Newsroom - News Release 

Devon Energy Reports Second-Quarter 2009 Results; $314 Million Net Earnings Driven by Record Production

OKLAHOMA CITY, Aug. 5 /PRNewswire-FirstCall/ -- Devon Energy Corporation (NYSE: DVN) today reported net earnings of $314 million for the quarter ended June 30, 2009, or 71 cents per common share (70 cents per diluted common share). For the quarter ended June 30, 2008, Devon reported net earnings of $1.3 billion, or $2.91 per common share ($2.88 per diluted common share). Production of oil, natural gas and natural gas liquids increased 12 percent to a record 65.4 million oil-equivalent barrels (Boe) in the second quarter of 2009. Lower realized prices for all three products led to the decrease in quarterly net earnings.

For the six months ended June 30, 2009, Devon reported a net loss of $3.6 billion, or $8.21 per common share ($8.21 per diluted common share). A $4.2 billion non-cash, after-tax reduction in the carrying value of oil and gas properties in the first quarter of 2009 drove the first-half loss. For the six months ended June 30, 2008, the company reported net earnings of $2.1 billion, or $4.60 per common share ($4.55 per diluted common share).

Earnings 85 Cents per Share Excluding Items Not Estimated by Analysts

Devon's second-quarter 2009 financial results were impacted by certain items securities analysts typically exclude from their published estimates. Excluding the adjusting items, Devon earned $379 million or 85 cents per diluted common share in the second quarter of 2009. The adjusting items are discussed in more detail later in this news release.

Production Growth in All Geographic Areas

Combined oil, gas and natural gas liquids production averaged 719 thousand Boe per day in the second quarter of 2009. This is the highest average daily production of any quarter in Devon's history and compares with 643 thousand Boe per day in the second quarter of 2008. Average daily production in the second quarter increased five percent sequentially, compared with 685 thousand Boe per day produced in the first quarter of 2009.

The 12 percent increase in year-over-year second-quarter production was driven by growth in all major operating segments. U.S. onshore natural gas production led by the Barnett Shale field in Texas demonstrated significant growth. Continuing ramp up of daily volumes from the Jackfish oil sands project led oil production growth in Canada. Canadian natural gas production increased principally due to lower government royalties. Canadian royalties are calculated on a sliding scale. At lower product prices, Devon's share of Canadian gas production increases.

Despite the strong production growth, revenues from oil, gas and natural gas liquids sales decreased 58 percent to $1.7 billion in the second quarter of 2009. Dramatically lower prices for all three products more than offset the increases in production.

Devon's average realized price for natural gas decreased 70 percent in the second quarter of 2009 compared to the second quarter of 2008, to $2.91 per thousand cubic feet. The company's average realized oil price decreased 53 percent to $52.44 per barrel in the second quarter of 2009. Devon's average second-quarter realized natural gas liquids price decreased 59 percent to $22.24 per barrel in 2009.

Climbing Jackfish Production Leads Operations Highlights

Devon drilled 198 wells (197 successful) in the second quarter of 2009 compared to 494 wells (483 successful) drilled in the second quarter of 2008. The company has reduced drilling activity and related capital expenditures in response to declines in natural gas and oil prices. In spite of the lower activity levels, Devon achieved several notable operational accomplishments in the second quarter:

    --  Devon continued to ramp up production from its 100 percent-owned
        Jackfish oil sands project in Alberta in the second quarter of 2009.
        Oil production at Jackfish averaged 28,000 barrels per day in June.
        Production hit a peak rate of 33,000 barrels per day during June,
        nearing its design capacity of 35,000 barrels per day.
    --  Construction of Jackfish 2, a nearly identical second phase of the
        project, is now about 40 percent complete. Devon commenced drilling
        the first producing wells for Jackfish 2 in July 2009.
    --  Devon maintained a four-rig drilling program in the Cana-Woodford
        Shale play in western Oklahoma in the second quarter of 2009 and added
        13 new wells to production. The company increased its average net
        production from the Cana-Woodford to 34 million cubic feet of gas
        equivalent per day in the second quarter. This is a 10-fold increase
        compared with the second quarter of 2008. Devon is adding two
        additional drilling rigs in the third quarter.
    --  At Groesbeck in east Texas, Devon drilled another high-volume well in
        the Nan-Su-Gail field in the second quarter. The Hill-Crenshaw 3H (100
        percent working interest) had a 24-hour initial production test of 18
        million cubic feet of gas per day.

