Newsroom - News Release 

Devon Energy Reports 2009 Financial Results, Record Production and Record Proved Reserves

OKLAHOMA CITY, Feb 17, 2010 /PRNewswire via COMTEX/ -- Devon Energy Corporation (NYSE: DVN) today reported 2009 full-year and fourth-quarter financial results. The company also reported that its 2009 full-year oil and gas production from continuing operations reached an all-time high. In addition, Devon reported record-high proved oil and natural gas reserves at December 31, 2009. Production and changes to proved reserves are discussed in more detail later in this report.

For the year ended December 31, 2009, Devon reported a net loss of $2.5 billion, or $5.58 per common share ($5.58 per diluted common share). Devon's 2009 financial results were impacted by certain items securities analysts typically exclude from their published estimates. The most significant of these items was a $4.2 billion after-tax reduction of the carrying value of oil and gas properties recorded in the first quarter of 2009. This was the result of a non-cash, full-cost ceiling adjustment. The charge resulted from application of the ceiling test as prescribed by the Securities and Exchange Commission for companies that follow the full-cost method of accounting.

Excluding the reduction of carrying value of oil and gas properties and other adjusting items, Devon earned $1.8 billion or $4.03 per diluted common share in 2009. The adjusting items are discussed in more detail later in this news release.

For the year ended December 31, 2008, Devon reported a net loss of $2.1 billion, or $4.85 per common share ($4.85 per diluted common share). The company's 2008 financial results included a $7.1 billion non-cash, after-tax reduction in the carrying value of oil and gas properties.

Devon reported net earnings of $667 million, or $1.50 per common share ($1.49 per diluted common share), for the quarter ended December 31, 2009. Excluding adjusting items, the company earned $713 million, or $1.60 per diluted common share in the fourth quarter of 2009.

For the quarter ended December 31, 2008, Devon reported a net loss of $6.8 billion or, $15.42 per common share ($15.42 per diluted common share).

North American Onshore Proved Reserves at Record 2.6 Billion Boe;

Drill-Bit Reserve Additions More than Double Record Production

"2009 was a pivotal year for Devon as we began repositioning the company to focus entirely on our high-return, North American onshore natural gas and oil portfolio," commented J. Larry Nichols, chairman and chief executive officer. "We grew North American onshore production by more than six percent in 2009 and replaced more than twice our production with the drill bit at very attractive costs. We expect to receive after-tax proceeds of $4.5 billion to $7.5 billion as we divest our offshore and international properties this year. This will further strengthen our rock-solid balance sheet and enable us to accelerate growth across our U.S. and Canadian asset base."

In accordance with accounting standards, Devon's year-end reserve reporting pertains to the company's continuing operations, which include its Gulf of Mexico properties. Following is a discussion of proved reserves pertaining only to Devon's North American onshore assets.

Devon increased North American onshore estimated proved reserves by 20 percent to a record 2,641 million oil-equivalent barrels (Boe) at December 31, 2009. The company added 669 million Boe to its North American onshore proved reserves from all sources. Costs incurred applicable to North American onshore properties were $3.3 billion.

Successful drilling (extensions, discoveries and performance revisions) accounted for 492 million Boe of North American onshore proved reserve additions. The company invested $3.2 billion of associated drill-bit capital during the year. Revisions related to changes in oil, natural gas and natural gas liquids prices increased 2009 North American onshore proved reserves by 176 million Boe.

North American onshore oil and gas production increased more than six percent to 220 million Boe in 2009. The reserve life index (proved reserves divided by annual production) for the North American onshore properties is approximately 12 years.

Proved developed reserves of 1,869 million Boe at December 31, 2009, represented 71 percent of total North American onshore proved reserves. Proved undeveloped reserves were 29 percent of the total. Year-end North American onshore proved reserves included 653 million barrels of crude oil, 9.4 trillion cubic feet of natural gas and 419 million barrels of natural gas liquids.




    Costs Incurred and Reserves Summary (1)
                                                     Year Ended December 31,
                                                     -----------------------
                                                     North American Onshore
                                                     ----------------------
                                                       2009            2008
                                                       ----            ----
    Costs Incurred (in millions)                     $3,279          $8,092
    Total Reserves Additions (MMBoe)                    669             139

    (1) Detailed tables are also provided in this release.



    Drill-bit Capital and Reserves Summary (1)
                                                     Year Ended December 31,
                                                     -----------------------
                                                     North American Onshore
                                                     ----------------------
                                                       2009            2008
                                                       ----            ----
    Drill-bit Capital (in millions)                  $3,244          $7,270
    -------------------------------                  ------          ------

    Reserves Data (MMBoe)
    ---------------------
      Extensions and discoveries                        446             536
      Revisions other than price                         46              21
      --------------------------                        ---             ---
      Drill-bit and performance reserve additions       492             557
      -------------------------------------------       ---             ---
    (1) Detailed tables and non-GAAP reconciliations are also provided in
     this release.


Divestitures Make Way for North American Onshore Growth

The company plans to direct the proceeds of the divestitures of its Gulf of Mexico and international properties to its U.S. and Canadian onshore operations and to retire debt. In accordance with accounting standards, Devon has reclassified the assets, liabilities and results of its international operations as discontinued operations for all accounting periods presented in this release. Although revenues and expenses for prior periods were reclassified, there was no impact upon previously reported net earnings. Included with the financial information that follows are tables of revenues, expenses, production, proved reserves and costs incurred and the amounts reclassified as discontinued operations for each period presented.

In spite of Devon's plans to divest its Gulf of Mexico assets, these properties do not qualify as discontinued operations under accounting standards. However, information is provided in this release that will enable the reader to isolate certain results of the company's North American onshore operations.

