Devon Energy (DVN) 8-K Devon Energy Reports First-Quarter 2021 Financial and Operational Results

Exhibit 99.2

Devon Energy First-Quarter 2021

Supplemental Tables

TABLE OF CONTENTS:	PAGE:
Income Statement		2
Supplemental Information for Income Statement		3
Cash Flow Statement		4
Balance Sheet		5
Production by Asset		6
Capital and Well Activity by Asset		7
Realized Price by Asset		8
Per-Unit Cash Margin by Asset		9
Non-GAAP Core Earnings (Loss),  Non-GAAP EBITDAX		10
Net Debt, Net Debt-to-EBITDAX, Free Cash Flow and Adjusted Free Cash Flow		11
Reinvestment Rate and Variable Dividend		12

1

CONSOLIDATED STATEMENTS OF EARNINGS  

(in millions, except per share amounts)	2021			2020
	Quarter 1			Quarter 4			Quarter 3			Quarter 2			Quarter 1
Oil, gas and NGL sales	$	1,788		$	786		$	678		$	424		$	807
Oil, gas and NGL derivatives (1)		(528	)		(117	)		(87	)		(361	)		720
Marketing and midstream revenues		502			611			476			331			560
Total revenues		1,762			1,280			1,067			394			2,087
Production expenses (2)		489			271			271			263			318
Exploration expenses		3			4			39			12			112
Marketing and midstream expenses		523			618			478			339			578
Depreciation, depletion and amortization		467			301			299			299			401
Asset impairments		—			27			—			—			2,666
Asset dispositions		(32	)		(1	)		—			—			—
General and administrative expenses		107			82			75			79			102
Financing costs, net (3)		77			70			66			69			65
Restructuring and transaction costs		189			17			32			—			—
Other, net		(29	)		1			—			13			(48	)
Total expenses		1,794			1,390			1,260			1,074			4,194
Loss from continuing operations before income taxes		(32	)		(110	)		(193	)		(680	)		(2,107	)
Income tax benefit		(248	)		(37	)		(90	)		(3	)		(417	)
Net earnings (loss) from continuing operations		216			(73	)		(103	)		(677	)		(1,690	)
Net earnings (loss) from discontinued operations, net of taxes		—			(25	)		13			9			(125	)
Net earnings (loss)		216			(98	)		(90	)		(668	)		(1,815	)
Net earnings attributable to noncontrolling interests		3			4			2			2			1
Net earnings (loss) attributable to Devon	$	213		$	(102	)	$	(92	)	$	(670	)	$	(1,816	)
Basic earnings (loss) per share:
Continuing operations	$	0.33		$	(0.20	)	$	(0.29	)	$	(1.80	)	$	(4.48	)
Discontinued operations		—			(0.07	)		0.04			0.02			(0.34	)
Basic net earnings (loss) per share	$	0.33		$	(0.27	)	$	(0.25	)	$	(1.78	)	$	(4.82	)
Diluted earnings (loss) per share:
Continuing operations	$	0.32		$	(0.20	)	$	(0.29	)	$	(1.80	)	$	(4.48	)
Discontinued operations		—			(0.07	)		0.04			0.02			(0.34	)
Diluted net earnings (loss) per share	$	0.32		$	(0.27	)	$	(0.25	)	$	(1.78	)	$	(4.82	)
Weighted average common shares outstanding:
Basic		654			383			383			383			383
Diluted		656			383			383			383			383

