Item 1. Financial Statements

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Item 1. Financial Statements

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS


	Three Months Ended September 30,					Nine Months Ended September 30,
	2025			2024		2025			2024
	(Unaudited)
Oil, gas and NGL sales	$	2,809		$	2,665	$	8,645		$	8,090
Oil, gas and NGL derivatives		80			227		218			105
Marketing and midstream revenues		1,442			1,132		4,204			3,342
Total revenues		4,331			4,024		13,067			11,537
Production expenses		895			763		2,706			2,302
Exploration expenses		8			4		38			16
Marketing and midstream expenses		1,453			1,149		4,246			3,390
Depreciation, depletion and amortization		879			794		2,705			2,284
Asset impairments		—			—		254			—
Asset dispositions		(37	)		—		(342	)		16
General and administrative expenses		114			117		357			345
Financing costs, net		109			88		348			240
Other, net		(2	)		45		36			72
Total expenses		3,419			2,960		10,348			8,665
Earnings before income taxes		912			1,064		2,719			2,872
Income tax expense		219			239		600			583
Net earnings		693			825		2,119			2,289
Net earnings attributable to noncontrolling interests		6			13		39			37
Net earnings attributable to Devon	$	687		$	812	$	2,080		$	2,252
Net earnings per share:
Basic net earnings per share	$	1.09		$	1.31	$	3.27		$	3.60
Diluted net earnings per share	$	1.09		$	1.30	$	3.27		$	3.59
Comprehensive earnings:
Net earnings	$	693		$	825	$	2,119		$	2,289
Other comprehensive earnings, net of tax:
Pension and postretirement plans		1			1		3			3
Other comprehensive earnings, net of tax		1			1		3			3
Comprehensive earnings:	$	694		$	826	$	2,122		$	2,292
Comprehensive earnings attributable to noncontrolling interests		6			13		39			37
Comprehensive earnings attributable to Devon	$	688		$	813	$	2,083		$	2,255

See accompanying notes to consolidated financial statements.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET****S


	September 30, 2025			December 31, 2024
	(Unaudited)
ASSETS
Current assets:
Cash, cash equivalents and restricted cash	$	1,278		$	846
Accounts receivable		1,835			1,972
Inventory		361			294
Other current assets		393			315
Total current assets		3,867			3,427
Oil and gas property and equipment, based on successful efforts accounting, net		23,591			23,198
Other property and equipment, net		1,698			1,813
Total property and equipment, net		25,289			25,011
Goodwill		753			753
Right-of-use assets		247			303
Investments		679			727
Other long-term assets		386			268
Total assets	$	31,221		$	30,489
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	934		$	806
Revenues and royalties payable		1,464			1,432
Short-term debt		998			485
Other current liabilities		646			586
Total current liabilities		4,042			3,309
Long-term debt		7,393			8,398
Lease liabilities		158			320
Asset retirement obligations		850			770
Other long-term liabilities		962			840
Deferred income taxes		2,466			2,148
Stockholders' equity:
Common stock, $0.10 par value. Authorized 1.0 billion shares; issued629 million and 651 million shares in 2025 and 2024, respectively		63			65
Additional paid-in capital		5,618			6,387
Retained earnings		9,788			8,166
Accumulated other comprehensive loss		(119	)		(122	)
Total stockholders’ equity attributable to Devon		15,350			14,496
Noncontrolling interests		—			208
Total equity		15,350			14,704
Total liabilities and equity	$	31,221		$	30,489

