Newsroom - News Release 

Devon Energy Earns $499 Million on Increased Third-Quarter Oil and Gas Production and Lower Costs

OKLAHOMA CITY, Nov. 4 /PRNewswire-FirstCall/ -- Devon Energy Corporation (NYSE: DVN) today reported net earnings of $499 million for the quarter ended September 30, 2009, or $1.13 per common share ($1.12 per diluted common share). For the quarter ended September 30, 2008, Devon reported net earnings of $2.6 billion, or $5.93 per common share ($5.88 per diluted common share).

Production of oil, natural gas and natural gas liquids increased six percent to 61.9 million oil-equivalent barrels (Boe) in the third quarter of 2009. Costs in nearly every expense category were lower in the third quarter of 2009 compared with the same period in the previous year. Strong production growth and lower overall costs were more than offset by significantly lower product prices.

For the nine months ended September 30, 2009, Devon reported a net loss of $3.1 billion, or $7.09 per common share ($7.09 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 year-to-date loss. For the nine months ended September 30, 2008, the company reported net earnings of $4.7 billion, or $10.50 per common share ($10.40 per diluted common share).

"Year to date, Devon increased oil and gas production eight percent compared with 2008," commented President John Richels. "The performance of the company's oil and gas properties has continued to exceed our expectations throughout 2009."

Minimal Impact from Items Not Estimated by Analysts

Devon's third-quarter 2009 financial results were increased slightly by the net effects of items securities analysts typically exclude from their published estimates. Excluding the adjusting items, Devon earned $491 million or $1.10 per diluted common share in the third quarter of 2009. The adjusting items are discussed in more detail later in this news release.

Companywide Production Increased

Combined oil, gas and natural gas liquids production averaged 673 thousand Boe per day in the third quarter of 2009. This is the highest third-quarter production in Devon's history and a six percent increase compared with the third quarter of 2008.

Each of Devon's operating segments contributed to the production growth. Growth in oil and natural gas liquids production in the United States was greater than the decline in natural gas volumes. The continuing ramp up of volumes at the Jackfish oil sands project led Canadian oil production growth. Canadian natural gas production also increased, principally due to lower government royalties. Canadian royalties are calculated on a sliding scale. Therefore, at lower product prices, a producer's share of Canadian gas production increases.

Sequentially, average daily oil and gas production in the third quarter decreased six percent when compared with 719 thousand Boe per day produced in the second quarter of 2009. The decrease is attributable to voluntary reductions, planned maintenance downtime and natural declines.

Revenues from oil, gas and natural gas liquids sales decreased 54 percent to $1.7 billion in the third quarter of 2009 compared with the third quarter of 2008. Significantly lower product prices more than offset the growth in natural gas and liquids production.

Other income, net of expenses, increased 17 percent to $96 million in the third quarter of 2009. This amount includes an $84 million accrual reversal resulting from a favorable federal court ruling pertaining to royalties in the deepwater Gulf of Mexico. For the third quarter of 2008, other income included $57 million of hurricane damage-related insurance recoveries.

Haynesville Shale Success Leads Operational Highlights

Devon drilled 233 wells in the third quarter of 2009 compared with 636 wells drilled in the third quarter of 2008. In both periods, approximately 97 percent of the wells were successful. In spite of significantly reduced drilling activity in 2009, Devon achieved several notable operational accomplishments in the third quarter:

