DVN Devon Energy Corp

Devon Energy Corp. (NYSE: DVN) today reported operational and financial results for the third quarter of 2017. Also included within the release is the company’s guidance outlook for the fourth quarter of 2017.

Highlights

• Production exceeds midpoint of hurricane-adjusted guidance
• 50 high-rate wells brought online with average rates exceeding 2,100 Boe per day
• Capital expenditures were 12 percent below guidance year to date
• Divestiture program reaches $420 million of asset sales
• Free cash flow increases cash balance to $2.8 billion

“We continue to deliver outstanding well productivity from our U.S. resource plays as we execute on our development plans,” said Dave Hager, president and CEO. “During the quarter, we had some of the best drill-bit results in Devon’s history with 50 new wells averaging 30-day rates in excess of 2,100 Boe per day. Importantly, we delivered these prolific wells with a capital investment that was below the low end of our guidance range for the third consecutive quarter.”

“With these strong results, we remain on track to achieve our 2017 exit rate production targets, and we are positioned to deliver attractive, high rate-of-return growth in 2018,” said Hager. “A key driver of our operational momentum is the advancement of multi-zone development activity across our world-class STACK and Delaware Basin opportunities. With several projects underway, this cutting-edge development technique will optimize per-section recoveries, while improving capital efficiencies by 20 percent.”

Production Exceeds Midpoint of Hurricane-Adjusted Guidance

Devon’s net production in the third quarter averaged 527,000 oil-equivalent barrels (Boe) per day. This result exceeded the midpoint of the company’s Hurricane Harvey-adjusted guidance by 6,000 Boe per day. Of this total, oil production accounted for the largest component of the company’s product mix at 44 percent of total volumes.

The majority of Devon’s production was attributable to its U.S. resource plays, which averaged 403,000 Boe per day during the third quarter. Storm-related curtailments reduced production in the U.S. by approximately 15,000 barrels per day (65 percent oil) in the quarter, with the most significant impact in the south Texas Eagle Ford play. The strongest asset-level performance in the quarter was from the company’s STACK assets, where production advanced 26 percent compared to 2016 exit rates.

In Canada, net production was at the top-end of guidance averaging 124,000 Boe per day during the third quarter. A maintenance event at Jackfish 2, completed over a three-week period in July, curtailed production by approximately 15,000 barrels per day in the third quarter. Devon’s Jackfish complex has returned to pre-turnaround production levels and exited September at rates that are 24 percent above nameplate capacity.

50 High-Rate Wells Brought Online with Rates Exceeding 2,100 Boe per Day

Devon continued to advance its development programs across its U.S. resource plays and exited the third quarter with 19 development rigs running. With this increased activity, the company commenced production on 50 high-rate wells that averaged initial 30-day rates of more than 2,100 Boe per day (50 percent oil).

This strong drill-bit productivity was highlighted by 14 new Meramec wells brought online in the STACK play that achieved average 30-day rates of greater than 2,300 Boe per day (55 percent oil). The Delaware Basin also delivered several high-rate oil wells. This activity was headlined by four new Bone Spring wells around the state-line area of southeast New Mexico that attained 30-day rates of 1,750 Boe per day (75 percent oil).

These high-rate development wells showcase Devon’s asset quality and outstanding execution that has generated best-in-class well productivity in North America. Based on publicly available data over the past year, Devon’s 90-day production rates from new wells have achieved the highest rates of any U.S. onshore operator.

Strong Exit Rates Build Momentum into 2018

With operations fully restored from storm-related impacts, Devon remains on track to achieve its full-year 2017 target for U.S. oil production. Importantly, based on higher activity levels for the remainder of the year, the company forecasts its U.S. oil production from retained assets to exit the year at levels approximately 20 percent higher than the fourth quarter of 2016.

This strong production growth over the remainder of 2017 is driven by the company’s STACK and Delaware Basin assets, where 90 percent of its U.S. development rig activity is allocated. Combined, these two franchise growth assets are expected to advance their production by greater than 30 percent by the end of 2017 compared to the same period a year ago. With this strong growth in higher-margin production, liquids volumes are now projected to reach approximately 65 percent of Devon’s product mix by year-end.

