EX-99.2

EX-99.2 3 d746925dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

Devon Energy Fourth-Quarter 2023

Supplemental Tables


TABLE OF CONTENTS:	PAGE:

Consolidated Statements of Earnings		2

Supplemental Information for Consolidated Statements of Earnings		3

Consolidated Balance Sheets		4

Consolidated Statements of Cash Flows		5

Production		6

Capital Expenditures, Costs Incurred and Reserves Reconciliation		7

Supplemental Information for Capital Expenditures		8

Realized Pricing		9

Asset Margins		10

Core Earnings		11

Return on Capital Employed and EBITDAX		12

Net Debt, Net Debt-to-EBITDAX, Free Cash Flow, Adjusted Free Cash Flow and Reinvestment Rate		13

CONSOLIDATED STATEMENTS OF EARNINGS


(in millions, except per share amounts)	2023										2022
	Quarter 4		Quarter 3			Quarter 2			Quarter 1		Quarter 4
Oil, gas and NGL sales	$	2,737	$	2,882		$	2,493		$	2,679	$	3,139
Oil, gas and NGL derivatives ⁽¹⁾		324		(194	)		(76	)		64		(53	)
Marketing and midstream revenues		1,084		1,148			1,037			1,080		1,213

Total revenues		4,145		3,836			3,454			3,823		4,299

Production expenses ⁽²⁾		759		757			719			693		715
Exploration expenses		4		3			10			3		13
Marketing and midstream expenses		1,093		1,160			1,051			1,105		1,231
Depreciation, depletion and amortization		650		651			638			615		625
Asset dispositions		11		—			(41	)		—		(29	)
General and administrative expenses		111		99			92			106		122
Financing costs, net ⁽³⁾		77		81			78			72		73
Other, net		10		13			10			5		(4	)

Total expenses		2,715		2,764			2,557			2,599		2,746

Earnings before income taxes		1,430		1,072			897			1,224		1,553
Income tax expense ⁽⁴⁾		269		152			199			221		349

Net earnings		1,161		920			698			1,003		1,204
Net earnings attributable to noncontrolling interests		9		10			8			8		3

Net earnings attributable to Devon	$	1,152	$	910		$	690		$	995	$	1,201

Net earnings per share:
Basic net earnings per share	$	1.81	$	1.43		$	1.08		$	1.53	$	1.84
Diluted net earnings per share	$	1.81	$	1.42		$	1.07		$	1.53	$	1.83
Weighted average common shares outstanding:
Basic		635		637			638			645		647
Diluted		638		639			639			647		649

SUPPLEMENTAL INFORMATION FOR CONSOLIDATED STATEMENTS OF EARNINGS

(1) OIL, GAS AND NGL DERIVATIVES


(in millions)	2023										2022
	Quarter 4		Quarter 3			Quarter 2			Quarter 1		Quarter 4
Derivative cash settlements	$	8	$	(11	)	$	37		$	13	$	(177	)
Derivative valuation changes		316		(183	)		(113	)		51		124

Oil, gas and NGL derivatives	$	324	$	(194	)	$	(76	)	$	64	$	(53	)

(2) PRODUCTION EXPENSES


(in millions)	2023								2022
	Quarter 4		Quarter 3		Quarter 2		Quarter 1		Quarter 4
Lease operating expense	$	381	$	367	$	353	$	327	$	308
Gathering, processing & transportation		181		178		177		166		178
Production taxes		182		191		165		175		210
Property taxes		15		21		24		25		19

Production expenses	$	759	$	757	$	719	$	693	$	715

(3) FINANCING COSTS, NET


(in millions)	2023												2022
	Quarter 4			Quarter 3			Quarter 2			Quarter 1			Quarter 4
Interest based on outstanding debt	$	87		$	93		$	96		$	93		$	93
Interest income		(12	)		(11	)		(15	)		(17	)		(16	)
Other		2			(1	)		(3	)		(4	)		(4	)

Financing costs, net	$	77		$	81		$	78		$	72		$	73

(4) INCOME TAX EXPENSE


(in millions)	2023								2022
	Quarter 4		Quarter 3		Quarter 2		Quarter 1		Quarter 4
Current expense	$	105	$	139	$	80	$	141	$	84
Deferred expense		164		13		119		80		265

Income tax expense	$	269	$	152	$	199	$	221	$	349

CONSOLIDATED BALANCE SHEETS


(in millions)	2023												2022
	Quarter 4			Quarter 3			Quarter 2			Quarter 1			Quarter 4
Current assets:
Cash, cash equivalents and restricted cash	$	875		$	761		$	488		$	887		$	1,454
Accounts receivable		1,573			1,853			1,519			1,615			1,767
Inventory		249			233			201			212			201
Other current assets		460			365			397			475			469