    --  In the third quarter of 2009 Devon commenced completion operations on
        its first Haynesville Shale well to be drilled in San Augustine County,
        Texas. The Kardell Gas Unit 1H flowed at an average continuous 24-hour
        rate of 30.7 million cubic feet of natural gas equivalent per day. Devon
        operates the well with a 48 percent working interest.
    --  The company is currently drilling another well on its east Texas
        Haynesville Shale acreage. This well is located in Shelby County,
        northwest of the Kardell well.
    --  Also in the third quarter, Devon added two operated drilling rigs at its
        Cana Woodford Shale play in western Oklahoma. The company commenced
        production from eight additional Cana wells in the quarter, bringing its
        net production in the play to 53 million cubic feet of gas equivalent
        per day.
    --  Following scheduled facilities maintenance in the third quarter, Devon
        has resumed ramping up production from its 100 percent-owned Jackfish
        oil sands project in Alberta. Currently, Jackfish is producing
        approximately 31,000 barrels of oil per day and is expected to reach its
        facilities-design capacity of 35,000 barrels per day by year end.
    --  Construction of the second phase of the Jackfish project, Jackfish 2,
        passed the 50 percent completion milestone in the third quarter. Devon
        expects Jackfish 2, which is also sized to produce 35,000 barrels per
        day, to commence steam injection in 2011.
    --  Devon completed evaluation of a third phase of the Jackfish project in
        the third quarter. The company plans to file a regulatory application
        for Jackfish 3 in 2010. In aggregate, the three phases of Jackfish are
        expected to produce more than 100,000 barrels of oil per day from
        approximately 900 million barrels of recoverable resource.

    --  In the Gulf of Mexico, Devon has encountered an encouraging oil column
        in an appraisal well on the Lower Tertiary Kaskida prospect. The company
        is now evaluating options including a possible side-track of the well.
        Devon has a 30 percent working interest in Kaskida.

Costs Decline in Most Expense Categories

Devon continued to report favorable cost comparisons in the third quarter of 2009 versus the year-ago quarter. The company reduced lease operating expenses (LOE) 15 percent, to $505 million. Unit LOE decreased by an even greater 19 percent to $8.16 per Boe, reflecting both lower absolute costs and increased production volumes.

Compared with the third quarter of 2008, depreciation, depletion and amortization (DD&A) of oil and gas properties decreased 39 percent to $480 million. Unit DD&A decreased by 42 percent to $7.75 per Boe in the third quarter of 2009.

The company also reduced general and administrative expenses (G&A) in the most recent quarter. G&A decreased by seven percent to $137 million.

Interest expense increased by 30 percent to $90 million compared with the third quarter of 2008. The increase results from a larger debt balance.

Income Taxes Reduced by Adjustments

Third-quarter 2009 income tax expense was reduced by $121 million attributable to four separate adjustments. These tax adjustments are presented in the table below listing the effects of items typically excluded by securities analysts in published estimates.

Maintaining Financial Strength

Cash flow before balance sheet changes reached $1.2 billion in the third quarter of 2009. This cash flow fully funded total capital investments and generated $168 million of free cash flow in the quarter. Devon exited the third quarter with more than $900 million of cash on hand and $1.9 billion of unused credit facilities.

At September 30, 2009, net debt to adjusted capitalization was 31 percent. Reconciliations of cash flow before balance sheet changes, free cash flow, net debt and adjusted capitalization, which are non-GAAP measures, are provided in this news 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 third quarter of 2009 were as follows:

Items affecting continuing operations-

    --  A change in the fair value of oil and natural gas derivative instruments
        decreased third-quarter earnings by $104 million pre-tax ($67 million
        after tax).
    --  A change in the fair value of other financial instruments decreased
        third-quarter earnings by $9 million pre-tax ($6 million after tax).
    --  Income tax accrual adjustments increased third-quarter earnings by $59
        million.

    --  Income tax benefits related to unsuccessful international drilling
        increased third-quarter earnings by $22 million.

The following table summarizes the effects of these items on third-quarter earnings and income taxes.



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

    Continuing Operations
                                                                     Cash Flow
                                                                     Before
                                                          After      Balance
                  Pre-tax        Income Tax Effect        tax        Sheet
                  Earnings   --------------------------   Earnings   Changes
                  Effect     Current  Deferred    Total   Effect     Effect
                  ------     -------  --------    -----   ------     ------

    Change
     in fair
     value of
     oil and gas
     derivative
     instruments   $(104)        -      (37)      (37)      (67)         -
    Change in
     fair value
     of other
     financial
     instruments      (9)        -       (3)       (3)       (6)         -
    Income tax
     accrual
     adjustment        -        (9)     (50)      (59)       59          9
    Income tax
     benefits on
     international
     drilling          -       (22)       -       (22)       22         22
                   -----       ---      ---      ----       ---        ---
      Totals       $(113)      (31)     (90)     (121)        8         31
                   -----       ---      ---      ----       ---        ---

In aggregate, these items increased third-quarter 2009 net earnings by $8 million, or two cents per common share (two cents per diluted share). These items and their associated tax effects increased third-quarter 2009 cash flow before balance sheet changes by $31 million.

