Table of Contents

Index to Financial Statements

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

For the fiscal year ended December 31, 20182021

or

Commission File Number 001-32318

DEVON ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code:

(405) 235-3611

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒     No  ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.   ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐    No  ☒

The aggregate market value of the voting common stock held by non-affiliates of the registrant as of June 29, 201830, 2021 was approximately $22.5$19.6 billion, based upon the closing price of $43.96$29.19 per share as reported by the New York Stock Exchange on such date. On February 6, 2019, 438.32, 2022, 664.2 million shares of common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Registrant’s definitive Proxy Statement relating to Registrant’s 20192022 annual meeting of stockholders have been incorporated by reference in Part III of this Annual Report on Form 10-K.

Table of Contents

Index to Financial Statements

DEVON ENERGY CORPORATION

FORM 10-K

TABLE OF CONTENTS

2

Table of Contents

Index to Financial Statements

DEFINITIONS

Unless the context otherwise indicates, references to “us,” “we,” “our,” “ours,” “Devon,” the “Company” and “Registrant” refer to Devon Energy Corporation and its consolidated subsidiaries. All monetary values, other than per unit and per share amounts, are stated in millions of U.S. dollars unless otherwise specified. In addition, the following are other abbreviations and definitions of certain terms used within this Annual Report on Form 10-K:

“2009 Plan” means the Devon Energy Corporation 2009 Long-Term Incentive Plan, as amended and restated.

“2015 Plan” means the Devon Energy Corporation 2015 Long-Term Incentive Plan.

“2017 Plan” means the Devon Energy Corporation 2017 Long-Term Incentive Plan.

“2012 Senior Credit Facility” means Devon’s syndicated unsecured revolving line of credit, effective as of October 24, 2012.

“2018 Senior Credit Facility” means Devon’s syndicated unsecured revolving line of credit, effective as of October 5, 2018.

“ASC” means Accounting Standards Codification.

“ASR” means an accelerated share-repurchase transaction with a financial institution to repurchase Devon’s common stock.

“ASU” means Accounting Standards Update.

“Bbl” or “Bbls” means barrel or barrels.

“Bcf” means billion cubic feet.

“BKV” means Banpu Kalnin Ventures.

“BLM” means the United States Bureau of Land Management.

“Boe” means barrel of oil equivalent. Gas proved reserves and production are converted to Boe, at the pressure and temperature base standard of each respective state in which the gas is produced, at the rate of six Mcf of gas per Bbl of oil, based upon the approximate relative energy content of gas and oil. Bitumen and NGL proved reserves and production are converted to Boe on a one-to-one basis with oil.

“Btu” means British thermal units, a measure of heating value.

“Canada” means the division of Devon encompassing oil and gas properties located in Canada. All dollar amounts associated with Canada are in U.S. dollars, unless stated otherwise.

“Canadian Plan”Catalyst” means Devon Canada Corporation Incentive Savings Plan.Catalyst Midstream Partners, LLC.

“CDM” means Cotton Draw Midstream, L.L.C.

“DD&A” means depreciation, depletion and amortization expenses.

“Devon Financing” means Devon Financing Company, L.L.C.

“Devon Plan” means Devon Energy Corporation Incentive Savings Plan.

“EnLink” means EnLink Midstream Partners, LP, a master limited partnership.EHS” mean environmental, health and safety.

“EPA” means the United States Environmental Protection Agency.

“FASB”ESG” means Financial Accounting Standards Board.environmental, social and governance.

“Federal Funds Rate” means the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.

“G&A” means general and administrative expenses.

“GAAP” means U.S. generally accepted accounting principles.

“General Partner”GHG” means EnLink Midstream, LLC, the indirect general partner entity of EnLink, and, unless the context otherwise indicates, EnLink Midstream Manager, LLC, the managing member of EnLink Midstream, LLC.greenhouse gas.

“Inside FERC” refers to the publication Inside F.E.R.C.’s Gas Market Report.

“LIBOR” means London Interbank Offered Rate.

“LOE” means lease operating expenses.

“MBbls” means thousand barrels.

“MBoe” means thousand Boe.

3

Table of Contents

Index to Financial Statements

“Mcf” means thousand cubic feet.

“Merger” means the merger of Merger Sub with and into WPX, with WPX continuing as the surviving corporation and a wholly-owned subsidiary of the Company, pursuant to the terms of the Merger Agreement.

“Merger Agreement” means that certain Agreement and Plan of Merger, dated September 26, 2020, by and among the Company, Merger Sub and WPX.

“Merger Sub” means East Merger Sub, Inc., a wholly-owned subsidiary of the Company.

“MMBbls” means million barrels.

“MMBoe” means million Boe.

“MMBtu” means million Btu.

“MMcf” means million cubic feet.

“N/M” means not meaningful.

“NGL” or “NGLs” means natural gas liquids.

“NYMEX” means New York Mercantile Exchange.

“NYSE” means New York Stock Exchange.

“OPEC” means Organization of the Petroleum Exporting Countries.