In Canada, with maintenance at the Jackfish complex complete, the company expects to build strong momentum heading into 2018. For the fourth quarter of 2017, net production in Canada is forecasted to increase to a range of 137,000 to 143,000 Boe per day.

Capital Expenditures 12 Percent Below Guidance Year to Date

The company’s exploration and development capital expenditures in the third quarter totaled $548 million, which was below the low end of guidance for the third consecutive quarter. On a year-to-date basis, Devon’s capital investment has been 12 percent below the midpoint of guidance and amounted to 65 percent of the original capital budget provided in February.

This strong capital efficiency is driven by productivity gains in the STACK and Delaware Basin and the decoupling of historically bundled services. These efficiency improvements have largely offset industry inflationary pressures in 2017.

Due to these positive operating trends, Devon expects E&P capital spending to range from $2.0 billion to $2.1 billion in 2017. The company has not made any changes to its planned activity levels in 2017 and is on track to run approximately 20 development rigs across its U.S. resource plays by the end of 2017.

Third-Quarter 2017 Operations Report

For additional details on well results and other information about Devon’s E&P operations, please refer to the company’s third-quarter 2017 operations report at www.devonenergy.com. Highlights from the report include:

• STACK production advances 26 percent year to date
• Meramec pilot achieves average 30-day rates of 3,500 Boe per day
• STACK full-field development underway with spudding of Showboat project
• Initial Delaware Basin multi-zone project delivers cost savings of $1 million per well
• Jackfish complex exits quarter 24 percent above nameplate capacity
• Preliminary 2018 capital and production outlook

Midstream Profit Advances 9 Percent Year to Date

Devon’s midstream business generated operating profits of $242 million in the third quarter, expanding by 9 percent on a year-to-date basis compared to 2016. This growth was driven entirely by Devon’s strategic investment in EnLink Midstream.

Devon has a 64 percent ownership in EnLink’s general partner (NYSE: ENLC) and a 23 percent interest in the limited partner (NYSE: ENLK). In aggregate, the company’s ownership in EnLink has a market value of approximately $3.4 billion and is expected to generate cash distributions of approximately $270 million annually.

Cost Structure Continues to Improve

In addition to the shift to higher-value production, Devon plans to further expand margins with cost-reduction initiatives that are expected to achieve $1.4 billion of annualized operating and general and administrative expense (G&A) savings in 2017. In the third quarter, the company’s largest field-level cost, lease operating expenses (LOE), totaled $391 million, or $8.05 per Boe. This represents nearly $10 million of savings compared to the second quarter of 2017, with cost reductions achieved in both the U.S. and Canada.

Importantly, the company’s operating costs are expected to further improve on a per-unit basis in the fourth quarter of 2017. This improvement is driven by the combination of higher production rates and relatively flat LOE costs due to efficiency gains within field operations.

The company also effectively managed its G&A cost structure in the third quarter. Overhead expenses totaled $153 million, a 15 percent improvement compared to peak rates in the first half of the year. Savings were driven by lower employee-related costs.

Higher-Margin Production Nearly Doubles Cash Flow

Devon’s operating cash flow totaled $776 million in the third quarter. On a year-to-date basis, operating cash flow has reached $2.4 billion, a 96 percent increase compared to the same period a year ago. The higher cash flow is primarily attributable to improvements in commodity prices and a lower cost structure.

Devon’s reported net earnings totaled $228 million or $0.43 per diluted share in the third quarter. Adjusting for items that securities analysts typically exclude from their published estimates, the company’s core earnings totaled $242 million or $0.46 per diluted share, exceeding analyst consensus estimates.

Free Cash Flow Increases Cash Balance to $2.8 Billion

In the third quarter, the company’s upstream operations fully funded its capital requirements and generated free cash flow, which helped increase cash balances by $400 million to $2.8 billion at the end of September. This represents the third consecutive quarter that Devon has increased its cash balance, representing a total cash build of approximately $800 million year to date.