See accompanying notes to consolidated financial statements.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
	(Unaudited)
Cash flows from operating activities:
Net earnings	$	693		$	825		$	2,119		$	2,289
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation, depletion and amortization		879			794			2,705			2,284
Asset impairments		—			—			254			—
Leasehold impairments		1			1			13			2
Accretion of liabilities		4			2			13			2
Total gains on commodity derivatives		(80	)		(227	)		(218	)		(105	)
Cash settlements on commodity derivatives		50			61			107			139
(Gains) losses on asset dispositions		(37	)		—			(342	)		16
Deferred income tax expense		263			164			322			243
Share-based compensation		24			24			77			75
Other		(45	)		3			(62	)		6
Changes in assets and liabilities, net		(62	)		16			189			(15	)
Net cash from operating activities		1,690			1,663			5,177			4,936
Cash flows from investing activities:
Capital expenditures		(870	)		(877	)		(2,760	)		(2,719	)
Acquisitions of property and equipment		(197	)		(3,602	)		(221	)		(3,692	)
Divestitures of property, equipment and investments		38			—			543			18
Grayson Mill acquired cash		—			147			—			147
Distributions from investments		7			13			27			35
Contributions to investments and other		(2	)		(30	)		(12	)		(78	)
Net cash from investing activities		(1,024	)		(4,349	)		(2,423	)		(6,289	)
Cash flows from financing activities:
Borrowings of long-term debt, net of issuance costs		—			3,219			—			3,219
Repayments of long-term debt		(485	)		(472	)		(485	)		(472	)
Repurchases of common stock		(250	)		(295	)		(800	)		(756	)
Dividends paid on common stock		(151	)		(272	)		(470	)		(794	)
Contributions from noncontrolling interests		—			20			14			44
Distributions to noncontrolling interests		—			(10	)		(23	)		(36	)
Acquisition of noncontrolling interests		(260	)		—			(260	)		—
Repayment of finance lease		—			—			(274	)		—
Shares exchanged for tax withholdings and other		(1	)		2			(25	)		(49	)
Net cash from financing activities		(1,147	)		2,192			(2,323	)		1,156
Effect of exchange rate changes on cash		—			1			1			(2	)
Net change in cash, cash equivalents and restricted cash		(481	)		(493	)		432			(199	)
Cash, cash equivalents and restricted cash at beginning of period		1,759			1,169			846			875
Cash, cash equivalents and restricted cash at end of period	$	1,278		$	676		$	1,278		$	676

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	1,229		$	645		$	1,229		$	645
Restricted cash		49			31			49			31
Total cash, cash equivalents and restricted cash	$	1,278		$	676		$	1,278		$	676

See accompanying notes to consolidated financial statements.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY


													Other
							Additional						Comprehensive
	Common Stock						Paid-In			Retained			Earnings			Treasury			Noncontrolling			Total
	Shares			Amount			Capital			Earnings			(Loss)			Stock			Interests			Equity
	(Unaudited)
Three Months Ended September 30, 2025
Balance as of June 30, 2025		636		$	64		$	5,864		$	9,252		$	(120	)	$	—		$	232		$	15,292
Net earnings		—			—			—			687			—			—			6			693
Other comprehensive earnings, net of tax		—			—			—			—			1			—			—			1
Common stock repurchased		—			—			(3	)		—			—			(251	)		—			(254	)
Common stock retired		(7	)		(1	)		(250	)		—			—			251			—			—
Common stock dividends		—			—			—			(151	)		—			—			—			(151	)
Share-based compensation		—			—			24			—			—			—			—			24
Acquisition of noncontrolling interests		—			—			(17	)		—			—			—			(238	)		(255	)
Balance as of September 30, 2025		629		$	63		$	5,618		$	9,788		$	(119	)	$	—		$	—		$	15,350
Three Months Ended September 30, 2024
Balance as of June 30, 2024		628		$	63		$	5,478		$	7,132		$	(122	)	$	—		$	178		$	12,729
Net earnings		—			—			—			812			—			—			13			825
Other comprehensive earnings, net of tax		—			—			—			—			1			—			—			1
Common stock repurchased		—			(1	)		4			—			—			(295	)		—			(292	)
Common stock retired		(7	)		—			(295	)		—			—			295			—			—
Common stock dividends		—			—			—			(274	)		—			—			—			(274	)
Common stock issued		37			4			1,451			—			—			—			—			1,455
Share-based compensation		—			—			24			—			—			—			—			24
Contributions from noncontrolling interests		—			—			—			—			—			—			20			20
Distributions to noncontrolling interests		—			—			—			—			—			—			(10	)		(10	)
Balance as of September 30, 2024		658		$	66		$	6,662		$	7,670		$	(121	)	$	—		$	201		$	14,478
Nine Months Ended September 30, 2025
Balance as of December 31, 2024		651		$	65		$	6,387		$	8,166		$	(122	)	$	—		$	208		$	14,704
Net earnings		—			—			—			2,080			—			—			39			2,119
Other comprehensive earnings, net of tax		—			—			—			—			3			—			—			3
Restricted stock grants, net of cancellations		2			—			—			—			—			—			—			—
Common stock repurchased		—			—			(7	)		—			—			(824	)		—			(831	)
Common stock retired		(24	)		(2	)		(822	)		—			—			824			—			—
Common stock dividends		—			—			—			(458	)		—			—			—			(458	)
Share-based compensation		—			—			77			—			—			—			—			77
Contributions from noncontrolling interests		—			—			—			—			—			—			14			14
Distributions to noncontrolling interests		—			—			—			—			—			—			(23	)		(23	)
Acquisition of noncontrolling interest		—			—			(17	)		—			—			—			(238	)		(255	)
Balance as of September 30, 2025		629		$	63		$	5,618		$	9,788		$	(119	)	$	—		$	—		$	15,350
Nine Months Ended September 30, 2024
Balance as of December 31, 2023		636		$	64		$	5,939		$	6,195		$	(124	)	$	(13	)	$	156		$	12,217
Net earnings		—			—			—			2,252			—			—			37			2,289
Other comprehensive earnings, net of tax		—			—			—			—			3			—			—			3
Restricted stock grants, net of cancellations		2			—			—			—			—			—			—			—
Common stock repurchased		—			—			—			—			—			(792	)		—			(792	)
Common stock retired		(18	)		(2	)		(803	)		—			—			805			—			—
Common stock dividends		—			—			—			(777	)		—			—			—			(777	)
Common stock issued		37			4			1,451			—			—			—			—			1,455
Share-based compensation		1			—			75			—			—			—			—			75
Contributions from noncontrolling interests		—			—			—			—			—			—			44			44
Distributions to noncontrolling interests		—			—			—			—			—			—			(36	)		(36	)
Balance as of September 30, 2024		658		$	66		$	6,662		$	7,670		$	(121	)	$	—		$	201		$	14,478

See accompanying notes to consolidated financial statements.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

S****ummary of Significant Accounting Policies

The accompanying unaudited interim financial statements and notes of Devon have been prepared pursuant to the rules and regulations of the SEC. Pursuant to such rules and regulations, certain disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted. The accompanying unaudited interim financial statements and notes should be read in conjunction with the financial statements and notes included in Devon’s 2024 Annual Report on Form 10-K. The accompanying unaudited interim financial statements in this report reflect all adjustments that are, in the opinion of management, necessary for a fair statement of Devon’s results of operations and cash flows for the three-month and nine-month periods ended September 30, 2025 and 2024 and Devon’s financial position as of September 30, 2025.

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. See Note 2 for further discussion.

Variable Interest Entity

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.

Prior to this transaction, CDM was a joint venture entity formed by Devon and an affiliate of QL Capital Partners, LP. 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.

Disaggregation of Revenue

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Oil	$	2,267	$	2,273	$	6,855	$	6,875
Gas		186		49		673		234
NGL		356		343		1,117		981
Oil, gas and NGL sales		2,809		2,665		8,645		8,090

Oil		932		815		2,709		2,423
Gas		252		105		769		326
NGL		258		212		726		593
Marketing and midstream revenues		1,442		1,132		4,204		3,342
Total revenues from contracts with customers	$	4,251	$	3,797	$	12,849	$	11,432

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. ASU 2023-09 intends to provide 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. This ASU will result in additional disclosures for annual reporting periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued. This ASU will result in additional disclosures for Devon beginning with our 2025 annual reporting and interim periods beginning in 2026.