“OPIS” means Oil Price Information Service.

“PHMSA” means United States Department of Transportation Pipeline and Hazardous Materials Safety Administration.

“SEC” means United States Securities and Exchange Commission.

“Senior Credit Facility” means Devon’s syndicated unsecured revolving line of credit, effective as of October 5, 2018.

“Standardized measure” means the present value of after-tax future net revenues discounted at 10% per annum.

“STEM” means science, technology, engineering and mathematics.

“S&P 500 Index” means Standard and Poor’s 500 index.

“Tax Reform Legislation” means Tax Cuts and Jobs Act.

“TSR” means total shareholder return.

“Upstream operations” means upstream revenues minus production expenses.

“U.S.” means United States of America.

“VIE” means variable interest entity.

“WPX” means WPX Energy, Inc.

“WTI” means West Texas Intermediate.

“/Bbl” means per barrel.

“/d” means per day.

“/MMBtu” means per MMBtu.

4

Table of Contents

Index to Financial Statements

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This report includes “forward-looking statements” as defined bywithin the SEC.meaning of the federal securities laws. Such statements include those concerning strategic plans, our expectations and objectives for future operations, as well as other future events or conditions, and are often identified by use of the words and phrases “expects,” “believes,” “will,” “would,” “could,” “continue,” “may,” “aims,” “likely to be,” “intends,” “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 report that address activities, events or developments that Devon 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 our control. Consequently, actual future results could differ materially and adversely from our expectations due to a number of factors, including, but not limited to:

The forward-looking statements included in this filing speak only as of the date of this report, represent management’s current reasonable expectations as of the date of this filing and are subject to the risks and uncertainties identified above as well as those described elsewhere in this report and in other documents we file from time to time with the SEC. We cannot guarantee the accuracy of our forward-looking statements, and readers are urged to carefully review and consider the various disclosures made in this report and in other documents we file from time to time with the SEC. All subsequent written and oral forward-looking statements attributable to Devon, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements above. We assume nodo not undertake, and expressly disclaim, any duty to update or revise our forward-looking statements based on new information, future events or otherwise.

5

Table of Contents

Index to Financial Statements

PART I

Items 1 and 2. Business and Properties

General

A Delaware corporation formed in 1971 and publicly held since 1988, Devon (NYSE: DVN) is an independent energy company engaged primarily in the exploration, development and production of oil, natural gas and NGLs. Our operations are concentrated in various North American onshore areas in the U.S.

On January 7, 2021, Devon and Canada. In July 2018, we exitedWPX completed an all-stock merger of equals. WPX was an oil and gas exploration and production company with assets in the midstream business by divesting our aggregate ownership interestsDelaware Basin in EnLinkTexas and New Mexico and the General Partner.

Williston Basin in North Dakota. This merger enhanced the scale of our operations, built a leading position in the Delaware Basin and accelerated our cash-return business model that prioritizes free cash flow generation and the return of capital to shareholders. In accordance with the Merger Agreement, WPX shareholders received a fixed exchange of 0.5165 shares of Devon common stock for each share of WPX common stock owned. The combined company continues to operate under the name Devon.Our principal and administrative offices are located at 333 West Sheridan, Oklahoma City, OK 73102-5015 (telephone 405-235-3611). As of December 31, 2018, Devon and its consolidated subsidiaries had approximately 2,900 employees.

Devon files or furnishes annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments to these reports, with the SEC. Through our website, www.devonenergy.com, we make available electronic copies of the documents we file or furnish to the SEC, the charters of the committees of our Board of Directors and other documents related to our corporate governance. The corporate governance documents available on our website include our Code of Ethics for Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, and any amendments to and waivers from any provision of that Code will also be posted on our website. Access to these electronic filings is available free of charge as soon as reasonably practicable after filing or furnishing them to the SEC. Printed copies of our committee charters or other governance documents and filings can be requested by writing to our corporate secretary at the address on the cover of this report. Reports filed with the SEC are also made available on its website at www.sec.gov.

Our Strategy

Our business strategy is focused on delivering a consistently competitive shareholder return among our peer group. Because the business of exploring for, developing and producing oil and natural gas is capital intensive, delivering sustainable, capital efficient cash flow growth is a key tenanttenet to our success. While our cash flow is highly dependent on volatile and uncertain commodity prices, we pursue our strategy throughout all commodity price cycles with threefour fundamental principles.

AProven and responsible operator – We operate our business with the interests of our stakeholders and our ESG values in mind. With our vision to be a premier independent oil and natural gas exploration and production company, the work our employees do every day contributes to the local, national and global economies. We produce a valuable commodity that is fundamental to society, and we endeavor to do so in a safe, environmentally responsible and ethical way, while striving to deliver strong returns to our shareholders. We have an ongoing commitment to transparency in reporting our ESG performance. We continue to establish new environmental performance targets for our company and further incorporate ESG initiatives into our compensation structure.