In addition to the company’s strong liquidity and investment-grade ratings, Devon’s financial position is further bolstered by its attractive hedge position. The company currently has approximately 65 percent of its estimated oil and gas production protected for the remainder of 2017 at attractive pricing points.

The company continues to accumulate hedges for 2018 and has protected the price of approximately 40 percent of estimated volumes for the first half of the year. Devon’s disciplined, risk-management program will continue to add hedges for the upcoming six quarters. This activity will consist of systematic hedges added on a quarterly basis and discretionary hedges that take advantage of favorable market conditions.

Asset Divestiture Program Reaches $420 Million of Asset Sales

The company’s financial strength will be further enhanced by proceeds from its ongoing divestiture program. In the third quarter, the divestiture program progressed with an additional $80 million of asset sales, increasing overall proceeds to $420 million to date.

The most significant asset remaining within this divestiture program is select leasehold within the Barnett Shale focused primarily in Johnson County. Data rooms for the Johnson County properties were opened at the end of September and initial bids are expected during the fourth quarter. Production associated with the assets in Johnson County is approximately 30,000 Boe per day.

Due to the closing of the Lavaca County assets at the end of the quarter and other minor asset sales, Devon’s fourth quarter production is expected to be reduced by 5,000 Boe per day (60 percent oil).

Non-GAAP Reconciliations

Pursuant to regulatory disclosure requirements, Devon is required to reconcile non-GAAP (generally accepted accounting principles) financial measures to the related GAAP information. Core earnings and core earnings per share referenced within the commentary of this release are non-GAAP financial measures. Reconciliations of these and other non-GAAP measures are provided within the tables of this release.

Conference Call Webcast and Supplemental Earnings Materials

Please note that as soon as practicable today, Devon will post an operations report to its website at www.devonenergy.com. The company’s third-quarter conference call will be held at 10 a.m. Central (11 a.m. Eastern) on Wednesday, Nov. 1, 2017, and will serve primarily as a forum for analyst and investor questions and answers.

Forward-Looking Statements

This press release includes "forward-looking statements" as defined by the Securities and Exchange Commission (SEC). Such statements include those concerning strategic plans, expectations and objectives for future operations, and are often identified by use of the words “expects,” “believes,” “will,” “would,” “could,” “forecasts,” “projections,” “estimates,” “plans,” “expectations,” “targets,” “opportunities,” “potential,” “anticipates,” “outlook” and other similar terminology. 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 our business and operations 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, gas and NGL prices; uncertainties inherent in estimating oil, gas and NGL reserves; the extent to which we are successful in acquiring and discovering additional reserves; the uncertainties, costs and risks involved in exploration and development activities; risks related to our hedging activities; counterparty credit risks; regulatory restrictions, compliance costs and other risks relating to governmental regulation, including with respect to environmental matters; risks relating to our indebtedness; our ability to successfully complete mergers, acquisitions and divestitures; the extent to which insurance covers any losses we may experience; our limited control over third parties who operate our oil and gas properties; midstream capacity constraints and potential interruptions in production; competition for leases, materials, people and capital; cyberattacks targeting our systems and infrastructure; and any of the other risks and uncertainties identified in our Form 10-K and our other filings with the SEC. 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 SEC 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, potential locations, risked and unrisked locations, estimated ultimate recovery (or EUR), exploration target size and other similar terms. 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. Investors are urged to consider closely the disclosure in our Form 10-K, available at www.devonenergy.com. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or from the SEC’s website at www.sec.gov.

About Devon Energy

Devon Energy is a leading independent energy company engaged in finding and producing oil and natural gas. Based in Oklahoma City and included in the S&P 500, Devon operates in several of the most prolific oil and natural gas plays in the U.S. and Canada with an emphasis on a balanced portfolio. For more information, please visit www.devonenergy.com.

    DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION   PRODUCTION NET OF ROYALTIES                         Quarter Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Oil and bitumen (MBbls/d) U. S. - Core 112 108 117 124 Heavy Oil 121 137 127 128 Retained assets 233 245 244 252 Divested assets — 6 — 13 Total 233 251 244 265 Natural gas liquids (MBbls/d) U. S. - Core 94 96 96 107 Divested assets — 8 — 17 Total 94 104 96 124 Gas (MMcf/d) U. S. - Core 1,185 1,231 1,195 1,292 Heavy Oil 16 18 17 20 Retained assets 1,201 1,249 1,212 1,312 Divested assets — 75 — 165 Total 1,201 1,324 1,212 1,477 Oil equivalent (MBoe/d) U. S. - Core 403 410 412 446 Heavy Oil 124 140 130 132 Retained assets 527 550 542 578 Divested assets — 27 — 57 Total 527 577 542 635     DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION   PRODUCTION TREND                               2016 2017 Quarter 3 Quarter 4 Quarter 1 Quarter 2 Quarter 3 Oil and bitumen (MBbls/d) Barnett Shale 1 1 1 1 1 Delaware Basin 31 29 30 30 31 Eagle Ford 33 34 48 36 30 Heavy Oil 137 139 138 122 121 Rockies Oil 11 11 13 13 12 STACK 21 19 21 25 27 Other assets 11 11 10 11 11 Retained assets 245 244 261 238 233 Divested assets 6 — — — — Total 251 244 261 238 233 Natural gas liquids (MBbls/d) Barnett Shale 44 43 43 42 36 Delaware Basin 12 10 10 10 11 Eagle Ford 13 11 15 11 12 Rockies Oil 1 1 1 1 1 STACK 23 21 26 31 32 Other assets 3 4 3 2 2 Retained assets 96 90 98 97 94 Divested assets 8 — — — — Total 104 90 98 97 94 Gas (MMcf/d) Barnett Shale 730 710 683 675 672 Delaware Basin 92 89 88 96 90 Eagle Ford 85 90 119 96 88 Heavy Oil 18 18 23 14 16 Rockies Oil 19 17 15 17 11 STACK 292 284 287 298 313 Other assets 13 13 13 12 11 Retained assets 1,249 1,221 1,228 1,208 1,201 Divested assets 75 — — — — Total 1,324 1,221 1,228 1,208 1,201 Oil equivalent (MBoe/d) Barnett Shale 166 163 158 155 148 Delaware Basin 59 54 54 56 57 Eagle Ford 61 60 83 63 57 Heavy Oil 140 141 141 124 124 Rockies Oil 16 15 17 18 16 STACK 92 88 95 105 111 Other assets 16 16 15 15 14 Retained assets 550 537 563 536 527 Divested assets 27 — — — — Total 577 537 563 536 527     DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION   BENCHMARK PRICES                         (average prices) Quarter 3 September YTD 2017 2016 2017 2016 Oil ($/Bbl) - West Texas Intermediate (Cushing) $ 48.14 $ 45.02 $ 49.48 $ 41.41 Natural Gas ($/Mcf) - Henry Hub $ 2.99 $ 2.81 $ 3.17 $ 2.28   REALIZED PRICES Quarter Ended September 30, 2017 Oil /Bitumen NGL Gas Total (Per Bbl) (Per Bbl) (Per Mcf) (Per Boe) United States $ 47.12 $ 15.15 $ 2.45 $ 23.85 Canada $ 32.25     N/M     N/M   $ 31.59 Realized price without hedges $ 39.36 $ 15.15 $ 2.45 $ 25.67 Cash settlements $ 0.54   $ (0.03 ) $ 0.12   $ 0.52 Realized price, including cash settlements $ 39.90   $ 15.12   $ 2.57   $ 26.19   Quarter Ended September 30, 2016 Oil /Bitumen NGL Gas Total (Per Bbl) (Per Bbl) (Per Mcf) (Per Boe) United States $ 42.51 $ 9.80 $ 2.24 $ 20.26 Canada $ 23.71     N/M     N/M   $ 23.23 Realized price without hedges $ 32.27 $ 9.80 $ 2.24 $ 20.98 Cash settlements $ 0.84   $ 0.10   $ (0.04 ) $ 0.32 Realized price, including cash settlements $ 33.11   $ 9.90   $ 2.20   $ 21.30   Nine Months Ended September 30, 2017 Oil /Bitumen NGL Gas Total (Per Bbl) (Per Bbl) (Per Mcf) (Per Boe) United States $ 47.84 $ 14.62 $ 2.54 $ 24.44 Canada $ 29.10     N/M     N/M   $ 28.50 Realized price without hedges $ 38.08 $ 14.62 $ 2.54 $ 25.41 Cash settlements $ 0.45   $ (0.02 ) $ 0.05   $ 0.29 Realized price, including cash settlements $ 38.53   $ 14.60   $ 2.59   $ 25.70   Nine Months Ended September 30, 2016 Oil /Bitumen NGL Gas Total (Per Bbl) (Per Bbl) (Per Mcf) (Per Boe) United States $ 36.89 $ 8.84 $ 1.70 $ 17.16 Canada $ 18.58     N/M     N/M   $ 18.15 Realized price without hedges $ 28.03 $ 8.84 $ 1.70 $ 17.37 Cash settlements $ (0.57 ) $ (0.06 ) $ 0.12   $ 0.02 Realized price, including cash settlements $ 27.46   $ 8.78   $ 1.82   $ 17.39     DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION   CONSOLIDATED STATEMENTS OF EARNINGS                         (in millions, except per share amounts) Quarter Ended Nine Months Ended September 30, September 30,   2017     2016     2017     2016   Oil, gas and NGL sales $ 1,245 $ 1,113 $ 3,760 $ 3,023 Oil, gas and NGL derivatives (144 ) 79 214 (30 ) Marketing and midstream revenues 2,055 1,690 5,992 4,503 Asset dispositions and other   —     1,351     10     1,351   Total revenues and other   3,156     4,233     9,976     8,847   Lease operating expenses 391 355 1,176 1,215 Marketing and midstream operating expenses 1,813 1,480 5,319 3,884 General and administrative expenses 153 141 498 482 Production and property taxes 71 67 227 220 Depreciation, depletion and amortization 400 394 1,162 1,420 Asset impairments 2 319 9 4,851 Restructuring and transaction costs — (5 ) — 266 Other operating items   —     17     11     41   Total operating expenses   2,830     2,768     8,402     12,379   Operating income (loss) 326 1,465 1,574 (3,532 ) Net financing costs 127 243 370 570 Other nonoperating items   (73 )   44     (124 )   150   Earnings (loss) before income taxes 272 1,178 1,328 (4,252 ) Income tax expense (benefit)   25     171     51     (228 ) Net earnings (loss) 247 1,007 1,277 (4,024 ) Net earnings (loss) attributable to noncontrolling interests   19     14     59     (391 ) Net earnings (loss) attributable to Devon $ 228   $ 993   $ 1,218   $ (3,633 ) Net earnings (loss) per share attributable to Devon: Basic $ 0.43 $ 1.90 $ 2.32 $ (7.22 ) Diluted $ 0.43 $ 1.89 $ 2.31 $ (7.22 )   Weighted average common shares outstanding: Basic 526 524 525 509 Diluted 529 527 528 509     DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION   CONSOLIDATED STATEMENTS OF CASH FLOWS                         (in millions) Quarter Ended Nine Months Ended September 30, September 30,   2017     2016     2017     2016   Cash flows from operating activities: Net earnings (loss) $ 247 $ 1,007 $ 1,277 $ (4,024 ) Adjustments to reconcile net earnings (loss) to net cash from operating activities: Depreciation, depletion and amortization 400 394 1,162 1,420 Asset impairments 2 319 9 4,851 Gains and losses on asset sales 1 (1,351 ) (6 ) (1,351 ) Deferred income tax expense (benefit) (14 ) 86 (20 ) (300 ) Commodity derivatives 144 (79 ) (214 ) 30 Cash settlements on commodity derivatives 24 12 43 15 Other derivatives and financial instruments 9 21 16 329 Cash settlements on other derivatives and financial instruments — 3 — (148 ) Asset retirement obligation accretion 16 19 47 58 Share-based compensation 33 23 122 163 Other (85 ) 127 (134 ) (31 ) Net change in working capital 7 137 94 208 Change in long-term other assets 2 (3 ) 12 10 Change in long-term other liabilities   (10 )   12     12     7   Net cash from operating activities   776     727     2,420     1,237   Cash flows from investing activities: Capital expenditures (735 ) (421 ) (2,203 ) (1,659 ) Acquisitions of property, equipment and businesses (6 ) (3 ) (39 ) (1,641 ) Proceeds from sale of investment — — 190 — Divestitures of property and equipment 209 1,680 323 1,889 Other   (1 )   34     (5 )   7   Net cash from investing activities   (533 )   1,290     (1,734 )   (1,404 ) Cash flows from financing activities: Borrowings of long-term debt, net of issuance costs 413 816 2,208 1,662 Repayments of long-term debt (571 ) (2,173 ) (1,950 ) (2,722 ) Payment of installment payable — — (250 ) — Net short-term debt repayments — — — (626 ) Early retirement of debt — (82 ) (6 ) (82 ) Issuance of common stock — — — 1,469 Issuance of subsidiary units 414 59 486 835 Dividends paid on common stock (30 ) (32 ) (95 ) (190 ) Contributions from noncontrolling interests 18 146 47 152 Distributions to noncontrolling interests (84 ) (77 ) (247 ) (224 ) Shares exchanged for tax withholdings (3 ) (2 ) (67 ) (30 ) Other   —     (1 )   (2 )   (7 ) Net cash from financing activities   157     (1,346 )   124     237   Effect of exchange rate changes on cash   12     (9 )   12     5   Net change in cash