Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

Report of Independent Registered Public Accounting Firm		50
Consolidated Financial Statements
Consolidated Statements of Comprehensive Earnings		52
Consolidated Balance Sheets		53
Consolidated Statements of Cash Flows		54
Consolidated Statements of Equity		55
Notes to Consolidated Financial Statements		56
Note 1 – Summary of Significant Accounting Policies		56
Note 2 – Acquisitions and Divestitures		64
Note 3 – Derivative Financial Instruments		66
Note 4 – Share-Based Compensation		68
Note 5 – Asset Impairments		69
Note 6 – Income Taxes		70
Note 7 – Net Earnings Per Share		72
Note 8 – Other Comprehensive Earnings (Loss)		73
Note 9 – Supplemental Information to Statements of Cash Flows		73
Note 10 – Accounts Receivable		73
Note 11 – Property and Equipment		74
Note 12 – Investments		74
Note 13 – Debt and Related Expenses		76
Note 14 – Leases		78
Note 15 – Asset Retirement Obligations		80
Note 16 – Retirement Plans		80
Note 17 – Stockholders’ Equity		83
Note 18 – Commitments and Contingencies		84
Note 19 – Fair Value Measurements		87
Note 20 – Reportable Segments		88
Note 21 – Supplemental Information on Oil and Gas Operations (Unaudited)		89

All financial statement schedules are omitted as they are inapplicable or the required information has been included in the consolidated financial statements or notes thereto.

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Report of Independent Regist****ered Public Accounting Firm

To the Stockholders and Board of Directors Devon Energy Corporation:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Devon Energy Corporation and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of comprehensive earnings, equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Estimate of proved oil and gas reserves used in the depletion of proved oil and gas properties

As discussed in Notes 1 and 11 to the consolidated financial statements, the Company calculates depletion for its proved oil and gas properties subject to amortization using a units-of-production method. The rates used to deplete the balance of oil and gas properties subject to amortization are set using the estimate of proved oil and gas reserves by common operating field. Under the units-of-production method, a rate is set annually using the beginning of year balance of oil and gas properties subject to amortization and estimated proved oil and gas reserves for each common operating field. That rate is then applied to production throughout the year to determine the amount of depletion expense to be recorded by common operating field. The Company also periodically evaluates whether changes in the estimated proved oil and gas reserves for each common operating field have occurred that would require a change in the rate of depletion to be applied to the production realized. The Company’s internal reservoir engineers estimate proved oil and gas reserves, and the Company engages external reservoir engineers to perform an independent evaluation of a portion of the estimates of proved oil and gas reserves. The company recorded depletion expense of $3.6 billion for the year ended December 31, 2025.

We identified the estimate of proved oil and gas reserves used in the depletion of proved oil and gas properties as a critical audit matter. There was a high degree of subjectivity in evaluating the Company’s estimate of the proved oil and gas reserves used as an input to determine depletion for each common operating field.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s depletion expense process, including controls related to the estimate of proved oil and gas reserves. We analyzed and assessed the determination of depletion expense for compliance with industry and regulatory standards. To assess the Company’s ability to accurately estimate proved oil and gas reserves, we compared the estimated future production quantities assumptions used by the Company in prior periods to the actual production amounts realized and the current year-end future production quantities forecasted. We compared the estimated future production quantities used by the Company in the current period to historical production trends and investigated differences. We evaluated (1) the professional qualifications of the Company’s internal reservoir engineers as well as the external reservoir engineers and external engineering firm, (2) the knowledge, skills, and ability of the Company’s internal and external reservoir engineers, and (3) the relationship of the external reservoir engineers and external engineering firm to the Company. We read and considered the report of the Company’s external reservoir engineers in connection with our evaluation of the Company’s reserve estimates.

/s/ KPMG, LLP

We have served as the Company’s auditor since 1980.

Oklahoma City, Oklahoma

February 18, 2026

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHEN****SIVE EARNINGS

		Year Ended December 31,
		2025				2024				2023
		(Millions, except per share amounts)
Oil, gas and NGL sales		$	11,223			$	11,176			$	10,791
Oil, gas and NGL derivatives			402				21				118
Marketing and midstream revenues			5,563				4,743				4,349
Total revenues			17,188				15,940				15,258
Production expenses			3,567				3,183				2,928
Exploration expenses			43				28				20
Marketing and midstream expenses			5,635				4,792				4,409
Depreciation, depletion and amortization			3,595				3,255				2,554
Asset impairments			254				—				—
Asset dispositions			(343	)			11				(30	)
General and administrative expenses			492				500				408
Financing costs, net			455				363				308
Other, net			24				96				38
Total expenses			13,722				12,228				10,635
Earnings before income taxes			3,466				3,712				4,623
Income tax expense			785				770				841
Net earnings			2,681				2,942				3,782
Net earnings attributable to noncontrolling interests			39				51				35
Net earnings attributable to Devon		$	2,642			$	2,891			$	3,747
Net earnings per share:
Basic net earnings per share		$	4.18			$	4.58			$	5.86
Diluted net earnings per share		$	4.17			$	4.56			$	5.84
Comprehensive earnings (loss):
Net earnings		$	2,681			$	2,942			$	3,782
Other comprehensive earnings (loss), net of tax:
Pension and postretirement plans			—				2				(8	)
Other comprehensive earnings (loss), net of tax			—				2				(8	)
Comprehensive earnings:		$	2,681			$	2,944			$	3,774
Comprehensive earnings attributable to noncontrolling interests			39				51				35
Comprehensive earnings attributable to Devon		$	2,642			$	2,893			$	3,739

See accompanying notes to consolidated financial statements.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

		December 31, 2025				December 31, 2024
ASSETS
Current assets:
Cash, cash equivalents and restricted cash		$	1,434			$	846
Accounts receivable			1,792				1,972
Inventory			336				294
Other current assets			444				315
Total current assets			4,006				3,427
Oil and gas property and equipment, based on successful efforts accounting, net			23,731				23,198
Other property and equipment, net			1,688				1,813
Total property and equipment, net			25,419				25,011
Goodwill			753				753
Right-of-use assets			299				303
Investments			727				727
Other long-term assets			395				268
Total assets		$	31,599			$	30,489
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	790			$	806
Revenues and royalties payable			1,491				1,432
Short-term debt			998				485
Other current liabilities			807				586
Total current liabilities			4,086				3,309
Long-term debt			7,391				8,398
Lease liabilities			197				320
Asset retirement obligations			863				770
Other long-term liabilities			907				840
Deferred income taxes			2,627				2,148
Stockholders' equity:
Common stock, $0.10 par value. Authorized 1.0 billion shares; issued622 million and 651 million shares in 2025 and 2024, respectively			62				65
Additional paid-in capital			5,388				6,387
Retained earnings			10,200				8,166
Accumulated other comprehensive loss			(122	)			(122	)
Total stockholders’ equity attributable to Devon			15,528				14,496
Noncontrolling interests			—				208
Total equity			15,528				14,704
Total liabilities and equity		$	31,599			$	30,489

See accompanying notes to consolidated financial statements.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CA****SH FLOWS

		Year Ended December 31,
		2025				2024				2023
Cash flows from operating activities:
Net earnings		$	2,681			$	2,942			$	3,782
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation, depletion and amortization			3,595				3,255				2,554
Asset impairments			254				—				—
Leasehold impairments			11				5				5
Accretion (amortization) of liabilities			16				8				(16	)
Total gains on commodity derivatives			(402	)			(21	)			(118	)
Cash settlements on commodity derivatives			232				197				47
(Gains) losses on asset dispositions			(343	)			11				(30	)
Deferred income tax expense			484				311				376
Share-based compensation			99				99				93
Other			(67	)			10				(5	)
Changes in assets and liabilities, net			151				(217	)			(144	)
Net cash from operating activities			6,711				6,600				6,544
Cash flows from investing activities:
Capital expenditures			(3,592	)			(3,645	)			(3,883	)
Acquisitions of property and equipment			(322	)			(3,808	)			(64	)
Divestitures of property, equipment and investments			545				24				26
Grayson Mill acquired cash			—				147				—
Distributions from investments			38				68				32
Contributions to investments and other			(62	)			(118	)			(53	)
Net cash from investing activities			(3,393	)			(7,332	)			(3,942	)
Cash flows from financing activities:
Borrowings of long-term debt, net of issuance costs			—				3,219				—
Repayments of long-term debt			(485	)			(472	)			(242	)
Repurchases of common stock			(1,050	)			(1,057	)			(979	)
Dividends paid on common stock			(619	)			(937	)			(1,858	)
Contributions from noncontrolling interests			14				52				37
Distributions to noncontrolling interests			(23	)			(51	)			(45	)
Acquisition of noncontrolling interests			(260	)			—				—
Repayment of finance leases			(282	)			—				—
Shares exchanged for tax withholdings and other			(25	)			(48	)			(97	)
Net cash from financing activities			(2,730	)			706				(3,184	)
Effect of exchange rate changes on cash			—				(3	)			3
Net change in cash, cash equivalents and restricted cash			588				(29	)			(579	)
Cash, cash equivalents and restricted cash at beginning of period			846				875				1,454
Cash, cash equivalents and restricted cash at end of period		$	1,434			$	846			$	875
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents		$	1,384			$	811			$	853
Restricted cash			50				35				22
Total cash, cash equivalents and restricted cash		$	1,434			$	846			$	875

See accompanying notes to consolidated financial statements.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMEN****TS OF EQUITY

																		Other
										Additional								Comprehensive
		Common Stock								Paid-In				Retained				Earnings				Treasury				Noncontrolling				Total
		Shares				Amount				Capital				Earnings				(Loss)				Stock				Interests				Equity
Balance as of December 31, 2022			653			$	65			$	6,921			$	4,297			$	(116	)		$	—			$	129			$	11,296
Net earnings			—				—				—				3,747				—				—				35				3,782
Other comprehensive loss, net of tax			—				—				—				—				(8	)			—				—				(8	)
Restricted stock grants, net of cancellations			2				—				—				—				—				—				—				—
Common stock repurchased			—				—				(8	)			—				—				(1,081	)			—				(1,089	)
Common stock retired			(20	)			(1	)			(1,067	)			—				—				1,068				—				—
Common stock dividends			—				—				—				(1,849	)			—				—				—				(1,849	)
Share-based compensation			1				—				93				—				—				—				—				93
Contributions from noncontrolling interests			—				—				—				—				—				—				37				37
Distributions to noncontrolling interests			—				—				—				—				—				—				(45	)			(45	)
Balance as of December 31, 2023			636			$	64			$	5,939			$	6,195			$	(124	)		$	(13	)		$	156			$	12,217
Net earnings			—				—				—				2,891				—				—				51				2,942
Other comprehensive earnings, net of tax			—				—				—				—				2				—				—				2
Restricted stock grants, net of cancellations			2				—				—				—				—				—				—				—
Common stock repurchased			—				—				—				—				—				(1,092	)			—				(1,092	)
Common stock retired			(25	)			(2	)			(1,103	)			—				—				1,105				—				—
Common stock dividends			—				—				—				(920	)			—				—				—				(920	)
Common stock issued			37				3				1,452				—				—				—				—				1,455
Share-based compensation			1				—				99				—				—				—				—				99
Contributions from noncontrolling interests			—				—				—				—				—				—				52				52
Distributions to noncontrolling interests			—				—				—				—				—				—				(51	)			(51	)
Balance as of December 31, 2024			651			$	65			$	6,387			$	8,166			$	(122	)		$	—			$	208			$	14,704
Net earnings			—				—				—				2,642				—				—				39				2,681
Other comprehensive earnings, net of tax			—				—				—				—				—				—				—				—
Restricted stock grants, net of cancellations			2				—				—				—				—				—				—				—
Common stock repurchased			—				—				(10	)			—				—				(1,074	)			—				(1,084	)
Common stock retired			(31	)			(3	)			(1,071	)			—				—				1,074				—				—
Common stock dividends			—				—				—				(608	)			—				—				—				(608	)
Share-based compensation			—				—				99				—				—				—				—				99
Contributions from noncontrolling interests			—				—				—				—				—				—				14				14
Distributions to noncontrolling interests			—				—				—				—				—				—				(23	)			(23	)
Acquisition of noncontrolling interests			—				—				(17	)			—				—				—				(238	)			(255	)
Balance as of December 31, 2025			622			$	62			$	5,388			$	10,200			$	(122	)		$	—			$	—			$	15,528

See accompanying notes to consolidated financial statements.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

N****OTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.

Summary of Significant Accounting Policies

Devon is a leading independent energy company engaged primarily in the exploration, development and production of oil, natural gas and NGLs. Devon’s operations are concentrated in various onshore areas in the U.S.

On September 27, 2024, Devon acquired the Williston Basin business of Grayson Mill for total consideration of approximately $5.0 billion, consisting of $3.5 billion of cash and approximately 37.3 million shares of Devon common stock, including purchase price adjustments. The transaction was accounted for using the acquisition method of accounting.