Shale Gas Development and Jackfish Ramp-up Led 2009 Operating Highlights

Devon drilled 1,135 wells in 2009 applicable to its continuing operations with a 99 percent success rate. Following are operational highlights and updates for selected exploration and development projects:

  • The company drilled 336 wells in the Barnett Shale field in north Texas in 2009, bringing its total producing wells in the field to almost 4,200 at year end. Devon exited 2009 with net Barnett Shale production at just over 1 billion cubic feet of natural gas equivalent per day. The company drilled its 2,000th horizontal well in the field in early 2010 and is currently running 16 operated drilling rigs. Devon expects to drill 370 total Barnett Shale wells during the year.
  • Devon drilled 47 successful wells in the Cana-Woodford Shale in western Oklahoma in 2009. During 2009 the company increased its net production from this important new shale-gas resource to an average of 39 million cubic feet of gas equivalent per day. Devon has increased its lease position in the Cana-Woodford Shale to 118,000 net acres and expects to drill approximately 85 wells in the field in 2010.
  • The company drilled eight Haynesville Shale wells in the greater Carthage area of east Texas in 2009. These wells have significantly de-risked Devon's 110,000 net Haynesville Shale acres in the Carthage area. The company expects to recover up to four trillion cubic feet equivalent of natural gas from its Carthage area Haynesville acreage.
  • In Canada, Devon's 100-percent owned Jackfish oil sands project in Alberta was operational throughout 2009. As measured by production per well and steam-oil ratio, Jackfish is one of Canada's most commercially successful steam-assisted gravity drainage (SAGD) projects. In late 2009, Jackfish production reached 33,700 barrels of oil per day. The addition of four more producing wells is expected to push production to the facility's capacity of 35,000 barrels per day in early 2010.
  • Construction continued throughout 2009 on a second phase of the Jackfish SAGD project. Jackfish 2 is also sized to produce 35,000 barrels of oil per day and will commence operations in 2011. Devon expects to file a regulatory application for a third phase of the project in the third quarter of 2010.
  • Offshore Brazil, Devon participated in two significant deepwater discoveries in 2009. The Devon-operated Itaipu exploratory discovery followed a successful appraisal of the 2008 Wahoo discovery. Both Itaipu and Wahoo are pre-salt prospects located in the Campos Basin. Devon plans to divest its Brazilian assets along with all of its other international properties in 2010. The Itaipu and Wahoo discoveries significantly enhance the value of the company's international assets to prospective buyers.

Continuing Operations Show Strong Production Growth

Combined oil, gas and natural gas liquids production from continuing operations averaged 639 thousand Boe per day in 2009. This compares with 2008 average daily production of 610 thousand Boe per day.

Sharp declines in the average prices of oil, gas and natural gas liquids led to a 48 percent reduction in combined sales from continuing operations. Comparable sales for the years 2009 and 2008 were $6.1 billion and $11.7 billion, respectively. Furthermore, marketing and midstream operating profit decreased 25 percent to $512 million in 2009, reflecting lower prices for natural gas and natural gas liquids.

Cash Flow Totals $4.7 Billion

Cash flow before balance sheet changes decreased 50 percent to $4.7 billion in 2009. During the year Devon funded $5.1 billion of capital expenditures and paid $284 million in dividends utilizing cash flow and short-term borrowing. In spite of the increase in short-term borrowing, Devon's balance sheet remains strong with a ratio of net debt to adjusted capitalization of 29 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 full year and fourth quarter of 2009 were as follows:

Items affecting continuing operations:

  • A change in the fair value of oil and natural gas derivative instruments decreased full-year earnings by $121 million pre-tax ($77 million after tax) and an unrealized gain increased fourth-quarter earnings by $48 million pre-tax ($31 million after tax).
  • A change in fair value of other financial instruments increased full-year earnings by $66 million pre-tax ($42 million after tax) and increased fourth-quarter earnings by $81 million pre-tax ($52 million after tax).
  • Severance and restructuring costs decreased full-year earnings by $128 million pre-tax ($82 million after tax) and decreased fourth-quarter earnings by $105 million pre-tax ($67 million after tax).
  • A reduction of the carrying value of oil and gas properties decreased full-year earnings by $6.4 billion pre-tax ($4.1 billion after tax).
  • U.S. income taxes on foreign earnings now expected to be repatriated to the U.S. decreased full-year and fourth-quarter earnings by $55 million.
  • Income tax accrual adjustments increased full-year earnings by $59 million.

Items affecting discontinued operations:

  • A post-closing adjustment from the divestiture of West African assets in 2008 resulted in a full-year gain of $16 million pre-tax ($16 million after tax).
  • Severance and restructuring costs decreased full-year earnings by $57 million pre-tax ($37 million after tax) and decreased fourth-quarter earnings by $48 million pre-tax ($31 million after tax).
  • A reduction of the carrying value of oil and gas properties decreased full-year earnings by $108 million pre-tax ($105 million after tax).
  • Income tax benefits related to unsuccessful international drilling increased full-year earnings by $22 million.
  • The decision to divest all international assets generated financial benefits that increased full-year and fourth-quarter earnings by $37 million pre-tax ($24 million after tax).

The following tables summarize the full-year and fourth-quarter effects of these items on 2009 earnings, income taxes and cash flow.



    Summary of Items Typically Excluded by Securities Analysts (in millions)

                                                                     Cash Flow
                                                                     Before
    Continuing                                                       Balance
     Operations     Pre-tax       Income Tax Effect       After-tax  Sheet
     -Full Year     Earnings  --------------------------  Earnings   Changes
     2009           Effect    Current   Deferred   Total  Effect     Effect
                    --------  -------   --------   -----  ---------  ---------
    Change in fair
     value of oil
     and gas
     derivative
     instruments     $(121)      -        (44)      (44)      (77)         -
    Change in fair
     value of
     other financial
     instruments        66       -         24        24        42          -
    Severance and
     restructuring
     costs            (128)     (9)       (37)      (46)      (82)       (54)
    Reduction of
     the carrying
     value of
     oil and gas
     properties     (6,408)      -     (2,323)   (2,323)   (4,085)         -
    U.S. income
     taxes on
     foreign
     earnings            -       -         55        55       (55)         -
    Income tax
     accrual
     adjustment          -      (9)       (50)      (59)       59          9
    -----------        ---     ---        ---       ---       ---        ---
      Totals       $(6,591)    (18)    (2,375)    (2,393)  (4,198)       (45)
      ------       -------     ---     ------     ------   ------        ---



                                                                     Cash Flow
                                                                     Before
    Discontinued                                                     Balance
     Operations     Pre-tax        Income Tax Effect      After-tax  Sheet
     -Full Year     Earnings  --------------------------  Earnings   Changes
     2009            Effect   Current   Deferred   Total  Effect     Effect
                    --------  -------   --------   -----  ---------  ---------
    Post-closing
     adjustment on
     sale of West
     African assets    $16        -          -        -      16            -
    Severance and
     restructuring
     costs             (57)      (2)       (18)     (20)    (37)         (15)
    Reduction of
     the carrying
     value of oil
     and gas assets   (108)       -         (3)      (3)   (105)           -
    Income tax
     benefit on
     international
     drilling            -      (22)         -      (22)     22           22
    Financial
     benefits
     of decision
     to divest
     assets             37        -         13       13      24            -
    ------------       ---      ---        ---      ---     ---          ---
      Totals         $(112)     (24)        (8)     (32)    (80)           7
      ------         -----      ---        ---      ---     ---          ---


    In aggregate, these items decreased full-year 2009 net earnings by
    $4.3 billion, or $9.63 per common share ($9.61 per diluted share). These
    items and their associated tax effects decreased full-year 2009 cash flow
    before balance sheet changes by $38 million.



