Devon Energy (DVN) 8-K Devon Energy Reports First-Quarter 2022 Financial and Operational Results

Exhibit 99.2

Devon Energy First-Quarter 2022

Supplemental Tables

TABLE OF CONTENTS:	PAGE:
Consolidated Statements of Earnings		2
Supplemental Information for Consolidated Statements of Earnings		3
Consolidated Statements of Cash Flows		4
Consolidated Balance Sheets		5
Production		6
Capital Expenditures and Supplemental Information for Capital Expenditures		7
Realized Pricing		8
Asset Margins		9
Core Earnings		10
Return on Capital Employed and EBITDAX		11
Net Debt, Net Debt-to-EBITDAX, Free Cash Flow and Adjusted Free Cash Flow		12
Reinvestment Rate and Variable Dividend		13

1

CONSOLIDATED STATEMENTS OF EARNINGS

(in millions, except per share amounts)	2022			2021
	Quarter 1			Quarter 4			Quarter 3			Quarter 2			Quarter 1
Oil, gas and NGL sales	$	3,175		$	2,985		$	2,635		$	2,154		$	1,757
Oil, gas and NGL derivatives (1)		(683	)		22			(335	)		(703	)		(528	)
Marketing and midstream revenues		1,320			1,266			1,166			966			821
Total revenues		3,812			4,273			3,466			2,417			2,050
Production expenses (2)		618			605			555			513			458
Exploration expenses		2			5			3			3			3
Marketing and midstream expenses		1,324			1,266			1,165			965			842
Depreciation, depletion and amortization		489			577			578			536			467
Asset dispositions		(1	)		(49	)		—			(87	)		(32	)
General and administrative expenses		94			95			95			94			107
Financing costs, net (3)		85			86			86			80			77
Restructuring and transaction costs		—			28			18			23			189
Other, net		(61	)		(2	)		2			(14	)		(29	)
Total expenses		2,550			2,611			2,502			2,113			2,082
Earnings (loss) before income taxes		1,262			1,662			964			304			(32	)
Income tax expense (benefit) (4)		267			150			120			43			(248	)
Net earnings		995			1,512			844			261			216
Net earnings attributable to noncontrolling interests		6			6			6			5			3
Net earnings attributable to Devon	$	989		$	1,506		$	838		$	256		$	213
Net earnings per share:
Basic net earnings per share	$	1.48		$	2.24		$	1.24		$	0.38		$	0.33
Diluted net earnings per share	$	1.48		$	2.23		$	1.24		$	0.38		$	0.32
Weighted average common shares outstanding:
Basic		663			671			677			677			654
Diluted		665			673			679			679			656

2

SUPPLEMENTAL INFORMATION FOR CONSLIDATED STATEMENTS OF EARNINGS

(1) OIL, GAS AND NGL DERIVATIVES

(in millions)	2022			2021
	Quarter 1			Quarter 4			Quarter 3			Quarter 2			Quarter 1
Derivative cash settlements	$	(344	)	$	(493	)	$	(370	)	$	(367	)	$	(232	)
Derivative valuation changes		(339	)		515			35			(336	)		(296	)
Oil, gas and NGL derivatives	$	(683	)	$	22		$	(335	)	$	(703	)	$	(528	)

(2) PRODUCTION EXPENSES

(in millions)	2022		2021
	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
Lease operating expense	$	224	$	235	$	215	$	210	$	199
Gathering, processing & transportation		161		173		157		147		129
Production taxes		214		197		176		143		117
Property taxes		19		—		7		13		13
Production expenses	$	618	$	605	$	555	$	513	$	458

(3) FINANCING COSTS, NET

(in millions)	2022			2021
	Quarter 1			Quarter 4			Quarter 3			Quarter 2			Quarter 1
Interest based on outstanding debt	$	92		$	92		$	93		$	98		$	105
Gain on early retirement of debt		—			—			—			(10	)		(20	)
Interest income		(1	)		—			(1	)		—			(1	)
Other		(6	)		(6	)		(6	)		(8	)		(7	)
Financing costs, net	$	85		$	86		$	86		$	80		$	77