and cash equivalents 412 662 822 75 Cash and cash equivalents at beginning of period   2,369     1,723     1,959     2,310   Cash and cash equivalents at end of period $ 2,781   $ 2,385   $ 2,781   $ 2,385       DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION   CONSOLIDATED BALANCE SHEETS             (in millions) September 30, December 31,   2017     2016   Current assets: Cash and cash equivalents $ 2,781 $ 1,959 Accounts receivable 1,462 1,356 Assets held for sale — 193 Other current assets   379     264   Total current assets   4,622     3,772   Property and equipment, at cost: Oil and gas, based on full cost accounting: Subject to amortization 78,470 75,648 Not subject to amortization   2,853     3,437   Total oil and gas 81,323 79,085 Midstream and other   11,097     10,455   Total property and equipment, at cost 92,420 89,540 Less accumulated depreciation, depletion and amortization   (75,338 )   (73,350 ) Property and equipment, net   17,082     16,190   Goodwill 3,964 3,964 Other long-term assets   1,891     1,987   Total assets $ 27,559   $ 25,913     Current liabilities: Accounts payable $ 797 $ 642 Revenues and royalties payable 1,012 908 Short-term debt 20 — Other current liabilities   1,003     1,066   Total current liabilities   2,832     2,616   Long-term debt 10,383 10,154 Asset retirement obligations 1,100 1,226 Other long-term liabilities 645 894 Deferred income taxes 665 648 Equity: Common stock 53 52 Additional paid-in capital 7,207 7,237 Accumulated deficit (428 ) (1,646 ) Accumulated other comprehensive earnings   297     284   Total stockholders’ equity attributable to Devon 7,129 5,927 Noncontrolling interests   4,805     4,448   Total equity   11,934     10,375   Total liabilities and equity $ 27,559   $ 25,913     Common shares outstanding 525 523     DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION   CONSOLIDATING STATEMENTS OF OPERATIONS                         (in millions) Quarter Ended September 30, 2017 Devon U.S. & Canada EnLink Eliminations Total Oil, gas and NGL sales $ 1,245 $ — $ — $ 1,245 Oil, gas and NGL derivatives (144) — — (144) Marketing and midstream revenues 832 1,397 (174) 2,055 Asset dispositions and other   1   (1)   —   — Total revenues and other   1,934   1,396   (174)   3,156 Lease operating expenses 391 — — 391 Marketing and midstream operating expenses 843 1,144 (174) 1,813 General and administrative expenses 122 31 — 153 Production and property taxes 60 11 — 71 Depreciation, depletion and amortization 258 142 — 400 Asset impairments   —   2   —   2 Total operating expenses   1,674   1,330   (174)   2,830 Operating income 260 66 — 326 Net financing costs 77 50 — 127 Other nonoperating items   (69)   (4)   —   (73) Earnings before income taxes 252 20 — 272 Income tax expense   23   2   —   25 Net earnings 229 18 — 247 Net earnings attributable to noncontrolling interests   —   19   —   19 Net earnings (loss) attributable to Devon $ 229 $ (1) $ — $ 228         OTHER KEY STATISTICS (in millions) Quarter Ended September 30, 2017 Devon U.S. &                   Canada EnLink Eliminations Total Cash flow statement related items: Operating cash flow $ 577 $ 199 $ — $ 776 Divestitures of property and equipment $ 208 $ 1 $ — $ 209 Capital expenditures $ (545 ) $ (190 ) $ — $ (735 ) Debt activity, net $ — $ (158 ) $ — $ (158 ) EnLink distributions received (paid) $ 66 $ (150 ) $ — $ (84 ) Issuance of subsidiary units $ — $ 414 $ — $ 414   Balance sheet statement items: Net debt (1) $ 4,223 $ 3,399 $ - $ 7,622   (1) Net debt is a non-GAAP measure. For a reconciliation of the comparable GAAP measure, see "Non-GAAP Financial Measures" later in this release.               CAPITAL EXPENDITURES (in millions) Quarter Ended September 30, 2017 Nine Months Ended September 30, 2017 Exploration and development capital $ 548 $ 1,401 Land and other acquisitions   16   46 Exploration and production (E&P) capital 564 1,447 Capitalized G&A and interest 75 224 Other   24   64 Devon capital expenditures (1) $ 663 $ 1,735  