    Summary of Items Typically Excluded by Securities Analysts (in millions)

                                                                     Cash Flow
    Continuing                                                       Before
    Operations -                                                     Balance
     Fourth         Pre-tax        Income Tax Effect      After-tax  Sheet
     Quarter        Earnings  --------------------------  Earnings   Changes
     2009           Effect    Current   Deferred   Total  Effect     Effect
                    --------  -------   --------   -----  ---------  ---------
    Change in fair
     value of oil
     and gas
     derivative
     instruments       $48       -        17         17       31         -
    Change in fair
     value of other
     financial
     instruments        81       -        29         29       52         -
    Restructuring
     costs            (105)      -       (38)       (38)     (67)      (42)
    U.S. income
     taxes on
     foreign
     earnings            -       -        55         55      (55)        -
    -----------        ---     ---       ---        ---      ---       ---
      Totals           $24       -        63         63      (39)      (42)
      ------           ---     ---       ---        ---      ---       ---



                                                                     Cash Flow
    Discontinued                                                     Before
     Operations -                                                    Balance
     Fourth         Pre-tax       Income Tax Effect       After-tax  Sheet
     Quarter        Earnings  --------------------------  Earnings   Changes
     2009           Effect    Current   Deferred   Total  Effect     Effect
                    --------  -------   --------   -----  ---------  ---------
    Restructuring
     costs             (48)      -        (17)      (17)     (31)       (15)
    Financial
     benefits of
     decision to
     divest assets     $37       -         13        13       24          -
    --------------     ---     ---        ---       ---      ---        ---
      Totals          $(11)      -         (4)       (4)      (7)       (15)
      ------          ----     ---        ---       ---      ---        ---


    In aggregate, these items decreased fourth-quarter 2009 net earnings by
    $46 million, or 10 cents per common share (11 cents per diluted share).
    These items and their associated tax effects decreased fourth-quarter 2009
    cash flow before balance sheet changes by $57 million.


Conference Call to be Webcast Today

Devon will discuss its 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.

Effective January 1, 2010, the United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC's definitions for such terms, and price and cost sensitivities for such reserves, and prohibits disclosure of resources that do not constitute such reserves. This release may contain certain terms, such as resource potential and exploration target size. These estimates are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being actually realized. The SEC guidelines strictly prohibit us from including these estimates in filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K for the fiscal year ended December 31, 2009, 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 or from the SEC's website atwww.sec.gov.

Devon Energy Corporation is an Oklahoma City-based independent energy company engaged in oil and gas exploration and production. Devon is a leading 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
                        FINANCIAL AND OPERATIONAL INFORMATION


    PRODUCTION (net of royalties)          Year Ended       Quarter Ended
    Excludes discontinued operations       December 31,      December 31,
                                           ------------      ------------
                                          2009      2008    2009      2008
                                          ----      ----    ----      ----
    Total Period Production
    -----------------------
    Natural Gas (Bcf)
      U.S. Onshore                        698.7     668.1   162.8     181.2
      Canada                              222.8     212.1    51.6      53.6
                                          -----     -----    ----      ----
      North American Onshore              921.5     880.2   214.4     234.8
      U.S. Offshore                        44.9      57.6    11.4      12.6
      -------------                        ----      ----    ----      ----
      Total Natural Gas                   966.4     937.8   225.8     247.4
      -----------------                   -----     -----   -----     -----
    Oil (MMBbls)
      U.S. Onshore                         11.6      11.3     2.9       3.0
      Canada                               25.3      21.6     6.6       6.2
                                           ----      ----     ---       ---
      North American Onshore               36.9      32.9     9.5       9.2
      U.S. Offshore                         5.0       5.9     1.3       1.0
      -------------                         ---       ---     ---       ---
      Total Oil                            41.9      38.8    10.8      10.2
      ---------                            ----      ----    ----      ----
    Natural Gas Liquids (MMBbls)
      U.S. Onshore                         25.7      23.6     6.5       6.5
      Canada                                3.8       4.0     1.0       1.0
                                            ---       ---     ---       ---
      North American Onshore               29.5      27.6     7.5       7.5
      U.S. Offshore                         0.7       0.6     0.2       0.1
      -------------                         ---       ---     ---       ---
      Total Natural Gas Liquids            30.2      28.2     7.7       7.6
      -------------------------            ----      ----     ---       ---
    Oil Equivalent (MMBoe)
      U.S. Onshore                        153.7     146.2    36.5      39.7
      Canada                               66.3      60.9    16.2      16.1
                                           ----      ----    ----      ----
      North American Onshore              220.0     207.1    52.7      55.8
      U.S. Offshore                        13.2      16.1     3.4       3.2
      -------------                        ----      ----     ---       ---
      Total Oil Equivalent                233.2     223.2    56.1      59.0
      --------------------                -----     -----    ----      ----
    Average Daily Production
    ------------------------
    Natural Gas (MMcf)
      U.S. Onshore                      1,914.3   1,825.5 1,769.7   1,969.6
      Canada                              610.5     579.4   560.5     582.7
                                          -----     -----   -----     -----
      North American Onshore            2,524.8   2,404.9 2,330.2   2,552.3
      U.S. Offshore                       123.0     157.3   123.8     136.3
      -------------                       -----     -----   -----     -----
      Total Natural Gas                 2,647.8   2,562.2 2,454.0   2,688.6
      -----------------                 -------   ------- -------   -------
    Oil (MBbls)
      U.S. Onshore                         31.6      30.7    31.3      32.1
      Canada                               69.3      59.0    72.0      67.4
                                           ----      ----    ----      ----
      North American Onshore              100.9      89.7   103.3      99.5
      U.S. Offshore                        13.8      16.2    13.7      11.3
      -------------                        ----      ----    ----      ----
      Total Oil                           114.7     105.9   117.0     110.8
      ---------                           -----     -----   -----     -----
    Natural Gas Liquids (MBbls)
      U.S. Onshore                         70.4      64.6    71.1      71.2
      Canada                               10.4      10.9    10.2      10.9
                                           ----      ----    ----      ----
      North American Onshore               80.8      75.5    81.3      82.1
      U.S. Offshore                         2.0       1.5     2.2       1.1
      -------------                         ---       ---     ---       ---
      Total Natural Gas Liquids            82.8      77.0    83.5      83.2
      -------------------------            ----      ----    ----      ----
    Oil Equivalent (MBoe)
      U.S. Onshore                        421.1     399.5   397.4     431.5
      Canada                              181.5     166.5   175.6     175.4
                                          -----     -----   -----     -----
      North American Onshore              602.6     566.0   573.0     606.9
      U.S. Offshore                        36.3      44.0    36.5      35.1
      -------------                        ----      ----    ----      ----
      Total Oil Equivalent                638.9     610.0   609.5     642.0
      --------------------                -----     -----   -----     -----