(4) INCOME TAX EXPENSE (BENEFIT)

(in millions)	2022		2021
	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
Current expense (benefit)	$	103	$	1	$	1	$	19	$	(5	)
Deferred expense (benefit)		164		149		119		24		(243	)
Income tax expense (benefit)	$	267	$	150	$	120	$	43	$	(248	)

3

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)	2022			2021
	Quarter 1			Quarter 4			Quarter 3			Quarter 2			Quarter 1
Cash flows from operating activities:
Net earnings	$	995		$	1,512		$	844		$	261		$	216
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation, depletion and amortization		489			577			578			536			467
Leasehold impairments		1			1			1			1			1
Amortization of liabilities		(6	)		(6	)		(7	)		(7	)		(7	)
Total (gains) losses on commodity derivatives		683			(22	)		335			703			528
Cash settlements on commodity derivatives		(344	)		(493	)		(370	)		(367	)		(232	)
Gains on asset dispositions		(1	)		(49	)		—			(87	)		(32	)
Deferred income tax expense (benefit)		164			149			119			24			(243	)
Share-based compensation		20			19			19			20			41
Early retirement of debt		—			—			—			(10	)		(20	)
Other		(21	)		2			11			2			—
Changes in assets and liabilities, net		(143	)		(74	)		68			17			(127	)
Net cash from operating activities		1,837			1,616			1,598			1,093			592
Cash flows from investing activities:
Capital expenditures		(537	)		(512	)		(474	)		(504	)		(499	)
Acquisitions of property and equipment		(1	)		(3	)		(10	)		(5	)		—
Divestitures of property and equipment		26			14			1			49			15
WPX acquired cash		—			—			—			—			344
Distributions from equity method investments		8			8			9			8			10
Contributions to equity method investments		(22	)		(25	)		—			—			—
Net cash from investing activities		(526	)		(518	)		(474	)		(452	)		(130	)
Cash flows from financing activities:
Repayments of long-term debt		—			—			—			(710	)		(533	)
Early retirement of debt		—			—			—			(32	)		(27	)
Repurchases of common stock		(211	)		(589	)		—			—			—
Dividends paid on common stock		(667	)		(554	)		(329	)		(229	)		(203	)
Contributions from noncontrolling interests		—			—			1			3			—
Distributions to noncontrolling interests		(8	)		(6	)		(6	)		(5	)		(4	)
Acquisition of noncontrolling interests		—			—			—			—			(24	)
Shares exchanged for tax withholdings and other		(73	)		—			(3	)		(9	)		(33	)
Net cash from financing activities		(959	)		(1,149	)		(337	)		(982	)		(824	)
Effect of exchange rate changes on cash		2			1			(5	)		2			3
Net change in cash, cash equivalents and restricted cash		354			(50	)		782			(339	)		(359	)
Cash, cash equivalents and restricted cash at beginning of period		2,271			2,321			1,539			1,878			2,237
Cash, cash equivalents and restricted cash at end of period	$	2,625		$	2,271		$	2,321		$	1,539		$	1,878
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	2,459		$	2,099		$	2,144		$	1,348		$	1,683
Restricted cash		166			172			177			191			195
Total cash, cash equivalents and restricted cash	$	2,625		$	2,271		$	2,321		$	1,539		$	1,878