(1) Excludes $170 million and $636 million attributable to EnLink for the third quarter and first nine months of 2017, respectively.

    DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION  

NON-GAAP FINANCIAL MEASURES

This press release includes non-GAAP financial measures. These non-GAAP measures are not alternatives to GAAP measures, and you should not consider these non-GAAP measures in isolation or as a substitute for analysis of our results as reported under GAAP. Below is additional disclosure regarding each of the non-GAAP measures used in this press release, including reconciliations to their most directly comparable GAAP measure.

CORE EARNINGS

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. Accordingly, the company also uses the measures of core earnings and core earnings per share attributable to Devon. Devon believes these non-GAAP measures facilitate comparisons of its performance to earnings estimates published by securities analysts. Devon also believes these non-GAAP measures can facilitate comparisons of its performance between periods and to the performance of its peers. The following table summarizes the effects of these items on third-quarter 2017 earnings.

      (in millions, except per share amounts) Quarter Ended September 30, 2017             After       Noncontrolling Per Diluted Before-tax After-tax Interests Share Earnings attributable to Devon (GAAP) $ 272 $ 247 $ 228 $ 0.43 Adjustments: Fair value changes in financial instruments and foreign currency 106 40 39 0.08 Gains and losses on asset sales 1 1 — — Asset impairments 2 1 1 — Deferred tax asset valuation allowance   —   (26 )   (26 )   (0.05 ) Core earnings attributable to Devon (Non-GAAP) $ 381 $ 263   $ 242   $ 0.46    

NET DEBT

Devon defines net debt as debt less cash and cash equivalents and net debt attributable to the consolidation of EnLink Midstream as presented in the following table. Devon believes that netting these sources of cash against debt and adjusting for EnLink net debt provides a clearer picture of the future demands on cash from Devon to repay debt.