Premier, sustainable portfolio of assets – As discussed in the nextmore detail later in this section of this Annual Report, we own a portfolio of assets located in the United States and Alberta, Canada.States. We strive to own premier assets capable of generating cash flows in excess of our capital and operating requirements, as well as competitive rates of return. We also desire to own a portfolio of assets that can provide asustainable production growth platform extending many years into the future. BecauseAs a result of the strength of oil prices relative to natural gas, we have been positioning our portfolio to be more heavily weighted to U.S. oil assets in recent years.

During 2018, we made significant progress in our transition to a U.S. oil company. We sold our midstream businessMerger and certain non-core upstream assets, generating nearly $5 billion in proceeds. In February 2019, we announced our intent to separate our Canadian businessacquisition and our Barnett Shale assets from the Company. After these separations, we expectdivestiture activity, our oil production, growth, price realizations and field-level margins will allhave continued to improve as we continue to sharpen our focus on four corefive U.S. oil and liquids plays located in the Delaware Basin, STACK,Anadarko Basin, Williston Basin, Eagle Ford and Rockies.Powder River Basin.

Superior execution – As we pursue cash flow growth, we continually work to optimize the efficiency of our capital programs and production operations, with an underlying objective of reducing absolute and per unit costs and enhancing our returns. We also strive to leverage our culture of health, safety and environmental stewardship in all aspects of our business.

Throughout 2018,With the Merger and continuous improvement initiatives, we continued to achieve efficiency gains in various aspects of our business. Our initial production rates from new wells continued to improve in our four core U.S. oil plays and have exceeded the average of the top 40 U.S. producers since 2015 by more than 40%. We continued to improve cycle times, incorporate production optimization strategies and other cost reduction initiatives, driving down breakeven costs across our portfolio of assets.

As we focus onbuilt a more streamlinedscalable, multi-basin portfolio of U.S. oil assets we areand continue to aggressively pursuing an improvedimprove our cost structure with $780 million of annual costs savings expected by 2021.to further expand margins. We expect to realize about 70% of thehave realized annualized savings by the end of 2019. Our retained U.S. oil business is expected to realize $300 million of annual well cost savings by 2021, as we increase our focus on development drilling, reduce our facilityreducing well costs, production expenses, financing costs and optimize well spacing in the STACK. Additionally, we will streamline and align our workforce with our go-forward business, which should result in $300 million of annual cost savings by the end of the three-year period. As we continue deleveraging, we expect to reduce annual interest costs by $130 million. Finally, we have plans to reduce our annual production expenses by $50 million over the next three years.G&A costs.

Financial strength and flexibility – Commodity prices are uncertain and volatile, so we strive to maintain a strong balance sheet, as well as adequate liquidity and financial flexibility, in order to operate competitively in all commodity price cycles. Our capital allocation decisions are made with attention to these financial stewardship principles, as well as the priorities of funding our core

operations, protecting our investment-grade credit ratings, and paying and growing our shareholder dividend. While maintaining financial strength is a top priority, we remain committed to maximizing shareholder value which is evidenced by instituting our fixed plus variable dividend strategy and making opportunistic share repurchases.

6

Table of ContentsEnvironmental, Social and Governance

IndexDevon is focused on producing reliable, affordable and accessible energy the world needs, while continuing to Financial Statements

During 2018, we reduced our consolidated debt by 40%, primarily from our divestitures.find ways to produce and deliver it more responsibly. We also raised our quarterly dividend 33% and began a $4 billion share repurchase program. As we disposeconsider the potential impacts of our Canadianoperations when planning activities and Barnett Shale assetsmaking decisions. We strive to comply with all applicable environmental laws and regulations, often going above and beyond what is required. In the process, Devon incorporates technology, tools and techniques that enable us to minimize or avoid effects on air, water, land and wildlife. We are also evaluating opportunities to create value in 2019, we expectthe transition to use the proceedsever-cleaner forms of energy, seeking to reduce debt furtherleverage our strengths and repurchase additional common shares. Aspartnerships.

We have a result of our planned dispositions,strong organization in place to manage environmental performance, from our Board of Directors to our EHS/ESG leadership team and field-level EHS and operations teams. In recent years, we have updated our governance practices to elevate EHS and ESG oversight and discussion, including those related to climate change and the energy transition. In 2021, we renamed Devon’s Board Governance Committee as the Governance, Environmental, and Public Policy Committee and expanded the Committee’s Charter to, among other things, underscore environmental performance and integration of sustainability into our business activities. The Committee frequently reviews our environmental initiatives and is keenly interested in the operational measures, technological advancements, and other actions that the Company takes in advancing our status in this important area.

Devon has increasedestablished environmental performance targets that reflect our dedication and commitment to providing affordable energy while achieving meaningful emissions reductions and pursuing our ultimate goal of net zero GHG emissions for Scope 1 and 2. Our GHG and methane targets shown below are calculated from a 2019 baseline.