    --  Also in east Texas, Devon continued evaluating its Haynesville Shale
        acreage in the greater Carthage area. The company has substantially
        de-risked 74,000 of its 110,000 net acres within the Carthage area and
        has identified roughly 800 Haynesville drilling locations on this
        acreage. The company believes this 74,000 net acres has resource
        potential of more than three trillion cubic feet of natural gas
        equivalent. Devon is now drilling a well in San Augustine County as
        the company also evaluates its acreage in the southern region of the
        Haynesville Shale.


    Marketing and Midstream Profit Reflects Lower Prices

Marketing and midstream operating profit was $125 million in the second quarter of 2009. This was a 39 percent decrease compared with the second quarter of 2008. The decrease was largely attributable to lower natural gas and natural gas liquids prices.

Positive Cost Comparisons Continue

Continuing a trend evidenced in the first quarter of 2009, expenses in several important categories decreased in the second quarter. Compared with the second quarter of 2008, quarterly unit lease operating expenses (LOE) decreased by 15 percent to $7.80 per Boe in 2009. The decrease in unit LOE reflects declines in oil field service, supply, power and fuel costs and lower Canadian exchange rates.

Depreciation, depletion and amortization (DD&A) of oil and gas properties decreased 35 percent to $494 million in the second quarter of 2009. Unit DD&A decreased 42 percent to $7.56 per Boe compared with the second quarter of 2008.

General and administrative expenses (G&A) increased two percent to $182 million compared with the second quarter of 2008. The increase resulted from employee severance costs following the consolidation of Devon's Gulf and International operations. The consolidation is expected to achieve operating efficiencies and reduce G&A costs in future periods.

Retaining Liquidity and Financial Strength

Second-quarter 2009 cash flow before balance sheet changes totaled $1.1 billion, fully funding capital expenditures and dividend payments for the quarter. The company ended the quarter with cash on hand and unused credit facilities of $2.6 billion and a net debt to adjusted capitalization ratio of 33 percent. Reconciliations of cash flow before balance sheet changes, net debt and adjusted capitalization, which are non-GAAP measures, are provided in this release.

Items Excluded from Published Earnings Estimates

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. These items and their effects upon reported earnings for the second quarter of 2009 were as follows:

    Items affecting continuing operations-

    --  A change in the fair value of oil and natural gas derivative
        instruments decreased second-quarter earnings by $101 million pre-tax
        ($65 million after tax).
    --  A change in the fair value of other financial instruments increased
        second-quarter earnings by $5 million pre-tax ($4 million after tax).

    --  Employee severance costs associated with consolidation of the Gulf and
        International operations decreased second-quarter net earnings by $33
        million pre-tax ($21 million after tax).


    Items affecting discontinued operations-

    --  A post-closing adjustment from the divestiture of West African assets
        in 2008 resulted in a second-quarter gain of $17 million pre-tax ($17
        million after tax).

The following tables summarize the effects of these items on second-quarter earnings and income taxes.



    Summary of Items Typically Excluded by Securities Analysts (in millions)
    Quarter Ended June 30, 2009

    Continuing Operations
                                                                    Cash Flow
                                                                     Before
                                                                     Balance
                        Pre-tax    Income Tax Effect     After tax   Sheet
                       Earnings    -----------------      Earnings   Changes
                        Effect  Current  Deferred  Total   Effect    Effect
                        ------  -------  --------  -----   ------    ------
    Change in
     fair value of
     oil and gas
     derivative
     instruments        $(101)      -       (36)    (36)     (65)        -
    Change in
     fair value
     of other
     financial
     instruments            5       -         1       1        4         -
    Employee
     severance
     costs from
     consolidation
     of operations        (33)    (12)        -     (12)     (21)      (11)
                         ----    ----      ----    ----      ---       ---
          Totals        $(129)    (12)      (35)    (47)     (82)      (11)
          ------        -----    ----      ----    ----     ----      ----


    Discontinued Operations

                                                                    Cash Flow
                                                                     Before
                                                                     Balance
                        Pre-tax    Income Tax Effect     After tax   Sheet
                       Earnings    -----------------      Earnings   Changes
                        Effect  Current  Deferred  Total   Effect    Effect
                        ------  -------  --------  -----   ------    ------
    Post-closing
     adjustment on
     sale of
     West African
     assets               $17       -         -       -       17         -
                         ----    ----      ----    ----     ----      ----

In aggregate, these items decreased second-quarter 2009 net earnings by $65 million, or 14 cents per common share (15 cents per diluted share). These items and their associated tax effects decreased second-quarter 2009 cash flow before balance sheet changes by $11 million.

