Net Earnings (Loss) Attributable to Devon

The following tables present a summary of Devon’s unaudited interim results of operations as recast under the successful efforts method of accounting. See Note 2 for additional details. As a result of the conversion to the successful efforts method of accounting in the fourth quarter of 2017, Devon has provided the full consolidated comprehensive statements of earnings for each interim quarter in 2017 to aid investors and facilitate comparative periods to be shown during 2018. Devon has provided the required summary information for each interim quarter in 2016.

	2017, under Successful Efforts
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full Year
Upstream revenues	$	1,541		$	1,332		$	1,101		$	1,333		$	5,307
Marketing and midstream revenues		2,010			1,927			2,055			2,650			8,642
Total revenues		3,551			3,259			3,156			3,983			13,949
Production expenses		457			455			448			463			1,823
Exploration expenses		95			57			57			171			380
Marketing and midstream expenses		1,814			1,714			1,824			2,378			7,730
Depreciation, depletion and amortization		528			506			512			528			2,074
Asset impairments		7			—			2			8			17
Asset dispositions		(3	)		(27	)		(169	)		(18	)		(217	)
General and administrative expenses		233			214			203			222			872
Financing costs, net		128			116			128			126			498
Other expenses		(33	)		(20	)		(76	)		5			(124	)
Total expenses		3,226			3,015			2,929			3,883			13,053
Earnings before income taxes		325			244			227			100			896
Income tax expense (benefit)		8			(1	)		15			(204	)		(182	)
Net earnings		317			245			212			304			1,078
Net earnings attributable to noncontrolling interests		14			26			19			121			180
Net earnings attributable to Devon	$	303		$	219		$	193		$	183		$	898
Net earnings per share attributable to Devon:
Basic	$	0.58		$	0.41		$	0.37		$	0.35		$	1.71
Diluted	$	0.58		$	0.41		$	0.37		$	0.35		$	1.70
Comprehensive earnings:
Net earnings	$	317		$	245		$	212		$	304		$	1,078
Other comprehensive earnings, net of tax:
Foreign currency translation and other		8			28			42			5			83
Pension and postretirement plans		5			4			5			15			29
Other comprehensive earnings, net of tax		13			32			47			20			112
Comprehensive earnings		330			277			259			324			1,190
Comprehensive earnings attributable to noncontrolling interests		14			26			19			121			180
Comprehensive earnings attributable to Devon	$	316		$	251		$	240		$	203		$	1,010

	2016, under Successful Efforts
	First Quarter			Second Quarter			Third Quarter		Fourth Quarter		Full Year
Total revenues	$	2,126		$	2,488		$	2,882	$	2,808	$	10,304
Earnings (loss) before income taxes	$	(2,036	)	$	(339	)	$	787	$	271	$	(1,317	)
Net earnings (loss) attributable to Devon	$	(1,550	)	$	(326	)	$	613	$	207	$	(1,056	)
Basic net earnings (loss) per share attributable to Devon	$	(3.27	)	$	(0.63	)	$	1.17	$	0.41	$	(2.09	)
Diluted net earnings (loss) per share attributable to Devon	$	(3.27	)	$	(0.63	)	$	1.16	$	0.41	$	(2.09	)

The following table presents a summary of Devon’s quarterly cash flow information as recast under the successful efforts method of accounting. See Note 2 for additional details. Devon has provided this information for each interim quarter in 2017 to aid investors and facilitate comparative periods to be shown during 2018.


	2017
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full Year
Net earnings	$	317		$	245		$	212		$	304		$	1,078
Net cash from operating activities		746			738			700			725			2,909
Net cash from investing activities		(454	)		(587	)		(457	)		(712	)		(2,210	)
Net cash from financing activities		(124	)		91			157			(115	)		9
Effect of exchange rate changes on cash		(8	)		8			12			(6	)		6
Net change in cash and cash equivalents		160			250			412			(108	)		714
Cash and cash equivalents at beginning of period		1,959			2,119			2,369			2,781			1,959
Cash and cash equivalents at end of period	$	2,119		$	2,369		$	2,781		$	2,673		$	2,673

As Devon recast the financial statements due to a change in accounting principle during the fourth quarter of 2017, the effects of the accounting change on the fourth quarter consolidated comprehensive statement of earnings and consolidated statement of cash flow are included below. See Note 2 for additional details.

	Changes to the Consolidated Comprehensive
	Statement of Earnings
							As Reported Under
For the Quarter Ended December 31, 2017	Under Full Cost			Changes			Successful Efforts
Exploration expenses	$	—		$	171		$	171
Depreciation, depletion and amortization		417			111			528
Asset dispositions		1			(19	)		(18	)
General and administrative expenses		174			48			222
Financing costs, net		124			2			126
Other expenses		15			(10	)		5
Earnings before income taxes		403			(303	)		100
Income tax benefit		(191	)		(13	)		(204	)
Net earnings		594			(290	)		304
Net earnings attributable to Devon		473			(290	)		183
Net earnings per share attributable to Devon:
Basic		0.90			(0.55	)		0.35
Diluted		0.89			(0.54	)		0.35
Comprehensive earnings:
Net earnings		594			(290	)		304
Foreign currency translation and other		6			(1	)		5
Comprehensive earnings		615			(291	)		324
Comprehensive earnings attributable to Devon		494			(291	)		203

	Changes to the Consolidated
	Statement of Cash Flows
							As Reported Under
For the Quarter Ended December 31, 2017	Under Full Cost			Changes			Successful Efforts
Net earnings	$	594		$	(290	)	$	304
Depreciation, depletion and amortization		417			111			528
Exploratory dry hole expense and unproved leasehold impairments		—			139			139
Gains and losses on asset sales		1			(19	)		(18	)
Deferred income tax benefit		(232	)		(13	)		(245	)
Share-based compensation		36			11			47
Other		26			(10	)		16
Net cash from operating activities		796			(71	)		725
Capital expenditures		(871	)		72			(799	)
Divestitures of property and equipment		102			(1	)		101
Net cash from investing activities		(783	)		71			(712	)