4

CONSOLIDATED BALANCE SHEETS

(in millions)	March 31, 2022			December 31, 2021
Current assets:
Cash, cash equivalents and restricted cash	$	2,625		$	2,271
Accounts receivable		2,002			1,543
Other current assets		346			435
Total current assets		4,973			4,249
Oil and gas property and equipment, based on successful efforts accounting, net		13,566			13,536
Other property and equipment, net		1,508			1,472
Total property and equipment, net		15,074			15,008
Goodwill		753			753
Right-of-use assets		229			235
Investments		416			402
Other long-term assets		333			378
Total assets	$	21,778		$	21,025
Current liabilities:
Accounts payable	$	576		$	500
Revenues and royalties payable		1,672			1,456
Other current liabilities		1,506			1,131
Total current liabilities		3,754			3,087
Long-term debt		6,471			6,482
Lease liabilities		251			252
Asset retirement obligations		443			468
Other long-term liabilities		974			1,050
Deferred income taxes		450			287
Stockholders’ equity:
Common stock		66			66
Additional paid-in capital		7,371			7,636
Retained earnings		2,013			1,692
Accumulated other comprehensive loss		(131	)		(132	)
Treasury stock, at cost, 0.3 million shares in 2022		(19	)		—
Total stockholders’ equity attributable to Devon		9,300			9,262
Noncontrolling interests		135			137
Total equity		9,435			9,399
Total liabilities and equity	$	21,778		$	21,025
Common shares outstanding		661			663

5

PRODUCTION

	2022		2021
	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
Oil (MBbls/d)
Delaware Basin		209		213		213		191		172
Anadarko Basin		14		14		14		17		13
Williston Basin		32		36		39		46		44
Eagle Ford		17		19		20		18		16
Powder River Basin		12		14		14		16		17
Other		4		4		3		3		6
Total		288		300		303		291		268
Natural gas liquids (MBbls/d)
Delaware Basin		92		107		100		82		60
Anadarko Basin		25		27		25		26		21
Williston Basin		8		9		9		9		8
Eagle Ford		9		9		11		9		6
Powder River Basin		2		2		3		3		3
Other		—		—		—		—		1
Total		136		154		148		129		99
Gas (MMcf/d)
Delaware Basin		561		577		578		513		471
Anadarko Basin		210		222		219		225		200
Williston Basin		54		64		59		61		49
Eagle Ford		61		60		67		59		47
Powder River Basin		19		19		19		21		21
Other		1		1		1		2		3
Total		906		943		943		881		791
Total oil equivalent (MBoe/d)
Delaware Basin		394		416		409		358		310
Anadarko Basin		75		78		75		80		68
Williston Basin		48		55		58		66		61
Eagle Ford		36		38		42		37		30
Powder River Basin		18		19		20		22		23
Other		4		5		4		4		7
Total		575		611		608		567		499

6

CAPITAL EXPENDITURES

(in millions)	2022		2021
	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
Delaware Basin	$	413	$	392	$	363	$	394	$	355
Anadarko Basin		16		19		15		11		13
Williston Basin		17		25		13		19		20
Eagle Ford		27		21		34		36		29
Powder River Basin		27		27		15		5		27
Other		1		2		2		2		3
Total upstream capital	$	501	$	486	$	442	$	467	$	447
Environmental (1)		16		—		—		—		—
Midstream		32		14		11		22		24
Other		15		21		28		20		16
Total capital	$	564	$	521	$	481	$	509	$	487

(1) Devon began tracking environmental capital separately in 2022.

SUPPLEMENTAL INFORMATION FOR CAPITAL EXPENDITURES

GROSS OPERATED SPUDS

	2022		2021
	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
Delaware Basin		59		54		50		55		60
Anadarko Basin		13		6		9		8		8
Williston Basin		—		9		—		—		7
Eagle Ford		11		9		10		11		14
Powder River Basin		—		4		9		1		—
Total		83		82		78		75		89

GROSS OPERATED WELLS TIED-IN

	2022		2021
	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
Delaware Basin		52		65		52		88		52
Anadarko Basin		—		12		4		6		—
Williston Basin		—		—		4		13		—
Eagle Ford		8		7		19		9		12
Powder River Basin		4		2		2		—		10
Total		64		86		81		116		74