2

SUPPLEMENTAL INFORMATION FOR CONSLIDATED STATEMENTS OF EARNINGS  

(1) OIL, GAS AND NGL DERIVATIVES
(in millions)	2021			2020
	Quarter 1			Quarter 4			Quarter 3			Quarter 2			Quarter 1
Derivative cash settlements	$	(232	)	$	(27	)	$	10		$	232		$	101
Derivative valuation changes		(296	)		(90	)		(97	)		(593	)		619
Oil, gas and NGL derivatives	$	(528	)	$	(117	)	$	(87	)	$	(361	)	$	720
(2) PRODUCTION EXPENSES
(in millions)	2021			2020
	Quarter 1			Quarter 4			Quarter 3			Quarter 2			Quarter 1
Lease operating expense	$	199		$	91		$	100		$	108		$	126
Gathering, processing & transportation		160			130			125			123			130
Production taxes		117			47			42			25			56
Property taxes		13			3			4			7			6
Production expenses	$	489		$	271		$	271		$	263		$	318
(3) FINANCING COSTS, NET
(in millions)	2021			2020
	Quarter 1			Quarter 4			Quarter 3			Quarter 2			Quarter 1
Interest on outstanding debt	$	105		$	65		$	65		$	65		$	65
Gain on early retirement of debt		(20	)		—			—			—			—
Interest income		(1	)		—			(5	)		(2	)		(5	)
Other		(7	)		5			6			6			5
Financing costs, net	$	77		$	70		$	66		$	69		$	65

3

CONSOLIDATED STATEMENTS OF CASH FLOWS  

(in millions)	2021			2020
	Quarter 1			Quarter 4			Quarter 3			Quarter 2			Quarter 1
Cash flows from operating activities:
Net earnings (loss)	$	216		$	(98	)	$	(90	)	$	(668	)	$	(1,815	)
Adjustments to reconcile net loss to net cash from operating activities:
Net (earnings) loss from discontinued operations, net of income taxes		—			25			(13	)		(9	)		125
Depreciation, depletion and amortization		467			301			299			299			401
Asset impairments		—			27			—			—			2,666
Leasehold impairments		1			3			36			3			110
(Amortization) accretion of liabilities		(54	)		8			8			8			8
Total (gains) losses on commodity derivatives		528			117			87			361			(720	)
Cash settlements on commodity derivatives		(232	)		(27	)		10			232			101
Gains on asset dispositions		(32	)		(1	)		—			—			—
Deferred income tax benefit		(243	)		(17	)		—			—			(311	)
Share-based compensation		41			18			31			19			20
Early retirement of debt		27			—			—			—			—
Other		—			—			1			4			—
Changes in assets and liabilities, net		(127	)		2			58			(99	)		(56	)
Net cash from operating activities - continuing operations		592			358			427			150			529
Cash flows from investing activities:
Capital expenditures		(499	)		(217	)		(204	)		(307	)		(425	)
Acquisitions of property and equipment		—			(3	)		—			(1	)		(4	)
Divestitures of property and equipment		15			5			1			3			25
WPX acquired cash		344			—			—			—			—
Distributions from equity method investments		10			—			—			—			—
Net cash from investing activities - continuing operations		(130	)		(215	)		(203	)		(305	)		(404	)
Cash flows from financing activities:
Repayments of long-term debt		(533	)		—			—			—			—
Early retirement of debt		(27	)		—			—			—			—
Repurchases of common stock		—			—			—			—			(38	)
Dividends paid on common stock		(203	)		(138	)		(43	)		(42	)		(34	)
Contributions from noncontrolling interests		—			9			1			6			5
Distributions to noncontrolling interests		(4	)		(4	)		(4	)		(3	)		(3	)
Acquisition of noncontrolling interests		(24	)		—			—			—			—
Shares exchanged for tax withholdings and other		(33	)		(1	)		—			—			(17	)
Net cash from financing activities - continuing operations		(824	)		(134	)		(46	)		(39	)		(87	)
Effect of exchange rate changes on cash - continuing		3			—			—			—			—
Net change in cash, cash equivalents and restricted cash of continuing operations		(359	)		9			178			(194	)		38
Cash flows from discontinued operations:
Operating activities		—			19			45			(43	)		(131	)
Investing activities		—			310			1			171			(1	)
Financing activities		—			—			—			—			—
Effect of exchange rate changes on cash		—			2			4			8			(23	)
Net change in cash, cash equivalents and restricted cash of discontinued operations		—			331			50			136			(155	)
Net change in cash, cash equivalents and restricted cash		(359	)		340			228			(58	)		(117	)
Cash, cash equivalents and restricted cash at beginning of period		2,237			1,897			1,669			1,727			1,844
Cash, cash equivalents and restricted cash at end of period	$	1,878		$	2,237		$	1,897		$	1,669		$	1,727
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	1,683		$	2,047		$	1,707		$	1,474		$	1,527
Restricted cash		195			190			190			195			200
Total cash, cash equivalents and restricted cash	$	1,878		$	2,237		$	1,897		$	1,669		$	1,727

