementary Data” in this report.
Previous wording
The following table summarizes our common stock dividends in 2023 and 2022. Devon has raised its fixed dividend multiple times over the past two calendar years to $0.20 per share beginning in the first quarter of 2023. In addition to the fixed quarterly dividend, we paid a variable dividend in each quarter of 2023 and 2022. For additional information, see Note 17 in “Item 8. Financial Statements and Supplementary Data” of this report.
Current wording
The following table summarizes our common stock dividends in 2024 and 2023. Devon most recently raised its fixed dividend by 10% from $0.20 to $0.22 per share in the first quarter of 2024. In addition to the fixed quarterly dividend, we paid a variable dividend in the first, second and third quarters of 2024 and each quarter of 2023. For additional information, see Note 17 in “Item 8. Financial Statements and Supplementary Data” of this report.
Previous wording
During 2023, we received $37 million of contributions from our noncontrolling interests in CDM. During 2023 and 2022, we distributed $45 million and $30 million, respectively, to our noncontrolling interests in CDM.
Current wording
During 2024 and 2023, we received $52 million and $37 million, respectively, of contributions from our noncontrolling interests in CDM. During 2024 and 2023, we distributed $51 million and $45 million, respectively, to our noncontrolling interests in CDM.
Previous wording
Historically, our primary sources of capital funding and liquidity have been our operating cash flow, cash on hand and asset divestiture proceeds. Additionally, we maintain a commercial paper program, supported by our revolving line of credit, which can be accessed as needed to supplement operating cash flow and cash balances. If needed, we can also issue debt and equity securities, including through transactions under our shelf registration statement filed with the SEC. We estimate the combination of our sources of capital will continue to be adequate to fund our planned capital requirements, as discussed in this section, as well as execute our cash-return business model.
Current wording
Historically, our primary sources of capital funding and liquidity have been our operating cash flow and cash on hand. Additionally, we maintain a commercial paper program, supported by our revolving line of credit, which can be accessed as needed to supplement operating cash flow and cash balances. If needed, we can also issue debt and equity securities, including through transactions under our shelf registration statement filed with the SEC. We estimate the combination of our sources of capital will continue to be adequate to fund our planned capital requirements, as discussed in this section, as well as execute our cash-return business model.
Previous wording
Key inputs into determining our planned capital investment is the amount of cash we hold and operating cash flow we expect to generate over the next one to three or more years. At the end of 2023, we held approximately $900 million of cash. Our operating cash flow forecasts are sensitive to many variables and include a measure of uncertainty as actual results may differ from our expectations.
Current wording
Key inputs into determining our planned capital investment is the amount of cash we hold and operating cash flow we expect to generate over the next one to three or more years. At the end of 2024, we held approximately $850 million of cash. Our operating cash flow forecasts are sensitive to many variables and include a measure of uncertainty as actual results may differ from our expectations.
Previous wording
Further, when considering the current commodity price environment and our current hedge position, we expect to achieve our capital investment priorities. Additionally, we remain committed to capital discipline and focused on delivering the objectives that underpin our capital plan for 2024. The currently elevated level of cost inflation has eroded, and could continue to erode, our cost efficiencies gained over previous years and pressure our margin in 2024. Despite this, we expect to continue generating material amounts of free cash flow at current commodity price levels due to our strategy of spending within cash flow.
Current wording
Further, when considering the current commodity price environment and our current hedge position, we expect to achieve our capital investment priorities. Additionally, we remain committed to capital discipline and focused on delivering the objectives that underpin our capital plan for 2025.
Previous wording
We have $3.0 billion of available borrowing capacity under our 2023 Senior Credit Facility at December 31, 2023. The 2023 Senior Credit Facility matures on March 24, 2028, with the option to extend the maturity date by three additional one-year periods subject to lender consent. The 2023 Senior Credit Facility supports our $3.0 billion of short-term credit under our commercial paper program. As of December 31, 2023, there were no borrowings under our commercial paper program. See Note 13 in “Item 8. Financial Statements and Supplementary Data” of this report for further discussion.
Current wording
We had approximately $3.0 billion of available borrowing capacity under our 2023 Senior Credit Facility at December 31, 2024. In the first quarter of 2024, Devon exercised its option to extend the 2023 Senior Credit Facility maturity date from March 24, 2028 to March 24, 2029. Devon has the option to extend the March 24, 2029 maturity date by two additional one-year periods subject to lender consent. The 2023 Senior Credit Facility supports our $3.0 billion of short-term credit under our commercial paper program. As of December 31, 2024, there were no borrowings under our commercial paper program. See Note 13 in “Item 8. Financial Statements and Supplementary Data” of this report for further discussion.