    BENCHMARK PRICES                     Year Ended         Quarter Ended
    (average prices)                     December 31,        December 31,
                                         -----------        -------------
                                        2009     2008       2009      2008
                                        ----     ----       ----      ----
    Natural Gas ($/Mcf) - Henry Hub    $3.99    $9.04      $4.16     $6.95
    Oil ($/Bbl) - West Texas
     Intermediate (Cushing)           $61.82   $99.75     $76.00    $58.51
                                      ------   ------     ------    ------


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

    Quarter Ended December 31, 2009    Oil      Gas        NGLs     Total
                                    (Per Bbl) (Per Mcf) (Per Bbl) (Per Boe)
                                    --------- --------- --------- ---------
    U.S. Onshore                      $71.62    $3.65     $30.48    $27.35
    Canada                            $58.43    $4.13     $41.88    $39.58
                                      ------   ------     ------    ------
    North American Onshore            $62.43    $3.77     $31.92    $31.10
    U.S. Offshore                     $74.45    $4.45     $37.59    $45.26
                                      ------   ------     ------    ------
    Realized price without hedges     $63.84    $3.80     $32.07    $31.95
    Cash settlements                     $ -    $0.65        $ -     $2.60
                                      ------   ------     ------    ------
    Realized price, including
     cash settlements                 $63.84    $4.45     $32.07    $34.55
                                      ------   ------     ------    ------


    Quarter Ended December 31, 2008    Oil      Gas        NGLs     Total
                                    (Per Bbl) (Per Mcf) (Per Bbl) (Per Boe)
                                    --------- --------- --------- ---------
    U.S. Onshore                      $55.11    $4.98     $20.52    $30.21
    Canada                            $30.67    $6.02     $35.95    $34.02
                                      ------    -----     ------    ------
    North American Onshore            $38.56    $5.22     $22.57    $31.31
    U.S. Offshore                     $56.80    $6.95     $34.28    $46.31
                                      ------    -----     ------    ------
    Realized price without hedges     $40.42    $5.30     $22.73    $32.13
    Cash settlements                   $2.69    $0.52        $ -     $2.62
                                       -----    -----      -----     -----
    Realized price, including
     cash settlements                 $43.11    $5.82     $22.73    $34.75
                                      ------    -----     ------    ------


    Year Ended December 31, 2009       Oil      Gas        NGLs     Total
                                    (Per Bbl) (Per Mcf) (Per Bbl) (Per Boe)
                                    --------- --------- --------- ---------
    U.S. Onshore                      $56.17    $3.14     $23.40    $22.41
    Canada                            $47.35    $3.66     $33.09    $32.29
                                      ------    -----     ------    ------
    North American Onshore            $50.11    $3.27     $24.65    $25.38
    U.S. Offshore                     $60.75    $4.20     $27.42    $38.83
                                      ------    -----     ------    ------
    Realized price without hedges     $51.39    $3.31     $24.71    $26.15
    Cash settlements                     $ -    $0.52        $ -     $2.16
                                      ------    -----     ------     -----
    Realized price, including
     cash settlements                 $51.39    $3.83     $24.71    $28.31
                                      ------    -----     ------    ------


    Year Ended December 31, 2008       Oil      Gas        NGLs     Total
                                    (Per Bbl) (Per Mcf) (Per Bbl) (Per Boe)
                                    --------- --------- --------- ---------
    U.S. Onshore                      $95.63    $7.43     $40.97    $47.91
    Canada                            $71.04    $8.17     $61.45    $57.65
                                      ------    -----     ------    ------
    North American Onshore            $79.45    $7.61     $43.94    $50.78
    U.S. Offshore                    $104.90    $9.53     $51.11    $74.55
                                     -------    -----     ------    ------
    Realized price without hedges     $83.35    $7.73     $44.08    $52.49
    Cash settlements                   $0.70   $(0.46)       $ -    $(1.78)
                                       -----   ------     ------    ------
    Realized price, including
     cash settlements                 $84.05    $7.27     $44.08    $50.71
                                      ------    -----     ------    ------



    CONSOLIDATED STATEMENTS OF OPERATIONS
    (in millions, except per share amounts)   Year Ended     Quarter Ended
                                             December 31,     December 31,
                                             ------------     ------------
                                             2009     2008    2009     2008
                                             ----     ----    ----     ----
    Revenues
    --------
      Oil, gas, and NGL sales               $6,097  $11,720  $1,791   $1,898
      Net gain (loss) on oil and gas
       derivative financial instruments        384     (154)    194      257
      Marketing and midstream revenues       1,534    2,292     460      397
      --------------------------------       -----    -----     ---      ---
          Total revenues                     8,015   13,858   2,445    2,552
          --------------                     -----   ------   -----    -----
    Expenses and other income, net
    ------------------------------
      Lease operating expenses               1,670    1,851     404      486
      Taxes other than income taxes            314      476      65       69
      Marketing and midstream operating
       costs and expenses                    1,022    1,611     327      272
      Depreciation, depletion and
       amortization of oil and gas
       properties                            1,832    2,948     418      840
      Depreciation and amortization of
       non-oil and gas properties              276      255      68       70
      Accretion of asset retirement
       obligation                               91       80      23       18
      General and administrative expenses      648      645     176      177
      Restructuring costs                      105        -     105        -
      Interest expense                         349      329      86       68
      Change in fair value of other
       financial instruments                  (106)     149     (86)     127
      Reduction of carrying value of oil
       and gas properties                    6,408    9,891       -    9,891
      Other income, net                        (68)    (217)     (7)    (113)
      -----------------                        ---     ----     ---     ----
          Total expenses and other
           income, net                      12,541   18,018   1,579    11,905
          ------------------------          ------   ------   -----    ------
    (Loss) earnings from continuing
     operations before income tax expense   (4,526)  (4,160)    866   (9,353)
    -------------------------------------   ------   ------     ---   ------
    Income tax (benefit) expense
    ----------------------------
      Current                                  241      441     106     (136)
      Deferred                              (2,014)  (1,562)    203   (2,947)
      --------                              ------   ------     ---   ------
          Total income tax (benefit)
           expense                          (1,773)  (1,121)    309   (3,083)
          --------------------------        ------   ------     ---   ------
    (Loss) earnings from continuing
     operations                             (2,753)  (3,039)    557   (6,270)
    -------------------------------         ------   ------     ---   ------
    Discontinued operations
    -----------------------
      Earnings (loss) from discontinued
       operations before income taxes          322    1,258     124     (570)
      Discontinued operations income tax
       expense (benefit)                        48      367      14      (24)
      ----------------------------------       ---      ---     ---      ---
          Earnings (loss) from
           discontinued operations             274      891     110     (546)
           -----------------------             ---      ---     ---     ----
    Net (loss) earnings                     (2,479)  (2,148)    667   (6,816)
    Preferred stock dividends                    -        5       -        -
    -------------------------                  ---      ---     ---      ---
    Net (loss) earnings applicable to
     common stockholders                   $(2,479) $(2,153)   $667  $(6,816)
    ---------------------------------      -------  -------    ----  -------