4

CONSOLIDATED BALANCE SHEETS  

(in millions)	March 31,			December 31,
	2021			2020
Current assets:
Cash, cash equivalents and restricted cash	$	1,878		$	2,237
Accounts receivable		1,089			601
Income tax receivable		166			174
Other current assets		334			248
Total current assets		3,467			3,260
Oil and gas property and equipment, based on successful efforts accounting, net		13,826			4,436
Other property and equipment, net		1,448			957
Total property and equipment, net		15,274			5,393
Goodwill		753			753
Right-of-use assets		255			223
Investments		402			12
Other long-term assets		306			271
Total assets	$	20,457		$	9,912
Current liabilities:
Accounts payable	$	564		$	242
Revenues and royalties payable		909			662
Short-term debt		226			—
Other current liabilities		1,246			536
Total current liabilities		2,945			1,440
Long-term debt		7,042			4,298
Lease liabilities		260			246
Asset retirement obligations		455			358
Other long-term liabilities		1,269			551
Stockholders’ equity:
Common stock		67			38
Additional paid-in capital		8,172			2,766
Retained earnings		218			208
Accumulated other comprehensive loss		(104	)		(127	)
Total stockholders’ equity attributable to Devon		8,353			2,885
Noncontrolling interests		133			134
Total equity		8,486			3,019
Total liabilities and equity	$	20,457		$	9,912
Common shares outstanding		675			382

5

PRODUCTION TREND ⁽¹⁾  

	2021		2020
	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
Oil (MBbls/d)
Delaware Basin		172		99		77		79		84
Anadarko Basin		13		16		19		21		24
Williston Basin		44		—		—		—		—
Eagle Ford		16		18		22		27		26
Powder River Basin		17		16		21		18		21
Other		6		7		7		8		8
Total		268		156		146		153		163
Natural gas liquids (MBbls/d)
Delaware Basin		60		43		38		29		37
Anadarko Basin		21		25		30		25		30
Williston Basin		8		—		—		—		—
Eagle Ford		6		9		11		12		9
Powder River Basin		3		3		3		2		3
Other		1		—		1		1		1
Total		99		80		83		69		80
Gas (MMcf/d)
Delaware Basin		471		267		239		241		244
Anadarko Basin		200		233		242		262		272
Williston Basin		49		—		—		—		—
Eagle Ford		47		60		73		87		86
Powder River Basin		21		22		23		20		29
Other		3		2		3		4		3
Total		791		584		580		614		634
Total oil equivalent (MBoe/d)
Delaware Basin		310		186		155		149		162
Anadarko Basin		68		81		89		90		98
Williston Basin		61		—		—		—		—
Eagle Ford		30		37		46		53		50
Powder River Basin		23		22		28		24		29
Other		7		7		8		9		9
Total		499		333		326		325		348

(1) Q1 2021 daily production rates exclude WPX results prior to the merger close date of January 7, 2021.

