Devon Energy (DVN) 8-K Devon Energy Reports Second-Quarter 2019 Results

Exhibit 99.3

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

PRODUCTION NET OF ROYALTIES

	Quarter Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Oil and bitumen (MBbls/d)
New Devon		142		126		140		119
U.S. divest assets		3		10		3		10
Canada - discontinued operations		96		109		105		119
Total		241		245		248		248
Natural gas liquids (MBbls/d)
New Devon		82		68		78		62
U.S. divest assets		30		41		30		41
Total		112		109		108		103
Gas (MMcf/d)
New Devon		575		513		578		503
U.S. divest assets		423		603		431		637
Canada - discontinued operations		4		12		4		12
Total		1,002		1,128		1,013		1,152
Total oil equivalent (MBoe/d)
New Devon		321		279		314		264
U.S. divest assets		103		151		105		158
Canada - discontinued operations		97		111		105		121
Total		521		541		524		543

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

PRODUCTION TREND

	2018						2019
	Quarter 2		Quarter 3		Quarter 4		Quarter 1		Quarter 2
Oil and bitumen (MBbls/d)
Delaware Basin		45		44		45		60		67
STACK		34		29		31		32		31
Powder River Basin		13		15		13		15		15
Eagle Ford		28		31		30		25		23
Other		6		5		6		6		6
New Devon		126		124		125		138		142
U.S. divest assets		10		9		8		4		3
Canada - discontinued operations		109		102		120		112		96
Total		245		235		253		254		241
Natural gas liquids (MBbls/d)
Delaware Basin		15		19		18		23		27
STACK		37		40		37		35		40
Powder River Basin		1		2		2		2		2
Eagle Ford		13		15		15		12		12
Other		2		1		1		1		1
New Devon		68		77		73		73		82
U.S. divest assets		41		36		32		31		30
Total		109		113		105		104		112
Gas (MMcf/d)
Delaware Basin		94		103		127		146		158
STACK		329		337		343		333		313
Powder River Basin		13		18		20		18		22
Eagle Ford		74		84		95		83		81
Other		3		2		2		1		1
New Devon		513		544		587		581		575
U.S. divest assets		603		491		457		439		423
Canada - discontinued operations		12		11		6		4		4
Total		1,128		1,046		1,050		1,024		1,002
Total oil equivalent (MBoe/d)
Delaware Basin		76		79		84		107		120
STACK		125		126		126		123		124
Powder River Basin		16		19		18		21		21
Eagle Ford		54		60		61		50		49
Other		8		7		6		7		7
New Devon		279		291		295		308		321
U.S. divest assets		151		127		116		108		103
Canada - discontinued operations		111		104		121		113		97
Total		541		522		532		529		521

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

BENCHMARK PRICES

(average prices)	Quarter 2				June YTD
	2019		2018		2019		2018
Oil ($/Bbl) - West Texas Intermediate (Cushing)	$	59.85	$	67.83	$	57.36	$	65.38
Natural Gas ($/Mcf) - Henry Hub	$	2.64	$	2.80	$	2.90	$	2.90

REALIZED PRICES

	Quarter Ended June 30, 2019
	Oil			NGL			Gas		Total
	(Per Bbl)			(Per Bbl)			(Per Mcf)		(Per Boe)
Realized price without hedges	$	57.09		$	14.79		$	1.61	$	27.24
Cash settlements	$	(0.41	)	$	1.03		$	0.20	$	0.60
Realized price, including cash settlements	$	56.68		$	15.82		$	1.81	$	27.84
	Quarter Ended June 30, 2018
	Oil			NGL			Gas		Total
	(Per Bbl)			(Per Bbl)			(Per Mcf)		(Per Boe)
Realized price without hedges	$	65.41		$	24.10		$	2.03	$	31.97
Cash settlements	$	(11.43	)	$	(1.66	)	$	0.13	$	(3.67	)
Realized price, including cash settlements	$	53.98		$	22.44		$	2.16	$	28.30
	Six Months Ended June 30, 2019
	Oil			NGL			Gas		Total
	(Per Bbl)			(Per Bbl)			(Per Mcf)		(Per Boe)
Realized price without hedges	$	54.50		$	16.62		$	2.08	$	27.90
Cash settlements	$	1.58		$	0.77		$	0.01	$	0.76
Realized price, including cash settlements	$	56.08		$	17.39		$	2.09	$	28.66
	Six Months Ended June 30, 2018
	Oil			NGL			Gas		Total
	(Per Bbl)			(Per Bbl)			(Per Mcf)		(Per Boe)
Realized price without hedges	$	63.71		$	23.38		$	2.23	$	31.20
Cash settlements	$	(10.32	)	$	(1.13	)	$	0.16	$	(3.01	)
Realized price, including cash settlements	$	53.39		$	22.25		$	2.39	$	28.19

