DEVON ENERGY CORP/DE
For the period ended Mar 31, 2026. Filed May 6, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 6, 2026
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Item 2. Results of Operations
Results of Operations
The following graphs, discussion and analysis are intended to provide an understanding of our results of operations and current financial condition. To facilitate the review, these numbers are being presented before consideration of noncontrolling interests.
Q1 2026 vs. Q4 2025
Our first quarter 2026 and fourth quarter 2025 net earnings were $120 million and $562 million, respectively. The graph below shows the change in net earnings from the fourth quarter of 2025 to the first quarter of 2026. The material changes are further discussed by category on the following pages.
Production Volumes
| Q1 2026 | % of Total | Q4 2025 | Change | |
|---|---|---|---|---|
| Oil (MBbls/d) | ||||
| Delaware Basin | 225 | 58% | 234 | -4% |
| Rockies | 103 | 27% | 102 | 1% |
| Eagle Ford | 43 | 11% | 39 | 10% |
| Anadarko Basin | 12 | 3% | 12 | 0% |
| Other | 4 | 1% | 3 | N/M |
| Total | 387 | 100% | 390 | -1% |
| Q1 2026 | % of Total | Q4 2025 | Change | |
|---|---|---|---|---|
| Gas (MMcf/d) | ||||
| Delaware Basin | 831 | 60% | 848 | -2% |
| Rockies | 230 | 17% | 234 | -2% |
| Eagle Ford | 76 | 6% | 56 | 35% |
| Anadarko Basin | 235 | 17% | 246 | -4% |
| Other | 1 | 0% | 1 | N/M |
| Total | 1,373 | 100% | 1,385 | -1% |
| Q1 2026 | % of Total | Q4 2025 | Change | |
|---|---|---|---|---|
| NGLs (MBbls/d) | ||||
| Delaware Basin | 137 | 63% | 146 | -7% |
| Rockies | 46 | 21% | 51 | -10% |
| Eagle Ford | 11 | 5% | 10 | 12% |
| Anadarko Basin | 24 | 11% | 24 | 0% |
| Other | — | 0% | — | N/M |
| Total | 218 | 100% | 231 | -6% |
| Q1 2026 | % of Total | Q4 2025 | Change | |
|---|---|---|---|---|
| Combined (MBoe/d) | ||||
| Delaware Basin | 501 | 60% | 521 | -4% |
| Rockies | 187 | 23% | 192 | -2% |
| Eagle Ford | 66 | 8% | 57 | 14% |
| Anadarko Basin | 75 | 9% | 77 | -2% |
| Other | 4 | 0% | 4 | N/M |
| Total | 833 | 100% | 851 | -2% |
From the fourth quarter of 2025 to the first quarter of 2026, the change in volumes contributed to a $94 million decrease in earnings. The decrease in volumes was driven by natural declines and winter weather-related downtime, primarily in the Delaware Basin.
Realized Prices
| Q1 2026 | Realization | Q4 2025 | Change | |
|---|---|---|---|---|
| Oil (per Bbl) | ||||
| WTI index | $72.10 | $59.09 | 22% | |
| Realized price, unhedged | $69.66 | 97% | $57.19 | 22% |
| Cash settlements | $(1.72) | $2.47 | ||
| Realized price, with hedges | $67.94 | 94% | $59.66 | 14% |
| Q1 2026 | Realization | Q4 2025 | Change | |
|---|---|---|---|---|
| Gas (per Mcf) | ||||
| Henry Hub index | $5.05 | $3.55 | 42% | |
| Realized price, unhedged | $1.66 | 33% | $1.33 | 25% |
| Cash settlements | $0.02 | $0.25 | ||
| Realized price, with hedges | $1.68 | 33% | $1.58 | 6% |
| Q1 2026 | Realization | Q4 2025 | Change | |
|---|---|---|---|---|
| NGLs (per Bbl) | ||||
| WTI index | $72.10 | $59.09 | 22% | |
| Realized price, unhedged | $17.80 | 25% | $16.86 | 6% |
| Cash settlements | $— | $0.23 | ||
| Realized price, with hedges | $17.80 | 25% | $17.09 | 4% |
| Q1 2026 | Q4 2025 | Change | |
|---|---|---|---|
| Combined (per Boe) | |||
| Realized price, unhedged | $39.70 | $32.92 | 21% |
| Cash settlements | $(0.76) | $1.60 | |
| Realized price, with hedges | $38.94 | $34.52 | 13% |
From the fourth quarter of 2025 to the first quarter of 2026, realized prices contributed to a $493 million increase in earnings. Unhedged realized oil, gas and NGL prices increased primarily due to higher WTI, Henry Hub and Mont Belvieu index prices.