Conference Call to be Webcast Today

Devon will discuss its third-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.



                           DEVON ENERGY CORPORATION
                   UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION


    PRODUCTION (net of royalties)   Quarter Ended     Nine Months Ended
                                     September 30,       September 30,
                                     -------------       -------------
                                    2009      2008      2009     2008
                                    ----      ----      ----     ----
    Total Period Production
    -----------------------
    Natural Gas (Bcf)
       U.S. Onshore                171.7     172.1     535.9    486.9
       U.S. Offshore                12.2      12.5      33.5     45.0
                                    ----      ----      ----     ----
       Total U.S.                  183.9     184.6     569.4    531.9
       Canada                       58.5      53.8     171.3    158.5
       International                 0.4       0.5       1.0      1.5
       -------------                 ---       ---       ---      ---
       Total Natural Gas           242.8     238.9     741.7    691.9
       -----------------           -----     -----     -----    -----
    Oil (MMBbls)
       U.S. Onshore                  2.8       2.6       8.6      8.3
       U.S. Offshore                 1.5       1.3       3.8      4.9
                                     ---       ---       ---      ---
       Total U.S.                    4.3       3.9      12.4     13.2
       Canada                        5.8       5.5      18.7     15.4
       International                 3.7       2.7      11.6     10.8
       -------------                 ---       ---      ----     ----
       Total Oil                    13.8      12.1      42.7     39.4
       ---------                    ----      ----      ----     ----
    Natural Gas Liquids (MMBbls)
       U.S. Onshore                  6.6       5.5      19.2     17.1
       U.S. Offshore                 0.1       0.1       0.5      0.5
                                     ---       ---       ---      ---
       Total U.S.                    6.7       5.6      19.7     17.6
       Canada                        0.9       1.0       2.8      3.0
       International                   -         -         -        -
       -------------                 ---       ---       ---      ---
       Total Natural Gas Liquids     7.6       6.6      22.5     20.6
       -------------------------     ---       ---      ----     ----
    Oil Equivalent (MMBoe)
       U.S. Onshore                 37.9      36.8     117.1    106.5
       U.S. Offshore                 3.7       3.5       9.9     12.9
                                     ---       ---       ---     ----
       Total U.S.                   41.6      40.3     127.0    119.4
       Canada                       16.5      15.5      50.1     44.8
       International                 3.8       2.8      11.8     11.1
       -------------                 ---       ---      ----     ----
       Total Oil Equivalent         61.9      58.6     188.9    175.3
       --------------------         ----      ----     -----    -----
    Average Daily Production
    ------------------------
    Natural Gas (MMcf)
       U.S. Onshore              1,865.9   1,871.0   1,963.0  1,777.1
       U.S. Offshore               133.1     135.9     122.7    164.3
                                   -----     -----     -----    -----
       Total U.S.                1,999.0   2,006.9   2,085.7  1,941.4
       Canada                      635.8     584.9     627.4    578.4
       International                 4.2       5.6       3.6      5.4
       -------------                 ---       ---       ---      ---
       Total Natural Gas         2,639.0   2,597.4   2,716.7  2,525.2
       -----------------         -------   -------   -------  -------
    Oil (MBbls)
       U.S. Onshore                 30.3      28.8      31.8     30.2
       U.S. Offshore                16.4      13.8      13.8     17.9
                                    ----      ----      ----     ----
       Total U.S.                   46.7      42.6      45.6     48.1
       Canada                       62.8      59.3      68.4     56.3
       International                40.9      29.7      42.6     39.6
       -------------                ----      ----      ----     ----
       Total Oil                   150.4     131.6     156.6    144.0
       ---------                   -----     -----     -----    -----
    Natural Gas Liquids (MBbls)
       U.S. Onshore                 71.0      59.7      70.2     62.4
       U.S. Offshore                 1.4       1.1       1.9      1.7
                                     ---       ---       ---      ---
       Total U.S.                   72.4      60.8      72.1     64.1
       Canada                        9.9      11.2      10.5     10.9
       International                   -         -         -        -
       -------------                 ---       ---       ---      ---
       Total Natural Gas Liquids    82.3      72.0      82.6     75.0
       -------------------------    ----      ----      ----     ----
    Oil Equivalent (MBoe)
       U.S. Onshore                412.3     400.4     429.1    388.8
       U.S. Offshore                40.0      37.6      36.2     46.9
                                    ----      ----      ----     ----
       Total U.S.                  452.3     438.0     465.3    435.7
       Canada                      178.7     168.0     183.5    163.6
       International                41.6      30.6      43.2     40.5
       -------------                ----      ----      ----     ----
       Total Oil Equivalent        672.6     636.6     692.0    639.8
       --------------------        -----     -----     -----    -----