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 is effective for Devon beginning with its 2027 annual reporting and interim

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

periods beginning in 2028. Devon is evaluating the impact this ASU will have on the disclosures that accompany its consolidated financial statements.

Acquisitions and Dive****stitures

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.

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

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

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

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 the second quarter of 2025, Devon sold its investment in Matterhorn for $372 million and recognized a pre-tax gain of $307 million ($239 million, net of tax), which was recorded to asset dispositions on the accompanying consolidated statements of comprehensive earnings. For additional information, see Note 12.

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 nine months of both 2025 and 2024.

Derivative Fin****ancial Instruments

Objectives and Strategies

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 commodity derivative financial instruments include financial price swaps, basis swaps and costless price collars.

Devon does not intend to hold or issue derivative financial instruments for speculative trading purposes and has elected not to designate any of its derivative instruments for hedge accounting treatment.

Counterparty Credit Risk

By using derivative financial instruments, 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 contain provisions that provide for collateral payments if Devon’s or its counterparty’s credit rating falls below certain credit rating levels. As of September 30, 2025, Devon neither held cash collateral of its counterparties nor posted cash collateral to its counterparties.

Commodity Derivatives

As of September 30, 2025, Devon had the following open oil derivative positions. The first two tables present Devon’s oil derivatives that settle against the average of the prompt month NYMEX WTI futures price. The third table presents Devon’s oil derivatives that settle against the respective indices noted within the table.


	Price Swaps				Price Collars
Period	Volume (Bbls/d)		Weighted Average Price ($/Bbl)		Volume (Bbls/d)		Weighted Average Floor Price ($/Bbl)		Weighted Average Ceiling Price ($/Bbl)
Q4 2025		9,000	$	71.52		105,000	$	66.35	$	75.36


	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)
Q4 2025		13,000	$	50.77	$	65.00	$	77.37
Q1-Q4 2026		84,471	$	50.21	$	60.35	$	72.64

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)


	Oil Basis Swaps
Period	Index	Volume (Bbls/d)		Weighted Average Differential to WTI ($/Bbl)
Q4 2025	Midland Sweet		63,000	$	1.00
Q4 2025	WTI/Brent		5,391	$	(3.64	)
Q4 2025	NYMEX Roll		13,000	$	1.05
Q1-Q4 2026	Midland Sweet		46,000	$	1.10
Q1-Q4 2027	Midland Sweet		14,000	$	1.04

As of September 30, 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)
Q4 2025		245,000	$	3.51		170,000	$	3.00	$	3.80
Q1-Q4 2026		247,500	$	3.80		160,000	$	3.14	$	4.88


	Natural Gas Basis Swaps
Period	Index	Volume (MMBtu/d)		Weighted Average Differential to Henry Hub ($/MMBtu)
Q4 2025	Houston Ship Channel		230,000	$	(0.35	)
Q4 2025	WAHA		200,000	$	(1.53	)
Q1-Q4 2026	Houston Ship Channel		50,000	$	(0.29	)
Q1-Q4 2026	WAHA		120,000	$	(1.79	)

As of September 30, 2025, Devon had the following open NGL derivative positions. Devon's NGL positions settle against the average of the prompt month OPIS Mont Belvieu, Texas index.


		Price Swaps
Period	Product	Volume (Bbls/d)		Weighted Average Price ($/Bbl)
Q4 2025	Natural Gasoline		3,000	$	63.35
Q4 2025	Normal Butane		323	$	39.90
Q4 2025	Propane		3,000	$	32.29

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Financial Statement Presentation

All derivative financial instruments are recognized at their current fair value as either assets or liabilities in 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 consolidated balance sheets. The table below presents a summary of these positions as of September 30, 2025 and December 31, 2024.