Total current assets		3,157			3,212			2,605			3,189			3,891
Oil and gas property and equipment, based on successful efforts accounting, net		17,825			17,563			17,317			16,932			16,567
Other property and equipment, net		1,503			1,468			1,446			1,583			1,539

Total property and equipment, net		19,328			19,031			18,763			18,515			18,106
Goodwill		753			753			753			753			753
Right-of-use assets		267			261			266			219			224
Investments		666			671			675			469			440
Other long-term assets		319			313			293			275			307

Total assets	$	24,490		$	24,241		$	23,355		$	23,420		$	23,721

Current liabilities:
Accounts payable	$	760		$	812		$	843		$	935		$	859
Revenues and royalties payable		1,222			1,434			1,199			1,266			1,506
Short-term debt		483			487			244			247			251
Other current liabilities		484			597			383			483			489

Total current liabilities		2,949			3,330			2,669			2,931			3,105
Long-term debt		5,672			5,675			6,169			6,175			6,189
Lease liabilities		295			290			299			256			257
Asset retirement obligations		643			641			548			546			511
Other long-term liabilities		876			850			858			866			900
Deferred income taxes		1,838			1,676			1,662			1,543			1,463
Stockholders’ equity:
Common stock		64			64			64			64			65
Additional paid-in capital		5,939			6,153			6,131			6,344			6,921
Retained earnings		6,195			5,535			4,940			4,712			4,297
Accumulated other comprehensive loss		(124	)		(113	)		(114	)		(115	)		(116	)
Treasury stock		(13	)		—			—			(28	)		—

Total stockholders’ equity attributable to Devon		12,061			11,639			11,021			10,977			11,167
Noncontrolling interests		156			140			129			126			129

Total equity		12,217			11,779			11,150			11,103			11,296

Total liabilities and equity	$	24,490		$	24,241		$	23,355		$	23,420		$	23,721

CONSOLIDATED STATEMENTS OF CASH FLOWS


(in millions)	2023												2022
	Quarter 4			Quarter 3			Quarter 2			Quarter 1			Quarter 4
Cash flows from operating activities:
Net earnings	$	1,161		$	920		$	698		$	1,003		$	1,204
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation, depletion and amortization		650			651			638			615			625
Leasehold impairments		1			1			3			—			2
Accretion (amortization) of liabilities		1			(2	)		(8	)		(7	)		(8	)
Total (gains) losses on commodity derivatives		(324	)		194			76			(64	)		53
Cash settlements on commodity derivatives		8			(11	)		37			13			(177	)
Gains on asset dispositions		11			—			(41	)		—			(29	)
Deferred income tax expense		164			13			119			80			265
Share-based compensation		23			22			25			23			23
Other		(3	)		(2	)		(2	)		2			(1	)
Changes in assets and liabilities, net		45			(61	)		(140	)		12			(46	)

Net cash from operating activities		1,737			1,725			1,405			1,677			1,911

Cash flows from investing activities:
Capital expenditures		(910	)		(882	)		(1,079	)		(1,012	)		(804	)
Acquisitions of property and equipment		(10	)		(23	)		(18	)		(13	)		(17	)
Divestitures of property and equipment		3			1			1			21			—
Distributions from investments		8			7			9			8			9
Contributions to investments and other		(1	)		—			(15	)		(37	)		(17	)

Net cash from investing activities		(910	)		(897	)		(1,102	)		(1,033	)		(829	)

Cash flows from financing activities:
Repayments of long-term debt		—			(242	)		—			—			—
Repurchases of common stock		(234	)		—			(228	)		(517	)		(57	)
Dividends paid on common stock		(488	)		(312	)		(462	)		(596	)		(875	)
Contributions from noncontrolling interests		19			10			8			—			—
Distributions to noncontrolling interests		(12	)		(9	)		(13	)		(11	)		(8	)
Shares exchanged for tax withholdings and other		(1	)		—			(9	)		(87	)		—

Net cash from financing activities		(716	)		(553	)		(704	)		(1,211	)		(940	)

Effect of exchange rate changes on cash		3			(2	)		2			—			2

Net change in cash, cash equivalents and restricted cash		114			273			(399	)		(567	)		144
Cash, cash equivalents and restricted cash at beginning of period		761			488			887			1,454			1,310

Cash, cash equivalents and restricted cash at end of period	$	875		$	761		$	488		$	887		$	1,454