Conference Call to be Webcast Today

Devon will discuss its second-quarter 2009 financial and operating results in a conference call webcast today. The webcast will begin at 10 a.m. Central Time (11 a.m. Eastern Time). The webcast may be accessed from Devon's internet home page at www.devonenergy.com.

This press release includes "forward-looking statements" as defined by the Securities and Exchange Commission. Such statements are those concerning strategic plans, expectations and objectives for future operations. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the company expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company. Statements regarding future drilling and production are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to the volatility of oil, natural gas and NGL prices; uncertainties inherent in estimating oil, natural gas and NGL reserves; drilling risks; environmental risks; and political or regulatory changes. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this press release are made as of the date of this press release, even if subsequently made available by Devon on its website or otherwise. Devon does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.

The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. This release may contain certain terms, such as resource potential, reserve potential, probable reserves, possible reserves and exploration target size. The SEC guidelines strictly prohibit us from including these terms in filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K, File No. 001-32318, available from us at Devon Energy Corporation, Attn. Investor Relations, 20 North Broadway, Oklahoma City, OK 73102. You can also obtain this form from the SEC by calling 1-800-SEC-0330.


    Devon Energy Corporation is an Oklahoma City-based independent energy
company engaged in oil and gas exploration and production. Devon is the
largest U.S.-based independent oil and gas producer and is included in the S&P
500 Index. For more information about Devon, please visit our website at
www.devonenergy.com.




     PRODUCTION (net of
      royalties)                   Quarter Ended         Six Months Ended
     Excludes discontinued            June 30,              June 30,
      operations                    ------------          ------------
                                   2009      2008        2009      2008
                                   ----      ----        ----      ----
     Total Period Production
     -----------------------
     Natural Gas (Bcf)
        U.S. Onshore              183.2     162.3       364.2     314.8
        U.S. Offshore              10.5      14.2        21.3      32.5
                                   ----      ----        ----      ----
        Total U.S.                193.7     176.5       385.5     347.3
        Canada                     60.1      53.0       112.8     104.7
        International               0.3       0.4         0.6       1.0
        -------------               ---       ---         ---       ---
        Total Natural Gas         254.1     229.9       498.9     453.0
        -----------------         -----     -----       -----     -----
     Oil (MMBbls)
        U.S. Onshore                2.9       2.8         5.9       5.7
        U.S. Offshore               1.2       1.8         2.3       3.6
                                    ---       ---         ---       ---
        Total U.S.                  4.1       4.6         8.2       9.3
        Canada                      6.6       5.3        12.9       9.9
        International               4.7       3.3         7.9       8.1
        -------------               ---       ---         ---       ---
        Total Oil                  15.4      13.2        29.0      27.3
        -------------              ----      ----        ----      ----
     Natural Gas Liquids (MMBbls)
        U.S. Onshore                6.4       5.8        12.6      11.6
        U.S. Offshore               0.2       0.2         0.4       0.4
                                    ---       ---         ---       ---
        Total U.S.                  6.6       6.0        13.0      12.0
        Canada                      1.0       1.0         2.0       1.9
        International                 -         -           -         -
        -------------               ---       ---         ---       ---
        Total Natural Gas
         Liquids                    7.6       7.0        15.0      13.9
        -----------------           ---       ---        ----      ----
     Oil Equivalent (MMBoe)
        U.S. Onshore               39.9      35.7        79.2      69.7
        U.S. Offshore               3.1       4.4         6.2       9.4
                                    ---       ---         ---       ---
        Total U.S.                 43.0      40.1        85.4      79.1
        Canada                     17.6      15.1        33.7      29.4
        International               4.8       3.3         8.0       8.3
        -------------               ---       ---         ---       ---
        Total Oil
         Equivalent                65.4      58.5       127.1     116.8
         -------------             ----      ----       -----     -----
     Average Daily Production
     ------------------------
     Natural Gas (MMcf)
        U.S. Onshore            2,013.1   1,783.0     2,012.4   1,729.7
        U.S. Offshore             115.5     156.1       117.4     178.7
                                  -----     -----       -----     -----
        Total U.S.              2,128.6   1,939.1     2,129.8   1,908.4
        Canada                    660.2     582.6       623.0     575.0
        International               3.2       4.8         3.3       5.4
        -------------               ---       ---         ---       ---
        Total Natural Gas       2,792.0   2,526.5     2,756.1   2,488.8
        -----------------       -------   -------     -------   -------
     Oil (MBbls)
        U.S. Onshore               32.0      30.9        32.5      31.0
        U.S. Offshore              13.0      19.9        12.5      19.9
                                   ----      ----        ----      ----
        Total U.S.                 45.0      50.8        45.0      50.9
        Canada                     72.1      58.0        71.3      54.7
        International              52.3      35.8        43.4      44.6
        -------------              ----      ----        ----      ----
        Total Oil                 169.4     144.6       159.7     150.2
        ---------                 -----     -----       -----     -----
     Natural Gas Liquids
      (MBbls)
        U.S. Onshore               70.8      64.1        69.7      63.7
        U.S. Offshore               2.0       2.1         2.2       2.0
                                    ---       ---         ---       ---
        Total U.S.                 72.8      66.2        71.9      65.7
        Canada                     11.1      10.7        10.8      10.8
        International                 -         -           -         -
        -------------               ---       ---         ---       ---
        Total Natural Gas
         Liquids                   83.9      76.9        82.7      76.5
        -----------------          ----      ----        ----      ----
     Oil Equivalent (MBoe)
        U.S. Onshore              438.2     392.2       437.6     382.9
        U.S. Offshore              34.2      48.0        34.3      51.7
                                   ----      ----        ----      ----
        Total U.S.                472.4     440.2       471.9     434.6
        Canada                    193.3     165.8       185.9     161.3
        International              52.8      36.6        43.9      45.6
        -------------              ----      ----        ----      ----
        Total Oil Equivalent      718.5     642.6       701.7     641.5
        -----------------         -----     -----       -----     -----