      (in millions) September 30, 2017 Devon U.S. & Canada       EnLink       Devon Consolidated Total debt (GAAP) $ 6,862 $ 3,541 $ 10,403 Less cash and cash equivalents   (2,639 )   (142 )   (2,781 ) Net debt (Non-GAAP) $ 4,223   $ 3,399   $ 7,622       DEVON ENERGY CORPORATION FORWARD LOOKING GUIDANCE   PRODUCTION GUIDANCE             Quarter 4 Low High Oil and bitumen (MBbls/d) U.S.(1) 120 125 Heavy Oil 135 140 Total 255 265   Natural gas liquids (MBbls/d) 99 103 Total(1) 99 103   Gas (MMcf/d) U.S. (1) 1,170 1,200 Heavy Oil 14 16 Total 1,184 1,216 Oil equivalent (MBoe/d) U.S. (1) 414 428 Heavy Oil 137 143 Total 551 571

(1) Q4 U.S. production guidance is reduced by ~5,000 Boe per day (60 percent oil) associated with Lavaca County and other minor asset sales.

            PRICE REALIZATIONS GUIDANCE Quarter 4 Low High Oil and bitumen - % of WTI U.S. 90 % 100 % Canada 53 % 63 % NGL - realized price $ 13 $ 16 Natural gas - % of Henry Hub 75 % 85 %     DEVON ENERGY CORPORATION FORWARD LOOKING GUIDANCE   OTHER GUIDANCE ITEMS             Quarter 4 ($ millions, except %) Low High Marketing & midstream operating profit $ 245 $ 265 Lease operating expenses $ 360 $ 410 General & administrative expenses $ 150 $ 170 Production and property taxes $ 65 $ 75 Depreciation, depletion and amortization $

400

$

450

Other operating items $ 10 $ 20 Net financing costs $ 120 $ 130 Current income tax rate 5.0 % 15.0 % Deferred income tax rate   20.0 %   30.0 % Total income tax rate   25.0 %   45.0 %   Net earnings attributable to noncontrolling interests $ 30 $ 40     CAPITAL EXPENDITURES GUIDANCE Quarter 4 (in millions) Low High Exploration and production $ 650 $ 700 Capitalized G&A 55 65 Capitalized interest 15 20 Other   20     30   Devon capital expenditures (1) $ 740   $ 815     (1) Excludes capital expenditures related to EnLink.     DEVON ENERGY CORPORATION FORWARD LOOKING GUIDANCE   Oil Commodity Hedges                         Price Swaps Price Collars       Weighted Weighted Weighted Average Average Price Average Floor Ceiling Price Period Volume (Bbls/d) ($/Bbl) Volume (Bbls/d) Price ($/Bbl) ($/Bbl) Q4 2017 83,178 $ 53.83 79,200 $ 45.51 $ 57.41 Q1-Q4 2018 35,532 $ 51.65 45,860 $ 45.88 $ 55.88 Q1-Q4 2019 2,844 $ 50.87 4,079 $ 44.95 $ 54.95                     Oil Basis Swaps Weighted Average Differential to Period Index Volume (Bbls/d) WTI ($/Bbl) Q4 2017 Midland Sweet 13,261 $ (0.41 ) Q4 2017 Western Canadian Select 92,696 $ (14.54 ) Q1-Q4 2018 Midland Sweet 23,000 $ (1.02 ) Q1-Q4 2018 Western Canadian Select 69,085 $ (14.79 ) Q1-Q4 2019 Midland Sweet 14,000 $ (0.66 )                     Natural Gas Commodity Hedges       Price Swaps Price Collars       Weighted Average Weighted Average Volume Weighted Average Volume Floor Price Ceiling Price Period (MMBtu/d) Price ($/MMBtu) (MMBtu/d) ($/MMBtu) ($/MMBtu) Q4 2017 357,717 $ 3.20 455,000 $ 3.03 $ 3.41 Q1-Q4 2018 339,422 $ 3.07 164,982 $ 2.98 $ 3.29 Q1-Q4 2019 13,603 $ 3.05 16,068 $ 2.91 $ 3.21  

Devon’s oil derivatives settle against the average of the prompt month NYMEX West Texas Intermediate futures price. Devon’s natural gas derivatives settle against the Inside FERC first of the month Henry Hub index. Commodity hedge positions are shown as of October 27, 2017.

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Devon Energy CorporationInvestor ContactsScott Coody, 405-552-4735Chris Carr, 405-228-2496Media ContactJohn Porretto, 405-228-7506