	September 30, 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	$	165		$	(13	)	$	152		$	78		$	(23	)	$	55		Other current assets
Long-term derivative asset		5			(2	)		3			5			(4	)		1		Other long-term assets
Short-term derivative liability		(15	)		13			(2	)		(37	)		23			(14	)	Other current liabilities
Long-term derivative liability		(21	)		2			(19	)		(23	)		4			(19	)	Other long-term liabilities
Total derivative asset	$	134		$	—		$	134		$	23		$	—		$	23

Share-Base****d Compensation

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


	Nine Months Ended September 30,
	2025		2024
G&A	$	67	$	74
Exploration expenses		1		1
Restructuring and transaction costs		9		—
Total	$	77	$	75

Related income tax benefit	$	12	$	21

Under its approved long-term incentive plan, Devon grants share-based awards to its employees. The following table presents a summary of Devon’s unvested restricted stock awards and units and performance share units granted under the plan.


	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		2,635		$	34.12		510			$	45.92
Vested		(1,847	)	$	41.23		(272	)		$	68.68
Forfeited		(215	)	$	40.18		(124	)		$	65.47
Unvested at 9/30/25		4,680		$	40.85		1,293		(1)	$	58.82

(1)

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

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The following table presents the assumptions related to the performance share units granted in 2025, as indicated in the previous summary table.


	2025
Grant-date fair value	$	45.92
Risk-free interest rate		4.29	%
Volatility factor		38.70	%
Contractual term (years)		2.89

The following table presents a summary of the unrecognized compensation cost and the related weighted average recognition period associated with unvested awards and units as of September 30, 2025.


	Restricted Stock		Performance
	Awards/Units		Share Units
Unrecognized compensation cost	$	124	$	22
Weighted average period for recognition (years)		2.7		2.0

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.

Inco****me Taxes

The following table presents Devon’s total income tax expense and a reconciliation of its effective income tax rate to the U.S. statutory income tax rate.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Earnings before income taxes	$	912		$	1,064		$	2,719		$	2,872

Current income tax expense (benefit)	$	(44	)	$	75		$	278		$	340
Deferred income tax expense		263			164			322			243
Total income tax expense	$	219		$	239		$	600		$	583

U.S. statutory income tax rate		21	%		21	%		21	%		21	%
State income taxes		2	%		3	%		2	%		2	%
Other		1	%		(2	%)		(1	%)		(3	%)
Effective income tax rate		24	%		22	%		22	%		20	%

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 third quarter 2025 income tax expense included a current tax benefit of approximately $155 million and a corresponding deferred tax expense associated with the deferral of income taxes resulting from the enactment of OBBB.

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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.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Net earnings	$	687	$	812	$	2,080	$	2,252
Common shares:
Average common shares outstanding - basic		628		622		636		626
Dilutive effect of potential common shares issuable		1		1		1		2
Average common shares outstanding - diluted		629		623		637		628
Net earnings per share available to common shareholders:
Basic	$	1.09	$	1.31	$	3.27	$	3.60
Diluted	$	1.09	$	1.30	$	3.27	$	3.59

Other Comprehensive Earnings (Loss)

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Pension and postretirement benefit plans:
Beginning accumulated pension and postretirement benefits	$	(120	)	$	(122	)	$	(122	)	$	(124	)
Recognition of net actuarial loss and prior service cost in earnings (1)		1			1			4			4
Income tax expense		—			—			(1	)		(1	)
Accumulated other comprehensive loss, net of tax	$	(119	)	$	(121	)	$	(119	)	$	(121	)

(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.

Supplemental Information to Statements of Cash Flows


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Changes in assets and liabilities, net:
Accounts receivable	$	20		$	41		$	140		$	26
Other current assets		(51	)		(13	)		(71	)		(120	)
Other long-term assets		(17	)		(9	)		(118	)		24
Accounts payable and revenues and royalties payable		93			(64	)		179			121
Other current liabilities		(86	)		57			(2	)		(51	)
Other long-term liabilities		(21	)		4			61			(15	)
Total	$	(62	)	$	16		$	189		$	(15	)
Supplementary cash flow data:
Interest paid	$	162		$	90		$	423		$	265
Income taxes paid	$	31		$	92		$	183		$	476

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10.