     BENCHMARK PRICES                 Quarter Ended   Six Months Ended
      (average prices)                   June 30,          June 30,
                                      -------------     -------------
                                      2009     2008     2009     2008
                                      ----     ----     ----     ----
     Natural Gas ($/Mcf) -
      Henry Hub                       $3.51   $10.94    $4.21    $9.49
     Oil ($/Bbl) - West Texas
      Intermediate
      (Cushing)                      $59.83  $124.28   $51.51  $110.98
     -------------------------------- -----  -------   ------  -------

     REALIZED PRICES
     (excludes the effects of
      unrealized gains and
      losses from hedging)

     Quarter Ended June 30, 2009      Oil      Gas     NGLs     Total
                                     (Per     (Per     (Per     (Per
                                      Bbl)     Mcf)     Bbl)     Boe)
                                     ------   ------   ------   ------
     U.S. Onshore                    $54.66    $2.75   $20.81   $19.98
     U.S. Offshore                   $56.44    $3.76   $23.69   $35.49
     Total U.S.                      $55.18    $2.81   $20.89   $21.10
     Canada                          $48.14    $3.25   $30.99   $30.85
     International                   $56.03    $4.24       $-   $55.71
     -------------                   ------    -----      ---   ------
     Realized price without hedges   $52.44    $2.91   $22.24   $26.27
     Cash settlements                    $-    $0.45       $-    $1.75
     ----------------                   ---    -----      ---    -----
     Realized price, including cash
      settlements                    $52.44    $3.36   $22.24   $28.02
     ------------------------------  ------    -----   ------   ------


     Quarter Ended June 30, 2008      Oil      Gas     NGLs     Total
                                     (Per     (Per     (Per     (Per
                                      Bbl)     Mcf)     Bbl)     Boe)
                                    -------  -------  -------  -------
     U.S. Onshore                   $120.69    $9.40   $50.56   $60.51
     U.S. Offshore                  $125.24   $11.43   $53.63   $91.38
     Total U.S.                     $122.47    $9.56   $50.66   $63.88
     Canada                          $94.35    $9.76   $75.10   $72.14
     International                  $119.87   $11.00       $-  $118.70
     ------------------             -------   ------      ---  -------
     Realized price without hedges  $110.56    $9.61   $54.08   $69.14
     Cash settlements                $(0.01)  $(1.32)      $-   $(5.18)
     ----------------               -------  -------      ---  -------
     Realized price, including cash
      settlements                   $110.55    $8.29   $54.08   $63.96
     ------------------------------ -------    -----   ------   ------