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

CONSOLIDATED STATEMENTS OF EARNINGS

(in millions, except per share amounts)	Quarter Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Upstream revenues	$	1,191		$	766		$	1,654		$	1,783
Marketing revenues		730			1,156			1,495			2,018
Total revenues		1,921			1,922			3,149			3,801
Production expenses		371			406			736			801
Exploration expenses		7			62			11			83
Marketing expenses		713			1,149			1,463			2,015
Depreciation, depletion and amortization		394			342			774			647
Asset impairments		—			154			—			154
Asset dispositions		(1	)		23			(45	)		11
General and administrative expenses		114			135			249			310
Financing costs, net		66			64			126			453
Restructuring and transaction costs		12			85			63			85
Other expenses		8			(15	)		(9	)		(64	)
Total expenses		1,684			2,405			3,368			4,495
Earnings (loss) from continuing operations before income taxes		237			(483	)		(219	)		(694	)
Income tax expense (benefit)		71			13			(39	)		10
Net earnings (loss) from continuing operations		166			(496	)		(180	)		(704	)
Net earnings from discontinued operations, net of income tax expense		329			161			358			216
Net earnings (loss)		495			(335	)		178			(488	)
Net earnings attributable to noncontrolling interests		—			90			—			134
Net earnings (loss) attributable to Devon	$	495		$	(425	)	$	178		$	(622	)
Basic net earnings (loss) per share:
Basic earnings (loss) from continuing operations per share	$	0.40		$	(0.97	)	$	(0.43	)	$	(1.36	)
Basic earnings from discontinued operations per share		0.80			0.14			0.85			0.16
Basic net earnings (loss) per share	$	1.20		$	(0.83	)	$	0.42		$	(1.20	)
Diluted net earnings (loss) per share:
Diluted earnings (loss) from continuing operations per share	$	0.40		$	(0.97	)	$	(0.43	)	$	(1.36	)
Diluted earnings from discontinued operations per share		0.79			0.14			0.85			0.16
Diluted net earnings (loss) per share	$	1.19		$	(0.83	)	$	0.42		$	(1.20	)
Weighted average common shares outstanding:
Basic		415			521			425			524
Diluted		417			521			425			524

UPSTREAM REVENUES

(in millions)	Quarter Ended					Six Months Ended
	June 30,					June 30,
	2019		2018			2019			2018
Oil, gas and NGL sales	$	1,051	$	1,253		$	2,119		$	2,383
Derivative cash settlements		23		(144	)		57			(229	)
Derivative valuation changes		117		(343	)		(522	)		(371	)
Upstream revenues	$	1,191	$	766		$	1,654		$	1,783

PRODUCTION EXPENSES

(in millions)	Quarter Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Lease operating expense	$	133	$	154	$	265	$	302
Gathering, processing & transportation		161		180		320		362
Production taxes		66		64		130		121
Property taxes		11		8		21		16
Production expenses	$	371	$	406	$	736	$	801