Devon is also focused on conserving and reusing water and interacting with our value chain on our overall environmental goals. We have set a target to advance our recycled water rate and use 90% or more non-freshwater for completions activities in our most active operating areas within the Delaware Basin. Devon is also actively engaged with our stakeholders upstream and downstream of our operations to improve ESG performance across our value chain. We are confident we can deliver strong operational and financial results in a manner that reduces our environmental impact while safeguarding our workforce and the communities in which we operate.

Human Capital

Delivering strong operational and financial results in a safe, environmentally and socially responsible way requires the expertise and positive contributions of every Devon employee. Consequently, our people are the Company’s most important resource and we seek to hire the best people who share repurchaseour core values of integrity, relationships, courage and results. To develop our workforce, we focus on training, safety, wellness, inclusion, diversity and equality. As of December 31, 2021, Devon and its consolidated subsidiaries had approximately 1,600 employees, all located in the U.S.

Employee Safety and Wellness

We prepare our workforce to work safely with comprehensive training and orientation, on-the-job guidance and tools, safety engagements, recognition and other resources. Employees and contractors are expected to comply with safety rules and regulations and are accountable for stopping at-risk work, immediately reporting incidents and near-miss events and informing visitors of emergency alarms and evacuation plans. To safeguard workers on our well sites and neighbors nearby, we plan, design, drill, complete and produce wells using proven best practices, technologies, tools and materials.

In response to the COVID-19 pandemic, we formally established a COVID-19 team focused on developing and implementing a number of safety measures to help our employees manage their work and personal responsibilities, with a strong focus on employee well-being, health and safety. The COVID-19 team established an information campaign to provide employees an understanding of the virus risk factors and safety measures, as well as timely updates from governmental regulations.

Beyond employee safety, Devon also prioritizes the physical, mental and financial wellness of our employees. We offer competitive health and financial benefits with incentives designed to promote well-being, including an Employee Assistance Program (“EAP”) that provides virtual counseling services for employees and their family members free of charge. Access to experienced counselors, financial experts, staff attorneys, elder-care consultants and concierge services is included in EAP services available 365 days a year, 24 hours a day. Devon encourages employees to take advantage of our wellness programs and activities by getting an annual physical exam, attending preventive health screenings and completing a financial wellness series at no cost to employees.

Employee Compensation, Benefits and Development

We strive to attract and retain high-performing individuals across our workforce. One way we do this is by providing competitive compensation and benefits, including annual bonuses; a 401(k) savings plan with a Devon contribution up to 14% of the employee’s earnings; stock awards for all employees; medical, dental and vision health care coverage; health savings and dependent-care flexible spending accounts; maternity and parental leave for the birth or adoption of a child; an adoption assistance program; alternate work schedules; flexible work hours; part-time work options; and telecommuting support; among other benefits.

Devon also looks to our core values to build the workforce we need. We develop our employees’ knowledge and creativity and advance continual learning and career development through ongoing performance, training and development conversations.

Diversity, Equity and Inclusion

Devon’s success depends on employees who demonstrate integrity, accountability, perseverance and a passion for building our business and delivering results. Our efforts to create a workforce with these qualities start with offering equal opportunity in all aspects of employment. We do this with company policies and leadership commitment, and by providing employees opportunities to help shape Devon’s diversity, equity and inclusion direction and actions.

We strive to demonstrate inclusion, equity and diversity throughout the Company to bring a range of thoughts, experiences and points of view to our problem-solving and decision-making. Along with senior leadership efforts, Devon’s Diversity, Equity and Inclusion (“DEI”) Team works to proactively increase diversity and inclusion awareness, identify challenges and find innovative ways to achieve Devon’s inclusion and diversity vision and priorities. In 2021, our workforce was comprised of 24% females and 22% minorities. Along with our workforce efforts, we invest in DEI through community partnerships. One way we are achieving this is by creating STEM centers in elementary schools in the areas in which we operate. Devon has helped open more than 100 STEM centers that orient children of all backgrounds to skills that will be essential for the future workforce. In 2021, Devon awarded nine Inclusion and Equity Grants, ranging from $5,000 to $25,000 to nine diverse community organizations throughout Oklahoma City. This program plans to $5 billionexpand in February 20192022 to reach additional organizations across more of the Company’s operational areas.

Compliance Culture

We reinforce the high expectations we have for ethical conduct by our employees through our Code of Business Conduct and raisedEthics (“Code”). The Code sets out basic principles for all employees to follow and incorporates specific guidance on critical areas such as our quarterly dividend 12.5%prohibition of harassment and discrimination, our protocols for avoiding conflicts of interest and our policies related to $0.09 per share.anti-corruption laws, privacy, cybersecurity and confidential information. On an annual basis, Devon employees, as well as our directors and officers, are required to acknowledge and agree to abide by our Code and complete a training course on the Code and its related policies. We encourage our employees to help enforce the Code and maintain reporting systems that are designed to minimize concerns that reports will result in retaliation.

Oil and Gas Properties

Property Profiles

Key summary data from each of our areas of operation as of and for the year ended December 31, 20182021 are detailed in the map below.Notes 22 and 23 to the financial statements included in “Item 8. Financial Statements and Supplementary Data” of this report contain additional information on our segments and geographical areas.