6

CAPITAL EXPENDITURES  

(in millions)	2021		2020
	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
Delaware Basin	$	355	$	153	$	179	$	148	$	220
Anadarko Basin		13		3		1		3		4
Williston Basin		20		—		—		—		—
Eagle Ford		29		2		1		10		70
Powder River Basin		27		22		11		39		90
Other		3		3		3		3		7
Total upstream capital	$	447	$	183	$	195	$	203	$	391
Midstream		24		3		7		8		7
Other		16		3		5		3		9
Total capital	$	487	$	189	$	207	$	214	$	407

SUPPLEMENTAL INFORMATION FOR UPSTREAM CAPITAL EXPENDITURES

GROSS OPERATED SPUDS

	2021		2020
	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
Delaware Basin		60		21		35		27		38
Anadarko Basin		8		—		—		—		—
Williston Basin		7		—		—		—		—
Eagle Ford		14		—		—		—		10
Powder River Basin		—		2		—		—		12
Total		89		23		35		27		60

GROSS OPERATED WELLS TIED-IN

	2021		2020
	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
Delaware Basin		52		23		32		22		32
Anadarko Basin		—		—		—		—		4
Williston Basin		—		—		—		—		—
Eagle Ford		12		—		—		13		30
Powder River Basin		10		2		9		4		14
Total		74		25		41		39		80

AVERAGE LATERAL LENGTH

(based on wells tied-in)	2021		2020
	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
Delaware Basin		10,000’		9,800’		9,900’		9,100’		8,000’
Anadarko Basin		—		—		—		—		9,800’
Williston Basin		—		—		—		—		—
Eagle Ford		4,400’		—		—		5,900’		5,400’
Powder River Basin		9,800’		13,600’		9,800’		8,100’		9,100’
Total		9,100’		10,100’		9,900’		7,900’		7,300’

7

REALIZED PRICING  

BENCHMARK PRICES

(average prices)	2021			2020
	Quarter 1			Quarter 4			Quarter 3			Quarter 2		Quarter 1
Oil ($/Bbl) - West Texas Intermediate (Cushing)	$	57.87		$	42.65		$	40.86		$	28.42	$	46.44
Natural Gas ($/Mcf) - Henry Hub	$	2.71		$	2.67		$	1.98		$	1.71	$	1.95
NGL ($/Bbl) - Mont Belvieu Blended	$	25.81		$	20.01		$	16.69		$	12.57	$	14.39
REALIZED PRICES
	2021			2020
	Quarter 1			Quarter 4			Quarter 3			Quarter 2		Quarter 1
Oil (Per Bbl)
Delaware Basin	$	57.30		$	40.67		$	39.19		$	22.70	$	45.18
Anadarko Basin		55.86			40.34			37.88			19.52		45.32
Williston Basin		54.45			—			—			—		—
Eagle Ford		54.90			37.83			33.68			15.30		44.90
Powder River Basin		53.77			36.42			35.39			24.03		41.14
Other		55.65			39.93			37.33			25.45		44.53
Realized price without hedges		56.36			39.84			37.56			21.25		44.59
Cash settlements		(9.13	)		(1.83	)		0.65			15.25		5.14
Realized price, including cash settlements	$	47.23		$	38.01		$	38.21		$	36.50	$	49.73
Natural gas liquids (Per Bbl)
Delaware Basin	$	26.25		$	13.67		$	11.49		$	7.94	$	8.36
Anadarko Basin		23.14			15.65			12.68			9.31		10.90
Williston Basin		18.54			—			—			—		—
Eagle Ford		24.44			15.66			13.74			10.02		14.77
Powder River Basin		30.19			19.39			13.10			10.07		15.86
Other		31.86			24.24			21.74			10.19		15.82
Realized price without hedges		25.01			14.77			12.36			8.89		10.40
Cash settlements		(0.20	)		(0.01	)		(0.30	)		0.51		0.61
Realized price, including cash settlements	$	24.81		$	14.76		$	12.06		$	9.40	$	11.01
Gas (Per Mcf)
Delaware Basin	$	3.31		$	1.51		$	1.11		$	1.05	$	0.58
Anadarko Basin		2.49			2.29			1.66			1.31		1.45
Williston Basin		(0.48	)		—			—			—		—
Eagle Ford		3.15			2.38			1.95			1.79		2.05
Powder River Basin		5.27			2.70			1.94			1.80		1.71
Other		2.57			2.87			1.52			1.32		1.69
Realized price without hedges		2.91			1.96			1.48			1.29		1.21
Cash settlements		(0.15	)		0.00			0.06			0.28		0.36
Realized price, including cash settlements	$	2.76		$	1.96		$	1.54		$	1.57	$	1.57
Total oil equivalent (Per Boe)
Delaware Basin	$	41.82		$	26.94		$	24.00		$	15.39	$	26.19
Anadarko Basin		25.35			19.79			16.81			10.98		18.14
Williston Basin		42.04			—			—			—		—
Eagle Ford		38.90			25.97			22.78			12.90		29.94
Powder River Basin		47.58			31.08			29.83			20.80		33.65
Other		50.58			37.67			34.15			22.95		39.15
Realized price without hedges		39.84			25.63			22.60			14.37		25.43
Cash settlements		(5.17	)		(0.86	)		0.33			7.83		3.20
Realized price, including cash settlements	$	34.67		$	24.77		$	22.93		$	22.20	$	28.63