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	853		$	654		$	372		$	761		$	1,314
Restricted cash		22			107			116			126			140

Total cash, cash equivalents and restricted cash	$	875		$	761		$	488		$	887		$	1,454

PRODUCTION


	2023								2022
	Quarter 4		Quarter 3		Quarter 2		Quarter 1		Quarter 4
Oil (MBbls/d)
Delaware Basin		208		215		209		211		201
Eagle Ford		43		40		45		40		42
Anadarko Basin		13		14		15		15		15
Williston Basin		36		35		36		36		37
Powder River Basin		13		13		14		14		16
Other		4		4		4		4		5

Total		317		321		323		320		316

Natural gas liquids (MBbls/d)
Delaware Basin		112		112		105		97		101
Eagle Ford		15		15		16		15		12
Anadarko Basin		29		27		31		26		23
Williston Basin		10		9		9		8		9
Powder River Basin		3		2		2		2		3
Other		—		1		1		1		—

Total		169		166		164		149		148

Gas (MMcf/d)
Delaware Basin		673		680		636		640		626
Eagle Ford		81		78		86		82		84
Anadarko Basin		225		235		254		237		238
Williston Basin		61		58		59		54		64
Powder River Basin		20		18		18		16		21
Other		1		1		1		1		1

Total		1,061		1,070		1,054		1,030		1,034

Total oil equivalent (MBoe/d)
Delaware Basin		433		440		420		415		407
Eagle Ford		72		68		74		68		68
Anadarko Basin		79		80		89		81		77
Williston Basin		55		54		56		53		57
Powder River Basin		19		19		19		19		22
Other		4		4		4		5		5

Total		662		665		662		641		636

CAPITAL EXPENDITURES


(in millions)	2023								2022
	Quarter 4		Quarter 3		Quarter 2		Quarter 1		Quarter 4
Delaware Basin	$	506	$	503	$	583	$	572	$	518
Eagle Ford		194		198		179		188		160
Anadarko Basin		51		13		67		66		59
Williston Basin		55		69		89		73		90
Powder River Basin		55		45		39		32		46
Other		3		2		1		2		1

Total upstream capital	$	864	$	830	$	958	$	933	$	874

Carbon capital		31		25		30		27		20
Midstream and Corporate		45		41		30		28		28
Acquisitions		11		23		18		13		13

Total capital	$	951	$	919	$	1,036	$	1,001	$	935

COSTS INCURRED AND RESERVES RECONCILIATION


COSTS INCURRED	Year Ended December 31,
(in millions)	2023		2022
Property acquisition costs:
Proved properties	$	2	$	1,760
Unproved properties		63		803
Exploration costs		534		472
Development costs		3,160		2,132

Costs incurred	$	3,759	$	5,167

RESERVES RECONCILIATION


	Oil (MMBbls)			Gas (Bcf)			NGL (MMBbls)			Total (MMBoe)
As of December 31, 2022:
Proved developed		596			2,595			391			1,419
Proved undeveloped		197			580			102			396

Total Proved		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	)

As of December 31, 2023:
Proved developed		603			2,560			395			1,425
Proved undeveloped		183			622			105			392

Total Proved		786			3,182			500			1,817

SUPPLEMENTAL INFORMATION FOR CAPITAL EXPENDITURES

GROSS OPERATED SPUDS


	2023								2022
	Quarter 4		Quarter 3		Quarter 2		Quarter 1		Quarter 4
Delaware Basin		60		64		65		60		60
Eagle Ford		26		28		18		23		31
Anadarko Basin		17		10		9		19		8
Williston Basin		—		7		8		6		9
Powder River Basin		5		4		3		3		4

Total		108		113		103		111		112

GROSS OPERATED WELLS TIED-IN


	2023								2022
	Quarter 4		Quarter 3		Quarter 2		Quarter 1		Quarter 4
Delaware Basin		62		59		76		42		55
Eagle Ford		24		13		29		26		28
Anadarko Basin		4		—		16		7		23
Williston Basin		6		6		8		17		5
Powder River Basin		4		3		2		5		3

Total		100		81		131		97		114

NET OPERATED WELLS TIED-IN


	2023								2022
	Quarter 4		Quarter 3		Quarter 2		Quarter 1		Quarter 4
Delaware Basin		47		49		61		40		52
Eagle Ford		20		12		25		18		23
Anadarko Basin		1		—		7		3		11
Williston Basin		3		4		6		15		1
Powder River Basin		4		3		2		4		2

Total		75		68		101		80		89

AVERAGE LATERAL LENGTH

(based on wells tied-in)