Accounting policies used by Devon and its subsidiaries conform to accounting principles generally accepted in the U.S. and reflect industry practices. The more significant of such policies are discussed below.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Devon, entities in which it holds a controlling interest and VIEs for which Devon was the primary beneficiary. All intercompany transactions have been eliminated. Undivided interests in oil and natural gas exploration and production joint ventures are consolidated on a proportionate basis. Investments in non-controlled entities, over which Devon has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method. In applying the equity method of accounting, the investments are initially recognized at cost and subsequently adjusted for Devon’s proportionate share of earnings, losses, contributions and distributions. Investments in non-controlled entities over which Devon does not have the ability to exercise significant influence are initially recognized at cost and subsequently adjusted for contributions and distributions.

Variable Interest Entity

CDM was a joint venture entity formed by Devon and an affiliate of QL Capital Partners, LP (“QLCP”). Devon held a controlling interest in CDM and the portions of CDM’s net earnings and equity not attributable to Devon’s controlling interest were shown separately as noncontrolling interests in the accompanying consolidated statements of comprehensive earnings and consolidated balance sheets. CDM was considered a VIE to Devon.

As the primary beneficiary of CDM, Devon had the power to direct the activities that significantly affected the economic performance of CDM and the obligation to absorb losses or the right to receive benefits that could be significant to CDM; therefore, Devon consolidated CDM in its financial statements. CDM maintained its own capital structure that was separate from Devon. During 2025, 2024 and 2023, QLCP distributions from CDM were approximately $23 million, $51 million and $45 million, respectively. During 2025, 2024 and 2023, QLCP contributions to CDM were approximately $14 million, $52 million and $37 million, respectively.

On August 1, 2025, Devon completed the acquisition of all outstanding noncontrolling interests in CDM for $260 million. As a result of this transaction, Devon owns 100% of the equity interests in CDM. The acquisition of the noncontrolling interests was accounted for as an equity transaction, resulting in a $17 million, net of tax, reduction in Devon's additional paid-in capital within the consolidated balance sheet. This amount represents the difference between the carrying amount of the noncontrolling interests and the consideration paid.

Segment Information

Devon’s oil and gas exploration and production activities are solely focused in the U.S. For financial reporting purposes, Devon aggregates its U.S. operating segments into one reporting segment due to the similar nature of these operations.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from these estimates, and changes in these estimates are recorded when known. Significant items subject to such estimates and assumptions include the following:

proved reserves and related present value of future net revenues;

evaluation of suspended well costs;

the carrying and fair values of oil and gas properties, other property and equipment and product and equipment inventories;

derivative financial instruments;

the fair value of reporting units and related assessment of goodwill for impairment;

income taxes;

asset retirement obligations;

obligations related to employee pension and postretirement benefits;

purchase accounting estimates used for assets acquired and liabilities assumed;

legal and environmental risks and exposures; and

general credit risk associated with receivables and other assets.

Revenue Recognition

Upstream Revenues

Upstream revenues include the sale of oil, gas and NGL production. Oil, gas and NGL sales are recognized when production is sold to a purchaser at a fixed or determinable price, delivery has occurred, control has transferred and collectability of the revenue is probable. Devon’s performance obligations are satisfied at a point in time. This occurs when control is transferred to the purchaser upon delivery of contract-specified production volumes at a specified point. The transaction price used to recognize revenue is a function of the contract billing terms. Revenue is invoiced, if required, by calendar month based on volumes at contractually based rates with payment typically received within 30 days of the end of the production month. Taxes assessed by governmental authorities on oil, gas and NGL sales are presented separately from such revenues in the accompanying consolidated statements of comprehensive earnings.

Devon acts as a principal in sales transactions when control of the product is retained prior to delivery to the ultimate third-party customer or acts as an agent when services are rendered on behalf of the principal in the transactions. A control-based assessment is performed to identify whether Devon is a principal or an agent in the transaction, which determines whether revenue and the related expenses are presented on a gross or net basis, respectively.

Oil sales

Devon’s oil sales contracts are generally structured in one of two ways. First, production is sold at the wellhead at an agreed-upon index price, net of pricing differentials. In this scenario, revenue is recognized when control transfers to the purchaser at the wellhead at the net price received. Alternatively, production is delivered to the purchaser at a contractually agreed-upon delivery point where the purchaser takes custody, title and risk of loss of the product. Under this arrangement, a third party is paid to transport the product and Devon receives a specified index price from the purchaser with no transportation deduction. In this scenario, revenue is recognized when control transfers to the purchaser at the delivery point based on the price received from the purchaser. The

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

third-party costs are recorded as gathering, processing and transportation expense as a component of production expenses in the consolidated statements of comprehensive earnings.

Natural gas and NGL sales

Under Devon’s natural gas processing contracts, natural gas is delivered to a midstream processing entity at the wellhead or the inlet of the midstream processing entity’s system. The midstream processing entity gathers and processes the natural gas and remits proceeds for the resulting sales of NGLs and residue gas. In these scenarios, Devon evaluates whether it is the principal or the agent in the transaction. Devon has concluded it is the principal under these contracts and the ultimate third party is the customer. Revenue is recognized on a gross basis, with gathering, processing and transportation fees presented as a component of production expenses in the consolidated statements of comprehensive earnings.

In certain natural gas processing agreements, Devon may elect to take residue gas and/or NGLs in-kind at the tailgate of the midstream entity’s processing plant and subsequently market the product. Through the marketing process, the product is delivered to the ultimate third-party purchaser at a contractually agreed-upon delivery point, and Devon receives a specified index price from the purchaser. In this scenario, revenue is recognized when control transfers to the purchaser at the delivery point based on the index price received from the purchaser. The gathering, processing and compression fees attributable to the gas processing contract, as well as any transportation fees incurred to deliver the product to the purchaser, are presented as gathering, processing and transportation expense as a component of production expenses in the consolidated statements of comprehensive earnings.

Marketing Revenues

Marketing revenues are generated primarily as a result of Devon selling commodities purchased from third parties. Marketing revenues are recognized when performance obligations are satisfied. This occurs at the time contract-specified products are sold to third parties at a contractually fixed or determinable price, delivery occurs at a specified point or performance has occurred, control has transferred and collectability of the revenue is probable. The transaction price used to recognize revenue and invoice customers is based on a contractually stated fee or on a third party published index price plus or minus a known differential. Devon typically receives payment for invoiced amounts within 30 days. Marketing revenues and expenses attributable to oil, gas and NGL purchases are reported on a gross basis when Devon takes control of the products and has risks and rewards of ownership.

Midstream Revenues

Midstream revenues are generated as a result of Devon providing gathering, transportation, compression and dehydration services for other producers' oil and natural gas production. Devon evaluates whether it is the principal or agent in these transactions. Under the terms of these gathering, transportation, compression and dehydration contracts, Devon has concluded it is the agent as title to the oil and gas production remains with the third-party producer. Revenue is recognized on a net basis since Devon is strictly providing a service. Costs to maintain Devon’s assets are presented as marketing and midstream expenses in the consolidated statements of comprehensive earnings. Revenue is recognized for sales at the time the gathering, transportation, compression and dehydration service has been rendered or performed.

Satisfaction of Performance Obligations and Revenue Recognition

Because Devon has a right to consideration from its customers in amounts that correspond directly to the value that the customer receives from the performance completed on each contract, Devon recognizes revenue for sales at the time the crude oil, natural gas or NGLs are delivered at a fixed or determinable price.

Transaction Price Allocated to Remaining Performance Obligations

Most of Devon’s contracts are short-term in nature with a contract term of one year or less. Devon applies the practical expedient exempting the disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less. For contracts with terms greater than one year, Devon applies the practical expedient exempting the disclosure of the transaction price allocated to remaining performance

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under Devon’s contracts, each unit of product typically represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required.

Contract Balances

Cash received relating to future performance obligations is deferred and recognized when all revenue recognition criteria are met. Contract liabilities generated from such deferred revenue are not considered material as of December 31, 2025. Devon’s product sales and marketing contracts do not give rise to contract assets.

Disaggregation of Revenue

The following table presents revenue from contracts with customers that are disaggregated based on the type of good.

		Year Ended December 31,
		2025				2024				2023
Oil		$	8,906			$	9,368			$	8,879
Gas			842				398				703
NGL			1,475				1,410				1,209
Oil, gas and NGL sales			11,223				11,176				10,791
Oil			3,580				3,405				3,018
Gas			1,010				517				572
NGL			973				821				759
Marketing and midstream revenues			5,563				4,743				4,349
Total revenues from contracts with customers		$	16,786			$	15,919			$	15,140

Customers

For the year ended December 31, 2025 and the year ended December 31, 2024, no customer accounted for more than 10% of Devon's sales revenue. For the year ended December 31, 2023, sales to two customers accounted for approximately 14% and 10% of Devon's sales revenue.

If any one of Devon’s major customers were to stop purchasing our production, the Company believes there are a number of other purchasers to whom the company could sell Devon’s production. If multiple significant customers were to discontinue purchasing Devon’s production abruptly, the Company believes it would have the resources needed to access alternative customers or markets and avoid or materially mitigate associated sales disruptions.

Derivative Financial Instruments

Devon is exposed to certain risks relating to its ongoing business operations, including risks related to commodity prices and interest rates. As discussed more fully below, Devon uses derivative instruments primarily to manage commodity price risk. Devon does not intend to issue or hold derivative financial instruments for speculative trading purposes.

Devon enters into derivative financial instruments with respect to a portion of its oil, gas and NGL production to hedge future prices received. Additionally, Devon periodically enters into derivative financial instruments with respect to a portion of its oil, gas and NGL marketing activities. These instruments are used to manage the inherent uncertainty of future revenues resulting from commodity price volatility. Devon’s derivative financial instruments typically include financial price swaps, basis swaps and costless price collars. Under the terms of the price swaps, Devon receives a fixed price for its production and pays a variable market price to the contract counterparty. For the basis swaps, Devon receives a fixed differential between two regional index prices and pays a variable differential on the same two index prices to the contract counterparty. For price collars, Devon utilizes two-way and three-way price collars. The two-way price collars set a floor and ceiling price for the hedged production. If the applicable monthly price

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indices are outside of the ranges set by the floor and ceiling prices in the various collars, Devon will cash-settle the difference with the counterparty. The three-way price collars consist of a two-way collar with an additional short put option sold by Devon. These contracts cash-settle similarly to the two-way collars unless the market price falls below the additional short put, causing the company to receive the market price plus the long put to short put price differential.

All derivative financial instruments are recognized at their current fair value as either assets or liabilities on the consolidated balance sheets. Amounts related to contracts allowed to be netted upon payment subject to a master netting arrangement with the same counterparty are reported on a net basis in the balance sheets. Changes in the fair value of these derivative financial instruments are recorded in earnings unless specific hedge accounting criteria are met. For derivative financial instruments held during the three-year period ended December 31, 2025, Devon chose not to meet the necessary criteria to qualify its derivative financial instruments for hedge accounting treatment. Cash settlements with counterparties on Devon’s derivative financial instruments are also recorded in earnings.

By using derivative financial instruments to hedge exposures to changes in commodity prices, Devon is exposed to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, the hedging instruments are placed with a number of counterparties whom Devon believes are acceptable credit risks. It is Devon’s policy to enter into derivative contracts only with investment-grade rated counterparties deemed by management to be competent and competitive market makers. Additionally, Devon’s derivative contracts generally require cash collateral to be posted if either its or the counterparty’s credit rating falls below certain credit rating levels. As of December 31, 2025, Devon held no cash collateral of its counterparties nor posted collateral to its counterparties.

General and Administrative Expenses

G&A is reported net of amounts reimbursed by working interest owners of the oil and gas properties operated by Devon.

Share-Based Compensation

Devon grants share-based awards to members of its Board of Directors, management and employees. All such awards are measured at fair value on the date of grant and are generally recognized as a component of G&A in the accompanying consolidated statements of comprehensive earnings over the applicable requisite service periods.

Generally, Devon uses new shares from approved incentive programs to grant share-based awards and to issue shares upon stock option exercises. Shares repurchased under approved programs are generally available to be issued as part of Devon’s share-based awards. However, Devon has historically canceled these shares upon repurchase.

Income Taxes

Devon is subject to current income taxes assessed by the federal and various state jurisdictions in the U.S. and by other foreign jurisdictions. In addition, Devon accounts for deferred income taxes related to these jurisdictions using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred tax assets are also recognized for the future tax benefits attributable to the expected utilization of existing tax net operating loss carryforwards and other types of carryforwards. If the future utilization of some portion of the deferred tax assets is determined to be unlikely, a valuation allowance is provided to reduce the recorded tax benefits from such assets. Devon periodically weighs the positive and negative evidence to determine if it is more likely than not that some or all of the deferred tax assets will be realized. Forming a conclusion that a valuation allowance is not required is difficult when there is significant negative evidence, such as cumulative losses in recent years.