We currently have approximately 30% and 35% of our remaining anticipated 2026 oil and gas production hedged, respectively.
Hedge Settlements
| Q1 2026 | Q4 2025 | Change | |
|---|---|---|---|
| Q | |||
| Oil | $(60) | $89 | -167% |
| Natural gas | 3 | 31 | -90% |
| NGL | — | 5 | N/M |
| Total cash settlements (1) | $(57) | $125 | -146% |
(1)
Cash settlements as presented in the tables above represent realized gains or losses related to the instruments described in Note 3 in “Part I. Financial Information – Item 1. Financial Statements” in this report.
Production Expenses
| Q1 2026 | Q4 2025 | Change | |
|---|---|---|---|
| LOE | $486 | $479 | 1% |
| Gathering, processing & transportation | 191 | 195 | -2% |
| Production taxes | 205 | 172 | 19% |
| Property taxes | 12 | 15 | -20% |
| Total | $894 | $861 | 4% |
| Per Boe: | |||
| LOE | $6.48 | $6.11 | 6% |
| Gathering, processing & transportation | $2.54 | $2.49 | 2% |
| Percent of oil, gas and NGL sales: | |||
| Production taxes | 6.9% | 6.7% | 3% |
Production expenses increased during the first quarter of 2026 primarily due to higher production taxes resulting from an increase in WTI, Henry Hub and Mont Belvieu index prices.
Field-Level Cash Margin
The table below presents the field-level cash margin for each of our operating areas. Field-level cash margin is computed as oil, gas and NGL sales less production expenses and is not a measure defined by GAAP. A reconciliation to the comparable GAAP measures is found in “Non-GAAP Measures” in this Item 2. The changes in production volumes, realized prices and production expenses, shown above, had the following impact on our field-level cash margins by asset.
| Q1 2026 | $ per BOE | Q4 2025 | $ per BOE | |
|---|---|---|---|---|
| Field-level cash margin (Non-GAAP) | ||||
| Delaware Basin | $1,253 | $27.77 | $1,083 | $22.60 |
| Rockies | 451 | $26.80 | 341 | $19.32 |
| Eagle Ford | 238 | $40.18 | 177 | $33.51 |
| Anadarko Basin | 129 | $19.18 | 106 | $15.02 |
| Other | 12 | N/M | 10 | N/M |
| Total | $2,083 | $27.78 | $1,717 | $21.93 |
DD&A
| Q1 2026 | Q4 2025 | Change | |
|---|---|---|---|
| Oil and gas per Boe | $11.71 | $10.85 | 8% |
| Oil and gas | $878 | $850 | 3% |
| Other property and equipment | 26 | 40 | -35% |
| Total DD&A | $904 | $890 | 2% |
DD&A increased in the first quarter of 2026 primarily due to an increase in the oil and gas DD&A rate. The largest contributor to the higher rate was our 2025 drilling and development activity.
G&A
| Q1 2026 | Q4 2025 | Change | |
|---|---|---|---|
| G&A per Boe | $1.67 | $1.72 | -3% |
| Labor and benefits | $64 | $70 | -9% |
| Non-labor | 61 | 65 | -6% |
| Total | $125 | $135 | -7% |
Other Items
| Q1 2026 · Q4 2025 · Change in earnings | ||||
|---|---|---|---|---|
| Commodity hedge valuation changes (1) | $(644) | $59 | $(703) | |
| Marketing and midstream operations | (16) | (30) | 14 | |
| Exploration expenses | 25 | 5 | (20) | |
| Asset dispositions | 1 | (1) | (2) | |
| Net financing costs | 109 | 107 | (2) | |
| Restructuring and transaction costs | 19 | — | (19) | |
| Other, net | 17 | (12) | (29) | |
| $(761) | ||||
(1)
We recognize fair value changes on our oil, gas and NGL derivative instruments in each reporting period. The changes in fair value resulted from new positions and settlements that occurred during each period, as well as the relationship between contract prices and the associated forward curves. For additional information, see Note 3 in “Part I. Financial Information – Item 1. Financial Statements” in this report.