2023

2022

Quarter 4

Quarter 3

Quarter 2

Quarter 1

Quarter 4

Delaware Basin

10,300’

9,700’

10,100’

9,900’

9,600’

Eagle Ford

7,900’

5,000’

6,200’

6,700’

6,500’

Anadarko Basin

12,500’

—

9,100’

9,300’

8,700’

Williston Basin

12,300’

10,000’

11,500’

9,900’

Powder River Basin

9,600’

13,300’

15,000’

10,700’

9,600’

Total

9,900’

9,300’

9,200’

9,300’

8,700’

REALIZED PRICING

BENCHMARK PRICES


(average prices)	2023											2022
	Quarter 4			Quarter 3			Quarter 2		Quarter 1			Quarter 4
Oil ($/Bbl) - West Texas Intermediate (Cushing)	$	78.48		$	82.06		$	73.76	$	76.17		$	82.53
Natural Gas ($/Mcf) - Henry Hub	$	2.88		$	2.54		$	2.09	$	3.44		$	6.26
NGL ($/Bbl) - Mont Belvieu Blended	$	25.52		$	26.62		$	23.99	$	29.48		$	30.46

REALIZED PRICES
	2023											2022
	Quarter 4			Quarter 3			Quarter 2		Quarter 1			Quarter 4
Oil (Per Bbl)
Delaware Basin	$	77.75		$	80.72		$	71.86	$	74.43		$	82.48
Eagle Ford		78.51			80.85			72.36		74.06			83.23
Anadarko Basin		77.09			79.86			71.52		74.14			82.57
Williston Basin		74.26			79.50			70.80		74.09			81.05
Powder River Basin		74.58			78.51			70.75		74.30			81.29

Realized price without hedges		77.32			80.48			71.74		74.32			82.31
Cash settlements		(0.34	)		(0.67	)		—		(0.10	)		(4.87	)

Realized price, including cash settlements	$	76.98		$	79.81		$	71.74	$	74.22		$	77.44

Natural gas liquids (Per Bbl)
Delaware Basin	$	19.93		$	20.76		$	18.07	$	23.72		$	23.68
Eagle Ford		22.67			23.70			20.22		26.18			29.06
Anadarko Basin		21.44			23.37			19.42		27.88			29.58
Williston Basin		2.95			4.09			2.52		8.97			7.97
Powder River Basin		28.80			29.63			24.52		35.72			34.91

Realized price without hedges		19.67			20.72			17.79		24.12			24.32
Cash settlements		—			—			—		—			—

Realized price, including cash settlements	$	19.67		$	20.72		$	17.79	$	24.12		$	24.32

Gas (Per Mcf)
Delaware Basin	$	1.76		$	1.94		$	1.18	$	1.90		$	4.30
Eagle Ford		2.44			2.31			1.80		2.99			5.02
Anadarko Basin		2.38			2.17			1.72		3.14			5.37
Williston Basin		N/M			N/M			N/M		1.57			0.44
Powder River Basin		2.52			2.53			2.41		4.25			5.57

Realized price without hedges		1.83			1.92			1.27		2.29			4.39
Cash settlements		0.19			0.09			0.39		0.18			(0.38	)

Realized price, including cash settlements	$	2.02		$	2.01		$	1.66	$	2.47		$	4.01

Total oil equivalent (Per Boe)
Delaware Basin	$	45.38		$	47.68		$	42.05	$	46.35		$	53.34
Eagle Ford		54.64			55.71			49.69		52.81			62.92
Anadarko Basin		26.96			27.88			24.04		32.16			41.25
Williston Basin		47.77			52.64			45.94		52.94			54.51
Powder River Basin		57.99			62.21			56.33		63.01			67.59

Realized price without hedges		44.93			47.10			41.39		46.44			53.66
Cash settlements		0.14			(0.18	)		0.61		0.22			(3.04	)

Realized price, including cash settlements	$	45.07		$	46.92		$	42.00	$	46.66		$	50.62

ASSET MARGINS

BENCHMARK PRICES


(average prices)	2023								2022
	Quarter 4		Quarter 3		Quarter 2		Quarter 1		Quarter 4
Oil ($/Bbl) - West Texas Intermediate (Cushing)	$	78.48	$	82.06	$	73.76	$	76.17	$	82.53
Natural Gas ($/Mcf) - Henry Hub	$	2.88	$	2.54	$	2.09	$	3.44	$	6.26
NGL ($/Bbl) - Mont Belvieu Blended	$	25.52	$	26.62	$	23.99	$	29.48	$	30.46