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Devon recognizes the financial statement effects of tax positions when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority. Recognized tax positions are initially and subsequently measured as the largest amount of tax benefit that is more likely than not of being realized upon ultimate settlement with a taxing authority. Liabilities for unrecognized tax benefits related to such tax positions are included in other long-term liabilities unless the tax position is expected to be settled within the upcoming year, in which case the liabilities are included in other current liabilities. Interest and penalties related to unrecognized tax benefits are included in current income tax expense.

Devon estimates its annual effective income tax rate in recording its provision for income taxes in the various jurisdictions in which it operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the period in which they occur.

Net Earnings Per Share Attributable to Devon

Devon’s basic earnings per share amounts have been computed based on the average number of shares of common stock outstanding for the period. Devon applies the two-class method to stock awards deemed to be participating securities. The two-class method requires allocating net earnings to both common shares and participating securities based on their respective rights to receive dividends. Diluted earnings per share is calculated using the treasury stock method to reflect the assumed issuance of common shares for all potentially dilutive securities. Such securities primarily consist of unvested restricted stock awards and unvested performance share units.

Cash, Cash Equivalents and Restricted Cash

Devon considers all highly liquid investments with original contractual maturities of three months or less to be cash equivalents. Devon also considers cash balances subject to legal and contractual restrictions as restricted cash.

Accounts Receivable

Devon’s accounts receivable balance primarily consists of oil and gas sales receivables, marketing and midstream revenue receivables and joint interest receivables. Devon does not require collateral security for joint interest receivables.

Devon records an allowance for credit losses based on a forward-looking “expected loss” model. Credit risk is assessed by class of account type, which includes cash equivalents and oil and gas, marketing and midstream, joint interest and other accounts receivable. These classes are further evaluated using a probability-weighted scenario assessment based on historical losses and a probability of future default. This evaluation is supported by an assessment of risk factors such as the age of the receivable, current macro-economic conditions, credit rating of the counterparty and our historical loss rate.

Inventory

Devon’s inventories primarily consist of oil and NGL inventory and equipment inventory. Oil and NGL inventory are recorded at weighted average cost and carried at the lower of cost or net realizable value. Equipment inventory is valued at weighted average cost and reviewed periodically for obsolescence or impairment when market conditions indicate.

Property and Equipment

Oil and Gas Property and Equipment

Devon follows the successful efforts method of accounting for its oil and gas properties. Exploration costs, such as exploratory geological and geophysical costs, and costs associated with nonproductive exploratory wells, delay rentals and exploration overhead are charged against earnings as incurred. Costs of drilling successful exploratory wells along with acquisition costs and the costs of drilling development wells, including those that are unsuccessful, are capitalized. Devon groups its oil and gas properties with a common geological structure or stratigraphic condition (“common operating field”) for purposes of computing DD&A, assessing proved property impairments and accounting for asset dispositions.

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Exploratory drilling costs and exploratory-type stratigraphic test wells are initially capitalized, or suspended, pending the determination of proved reserves. If proved reserves are found, drilling costs remain capitalized as proved properties. Costs of unsuccessful wells are charged to exploration expense. For exploratory wells that find reserves that cannot be classified as proved when drilling is completed, costs continue to be capitalized as suspended exploratory well costs if there have been sufficient reserves found to justify completion as a producing well and sufficient progress is being made in assessing the reserves and the economic and operating viability of the project. If management determines that future appraisal drilling or development activities are unlikely to occur, associated suspended exploratory well costs are expensed. In some instances, this determination may take longer than one year. Devon reviews the status of all suspended exploratory drilling costs quarterly.

Capitalized costs of proved oil and gas properties are depleted by an equivalent unit-of-production method, converting gas to oil at the ratio of six Mcf of gas to one Bbl of oil. Proved leasehold acquisition costs, less accumulated amortization, are depleted over total proved reserves, which includes proved undeveloped reserves. Capitalized costs of wells and related equipment and facilities, including estimated asset retirement costs, net of estimated salvage values and less accumulated amortization are depreciated over proved developed reserves associated with those capitalized costs. Depletion is calculated by applying the DD&A rate (amortizable base divided by beginning of period proved reserves) to current period production.

Costs associated with unproved properties are excluded from the depletion calculation until it is determined whether or not proved reserves can be assigned to such properties. Devon assesses its unproved properties for impairment annually, or more frequently if events or changes in circumstances dictate that the carrying value of those assets may not be recoverable. Significant unproved properties are assessed individually.

Proved properties are assessed for impairment when events or changes in circumstances dictate that the carrying value of those assets may not be recoverable. Individual assets are grouped for impairment purposes based on a common operating field. If there is an indication the carrying amount of an asset may not be recovered, the asset is assessed for potential impairment by management through an established process. If, upon review, the sum of the undiscounted pre-tax reserve cash flows is less than the carrying value of the asset, the carrying value is written down to estimated fair value. Because there is usually a lack of quoted market prices for long-lived assets, the fair value of impaired assets is typically determined based on the present values of expected future cash flows using discount rates believed to be consistent with those used by principal market participants or by comparable transactions. The expected future cash flows used for impairment reviews and related fair value calculations are typically based on judgmental assessments of future production volumes, commodity prices, operating costs, and capital investment plans, considering all available information at the date of review.

Gains or losses are recorded for sales or dispositions of oil and gas properties which constitute an entire common operating field or which result in a significant alteration of the common operating field’s DD&A rate. These gains and losses are classified as asset dispositions in the accompanying statements of comprehensive earnings. Partial common operating field sales or dispositions deemed not to significantly alter the DD&A rates are generally accounted for as adjustments to capitalized costs with no gain or loss recognized.

Devon capitalizes interest costs incurred that are attributable to material unproved oil and gas properties and major development projects of oil and gas properties.

Other Property and Equipment

Costs for midstream assets that are in use are depreciated over the assets’ estimated useful lives, using the straight-line method. Depreciation and amortization of other property and equipment, including corporate and leasehold improvements, are provided using the straight-line method based on estimated useful lives ranging from three to 60 years. Interest costs incurred and attributable to major corporate construction projects are also capitalized.

Asset Retirement Obligations

Devon recognizes liabilities for retirement obligations associated with tangible long-lived assets, such as producing well sites when there is a legal obligation associated with the retirement of such assets and the amount can be reasonably estimated. The initial measurement of an asset retirement obligation is recorded as a liability at its fair value, with an offsetting asset retirement cost recorded as an increase to the associated property and equipment on the consolidated balance sheet unless the associated asset has already been disposed. When the assumptions used to estimate a recorded asset retirement obligation change, a revision is recorded to

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both the asset retirement obligation and the asset retirement cost. Devon’s asset retirement obligations also include estimated environmental remediation costs which arise from normal operations and are associated with the retirement of such long-lived assets. The asset retirement cost is depreciated using a systematic and rational method similar to that used for the associated property and equipment.

Leases

Devon establishes right-of-use assets and lease liabilities on the consolidated balance sheet for all leases with a term longer than 12 months. Devon’s right-of-use operating lease assets are for certain leases related to real estate, drilling rigs and other equipment related to the exploration, development and production of oil and gas. Devon’s right-of-use financing lease assets primarily relate to real estate and equipment utilized in the exploration, development and production of oil and gas. Certain of Devon’s lease agreements include variable payments based on usage or rental payments adjusted periodically for inflation.

Goodwill

Goodwill represents the excess of the purchase price of business combinations over the fair value of the net assets acquired and is tested for impairment annually, or more frequently if events or changes in circumstances dictate that the carrying value of goodwill may not be recoverable. Such test includes a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, then a quantitative goodwill impairment test is performed. The quantitative goodwill impairment test requires the fair value of the reporting unit be compared to the carrying value of the reporting unit. If the fair value of the reporting unit is less than the carrying value, an impairment charge will be recognized for the amount by which the carrying amount exceeds the fair value. The fair value of the reporting unit is estimated based upon market capitalization, comparable transactions of similar companies and premiums paid.

Devon performed impairment tests of goodwill in the fourth quarters of 2025, 2024 and 2023. No impairment was required as a result of the annual tests in these time periods.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation or other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Liabilities for environmental remediation or restoration claims resulting from allegations of improper operation of assets are recorded when it is probable that obligations have been incurred and the amounts can be reasonably estimated. Expenditures related to such environmental matters are expensed or capitalized in accordance with Devon’s accounting policy for property and equipment.

Fair Value Measurements

Certain of Devon’s assets and liabilities are measured at fair value at each reporting date. Fair value represents the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants. This price is commonly referred to as the “exit price.” Fair value measurements are classified according to a hierarchy that prioritizes the inputs underlying the valuation techniques. This hierarchy consists of three broad levels:

Level 1 – Inputs consist of unadjusted quoted prices in active markets for identical assets and liabilities and have the highest priority. When available, Devon measures fair value using Level 1 inputs because they generally provide the most reliable evidence of fair value.

Level 2 – Inputs consist of quoted prices that are generally observable for the asset or liability. Common examples of Level 2 inputs include quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets and liabilities in markets not considered to be active.

Level 3 – Inputs are not observable from objective sources and have the lowest priority. The most common Level 3 fair value measurement is an internally developed cash flow model.

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Noncontrolling Interests

Noncontrolling interests represent third-party ownership in the net assets of Devon’s consolidated subsidiaries and are presented as a component of equity. Changes in Devon’s ownership interests in subsidiaries that do not result in deconsolidation are recognized in equity.

Recently Adopted Accounting Standards

Beginning in this Annual Report on Form 10-K, Devon adopted ASU 2023-09, Improvements to Income Tax Disclosures. ASU 2023-09 provides investors with enhanced information about an entity’s income taxes by requiring disclosure of items such as disaggregation of the effective tax rate reconciliation as well as information regarding income taxes paid. See Note 6 for Devon's disclosure.

Recently Issued Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. ASU 2024-03 requires disclosures about specific types of expenses included in the expense captions presented on the face of the statement of operations as well as disclosures about selling expenses. This ASU will result in additional disclosures for Devon beginning with its 2027 annual reporting and interim periods beginning in 2028.

2.

Acquisitions and Divestiture****s

Grayson Mill Acquisition

On September 27, 2024, Devon completed its acquisition of the Williston Basin business of Grayson Mill for total consideration of approximately $5.0 billion, consisting of $3.5 billion of cash and approximately 37.3 million shares of Devon common stock, including purchase price adjustments. Devon funded the cash portion of the purchase price through cash on hand and debt financing. For additional information regarding the debt financing, see Note 13.

Purchase Price Allocation

This transaction was accounted for using the acquisition method of accounting. Under the acquisition method of accounting, the assets and liabilities of Grayson Mill and its subsidiaries were recorded at their respective fair values as of the date of completion of the acquisition and added to Devon’s. Determining the fair value of the assets and liabilities of Grayson Mill required judgment and certain assumptions to be made, the most significant of these being related to the valuation of Grayson Mill’s oil and gas properties. The inputs and assumptions related to the oil and gas properties were categorized as level 3 in the fair value hierarchy.

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The following table represents the final allocation of the total purchase price of Grayson Mill to the identifiable assets acquired and the liabilities assumed based on the fair values as of the acquisition date.

		Final Purchase
		Price Allocation
Consideration:
Devon common stock issued			37.3
Devon closing price on September 27, 2024		$	38.96
Total common equity consideration		$	1,455
Cash consideration			3,567
Total consideration		$	5,022
Assets acquired:
Cash, cash equivalents and restricted cash		$	147
Accounts receivable			219
Inventory			44
Other current assets			9
Proved oil and gas property and equipment			3,056
Unproved oil and gas property and equipment			1,771
Other property and equipment, net			210
Right-of-use assets			29
Total assets acquired		$	5,485
Liabilities assumed:
Accounts payable		$	145
Revenue and royalties payable			209
Other current liabilities			16
Asset retirement obligations			75
Lease liabilities			18
Total liabilities assumed			463
Net assets acquired		$	5,022

Pro Forma Financial Information

The following unaudited pro forma financial information is based on our historical consolidated financial statements adjusted to reflect as if the Grayson Mill acquisition had occurred on January 1, 2023. The information below reflects pro forma adjustments to conform Grayson Mill's historical financial information to Devon’s financial statement presentation. The unaudited pro forma financial information is not necessarily indicative of what would have occurred if the acquisition had been completed as of the beginning of the periods presented, nor is it indicative of future results.

		Year Ended December 31,
		2024				2023
		(Unaudited)
Total revenues		$	17,930			$	17,483
Net earnings		$	3,166			$	4,083

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Asset Exchange

On April 1, 2025, Devon and BPX Energy dissolved their partnership and divided their acreage in the Eagle Ford Blackhawk field located in Texas' DeWitt County, resulting in increased operational flexibility for both parties. The assets exchanged were in close proximity and shared similar geological characteristics. The transaction was accounted for as an equal, non-monetary exchange, as it did not result in a significant change to the risks, expected future cash flows or the timing of those cash flows, and therefore was determined to lack commercial substance. As a result, the new acreage and underlying property costs were recorded at the historical cost of the assets exchanged.