7

Table of Contents

Index to Financial Statements

Delaware Basin – The Delaware Basin is one of Devon’s top assets and continues to offerour most active program in the portfolio. We acquired additional acreage in the Delaware Basin through the Merger, creating an industry leading position in this basin. Through capital efficient drilling programs, it offers exploration and low-risk development opportunities from many geologic reservoirs and play types, including the oil-rich Wolfcamp, Bone Spring, WolfcampAvalon and LeonardDelaware formations. We expect theseWith a significant inventory of oil and liquids-rich drilling opportunities across our acreage in the Delaware Basinthat have multi-zone development potential, Devon has a robust platform to deliver high-margin growthdrilling programs for many years to come. During 2018, our continued appraisal and development work enabled us to increase our proved reserves in this area by approximately 24%. At December 31, 2018,2021, we had 1013 operated rigs developing this asset. In 2019, we plan to invest approximately $900 million of capital in the Delaware Basin, making it the top-funded asset in the portfolio.Wolfcamp, Bone Spring and Avalon formations. The Delaware Basin is our top funded asset and is expected to receive approximately 75% of our capital allocation in 2022.

STACKAnadarko Basin – The STACKOur Anadarko Basin development, located primarily in Oklahoma’s Canadian, Kingfisher and Blaine counties, is one of Devon’s top assets.provides long-term optionality through its significant inventory. Our STACKAnadarko Basin position is one of the largest in the industry, providing visible long-term stable production. AtWe have an agreement with Dow to jointly develop a portion of our Anadarko Basin acreage and, as of December 31, 2018,2021, we had fivea two operated rigsrig program associated with this joint venture. Dow will fund approximately 65% of the partnership capital requirements through a remaining drilling focused incarry of approximately $65 million over the Meramec formation. In 2019, we plan approximately $400 million of capital investment. The STACK is Devon’s second highest funded asset in the portfolio for 2019.next three years.  

Eagle FordWilliston Basin – We acquired our position in the Williston Basin through the Merger in 2021. It is located entirely on the Fort Berthold Indian Reservation, and its operations are focused in the oil-prone Bakken and Three Forks formations. The Williston Basin

is a high-margin oil resource located in the core of the play and generated substantial cash flow in 2021. At December 31, 2021, we had one operated rig developing this asset.   

Eagle Ford – Our Eagle Ford in 2014. Since acquiring these assets, we have delivered tremendous results by producing 173 million oil-equivalent barrels. Our excellent resultsoperations are driven by our developmentlocated in DeWitt County, locatedTexas, situated in the economic core of the play. Our Eagle Ford assets generated significant cash flow in 2018. In 2019, we plan approximately $300 million of capital investment.Its production is leveraged to oil and has low-cost access to premium Gulf Coast pricing, providing for strong operating margins.

Rockies OilPowder River Basin – Our acreage in the RockiesThis asset is focused on emerging oil opportunities in the Powder River Basin. Recent drilling success in this basin has expanded our drilling inventory, and we expect further growth as we accelerate activity and continue to de-risk this emerging light-oil opportunity. As of December 31, 2018, we had two operated rigsWe are currently targeting several Cretaceous oil objectives, including the Turner, Parkman, Teapot and Niobrara formations in northern Converse County of the Powder River Basin. In 2019, we plan approximately $300 million of capital investment and adding two additional operated rigs.

Heavy Oil – Our operations in Canada are focused on our heavy oil assets in Alberta, Canada. Our most significant Canadian operation is our Jackfish complex, an industry-leading thermal heavy oil operation in the non-conventional oil sands of east central Alberta. We employ a recovery method known as steam-assisted gravity drainage at Jackfish. The Jackfish operation consists of three facilities. We expect Jackfish to maintain a reasonably flat production profile for greater than 15 years requiring approximately $200 million of annual maintenance capital based on current economic conditions.

Our Pike oil sands acreage is situated directly to the southeast of our Jackfish acreage in east central Alberta and has similar reservoir characteristics to Jackfish. The Pike leasehold is currently undeveloped and has no proved reserves or production as offormations. At December 31, 2018. Currently,2021, we have minimal planned capital outlays for Pike in the near future. The majority of our Pike leasehold does not expire until 2025 and 2026.

In addition to Jackfish and Pike, we hold acreage and own producing assets in the Bonnyville region, located to the south and east of Jackfish in eastern Alberta. Bonnyville is a low-risk oil development play that produces heavy oil by conventional means, without the need for steam injection.

In 2019, we plan to separate our operations in Canada.

Barnett Shale – This is our largest property in terms of proved reserves. Our leases are located primarily in Denton, Parker, Tarrant and Wise counties in north Texas. Since acquiring a substantial position inhad one operated rig developing this field in 2002, we continue to introduce technology and new innovations to optimize production operations and have transformed this asset into one of the top producing gas fields in North America. In 2019, we plan to separate our Barnett Shale assets.asset.