PER-UNIT CASH MARGIN BY ASSET (per Boe)


	2023												2022
	Quarter 4			Quarter 3			Quarter 2			Quarter 1			Quarter 4
Delaware Basin
Realized price	$	45.38		$	47.68		$	42.05		$	46.35		$	53.34
Lease operating expenses		(5.46	)		(5.03	)		(4.96	)		(4.58	)		(4.55	)
Gathering, processing & transportation		(2.75	)		(2.63	)		(2.63	)		(2.63	)		(2.52	)
Production & property taxes		(3.24	)		(3.48	)		(3.18	)		(3.43	)		(3.89	)

Field-level cash margin	$	33.93		$	36.54		$	31.28		$	35.71		$	42.38

Eagle Ford
Realized price	$	54.64		$	55.71		$	49.69		$	52.81		$	62.92
Lease operating expenses		(7.05	)		(7.52	)		(6.18	)		(6.32	)		(5.63	)
Gathering, processing & transportation		(1.62	)		(1.63	)		(1.67	)		(1.49	)		(3.08	)
Production & property taxes		(2.95	)		(3.18	)		(2.97	)		(3.25	)		(2.97	)

Field-level cash margin	$	43.02		$	43.38		$	38.87		$	41.75		$	51.24

Anadarko Basin
Realized price	$	26.96		$	27.88		$	24.04		$	32.16		$	41.25
Lease operating expenses		(3.26	)		(3.43	)		(3.13	)		(3.41	)		(3.59	)
Gathering, processing & transportation		(5.98	)		(6.11	)		(5.97	)		(5.93	)		(6.84	)
Production & property taxes		(1.40	)		(1.36	)		(1.22	)		(1.73	)		(2.29	)

Field-level cash margin	$	16.32		$	16.98		$	13.72		$	21.09		$	28.53

Williston Basin
Realized price	$	47.77		$	52.64		$	45.94		$	52.94		$	54.51
Lease operating expenses		(13.07	)		(13.04	)		(13.43	)		(13.25	)		(9.93	)
Gathering, processing & transportation		(2.34	)		(2.31	)		(2.29	)		(2.19	)		(1.92	)
Production & property taxes		(4.78	)		(5.13	)		(4.68	)		(4.85	)		(5.64	)

Field-level cash margin	$	27.58		$	32.16		$	25.54		$	32.65		$	37.02

Powder River Basin
Realized price	$	57.99		$	62.21		$	56.33		$	63.01		$	67.59
Lease operating expenses		(8.65	)		(8.45	)		(10.03	)		(11.07	)		(7.15	)
Gathering, processing & transportation		(3.17	)		(3.02	)		(2.97	)		(2.73	)		(2.98	)
Production & property taxes		(6.75	)		(7.45	)		(6.79	)		(7.78	)		(8.13	)

Field-level cash margin	$	39.42		$	43.29		$	36.54		$	41.43		$	49.33

Devon - Total
Realized price	$	44.93		$	47.10		$	41.39		$	46.44		$	53.66
Lease operating expenses		(6.25	)		(6.00	)		(5.86	)		(5.67	)		(5.26	)
Gathering, processing & transportation		(2.97	)		(2.91	)		(2.94	)		(2.88	)		(3.05	)
Production & property taxes		(3.24	)		(3.46	)		(3.14	)		(3.47	)		(3.91	)

Field-level cash margin	$	32.47		$	34.73		$	29.45		$	34.42		$	41.44

NON-GAAP MEASURES

(all monetary values in millions, except per share amounts)

Devon’s earnings materials include non-GAAP financial measures. These non-GAAP measures are not alternatives to GAAP measures, and you should not consider these non-GAAP measures in isolation or as a substitute for analysis of our results as reported under GAAP. Below is additional disclosure regarding each of the non-GAAP measures used in the earnings materials, including reconciliations to their most directly comparable GAAP measure.

The earnings materials may include forward-looking non-GAAP measures. The company is unable to provide reconciliations of these forward-looking non-GAAP measures, because components of the calculations are inherently unpredictable, such as changes to current assets and liabilities, the timing of changes in capital accruals, unknown future events and estimating certain future GAAP measures. The inability to reliably quantify certain components of the calculation would significantly affect the usefulness and accuracy of a reconciliation.

CORE EARNINGS

Devon’s reported net earnings include items of income and expense that are typically excluded by securities analysts in their published estimates of the company’s financial results. Accordingly, the company also uses the measures of core earnings and core earnings per share attributable to Devon. Devon believes these non-GAAP measures facilitate comparisons of its performance to earnings estimates published by securities analysts. Devon also believes these non-GAAP measures can facilitate comparisons of its performance between periods and to the performance of its peers. The following table summarizes the effects of these items on fourth- quarter and full year 2023 earnings.


