DEVON ENERGY CORP/DE

Devon Energy Corporation is an independent energy company engaged primarily in the exploration, development and production of oil, natural gas and NGLs, with operations concentrated in various onshore areas in the U.S. The company's business strategy is focused on delivering a consistently competitive shareholder return among its peer group, with a key tenet of delivering sustainable, capital efficient cash flow growth. Devon pursues its strategy throughout all commodity price cycles with five fundamental principles: operating excellence, an advantaged asset portfolio, maintaining financial strength and flexibility, delivering value to shareholders, and cultivating a culture of innovation and results.

Devon's competitive positioning is built on owning a portfolio of premier assets located in the Delaware Basin, Rockies, Eagle Ford and Anadarko Basin, which the company believes are capable of generating cash flows in excess of capital and operating requirements. The company strives to maintain a strong balance sheet, adequate liquidity, and financial flexibility to operate competitively in all commodity price cycles, while protecting its investment-grade credit ratings. Devon is committed to shareholder returns through a growing fixed dividend that is sustainable through commodity price cycles and by distributing cash flows in excess of operating and capital needs to shareholders.

Devon generates revenue primarily through the exploration, development and production of oil, natural gas and NGLs. The company's cash flow is highly dependent on volatile and uncertain commodity prices. Devon's business model is capital intensive, and the company focuses on delivering sustainable, capital efficient cash flow growth. The company's capital allocation decisions are made with attention to financial stewardship principles, funding core operations, protecting investment-grade credit ratings, and paying and growing the shareholder dividend, while also making opportunistic share repurchases.

Devon's largest and most active program is the Delaware Basin, which offers exploration and low-risk development opportunities from many geologic reservoirs and play types, including the Wolfcamp, Bone Spring, Avalon and Delaware formations. At December 31, 2025, Devon had 11 operated rigs developing this asset. The Rockies development consists of the Williston Basin and Powder River Basin assets, with the Williston Basin focused on the oil-prone Bakken and Three Forks formations. At December 31, 2025, Devon had three operated rigs developing the Williston Basin and one operated rig developing the Powder River Basin asset. The Eagle Ford operations are located in Texas' DeWitt and Karnes counties, with production leveraged to oil and low-cost access to premium Gulf Coast pricing. At December 31, 2025, Devon had two operated rigs developing this asset. The Anadarko Basin development in western Oklahoma is one of the largest in the industry, and as of December 31, 2025, Devon had a two rig program associated with a joint venture with Dow.

On April 1, 2025, Devon and BPX Energy dissolved their partnership and divided their acreage in the Eagle Ford Blackhawk field located in Texas' DeWitt County, resulting in increased operational flexibility for both parties. Devon spent approximately $100 million in 2025 on capital projects that will directly or indirectly result in emissions reduction, and anticipates spending a similar amount in 2026. The company has established environmental performance targets calculated from a 2019 baseline, including GHG and methane targets, and is targeting to use 90% or more non-freshwater for completions activities in its most active operating areas within the Delaware Basin.

For the fiscal year ended December 31, 2025, Devon's total revenues were $14.870 billion ¹, compared to $15.725 billion ² in 2024. Net earnings attributable to Devon were $2.106 billion ³ in 2025, compared to $3.364 billion ⁴ in 2024. Diluted net earnings per share were $3.22 ⁵ in 2025, versus $5.07 ⁶ in 2024. Cash flow from operating activities was $6.427 billion ⁷ in 2025, compared to $7.477 billion ⁸ in 2024.

Devon's management has not provided specific quantitative revenue, margin, or EPS guidance for the upcoming period in this filing.

Devon's growth strategy is centered on its advantaged asset portfolio, with the Delaware Basin as its top funded asset. The company has a significant inventory of oil and liquids-rich drilling opportunities with multi-zone development potential, providing a robust platform to deliver high-margin drilling programs for many years to come. Through the Grayson Mill acquisition, Devon significantly expanded its operating position within the Williston Basin, and the company expects further growth in the Powder River Basin as it continues to de-risk this emerging light-oil opportunity.