    BENCHMARK PRICES                       Quarter Ended     Nine Months Ended
    (average prices)                        September 30,      September 30,
                                            -------------      -------------
                                           2009       2008    2009      2008
                                           ----       ----    ----      ----
    Natural Gas ($/Mcf) - Henry Hub        $3.39     $10.25   $3.93     $9.74
    Oil ($/Bbl) - West Texas
     Intermediate (Cushing)               $68.25    $118.52  $57.09   $113.49
     ---------------------------          ------    -------  ------   -------

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

    Quarter Ended
    September 30, 2009                Oil      Gas       NGLs     Total
                                   (Per Bbl) (Per Mcf) (Per Bbl) (Per Boe)
                                   --------- --------- --------- ---------
    U.S. Onshore                      $64.48     $2.77    $24.49    $21.48
    U.S. Offshore                     $65.99     $3.49    $28.34    $39.67
    Total U.S.                        $65.01     $2.82    $24.56    $23.09
    Canada                            $55.10     $2.91    $33.81    $31.62
    International                     $65.94     $5.90       $ -    $65.42
    -------------                     ------     -----       ---    ------
    Realized price without
     hedges                           $61.12     $2.84    $25.67    $27.97
    Cash settlements                     $ -     $0.53       $ -     $2.05
    ----------------                     ---     -----       ---     -----
    Realized price, including
     cash settlements                 $61.12     $3.37    $25.67    $30.02
    --------------------------        ------     -----    ------    ------


    Quarter Ended
    September 30, 2008                Oil      Gas       NGLs      Total
                                   (Per Bbl) (Per Mcf)  (Per Bbl) (Per Boe)
                                   --------  --------   --------  --------
    U.S. Onshore                     $116.26     $8.48    $51.24    $55.65
    U.S. Offshore                    $123.78    $11.05    $65.35    $87.42
    Total U.S.                       $118.70     $8.66    $51.50    $58.38
    Canada                            $92.98     $9.36    $72.19    $70.24
    International                    $117.97    $10.72       $ -   $116.34
    -------------                    -------    ------       ---   -------
    Realized price without
     hedges                          $106.95     $8.82    $54.72    $64.29
    Cash settlements                  $(0.01)   $(1.01)      $ -   $(4.10)
    ----------------                 ------    ------        ---    ------
    Realized price, including
     cash settlements                $106.94     $7.81    $54.72    $60.19
    -------------------------        -------     -----    ------    ------


    Nine Months Ended
    September 30, 2009                 Oil       Gas       NGLs     Total
                                    (Per Bbl) (Per Mcf)  (Per Bbl) (Per Boe)
                                    --------   -------   --------  --------
    U.S. Onshore                     $51.04     $2.99      $20.98    $20.86
    U.S. Offshore                    $56.19     $4.11      $23.51    $36.64
    Total U.S.                       $52.60     $3.05      $21.04    $22.09
    Canada                           $43.42     $3.51      $30.20    $29.94
    International                    $55.23     $4.65          $-    $54.85
    -----------------------          ------     -----         ---    ------
    Realized price without hedges    $49.30     $3.16      $22.21    $26.21
    Cash settlements                     $-     $0.48          $-     $1.90
    ----------------                    ---     -----         ---     -----
    Realized price, including
     cash settlements                $49.30     $3.64      $22.21    $28.11
     ----------------                ------     -----      ------    ------