     Six Months Ended June 30, 2009   Oil      Gas       NGLs    Total
                                     (Per     (Per      (Per    (Per
                                      Bbl)     Mcf)      Bbl)    Boe)
                                     ------   ------    ------  ------
     U.S. Onshore                    $44.67    $3.09    $19.16  $20.57
     U.S. Offshore                   $49.69    $4.46    $21.96  $34.85
     Total U.S.                      $46.07    $3.16    $19.24  $21.61
     Canada                          $38.19    $3.82    $28.52  $29.11
     International                   $50.10    $3.85        $-  $49.76
     ------------------------------- ------    -----        --  ------
     Realized price without hedges   $43.65    $3.31    $20.45  $25.36
     Cash settlements                    $-    $0.47        $-   $1.83
     ----------------                   ---    -----       ---   -----
     Realized price, including cash
      settlements                    $43.65    $3.78    $20.45  $27.19
     ------------------------------  ------    -----    ------  ------

     Six Months Ended June 30, 2008   Oil      Gas      NGLs     Total
                                     (Per     (Per     (Per     (Per
                                      Bbl)     Mcf)     Bbl)     Boe)
                                     -----     -----   ------   ------
     U.S. Onshore                   $107.15    $8.26   $47.65   $53.91
     U.S. Offshore                  $112.07    $9.94   $51.77   $79.52
     Total U.S.                     $109.08    $8.42   $47.78   $56.95
     Canada                          $84.16    $8.66   $68.86   $64.01
     International                  $105.63    $9.56       $-  $104.68
     ---------------                -------    -----      ---  -------
     Realized price without hedges   $98.98    $8.48   $50.76   $62.12
     Cash settlements                    $-   $(0.69)      $-   $(2.67)
     ----------------                   ---   ------      ---   ------
     Realized price, including cash
      settlements                    $98.98    $7.79   $50.76   $59.45
     ------------------------------  ------    -----   ------   ------


     CONSOLIDATED STATEMENTS OF
      OPERATIONS
      (in millions, except per          Quarter Ended  Six Months Ended
       share amounts)                      June 30,        June 30,
                                         -----------     ------------
                                         2009   2008     2009    2008
                                         ----   ----     ----    ----
     Revenues
     --------
       Oil sales                         $808  $1,455   $1,262  $2,705
       Gas sales                          740   2,210    1,653   3,840
       NGL sales                          170     379      306     707
       Net gain (loss) on oil and gas
        derivative financial
        instruments                        13  (1,215)     167  (2,003)
       Marketing and midstream
        revenues                          359     719      730   1,274
       -----------------------            ---     ---      ---   -----
            Total revenues              2,090   3,548    4,118   6,523
       -----------------------          -----   -----    -----   -----
     Expenses and other income, net
     ------------------------------
       Lease operating expenses           510     537    1,034   1,043
       Production taxes                    47     176       89     310
       Marketing and midstream
        operating costs and expenses      234     515      463     897
       Depreciation, depletion and
        amortization of oil and gas
        properties                        494     762    1,093   1,499
       Depreciation and amortization
        of non-oil and gas properties      74      62      144     119
       Accretion of asset retirement
        obligation                         24      22       48      44
       General and administrative
        expenses                          182     180      348     328
       Interest expense                    90      90      173     192
       Change in fair value of other
        financial instruments             (10)    (40)     (15)    (24)
       Reduction of carrying value of
        oil and gas properties              -       -    6,516       -
       Other expense (income), net         20     (17)      27     (38)
       ---------------------------        ---     ---      ---     ---
            Total expenses and other
             income, net                1,665   2,287    9,920   4,370
       -----------------------------    -----   -----    -----   -----
     Earnings (loss) from continuing
      operations before income taxes      425   1,261   (5,802)  2,153
     -------------------------------      ---   -----  -------   -----
     Income tax expense (benefit)
     ---------------------------
       Current                             51     414       53     517
       Deferred                            77     253   (2,194)    391
       --------                            --     ---  -------     ---
            Total income tax expense
             (benefit)                    128     667   (2,141)    908
       -----------------------------      ---     ---  -------     ---
     Earnings (loss) from continuing
      operations                          297     594   (3,661)  1,245
     -------------------------------      ---     ---  -------   -----
     Discontinued operations
     -----------------------
       Earnings from discontinued
        operations before income taxes     17     851       16   1,040
       Income tax expense                   -     144        -     235
       ------------------                 ---     ---      ---     ---
            Earnings from discontinuing
             operations                    17     707       16     805
       --------------------------------   ---     ---      ---     ---
     Net earnings (loss)                  314   1,301   (3,645)  2,050
     Preferred stock dividends              -       3        -       5
     -------------------------            ---     ---      ---     ---
     Net earnings (loss) applicable
      to common stockholders             $314  $1,298  $(3,645) $2,045
     ------------------------------      ----  ------  -------  ------