Previous wording
The 2023 Senior Credit Facility contains only one material financial covenant. This covenant requires us to maintain a ratio of total funded debt to total capitalization, as defined in the credit agreement, of no more than 65%. As of December 31, 2023, we were in compliance with this covenant with a 22% debt-to-capitalization ratio.
Current wording
The 2023 Senior Credit Facility contains only one material financial covenant. This covenant requires us to maintain a ratio of total funded debt to total capitalization, as defined in the credit agreement, of no more than 65%. As of December 31, 2024, we were in compliance with this covenant with a 26.5% debt-to-capitalization ratio.
Previous wording
We are committed to returning approximately 70% of our free cash flow to shareholders through a fixed dividend, variable dividend and share repurchases. Our Board of Directors will consider a number of factors when setting the quarterly dividend, if any, including a general target of paying out approximately 10% of operating cash flow through the fixed dividend. In addition to the fixed quarterly dividend, we may pay a variable dividend or complete share repurchases. Each quarter’s free cash flow, which is a non-GAAP measure, is computed as operating cash flow (a GAAP measure) before balance sheet changes less capital expenditures. The declaration and payment of any future dividend, whether fixed or variable, will remain at the full discretion of our Board of Directors and will depend on our financial results, cash requirements, future prospects and other factors deemed relevant by the Board.
Current wording
We are committed to returning cash to shareholders through dividends and share repurchases. Our Board of Directors will consider a number of factors when setting the quarterly dividend, if any, including a general target of paying out approximately 10% of operating cash flow through the fixed dividend. In addition to the fixed quarterly dividend, we may pay a variable dividend or complete share repurchases. The declaration and payment of any future dividend, whether fixed or variable, will remain at the full discretion of our Board of Directors and will depend on our financial results, cash requirements, future prospects and other factors deemed relevant by the Board.
Previous wording
Our Board of Directors has authorized a $3.0 billion share repurchase program that expires on December 31, 2024. Through February 23, 2024, we had executed $2.4 billion of the authorized program.
Current wording
Our Board of Directors has authorized a $5.0 billion share repurchase program that expires on June 30, 2026. Through February 14, 2025, we had executed $3.4 billion of the authorized program.
Previous wording
Our 2024 capital expenditure budget is expected to be approximately $3.3 billion to $3.6 billion, which is approximately 10% lower than our 2023 capital expenditures. In 2024, we plan to refine our capital allocation by further concentrating investment in the Delaware Basin.
Current wording
Our 2025 capital expenditure budget is expected to be approximately $3.8 billion to $4.0 billion, which is approximately 7% higher than our 2024 capital expenditures primarily due to the Grayson Mill acquisition.
Previous wording
As of December 31, 2023, our material contractual obligations include debt, interest expense, asset retirement obligations, lease obligations, retained obligations related to our divested Canadian business, operational agreements, drilling and facility obligations and various tax obligations. As discussed above, we estimate the combination of our sources of capital will continue to be adequate to fund our short- and long-term contractual obligations. See Notes 5,7,13, 14,15 and 18 in “Item 8. Financial Statements and Supplementary Data” of this report for further discussion.
Current wording
As of December 31, 2024, our material contractual obligations include debt, interest expense, asset retirement obligations, lease obligations, operational agreements, drilling and facility obligations, various tax obligations and retained obligations related to our divested Canadian business. As discussed above, we estimate the combination of our sources of capital will continue to be adequate to fund our short- and long-term contractual obligations. See Notes 6,13, 14,15 and 18 in “Item 8. Financial Statements and Supplementary Data” of this report for further discussion.
Previous wording
Similar to the evaluation of suspended exploratory well costs, costs for undeveloped leasehold, for which reserves have not been proven, must also be evaluated for continued capitalization or impairment. At the end of each quarter, management assesses undeveloped leasehold costs for impairment by considering future drilling plans, drilling activity results, commodity price outlooks, planned future sales or expiration of all or a portion of such projects. At December 31, 2023, Devon had approximately $501 million of undeveloped leasehold costs. Of the remaining undeveloped leasehold costs at December 31, 2023, none is scheduled to expire in 2024.
