Devon Energy 10-Q 2026-03-31

Filed 2026-05-06. 8 sections, 140K characters. Original on sec.gov · Markdown · JSON

Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-32318

DEVON ENERGY CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		73-1567067
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer identification No.)

333 West Sheridan Avenue, Oklahoma City, Oklahoma		73102-5015
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (405) 235-3611

Former name, address and former fiscal year, if changed from last report: Not applicable

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.10 per share	DVN	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer		☑	Accelerated filer		☐	Non-accelerated filer		☐
Smaller reporting company		☐	Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

On April 22, 2026, 621.4 million shares of common stock were outstanding.

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DEVON ENERGY CORPORATION

FORM 10-Q

TABLE OF CONTEN****TS


Part I. Financial Information
Item 1.	Financial Statements	7
	Consolidated Statements of Comprehensive Earnings	7
	Consolidated Balance Sheets	8
	Consolidated Statements of Cash Flows	9
	Consolidated Statements of Equity	10
	Notes to Consolidated Financial Statements	11
	Note 1 – Summary of Significant Accounting Policies	11
	Note 2 – Acquisitions and Divestitures	12
	Note 3 – Derivative Financial Instruments	12
	Note 4 – Share-Based Compensation	14
	Note 5 – Asset Impairments	15
	Note 6 – Income Taxes	15
	Note 7 – Net Earnings Per Share	16
	Note 8 – Other Comprehensive Earnings (Loss)	16
	Note 9 – Supplemental Information to Statements of Cash Flows	16
	Note 10 – Accounts Receivable	17
	Note 11 – Property and Equipment	17
	Note 12 – Investments	17
	Note 13 – Debt and Related Expenses	18
	Note 14 – Leases	19
	Note 15 – Asset Retirement Obligations	20
	Note 16 – Stockholders’ Equity	20
	Note 17 – Commitments and Contingencies	21
	Note 18 – Fair Value Measurements	23
	Note 19 – Reportable Segments	24
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	Executive Overview	25
	Results of Operations	27
	Capital Resources, Uses and Liquidity	35
	Critical Accounting Estimates	39
	Non-GAAP Measures	40
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42

Part II. Other Information
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	44

Signatures		44

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DEFINI****TIONS

Unless the context otherwise indicates, references to “us,” “we,” “our,” “ours,” “Devon,” the “Company” and “Registrant” refer to Devon Energy Corporation and its consolidated subsidiaries. All monetary values, other than per unit and per share amounts, are stated in millions of U.S. dollars unless otherwise specified. In addition, the following are other abbreviations and definitions of certain terms used within this Quarterly Report on Form 10-Q:

“ASU” means Accounting Standards Update.

“Bbl” or “Bbls” means barrel or barrels.

“Boe” means barrel of oil equivalent. Gas proved reserves and production are converted to Boe, at the pressure and temperature base standard of each respective state in which the gas is produced, at the rate of six Mcf of gas per Bbl of oil, based upon the approximate relative energy content of gas and oil. NGL proved reserves and production are converted to Boe on a one-to-one basis with oil.

“Btu” means British thermal units, a measure of heating value.

“CAMT” means Corporate Alternative Minimum Tax.

“Catalyst” means Catalyst Midstream Partners, LLC.

“CDM” means Cotton Draw Midstream, L.L.C.

“Coterra” means Coterra Energy Inc.

“DD&A” means depreciation, depletion and amortization expenses.

“EPA” means the United States Environmental Protection Agency.

“FASB” means Financial Accounting Standards Board.

“Fervo” means Fervo Energy Company.

“G&A” means general and administrative expenses.

“GAAP” means U.S. generally accepted accounting principles.

“Grayson Mill” means Grayson Mill Intermediate HoldCo II, LLC and Grayson Mill Intermediate HoldCo III, LLC.

“Inside FERC” refers to the publication Inside F.E.R.C.’s Gas Market Report.

“LOE” means lease operating expenses.

“MBbls” means thousand barrels.

“MBoe” means thousand Boe.

“Mcf” means thousand cubic feet.

“Merger” means the merger of Merger Sub with and into Coterra, Coterra continuing as the surviving corporation and a wholly-owned subsidiary of the Company, pursuant to the terms of the Merger Agreement.

“Merger Agreement” means that certain Agreement and Plan of Merger, dated February 1, 2026, by and among the Company, Merger Sub and Coterra.

“Merger Sub” means Cubs Merger Sub, Inc., a wholly-owned subsidiary of the Company.

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“MMBoe” means million Boe.

“MMBtu” means million Btu.

“MMcf” means million cubic feet.

“N/M” means not meaningful.

“NCI” means noncontrolling interests.

“NGL” or “NGLs” means natural gas liquids.

“NOV” means notice of violation.

“NYMEX” means New York Mercantile Exchange.

“OBBB” means One Big Beautiful Bill Act.

“OPEC” means Organization of the Petroleum Exporting Countries.

“SEC” means United States Securities and Exchange Commission.

“Senior Credit Facility” means Devon’s syndicated unsecured revolving line of credit, effective as of March 24, 2023.

“SOFR” means secured overnight financing rate.

“Term Loan” means Term Loan Credit Agreement.

“TSR” means total shareholder return.