	Year Ended December 31, 2023												Quarter Ended December 31, 2023
	Before- tax			After- tax			After NCI			Per Diluted Share			Before- tax			After- tax			After NCI			Per Diluted Share
Total
Earnings (GAAP)	$	4,623		$	3,782		$	3,747		$	5.84		$	1,430		$	1,161		$	1,152		$	1.81
Adjustments:
Asset dispositions		(30	)		(24	)		(24	)		(0.04	)		11			7			7			0.01
Asset and exploration impairments		5			3			3			—			2			1			1			—
Deferred tax asset valuation allowance		—			(1	)		(1	)		—			—			(11	)		(11	)		(0.02	)
Fair value changes in financial instruments		(74	)		(58	)		(58	)		(0.09	)		(319	)		(247	)		(247	)		(0.39	)

Core earnings (Non-GAAP)	$	4,524		$	3,702		$	3,667		$	5.71		$	1,124		$	911		$	902		$	1.41

RETURN ON CAPITAL EMPLOYED

Devon defines return on capital employed as pre-interest core earnings divided by averaged capital employed. Devon believes return on capital employed provides a useful measure of how efficiently the company is using its capital to generate profits. Average capital employed is the average of the capital employed as of the beginning and ending of the relevant period, with capital employed calculated as debt plus stockholders’ equity attributable to Devon less cash and cash equivalents.


	Year Ended Dec. 31, 2023
Earnings (GAAP)	$	3,747
Non-GAAP adjustments		(80	)

Core earnings (Non-GAAP)		3,667

Net financing costs (GAAP)		308
Less tax impact (18%)		(56	)

After-tax adjusted net financing costs (Non-GAAP)		252

Pre-interest core earnings (Non-GAAP)	$	3,919

Beginning balance:
Gross debt	$	6,440
Stockholders’ equity		11,167
Less cash		(1,454	)

Beginning capital employed	$	16,153

Ending balance:
Gross debt	$	6,155
Stockholders’ equity		12,061
Less cash		(875	)

Ending capital employed	$	17,341

Average capital employed	$	16,747

ROCE		23	%

EBITDAX

Devon believes EBITDAX provides information useful in assessing operating and financial performance across periods. Devon computes EBITDAX as net earnings before financing costs, net; income tax expense; exploration expenses; depreciation, depletion and amortization; asset disposition gains and losses; non-cash share-based compensation; non-cash valuation changes for derivatives and financial instruments; accretion on discounted liabilities; and other items not related to normal operations. EBITDAX as defined by Devon may not be comparable to similarly titled measures used by other companies.


	Q4 ‘23			Q3 ‘23		Q2 ‘23			Q1 ‘23			TTM			Q4 ‘22
Net earnings (GAAP)	$	1,161		$	920	$	698		$	1,003		$	3,782		$	1,204
Financing costs, net		77			81		78			72			308			73
Income tax expense		269			152		199			221			841			349
Exploration expenses		4			3		10			3			20			13
Depreciation, depletion and amortization		650			651		638			615			2,554			625
Asset dispositions		11			—		(41	)		—			(30	)		(29	)
Share-based compensation		22			22		25			23			92			23
Derivative & financial instrument non-cash val. changes		(316	)		183		113			(51	)		(71	)		(122	)
Accretion on discounted liabilities and other		10			13		10			5			38			(6	)

EBITDAX (Non-GAAP)	$	1,888		$	2,025	$	1,730		$	1,891		$	7,534		$	2,130

NET DEBT

Devon defines net debt as debt (includes short-term and long-term debt) less cash, cash equivalents and restricted cash. Devon believes that netting these sources of cash against debt provides a clearer picture of the future demands on cash from Devon to repay debt.


	Dec. 31, 2023			Sep. 30, 2023			Jun. 30, 2023			Mar. 31, 2023			Dec. 31, 2022
Total debt (GAAP)	$	6,155		$	6,162		$	6,413		$	6,422		$	6,440
Less:
Cash, cash equivalents and restricted cash		(875	)		(761	)		(488	)		(887	)		(1,454	)

Net debt (Non-GAAP)	$	5,280		$	5,401		$	5,925		$	5,535		$	4,986

NET DEBT-TO-EBITDAX

Devon defines net debt-to-EBITDAX as net debt divided by an annualized EBITDAX measure. Devon believes this ratio provides information useful to investors in assessing the company’s credit position and debt leverage.