Divestiture of Matterhorn Investment

During 2025, Devon sold its investment in Matterhorn for $409 million and recognized a pre-tax gain of $342 million ($266 million, net of tax), which was recorded to asset dispositions on the accompanying consolidated statements of comprehensive earnings.

Contingent Earnout Payments

Devon was entitled to contingent earnout payments associated with the sale of its Barnett Shale assets in 2020 with upside participation beginning at a $2.75 Henry Hub natural gas price or a $50 WTI oil price. The contingent payment period commenced on January 1, 2021, and had a term of four years. Devon received $20 million in contingent earnout payments related to this transaction in the first quarters of 2025 and 2024 and $65 million in the first quarter of 2023.

Devon also received $4 million in contingent earnout payments in the first quarter of 2023 related to the sale of non-core assets in the Rockies which occurred in 2021.

Pending Merger

On February 1, 2026, Devon, Coterra and Merger Sub entered into the Merger Agreement, providing for an all-stock merger of equals. Coterra is an oil and gas exploration and production company with assets in the Delaware Basin in Texas and New Mexico, Marcellus Shale in Pennsylvania and the Anadarko Basin in Oklahoma. On the closing date of the Merger, each share of Coterra common stock will be automatically converted into the right to receive 0.70 of a share of Devon common stock. No fractional shares of Devon’s common stock will be issued in the Merger, and holders of shares of Coterra common stock will, instead, receive cash in lieu of fractional shares of Devon common stock, if any. The Merger has been unanimously approved by the boards of directors of Devon and Coterra and remains subject to the approval of Coterra shareholders, and the issuance of shares of Devon common stock in the Merger remains subject to the approval of Devon shareholders. The Merger is expected to close in the second quarter of 2026, subject to shareholder and regulatory approvals and other customary closing conditions.

3.

Derivative Financial Instrument****s

Commodity Derivatives

As of December 31, 2025, Devon had the following open oil derivative positions. The first table presents Devon’s oil derivatives that settle against the average of the prompt month NYMEX WTI futures price. The second table presents Devon’s oil derivatives that settle against the respective indices noted within the table.

		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)
Q1-Q4 2026			103,529			$	49.73			$	59.85			$	71.54
Q1-Q4 2027			6,942			$	47.64			$	57.64			$	65.84

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		Oil Basis Swaps
Period		Index		Volume (Bbls/d)				Weighted Average Differential to WTI ($/Bbl)
Q1-Q4 2026		Midland Sweet			46,000			$	1.10
Q1-Q4 2026		NYMEX Roll			23,803			$	0.10
Q1-Q4 2027		Midland Sweet			16,000			$	1.04

As of December 31, 2025, Devon had the following open natural gas derivative positions. The first table presents Devon’s natural gas derivatives that settle against the Inside FERC first of the month Henry Hub index. The second table presents Devon’s natural gas derivatives that settle against the respective indices noted within the table.

		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)
Q1-Q4 2026			247,500			$	3.80				220,000			$	3.24			$	4.92

		Natural Gas Basis Swaps
Period		Index		Volume (MMBtu/d)				Weighted Average Differential to Henry Hub ($/MMBtu)
Q1-Q4 2026		Houston Ship Channel			50,000			$	(0.29	)
Q1-Q4 2026		WAHA			150,000			$	(1.79	)

Financial Statement Presentation

All derivative financial instruments are recognized at their current fair value as either assets or liabilities on the consolidated balance sheets. Amounts related to contracts allowed to be netted upon payment subject to a master netting arrangement with the same counterparty are reported on a net basis on the consolidated balance sheets. The table below presents a summary of these positions as of December 31, 2025 and 2024.

	December 31, 2025									December 31, 2024
	Gross Fair Value			Amounts Netted			Net Fair Value			Gross Fair Value			Amounts Netted			Net Fair Value			Balance Sheet Classification
Commodity derivatives:
Short-term derivative asset	$	199		$	(7	)	$	192		$	78		$	(23	)	$	55		Other current assets
Long-term derivative asset		2			—			2			5			(4	)		1		Other long-term assets
Short-term derivative liability		(8	)		7			(1	)		(37	)		23			(14	)	Other current liabilities
Long-term derivative liability		—			—			—			(23	)		4			(19	)	Other long-term liabilities
Total derivative asset	$	193		$	—		$	193		$	23		$	—		$	23

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4.

Share-Based Compensation

In 2022, Devon's stockholders approved the 2022 Plan, which replaced the 2017 Plan. From the effective date of the 2022 Plan, no further awards may be made under the 2017 Plan; however, awards previously granted will continue to be governed by the terms of the respective award documents. The 2022 Plan authorizes the grant of nonqualified and incentive stock options, restricted stock awards or units and stock appreciation rights to eligible employees. Restricted stock awards or restricted stock units granted under the 2022 Plan may be subject to performance-based conditions. The 2022 Plan also authorizes the grant of nonqualified stock options, restricted stock awards or units and stock appreciation rights to non-employee directors. To calculate the number of shares that may be granted in awards under the 2022 Plan, options and stock appreciation rights represent one share and other awards represent 1.74 shares.

The table below presents the share-based compensation expense included in Devon’s accompanying consolidated statements of comprehensive earnings.

		Year Ended December 31,
		2025				2024				2023
G&A		$	89			$	98			$	92
Exploration expenses			1				1				1
Restructuring and transaction costs			9				—				—
Total		$	99			$	99			$	93
Related income tax benefit		$	16			$	25			$	34

The following table presents a summary of Devon’s unvested restricted stock awards and units and performance share units granted under the plans.

		Restricted Stock Awards & Units								Performance Share Units
		Awards/Units				Weighted Average Grant-Date Fair Value				Units				Weighted Average Grant-Date Fair Value
		(Thousands, except fair value data)
Unvested at 12/31/24			4,107			$	45.31				1,179			$	67.38
Granted			2,679			$	34.11				510			$	45.92
Vested			(1,897	)		$	41.21				(272	)		$	68.68
Forfeited			(236	)		$	40.22				(124	)		$	65.47
Unvested at 12/31/25			4,653			$	40.79				1,293		(1)	$	58.82

(1)

A maximum of 2.6 million common shares could be awarded based upon Devon’s final TSR ranking.

The following table presents the aggregate fair value of awards and units that vested during the indicated period.

		2025				2024				2023
Restricted Stock Awards and Units		$	62			$	82			$	172
Performance Share Units		$	9			$	52			$	66

The following table presents the unrecognized compensation cost and the related weighted average recognition period associated with unvested awards and units as of December 31, 2025.

		Restricted Stock				Performance
		Awards/Units				Share Units
Unrecognized compensation cost		$	109			$	18
Weighted average period for recognition (years)			2.5				1.9

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Restricted Stock Awards and Units

Restricted stock awards and units are subject to the terms, conditions, restrictions and limitations, if any, that the Compensation Committee deems appropriate, including restrictions on continued employment. Generally, the service requirement for vesting ranges from one to four years. Dividends declared during the vesting period with respect to restricted stock awards and units will not be paid until the underlying award vests. Devon estimates the fair values of restricted stock awards and units as the closing price of Devon’s common stock on the grant date of the award, which is expensed over the applicable vesting period.

Performance Share Units

Performance share units are granted to certain members of Devon’s management and employees. Each unit that vests entitles the recipient to one share of Devon common stock. The vesting of these units is based on comparing Devon’s TSR to the TSR of a predetermined group of peer companies and certain indices over the specified three-year performance period. Subject to certain limits, the vesting of units may be between zero and 200% of the units granted depending on Devon’s TSR as compared to the peer group as of the end of the performance period.

At vesting, recipients receive dividend equivalents with respect to the number of units vested. The fair value of each performance share unit is estimated as of the date of grant using a Monte Carlo simulation with the following assumptions used for all grants made under the plan: (i) a risk-free interest rate based on U.S. Treasury rates as of the grant date; (ii) a volatility assumption based on the historical realized price volatility of Devon and the designated peer group; and (iii) an estimated ranking of Devon among the designated peer group. The fair value of the unit on the date of grant is expensed over the applicable vesting period. The following table presents the assumptions related to performance share units granted.

		2025				2024				2023
Grant-date fair value		$	45.92			$	56.99			$	81.70
Risk-free interest rate			4.29	%			4.28	%			4.15	%
Volatility factor			38.70	%			46.03	%			61.43	%
Contractual term (years)			2.89				2.89				2.89

5.

Asset Impairments

In the first quarter of 2025, Devon rationalized two headquarters-related real estate assets, triggering assets held for sale and recording asset impairments of $254 million. Both transactions closed in the first quarter of 2025 and generated aggregate sales proceeds of $120 million.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

6.

Income Taxes

Income Tax Expense

The following table presents Devon’s income tax expense.

		Year Ended December 31,
		2025				2024				2023
Earnings (loss) before income taxes:
U.S.		$	3,474			$	3,721			$	4,609
Canada			(8	)			(9	)			14
Total earnings before income taxes		$	3,466			$	3,712			$	4,623
Current income tax expense (benefit):
U.S. federal		$	285			$	427			$	441
Various states			16				32				27
Canada			—				—				(3	)
Total current income tax expense			301				459				465
Deferred income tax expense:
U.S. federal			406				267				365
Various states			78				44				11
Total deferred income tax expense			484				311				376
Total income tax expense (benefit):
U.S. federal			691				694				806
Various states			94				76				38
Canada			—				—				(3	)
Total income tax expense		$	785			$	770			$	841

Total income tax expense differed from the amounts computed by applying the U.S. federal income tax rate to earnings before income taxes as a result of the following:

		Year Ended December 31,
		2025							2024							2023
U.S. federal statutory tax rate		$	728			21	%		$	780			21	%		$	971			21	%
U.S. federal:
Tax credits			(32	)		(1	%)			(85	)		(2	%)			(133	)		(3	%)
Nontaxable and nondeductible items			2			—				(13	)		—				(15	)		—
Effect of changes in tax laws or rates			8			—				—			—				—			—
Other			(3	)		—				4			—				(17	)		(1	%)
U.S. state income taxes (1)			74			3	%			60			2	%			30			1	%
Foreign tax effects			2			—				2			—				(6	)		—
Changes in unrecognized tax benefits			6			—				22			—				11			—
Effective income tax rate		$	785			23	%		$	770			21	%		$	841			18	%

(1)

State taxes in North Dakota, New Mexico, and Texas made up the majority (greater than 50%) of the tax effect in this category.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

On July 4, 2025, OBBB was signed into law. In addition to other provisions, OBBB includes permanent reinstatement of 100% bonus depreciation and the expensing of domestic research costs beginning in 2025 and allows for the deduction of intangible drilling costs as part of the computation of the CAMT beginning in 2026. Accordingly, Devon’s 2025 income tax expense included a current tax benefit of approximately $215 million and a corresponding deferred tax expense associated with the deferral of income taxes resulting from the enactment of OBBB.

Income Taxes Paid

The following table presents the components of Devon's income taxes paid or refunded.

		Year Ended December 31,
		2025				2024				2023
U.S. federal		$	149			$	439			$	350
Various states:
New Mexico			5				20				28
Texas			22				11				23
North Dakota			10				12				1
Other			—				—				1
Subtotal			37				43				53
Canada			—				(2	)			(3	)
Total		$	186			$	480			$	400

Deferred Tax Assets and Liabilities

The following table presents the tax effects of temporary differences that gave rise to Devon’s deferred tax assets and liabilities.

		December 31,
		2025				2024
Deferred tax assets:
Capital loss carryforwards		$	522			$	497
Net operating loss carryforwards			375				428
Accrued liabilities			219				191
Asset retirement obligations			206				181
CAMT credit			179				—
Other			18				28
Total deferred tax assets before valuation allowance			1,519				1,325
Less: valuation allowance			(829	)			(794	)
Net deferred tax assets			690				531
Deferred tax liabilities:
Property and equipment			(3,251	)			(2,669	)
Other			(66	)			(10	)
Total deferred tax liabilities			(3,317	)			(2,679	)
Net deferred tax liability		$	(2,627	)		$	(2,148	)

At December 31, 2025, Devon has recognized $375 million of deferred tax assets related to various net operating loss carryforwards available to offset future taxable income. Devon has $38 million of U.S. federal net operating loss carryforwards which do not expire. Devon has $14 million of Canadian net operating loss carryforwards, all of which are covered by a valuation allowance. Devon also has $323 million of state net operating loss carryforwards, with $145 million expiring between 2027 and 2040, $178 million with no expiration, and $288 million of which are covered by a valuation allowance.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Devon’s $38 million U.S. federal net operating losses were acquired through the merger with WPX. These net operating losses are subject to limitation pursuant to Section 382 of the Internal Revenue Code of 1986, which relates to limitations upon the 50% or greater change of ownership of an entity during any three-year period. The Company anticipates utilizing these net operating losses prior to their expiration.