8

ASSET MARGINS  

BENCHMARK PRICES

(average prices)	2021			2020
	Quarter 1			Quarter 4			Quarter 3			Quarter 2			Quarter 1
Oil ($/Bbl) - West Texas Intermediate (Cushing)	$	57.87		$	42.65		$	40.86		$	28.42		$	46.44
Natural Gas ($/Mcf) - Henry Hub	$	2.71		$	2.67		$	1.98		$	1.71		$	1.95
NGL ($/Bbl) - Mont Belvieu Blended	$	25.81		$	20.01		$	16.69		$	12.57		$	14.39
PER-UNIT CASH MARGIN BY ASSET (per Boe)
	2021			2020
	Quarter 1			Quarter 4			Quarter 3			Quarter 2			Quarter 1
Delaware Basin
Realized price	$	41.82		$	26.94		$	24.00		$	15.39		$	26.19
Lease operating expenses		(3.97	)		(2.38	)		(3.00	)		(3.56	)		(3.61	)
Gathering, processing & transportation		(2.83	)		(2.40	)		(2.68	)		(2.88	)		(2.71	)
Production & property taxes		(2.95	)		(2.08	)		(1.80	)		(1.14	)		(2.15	)
Field-level cash margin	$	32.07		$	20.08		$	16.52		$	7.81		$	17.72
Anadarko Basin
Realized price	$	25.35		$	19.79		$	16.81		$	10.98		$	18.14
Lease operating expenses		(3.82	)		(2.57	)		(2.16	)		(2.42	)		(2.79	)
Gathering, processing & transportation		(6.31	)		(8.39	)		(7.39	)		(6.57	)		(6.36	)
Production & property taxes		(1.21	)		(0.55	)		(0.54	)		(0.32	)		(0.77	)
Field-level cash margin	$	14.01		$	8.28		$	6.72		$	1.67		$	8.22
Williston Basin
Realized price	$	42.04		$	—		$	—		$	—		$	—
Lease operating expenses		(5.13	)		—			—			—			—
Gathering, processing & transportation		(3.39	)		—			—			—			—
Production & property taxes		(3.82	)		—			—			—			—
Field-level cash margin	$	29.70		$	—		$	—		$	—		$	—
Eagle Ford
Realized price	$	38.90		$	25.97		$	22.78		$	12.90		$	29.94
Lease operating expenses		(3.89	)		(2.79	)		(2.47	)		(2.59	)		(2.93	)
Gathering, processing & transportation		(6.73	)		(5.89	)		(4.73	)		(4.96	)		(5.96	)
Production & property taxes		(1.71	)		(0.16	)		(0.92	)		(0.85	)		(1.85	)
Field-level cash margin	$	26.57		$	17.13		$	14.66		$	4.50		$	19.20
Powder River Basin
Realized price	$	47.58		$	31.08		$	29.83		$	20.80		$	33.65
Lease operating expenses		(7.45	)		(5.47	)		(5.41	)		(6.60	)		(6.65	)
Gathering, processing & transportation		(2.66	)		(3.01	)		(2.30	)		(2.71	)		(2.32	)
Production & property taxes		(5.48	)		(3.91	)		(3.49	)		(2.40	)		(4.20	)
Field-level cash margin	$	31.99		$	18.69		$	18.63		$	9.09		$	20.48
Other
Realized price	$	50.58		$	37.67		$	34.15		$	22.95		$	39.15
Lease operating expenses		(17.15	)		(15.35	)		(19.92	)		(17.40	)		(18.95	)
Gathering, processing & transportation		(0.62	)		(0.59	)		(0.51	)		(0.34	)		(0.31	)
Production & property taxes		(4.60	)		(3.38	)		(3.62	)		(5.11	)		(4.34	)
Field-level cash margin	$	28.21		$	18.35		$	10.10		$	0.10		$	15.55
Devon - Total
Realized price	$	39.84		$	25.63		$	22.60		$	14.37		$	25.43
Lease operating expenses		(4.44	)		(2.97	)		(3.32	)		(3.69	)		(3.96	)
Gathering, processing & transportation		(3.57	)		(4.23	)		(4.17	)		(4.16	)		(4.11	)
Production & property taxes		(2.88	)		(1.66	)		(1.52	)		(1.07	)		(1.95	)
Field-level cash margin	$	28.95		$	16.77		$	13.59		$	5.45		$	15.41