    Basic net (loss) earnings per share
      (Loss) earnings from continuing
       operations per share                 $(6.20)  $(6.86)  $1.25  $(14.19)
      Earnings (loss) from discontinued
       operations per share                   0.62     2.01    0.25    (1.23)
      ---------------------------------       ----     ----    ----    -----
      Net (loss) earnings per share         $(5.58)  $(4.85)  $1.50  $(15.42)
      -----------------------------         ------   ------   -----  -------

    Diluted net earnings (loss) per share
      (Loss) earnings from continuing
       operations per share                 $(6.20)  $(6.86)  $1.25  $(14.19)
      Earnings (loss) from discontinued
       operations per share                   0.62     2.01    0.24    (1.23)
      ---------------------------------       ----     ----    ----    -----
      Net (loss) earnings per share         $(5.58)  $(4.85)  $1.49  $(15.42)
      -----------------------------         ------   ------   -----  -------

    Weighted average common shares
     outstanding
      Basic                                    444      444     445      442
      Diluted                                  446      447     447      444





    CONSOLIDATED BALANCE SHEETS
    (in millions)                                             December 31,
                                                              ------------
                                                             2009      2008
                                                             ----      ----
    Assets
    ------
    Current assets
    --------------
      Cash and cash equivalents                               $646      $195
      Accounts receivable                                    1,208     1,300
      Derivative financial instruments, at fair value          211       282
      Current assets held for sale                             657       392
      Other current assets                                     270       515
      --------------------                                     ---       ---
          Total current assets                               2,992     2,684
          --------------------                               -----     -----
    Property and equipment, at cost, based on the
     full cost method of accounting for oil and gas
     properties ($4,078 and $4,248 excluded from
     amortization in 2009 and 2008, respectively)           60,475    53,391
      Less accumulated depreciation, depletion and
       amortization                                         41,708    31,360
      ----------------------------------------              ------    ------
      Property and equipment, net                           18,767    22,031
      ---------------------------                           ------    ------
    Goodwill                                                 5,930     5,511
    Long-term assets held for sale                           1,250     1,128
    Other long-term assets                                     747       554
    ----------------------                                     ---       ---
    Total Assets                                           $29,686   $31,908
    ------------                                           -------   -------
    Liabilities and Stockholders' Equity
    ------------------------------------
    Current liabilities
    -------------------
      Accounts payable - trade                              $1,137    $1,612
      Revenues and royalties due to others                     486       490
      Short-term debt                                        1,432       180
      Current portion of asset retirement obligation,
       at fair value                                            95       138
      Current liabilities associated with assets held
       for sale                                                234       365
      Other current liabilities                                418       350
      -------------------------                                ---       ---
          Total current liabilities                          3,802     3,135
          -------------------------                          -----     -----
    Long-term debt                                           5,847     5,661
    Asset retirement obligation, at fair value               1,418     1,249
    Liabilities associated with assets held for sale           213       166
    Other long-term liabilities                                937     1,023
    Deferred income taxes                                    1,899     3,614
    ---------------------                                    -----     -----
    Stockholders' equity
    --------------------
      Common stock                                              45        44
      Additional paid-in capital                             6,527     6,257
      Retained earnings                                      7,613    10,376
      Accumulated other comprehensive income                 1,385       383
      --------------------------------------                 -----       ---
    Total Stockholders' Equity                              15,570    17,060
    --------------------------                              ------    ------
    Total Liabilities and Stockholders' Equity             $29,686   $31,908
    ------------------------------------------             -------   -------
    Common Shares Outstanding                                  447       444
    -------------------------                                  ---       ---





    CONSOLIDATED STATEMENTS OF CASH FLOWS                     Year Ended
    (in millions)                                             December 31,
                                                              ------------
                                                            2009        2008
                                                            ----        ----
    Cash Flows From Operating Activities
    ------------------------------------
      Net loss                                             $(2,479)  $(2,148)
      Net earnings from discontinued operations               (274)     (891)
      Adjustments to reconcile loss from continuing
       operations to net cash provided by operating
       activities:
          Depreciation, depletion and amortization           2,108     3,203
          Deferred income tax benefit                       (2,014)   (1,562)
          Reduction of carrying value of oil and gas
           properties                                        6,408     9,891
          Net unrealized loss (gain) on oil and gas
           derivative financial instruments                    121      (243)
          Other noncash charges                                222       410
          Net decrease (increase) in working capital           149      (207)
          Increase in long-term other assets                    (6)      (53)
          (Decrease) increase in long-term other liabilities    (3)       48
          --------------------------------------               ---       ---
      Cash provided by operating activities - continuing
       operations                                            4,232     8,448
      Cash provided by operating activities - discontinued
       operations                                              505       960
      ----------------------------------------------------     ---       ---
    Net cash provided by operating activities                4,737     9,408
    -----------------------------------------                -----     -----