    Nine Months Ended
     September 30, 2008                Oil       Gas      NGLs      Total
                                    (Per Bbl) (Per Mcf) (Per Bbl) (Per Boe)
                                     -------- --------   -------  ---------
    U.S. Onshore                      $110.07    $8.34    $48.81    $54.51
    U.S. Offshore                     $115.12   $10.25    $54.80    $81.65
    Total U.S.                        $111.94    $8.50    $48.96    $57.43
    Canada                            $87.28     $8.90    $70.00    $66.16
    International                     $108.73    $9.95        $-   $107.63
    -----------------------           -------    -----       ---   -------
    Realized price without hedges     $101.42    $8.60    $52.03    $62.84
    Cash settlements                       $-   $(0.80)       $-    $(3.15)
    ----------------                      ---   ------       ---    ------
    Realized price, including
     cash settlements                 $101.42    $7.80    $52.03    $59.69
     ------------------               -------    -----    ------    ------


    CONSOLIDATED STATEMENTS OF OPERATIONS
    (in millions, except per share amounts)

                                         Quarter Ended       Nine Months Ended
                                          September 30,         September 30,
                                          2009     2008        2009     2008


    Revenues
    --------
      Oil sales                           $845   $1,296      $2,107   $4,001
      Gas sales                            691    2,107       2,344    5,947
      NGL sales                            195      362         501    1,069
      Net gain (loss) on oil and gas
       derivative financial instruments     23    1,592         190     (411)
      Marketing and midstream
       revenues                            344      621       1,074    1,895
      ---------                            ---      ---       -----    -----
            Total revenues               2,098    5,978       6,216   12,501
            --------------               -----    -----       -----   ------
    Expenses and other income, net
    ------------------------------
      Lease operating expenses             505      591       1,539    1,634
      Production taxes                      61      152         150      462
      Marketing and midstream
       operating costs and expenses        244      452         707    1,349
      Depreciation, depletion
       and amortization of
       oil and gas properties              480      781       1,573    2,280
      Depreciation and
       amortization of non-oil
       and gas properties                   65       67         209      186
      Accretion of asset
       retirement obligations               25       22          73       66
      General and administrative
       expenses                            137      146         485      474
      Interest expense                      90       69         263      261
      Change in fair value
       of other financial instruments       (5)      46         (20)      22
      Reduction of carrying
       value of oil and gas
       properties                            -        -       6,516        -
      Other income, net                    (96)     (83)        (69)    (121)
      -----------------                    ---      ---         ---     ----
            Total expenses and
             other income, net           1,506    2,243      11,426    6,613
       -----------------------           -----    -----      ------    -----
    Earnings (loss) from
     continuing operations
     before income taxes                   592    3,735      (5,210)   5,888
    --------------------                   ---    -----      ------    -----
    Income tax expense (benefit)
    ---------------------------
      Current                              102      226         155      743
      Deferred                              (9)   1,000      (2,203)   1,391
       --------                            ---    -----     -------    -----
            Total income tax
             expense (benefit)              93    1,226      (2,048)   2,134
             -----------------             ---    -----      -------   -----
    Earnings (loss) from
     continuing operations                 499    2,509      (3,162)   3,754
    ----------------------                 ---    -----      ------    -----
    Discontinued operations
    -----------------------
      Earnings from discontinued
       operations before income taxes        -       93          16    1,133
      Discontinued operations
       income tax expense (benefit)          -      (16)          -      219
      -----------------------------        ---      ---         ---      ---
            Earnings from discontinued
             operations                      -      109          16      914
            --------------------------     ---      ---         ---      ---
    Net earnings (loss)                    499    2,618      (3,146)   4,668
    Preferred stock dividends                -        -           -        5
    -------------------------              ---      ---         ---      ---
    Net earnings (loss)
     applicable to common
     stockholders                         $499   $2,618     $(3,146)  $4,663
    -------------                         ----   ------     -------   ------