9

NON-GAAP MEASURES  

(all monetary values in millions, except per share amounts)

This press release and other earnings materials include 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 such non-GAAP measures, including reconciliations to their most directly comparable GAAP measure.

CORE EARNINGS (LOSS)

Devon’s reported net earnings (loss) 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 (loss) and core earnings (loss) 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 first-quarter 2021 earnings.

	Quarter Ended March 31, 2021
	Before-tax			After-tax			After Noncontrolling Interests			Per Diluted Share
Total
Earnings (loss) (GAAP)	$	(32	)	$	216		$	213		$	0.32
Adjustments:
Asset dispositions		(32	)		(24	)		(24	)		(0.04	)
Asset and exploration impairments		1			—			—			0.00
Deferred tax asset valuation allowance		—			(263	)		(263	)		(0.40	)
Fair value changes in financial instruments and foreign currency		294			225			225			0.34
Restructuring and transaction costs(1)		189			162			162			0.25
Early retirement of debt		(20	)		(15	)		(15	)		(0.02	)
Core earnings (Non-GAAP)	$	400		$	301		$	298		$	0.45

(1) Approximately $167 million of restructuring and transaction costs are cash and are excluded from the adjusted free cash flow reconciliation at the bottom of page 11.

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.

	Q1 ’21
Net earnings (loss) (GAAP)	$	216
Net (earnings) loss from discontinued operations, net of tax		—
Financing costs, net		77
Income tax benefit		(248	)
Exploration expenses		3
Depreciation, depletion and amortization		467
Asset impairments		—
Asset dispositions		(32	)
Share-based compensation		20
Derivative and financial instrument non-cash valuation changes		296
Restructuring and transaction costs		189
Accretion on discounted liabilities and other		(29	)
EBITDAX (Non-GAAP)	$	959
Annualized EBITDAX (Non-GAAP)	$	3,836

10

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.

	Quarter Ended March 31, 2021
Total debt (GAAP)	$	7,268
Less:
Cash, cash equivalents and restricted cash		(1,878	)
Net debt (Non-GAAP)	$	5,390

NET DEBT-TO-EBITDAX

Devon defines net debt-to-EBITDAX as net debt divided by an annualized EBITDAX measure. Due to the merger with WPX closing in the first quarter of 2021, Devon has shown Q1 2021 EBITDAX annualized divided by net debt to show a more meaningful net debt-to-EBITDAX measure. Devon believes this ratio provides information useful to investors in assessing the company’s credit position and debt leverage.