Devon's remaining Canadian deferred tax assets of $527 million, primarily made up of $515 million of capital losses, are fully covered by a valuation allowance.

Unrecognized Tax Benefits

The following table presents changes in Devon’s unrecognized tax benefits.

		December 31,
		2025				2024
		(Millions)
Balance at beginning of year		$	105			$	83
Tax positions taken in prior periods			10				22
Settlements			(4	)			—
Balance at end of year		$	111			$	105

Devon's unrecognized tax benefit balance at December 31, 2025 and 2024 included $18 million and $12 million, respectively, of interest. At December 31, 2025 and 2024, there were $111 million and $105 million, respectively, of current unrecognized tax benefits that if recognized would affect the annual effective tax rate.

Included below is a summary of the tax years, by jurisdiction, that remain subject to examination by taxing authorities.

Jurisdiction		Tax Years Open
U.S. federal		2018-2025
Various U.S. states		2021-2025
Canada		2006-2025

Certain statute of limitation expirations are scheduled to occur in the next twelve months. Devon is currently in various stages of the audit and administrative review process for certain open tax years.

7.

Net Earnings Per Share

The following table reconciles net earnings available to common shareholders and weighted-average common shares outstanding used in the calculations of basic and diluted net earnings per share.

		Year Ended December 31,
		2025				2024				2023
Net earnings available to common shareholders - basic and diluted		$	2,642			$	2,891			$	3,747
Common shares:
Average common shares outstanding - basic			632				632				639
Dilutive effect of potential common shares issuable			1				2				3
Average common shares outstanding - diluted			633				634				642
Net earnings per share available to common shareholders:
Basic		$	4.18			$	4.58			$	5.86
Diluted		$	4.17			$	4.56			$	5.84

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

8.

Other Compr****ehensive Earnings (Loss)

Components of other comprehensive earnings (loss) consist of the following:

		Year Ended December 31,
		2025				2024				2023
Pension and postretirement benefit plans:
Beginning accumulated pension and postretirement benefits		$	(122	)		$	(124	)		$	(116	)
Net actuarial gain (loss) and prior service cost arising in current year			(6	)			(3	)			(15	)
Recognition of net actuarial loss and prior service cost in earnings (1)			6				6				5
Income tax benefit (expense)			—				(1	)			2
Accumulated other comprehensive loss, net of tax		$	(122	)		$	(122	)		$	(124	)

(1)

Recognition of net actuarial loss and prior service cost are included in the computation of net periodic benefit cost, which is a component of other, net in the accompanying consolidated statements of comprehensive earnings. See Note 16 for additional details.

9.

Supplemental Information to Statements of Cash Flows

		Year Ended December 31,
		2025				2024				2023
Changes in assets and liabilities, net:
Accounts receivable		$	183			$	(170	)		$	191
Other current assets			(54	)			(46	)			95
Other long-term assets			(128	)			12				(36	)
Accounts payable and revenues and royalties payable			25				(32	)			(335	)
Other current liabilities			99				26				(50	)
Other long-term liabilities			26				(7	)			(9	)
Total		$	151			$	(217	)		$	(144	)
Supplementary cash flow data:
Interest paid		$	509			$	366			$	378
Income taxes paid		$	186			$	480			$	400

As of December 31, 2025 and 2024, Devon had approximately $360 million and $340 million, respectively, of accrued capital expenditures included in total property and equipment, net and accounts payable on the consolidated balance sheets.

10.

Accounts Receivable

Components of accounts receivable include the following:

		December 31, 2025				December 31, 2024
Oil, gas and NGL sales		$	865			$	1,130
Joint interest billings			245				341
Marketing and midstream revenues			669				465
Other			20				42
Gross accounts receivable			1,799				1,978
Allowance for doubtful accounts			(7	)			(6	)
Net accounts receivable		$	1,792			$	1,972

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

11.

Property and Equipment

Capitalized Costs

The following table presents the aggregate capitalized costs related to Devon’s oil and gas and non-oil and gas activities.

		December 31, 2025				December 31, 2024
Property and equipment:
Proved		$	58,573			$	53,647
Unproved and properties under development			1,910				2,814
Total oil and gas			60,483				56,461
Less accumulated DD&A			(36,752	)			(33,263	)
Oil and gas property and equipment, net			23,731				23,198
Other property and equipment			2,624				2,671
Less accumulated DD&A			(936	)			(858	)
Other property and equipment, net			1,688				1,813
Property and equipment, net		$	25,419			$	25,011

Suspended Exploratory Well Costs

The following summarizes the changes in suspended exploratory well costs for the three years ended December 31, 2025.

		Year Ended December 31,
		2025			2024			2023
Beginning balance		$	293		$	136		$	126
Additions pending determination of proved reserves			555			674			522
Charges to exploration expense			(1	)		(1	)		(1	)
Reclassifications to proved properties			(624	)		(516	)		(511	)
Ending balance		$	223		$	293		$	136

Devon had no projects with material suspended exploratory well costs capitalized for a period greater than one year since the completion of drilling as of December 31, 2025, 2024 and 2023.

12.

Investments

WaterBridge

In 2023, Devon made an investment in the Water JV, a joint venture entity formed with an affiliate of WaterBridge NDB LLC, for the purpose of providing increased capacity and flexibility in disposing of produced water in the Delaware Basin and Eagle Ford. Under terms of the arrangement, Devon contributed water infrastructure assets and committed to a water gathering and disposal dedication to the Water JV through 2038, in exchange for a 30% voting interest in the joint venture legal entity. WaterBridge NDB LLC contributed water infrastructure assets to the Water JV, in exchange for a 70% voting interest in the joint venture legal entity and was serving as the operator. In 2023, Devon recognized a $64 million gain in asset dispositions in the consolidated statements of comprehensive earnings, which represented the excess of the estimated fair value of Devon's interest in the Water JV over the carrying value of the water infrastructure assets Devon contributed to the Water JV. Devon accounted for the investment in the Water JV as an equity method investment. Devon's investment in the Water JV is shown within investments on the consolidated balance sheets, and Devon's share of the Water JV earnings are reflected as a component of other, net in the accompanying consolidated statements of comprehensive earnings.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

In the third quarter of 2025, Devon and its joint venture partner in the Water JV combined the Water JV with certain other companies to form WaterBridge, a water infrastructure business focused in the Delaware Basin, which ultimately completed an initial public offering. Devon received approximately 14% of the equity interests in WaterBridge in connection with these transactions. Devon accounts for its investment in WaterBridge under the equity method. As a result of the WaterBridge equity issued to third parties in the combination transaction and related initial public offering which were accretive, Devon's investment increased by approximately $45 million, which was recorded to other, net in the accompanying consolidated statements of comprehensive earnings.

Catalyst

Devon has an interest in Catalyst, which is a joint venture with an affiliate of Howard Energy Partners, LLC (“HEP”), to develop oil gathering and natural gas processing infrastructure in the Stateline area of the Delaware Basin. Under the terms of the arrangement, Devon and an affiliate of HEP each have a 50% voting interest in the joint venture legal entity, and HEP serves as the operator. Through 2038, Devon’s production from 50,000 net acres in the Stateline area of the Delaware Basin has been dedicated to Catalyst subject to fixed-fee oil gathering and natural gas processing agreements. Devon accounts for the investment in Catalyst as an equity method investment. Devon's investment in Catalyst is shown within investments on the consolidated balance sheets, and Devon's share of Catalyst earnings are reflected as a component of other, net in the accompanying consolidated statements of comprehensive earnings.

Fervo

In 2024, Devon invested approximately $117 million in Fervo, a company that generates energy from geothermal wells. The investment allows Devon to exercise significant influence over Fervo, and the investment is accounted for under the equity method of accounting. Devon's investment in Fervo is shown within investments on the consolidated balance sheets, and Devon's share of Fervo earnings are reflected as a component of other, net in the accompanying consolidated statements of comprehensive earnings. In the fourth quarter of 2025, Devon invested an additional $50 million in Fervo.

Matterhorn

Devon had an interest in Matterhorn, which was a joint venture in a natural gas pipeline. Devon's investment in Matterhorn did not give it the ability to exercise significant influence over Matterhorn. During 2025, Devon sold its investment in Matterhorn for $409 million and recognized a pre-tax gain of $342 million ($266 million, net of tax), which was recorded to asset dispositions in the accompanying consolidated statements of comprehensive earnings.

Other

Devon has other investments largely focused on midstream, new technologies and other initiatives. Devon does not have the ability to exercise significant influence over these investments.

The following table presents Devon's investments that are shown on the consolidated balance sheet.

		% Interest		Carrying Amount
Investments		December 31, 2025		December 31, 2025				December 31, 2024
WaterBridge		14%		$	268			$	216
Catalyst		50%			247				273
Fervo		15%			162				115
Matterhorn		—			—				69
Other		Various			50				54
Total				$	727			$	727

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As of December 31, 2025, Devon's investments in equity investees exceeded the underlying equity in net assets by approximately $160 million. The basis differences primarily relate to intangible assets associated with Devon's acreage dedication to Catalyst, which are being amortized over the remaining term of 12 years.

Devon's investments provided certain gathering, processing and marketing services to Devon in the ordinary course of business. The impact from these services on Devon’s consolidated statements of comprehensive earnings and consolidated balance sheets for the years ended and as of December 31, 2025, 2024 and 2023, respectively, relate primarily to Catalyst and are summarized below.

		Year ended December 31,
		2025				2024				2023
Oil, gas and NGL sales		$	136			$	284			$	213
Production expenses		$	160			$	131			$	93
Accounts receivable		$	—			$	18			$	11

13.

Debt and Related Expenses

See below for a summary of debt instruments and balances. The notes, debentures and Term Loan reflected below are senior, unsecured obligations of Devon unless otherwise noted in the table below.

		December 31, 2025				December 31, 2024
5.85% due December 15, 2025		$	—			$	485
7.50% due September 15, 2027 (1)			73				73
5.25% due October 15, 2027 (2)			390				390
5.875% due June 15, 2028 (2)			325				325
4.50% due January 15, 2030 (2)			585				585
7.875% due September 30, 2031			675				675
7.95% due April 15, 2032			366				366
5.20% due September 15, 2034			1,250				1,250
5.60% due July 15, 2041			1,250				1,250
4.75% due May 15, 2042			750				750
5.00% due June 15, 2045			750				750
5.75% due September 15, 2054			1,000				1,000
Term Loan due September 25, 2026			1,000				1,000
Net premium on debentures and notes			23				37
Debt issuance costs			(48	)			(53	)
Total debt		$	8,389			$	8,883
Less amount classified as short-term debt			998				485
Total long-term debt		$	7,391			$	8,398

(1)

This instrument was assumed by Devon in April 2003 in conjunction with the merger with Ocean Energy. This instrument is the unsecured and unsubordinated obligation of Devon OEI Operating, L.L.C. and is guaranteed by Devon Energy Production Company, L.P. Each of these entities is a wholly-owned subsidiary of Devon.

(2)

These instruments were assumed by Devon in January 2021 in conjunction with the merger with WPX. Approximately $27 million of these instruments remain the unsecured and unsubordinated obligation of WPX, a wholly-owned subsidiary of Devon.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Debt maturities as of December 31, 2025, excluding debt issuance costs, premiums and discounts, are as follows:

		Total
2026		$	1,000
2027			463
2028			325
2029			—
2030			585
Thereafter			6,041
Total		$	8,414

On or after the dates in the following schedule, Devon has the option to redeem the notes, in whole or in part, at the applicable redemption prices set forth in the indenture documents, plus accrued and unpaid interest thereon to the redemption date as more fully described in the indenture documents governing the notes to be redeemed. At any time prior to the dates in the following schedule, Devon has the option to redeem some or all of the notes at a specified “make whole” premium as described in such documents. Other than with respect to the notes identified in the schedule below, Devon's senior notes generally include more limited redemption provisions, such as "par call" rights near the maturity date or “make whole” redemption rights.

		Optional Redemption
5.25% due October 15, 2027		October 15, 2022
5.875% due June 15, 2028		June 15, 2023
4.50% due January 15, 2030		January 15, 2025

Credit Lines

Devon currently maintains a $3.0 billion revolving Senior Credit Facility. In the first quarter of 2025, Devon exercised its option to extend the Senior Credit Facility maturity date from March 24, 2029 to March 24, 2030. Devon has the option to extend the March 24, 2030 maturity date by an additional year subject to lender consent. As of December 31, 2025, Devon had no outstanding borrowings under the Senior Credit Facility and had less than $1.0 million in outstanding letters of credit under this facility. Interest rates on borrowings under the Senior Credit Facility are determined based on the applicable loan type elected by Devon and a pricing grid set forth in the credit agreement and vary according to the credit ratings of the Company. The Senior Credit Facility currently provides for an annual facility fee of approximately $5 million.