AVERAGE LATERAL LENGTH
(based on wells tied-in)	2022			2021
	Quarter 1			Quarter 4			Quarter 3			Quarter 2			Quarter 1
Delaware Basin		8,900	'		10,100	'		9,700	'		10,000	'		10,000	'
Anadarko Basin		—			11,700	'		9,200	'		9,600	'		—
Williston Basin		—			—			9,600	'		10,000	'		—
Eagle Ford		7,500	'		7,100	'		6,300	'		5,600	'		4,400	'
Powder River Basin		10,400	'		9,600	'		10,500	'		—			9,800	'
Total		8,800	'		10,100	'		8,900	'		9,600	'		9,100	'

7

REALIZED PRICING

BENCHMARK PRICES

(average prices)	2022		2021
	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
Oil ($/Bbl) - West Texas Intermediate (Cushing)	$	94.45	$	76.91	$	70.64	$	66.04	$	57.87
Natural Gas ($/Mcf) - Henry Hub	$	4.96	$	5.84	$	4.02	$	2.83	$	2.71
NGL ($/Bbl) - Mont Belvieu Blended	$	43.99	$	40.39	$	36.85	$	28.54	$	25.81

REALIZED PRICES

	2022			2021
	Quarter 1			Quarter 4			Quarter 3			Quarter 2			Quarter 1
Oil (Per Bbl)
Delaware Basin	$	93.12		$	75.67		$	68.44		$	63.93		$	56.07
Anadarko Basin		92.70			76.07			69.11			63.51			55.86
Williston Basin		90.87			74.02			66.60			62.00			52.74
Eagle Ford		94.51			75.35			68.32			64.04			54.90
Powder River Basin		92.69			72.86			65.81			62.36			53.77
Other		94.80			76.57			75.68			72.85			55.65
Realized price without hedges		92.94			75.36			68.19			63.63			55.28
Cash settlements		(11.32	)		(13.14	)		(10.60	)		(13.29	)		(9.13	)
Realized price, including cash settlements	$	81.62		$	62.22		$	57.59		$	50.34		$	46.15
Natural gas liquids (Per Bbl)
Delaware Basin	$	38.43		$	35.56		$	31.34		$	23.81		$	26.25
Anadarko Basin		38.38			35.66			33.20			25.55			23.14
Williston Basin		20.71			24.97			19.36			14.76			18.51
Eagle Ford		39.68			38.17			32.80			25.46			24.44
Powder River Basin		52.49			47.30			40.66			35.46			30.19
Other		56.00			66.22			54.51			41.19			31.86
Realized price without hedges		37.76			35.36			31.25			23.89			25.01
Cash settlements		—			(0.54	)		(0.45	)		(0.25	)		(0.20	)
Realized price, including cash settlements	$	37.76		$	34.82		$	30.80		$	23.64		$	24.81
Gas (Per Mcf)
Delaware Basin	$	3.83		$	4.60		$	3.58		$	2.31		$	3.19
Anadarko Basin		4.00			5.37			4.05			3.15			2.49
Williston Basin		0.74			1.53			0.65			(1.60	)		(0.48	)
Eagle Ford		4.91			5.76			4.08			3.25			3.15
Powder River Basin		4.24			6.10			4.15			3.54			5.27
Other		4.09			4.11			2.60			2.74			2.57
Realized price without hedges		3.77			4.68			3.55			2.35			2.84
Cash settlements		(0.62	)		(1.42	)		(0.78	)		(0.15	)		(0.15	)
Realized price, including cash settlements	$	3.15		$	3.26		$	2.77		$	2.20		$	2.69
Total oil equivalent (Per Boe)
Delaware Basin	$	63.75		$	54.28		$	48.29		$	42.84		$	40.95
Anadarko Basin		42.08			41.39			35.62			30.34			25.35
Williston Basin		63.31			53.44			48.55			43.98			40.79
Eagle Ford		62.74			56.06			47.40			42.84			38.90
Powder River Basin		75.75			63.45			55.93			52.55			47.58
Other		89.47			73.63			70.49			65.37			50.58
Realized price without hedges		61.40			53.12			47.08			41.75			39.14
Cash settlements		(6.65	)		(8.78	)		(6.60	)		(7.11	)		(5.17	)
Realized price, including cash settlements	$	54.75		$	44.34		$	40.48		$	34.64		$	33.97