	Quarter Ended March 31, 2021
Net debt (Non-GAAP)	$	5,390
EBITDAX (annualized Q1 ‘21) (Non-GAAP)	$	3,836
Net debt-to-EBITDAX (Non-GAAP)		1.4

FREE CASH FLOW

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

	Quarter Ended March 31, 2021
Total operating cash flow (GAAP)	$	592
Less capital expenditures:
Capital expenditures		(499	)
Free cash flow (Non-GAAP)	$	93

ADJUSTED FREE CASH FLOW

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

	Quarter Ended March 31, 2021
Total operating cash flow (GAAP)	$	592
Less capital expenditures:
Capital expenditures		(499	)
Free cash flow (Non-GAAP)		93
Cash restructuring and transaction costs (Non-GAAP)		167
Adjusted free cash flow (Non-GAAP)	$	260

11

REINVESTMENT RATE  

Devon defines reinvestment rate as accrued capital expenditures divided by adjusted operating cash flow. Devon believes this measure provides useful information to our investors as an indicator of the capital demands of our business relative to the cash flow generated from normal business operations.

	Quarter Ended March 31, 2021
Capital expenditures (accrued)	$	487
Operating cash flow		592
Cash restructuring and transaction costs (Non-GAAP)		167
Adjusted operating cash flow (Non-GAAP)	$	759
Reinvestment rate (Non-GAAP)		64	%

VARIABLE DIVIDEND CALCULATION

Devon may pay a variable dividend up to 50 percent of its excess cash flow. Each quarter’s excess cash flow is computed as adjusted cash flow less capital expenditures and the fixed dividend.

	Quarter Ended March 31, 2021
Operating cash flow (GAAP)	$	592
Changes in assets and liabilities, net		127
Cash from operations before balance sheet changes (Non-GAAP)		719
Cash restructuring and transaction costs (Non-GAAP)		167
Adjusted cash flow (Non-GAAP)		886
Capital expenditures (Accrued)		(487	)
Adjusted free cash flow (Non-GAAP)		399
Fixed quarterly dividend ($0.11/share)		(76	)
Excess free cash flow (Non-GAAP)		323
48% Pay out (Board Discretion: Up to 50%)		48	%
Total variable dividend	$	155

12

SECOND-QUARTER AND FULL-YEAR 2021 GUIDANCE  

PRODUCTION GUIDANCE

	Quarter 2				Full Year
	Low		High		Low		High
Oil (MBbls/d)		283		293		280		290
Natural gas liquids (MBbls/d)		117		122		110		120
Gas (MMcf/d)		825		875		835		895
Total oil equivalent (MBoe/d)		538		561		529		559

CAPITAL EXPENDITURES GUIDANCE

	Quarter 2				Full Year
(in millions)	Low		High		Low		High
Upstream capital	$	480	$	520	$	1,600	$	1,800
Midstream capital		35		45		80		100
Other capital		15		25		40		80
Total capital	$	530	$	590	$	1,720	$	1,980

PRICE REALIZATIONS GUIDANCE

	Quarter 2						Full Year
	Low			High			Low			High
Oil - % of WTI		92	%		100	%		92	%		100	%
NGL - % of WTI		35	%		45	%		35	%		45	%
Natural gas - % of Henry Hub		70	%		80	%		75	%		85	%

OTHER GUIDANCE ITEMS

	Quarter 2						Full Year
($ millions, except Boe and %)	Low			High			Low			High
Marketing & midstream operating profit	$	(10	)	$	(5	)	$	(50	)	$	(40	)
LOE & GP&T per BOE	$	7.80		$	8.00		$	7.70		$	7.90
Production & property taxes as % of upstream sales		7.0	%		8.0	%		7.0	%		8.0	%
Exploration expenses	$	—		$	5		$	5		$	15
Depreciation, depletion and amortization	$	500		$	550		$	2,000		$	2,100
General & administrative expenses	$	95		$	105		$	400		$	420
Restructuring & transaction expenses	$	15		$	25		$	205		$	215
Cash financing costs, net	$	95		$	105		$	395		$	415
Other expenses	$	5		$	15		$	—		$	10
Current income tax rate from continuing operations		0	%		0	%		0	%		0	%
Deferred income tax rate from continuing operations		20	%		30	%		20	%		30	%
Total income tax rate from continuing operations		20	%		30	%		20	%		30	%
Average common shares outstanding		675			679			669			673