In the first quarter of 2026, we incurred transaction costs of approximately $19 million, which included various legal, advisory and other consulting costs associated with the Merger.
| Q1 2026 | Q4 2025 | |
|---|---|---|
| Current expense (benefit) | $(188) | $23 |
| Deferred expense | 234 | 162 |
| Total expense | $46 | $185 |
| Current tax rate | -114% | 3% |
| Deferred tax rate | 142% | 22% |
| Effective income tax rate | 28% | 25% |
For discussion on income taxes, see Note 6 in “Part I. Financial Information – Item 1. Financial Statements” in this report.
Q1 2026 vs. Q1 2025
Our first quarter 2026 and first quarter 2025 net earnings were $120 million and $509 million, respectively. The graph below shows the change in net earnings from the first quarter of 2025 to the first quarter of 2026. The material changes are further discussed by category on the following pages.
Production Volumes
| Q1 2026 | % of Total | Q1 2025 | Change | |
|---|---|---|---|---|
| Oil (MBbls/d) | ||||
| Delaware Basin | 225 | 58% | 216 | 4% |
| Rockies | 103 | 27% | 112 | -8% |
| Eagle Ford | 43 | 11% | 45 | -5% |
| Anadarko Basin | 12 | 3% | 11 | 5% |
| Other | 4 | 1% | 4 | N/M |
| Total | 387 | 100% | 388 | 0% |
| Q1 2026 | % of Total | Q1 2025 | Change | |
|---|---|---|---|---|
| Gas (MMcf/d) | ||||
| Delaware Basin | 831 | 60% | 744 | 12% |
| Rockies | 230 | 17% | 233 | -1% |
| Eagle Ford | 76 | 6% | 117 | -35% |
| Anadarko Basin | 235 | 17% | 252 | -6% |
| Other | 1 | 0% | — | N/M |
| Total | 1,373 | 100% | 1,346 | 2% |
| Q1 2026 | % of Total | Q1 2025 | Change | |
|---|---|---|---|---|
| NGLs (MBbls/d) | ||||
| Delaware Basin | 137 | 63% | 118 | 16% |
| Rockies | 46 | 21% | 44 | 3% |
| Eagle Ford | 11 | 5% | 15 | -29% |
| Anadarko Basin | 24 | 11% | 26 | -8% |
| Other | — | 0% | — | N/M |
| Total | 218 | 100% | 203 | 7% |
| Q1 2026 | % of Total | Q1 2025 | Change | |
|---|---|---|---|---|
| Combined (MBoe/d) | ||||
| Delaware Basin | 501 | 60% | 458 | 9% |
| Rockies | 187 | 23% | 195 | -4% |
| Eagle Ford | 66 | 8% | 79 | -17% |
| Anadarko Basin | 75 | 9% | 79 | -5% |
| Other | 4 | 0% | 4 | N/M |
| Total | 833 | 100% | 815 | 2% |
From the first quarter of 2025 to the first quarter of 2026, the change in volumes contributed to a $26 million increase in earnings. Volumes increased primarily due to new well activity in the Delaware Basin.
Realized Prices
| Q1 2026 | Realization | Q1 2025 | Change | |
|---|---|---|---|---|
| Oil (per Bbl) | ||||
| WTI index | $72.10 | $71.50 | 1% | |
| Realized price, unhedged | $69.66 | 97% | $69.13 | 1% |
| Cash settlements | $(1.72) | $0.02 | ||
| Realized price, with hedges | $67.94 | 94% | $69.15 | -2% |
| Q1 2026 | Realization | Q1 2025 | Change | |
|---|---|---|---|---|
| Gas (per Mcf) | ||||
| Henry Hub index | $5.05 | $3.65 | 38% | |
| Realized price, unhedged | $1.66 | 33% | $2.55 | -35% |
| Cash settlements | $0.02 | $(0.07) | ||
| Realized price, with hedges | $1.68 | 33% | $2.48 | -32% |
| Q1 2026 | Realization | Q1 2025 | Change | |
|---|---|---|---|---|
| NGLs (per Bbl) | ||||
| WTI index | $72.10 | $71.50 | 1% | |
| Realized price, unhedged | $17.80 | 25% | $22.03 | -19% |
| Cash settlements | $— | $(0.10) | ||
| Realized price, with hedges | $17.80 | 25% | $21.93 | -19% |
| Q1 2026 | Q1 2025 | Change | |
|---|---|---|---|
| Combined (per Boe) | |||
| Realized price, unhedged | $39.70 | $42.58 | -7% |
| Cash settlements | $(0.76) | $(0.13) | |
| Realized price, with hedges | $38.94 | $42.45 | -8% |
From the first quarter of 2025 to the first quarter of 2026, realized prices contributed to a $175 million decrease in earnings. This decrease was primarily due to lower unhedged realized gas and NGL prices. This decrease was partially offset by an increase in unhedged realized oil prices. Realized prices were also negatively impacted by oil hedge cash settlements.