	Dec. 31, 2023		Sep. 30, 2023		Jun. 30, 2023		Mar. 31, 2023		Dec. 31, 2022
Net debt (Non-GAAP)	$	5,280	$	5,401	$	5,925	$	5,535	$	4,986
EBITDAX (Non-GAAP) ⁽¹⁾	$	7,534	$	7,776	$	8,239	$	9,342	$	9,586

Net debt-to-EBITDAX (Non-GAAP)		0.7		0.7		0.7		0.6		0.5

(1)	EBITDAX is an annualized measure using a trailing twelve-month calculation.

FREE CASH FLOW

Devon defines free cash flow as total operating cash flow less capital expenditures. Devon believes free cash flow provides a useful measure of available cash generated by operating activities for other investing and financing activities.


	Year Ended Dec. 31, 2023			Quarter Ended Dec. 31, 2023			Quarter Ended Sep. 30, 2023			Quarter Ended Jun. 30, 2023			Quarter Ended Mar. 31, 2023			Quarter Ended Dec. 31, 2022
Total operating cash flow (GAAP)	$	6,544		$	1,737		$	1,725		$	1,405		$	1,677		$	1,911
Less capital expenditures:		(3,883	)		(910	)		(882	)		(1,079	)		(1,012	)		(804	)

Free cash flow (Non-GAAP)	$	2,661		$	827		$	843		$	326		$	665		$	1,107

ADJUSTED FREE CASH FLOW

Devon is committed to returning approximately 70% of our adjusted free cash flow to shareholders through a fixed dividend, variable dividend and share repurchases. Adjusted free cash flow is calculated as total operating cash flow before balance sheet changes less accrued capital expenditures.


	Quarter Ended Dec. 31, 2023
Total operating cash flow (GAAP)	$	1,737
Changes in assets and liabilities		(45	)

Cash flow before balance sheet changes (Non-GAAP)		1,692
Capital expenditures (accrued, less acquisitions)		(940	)

Adjusted free cash flow (Non-GAAP)	$	752

REINVESTMENT RATE

Devon defines reinvestment rate as accrued capital expenditures (excluding acquisitions) divided by operating cash flow. Devon believes this measure provides useful information to our investors as an indicator of the capital demands of our business relative to the cash flow generated from normal business operations.


	Quarter Ended Dec. 31, 2023			Quarter Ended Sep. 30, 2023			Quarter Ended Jun. 30, 2023			Quarter Ended Mar. 31, 2023			Quarter Ended Dec. 31, 2022
Capital expenditures (excludes acquisitions)	$	940		$	896		$	1,018		$	988		$	922
Operating cash flow	$	1,737		$	1,725		$	1,405		$	1,677		$	1,911

Reinvestment rate (Non-GAAP)		54	%		52	%		72	%		59	%		48	%


FIRST-QUARTER AND FULL-YEAR 2024 GUIDANCE

PRODUCTION GUIDANCE


	Quarter 1 ⁽¹⁾				Full Year
	Low		High		Low		High
Oil (MBbls/d)		304		310		312		318
Natural gas liquids (MBbls/d)		159		165		160		165
Gas (MMcf/d)		1,000		1,050		1,010		1,060

Total oil equivalent (MBoe/d)⁽¹⁾		630		650		640		660

(1)	First-quarter volumes are estimated to be reduced by 2 percent due to the impact of severe winter weather across the company’s portfolio.

CAPITAL EXPENDITURES GUIDANCE


	Quarter 1 ⁽²⁾				Full Year
(in millions)	Low		High		Low		High
Upstream capital	$	840	$	870	$	3,050	$	3,250
Carbon capital		35		45		125		175
Midstream & other capital		40		50		125		175

Total capital⁽²⁾	$	915	$	965	$	3,300	$	3,600

(2)	Capital is expected to be higher in the first half of 2024 due to the addition of a fourth frac crew in the Delaware Basin. Activity from this incremental frac crew is expected to be completed around mid-year, resulting in lower capital spending in the second half of 2024.