    Cash Flows From Investing Activities
    ------------------------------------
      Proceeds from sales of property and equipment             34       117
      Capital expenditures                                  (4,879)   (8,843)
      Proceeds from exchange of investment in Chevron
       Corporation common stock                                  -       280
      Purchases of short-term investments                        -       (50)
      Sales of long-term investments                             7       300
      Other                                                    (17)        -
      -----                                                    ---       ---
      Cash used in investing activities -continuing
       operations                                           (4,855)   (8,196)
      Cash (used in) provided by investing activities
       -discontinued operations                               (499)    1,323
      -----------------------------------------------         ----     -----
    Net cash used in investing activities                   (5,354)   (6,873)
    -------------------------------------                   ------    ------

    Cash Flows From Financing Activities
    ------------------------------------
      Proceeds from borrowings of long term debt, net
       of issuance costs                                     1,187         -
      Credit facility repayments                                 -    (3,191)
      Credit facility borrowings                                 -     1,741
      Net commercial paper borrowings                          426         1
      Debt repayments                                         (178)   (1,031)
      Redemption of preferred stock                              -      (150)
      Proceeds from stock option exercises                      42       116
      Repurchases of common stock                                -      (665)
      Dividends paid on common and preferred stock            (284)     (289)
      Excess tax benefits related to share-based
       compensation                                              8        60
      ------------------------------------------               ---       ---
    Net cash provided by (used in) financing activities      1,201    (3,408)
    ---------------------------------------------------      -----    ------

    Effect of exchange rate changes on cash                     43      (116)
    ---------------------------------------                    ---      ----
    Net increase (decrease) in cash and cash equivalents       627      (989)
    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)                       $1,011      $384
    ------------------------------------------              ------      ----





    RESERVES RECONCILIATION

                            Total                   North American Onshore
               ------------------------------- -------------------------------
                 Oil     Gas    NGLs    Total     Oil    Gas    NGLs    Total
               (MMBbls) (Bcf) (MMBbls) (MMBoe) (MMBbls) (Bcf) (MMBbls) (MMBoe)
               -------- ----- -------- ------- -------- ----- -------- -------
    As of
     December 31,
     2008:
      Proved
       developed  243   8,038    292    1,875     221    7,826   291    1,816
      Proved
       undevel-
       oped        58   1,841     60      424      46    1,663    59      382
                 ----   -----   ----    -----    ----    -----   ---    -----
    Total proved  301   9,879    352    2,299     267    9,489   350    2,198
                 ----   -----   ----    -----    ----    -----   ---    -----
    Revisions
     due to
     prices       302    (694)    (9)     177     300     (690)   (9)     176
    Revisions
     other
     than price    (7)     43     37       38      (8)     105    36       46
    Extensions
     and
     discoveries  133   1,518     71      458     131    1,454    71      446
    Purchase
     of reserves    -       7      -        1       -        7     -        1
    Production    (42)   (966)   (30)    (233)    (37)    (921)  (29)    (220)
    Sale of
     reserves      (1)    (30)     -       (7)      -      (29)    -       (6)
    As of
     December 31,
     2009:
      Proved
       developed  289   7,845    326    1,922     268    7,660   325    1,869
      Proved
       undevel-
       oped       397   1,912     95      811     385    1,755    94      772
                 ----   -----   ----    -----    ----    -----   ---    -----
    Total Proved  686   9,757    421    2,733     653    9,415   419    2,641
                 ----   -----   ----    -----    ----    -----   ---    -----


                           U.S. Onshore                  Canada
              ------------------------------- -------------------------------
                 Oil    Gas    NGLs    Total    Oil     Gas    NGLs    Total
              (MMBbls) (Bcf) (MMBbls) (MMBoe) (MMBbls) (Bcf) (MMBbls) (MMBoe)
              -------- ----- -------- ------- -------- ----- -------- -------
    As of
     December
     31, 2008:
      Proved
       devel-
       oped      111   6,469    260    1,449     110    1,357    31      367
      Proved
       undevel-
       oped       22   1,510     55      328      24      153     4       54
                ----   -----   ----    -----    ----    -----   ---    -----
    Total
     proved      133   7,979    315    1,777     134    1,510    35      421
                ----   -----   ----    -----    ----    -----   ---    -----
    Revisions
     due to
     prices        9    (661)   (11)    (113)    291      (29)    2      289
    Revisions
     other
     than
     price         -     119     36       57      (8)     (14)    -      (11)
    Extensions
     and
     discoveries   9   1,387     70      311     122       67     1      135
    Purchase
     of
     reserves      -       1      -        -       -        6     -        1
    Production   (12)   (698)   (25)    (154)    (25)    (223)   (4)     (66)
    Sale of
     reserves      -       -      -        -       -      (29)    -       (6)
    As of
     December
     31, 2009:
      Proved
       devel-
       oped      119   6,447    293    1,486     149    1,213    32      383
      Proved
       undevel-
       oped       20   1,680     92      392     365       75     2      380
                ----   -----   ----    -----    ----    -----   ---    -----
    Total
     Proved      139   8,127    385    1,878     514    1,288    34      763
                ----   -----   ----    -----    ----    -----   ---    -----


                                                      U.S. Offshore
                                              ------------------------------
                                                Oil     Gas    NGLs    Total
                                              (MMBbls) (Bcf) (MMBbls) (MMBoe)
                                              -------------------------------
    As of December 31, 2008:
      Proved developed                            22     212      1       59
      Proved undeveloped                          12     178      1       42
                                                ----   -----   ----    -----
    Total proved                                  34     390      2      101
                                                ----   -----   ----    -----
    Revisions due to prices                        2      (4)     -        1
    Revisions other than price                     1     (62)     1       (8)
    Extensions and discoveries                     2      64      -       12
    Purchase of reserves                           -       -      -        -
    Production                                    (5)    (45)    (1)     (13)
    Sale of reserves                              (1)     (1)     -       (1)
    As of December 31, 2009:
      Proved developed                            21     185      1       53
      Proved undeveloped                          12     157      1       39
                                                ----   -----   ----    -----
    Total Proved                                  33     342      2       92
                                                ----   -----   ----    -----





    COSTS INCURRED                    Total           North American Onshore
    (in millions)            Year Ended December 31,  Year Ended December 31,
                             -----------------------  -----------------------
                                 2009       2008          2009      2008
                                 ----       ----          ----      ----
    Property Acquisition
     Costs:
    --------------------
      Total proved                $35       $822           $35      $822
      ------------                ---       ----           ---      ----
      Total unproved              135      1,763           124     1,578
      --------------              ---      -----           ---     -----
    Exploration and
     development costs          3,917      6,881         3,120     5,692
    ------------------          -----      -----         -----     -----
    Costs Incurred             $4,087     $9,466        $3,279    $8,092
    --------------             ------     ------        ------    ------