The Senior Credit Facility contains only one material financial covenant. This covenant requires Devon's ratio of total funded debt to total capitalization, as defined in the credit agreement, to be no greater than 65%. Under the terms of the credit agreement, total capitalization is adjusted to add back non-cash financial write-downs such as impairments. As of December 31, 2025, Devon was in compliance with this covenant with a debt-to-capitalization ratio of 24.8%.

Commercial Paper

Devon’s Senior Credit Facility supports its $3.0 billion of short-term credit under its commercial paper program. Commercial paper debt generally has a maturity of between 1 and 90 days, although it can have a maturity of up to 365 days, and bears interest at rates agreed to at the time of the borrowing. As of December 31, 2025, Devon had no outstanding commercial paper borrowings.

Term Loan Credit Agreement

In August 2024, Devon entered into a delayed draw term loan credit agreement (the “Term Loan Credit Agreement”), providing for delayed draw term loans in an aggregate principal amount not to exceed $2.0 billion, including a 364-day tranche of $500 million and a two-year tranche of $1.5 billion. On September 27, 2024, Devon borrowed $1.0 billion on the two-year tranche (the “Term Loan”) to partially fund the closing of the Grayson Mill acquisition. In connection with the borrowing of the Term Loan, the undrawn commitments under the Term Loan Credit Agreement automatically terminated. The Term Loan bears interest at a rate based on term SOFR plus a spread adjustment that varies based on Devon's credit ratings. The interest rate on the Term Loan was 5.4% as of December 31, 2025.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Term Loan Credit Agreement contains substantially the same financial covenant as the Senior Credit Facility. As of December 31, 2025, Devon was in compliance with this covenant with a debt-to-capitalization ratio of 24.8%.

Issuance of Senior Notes

In August 2024, Devon issued $1.25 billion of 5.20% senior notes due 2034 and $1.0 billion of 5.75% senior notes due 2054. Devon used the net proceeds to partially fund the Grayson Mill acquisition. For additional information, see Note 2.

Retirement of Senior Notes

On September 15, 2025, Devon early redeemed the $485 million of 5.85% senior notes due in December 2025 pursuant to the "par call" rights set forth in the indenture document.

On September 15, 2024, Devon repaid the $472 million of 5.25% senior notes at maturity.

Net Financing Costs

The following schedule includes the components of net financing costs.

		Year Ended December 31,
		2025				2024				2023
Net financing costs:
Interest based on debt outstanding		$	497			$	401			$	369
Interest income			(56	)			(62	)			(55	)
Other			14				24				(6	)
Total net financing costs		$	455			$	363			$	308

14.

Leases

Devon’s operating lease right-of-use assets relate to real estate, drilling rigs and other equipment related to the exploration, development and production of oil and gas. As of December 31, 2025, Devon’s financing lease right-of-use assets primarily relate to equipment related to the exploration, development and production of oil and gas.

During the first quarter of 2025, Devon extinguished an approximately $300 million real estate finance lease by making a cash payment of $274 million and recognized a gain on early lease extinguishment in other, net related to the difference on the accompanying consolidated statement of comprehensive earnings.

The following table presents Devon’s right-of-use assets and lease liabilities.

		December 31, 2025												December 31, 2024
		Finance				Operating				Total				Finance				Operating				Total
Right-of-use assets		$	23			$	276			$	299			$	248			$	55			$	303
Lease liabilities:
Current lease liabilities (1)		$	7			$	95			$	102			$	25			$	28			$	53
Long-term lease liabilities			16				181				197				293				27				320
Total lease liabilities (2)		$	23			$	276			$	299			$	318			$	55			$	373

(1)

Current lease liabilities are included in other current liabilities on the consolidated balance sheets.

(2)

Devon has entered into certain leases of equipment related to the exploration, development and production of oil and gas that had terms not yet commenced as of December 31, 2025 and are therefore excluded from the amounts shown above.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents Devon’s total lease cost.

			Year Ended December 31,
			2025				2024				2023
Operating lease cost	Property and equipment; LOE; G&A		$	85			$	28			$	13
Short-term lease cost (1)	Property and equipment; LOE; G&A			275				234				193
Financing lease cost:
Amortization of right-of-use assets	DD&A			5				11				9
Interest on lease liabilities	Net financing costs			5				19				15
Variable lease cost	G&A			—				—				5
Lease income	G&A			(3	)			(10	)			(10	)
Net lease cost			$	367			$	282			$	225

(1)

Short-term lease cost excludes leases with terms of one month or less.

The following table presents Devon’s additional lease information.

		Year Ended December 31,
		2025								2024
		Finance				Operating				Finance				Operating
Cash outflows for lease liabilities:
Operating cash flows		$	6			$	85			$	22			$	27
Investing cash flows		$	—			$	—			$	—			$	1
Financing cash flows		$	282			$	—			$	—			$	—
Right-of-use assets obtained in exchange for new lease liabilities		$	15			$	300			$	14			$	59
Weighted average remaining lease term (years)			2.6				3.6				8.2				2.1
Weighted average discount rate			4.8	%			4.9	%			6.2	%			5.3	%

The following table presents Devon’s maturity analysis as of December 31, 2025 for leases expiring in each of the next 5 years and thereafter.

		Finance				Operating				Total
2026		$	7			$	106			$	113
2027			7				66				73
2028			6				55				61
2029			3				49				52
2030			1				24				25
Thereafter			—				1				1
Total lease payments			24				301				325
Less: interest			(1	)			(25	)			(26	)
Present value of lease liabilities		$	23			$	276			$	299

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

15.

Asset Retirement Obligations

The following table presents the changes in asset retirement obligations.

		Year Ended December 31,
		2025				2024
Asset retirement obligations as of beginning of period		$	807			$	665
Assumed Grayson Mill obligations			—				75
Liabilities incurred			58				30
Liabilities settled and divested			(65	)			(37	)
Revision and reclassification of estimated obligation			55				35
Accretion expense on discounted obligation			51				39
Asset retirement obligations as of end of period			906				807
Less current portion			43				37
Asset retirement obligations, long-term		$	863			$	770

During 2025 and 2024, Devon increased its asset retirement obligations by approximately $55 million and $35 million, respectively, primarily due to changes in current cost estimates and future retirement dates for its oil and gas assets.

16.

Retirement Plans

Defined Contribution Plans

Devon sponsors defined contribution plans covering its employees. Such plans include its 401(k) plan and enhanced contribution plan. Devon makes matching contributions and additional retirement contributions, with the matching contributions being primarily based upon percentages of annual compensation and years of service. In addition, each plan is subject to regulatory limitations by the U.S. government. Devon contributed $47 million, $44 million and $38 million to these plans in 2025, 2024 and 2023, respectively.

Defined Benefit Plans

Devon has various non-contributory defined benefit pension plans, including qualified plans and nonqualified plans covering eligible employees and former employees meeting certain age and service requirements. Benefits under the defined benefit plans have been closed to new employees and effective, as of December 31, 2020, Devon’s benefits committee approved a freeze of all future benefit accruals under the plans.

Benefits are primarily funded from assets held in the plans’ trusts.

Devon’s investment objective for its plans’ assets is to achieve stability of the funded status while providing long-term growth of invested capital and income to ensure benefit payments can be funded when required. Devon has established certain investment strategies, including target allocation percentages and permitted and prohibited investments, designed to mitigate risks inherent with investing. Devon’s target allocations for its plan assets are 70% fixed income and 30% equity. See the following discussion for Devon’s pension assets by asset class.

Fixed-income – Devon’s fixed-income securities consist of U.S. Treasury obligations, bonds issued by investment-grade companies from diverse industries and asset-backed securities. These fixed-income securities do not consistently trade actively in an established market. The fair values of these Level 2 securities are estimated based upon rates available for securities with similar terms and maturity when active trading is not available and were $301 million and $286 million at December 31, 2025 and 2024, respectively.

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Equity – Devon’s equity securities include commingled global equity funds that invest in large, mid and small capitalization stocks across the world’s developed and emerging markets and international large cap equity securities. These equity securities can be sold on demand but are not actively traded. The fair values of these securities are based upon the net asset values provided by the investment managers and were $99 million and $97 million at December 31, 2025 and 2024, respectively.

Other – Devon’s other securities include short-term investment funds that invest both long and short term using a variety of investment strategies. The fair value of these securities is based upon the net asset values provided by investment managers and were $44 million and $64 million at December 31, 2025 and 2024, respectively.

Defined Postretirement Plans

Devon also has defined benefit postretirement plans that provide benefits for substantially all qualifying retirees. Benefit obligations for such plans are estimated based on Devon’s future cost-sharing intentions. Devon’s funding policy for the plans is to fund the benefits as they become payable with available cash and cash equivalents.

Benefit Obligations and Funded Status

The following table summarizes the benefit obligations, assets, funded status and balance sheet impacts associated with Devon’s defined pension and postretirement plans. Devon’s benefit obligations and plan assets are measured each year as of December 31. The accumulated benefit obligation for pension plans approximated the projected benefit obligation at December 31, 2025 and 2024.

		Pension Benefits								Postretirement Benefits
		2025				2024				2025				2024
Change in benefit obligation:
Benefit obligation at beginning of year		$	620			$	655			$	7			$	7
Interest cost			30				31				—				—
Actuarial loss (gain)			17				(14	)			—				—
Participant contributions			—				—				1				1
Benefits paid			(54	)			(52	)			(1	)			(1	)
Benefit obligation at end of year			613				620				7				7
Change in plan assets:
Fair value of plan assets at beginning of year			447				476				—				—
Actual return on plan assets			38				9				—				—
Employer contributions			13				14				1				1
Participant contributions			—				—				—				1
Benefits paid			(54	)			(52	)			(1	)			(2	)
Fair value of plan assets at end of year			444				447				—				—
Funded status at end of year		$	(169	)		$	(173	)		$	(7	)		$	(7	)
Amounts recognized in balance sheet:
Other current liabilities		$	(14	)		$	(13	)		$	(1	)		$	(1	)
Other long-term liabilities			(155	)			(160	)			(6	)			(6	)
Net amount		$	(169	)		$	(173	)		$	(7	)		$	(7	)
Amounts recognized in accumulated other comprehensive earnings:
Net actuarial loss (gain)		$	194			$	195			$	(12	)		$	(13	)
Prior service cost			—				—				1				1
Total		$	194			$	195			$	(11	)		$	(12	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Certain of Devon’s pension plans have a combined projected benefit obligation or accumulated benefit obligation in excess of plan assets at December 31, 2025, and December 31, 2024, as presented in the table below.

		December 31,
		2025				2024
Projected and accumulated benefit obligation		$	613			$	620
Fair value of plan assets		$	444			$	447

The following table presents the components of net periodic benefit cost and other comprehensive earnings.

		Pension Benefits												Postretirement Benefits
		2025				2024				2023				2025				2024				2023
Net periodic benefit cost:
Interest cost		$	30			$	31			$	34			$	—			$	—			$	—
Expected return on plan assets			(27	)			(27	)			(27	)			—				—				—
Recognition of net actuarial loss (gain) (1)			7				7				6				(1	)			(1	)			(1	)
Total net periodic benefit cost (2)			10				11				13				(1	)			(1	)			(1	)
Other comprehensive loss (earnings):
Actuarial loss (gain) arising in current year			6				4				16				—				—				—
Recognition of net actuarial (loss) gain, including settlement expense, in net periodic benefit cost			(7	)			(7	)			(6	)			1				1				1
Total other comprehensive loss (earnings)			(1	)			(3	)			10				1				1				1
Total		$	9			$	8			$	23			$	—			$	—			$	—

(1)

These net periodic benefit costs were reclassified out of other comprehensive earnings in the current period.

(2)

The service cost component of net periodic benefit cost is included in G&A expense and the remaining components of net periodic benefit costs are included in other, net in the accompanying consolidated statements of comprehensive earnings.

Assumptions

		Pension Benefits						Postretirement Benefits
		2025		2024		2023		2025		2024		2023
Assumptions to determine benefit obligations:
Discount rate		5.10%		5.27%		5.01%		4.99%		5.18%		4.96%
Assumptions to determine net periodic benefit cost:
Discount rate - service cost		N/A		N/A		N/A		5.36%		5.01%		5.81%
Discount rate - interest cost		5.05%		4.95%		5.61%		4.99%		4.94%		5.49%
Expected return on plan assets		6.20%		5.80%		6.21%		N/A		N/A		N/A

Discount rate – Future pension and post-retirement obligations are discounted based on the rate at which obligations could be effectively settled, considering the timing of expected future cash flows related to the plans. This rate is based on high-quality bond yields, after allowing for call and default risk.

Expected return on plan assets – This was determined by evaluating input from external consultants and economists, as well as long-term inflation assumptions and consideration of target allocation of investment types.