Devon is evaluating and selectively investing in low-emission opportunities that are complementary to its core business and deliver long-term shareholder value. The company spent approximately $100 million in 2025 on capital projects that will directly or indirectly result in emissions reduction, and anticipates spending a similar amount in 2026. Devon has established environmental performance targets reflecting its dedication to providing affordable energy while achieving meaningful emissions reductions and pursuing its longer-term aspiration of net zero GHG emissions for Scopes 1 and 2.

Devon's margin and cost outlook is focused on optimizing the efficiency of its capital programs and production operations, with an underlying objective of reducing absolute and per unit costs and enhancing returns. The company's production cost per Boe for total company was $8.98 ⁹ in 2025, compared to $8.76 ¹⁰ in 2024 and $8.87 ¹¹ in 2023. The company continues to work to optimize efficiency and reduce costs.

Devon's operational outlook includes a focus on water stewardship, continuing to advance its use of recycled water and targeting to use 90% or more non-freshwater for completions activities in its most active operating areas within the Delaware Basin. The company's emission reduction strategy involves a range of potential actions, including expanding its leak detection and repair program, deploying advanced leak detection technologies, reducing the volume of natural gas that is flared, electrifying facilities, and optimizing facility design to minimize leaks and eliminate common equipment failures.

Devon's capital allocation priorities include funding core operations, protecting its investment-grade credit ratings, and paying and growing its shareholder dividend. The company remains committed to maximizing shareholder value through opportunistic share repurchases and consistently paying and growing its fixed dividend. Devon adheres to distributing its cash flows in excess of operating and capital needs to shareholders.

Devon faces headwinds from the volatility of oil, gas and NGL prices, including from changes in trade relations and policies such as the imposition of new or increased tariffs or other trade protection measures by the U.S., China or other countries. The company also faces risks related to midstream capacity constraints and potential interruptions in production, including from limits to the build out of midstream infrastructure. Additionally, regulatory restrictions, compliance costs and other risks relating to governmental regulation, including with respect to federal lands, environmental matters, water disposal and tax matters, are identified as constraints.

Devon faces execution risks related to its ability to successfully complete mergers, acquisitions and divestitures, and risks related to the Merger, including restrictions on operations during the pendency of the Merger, litigation risk, the risk that the Merger Agreement may be terminated, and the risk that the company may not realize the anticipated benefits of the Merger or successfully integrate the two companies.

Devon's business is subject to the volatility of oil, gas and NGL prices, including from changes in trade relations and policies such as the imposition of new or increased tariffs or other trade protection measures by the U.S., China or other countries. The company faces risks related to midstream capacity constraints and potential interruptions in production, including from limits to the build out of midstream infrastructure. Regulatory restrictions, compliance costs and other risks relating to governmental regulation, including with respect to federal lands, environmental matters, water disposal and tax matters, are material. Approximately 15% ¹² of Devon's total net acres are located on federal lands, exposing the company to regulatory risks specific to those lands. The company also faces risks related to its hedging activities, counterparty credit risks, and risks relating to its indebtedness. Additionally, risks related to the Merger, including restrictions on operations during the pendency of the Merger, litigation risk, the risk that the Merger Agreement may be terminated, and the risk that the company may not realize the anticipated benefits of the Merger or successfully integrate the two companies, are significant.

Management's message emphasizes a business strategy focused on delivering a consistently competitive shareholder return among its peer group, with a key tenet of delivering sustainable, capital efficient cash flow growth. The company pursues its strategy throughout all commodity price cycles with five fundamental principles: operating excellence, an advantaged asset portfolio, maintaining financial strength and flexibility, delivering value to shareholders, and cultivating a culture of innovation and results. Management emphasizes a commitment to shareholder returns through a growing fixed dividend that is sustainable through commodity price cycles and distributing cash flows in excess of operating and capital needs to shareholders.