                                   U.S. Onshore               Canada
                             Year Ended December 31,  Year Ended December 31,
                             -----------------------  -----------------------
                                  2009      2008          2009      2008
                                  ----      ----          ----      ----
    Property Acquisition
     Costs:
    --------------------
      Total proved                 $17      $822           $18        $-
      ------------                 ---      ----           ---       ---
      Total unproved                52     1,226            72       352
      --------------               ---     -----           ---       ---
    Exploration and
     development costs           2,133     4,388           987     1,304
    ------------------           -----     -----           ---     -----
    Costs Incurred              $2,202    $6,436        $1,077    $1,656
    --------------              ------    ------        ------    ------

                                              U.S. Offshore
                                        Year Ended December 31,
                                        -----------------------
                                             2009      2008
                                             ----      ----
    Property Acquisition Costs:
    ---------------------------
      Total proved                             $-        $-
      ------------                            ---       ---
      Total unproved                           11       185
      --------------                          ---       ---
    Exploration and development costs         797     1,189
    ---------------------------------         ---     -----
    Costs Incurred                           $808    $1,374
    --------------                           ----    ------


    Devon capitalizes certain general and administrative expenses related to
    property acquisition, exploration and development activities. These
    capitalized expenses were $332 million and $337 million in 2009 and 2008,
    respectively. Devon also capitalizes certain interest expenses related to
    property acquisition, exploration and development activities. These
    capitalized expenses were $74 million and $71 million in 2009 and 2008,
    respectively. These capitalized general and administrative expenses and
    interest expenses are included in the costs shown in the preceding tables.





    DRILLING ACTIVITY                                 Year Ended
                                                     December 31,
                                                     ------------
                                                      2009   2008
                                                      ----   ----
    Exploration Wells Drilled
    -------------------------
      U.S. Onshore                                      11     22
      Canada                                            42     90
      ------                                           ---    ---
      North American Onshore                            53    112
      U.S. Offshore                                      1      6
      -------------                                    ---    ---
      Total                                             54    118
      -----                                            ---    ---
    Exploration Wells Success Rate
    ------------------------------
      U.S. Onshore                                      82%    91%
      Canada                                           100%    96%
      ------                                           ---    ---
      North American Onshore                            96%    95%
      U.S. Offshore                                      0%    17%
      -------------                                    ---    ---
      Total                                             94%    91%
      -----                                            ---    ---
    Development Wells Drilled
    -------------------------
      U.S. Onshore                                     734  1,622
      Canada                                           343    631
      ------                                           ---    ---
      North American Onshore                         1,077  2,253
      U.S. Offshore                                      4     17
      -------------                                    ---    ---
      Total                                          1,081  2,270
      -----                                          -----  -----
    Development Wells Success Rate
    ------------------------------
      U.S. Onshore                                     100%    98%
      Canada                                           100%    99%
      ------                                           ---    ---
      North American Onshore                           100%    99%
      U.S. Offshore                                     50%    94%
      -------------                                    ---    ---
      Total                                             99%    99%
      -----                                            ---    ---
    Total Wells Drilled
    -------------------
      U.S. Onshore                                     745  1,644
      Canada                                           385    721
      ------                                           ---    ---
      North American Onshore                         1,130  2,365
      U.S. Offshore                                      5     23
      -------------                                    ---    ---
      Total                                          1,135  2,388
      -----                                          -----  -----
    Total Wells Success Rate
    ------------------------
      U.S. Onshore                                      99%    98%
      Canada                                           100%    99%
      ------                                           ---    ---
      North American Onshore                            99%    98%
      U.S. Offshore                                     40%    74%
      -------------                                    ---    ---
      Total                                             99%    98%
      -----                                            ---    ---


    COMPANY OPERATED RIGS                             Year Ended
                                                     December 31,
                                                     ------------
                                                      2009   2008
                                                      ----   ----
    Number of Company Operated Rigs Running
    ---------------------------------------
      U.S. Onshore                                      46     78
      Canada                                            17     13
      ------                                           ---    ---
      North American Onshore                            63     91
      U.S. Offshore                                      1      4
      -------------                                    ---    ---
      Total                                             64     95
      -----                                            ---    ---



    CAPITAL EXPENDITURES (in millions)
    Quarter Ended December 31, 2009
                                              U.S.              U.S.
                                            Onshore   Canada  Offshore  Total
                                            -------   ------  --------  -----
    Capital Expenditures
    --------------------
      Exploration                             $82       139       29     $250
      Development                             397       222      133      752
      -----------                             ---       ---      ---      ---
      Exploration and development capital    $479       361      162   $1,002
      Capitalized G&A                                                      80
      Capitalized interest                                                 18
      Discontinued operations                                             139
      Midstream capital                                                    98
      Other capital                                                       121
      -------------                                                       ---
    Total Capital Expenditures                                         $1,458
    --------------------------                                         ------


    CAPITAL EXPENDITURES (in millions)
    Year Ended December 31, 2009
                                              U.S.               U.S.
                                            Onshore   Canada  Offshore  Total
                                            -------   ------  --------  -----
    Capital Expenditures
    --------------------
      Exploration                            $157       215      182      554
      Development                           1,835       819      534    3,188
      -----------                           -----       ---      ---    -----
      Exploration and development capital  $1,992     1,034      716    3,742
      Capitalized G&A                                                     332
      Capitalized interest                                                 74
      Discontinued operations                                             446
      Midstream capital                                                   305
      Other capital                                                       197
      -------------                                                       ---
    Total Capital Expenditures                                          5,096
    --------------------------                                          -----





    PRODUCTION FROM DISCONTINUED OPERATIONS       Year Ended   Quarter Ended
                                                  December 31,  December 31,
                                                  ------------  ------------
                                                 2009     2008  2009    2008
                                                 ----     ----  ----    ----
    Production from Discontinued Operations
    ---------------------------------------
      Oil (MMBbls)                               15.7     17.4   4.1     3.4
      Natural Gas (Bcf)                           1.5      4.8   0.5     0.7
      -----------------                           ---      ---   ---     ---
      Total Oil Equivalent (MMBoe)               16.0     18.2   4.2     3.5
      ----------------------------               ----     ----   ---     ---