8

ASSET MARGINS

BENCHMARK PRICES

(average prices)	2022		2021
	Quarter 1		Quarter 4		Quarter 3		Quarter 2		Quarter 1
Oil ($/Bbl) - West Texas Intermediate (Cushing)	$	94.45	$	76.91	$	70.64	$	66.04	$	57.87
Natural Gas ($/Mcf) - Henry Hub	$	4.96	$	5.84	$	4.02	$	2.83	$	2.71
NGL ($/Bbl) - Mont Belvieu Blended	$	43.99	$	40.39	$	36.85	$	28.54	$	25.81

PER-UNIT CASH MARGIN BY ASSET (per Boe)
	2022			2021
	Quarter 1			Quarter 4			Quarter 3			Quarter 2			Quarter 1
Delaware Basin
Realized price	$	63.75		$	54.28		$	48.29		$	42.84		$	40.95
Lease operating expenses		(3.79	)		(4.02	)		(3.52	)		(3.91	)		(3.97	)
Gathering, processing & transportation		(2.32	)		(2.27	)		(2.18	)		(2.06	)		(1.96	)
Production & property taxes		(4.65	)		(3.40	)		(3.31	)		(3.08	)		(2.95	)
Field-level cash margin	$	52.99		$	44.59		$	39.28		$	33.79		$	32.07
Anadarko Basin
Realized price	$	42.08		$	41.39		$	35.62		$	30.34		$	25.35
Lease operating expenses		(2.75	)		(2.70	)		(2.58	)		(2.96	)		(3.82	)
Gathering, processing & transportation		(6.67	)		(6.60	)		(6.14	)		(6.06	)		(6.31	)
Production & property taxes		(2.35	)		(2.44	)		(1.70	)		(1.46	)		(1.21	)
Field-level cash margin	$	30.31		$	29.65		$	25.20		$	19.86		$	14.01
Williston Basin
Realized price	$	63.31		$	53.44		$	48.55		$	43.98		$	40.79
Lease operating expenses		(7.67	)		(5.76	)		(5.83	)		(4.87	)		(5.13	)
Gathering, processing & transportation		(2.32	)		(2.09	)		(2.13	)		(1.86	)		(2.14	)
Production & property taxes		(5.67	)		(4.64	)		(4.47	)		(4.27	)		(3.82	)
Field-level cash margin	$	47.65		$	40.95		$	36.12		$	32.98		$	29.70
Eagle Ford
Realized price	$	62.74		$	56.06		$	47.40		$	42.84		$	38.90
Lease operating expenses		(4.63	)		(3.78	)		(3.43	)		(3.47	)		(3.89	)
Gathering, processing & transportation		(5.67	)		(6.65	)		(4.17	)		(5.56	)		(6.73	)
Production & property taxes		(3.52	)		(2.93	)		(1.99	)		(1.93	)		(1.71	)
Field-level cash margin	$	48.92		$	42.70		$	37.81		$	31.88		$	26.57
Powder River Basin
Realized price	$	75.75		$	63.45		$	55.93		$	52.55		$	47.58
Lease operating expenses		(9.01	)		(7.49	)		(8.09	)		(6.65	)		(7.45	)
Gathering, processing & transportation		(3.19	)		(2.86	)		(2.93	)		(3.02	)		(2.66	)
Production & property taxes		(9.23	)		(7.49	)		(6.73	)		(6.10	)		(5.48	)
Field-level cash margin	$	54.32		$	45.61		$	38.18		$	36.78		$	31.99
Other
Realized price	$	89.47		$	73.63		$	70.49		$	65.37		$	50.58
Lease operating expenses		(21.34	)		(13.34	)		(16.42	)		(16.69	)		(17.15	)
Gathering, processing & transportation		(0.24	)		(0.31	)		(0.35	)		(0.58	)		(0.62	)
Production & property taxes		(5.93	)		(4.84	)		(4.19	)		(5.25	)		(4.60	)
Field-level cash margin	$	61.96		$	55.14		$	49.53		$	42.85		$	28.21
Devon - Total
Realized price	$	61.40		$	53.12		$	47.08		$	41.75		$	39.14
Lease operating expenses		(4.33	)		(4.18	)		(3.85	)		(4.06	)		(4.44	)
Gathering, processing & transportation		(3.11	)		(3.08	)		(2.81	)		(2.85	)		(2.87	)
Production & property taxes		(4.51	)		(3.49	)		(3.25	)		(3.05	)		(2.88	)
Field-level cash margin	$	49.45		$	42.37		$	37.17		$	31.79		$	28.95