     Basic net earnings (loss) per
      share
       Earnings (loss) from continuing
        operations                      $0.67   $1.33   $(8.25)  $2.80
       Earnings from discontinued
        operations                      $0.04   $1.58    $0.04   $1.80
       --------------------------       -----   -----    -----   -----
       Net earnings (loss)              $0.71   $2.91   $(8.21)  $4.60
       ------------------               -----   -----  -------   -----

     Diluted net earnings (loss) per
      share
       Earnings (loss) from continuing
        operations                      $0.66   $1.31   $(8.25)  $2.76
       Earnings from discontinued
        operations                      $0.04   $1.57    $0.04   $1.79
       --------------------------       -----   -----    -----   -----
       Net earnings (loss)              $0.70   $2.88   $(8.21)  $4.55
       ------------------               -----   -----  -------   -----

     CONSOLIDATED BALANCE SHEETS
      (in millions)                                 June 30,  December 31,
                                                       2009       2008
                                                       ----       ----
     Assets                                                     (Audited)
     ------                                                     ---------
     Current assets
     --------------
       Cash and cash equivalents                        $648        $379
       Accounts receivable                             1,318       1,412
       Income taxes receivable                            27         334
       Derivative financial instruments, at fair
        value                                            226         282
       Other current assets                              358         277
       -----------------------                           ---         ---
          Total current assets                         2,577       2,684
       -----------------------                         -----       -----
     Property and equipment, at cost, based on
      the full cost method of accounting for oil
      and gas properties ($4,298 and $4,551
      excluded from amortization in 2009 and 2008,
      respectively)                                   59,086      55,664
       Less accumulated depreciation, depletion
        and amortization                              40,999      32,683
       ----------------------------------------       ------      ------
       Property and equipment, net                    18,087      22,981
       ---------------------------                    ------      ------
     Goodwill                                          5,710       5,579
     Other long-term assets, including $180
      million and $199 million at fair value
      in 2009 and 2008, respectively                     683         664
      ------------------------------                     ---         ---
     Total Assets                                    $27,057     $31,908
     ------------                                    -------     -------
     Liabilities and Stockholders' Equity
     ------------------------------------
     Current liabilities
     -------------------
       Accounts payable - trade                       $1,074      $1,825
       Revenues and royalties due to others              377         496
       Short-term debt                                 1,508         180
       Current portion of asset retirement
        obligation, at fair value                        175         138
       Accrued expenses and other current
        liabilities                                      358         496
       ----------------------------------                ---         ---
          Total current liabilities                    3,492       3,135
       ----------------------------------              -----       -----
     Long-term debt                                    5,849       5,661
     Asset retirement obligation, at fair value        1,411       1,347
     Other long-term liabilities                       1,036       1,026
     Deferred income taxes                             1,587       3,679
     ---------------------                             -----       -----
     Stockholders' equity
     --------------------
       Common stock                                       44          44
       Additional paid-in capital                      6,363       6,257
       Retained earnings                               6,589      10,376
       Accumulated other comprehensive income            686         383
       --------------------------------------            ---         ---
     Total Stockholders' Equity                       13,682      17,060
     --------------------------                       ------      ------
     Total Liabilities and Stockholders' Equity      $27,057     $31,908
     ------------------------------------------      -------     -------
     Common Shares Outstanding                           444         444
     -------------------------                           ---         ---

     CONSOLIDATED STATEMENTS OF CASH FLOWS
      (in millions)                                  Six Months Ended June 30,
                                                     -------------------------
                                                          2009      2008
     Cash Flows From Operating Activities                 ----      ----
     ------------------------------------
       Net (loss) earnings                              $(3,645)   $2,050
       Earnings from discontinued
        operations, net of tax                              (16)     (805)
       Adjustments to reconcile (loss)
        earnings from continuing
        operations to net cash provided by
        operating activities:
            Depreciation, depletion and
             amortization                                 1,237     1,618
            Deferred income tax (benefit)
             expense                                     (2,194)      391
            Reduction of carrying value of oil
             and gas properties                           6,516         -
            Net unrealized loss on oil and gas
             derivative financial instruments                65     1,692
            Other noncash charges                           134       122
            Net increase in working capital                 (89)     (132)
            Decrease (increase) in long-term
             other assets                                    43       (37)
            Increase in long-term other
             liabilities                                     19       181
       --------------------------------                     ---       ---
       Cash provided by operating
        activities - continuing operations                2,070     5,080
       Cash provided by operating
        activities - discontinued
        operations                                            7       106
       --------------------------                           ---       ---
     Net cash provided by operating
      activities                                         $2,077    $5,186
     ------------------------------                      ------    ------