Hedge Settlements
| Q1 2026 | Q1 2025 | Change | |
|---|---|---|---|
| Oil | $(60) | $— | N/M |
| Natural gas | 3 | (8) | 138% |
| NGL | — | (2) | N/M |
| Total cash settlements (1) | $(57) | $(10) | -470% |
(1)
Cash settlements as presented in the tables above represent realized gains or losses related to the instruments described in Note 3 in “Part I. Financial Information – Item 1. Financial Statements” in this report.
Production Expenses
| Q1 2026 | Q1 2025 | Change | |
|---|---|---|---|
| LOE | $486 | $479 | 1% |
| Gathering, processing & transportation | 191 | 204 | -6% |
| Production taxes | 205 | 212 | -3% |
| Property taxes | 12 | 17 | -29% |
| Total | $894 | $912 | -2% |
| Per Boe: | |||
| LOE | $6.48 | $6.53 | 0% |
| Gathering, processing & transportation | $2.54 | $2.78 | -9% |
| Percent of oil, gas and NGL sales: | |||
| Production taxes | 6.9% | 6.8% | 2% |
Field-Level Cash Margin
The table below presents the field-level cash margin for each of our operating areas. Field-level cash margin is computed as oil, gas and NGL sales less production expenses and is not a measure defined by GAAP. A reconciliation to the comparable GAAP measures is found in “Non-GAAP Measures” in this Item 2. The changes in production volumes, realized prices and production expenses, shown above, had the following impact on our field-level cash margins by asset.
| Q1 2026 | $ per BOE | Q1 2025 | $ per BOE | |
|---|---|---|---|---|
| Field-level cash margin (Non-GAAP) | ||||
| Delaware Basin | $1,253 | $27.77 | $1,283 | $31.13 |
| Rockies | 451 | $26.80 | 509 | $29.01 |
| Eagle Ford | 238 | $40.18 | 270 | $37.98 |
| Anadarko Basin | 129 | $19.18 | 136 | $19.13 |
| Other | 12 | N/M | 16 | N/M |
| Total | $2,083 | $27.78 | $2,214 | $30.16 |
DD&A and Asset Impairments
| Q1 2026 | Q1 2025 | Change | |
|---|---|---|---|
| Oil and gas per Boe | $11.71 | $12.07 | -3% |
| Oil and gas | $878 | $886 | -1% |
| Other property and equipment | 26 | 26 | 0% |
| Total DD&A | $904 | $912 | -1% |
| Asset impairments | $— | $254 | N/M |
In the first quarter of 2025, Devon rationalized two headquarters-related real estate assets resulting in total asset impairments of $254 million. See Note 5 in "Part I. Financial Information – Item 1. Financial Statements" of this report for further discussion.
G&A
| Q1 2026 | Q1 2025 | Change | |
|---|---|---|---|
| G&A per Boe | $1.67 | $1.77 | -6% |
| Labor and benefits | $64 | $70 | -9% |
| Non-labor | 61 | 60 | 2% |
| Total | $125 | $130 | -4% |
Other Items
| Q1 2026 · Q1 2025 · Change in earnings | ||||
|---|---|---|---|---|
| Commodity hedge valuation changes (1) | $(644) | $(88) | $(556) | |
| Marketing and midstream operations | (16) | (12) | (4) | |
| Exploration expenses | 25 | 10 | (15) | |
| Asset dispositions | 1 | 2 | 1 | |
| Net financing costs | 109 | 123 | 14 | |
| Restructuring and transaction costs | 19 | 18 | (1) | |
| Other, net | 17 | 9 | (8) | |
| $(569) | ||||
(1)
We recognize fair value changes on our oil, gas and NGL derivative instruments in each reporting period. The changes in fair value resulted from new positions and settlements that occurred during each period, as well as the relationship between contract prices and the associated forward curves. For additional information, see Note 3 in “Part I. Financial Information – Item 1. Financial Statements” in this report.
| Q1 2026 | Q1 2025 | |
|---|---|---|
| Current expense | $(188) | $96 |
| Deferred expense | 234 | 41 |
| Total expense | $46 | $137 |
| Current tax rate | -114% | 15% |
| Deferred tax rate | 142% | 6% |
| Effective income tax rate | 28% | 21% |
For information on income taxes, see Note 6 in “Part I. Financial Information – Item 1. Financial Statements” in this report.
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