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NON-GAAP MEASURES

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

Devon’s 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 each of the non-GAAP measures used in the earnings materials, including reconciliations to their most directly comparable GAAP measure.

The earnings materials may include forward-looking non-GAAP measures. The company is unable to provide reconciliations of these forward-looking non-GAAP measures, because components of the calculations are inherently unpredictable, such as changes to current assets and liabilities, the timing of changes in capital accruals, unknown future events and estimating certain future GAAP measures. The inability to reliably quantify certain components of the calculation would significantly affect the usefulness and accuracy of a reconciliation.

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 (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 2022 earnings.

	Quarter Ended March 31, 2022
	Before-tax			After-tax		After Noncontrolling Interests		Per Diluted Share
Total
Earnings (GAAP)	$	1,262		$	995	$	989	$	1.48
Adjustments:
Asset dispositions		(1	)		—		—		—
Deferred tax asset valuation allowance		—			6		6		0.01
Fair value changes in financial instruments		338			260		260		0.39
Core earnings (Non-GAAP)	$	1,599		$	1,261	$	1,255	$	1.88

* The tax impact for the adjustments to core earnings in the table above are all deferred.

	Quarter Ended December 31, 2021
	Before-tax			After-tax			After Noncontrolling Interests			Per Diluted Share
Total
Earnings (GAAP)	$	1,662		$	1,512		$	1,506		$	2.23
Adjustments:
Asset dispositions		(49	)		(38	)		(38	)		(0.06	)
Asset and exploration impairments		3			3			3			—
Deferred tax asset valuation allowance		—			(160	)		(160	)		(0.23	)
Change in tax legislation		—			(2	)		(2	)		—
Fair value changes in financial instruments		(515	)		(397	)		(397	)		(0.59	)
Restructuring and transaction costs		28			23			23			0.04
Core earnings (Non-GAAP)	$	1,129		$	941		$	935		$	1.39

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RETURN ON CAPITAL EMPLOYED

Devon defines return on capital employed as pre-interest core earnings divided by average capital employed. Devon believes return on capital employed provides a useful measure of how efficiently the company is using its capital to generate profits. Average capital employed is the average of the capital employed as of the beginning and ending of the relevant period, with capital employed calculated as debt plus stockholders’ equity attributable to Devon less cash and cash equivalents. The table below provides Devon’s return on capital employed for the most recent fiscal year. Because we completed our merger with WPX on January 7, 2021, we have adjusted the beginning capital employed amount to include the associated merger consideration amounts.

	Year Ended
	December 31, 2021
Earnings (GAAP)	$	2,813
Non-GAAP adjustments		(439	)
Core earnings (Non-GAAP)		2,374
Net financing costs (GAAP)		329
Less gain on early retirement of debt		30
Adjusted net financing costs (Non-GAAP)		359
Less tax impact (21%)		(77	)
After-tax net financing costs (Non-GAAP)		282
Pre-interest core earnings (Non-GAAP)	$	2,656
Beginning balance:
Devon legacy	$	4,298
Assumed in merger		3,562
Gross debt		7,860
Devon legacy		2,885
Equity consideration in merger		5,432
Stockholders’ equity		8,317
Devon legacy		(2,237	)
Acquired in merger		(344	)
Less cash		(2,581	)
Beginning capital employed	$	13,596
Ending balance:
Gross debt	$	6,482
Stockholders’ equity		9,262
Less cash		(2,271	)
Ending capital employed	$	13,473
Average capital employed	$	13,535
ROCE		20	%

EBITDAX

Devon believes EBITDAX provides information useful in assessing operating and financial performance across periods. Devon computes EBITDAX as net earnings 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.