Mortality rate – Devon utilized the Society of Actuaries produced mortality tables.

Other assumptions – For measurement of the December 31, 2025 benefit obligation for the other postretirement medical plans, a 7% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2026. The rate was assumed to decrease annually to an ultimate rate of 5% in the year 2036 and remain at that level thereafter.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Expected Cash Flows

Devon expects benefit plan payments to average approximately $52 million a year for the next five years and $236 million total for the five years thereafter. Of these payments to be paid in 2026, $14 million is expected to be funded from Devon’s available cash, cash equivalents and other assets.

17.

Stockholders’ Equity

The authorized capital stock of Devon consists of 1.0 billion shares of common stock, par value $0.10 per share, and 4.5 million shares of preferred stock, par value $1.00 per share. The preferred stock may be issued in one or more series, and the terms and rights of such stock will be determined by the Board of Directors.

Share Issuance

On September 27, 2024, Devon completed its acquisition of the Williston Basin business of Grayson Mill for total consideration of approximately $5.0 billion. The transaction consisted of $3.5 billion of cash and approximately 37.3 million shares of Devon common stock at $38.96 per share for total equity consideration of approximately $1.5 billion, including purchase price adjustments.

Share Repurchase Program

Devon's Board of Directors has authorized a $5.0 billion share repurchase program with a June 30, 2026 expiration date. The table below provides information regarding purchases of Devon’s common stock under the $5.0 billion share repurchase program (shares in thousands).

		Total Number of Shares Purchased				Dollar Value of Shares Purchased				Average Price Paid per Share
$5.0 Billion Plan
2021			13,983			$	589			$	42.15
2022			11,708				718			$	61.36
2023			19,350				992			$	51.23
2024			23,944				1,044			$	43.61
2025			30,813				1,050			$	34.07
Total plan			99,798			$	4,393			$	44.02

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Dividends

Devon pays a quarterly dividend which can be comprised of a fixed dividend and a variable dividend. The variable dividend is dependent on quarterly cash flows, among other factors. Devon has raised its fixed divided multiple times over the past three calendar years with it most recently being raised from $0.22 to $0.24 per share beginning in the first quarter of 2025. The following table summarizes the dividends Devon has paid on its common stock in 2025, 2024 and 2023, respectively.

		Dividends				Rate Per Share
2025:
First quarter		$	163			$	0.24
Second quarter			156			$	0.24
Third quarter			151			$	0.24
Fourth quarter			149			$	0.24
Total year-to-date		$	619
2024:
First quarter		$	299			$	0.44
Second quarter			223			$	0.35
Third quarter			272			$	0.44
Fourth quarter			143			$	0.22
Total year-to-date (1)		$	937
2023:
First quarter		$	596			$	0.89
Second quarter			462			$	0.72
Third quarter			312			$	0.49
Fourth quarter			488			$	0.77
Total year-to-date (1)		$	1,858

(1)

During 2024 and 2023, Devon paid variable dividends totaling $377 million and $1.3 billion, respectively, in addition to its recurring fixed dividend.

In February 2026, Devon announced a fixed cash dividend in the amount of $0.24 per share for approximately $149 million payable in the first quarter of 2026.

Noncontrolling Interests

On August 1st, 2025, Devon completed the acquisition of all outstanding noncontrolling interests in CDM for $260 million. As a result of this transaction, Devon owns 100% of the equity interests in CDM. Prior to the acquisition, the noncontrolling interests’ share of CDM’s net earnings and the contributions from and distributions to the noncontrolling interests are presented as components of equity. For additional information, see Note 1.

18.

Commitments and Contingencies

Devon is party to various legal actions arising in connection with its business. Matters that are probable of unfavorable outcome to Devon and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, Devon’s estimates of the outcomes of such matters and its experience in contesting, litigating and settling similar matters. None of the actions are believed by management to likely involve future amounts that would be material to Devon’s financial position or results of operations after consideration of recorded accruals. Actual amounts could differ materially from management’s estimates.

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Royalty Matters

Numerous oil and natural gas producers and related parties, including Devon, have been named in various lawsuits alleging royalty underpayments. Devon is currently named as a defendant in a number of such lawsuits, including some lawsuits in which the plaintiffs seek to certify classes of similarly situated plaintiffs. Among the allegations typically asserted in these suits are claims that Devon used below-market prices, made improper deductions, paid royalty proceeds in an untimely manner without including required interest, used improper measurement techniques and entered into gas purchase and processing arrangements with affiliates that resulted in underpayment of royalties in connection with oil, natural gas and NGLs produced and sold. Devon is also involved in governmental agency proceedings and royalty audits and is subject to related contracts and regulatory controls in the ordinary course of business, some that may lead to additional royalty claims. As of December 31, 2025, Devon has accrued approximately $60 million in other current liabilities pertaining to such royalty matters.

Environmental and Climate Change Matters

Devon’s business is subject to numerous federal, state, tribal and local laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal fines and penalties, as well as remediation costs. Although Devon believes that it is in substantial compliance with applicable environmental laws and regulations and that continued compliance with existing requirements will not have a material adverse impact on its business, there can be no assurance that this will continue in the future.

The Company has previously received separate NOVs from the EPA alleging emissions and permitting violations relating to certain of our historic operations in North Dakota, western Texas and New Mexico, respectively. The Company has been engaging with the EPA to resolve each of these matters, and Devon is actively negotiating a draft consent decree with the EPA and the Department of Justice with respect to the North Dakota NOV matter. If finalized, the consent decree may include monetary sanctions and obligations to complete mitigation projects and implement specific injunctive relief. Given that negotiations of the draft consent decree are ongoing and the uncertainty as to the ultimate result of the North Dakota NOV matter, we are currently unable to provide an estimate of potential loss; however, the costs associated with the resolution of the North Dakota NOV matter or any of the other NOV matters could be significant in amount and may include monetary penalties.

Beginning in 2013, various parishes in Louisiana filed suit against numerous oil and gas companies, including Devon, alleging that the companies’ operations and activities in certain fields violated the State and Local Coastal Resource Management Act of 1978, as amended, and caused substantial environmental contamination, subsidence and other environmental damages to land and water bodies located in the coastal zone of Louisiana. The plaintiffs’ claims against Devon relate primarily to the operations of several of Devon’s corporate predecessors. The plaintiffs seek, among other things, payment of the costs necessary to clear, re-vegetate and otherwise restore the allegedly impacted areas. Although Devon cannot predict the ultimate outcome of these matters, Devon denies the allegations in these lawsuits and intends to vigorously defend against these claims.

The State of Delaware has filed legal proceedings against numerous oil and gas companies, including Devon, seeking relief to abate alleged impacts of climate change. These proceedings include far-reaching claims for monetary damages and injunctive relief. Although Devon cannot predict the ultimate outcome of this matter, Devon denies the allegations asserted in this lawsuit and intends to vigorously defend against these claims.

Other Indemnifications and Legacy Matters

Pursuant to various sale agreements relating to divested businesses and assets, Devon has indemnified various purchasers against liabilities that they may incur with respect to the businesses and assets acquired from Devon. Additionally, federal, state and other laws in areas of former operations may require previous operators (including corporate successors of previous operators) to perform or make payments in certain circumstances where the current operator may no longer be able to satisfy the applicable obligation. Such obligations may include plugging and abandoning wells, removing production facilities, undertaking other restorative actions or performing requirements under surface agreements in existence at the time of disposition. For example, a predecessor entity of a Devon subsidiary previously sold certain private, state and federal oil and gas leases covering properties in shallow waters off the coast of Louisiana in the Gulf of America. These assets are generally referred to as the East Bay Field. The current operator of the East

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Bay Field has filed for protection under Chapter 11 of the U.S. Bankruptcy Code and will likely be unable to satisfy the eventual decommissioning obligations associated with the East Bay Field. Other companies in the chain of title of the East Bay Field have also sought bankruptcy protection and will also likely be unable to satisfy the eventual decommissioning obligations associated with the East Bay Field.

In March 2025, Devon received an order from the Department of the Interior, Bureau of Safety and Environmental Enforcement to decommission assets located on certain federal leases in the East Bay Field (the “Federal Assets”). As a result, during the first quarter of 2025, Devon recorded a contingent liability of $125 million within other liabilities in the consolidated balance sheet, reflecting the estimated costs of decommissioning the Federal Assets. The Company expects to be able to access funds available under certain bonds and a cash security account as and when Devon performs and pays these decommissioning obligations. Devon believes the funds will likely cover approximately $100 million of the estimated decommissioning costs for the Federal Assets. Accordingly, during the first quarter of 2025, Devon recorded an approximately $100 million receivable related to these sources of funds within other assets in the consolidated balance sheet. The remaining $25 million difference of the recorded decommissioning obligation and such sources of funds was recognized in the first quarter of 2025 in other, net on the consolidated statement of comprehensive earnings. Devon may also be required to perform or fund decommissioning obligations associated with the East Bay Field under state and federal regulations applicable to predecessor operators beyond amounts accrued. Factors impacting this contingency include, among others: (i) the ultimate outcome of the ongoing bankruptcy proceedings, including with respect to state lease assets included in the East Bay Field, (ii) the actual costs to decommission the Federal Assets relative to the estimates, which are subject to numerous assumptions and uncertainties and (iii) Devon's ability to successfully access funds under decommissioning bonds and other sources.

As of December 31, 2025, Devon has accrued approximately $190 million of contingent liabilities related to such decommissioning legacy matters, including liabilities associated with the East Bay Field.

Commitments

The following table presents Devon’s commitments that have initial or remaining noncancelable terms in excess of one year as of December 31, 2025.

Year Ending December 31,		Drilling and Facility Obligations**(1)**				Operational Agreements**(1)**				Equipment Leases and Other
2026		$	103			$	563			$	122
2027			23				523				140
2028			36				516				150
2029			4				495				113
2030			—				390				70
Thereafter			—				1,194				91
Total		$	166			$	3,681			$	686

(1)

Total costs incurred under take-or-pay and throughput obligations were approximately $700 million, $800 million and $750 million in 2025, 2024 and 2023, respectively.

Devon has certain drilling and facility obligations under contractual agreements with third-party service providers to procure drilling rigs and other related services for developmental and exploratory drilling and facilities construction. The value of the drilling obligations reported is based on gross contractual value.

Devon has certain operational agreements whereby Devon has committed to transport or process certain volumes of oil, gas and NGLs for a fixed fee. Devon has entered into these agreements to aid the movement of its production to downstream markets.

Devon leases certain equipment under financing and operating lease arrangements.

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19.

Fair Value Measurements

The following table provides carrying value and fair value measurement information for certain of Devon’s financial assets and liabilities. The carrying values of cash, restricted cash, accounts receivable, other current receivables, accounts payable, other current payables, accrued expenses and lease liabilities included in the accompanying consolidated balance sheets approximated fair value at December 31, 2025 and December 31, 2024, as applicable. Therefore, such financial assets and liabilities are not presented in the following table.

										Fair Value Measurements Using:
		Carrying				Total Fair				Level 1				Level 2				Level 3
		Amount				Value				Inputs				Inputs				Inputs
December 31, 2025 assets (liabilities):
Cash equivalents		$	764			$	764			$	764			$	—			$	—
Commodity derivatives		$	194			$	194			$	—			$	194			$	—
Commodity derivatives		$	(1	)		$	(1	)		$	—			$	(1	)		$	—
Debt		$	(8,389	)		$	(8,290	)		$	—			$	(8,290	)		$	—
December 31, 2024 assets (liabilities):
Cash equivalents		$	319			$	319			$	319			$	—			$	—
Commodity derivatives		$	56			$	56			$	—			$	56			$	—
Commodity derivatives		$	(33	)		$	(33	)		$	—			$	(33	)		$	—
Debt		$	(8,883	)		$	(8,520	)		$	—			$	(8,520	)		$	—
Contingent earnout payments		$	20			$	20			$	—			$	—			$	20

The following methods and assumptions were used to estimate the fair values in the table above.

Level 1 Fair Value Measurements

Cash equivalents – Amounts consist primarily of money market investments and the fair value approximates the carrying value.

Level 2 Fair Value Measurements

Commodity derivatives – The fair value of commodity derivatives is estimated using internal discounted cash flow calculations based upon forward curves and data obtained from independent third parties for contracts with similar terms or data obtained from counterparties to the agreements.

Debt – Devon’s debt instruments do not consistently trade actively in an established market. The fair values of its debt are estimated based on rates available for debt with similar terms and maturity when active trading is not available. Our variable rate debt is non-public and consists of our Term Loan. The fair value of our variable rate debt approximates the carrying value as the underlying SOFR resets every month based on the prevailing market rate.

Level 3 Fair Value Measurements

Contingent Earnout Payments – Devon had the right to receive contingent consideration related to the Barnett asset divestiture based on future oil and gas prices. 2024 was the last performance period related to this contingent consideration. These values were derived using a Monte Carlo valuation model and qualify as a level 3 fair value measurement. For additional information, see Note 2.