Current wording
Similar to the evaluation of suspended exploratory well costs, costs for undeveloped leasehold, for which reserves have not been proven, must also be evaluated for continued capitalization or impairment. At the end of each quarter, management assesses undeveloped leasehold costs for impairment by considering future drilling plans, drilling activity results, commodity price outlooks, planned future sales or expiration of all or a portion of such projects. At December 31, 2024, Devon had approximately $1.9 billion of undeveloped leasehold costs. Of the remaining undeveloped leasehold costs at December 31, 2024, none is scheduled to expire in 2025.
Previous wording
Our estimates of proved and proved developed reserves are a major component of DD&A calculations. Additionally, our proved reserves represent the element of these calculations that require the most subjective judgments. Estimates of reserves are forecasts based on engineering data, projected future rates of production and the timing of future expenditures. The process of estimating oil, gas and NGL reserves requires substantial judgment, resulting in imprecise determinations, particularly for new discoveries. Different reserve engineers may make different estimates of reserve quantities based on the same data. Our engineers prepare our reserve estimates. We then subject certain of our reserve estimates to audits performed by a third-party petroleum consulting firm. In 2023, 90% of our proved reserves were subjected to such an audit.
Current wording
Our estimates of proved and proved developed reserves are a major component of DD&A calculations. Additionally, our proved reserves represent the element of these calculations that require the most subjective judgments. Estimates of reserves are forecasts based on engineering data, projected future rates of production and the timing of future expenditures. The process of estimating oil, gas and NGL reserves requires substantial judgment, resulting in imprecise determinations, particularly for new discoveries. Different reserve engineers may make different estimates of reserve quantities based on the same data. Our engineers prepare our reserve estimates. We then subject certain of our reserve estimates to audits performed by a third-party petroleum consulting firm. In 2024, 89% of our proved reserves were subjected to such an audit.
Previous wording
Further, in the event we were to undergo an “ownership change” (as defined in Section 382 of the Internal Revenue Code of 1986, as amended), our ability to use net operating losses and tax credits generated prior to the ownership change may be limited. Generally, an “ownership change” occurs if one or more shareholders, each of whom owns five percent or more in value of a corporation’s stock, increase their aggregate percentage ownership by more than 50 percent over the lowest percentage of stock owned by those shareholders at any time during the preceding three-year period. Based on currently available information, we do not believe an ownership change has occurred during 2023 for Devon, but the Merger did cause an ownership change for WPX.
Current wording
Further, in the event we were to undergo an “ownership change” (as defined in Section 382 of the Internal Revenue Code of 1986, as amended), our ability to use net operating losses and tax credits generated prior to the ownership change may be limited. Generally, an “ownership change” occurs if one or more shareholders, each of whom owns five percent or more in value of a corporation’s stock, increase their aggregate percentage ownership by more than 50 percent over the lowest percentage of stock owned by those shareholders at any time during the preceding three-year period. Based on currently available information, we do not believe an ownership change has occurred during 2024 for Devon.
Previous wording
We make reference to “core earnings attributable to Devon” and “core earnings per share attributable to Devon” in “Overview of 2023 Results” in this Item 7 that are not required by or presented in accordance with GAAP. These non-GAAP measures are not alternatives to GAAP measures and should not be considered in isolation or as a substitute for analysis of our results reported under GAAP. Core earnings attributable to Devon, as well as the per share amount, represent net earnings excluding certain noncash and other items that are typically excluded by securities analysts in their published estimates of our quarterly financial results. Our non-GAAP measures are typically used as a quarterly performance measure. Amounts excluded for 2023 and 2022 relate to asset dispositions, noncash asset impairments (including unproved asset impairments), deferred tax asset valuation allowance and fair value changes in derivative financial instruments.
Current wording
We make reference to “core earnings attributable to Devon” and “core earnings per share attributable to Devon” in “Overview of 2024 Results” in this Item 7 that are not required by or presented in accordance with GAAP. These non-GAAP measures are not alternatives to GAAP measures and should not be considered in isolation or as a substitute for analysis of our results reported under GAAP. Core earnings attributable to Devon, as well as the per share amount, represent net earnings excluding certain noncash and other items that are typically excluded by securities analysts in their published estimates of our quarterly financial results. Our non-GAAP measures are typically used as a quarterly performance measure. Amounts excluded for 2024 relate to asset dispositions, noncash asset impairments (including unproved asset impairments), fair value changes in derivative financial instruments and restructuring and transaction costs.
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Previous report — wording carried elsewhere
Retired $242 million of senior notes.