     Cash Flows From Investing Activities
     ------------------------------------
       Proceeds from sales of property and
        equipment                                             2       108
       Capital expenditures                              (3,201)   (3,870)
       Purchases of short-term investments                    -       (50)
       Sales of long-term and short-term
        investments                                           4       295
       -----------------------------------                  ---       ---
       Cash used in investing activities -
        continuing operations                            (3,195)   (3,517)
       Cash provided by investing
        activities - discontinued
        operations                                            2     1,712
       --------------------------                           ---     -----
     Net cash used in investing activities              $(3,193)  $(1,805)
     -------------------------------------              -------   -------

     Cash Flows From Financing Activities
     ------------------------------------
       Proceeds from borrowing of
        long-term debt, net of issuance
        costs                                             1,187         -
       Credit facility repayments                             -    (3,070)
       Credit facility borrowings                             -     1,620
       Net commercial paper borrowings
        (repayments)                                        325    (1,004)
       Debt repayments                                       (1)      (47)
       Redemption of preferred stock                          -      (150)
       Proceeds from stock option
        exercises                                             9       104
       Repurchases of common stock                            -      (252)
       Dividends paid on common and
        preferred stock                                    (142)     (146)
       Excess tax benefits related to
        share-based compensation                              5        55
     ------------------------------                         ---       ---
     Net cash provided by (used in)
      financing activities                               $1,383   $(2,890)
     -------------------------------                     ------   -------

     Effect of exchange rate changes on cash                  5       (19)
     -------------------------------                        ---       ---
     Net increase in cash and cash
      equivalents                                           272       472
     Cash and cash equivalents at beginning
      of period (including assets held for sale)            384     1,373
     -------------------------------                        ---     -----
     Cash and cash equivalents at end of
      period (including assets held for
      sale)                                                $656    $1,845
     ===================================                   ====    ======


     DRILLING ACTIVITY                    Quarter Ended     Six Months Ended
                                             June 30,            June 30,
                                             --------            --------
                                          2009       2008     2009     2008
                                          ----       ----     ----     ----
     Exploration Wells Drilled
     -------------------------
         U.S.                                2          8        9       17
         Canada                              7          7       29       58
         International                       -          1        1        7
         -------------                     ---        ---      ---      ---
         Total                               9         16       39       82
         -----                             ---        ---      ---      ---
     Exploration Wells Success Rate
     ------------------------------
         U.S.                               50%        88%      78%      71%
         Canada                            100%        86%     100%      95%
         International                       -          0%       0%       0%
         -------------                     ---        ---      ---      ---
         Total                              89%        81%      92%      82%
         -----                             ---        ---      ---      ---
     Development Wells Drilled
     -------------------------
         U.S.                              160        405      454      777
         Canada                             22         61      143      259
         International                       7         12       13       22
         -------------                     ---        ---      ---      ---
         Total                             189        478      610    1,058
         -----                             ---        ---      ---    -----
     Development Wells Success Rate
     ------------------------------
         U.S.                              100%        98%      99%      98%
         Canada                            100%       100%      99%     100%
         International                     100%        92%     100%      91%
         -------------                     ---        ---      ---      ---
         Total                             100%        98%      99%      98%
         -----                             ---        ---      ---      ---
     Total Wells Drilled
     -------------------
         U.S.                              162        413      463      794
         Canada                             29         68      172      317
         International                       7         13       14       29
         -------------                     ---        ---      ---      ---
         Total                             198        494      649    1,140
         -----                             ---        ---      ---    -----
     Total Wells Success Rate
     ------------------------
         U.S.                               99%        98%      99%      98%
         Canada                            100%        99%      99%      99%
         International                     100%        85%      93%      69%
         -------------                     ---        ---      ---      ---
         Total                              99%        98%      99%      97%
         -----                             ---        ---      ---      ---

                                                                  June 30,
                                                               -------------
                                                               2009     2008
                                                               ----     ----
     Number of Company Operated Rigs Running
     ---------------------------------------
       U.S.                                                      23       79
       Canada                                                     1       12
       International                                              -        1
       -------------                                            ---      ---
       Total                                                     24       92
       -----                                                    ---      ---