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)	Quarter Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Cash flows from operating activities:
Net earnings (loss)	$	495		$	(335	)	$	178		$	(488	)
Adjustments to reconcile net earnings (loss) to net cash from operating activities:
Net earnings from discontinued operations, net of income tax expense		(329	)		(161	)		(358	)		(216	)
Depreciation, depletion and amortization		394			342			774			647
Asset impairments		—			154			—			154
Leasehold impairments		1			53			2			61
Accretion on discounted liabilities		10			9			20			18
Total (gains) losses on commodity derivatives		(140	)		487			465			600
Cash settlements on commodity derivatives		23			(144	)		54			(229	)
(Gains) losses on asset dispositions		(1	)		23			(45	)		11
Deferred income tax expense (benefit)		69			—			(38	)		(4	)
Share-based compensation		23			53			69			87
Early retirement of debt		—			—			—			312
Other		2			(20	)		(12	)		(65	)
Changes in assets and liabilities, net		(59	)		65			(143	)		71
Net cash from operating activities - continuing operations		488			526			966			959
Net cash from operating activities - discontinued operations		135			(21	)		33			350
Net cash from operating activities - total		623			505			999			1,309
Cash flows from investing activities:
Capital expenditures		(494	)		(543	)		(996	)		(1,105	)
Acquisitions of property and equipment		(13	)		(10	)		(23	)		(16	)
Divestitures of property and equipment		28			560			339			607
Net cash from investing activities - continuing operations		(479	)		7			(680	)		(514	)
Net cash from investing activities - discontinued operations		2,544			(281	)		2,497			(550	)
Net cash from investing activities - total		2,065			(274	)		1,817			(1,064	)
Cash flows from financing activities:
Repayments of long-term debt principal		—			—			(162	)		(807	)
Early retirement of debt		—			—			—			(304	)
Repurchases of common stock		(187	)		(428	)		(1,185	)		(499	)
Dividends paid on common stock		(37	)		(42	)		(71	)		(74	)
Shares exchanged for tax withholdings		(3	)		(6	)		(22	)		(35	)
Net cash from financing activities - continuing operations		(227	)		(476	)		(1,440	)		(1,719	)
Net cash from financing activities - discontinued operations		—			73			(8	)		103
Net cash from financing activities - total		(227	)		(403	)		(1,448	)		(1,616	)
Effect of exchange rate changes on cash - discontinued operations		37			227			39			212
Net change in cash, cash equivalents and restricted cash		2,498			55			1,407			(1,159	)
Cash, cash equivalents and restricted cash at beginning of period		1,355			1,470			2,446			2,684
Cash, cash equivalents and restricted cash at end of period	$	3,853		$	1,525		$	3,853		$	1,525
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	3,470		$	1,460		$	3,470		$	1,460
Cash restricted for discontinued operations		370			—			370			—
Restricted cash included in other current assets		13			28			13			28
Cash and cash equivalents included in current assets associated with discontinued operations		—			37			—			37
Total cash, cash equivalents and restricted cash	$	3,853		$	1,525		$	3,853		$	1,525

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

CONSOLIDATED BALANCE SHEETS

(in millions)	June 30,			December 31,
	2019			2018
Current assets:
Cash and cash equivalents	$	3,470		$	2,414
Cash restricted for discontinued operations		370			—
Accounts receivable		842			855
Current assets associated with discontinued operations		131			283
Other current assets		354			885
Total current assets		5,167			4,437
Oil and gas property and equipment, based on successful efforts accounting, net		8,987			8,982
Other property and equipment, net		1,050			1,044
Total property and equipment, net		10,037			10,026
Goodwill		841			841
Right-of-use assets		273			—
Other long-term assets		232			276
Long-term assets associated with discontinued operations		99			3,986
Total assets	$	16,649		$	19,566
Current liabilities:
Accounts payable	$	522		$	563
Revenues and royalties payable		772			832
Short-term debt		—			162
Current liabilities associated with discontinued operations		1,894			338
Other current liabilities		279			331
Total current liabilities		3,467			2,226
Long-term debt		4,294			4,292
Lease liabilities		263			—
Asset retirement obligations		528			606
Other long-term liabilities		431			442
Long-term liabilities associated with discontinued operations		189			2,285
Deferred income taxes		483			529
Stockholders’ equity:
Common stock		41			45
Additionalpaid-in capital		3,352			4,486
Retained earnings		3,738			3,650
Accumulated other comprehensive earnings (loss)		(117	)		1,027
Treasury stock, at cost, 0.7 million and 1.0 million shares in 2019 and 2018, respectively		(20	)		(22	)
Total stockholders’ equity		6,994			9,186
Total liabilities and stockholders’ equity	$	16,649		$	19,566
Common shares outstanding		410			450

CAPITAL EXPENDITURES

(in millions)	Quarter Ended		Six Months Ended
	June 30, 2019		June 30, 2019
New Devon upstream capital	$	478	$	935
Divest assets upstream capital		16		26
Land and other acquisitions		14		21
Exploration and production (E&P) capital		508		982
Other		22		29
Total continuing operations	$	530	$	1,011
Total discontinued operations	$	51	$	100

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

NON-GAAP FINANCIAL MEASURES

This press release includesnon-GAAP financial measures. Thesenon-GAAP measures are not alternatives to GAAP measures, and you should not consider thesenon-GAAP measures in isolation or as a substitute for analysis of our results as reported under GAAP. Below is additional disclosure regarding each of thenon-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 thesenon-GAAP measures facilitate comparisons of its performance to earnings estimates published by securities analysts. Devon also believes thesenon-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 second-quarter 2019 earnings.