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20.

Reportable Segments

Devon is a leading independent energy company engaged primarily in the exploration, development and production of oil, natural gas and NGLs. Devon’s oil and gas exploration and production activities are solely focused in the U.S. For financial reporting purposes, Devon aggregates its U.S. operating segments into one reporting segment due to the similar nature of these operations.

Devon’s chief operating decision maker is the executive committee, which includes the chief executive officer, chief operating officers and chief financial officer. To assess the performance of our assets, we use net earnings. We believe net earnings provides information useful in assessing our operating and financial performance across periods.

The following table reflects Devon's net earnings, assets and capital expenditures for the time periods presented below.

		Year Ended December 31,
		2025				2024				2023
Total revenues		$	17,188			$	15,940			$	15,258
LOE			1,922				1,574				1,428
Gathering, processing & transportation			831				790				702
Production and property taxes			814				819				798
Total significant expenses			3,567				3,183				2,928
Marketing and midstream expenses			5,635				4,792				4,409
DD&A			3,595				3,255				2,554
G&A			492				500				408
Financing costs, net			455				363				308
Income tax expense			785				770				841
Other segment items (1)			(22	)			135				28
Total expenses			14,507				12,998				11,476
Net earnings		$	2,681			$	2,942			$	3,782
Total assets		$	31,599			$	30,489			$	24,490
Capital expenditures, including acquisitions		$	4,000			$	8,919			$	3,907

(1)

Other segment items included in segment net earnings are exploration expenses, asset impairments, asset dispositions and other, net.

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21.

Supplemental Information on Oil and Gas Operations (Unaudited)

Supplemental unaudited information regarding Devon’s oil and gas activities is presented in this note. All of Devon’s reserves are located within the U.S.

Costs Incurred

The following table reflects the costs incurred in oil and gas property acquisition, exploration and development activities.

		Year Ended December 31,
		2025				2024				2023
Property acquisition costs:
Proved properties		$	138			$	3,058			$	2
Unproved properties			224				1,949				63
Exploration costs			581				690				534
Development costs			3,057				2,856				3,160
Costs incurred		$	4,000			$	8,553			$	3,759

Acquisition costs for 2025 in the table primarily reflect acreage acquisitions in the Delaware Basin. Acquisition costs for 2024 primarily relate to the Grayson Mill acquisition which closed in the third quarter of 2024. Development costs in the table above includes additions and revisions to Devon’s asset retirement obligations.

Results of Operations

The following table includes revenues and expenses associated with Devon’s oil and gas producing activities. It does not include any allocation of Devon’s interest costs or general corporate overhead and, therefore, is not necessarily indicative of the contribution to net earnings of Devon’s oil and gas operations. Income tax expense has been calculated using statutory income tax rates, and then giving effect to permanent differences associated with oil and gas producing activities.

		Year Ended December 31,
		2025				2024				2023
Oil, gas and NGL sales		$	11,223			$	11,176			$	10,791
Production expenses			(3,567	)			(3,183	)			(2,928	)
Exploration expenses			(43	)			(28	)			(20	)
Depreciation, depletion and amortization			(3,479	)			(3,156	)			(2,464	)
Asset dispositions			—				(15	)			(33	)
Accretion of asset retirement obligations			(49	)			(39	)			(29	)
Income tax expense			(888	)			(972	)			(1,044	)
Results of operations		$	3,197			$	3,783			$	4,273
Depreciation, depletion and amortization per Boe		$	11.35			$	11.70			$	10.27

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Proved Reserves

The following table presents Devon’s estimated proved reserves by product.

		Oil (MMBbls)				Gas (Bcf) (1)				NGL (MMBbls)				Combined (MMBoe)
Proved developed and undeveloped reserves:
December 31, 2022			793				3,175				493				1,815
Revisions due to prices			(25	)			(189	)			(22	)			(78	)
Revisions other than price			(12	)			58				1				(1	)
Extensions and discoveries			147				525				87				322
Production			(117	)			(385	)			(59	)			(240	)
Sale of reserves			—				(2	)			—				(1	)
December 31, 2023			786				3,182				500				1,817
Revisions due to prices			(9	)			(187	)			(14	)			(54	)
Revisions other than price			3				245				31				75
Extensions and discoveries			129				646				104				340
Purchase of reserves			120				328				73				247
Production			(127	)			(438	)			(70	)			(270	)
December 31, 2024			902				3,776				624				2,155
Revisions due to prices			(25	)			91				(6	)			(16	)
Revisions other than price			36				353				55				150
Extensions and discoveries			185				778				129				443
Purchase of reserves			23				59				10				43
Production			(142	)			(505	)			(81	)			(307	)
Sale of reserves			(18	)			(70	)			(11	)			(40	)
December 31, 2025			961				4,482				720				2,428
Proved developed reserves:
December 31, 2022			596				2,595				391				1,419
December 31, 2023			603				2,560				395				1,425
December 31, 2024			706				3,057				500				1,715
December 31, 2025			714				3,476				551				1,844
Proved undeveloped reserves:
December 31, 2022			197				580				102				396
December 31, 2023			183				622				105				392
December 31, 2024			196				719				124				440
December 31, 2025			247				1,006				169				584

(1)

Gas reserves are converted to Boe at the rate of six Mcf per Bbl of oil, based upon the approximate relative energy content of gas and oil. NGL reserves are converted to Boe on a one-to-one basis with oil. The conversion rates are not necessarily indicative of the relationship of oil, natural gas and NGL prices.

Price Revisions

Reserves decreased 16 MMBoe in 2025 primarily due to price decreases in the trailing 12-month average for oil and NGLs partially offset by price increases in the trailing 12-month average for gas.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Reserves decreased 54 MMBoe in 2024 primarily due to price decreases in the trailing 12-month averages for oil, gas and NGLs.

Reserves decreased 78 MMBoe in 2023 primarily due to price decreases in the trailing 12-month averages for oil, gas and NGLs.

Revisions Other Than Price

2025 – Total revisions other than price (150 MMBoe) are the result of upward revisions due to well performance exceeding previous estimates on proved developed reserves (163 MMBoe) and downward revisions to proved undeveloped reserves (-13 MMBoe) as noted below. In total, the most significant changes were located in the Rockies (125 MMBoe) and the Delaware Basin (25 MMBoe).

2024 – Total revisions other than price (75 MMBoe) are the result of upward revisions due to well performance exceeding previous estimates on proved developed reserves (81 MMBoe) and downward revisions to proved undeveloped reserves (-6 MMBoe) as noted below. In total, each of the operating areas recorded modest upward revisions with the most significant changes being located in the Delaware Basin (55 MMBoe), Anadarko Basin (7 MMBoe) and Powder River Basin (6 MMBoe).

2023 – Total revisions other than price (-1 MMBoe) are the result of upward revisions due to well performance exceeding previous estimates on developed properties (11 MMBoe), which were offset by downward revisions to proved undeveloped reserves (-12 MMBoe) as noted below. In total, we recorded modest upward revisions in the Delaware Basin (7 MMBoe), Eagle Ford (5 MMBoe), Anadarko Basin (4 MMBoe) and Powder River Basin (2 MMBoe) which were offset by downward revisions in the Williston Basin (-19 MMBoe) due to reduced well performance compared to previous estimates.

Extensions and Discoveries

Each year, Devon’s proved reserves extensions and discoveries consist of adding proved undeveloped reserves to locations classified as undeveloped at year-end and adding proved developed reserves from successful development wells drilled on locations outside the areas classified as proved at the previous year-end. Therefore, it is not uncommon for Devon’s total proved extensions and discoveries to differ from the extensions and discoveries for Devon’s proved undeveloped reserves. Furthermore, because annual additions are classified according to reserve determinations made at the previous year-end and because Devon operates a multi-basin portfolio with assets at varying stages of maturity, extensions and discoveries for proved developed and proved undeveloped reserves can differ significantly in any particular year.

2025 – Of the 443 MMBoe of additions from extensions and discoveries, 278 MMBoe were in the Delaware Basin, 81 MMBoe were in the Rockies, 51 MMBoe were in Eagle Ford and 33 MMBoe were in the Anadarko Basin.

2024 – Of the 340 MMBoe of additions from extensions and discoveries, 252 MMBoe were in the Delaware Basin, 36 MMBoe were in the Williston Basin, 30 MMBoe were in the Anadarko Basin, 16 MMBoe were in Eagle Ford and 6 MMBoe were in the Powder River Basin.

2023 – Of the 322 MMBoe of additions from extensions and discoveries, 212 MMBoe were in the Delaware Basin, 33 MMBoe were in the Anadarko Basin, 32 MMBoe were in Eagle Ford, 26 MMBoe were in the Powder River Basin and 19 MMBoe were in the Williston Basin.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Purchase and Sale of Reserves

During 2025, Devon had purchases and sales of reserves of 43 MMBoe and 40 MMBoe, respectively, which were primarily related to the asset exchange in the Eagle Ford. For additional information on the asset exchange, see Note 2.

During 2024, Devon had reserve additions due to the acquisition of 247 MMBoe in the Williston Basin. For additional information on these asset additions, see Note 2.

Proved Undeveloped Reserves

The following table presents the changes in Devon’s total proved undeveloped reserves during 2025 (MMBoe).

		Total
Proved undeveloped reserves as of December 31, 2024			440
Extensions and discoveries			322
Revisions due to prices			1
Revisions other than price			(13	)
Purchase of reserves			19
Sale of reserves			(10	)
Conversion to proved developed reserves			(175	)
Proved undeveloped reserves as of December 31, 2025			584

Total proved undeveloped reserves increased 33% from 2024 to 2025 with the year-end 2025 balance representing 24% of total proved reserves. Approximately 57% of the 322 MMBoe in extensions and discoveries were the result of Devon’s drilling and development activities in the Delaware Basin, followed by the Rockies (23%), Eagle Ford (12%), and the Anadarko Basin (8%). Purchases and sales (9 MMBoe) primarily were the result of Devon’s asset exchange discussed in Note 2. Conversions to proved developed reserves of 175 MMBoe were driven by development in the Delaware Basin (74%) and the Rockies (20%). Costs incurred in 2025 to develop and convert Devon's proved undeveloped reserves were approximately $1.1 billion. Proved undeveloped reserves revisions other than price (-13 MMBoe) were due to changes in previously adopted development plans (-45 MMBoe) primarily in the Delaware Basin (-33 MMBoe) and Rockies (-10 MMBoe), combined with upward revisions (32 MMBoe) related to continued evaluation of well performance primarily in the Delaware Basin and Rockies.

Standardized Measure

The following tables reflect Devon’s standardized measure of discounted future net cash flows from its proved reserves.

		Year Ended December 31,
		2025				2024				2023
Future cash inflows		$	81,155			$	82,422			$	75,734
Future costs:
Development			(6,035	)			(6,099	)			(5,241	)
Production			(38,022	)			(38,326	)			(31,648	)
Future income tax expense			(5,653	)			(5,528	)			(6,644	)
Future net cash flow			31,445				32,469				32,201
10% discount to reflect timing of cash flows			(12,680	)			(12,699	)			(12,888	)
Standardized measure of discounted future net cash flows		$	18,765			$	19,770			$	19,313

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Future cash inflows, development costs and production costs were computed using the same assumptions for prices and costs that were used to estimate Devon’s proved oil and gas reserves at the end of each year. For 2025 estimates, Devon’s future realized prices were assumed to be $62.67 per Bbl of oil, $1.32 per Mcf of gas and $20.85 per Bbl of NGLs. Of the $6.0 billion of future development costs as of the end of 2025, $1.8 billion, $1.3 billion and $1.0 billion are estimated to be spent in 2026, 2027 and 2028, respectively.

Future development costs include not only development costs but also future asset retirement costs. Included as part of the $6.0 billion of future development costs are $1.5 billion of future asset retirement costs. The future income tax expenses have been computed using statutory tax rates, giving effect to allowable tax deductions and tax credits under current laws.

The principal changes in Devon’s standardized measure of discounted future net cash flows are as follows:

		Year Ended December 31,
		2025				2024				2023
Beginning balance		$	19,770			$	19,313			$	31,314
Net changes in prices and production costs			(3,027	)			(3,202	)			(16,797	)
Oil, gas and NGL sales, net of production costs			(7,656	)			(7,993	)			(7,863	)
Changes in estimated future development costs			582				806				218
Extensions and discoveries, net of future development costs			4,367				3,951				5,222
Purchase of reserves			791				3,123				—
Sales of reserves in place			(744	)			—				(9	)
Revisions of quantity estimates			1,430				427				(747	)
Previously estimated development costs incurred during the period			1,792				1,269				1,567
Accretion of discount			1,623				1,730				2,972
Net change in income taxes and other			(163	)			346				3,436
Ending balance		$	18,765			$	19,770			$	19,313

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