     CAPITAL EXPENDITURES (in millions)
     Quarter Ended June 30,
      2009
                               U.S.     U.S.
                             Onshore  Offshore  Canada International   Total
                            --------- --------- ------ -------------   -----
     Capital Expenditures
     --------------------
       Exploration                $25     31        19       53         $128
       Development                409    119       149       43          720
       -----------                ---    ---       ---       --          ---
       Exploration and
        development capital      $434    150       168       96         $848
       Capitalized G&A                                                   104
       Capitalized interest                                               21
       Discontinued
        operations                                                         -
       Midstream capital                                                  62
       Other capital                                                      24
       -------------                                                      --
     Total Capital
      Expenditures                                                    $1,059
     -------------                                                    ------



     CAPITAL EXPENDITURES (in millions)
      Six Months Ended June 30,
       2009
                               U.S.     U.S.
                             Onshore  Offshore  Canada International   Total
                            --------- --------- ------ -------------   -----
     Capital Expenditures
     --------------------
       Exploration                $50    114        69      109         $342
       Development              1,130    238       379       60        1,807
       -----------              -----    ---       ---       --        -----
       Exploration and
        development capital    $1,180    352       448      169       $2,149
       Capitalized G&A                                                   208
       Capitalized interest                                               46
       Discontinued
        operations                                                         4
       Midstream capital                                                 150
       Other capital                                                      44
       -------------                                                      --
     Total Capital
      Expenditures                                                    $2,601
     -------------                                                    ------



    NON-GAAP FINANCIAL MEASURES

    The United States Securities and Exchange Commission has adopted
    disclosure requirements for public companies such as Devon concerning Non-
    GAAP financial measures. (GAAP refers to generally accepted accounting
    principles.) The company must reconcile the Non-GAAP financial measure to
    related GAAP information. Cash flow before balance sheet changes is a Non-
    GAAP financial measure. Devon believes cash flow before balance sheet
    changes is relevant because it is a measure of cash available to fund the
    company's capital expenditures, dividends and to service its debt. Cash
    flow before balance sheet changes is also used by certain securities
    analysts as a measure of Devon's financial results.


     RECONCILIATION TO GAAP INFORMATION
      (in millions)                          Quarter Ended   Six Months Ended
                                                June 30,          June 30,
                                            ----------------    ------------
                                            2009        2008    2009    2008
                                            ----        ----    ----    ----
     Net Cash Provided By Operating
      Activities (GAAP)                     $1,030     $2,931  $2,077  $5,186
     ------------------------------         ------     ------  ------  ------
       Changes in assets and liabilities -
        continuing operations                   81       (365)     27       2
       Changes in assets and liabilities -
        discontinued operations                 (2)       124      (7)     61
       -----------------------------------     ---        ---     ---     ---
     Cash flow before balance sheet changes
      (Non-GAAP)                            $1,109     $2,690  $2,097  $5,249
     -------------------------------------- ------     ------  ------  ------


    Devon believes that using net debt for the calculation of "net debt to
    adjusted capitalization" provides a better measure than using debt. Devon
    defines net debt as debt less cash and cash equivalents. Devon believes
    that because cash can be used to repay indebtedness, netting cash and cash
    equivalents against debt provides a clearer picture of the future demands
    on cash to repay debt.



     RECONCILIATION TO GAAP INFORMATION
      (in millions)                                           June 30,
                                                         ------------------
                                                         2009          2008
                                                         ----          ----
     Total debt (GAAP)                                  $7,357        $5,450
     Adjustments:
       Cash and cash equivalents                           648         1,838
       --------------------------                          ---         -----
       Net Debt (Non-GAAP)                              $6,709        $3,612
       --------------------------                       ------        ------

     Total debt                                         $7,357        $5,450
     Stockholders' equity                               13,682        23,433
       --------------------------                       ------        ------
       Total Capitalization (GAAP)                     $21,039       $28,883
       --------------------------                      -------       -------

     Net debt                                           $6,709        $3,612
     Stockholders' equity                               13,682        23,433
       --------------------------                       ------        ------
       Adjusted Capitalization (Non-GAAP)              $20,391       $27,045
       --------------------------                      -------       -------


SOURCE  Devon Energy Corporation


    /CONTACT:  Media, Chip Minty, +1-405-228-8647, or Investors, Zack Hager,
+1-405-552-4526, both of Devon Energy Corporation/
    /Company News On-Call:  http://www.prnewswire.com/comp/118040.html/
    /Web Site:  http://www.devonenergy.com /

Feature Story 

 
 
 

Devon is an industry leader in unconventional oil and gas production.

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Media Contacts 

 
 
 

U.S.:

Chip Minty
Manager, Media Relations
405.228.8647
chip.minty@dvn.com 

 

Canada:

Nadine Barber
Manager, Public Affairs and Corporate Communications
403-232-7695
nadine.barber@dvn.com