	Q1 ‘22			Q4 ‘21			Q3 ‘21			Q2 ‘21			TTM			Q1 ‘21
Net earnings (GAAP)	$	995		$	1,512		$	844		$	261		$	3,612		$	216
Financing costs, net		85			86			86			80			337			77
Income tax expense (benefit)		267			150			120			43			580			(248	)
Exploration expenses		2			5			3			3			13			3
Depreciation, depletion and amortization		489			577			578			536			2,180			467
Asset dispositions		(1	)		(49	)		—			(87	)		(137	)		(32	)
Share-based compensation		20			19			18			20			77			20
Derivative and financial instrument non-cash valuation changes		339			(515	)		(35	)		336			125			296
Restructuring and transaction costs		—			28			18			23			69			189
Accretion on discounted liabilities and other		(61	)		(2	)		2			(14	)		(75	)		(29	)
EBITDAX (Non-GAAP)	$	2,135		$	1,811		$	1,634		$	1,201		$	6,781		$	959
Annualized EBITDAX for first-quarter 2021 (Non-GAAP)																$	3,836

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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.

	Mar. 31, 2022			Dec. 31, 2021			Sep. 30, 2021			Jun. 30, 2021			Mar. 31, 2021
Total debt (GAAP)	$	6,471		$	6,482		$	6,492		$	6,502		$	7,268
Less:
Cash, cash equivalents and restricted cash		(2,625	)		(2,271	)		(2,321	)		(1,539	)		(1,878	)
Net debt (Non-GAAP)	$	3,846		$	4,211		$	4,171		$	4,963		$	5,390

NET DEBT-TO-EBITDAX

Devon defines net debt-to-EBITDAX as net debt divided by an annualized EBITDAX measure. Devon believes this ratio provides information useful to investors in assessing the company’s credit position and debt leverage.    

	March 31, 2022		December 31, 2021		March 31, 2021
Net debt (Non-GAAP)	$	3,846	$	4,211	$	5,390
EBITDAX (Non-GAAP) (1)	$	6,781	$	5,605	$	3,836
Net debt-to-EBITDAX (Non-GAAP)		0.6		0.8		1.4

(1) The first quarter 2022 EBITDAX is an annualized measure using a trailing twelve month calculation. The first quarter 2021 EBITDAX is an annualized measure. See the EBITDAX table on the previous page for details. 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.

FREE CASH FLOW AND ADJUSTED FREE CASH FLOW

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

	Quarter Ended Mar. 31, 2022			Quarter Ended Dec. 31, 2021			Quarter Ended Sep. 30, 2021			Quarter Ended Jun. 30, 2021			Quarter Ended Mar. 31, 2021
Total operating cash flow (GAAP)	$	1,837		$	1,616		$	1,598		$	1,093		$	592
Less capital expenditures:
Capital expenditures		(537	)		(512	)		(474	)		(504	)		(499	)
Free cash flow (Non-GAAP)		1,300			1,104			1,124			589			93
Cash restructuring and transaction costs (Non-GAAP)		—			28			14			23			167
Adjusted free cash flow (Non-GAAP)	$	1,300		$	1,132		$	1,138		$	612		$	260

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REINVESTMENT RATE

Devon defines reinvestment rate as accrued capital expenditures divided by 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, 2022			Quarter Ended December 31, 2021
Capital expenditures (accrued)	$	564		$	521
Operating cash flow	$	1,837		$	1,616
Reinvestment rate (Non-GAAP)		31	%		32	%