Accounts Receivable

Components of accounts receivable include the following:


	September 30, 2025			December 31, 2024
Oil, gas and NGL sales	$	966		$	1,130
Joint interest billings		342			341
Marketing and midstream revenues		519			465
Other		15			42
Gross accounts receivable		1,842			1,978
Allowance for doubtful accounts		(7	)		(6	)
Net accounts receivable	$	1,835		$	1,972

11.

Property, Plan****t and Equipment

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


	September 30, 2025			December 31, 2024
Property and equipment:
Proved	$	56,594		$	53,647
Unproved and properties under development		2,899			2,814
Total oil and gas		59,493			56,461
Less accumulated DD&A		(35,902	)		(33,263	)
Oil and gas property and equipment, net		23,591			23,198
Other property and equipment		2,595			2,671
Less accumulated DD&A		(897	)		(858	)
Other property and equipment, net		1,698			1,813
Property and equipment, net	$	25,289		$	25,011

12.

Investments

The following table presents Devon's investments shown on the consolidated balance sheets.


	% Interest	Carrying Amount
Investments	September 30, 2025	September 30, 2025		December 31, 2024
WaterBridge	14%	$	271	$	216
Catalyst	50%		254		273
Fervo	17%		104		115
Matterhorn	—		—		69
Other	Various		50		54
Total		$	679	$	727

During 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. Prior to these transactions, Devon owned a 30% interest in the Water JV. 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.

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During the second quarter of 2025, Devon sold its investment in Matterhorn for $372 million and recognized a pre-tax gain of $307 million ($239 million, net of tax), which was recorded to asset dispositions in the accompanying consolidated statements of comprehensive earnings.

13.

Debt and Re****lated 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.


	September 30, 2025			December 31, 2024
5.85% due December 15, 2025	$	—		$	485
7.50% due September 15, 2027		73			73
5.25% due October 15, 2027		390			390
5.875% due June 15, 2028		325			325
4.50% due January 15, 2030		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		27			37
Debt issuance costs		(50	)		(53	)
Total debt	$	8,391		$	8,883
Less amount classified as short-term debt		998			485
Total long-term debt	$	7,393		$	8,398

Credit Lines

Devon has a $3.0 billion revolving Senior Credit Facility, and, 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 September 30, 2025, Devon had no outstanding borrowings under the Senior Credit Facility and had issued $4 million in outstanding letters of credit under this facility. 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 September 30, 2025, Devon was in compliance with this covenant with a debt-to-capitalization ratio of 24.9%.

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 5.8% as of September 30, 2025.

The Term Loan Credit Agreement contains substantially the same financial covenant as the Senior Credit Facility. As of September 30, 2025, Devon was in compliance with this covenant with a debt-to-capitalization ratio of 24.9%.

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(Unaudited)

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 $472 million of 5.25% senior notes at maturity.

Net Financing Costs

The following schedule includes the components of net financing costs.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Net financing costs:
Interest based on debt outstanding	$	125		$	98		$	378		$	273
Interest income		(18	)		(19	)		(42	)		(46	)
Other		2			9			12			13
Total net financing costs	$	109		$	88		$	348		$	240

14.

Le****ases

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 September 30, 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. For additional information, see Note 5.

The following table presents Devon’s right-of-use assets and lease liabilities as of September 30, 2025 and December 31, 2024.


	September 30, 2025						December 31, 2024
	Finance		Operating		Total		Finance		Operating		Total
Right-of-use assets	$	17	$	230	$	247	$	248	$	55	$	303
Lease liabilities:
Current lease liabilities (1)	$	5	$	84	$	89	$	25	$	28	$	53
Long-term lease liabilities		12		146		158		293		27		320
Total lease liabilities (2)	$	17	$	230	$	247	$	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 September 30, 2025 and are therefore excluded from the amounts shown above.