1

CONTINGENT PAYMENTS FOR BARNETT SHALE DIVESTITURE (4-year period beginning in 2021)  

WTI Threshold		WTI Annual Earnout Amount		Henry Hub Threshold		Henry Hub Annual Earnout Amount
$	50.00	$	10,000,000	$	2.75	$	20,000,000
$	55.00	$	12,500,000	$	3.00	$	25,000,000
$	60.00	$	15,000,000	$	3.25	$	35,000,000
$	65.00	$	20,000,000	$	3.50	$	45,000,000

2021 & 2022 HEDGING POSITIONS

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)
Q2 2021	129,976	$	39.46	21,000	$	42.46	$	52.46
Q3 2021	57,460	$	41.68	53,250	$	39.74	$	49.74
Q4 2021	56,460	$	41.44	48,250	$	38.82	$	48.82
Q1-Q4 2022	25,619	$	43.82	20,233	$	46.41	$	56.41

	Price Swaptions			Price Call Options
Period	Volume (Bbls/d)	Weighted Average Price ($/Bbl)		Volume (Bbls/d)	Weighted Average Price ($/Bbl)
Q2 2021	—	$	—	5,000	$	39.50
Q3 2021	10,000	$	40.12	5,000	$	39.50
Q4 2021	10,000	$	40.12	5,000	$	39.50
Q1-Q4 2022	10,323	$	46.46	—	$	—

Oil Basis Swaps

Period	Index	Volume (Bbls/d)	Weighted Average Differential to WTI ($/Bbl)
Q2-Q4 2021	Midland Sweet	22,669	$	0.84
Q2-Q4 2021	BRENT/WTI Spread	1,000	$	(8.00	)
Q1-Q4 2022	BRENT/WTI Spread	1,000	$	(7.75	)

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)
Q2 2021	279,000	$	2.64	228,000	$	2.43	$	2.93
Q3 2021	279,000	$	2.64	228,000	$	2.43	$	2.93
Q4 2021	254,000	$	2.63	133,000	$	2.55	$	3.05
Q1-Q4 2022	3,452	$	2.85	74,110	$	2.53	$	3.03

2

2021 & 2022 HEDGING POSITIONS (continued)  

	Price Swaptions			Price Call Options
Period	Volume (MMBtu/d)	Weighted Average Price ($/MMBtu)		Volume (MMBtu/d)	Weighted Average Price ($/MMBtu)
Q2 2021	—	$	—	50,000	$	2.68
Q3 2021	—	$	—	50,000	$	2.68
Q4 2021	—	$	—	50,000	$	2.68
Q1-Q4 2022	100,000	$	2.70	—	$	—

Natural Gas Basis Swaps

Period	Index	Volume (MMBtu/d)	Weighted Average Differential to Henry Hub ($/MMBtu)
Q2-Q4 2021	El Paso Natural Gas	35,000	$	(0.92	)
Q2-Q4 2021	WAHA	80,000	$	(0.65	)
Q1-Q4 2022	WAHA	70,000	$	(0.57	)

NGL Commodity Hedges

		Price Swaps
Period	Product	Volume (Bbls/d)	Weighted Average Price ($/Bbl)
Q2-Q4 2021	Natural Gasoline	1,000	$	47.57
Q2-Q4 2021	Normal Butane	1,000	$	31.40
Q2-Q4 2021	Propane	1,000	$	27.88

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. Devon’s NGL derivatives settle against the average of the prompt month OPIS Mont Belvieu, Texas index. Commodity hedge positions are shown as of April 29, 2021.

3