(in millions, except per share amounts)	Quarter Ended June 30, 2019
	Before-tax			After-tax			Per Diluted Share
Continuing Operations
Net earnings (GAAP)	$	237		$	166		$	0.40
Adjustments:
Asset dispositions		(1	)		(1	)		(0.00	)
Asset and exploration impairments		2			2			0.00
Deferred tax asset valuation allowance		—			11			0.03
Fair value changes in financial instruments		(117	)		(91	)		(0.22	)
Restructuring and transaction costs		12			10			0.02
Core earnings(Non-GAAP)	$	133		$	97		$	0.23
Discontinued Operations
Net earnings (GAAP)	$	44		$	329		$	0.79
Adjustments:
Gain on sale of Canadian operations		(189	)		(460	)		(1.12	)
Asset and exploration impairments		37			27			0.07
Deferred tax asset valuation allowance		—			32			0.08
Fair value changes in financial instruments and foreign currency		(20	)		(17	)		(0.04	)
Restructuring and transaction costs		236			172			0.42
Core earnings(Non-GAAP)	$	108		$	83		$	0.20
Total
Net earnings (GAAP)	$	281		$	495		$	1.19
Adjustments:
Continuing Operations		(104	)		(69	)		(0.17	)
Discontinued Operations		64			(246	)		(0.59	)
Core earnings(Non-GAAP)	$	241		$	180		$	0.43

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

EBITDAX

Devon believes EBITDAX provides information useful in assessing operating and financial performance across periods. Devon computes EBITDAX as net earnings from continuing operations before income tax expense; financing costs, net; exploration expenses; depreciation, depletion and amortization; asset impairments; asset disposition gains and losses;non-cash share-based compensation;non-cash valuation changes for derivatives and financial instruments; restructuring and transaction costs; accretion on discounted liabilities; and other items not related to normal operations. EBITDAX as defined by Devon may not be comparable to similarly titled measures used by other companies and should be considered in conjunction with net earnings from continuing operations.

(in millions)
	Q3 2018			Q4 2018			Q1 2019			Q2 2019			Trailing 12 months
Net earnings (loss) from continuing operations (GAAP)	$	156		$	1,442		$	(346	)	$	166		$	1,418
Financing costs, net		68			59			60			66			253
Income tax expense (benefit)		(171	)		441			(110	)		71			231
Exploration expenses		22			24			4			7			57
Depreciation, depletion and amortization		342			339			380			394			1,455
Asset impairments		2			—			—			—			2
Asset dispositions		(6	)		(268	)		(44	)		(1	)		(319	)
Share-based compensation		23			23			23			21			90
Derivative and financial instrumentnon-cash valuation changes		200			(1,447	)		638			(117	)		(726	)
Restructuring and transaction costs		6			6			51			12			75
Accretion on discounted liabilities and other		(6	)		30			(16	)		8			16
EBITDAX(Non-GAAP)	$	636		$	649		$	640		$	627		$	2,552

NET DEBT

Devon defines net debt as debt less cash, cash equivalents and cash restricted for discontinued operations. Devon believes that netting these sources of cash against debt provides a clearer picture of the future demands on cash from Devon to repay debt.

(in millions)
	June 30, 2019
Debt - continuing operations (GAAP)	$	4,294
Debt classified as current liabilities associated with discontinued operations		1,494
Total debt		5,788
Cash and cash equivalents		(3,470	)
Cash restricted for discontinued operations		(370	)
Total cash		(3,840	)
Net debt(Non-GAAP)	$	1,948

FREE CASH FLOW

Devon defines free cash flow as total operating cash flow less capital expenditures and acquisitions. Devon believes that free cash flow provides a useful measure of available cash generated by operating activities for other investing and financing activities.

(in millions)
	Quarter Ended June 30, 2019
Total operating cash flow (GAAP)	$	623
Less capital expenditures and acquisitions:
Capital expenditures - continuing operations		(494	)
Capital expenditures - discontinued operations		(57	)
Acquisitions - continuing operations		(13	)
Free cash flow(Non-GAAP)	$	59

SUPPLEMENTAL INFORMATION

The following table presents the amounts reported in the consolidated comprehensive statements of earnings as discontinued operations.

STATEMENTS OF EARNINGS - DISCONTINUED OPERATIONS

(in millions)
	Three Months Ended			Six Months Ended
	June 30, 2019
Upstream revenues	$	388		$	635
Marketing revenues		12			38
Total revenues		400			673
Production expenses		153			294
Exploration expenses		4			13
Marketing expenses		9			18
Depreciation, depletion and amortization		49			128
Asset impairments		37			37
Asset dispositions		(189	)		(189	)
General and administrative expenses		13			31
Financing costs, net		13			26
Restructuring and transaction costs		236			239
Other expenses		31			3
Total expenses		356			600
Earnings from discontinued operations before income taxes		44			73
Income tax benefit		(285	)		(285	)
Net earnings from discontinued operations, net of tax	$	329		$	358