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15.

Asset Retir****ement Obligations

The following table presents the changes in Devon’s asset retirement obligations.


	Nine Months Ended September 30,
	2025			2024
Asset retirement obligations as of beginning of period	$	807		$	665
Assumed Grayson Mill obligations		—			75
Liabilities incurred		50			21
Liabilities settled and divested		(54	)		(25	)
Revision and reclassification of estimated obligation		55			35
Accretion expense on discounted obligation		37			28
Asset retirement obligations as of end of period		895			799
Less current portion		45			34
Asset retirement obligations, long-term	$	850		$	765

During the first nine months of 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.

Stockhol****ders’ Equity

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 Repurchases

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:
First quarter		4,428		193	$	43.47
Second quarter		5,188		256	$	49.40
Third quarter		6,675		295	$	44.23
Fourth quarter		7,653		300	$	39.22
2024 Total		23,944		1,044	$	43.61
2025:
First quarter		8,505		301	$	35.33
Second quarter		7,866		249	$	31.78
Third quarter		7,324		250	$	34.06
2025 Total		23,695		800	$	33.76
Total plan		92,680	$	4,143	$	44.70

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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 dividend multiple times over the past two calendar years and most recently raised it by 9% from $0.22 to $0.24 per share in the first quarter of 2025. The following table summarizes Devon’s dividends for the first nine months of 2025 and 2024, respectively.


	Dividends		Rate Per Share
2025:
First quarter	$	163	$	0.24
Second quarter		156	$	0.24
Third quarter		151	$	0.24
Total year-to-date	$	470
2024:
First quarter	$	299	$	0.44
Second quarter		223	$	0.35
Third quarter		272	$	0.44
Total year-to-date (1)	$	794

(1)

During the first nine months of 2024, Devon paid variable dividends totaling $377 million in addition to its recurring fixed dividend.

In November 2025, Devon announced a fixed cash dividend in the amount of $0.24 per share for approximately $150 million payable in the fourth quarter of 2025.

Noncontrolling Interests

17.

Com****mitments 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.

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 September 30, 2025, Devon has accrued approximately $40 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

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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 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

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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 September 30, 2025, Devon has accrued approximately $200 million of contingent liabilities related to such decommissioning legacy matters, including liabilities associated with the East Bay Field.

18.

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, 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 September 30, 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
September 30, 2025 assets (liabilities):
Cash equivalents	$	631		$	631		$	631	$	—		$	—
Commodity derivatives	$	155		$	155		$	—	$	155		$	—
Commodity derivatives	$	(21	)	$	(21	)	$	—	$	(21	)	$	—
Debt	$	(8,391	)	$	(8,274	)	$	—	$	(8,274	)	$	—
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 our 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. These values were derived using a Monte Carlo valuation model and qualified as a level 3 fair value measurement. For additional information, see Note 2.

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19.

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.


	Three Months Ended September 30,					Nine Months Ended September 30,
	2025			2024		2025			2024
Total revenues	$	4,331		$	4,024	$	13,067		$	11,537

LOE		481			366		1,443			1,129
Gathering, processing & transportation		213			200		636			577
Production and property taxes		201			197		627			596
Total significant expenses		895			763		2,706			2,302
Marketing and midstream expenses		1,453			1,149		4,246			3,390
DD&A		879			794		2,705			2,284
G&A		114			117		357			345
Financing costs, net		109			88		348			240
Income tax expense		219			239		600			583
Other segment items (1)		(31	)		49		(14	)		104
Total expenses		3,638			3,199		10,948			9,248

Net earnings	$	693		$	825	$	2,119		$	2,289

Total assets	$	31,221		$	30,263	$	31,221		$	30,263

Capital expenditures, including acquisitions	$	1,056		$	5,961	$	2,976		$	7,877

(1)

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

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