PRICE REALIZATIONS GUIDANCE


	Quarter 1						Full Year
	Low			High			Low			High
Oil - % of WTI		95	%		99	%		95	%		100	%
NGL - % of WTI		20	%		30	%		20	%		30	%
Natural gas - % of Henry Hub		60	%		70	%		65	%		75	%

OTHER GUIDANCE ITEMS


	Quarter 1						Full Year
($ millions, except Boe and %)	Low			High			Low			High
Marketing & midstream operating profit	$	(20	)	$	(10	)	$	(50	)	$	(40	)
LOE & GP&T per BOE	$	9.40		$	9.70		$	9.20		$	9.40
Production & property taxes as % of upstream sales		7.4	%		8.0	%		7.4	%		8.0	%
Exploration expenses	$	5		$	15		$	15		$	25
Depreciation, depletion and amortization	$	680		$	720		$	2,850		$	2,950
General & administrative expenses	$	110		$	120		$	410		$	450
Net financing costs, net	$	75		$	85		$	310		$	330
Other expenses	$	—		$	5		$	10		$	30

INCOME TAX GUIDANCE


	Quarter 1						Full Year
(% of pre-tax earnings)	Low			High			Low			High
Current income tax rate		14	%		16	%		14	%		16	%
Deferred income tax rate		6	%		8	%		6	%		8	%

Total income tax rate		~22%						~22%


CONTINGENT PAYMENTS FOR BARNETT SHALE DIVESTITURE (through 2024)


WTI Threshold		WTI Annual Earnout Amount		Henry Hub Threshold		Henry Hub Annual Earnout Amount
$	50.00	$	10,000,000	$	2.75	$	20,000,000
$	55.00	$	12,500,000	$	3.00	$	25,000,000
$	60.00	$	15,000,000	$	3.25	$	35,000,000
$	65.00	$	20,000,000	$	3.50	$	45,000,000

2024 & 2025 HEDGING POSITIONS


Oil Commodity Hedges
	Price Swaps				Price Collars
Period	Volume (Bbls/d)		Weighted Average Price ($/Bbl)		Volume (Bbls/d)		Weighted Average Floor Price ($/Bbl)		Weighted Average Ceiling Price ($/Bbl)
Q1 2024		35,000	$	74.91		62,000	$	65.39	$	84.90
Q2 2024		25,000	$	79.04		63,000	$	65.51	$	84.95
Q3 2024		25,000	$	79.04		63,000	$	65.51	$	84.95
Q4 2024		25,000	$	79.04		53,000	$	66.55	$	84.72
Q1-Q4 2025		1,485	$	71.16		—	$	—	$	—

Oil Basis Swaps


Period	Index		Volume (Bbls/d)		Weighted Average Differential to WTI ($/Bbl)
Q1-Q2 2024		Midland Sweet		62,500	$	1.17
Q3-Q4 2024		Midland Sweet		69,500	$	1.17
Q1-Q4 2025		Midland Sweet		62,000	$	1.00


Natural Gas Commodity Hedges - Henry Hub
	Price Swaps				Price Collars
Period	Volume (MMBtu/d)		Weighted Average Price ($/MMBtu)		Volume (MMBtu/d)		Weighted Average Floor Price ($/MMBtu)		Weighted Average Ceiling Price ($/MMBtu)
Q1 2024		201,000	$	3.30		107,000	$	3.71	$	7.50
Q2 2024		211,000	$	3.29		56,000	$	3.91	$	6.19
Q3 2024		211,000	$	3.29		—	$	—	$	—
Q4 2024		157,000	$	3.29		—	$	—	$	—
Q1-Q4 2025		36,644	$	3.23		—	$	—	$	—

Natural Gas Basis Swaps


Period	Index	Volume (MMBtu/d)		Weighted Average Differential to Henry Hub ($/MMBtu)
Q1 - Q2 2024	El Paso Permian		60,000	$	(0.90	)
Q3 - Q4 2024	El Paso Permian		10,000	$	(1.00	)
Q1 - Q4 2024	Houston Ship Channel		110,000	$	(0.24	)
Q1 2024	WAHA		56,813	$	(0.65	)
Q2 2024	WAHA		70,000	$	(0.66	)
Q3 - Q4 2024	WAHA		60,000	$	(0.58	)
Q1 - Q4 2025	WAHA		10,000	$	(0.63	)


2024 & 2025 HEDGING POSITIONS (continued)

NGL Commodity Hedges


		Price Swaps
Period	Product	Volume (Bbls/d)		Weighted Average Price ($/Bbl)
Q1-Q4 2024	Natural Gasoline		3,000	$	69.11
Q1-Q4 2024	Normal Butane		3,350	$	37.58
Q1-Q4 2024	Propane		3,188	$	32.24

Devon’s oil derivatives settle against the average of the prompt month NYMEX West Texas Intermediate futures price. Devon’s natural gas derivatives settle against the Inside FERC end of the month NYMEX index. Devon’s NGL derivatives settle against the average of the prompt month OPIS Mont Belvieu, Texas index. Commodity hedge positions are shown as of February 22, 2024.