Proved Reserves

For estimates of our proved developed and proved undeveloped reserves and the discussion of the contribution by each property, see Note 23 in “Item 8. Financial Statements and Supplementary Data” of this report.

Proved oil and gas reserves are those quantities of oil, gas and NGLs which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from known reservoirs under existing economic conditions, operating methods and government regulations. To be considered proved, oil and gas reserves must be economically producible before contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain. Also, the project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

8

We establish our proved reserves estimates using standard geological and engineering technologies and computational methods, which are generally accepted by the petroleum industry. We primarily prepare our proved reserves additions by analogy using type curves that are based on decline curve analysis of wells in analogous reservoirs. We further establish reasonable certainty of our proved reserves estimates by using one or more of the following methods: geological and geophysical information to establish reservoir continuity between penetrations, rate-transient analysis, analytical and numerical simulations, or other proprietary technical and statistical methods. For estimates of our proved developed and proved undeveloped reserves and the discussion of the contribution by each property, see Table of ContentsNote 22

Index to in “Item 8. Financial Statements and Supplementary Data” of this report.

The process of estimating oil, gas and NGL reserves is complex and requires significant judgment, as discussed in “Item 1A. Risk Factors” of this report. As a result, we have developed internal policies for estimating and recording reserves. Such policies require proved reserves to be in compliance with theapplicable SEC definitions and guidance. Our policies assign responsibilities for compliance in reserves bookings to our Reserve Evaluation Group (the “Group”). These same policies also require that reserve estimates be made by professionally qualified reserves estimators, as defined by the Society of Petroleum Engineers’ standards.

The Group, which is led by Devon’s DirectorManager of Reserves and Economics, is responsible for the internal review and certification of reserves estimates. We ensure the DirectorManager and key members of the Group have appropriate technical qualifications to oversee the preparation of reserves estimates. The Group reports toestimates and is managed through our finance department. No portionare independent of the Group’s compensation is directly dependent on the quantity of reserves booked.

operating groups. The DirectorManager of the Group has over 3015 years of industry experience, with positions of increasing responsibility for the estimation and evaluation of reserves. He has been employed by Devon for the past 18 years, including the past 11 in his current position. His further professional qualifications include a degree in petroleum engineering and is a registered professional engineer, member of the Society of Petroleum Engineers and experience in reserves estimation for projects in the U.S. (both onshore and offshore), as well as in Canada, Asia, the Middle East and South America.  

Throughout the year, the Group performs internal reserves reviews of each operating country’s reserves.engineer. The Group also oversees audits and reserves estimates performed by a qualified third-party petroleum consulting firms.firm. During 2018,2021, we engaged two such firms to audit approximately 89% of our proved reserves in accordance with generally accepted petroleum engineering and evaluation methods and procedures. LaRoche Petroleum Consultants, Ltd. auditedto audit approximately 87%88% of our U.S. reserves, and Deloitte LLP audited approximately 97%proved reserves. Additionally, our Board of our Canadian reserves.

In addition to conducting these internal reviews and external reserves audits, we also haveDirectors has a Reserves Committee that provides additional oversight of our reserves process. The committee consists of threefive independent members of our Board of Directors. This committee provides additional oversight of our reserves estimationDirectors who collectively have skills and certification process. The members of our Reserves Committee have educational backgrounds in geology or petroleum engineering, as well as experiencethat are relevant to the reserves estimation process. The Reserves Committee meets a minimum of twice a year to discuss reserves issuesprocesses, reporting systems and policies and meets at least once a year separately with our senior reserves engineering personnel and separately with our third-party petroleum consultants.disclosure requirements.

The following tables present production, price and cost information for each significant field countryin our asset portfolio and continent.the total company.

9

Table of Contents

Index to Financial Statements

Drilling Statistics

The following table summarizes our development and exploratory drilling results. We did not have any dry development or exploratory wells drilled for the years 2021, 2020 or 2019.

10

Table of ContentsProductive Wells

Index to Financial Statements

The following table presents thesets forth our producing wells that were in progress onas of December 31, 2018. As of February 1, 2019, these wells were still in progress.2021.

Productive Wells

The following table sets forth our producing wells as of December 31, 2018.

The day-to-day operations of oil and gas properties are the responsibility of an operator designated under pooling or operating agreements. The operator supervises production, maintains production records, employs field personnel and performs other functions. We are the operator of approximately 12,9005,134 gross wells. As operator, we receive reimbursement for direct expenses incurred to perform our duties, as well as monthly per-well producing, drilling and construction overhead reimbursement at rates customarily charged in the respective areas. In presenting our financial data, we record the monthly overhead reimbursements as a reduction of G&A, which is a common industry practice.