VARIABLE DIVIDEND

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, 2022
Operating cash flow (GAAP)	$	1,837
Changes in assets and liabilities, net		143
Cash from operations before balance sheet changes (Non-GAAP)		1,980
Ukraine charitable pledge		20
Adjusted cash flow (Non-GAAP)		2,000
Capital expenditures (Accrued)		(564	)
Adjusted free cash flow (Non-GAAP)		1,436
Fixed quarterly dividend ($0.16/share)		(109	)
Excess free cash flow (Non-GAAP)		1,327
~50% Pay out (Board Discretion: Up to 50%)		50	%
~50% of excess free cash flow		663
Contingent proceeds (Barnett and Wind River)		69
Total variable dividend	$	732

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SECOND-QUARTER AND FULL-YEAR 2022 GUIDANCE

PRODUCTION GUIDANCE

	Quarter 2				Full Year
	Low		High		Low		High
Oil (MBbls/d)		289		296		285		295
Natural gas liquids (MBbls/d)		146		151		138		148
Gas (MMcf/d)		900		940		880		940
Total oil equivalent (MBoe/d)		585		604		570		600

CAPITAL EXPENDITURES GUIDANCE

	Quarter 2				Full Year
(in millions)	Low		High		Low		High
Upstream capital	$	520	$	560	$	1,900	$	2,200
Environmental capital		20		30		80		120
Midstream & other capital		30		50		80		120
Total capital	$	570	$	640	$	2,060	$	2,440

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		75	%		85	%		80	%		90	%

OTHER GUIDANCE ITEMS

	Quarter 2						Full Year
($ millions, except Boe and %)	Low			High			Low			High
Marketing & midstream operating profit	$	(10	)	$	—		$	(25	)	$	(15	)
LOE & GP&T per BOE	$	7.30		$	7.60		$	7.25		$	7.75
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		$	2,050		$	2,150
General & administrative expenses	$	80		$	85		$	330		$	350
Net financing costs, net	$	80		$	90		$	335		$	345
Other expenses	$	—		$	10		$	(50	)	$	(30	)

INCOME TAX GUIDANCE

(% of pre-tax earnings)	Quarter 2			Full Year
Current income tax rate(1)		9	%		9	%
Deferred income tax rate		13	%		13	%
Total income tax rate		22	%		22	%

  (1) Assumes $95 WTI and $6 Henry Hub pricing for full-year 2022.

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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

2022 & 2023 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 2022		35,800	$	44.29		40,000	$	51.13	$	68.86
Q3 2022		35,000	$	44.61		42,500	$	56.11	$	73.82
Q4 2022		35,000	$	44.61		30,500	$	60.53	$	84.02
Q1-Q4 2023		—	$	—		6,200	$	61.32	$	97.65

Oil Basis Swaps

Period	Index	Volume (Bbls/d)		Weighted Average Differential to WTI ($/Bbl)
Q2-Q4 2022	BRENT/WTI Spread		1,000	$	(7.75	)
Q2-Q4 2022	NYMEX Roll		29,000	$	0.45
Q1-Q4 2023	Midland Sweet		3,000	$	0.73

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 2022		110,000	$	2.79		253,000	$	2.92	$	4.10
Q3 2022		110,000	$	2.79		221,000	$	2.98	$	4.35
Q4 2022		120,000	$	3.15		165,000	$	3.16	$	4.82
Q1-Q4 2023		7,425	$	4.81		63,901	$	3.43	$	5.86

Natural Gas Basis Swaps

Period	Index	Volume (MMBtu/d)		Weighted Average Differential to Henry Hub ($/MMBtu)
Q2-Q4 2022	WAHA		70,000	$	(0.57	)
Q2-Q4 2022	El Paso Permian		40,000	$	(0.82	)
Q2-Q4 2022	Houston Ship Channel		18,909	$	(0.16	)
Q1-Q4 2023	WAHA		70,000	$	(0.51	)
Q1-Q4 2023	El Paso Permian		85,000	$	(1.47	)
Q1-Q4 2023	Houston Ship Channel		30,000	$	(0.15	)

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 end of the month Henry Hub index. Commodity hedge positions are shown as of April 28, 2022.

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