    Basic net earnings (loss)
     per share
      Basic earnings (loss) from
       continuing
       operations per share              $1.13    $5.68      $(7.12)   $8.45
      Basic earnings from
       discontinued operations
       per share                            $-    $0.25       $0.03    $2.05
       ---------                           ---    -----       -----    -----
      Basic net earnings
       (loss) per share                  $1.13    $5.93      $(7.09)  $10.50
       ----------------                  -----    -----      ------   ------

    Diluted net earnings (loss)
     per share
      Diluted earnings (loss)
       from continuing
       operations per share              $1.12    $5.64      $(7.12)   $8.37
      Diluted earnings
       from discontinued
       operations per share                 $-    $0.24       $0.03    $2.03
       --------------------                ---    -----       -----    -----
      Diluted net earnings
       (loss) per share                  $1.12    $5.88      $(7.09)  $10.40
       ------------------                -----    -----      ------   ------


    CONSOLIDATED BALANCE SHEETS
     (in millions)                                  September 30, December 31,
                                                         2009        2008
                                                         ----        ----
    Assets                                            (Unaudited)
    ------                                            ----------
    Current assets
    --------------
      Cash and cash equivalents                           $905       $379
      Accounts receivable                                1,142      1,412
      Income taxes receivable                               47        334
      Derivative financial instruments, at fair value      131        282
      Other current assets                                 384        277
      --------------------                                 ---        ---
        Total current assets                             2,609      2,684
        --------------------                             -----      -----
    Property and equipment, at cost, based on the
     full cost method of accounting for oil and gas
     properties ($4,443 million and $4,551
     million excluded from amortization in 2009
     and 2008, respectively)                            61,375     55,664
      Less accumulated depreciation,
       depletion and amortization                       42,503     32,683
       --------------------------                       ------     ------
      Property and equipment, net                       18,872     22,981
      ---------------------------                       ------      -----
    Goodwill                                             5,929      5,579
    Other long-term assets, including $167 million and
     $199 million at fair value
     in 2009 and 2008, respectively                        731        664
     ------------------------------                        ---        ---
    Total Assets                                       $28,141    $31,908
    ------------                                       -------    -------
    Liabilities and Stockholders' Equity
    ------------------------------------
    Current liabilities
    -------------------
      Accounts payable - trade                          $1,113     $1,825
      Revenues and royalties due to others                 368        496
      Short-term debt                                    1,545        180
      Current portion of asset retirement obligations,
       at fair value                                       108        138
      Other current liabilities, including $7 million
       at fair value in 2009                               309        496
       -------------                                       ---        ---
        Total current liabilities                        3,443      3,135
        -------------------------                        -----      -----
    Long-term debt                                       5,848      5,661
    Asset retirement obligations, at fair value          1,511      1,347
    Other long-term liabilities                            977      1,026
    Deferred income taxes                                1,709      3,679
    ---------------------                                -----      -----
    Stockholders' equity
    --------------------
      Common stock                                          44         44
      Additional paid-in capital                         6,410      6,257
      Retained earnings                                  7,017     10,376
      Accumulated other comprehensive income             1,182        383
      --------------------------------------             -----        ---
    Total Stockholders' Equity                          14,653     17,060
    --------------------------                          ------     ------
    Total Liabilities and Stockholders' Equity         $28,141    $31,908
    ------------------------------------------         -------    -------
    Common Shares Outstanding                              444        444
                                                           ---        ---