    STATEMENTS OF DISCONTINUED OPERATIONS        Year Ended    Quarter Ended
    (in millions)                                December 31,   December 31,
                                                 ------------   ------------
                                                 2009    2008   2009    2008
                                                 ----    ----   ----    ----
    Revenues
    --------
      Total operating revenues                   $945   $1,702  $299    $158
      ------------------------                   ----   ------  ----    ----

    Expenses and other income, net
    ------------------------------
      Operating expenses                          484      769   127     234
      Restructuring costs                          48        -    48       -
      Reduction of carrying value
       of oil and gas properties                  108      494     -     494
      Gain on sale of oil and gas properties      (17)    (819)    -       -
      --------------------------------------      ---     ----   ---     ---
      Total expenses and other income, net        623      444   175     728
      ------------------------------------        ---      ---   ---     ---
    Earnings (loss) before income tax expense     322    1,258   124    (570)
    -----------------------------------------     ---    -----   ---    ----
    Income tax expense (benefit)
    ----------------------------
      Current                                      44      755    24     (54)
      Deferred                                      4     (388)  (10)     30
      --------                                    ---     ----   ---     ---
      Total income tax expense (benefit)           48      367    14     (24)
      ----------------------------------          ---      ---   ---     ---
    Earnings (loss) from discontinued
     operations                                  $274     $891  $110   $(546)
    ---------------------------------            ----     ----  ----   -----


    RESERVES DATA FOR DISCONTINUED OPERATIONS   Oil      Gas    NGLs    Total
                                              (MMBbls)  (Bcf) (MMBbls) (MMBoe)
                                              --------  ----- -------- -------
    As of December 31, 2008:
    ------------------------
      Proved developed                           58        6      -       59
      Proved undeveloped                         70        -      -       70
      ------------------                        ---      ---    ---      ---
    Total proved                                128        6      -      129
    Revisions due to prices                      (6)       -      -       (6)
    Revisions other than price                    -        3      -        -
    Extensions and discoveries                    1        -      -        1
    Production                                  (16)      (1)     -      (16)
    As of December 31, 2009:
    ------------------------
      Proved developed                           54        8      -       55
      Proved undeveloped                         53        -      -       53
      ------------------                        ---      ---    ---      ---
    Total proved                                107        8      -      108
    ------------                                ---      ---    ---      ---


    COSTS INCURRED FOR DISCONTINUED OPERATIONS
    (in millions)                                   Year Ended December 31,
                                                    -----------------------
                                                        2009      2008
                                                        ----      ----
    Costs Incurred                                      $450      $617
    --------------                                      ----      ----





    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          Year Ended    Quarter Ended
    (in millions)                              December 31,    December 31,
                                               ------------    ------------
                                               2009     2008    2009    2008
                                               ----     ----    ----    ----
    Net Cash Provided By
     Operating Activities (GAAP)              $4,737   $9,408  $1,445  $1,227
    ----------------------------              ------   ------  ------  ------
      Changes in assets and liabilities
       -continuing operations                   (140)     212     (74)    496
      Changes in assets and liabilities
       -discontinued operations                   90       (6)     15      13
      ---------------------------------          ---      ---     ---     ---
    Cash flow before balance sheet changes
     (Non-GAAP)                               $4,687   $9,614  $1,386  $1,736
    --------------------------------------    ------   ------  ------  ------


    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 and cash equivalents 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)
                                                         December 31,
                                                         ------------
                                                       2009         2008
                                                       ----         ----
    Total debt (GAAP)                                 $7,279       $5,841
    Adjustments:
      Cash and cash equivalents (including
       cash from discontinued operations)              1,011          384
                                                       -----          ---
      Net debt (Non-GAAP)                             $6,268       $5,457
      -------------------                             ------       ------
    Total debt                                        $7,279       $5,841
    Stockholders' equity                              15,570       17,060
    --------------------                              ------       ------
      Total capitalization (GAAP)                    $22,849      $22,901
      ---------------------------                    -------      -------
    Net debt                                          $6,268       $5,457
    Stockholders' equity                              15,570       17,060
    --------------------                              ------       ------
      Adjusted capitalization (Non-GAAP)             $21,838      $22,517
      ----------------------------------             -------      -------





    Drill-bit capital is defined as costs incurred less proved acquisition
    costs, unproved acquisition costs resulting from business combinations and
    other significant similar transactions. Drill-bit capital is a Non-GAAP
    measure. Devon believes drill-bit capital is relevant because it provides
    additional insight into costs associated with current year exploration and
    and development activity. It should be noted that the actual costs of
    reserves added through Devon's drilling program will differ, sometimes
    significantly, from the direct comparison of capital spent and reserves
    added in any given period due to the timing of capital expenditures and
    reserve bookings. Certain securities analysts also use this methodology
    to measure Devon's performance.


    RECONCILIATION TO
     GAAP INFORMATION                Total             North America Onshore
    (in millions)            Year Ended December 31,  Year Ended December 31,
                             -----------------------  -----------------------
                                  2009      2008         2009      2008
                                  ----      ----         ----      ----
    Costs Incurred (GAAP)        $4,087    $9,466       $3,279    $8,092
    ---------------------        ------    ------       ------    ------
    Less:
      Proved acquisition
       costs                         35       822           35       822
      ------------------            ---       ---          ---       ---
      Drill-bit capital
       (Non-GAAP)                $4,052    $8,644       $3,244    $7,270
      -----------------          ------    ------       ------    ------

                                 U.S. Onshore                 Canada
                             Year Ended December 31,  Year Ended December 31,
                             -----------------------  -----------------------
                                  2009      2008         2009      2008
                                  ----      ----         ----      ----
    Costs Incurred (GAAP)        $2,202    $6,436       $1,077    $1,656
    ---------------------        ------    ------       ------    ------
    Less:
      Proved acquisition
       costs                         17       822           18         -
      ------------                  ---       ---          ---       ---
      Drill-bit capital
       (Non-GAAP)                $2,185    $5,614       $1,059    $1,656
      -----------------          ------    ------       ------    ------

                                       U.S. Offshore
                                  Year Ended December 31,
                                  -----------------------
                                       2009      2008
                                       ----      ----
    Costs Incurred (GAAP)              $808    $1,374
    ---------------------              ----    ------
    Less:
      Proved acquisition costs            -         -
      ------------------------          ---       ---
      Drill-bit capital (Non-GAAP)     $808    $1,374
      ----------------------------     ----    ------



SOURCE Devon Energy Corporation

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