Acreage Statistics

The following table sets forth our developed and undeveloped lease and mineral acreage as of December 31, 2018.2021. Of our 3.81.9 million net acres, approximately 1.91.2 million acres are held by production. The acreage in the table includes 0.2 million, 0.1 million and 0.1 millionbelow does not include any

material net acres subject to leases that are scheduled to expire during 2019, 20202022, 2023 and 2021, respectively. As of December 31, 2018, there were no proved undeveloped reserves associated with our expiring acreage. Of2024. For the 0.3 million net acres that are set to expire by December 31, 2021,2024, we anticipate performing operational and administrative actions to continue the lease terms for portions of the acreage that we intend to further assess. However, we do expect to allow a portion of the acreage to expire in the normal course of business. In 2018, we allowed approximately 0.1 millionLess than 20% of our total net acres to expire.are located on federal lands.

11

Table of Contents

Index to Financial Statements

Title to Properties

Title to properties is subject to contractual arrangements customary in the oil and gas industry, liens for taxes not yet due and, in some instances, other encumbrances. We believe that such burdens do not materially detract from the value of properties or from the respective interests therein or materially interfere with their use in the operation of the business.

As is customary in the industry, a preliminary title investigation, typically consisting of a review of local title records, is made at the time of acquisitions of undeveloped properties. More thorough title investigations, which generally include a review of title records and the preparation of title opinions by outside legal counsel, are made prior to the consummation of an acquisition of producing properties and before commencement of drilling operations on undeveloped properties.

Marketing Activities

Oil, Gas and NGL Marketing

The spot markets for oil, gas and NGLs are subject to volatility as supply and demand factors fluctuate. As detailed below, we sell our production under both long-term (one year or more) and short-term (less than one year) agreements at prices negotiated with third parties. Regardless of the term of the contract, the vast majority of our production is sold at variable, or market-sensitive, prices.

Additionally, we may enter into financial hedging arrangements or fixed-price contracts associated with a portion of our oil, gas and NGL production. These activities are intended to support targeted price levels and to manage our exposure to price fluctuations. See Note 3 in “Item 8. Financial Statements and Supplementary Data” of this report for further information.

As of January 2019,2022, our production was sold under the following contract terms.

Delivery Commitments

A portion of our production is sold under certain contractual arrangements that specify the delivery of a fixed and determinable quantity. As of December 31, 2018,2021, we were committed to deliver the following fixed quantities of production.

We expect to fulfill our delivery commitments primarily with production from our proved developed reserves. Moreover, our proved reserves have generally been sufficient to satisfy our delivery commitments during the three most recent years, and we expect such reserves will continue to be the primary means of fulfilling our future commitments. However, where our proved reserves are not sufficient to satisfy our delivery commitments, we can and may use spot market purchases to satisfy the commitments.

Customers

During 2018, we had one purchaser that accounted for approximately 11% of our consolidated sales revenue.

During 2017 and 2016, no purchaser accounted for over 10% of our consolidated sales revenue.

Competition

See “Item 1A. Risk Factors.”

12

Table of Contents

Index to Financial Statements

Public Policy and Government Regulation

Our industry is subject to a wide range of regulations. Laws, rules, regulations, taxes, fees and other policy implementation actions affecting our industry have been pervasive and are under constant review for amendment or expansion. Numerous government agencies have issued extensive regulations which are binding on our industry and its individual members, some of which carry substantial penalties for failure to comply. These laws and regulations increase the cost of doing business and consequently affect profitability. Because public policy changes are commonplace, and changes to existing laws and regulations are frequently amended,proposed or implemented, we are unable to predict the future cost or impact of compliance. However, we do not expect that any of these laws and regulations will affect our operations materially differently than they would affect other companies with similar operations, size and financial strength. The following are significant areas of government control and regulation affecting our operations.

Exploration and Production Regulation

Our operations are subject to various federal, tribal, state, provincialtribal and local laws and regulations. These lawsregulations relating to exploration and regulations relate to matters that include:production activities, including with respect to:

Our operations also are subject to conservation regulations, including the regulation of the size of drilling and spacing units or proration units; the number of wells that may be drilled in a unit; the rate of production allowable from oil and gas wells; and the unitization or pooling of oil and gas properties. In the U.S., someSome states allow the forced pooling or unitization of tracts to facilitate exploration and development, while other states rely on voluntary pooling of lands and leases, whichleases. Such rules may make it more difficult to develop oilimpact the ultimate timing of our exploration and gas properties.development plans. In addition, federal and state conservation laws generally limit the venting or flaring of natural gas, and state conservation laws impose certain requirements regarding the ratable purchase of production. These regulations limit the amounts of oil and gas we can produce from our wells and the number of wells or the locations at which we can drill.

Certain of our U.S. natural gas and oil leases are granted or approved by the federal government and administered by the BLM or Bureau of Indian Affairs of the Department of the Interior. Such leases require compliance with detailed federal regulations and orders that regulate, among other matters, drilling and operations on lands covered by these leases and calculation and disbursement of royalty payments to the federal government, tribes or tribal members. Moreover, the permitting process for oil and gas activities on federal and Indian lands can sometimes be subject to delay, which can hinder development activities or otherwise adversely impact operations. The

federal government has, from time to time, evaluated and, in some cases, promulgated new rules and regulations regarding competitive lease bidding, venting and flaring, oil and gas measurement and royalty payment obligations for production from federal lands. In addition, permitting activities on federal lands can sometimes be subject to delays.