    CONSOLIDATED STATEMENTS OF CASH FLOWS
     (in millions)                             Nine Months Ended September 30,
                                               -------------------------------
                                                       2009        2008
                                                       ----        ----
    Cash Flows From
     Operating Activities
     --------------------
      Net (loss) earnings                             $(3,146)     $4,668
      Net loss (earnings) from discontinued
       operations                                         (16)       (914)
      Adjustments to reconcile earnings (loss) from
       continuing operations to net cash provided by
       operating activities:
         Depreciation, depletion and amortization       1,782       2,466
         Deferred income tax (benefit) expense         (2,203)      1,391
         Reduction of carrying
          value of oil and gas properties               6,516           -
         Net unrealized loss (gain) on oil and gas
          derivative financial instruments                169        (140)
         Other noncash charges                            199         217
         Net (increase) decrease in working capital        (1)        339
         Decrease (increase) in
          long-term other assets                           20         (61)
         (Decrease) increase in
          long-term other liabilities                     (33)         94
          ---------------------------                     ---         ---
      Cash provided by operating
       activities - continuing operations               3,287       8,060
      Cash provided by operating
       activities - discontinued operations                 5         121
       ------------------------------------               ---         ---
    Net cash provided by operating activities          $3,292      $8,181
    -----------------------------------------          ------     -------
    Cash Flows From Investing Activities
    ------------------------------------
      Proceeds from sales of property and equipment        23         116
      Capital expenditures                             (4,184)     (6,184)
      Purchases of short-term investments                   -         (50)
      Sales of long-term and short-term investments         6         297
      ---------------------------------------------       ---         ---
      Cash used in investing
       activities - continuing operations              (4,155)     (5,821)
      Cash provided by investing
       activities - discontinued operations                 1       1,859
       ------------------------------------               ---       -----
    Net cash used in investing activities             $(4,154)    $(3,962)
    -------------------------------------             -------     -------
    Cash Flows From Financing Activities
    ------------------------------------
      Proceeds from borrowing of
       long-term debt, net of issuance costs            1,187           -
      Credit facility repayments                            -      (3,191)
      Credit facility borrowings                            -       1,741
      Net commercial paper borrowings (repayments)        363      (1,004)
      Debt repayments                                      (1)     (1,031)
      Redemption of preferred stock                         -        (150)
      Proceeds from stock option exercises                 19         109
      Repurchases of common stock                           -        (665)
      Dividends paid on common and preferred stock       (213)       (216)
      Excess tax benefits related to
       share-based compensation                             6          58
       ------------------------                           ---         ---
    Net cash provided by (used in)
     financing activities                              $1,361     $(4,349)
     --------------------                              ------     -------
    Effect of exchange rate changes on cash                29         (47)
    ---------------------------------------               ---         ---
    Net increase (decrease) in
     cash and cash equivalents                            528        (177)
    Cash and cash equivalents at beginning of period
     (including cash related to assets held for sale)     384       1,373
     --------------------------------                     ---       -----
    Cash and cash equivalents at end
     of period (including cash related
     to assets held for sale)                            $912      $1,196
     ------------------------                            ----      ------


     DRILLING ACTIVITY                  Quarter Ended   Nine Months Ended
                                        September 30,     September 30,
                                        -------------     -------------
                                        2009     2008     2009     2008
                                        ----     ----     ----     ----
     Exploration Wells Drilled
     -------------------------
         U.S.                              2        4      11       21
         Canada                            -       18      29       76
         International                     6        -       7        7
         -------------                   ---      ---     ---      ---
         Total                             8       22      47      104
         -----                           ---      ---     ---      ---
     Exploration Wells Success Rate
     ------------------------------
         U.S.                             50%      75%     73%      71%
         Canada                            -       94%    100%      95%
         International                    33%       -      29%       0%
         -------------                   ---       --     ---      ---
         Total                            38%      91%     83%      84%
         -----                           ---      ---     ---      ---
     Development Wells Drilled
     -------------------------
         U.S.                            135      430     589    1,207
         Canada                           87      171     230      430
         International                     3       13      16       35
         -------------                   ---      ---     ---      ---
         Total                           225      614     835    1,672
         -----                           ---      ---     ---    -----
     Development Wells Success Rate
     ------------------------------
         U.S.                             98%      98%     99%      98%
         Canada                          100%      98%     99%      99%
         International                   100%      92%    100%      91%
         -------------                   ---      ---     ---      ---
         Total                            99%      98%     99%      98%
         -----                           ---      ---     ---      ---
     Total Wells Drilled
     -------------------
         U.S.                            137      434     600    1,228
         Canada                           87      189     259      506
         International                     9       13      23       42
         -------------                   ---      ---     ---      ---
         Total                           233      636     882    1,776
         -----                           ---      ---     ---    -----
     Total Wells Success Rate
     ------------------------
         U.S.                             97%      97%     98%      98%
         Canada                          100%      98%     99%      99%
         International                    56%      92%     78%      76%
         -------------                   ---      ---     ---      ---
         Total                            97%      97%     98%      97%
         -----                           ---      ---     ---      ---