DEVON ENERGY CORPORATION

FORWARD LOOKING GUIDANCE

PRODUCTION GUIDANCE

	Quarter 3				Full Year
	Low		High		Low		High
Oil (MBbls/d)
New Devon		141		147		143		146
U.S. divest assets		2		4		2		4
Total		143		151		145		150
Natural gas liquids (MBbls/d)
New Devon		75		80		76		81
U.S. divest assets		26		32		26		31
Total		101		112		102		112
Gas (MMcf/d)
New Devon		540		580		560		590
U.S. divest assets		400		430		400		440
Total		940		1,010		960		1,030
Total oil equivalent (MBoe/d)
New Devon		306		323		312		325
U.S. divest assets		95		108		95		108
Total		401		431		407		433

PRICE REALIZATIONS GUIDANCE

	Quarter 3						Full Year
	Low			High			Low			High
Oil - % of WTI		90	%		100	%		90	%		100	%
NGL - realized price	$	12.00		$	16.00		$	13.00		$	17.00
Natural gas - % of Henry Hub		50	%		60	%		65	%		70	%

OTHER GUIDANCE ITEMS

	Quarter 3						Full Year
($ millions, except Boe and %)	Low			High			Low			High
Marketing & midstream operating profit	$	5		$	15		$	40		$	50
LOE & GP&T per BOE	$	7.50		$	7.75		$	7.50		$	7.75
Production & property tax	$	70		$	90		$	300		$	350
Exploration expenses	$	5		$	10		$	20		$	30
Depreciation, depletion and amortization	$	370		$	410		$	1,550		$	1,600
General & administrative expenses	$	105		$	115		$	450		$	490
Financing costs, net	$	60		$	70		$	250		$	270
Other expenses	$	10		$	20		$	40		$	50
Current income tax rate		0	%		0	%		0	%		0	%
Deferred income tax rate		20	%		25	%		20	%		25	%
Total income tax rate		20	%		25	%		20	%		25	%

CAPITAL EXPENDITURES GUIDANCE

	Quarter 3				Full Year
(in millions)	Low		High		Low		High
New Devon upstream capital	$	450	$	550	$	1,800	$	1,900
Divest assets upstream capital (assumes full year)		5		15		40		50
Corporate		5		10		40		50
Devon capital expenditures	$	460	$	575	$	1,880	$	2,000

DEVON ENERGY CORPORATION

FORWARD LOOKING GUIDANCE

Oil Commodity Hedges

	Price Swaps				Price Collars
Period	Volume (Bbls/d)		Weighted Average Price ($/Bbl)		Volume (Bbls/d)		Weighted Average Floor Price ($/Bbl)		Weighted Average Ceiling Price ($/Bbl)
Q3-Q4 2019		41,100	$	60.76		79,750	$	54.89	$	64.92
	Three-Way Price Collars
Period	Volume (Bbls/d)		Weighted Average Floor Sold Price ($/Bbl)		Weighted Average Floor Purchased Price ($/Bbl)		Weighted Average Ceiling Price ($/Bbl)
Q3-Q4 2019		5,000	$	50.00	$	63.00	$	74.80

Oil Basis Swaps

Period	Index	Volume (Bbls/d)		Weighted Average Differential to WTI ($/Bbl)
Q3-Q4 2019	Midland Sweet		28,000	$	(0.46	)
Q3-Q4 2019	Argus LLS		7,500	$	5.18
Q3-Q4 2019	Argus MEH		26,000	$	3.33
Q3-Q4 2019	NYMEX Roll		38,000	$	0.45
Q3-Q4 2019	Western Canadian Select		12,469	$	(20.03	)

Natural Gas Commodity Hedges - Henry Hub

	Price Swaps				Price Collars
Period	Volume (MMBtu/d)		Weighted Average Price ($/MMBtu)		Volume (MMBtu/d)		Weighted Average Floor Price ($/MMBtu)		Weighted Average Ceiling Price ($/MMBtu)
Q3-Q4 2019		257,800	$	2.80		200,500	$	2.63	$	3.02

Natural Gas Basis Swaps

Period	Index	Volume (MMBtu/d)		Weighted Average Differential to Henry Hub ($/MMBtu)
Q3-Q4 2019	Panhandle Eastern Pipe Line		20,000	$	(0.56	)
Q3-Q4 2019	El Paso Natural Gas		130,000	$	(1.46	)
Q3-Q4 2019	Houston Ship Channel		162,500	$	0.01

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 July 26, 2019.