Royalties and Incentives in Canada

The royalty calculation in Canada is a significant factor in the profitability of Canadian oil and gas production. Oil sands crown royalties are determined by government regulations and are generally calculated as a percentage of the value of the gross production, net of allowed deductions. The royalty percentage is determined on a sliding-scale based on crown posted prices. For pre-payout oil sands projects, the regulations prescribe lower royalty rates for oil sands projects until allowable capital costs have been recovered. In

13

Table of Contents

Index to Financial Statements

early 2016, the Alberta government adopted the recommendation of its Royalty Review Panel. The new royalty framework preserves the existing royalty structure and rates for oil sands. For conventional oil and gas royalty calculations, wells drilled after January 1, 2017 would use the Modernized Royalty Framework (MRF) which prescribes a lower royalty rate until allowable costs have been recovered. The calculation for wells post payout is based on a percentage of production net of allowed deductions and varies with commodity price. 

Marketing in Canada

Any oil or gas export requires an exporter to obtain export authorizations from Canada’s National Energy Board.

In December 2018, Alberta enacted the Curtailment Rules (Rules) in an effort to reduce Alberta’s oversupply of oil which resulted from pipeline and rail constraints. Pursuant to the Rules, operators that produce either or both crude oil or crude bitumen in amounts in excess of 10 MBbls/d are required to curtail their production. As of January 1, 2019, the production curtailment amount was set at 325 MBbls/d. The curtailment amounts are expected to reduce over 2019 to an average of approximately 95 MBbls/d as storage levels ease and price differential improve, and the Rules terminate on December 31, 2019. Devon’s curtailments in the first quarter of 2019 as a result of the Rules are anticipated to total approximately 10 MBbls/d of bitumen, or approximately 2% of our total production.

Environmental, Pipeline Safety and Occupational Regulations

We strive to conduct our operations in a socially and environmentally responsible manner, which includes compliance with applicable law. We are subject to many federal, state, provincial, tribal and local laws and regulations concerning occupational safety and health as well as the discharge of materials into, and the protection of, the environment and natural resources. Environmental, health and safety laws and regulations relate to:

Failure to comply with these laws and regulations can lead to the imposition of remedial liabilities, administrative, civil or criminal fines or penalties or injunctions limiting our operations in affected areas. Moreover, multiple environmental laws provide for citizen suits, which can allow environmental organizations to act in the place of the government and sue operators for alleged violations of environmental law. Environmental organizations also can assert legal and administrative challenges to certain actions of oil and gas regulators, such as the BLM, for allegedly failing to comply with environmental laws, which can result in delays in obtaining permits or other necessary authorizations. In recent years, federal and state policy makers and regulators have increasingly implemented or proposed new laws and regulations designed to reduce methane emissions and other GHG, which have included mandates for new leak detection and retrofitting requirements, stricter emission standards and a proposed fee on methane emission leaks. For example, in November 2021, the Pipeline and Hazardous Materials Safety Administration issued a final rule significantly expanding reporting and safety requirements for operators of gas gathering pipelines, including previously unregulated pipelines.

Environmental protection and health and safety compliance are necessary manageable parts of our business. Webusiness that we historically have been able to plan for and comply with environmental, safety and health initiatives without materially altering our operating strategy or incurring significant unreimbursed expenditures. However, based on regulatory trends and increasingly stringent laws and permitting requirements, our capital expenditures and operating expenses related to the protection of the environment and safety and health compliance have increased over the years and may continue to increase. We cannot predict with any reasonable degree of certainty our future exposure concerning such matters.

Item 1A. Risk Factors

Our business and operations, and our industry in general, are subject to a variety of risks. The risks described below may not be the only risks we face, as our business and operations may also be subject to risks that we do not yet know of, or that we currently believe are immaterial. If any of the following risks should occur, our business, financial condition, results of operations and liquidity could be materially and adversely impacted. As a result, holders of our securities could lose part or all of their investment in Devon.

14

Table of Contents

Index to Financial Statements

Volatile Oil, Gas and NGL Prices Significantly Impact ourOur Business

Our financial condition, results of operations and the value of our properties are highly dependent on the general supply and demand for oil, gas and NGLs, which impact the prices we ultimately realize on our sales of these commodities. Historically, market prices and our realized prices have been volatile. For example, over the last five years, monthly NYMEX WTI oil and NYMEX Henry Hub gas prices ranged from a highhighs of over $100$80 per Bbl and $6$6.00 per MMBtu, respectively, to a lowlows of under $27$30 per Bbl and $1.70$1.50 per MMBtu, respectively. Such volatility is likely to continue in the future due to numerous factors beyond our control, including, but not limited to:

Our Business Has Been Adversely Impacted by the COVID-19 Pandemic, and We May Experience Continuing or Worsening Adverse Effects From This or Other Pandemics