                                                   September 30,
                                                   -------------
                                                   2009    2008
                                                   ----    ----
     Number of Company Operated Rigs Running
     ---------------------------------------
       U.S.                                         22      92
       Canada                                        8      12
       International                                 -       2
       -------------                               ---     ---
       Total                                        30     106
       -----                                       ---     ---


    CAPITAL EXPENDITURES (in millions)
    Quarter Ended September 30, 2009

                              U.S.     U.S.
                            Onshore  Offshore  Canada  International  Total
                            -------  --------  ------  -------------  -----
    Capital Expenditures
    --------------------
      Exploration             $24        39       7          42       $112
      Development             308       163     218          31        720
      -----------             ---       ---     ---         ---        ---
      Exploration and
       development capital   $332       202     225          73       $832
      Capitalized G&A                                                   94
      Capitalized interest                                              21
      Discontinued operations                                            1
      Midstream capital                                                 56
      Other capital                                                     32
       -------------                                                   ---
    Total Capital
     Expenditures                                                   $1,036
    -------------                                                   ------


    CAPITAL EXPENDITURES (in millions)
    Nine Months Ended September 30, 2009

                             U.S.     U.S.
                            Onshore  Offshore  Canada  International  Total
                            -------  --------  ------  -------------  -----
    Capital Expenditures
    --------------------
      Exploration             $74       153       76         151      $454
      Development           1,438       401      597          91     2,527
      -----------           -----       ---      ---         ---     -----
      Exploration and
       development capital $1,512       554      673         242    $2,981
      Capitalized G&A                                                  302
      Capitalized interest                                              67
      Discontinued operations                                            5
      Midstream capital                                                206
      Other capital                                                     76
      -------------                                                    ---
    Total Capital
      Expenditures                                                  $3,637
      ------------                                                  ------

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 and free cash flow are Non-GAAP financial measures. 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. Devon believes free cash flow is relevant because it is a measure of cash available to pay dividends, service debt or buyback stock. Cash flow before balance sheet changes and free cash flow are used by certain securities analysts as a measure of Devon's financial results.


    RECONCILIATION TO GAAP
     INFORMATION                   Quarter Ended   Nine Months Ended
    (in millions)                  September 30,     September 30,
                                   -------------     -------------
                                 2009         2008    2009     2008
                                 ----         ----    ----     ----
    Net Cash Provided By
     Operating Activities
     (GAAP)                     $1,215       $2,995  $3,292   $8,181
      -----                     ------       ------  ------   ------
      Changes in assets and
       liabilities -
       continuing operations       (13)        (393)     14     (391)
      Changes in assets and
       liabilities -
       discontinued operations       2           27      (5)      88
       -----------------------     ---          ---     ---      ---
    Cash flow before balance
     sheet changes
     (Non-GAAP)                 $1,204       $2,629  $3,301   $7,878
     ----------                 ------       ------  ------   ------
    Less:
      Capital expenditures       1,036        2,364   3,637    6,351
       --------------------      -----        -----   -----    -----
     Free cash flow (Non-GAAP)    $168         $265   $(336)  $1,527
     ------------------------     ----         ----   -----   ------

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)                                    September 30,
                                                      -------------
                                                     2009       2008
                                                     ----       ----
    Total debt (GAAP)                              $7,393     $4,837
    Adjustments:
      Cash and cash equivalents                       905      1,194
      -------------------------                       ---      -----
      Net Debt (Non-GAAP)                          $6,488     $3,643
      ------------------                           ------     ------

    Total debt                                     $7,393     $4,837
    Stockholders' equity                           14,653     25,290
    --------------------                           ------     ------
      Total Capitalization (GAAP)                 $22,046    $30,127
      --------------------------                  -------    -------

    Net debt                                       $6,488     $3,643
    Stockholders' equity                           14,653     25,290
    --------------------                           ------     ------
      Adjusted Capitalization (Non-GAAP)          $21,141    $28,933
      ---------------------------------           -------    -------

SOURCE Devon Energy Corporation

Investors
Zack Hager, +1-405-552-4526
or
Media
Chip Minty, +1-405-228-8647
both of Devon Energy Corporation

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