“U.S.” means United States of America.

“VIE” means variable interest entity.

“WaterBridge” means WaterBridge Infrastructure LLC and WBI Operating LLC. Any references to WaterBridge as a public company or its publicly-traded equity are to WaterBridge Infrastructure LLC individually.

“WTI” means West Texas Intermediate.

“/Bbl” means per barrel.

“/d” means per day.

“/MMBtu” means per MMBtu.

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INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This report includes “forward-looking statements” within the meaning of the federal securities laws. Such statements include those concerning strategic plans, our expectations and objectives for future operations, as well as other future events or conditions, and are often identified by use of the words and phrases “expects,” “believes,” “will,” “would,” “could,” “continue,” “may,” “aims,” “likely to be,” “intends,” “forecasts,” “projections,” “estimates,” “plans,” “expectations,” “targets,” “opportunities,” “potential,” “anticipates,” “outlook” and other similar terminology. All statements, other than statements of historical facts, included in this report that address activities, events or developments that Devon expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control. Consequently, actual future results could differ materially and adversely from our expectations due to a number of factors, including, but not limited to:

the volatility of oil, gas and NGL prices, including from changes in trade relations and policies, such as the imposition of new or increased tariffs or other trade protection measures by the U.S., China or other countries;

uncertainties inherent in estimating oil, gas and NGL reserves;

the extent to which we are successful in acquiring and discovering additional reserves;

the uncertainties, costs and risks involved in our operations;

risks related to our hedging activities;

our limited control over third parties who operate some of our oil and gas properties and investments;

midstream capacity constraints and potential interruptions in production, including from limits to the build out of midstream infrastructure;

competition for assets, materials, people and capital, which can be exacerbated by supply chain disruptions, including as a result of tariffs or other changes in trade policy;

regulatory restrictions, compliance costs and other risks relating to governmental regulation, including with respect to federal lands, environmental matters, water disposal and tax matters;

climate change and risks related to regulatory, social and market efforts to address climate change;

risks relating to our sustainability initiatives;

claims, audits and other proceedings impacting our business, including with respect to historic and legacy operations;

governmental interventions in energy markets;

counterparty credit risks;

risks relating to our indebtedness;

cybersecurity risks;

risks associated with artificial intelligence and other emerging technologies;

the extent to which insurance covers any losses we may experience;

risks related to shareholder activism;

our ability to successfully complete mergers, acquisitions and divestitures;

our ability to pay dividends and make share repurchases;

risks related to the Merger, including restrictions on our operations during the pendency of the Merger, litigation risk, the risk that the Merger Agreement may be terminated and the risk that we may not realize the anticipated benefits of the Merger or successfully integrate the two companies; and

any of the other risks and uncertainties discussed in this report, our 2025 Annual Report on Form 10-K and our other filings with the SEC.

The forward-looking statements included in this filing speak only as of the date of this report, represent management’s current reasonable expectations as of the date of this filing and are subject to the risks and uncertainties identified above as well as those described elsewhere in this report and in other documents we file from time to time with the SEC. We cannot guarantee the accuracy

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of our forward-looking statements, and readers are urged to carefully review and consider the various disclosures made in this report and in other documents we file from time to time with the SEC. All subsequent written and oral forward-looking statements attributable to Devon, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements above. We do not undertake, and expressly disclaim, any duty to update or revise our forward-looking statements based on new information, future events or otherwise.

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Part I. Financial Information

Item 1. Financial Statements

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS


	Three Months Ended March 31,
	2026			2025
	(Unaudited)
Oil, gas and NGL sales	$	2,977		$	3,126
Oil, gas and NGL derivatives		(701	)		(98	)
Marketing and midstream revenues		1,531			1,424
Total revenues		3,807			4,452
Production expenses		894			912
Exploration expenses		25			10
Marketing and midstream expenses		1,547			1,436
Depreciation, depletion and amortization		904			912
Asset impairments		—			254
Asset dispositions		1			2
General and administrative expenses		125			130
Financing costs, net		109			123
Restructuring and transaction costs		19			18
Other, net		17			9
Total expenses		3,641			3,806
Earnings before income taxes		166			646
Income tax expense		46			137
Net earnings		120			509
Net earnings attributable to noncontrolling interests		—			15
Net earnings attributable to Devon	$	120		$	494
Net earnings per share:
Basic net earnings per share	$	0.19		$	0.77
Diluted net earnings per share	$	0.19		$	0.77
Comprehensive earnings:
Net earnings	$	120		$	509
Other comprehensive earnings, net of tax:
Pension and postretirement plans		1			1
Other comprehensive earnings, net of tax		1			1
Comprehensive earnings:		121			510
Comprehensive earnings attributable to noncontrolling interests		—			15
Comprehensive earnings attributable to Devon	$	121		$	495

See accompanying notes to consolidated financial statements.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET****S


	March 31, 2026			December 31, 2025
	(Unaudited)
ASSETS
Current assets:
Cash, cash equivalents and restricted cash	$	1,815		$	1,434
Accounts receivable		2,250			1,792
Inventory		319			336
Other current assets		378			444
Total current assets		4,762			4,006
Oil and gas property and equipment, based on successful efforts accounting, net		23,912			23,731
Other property and equipment, net		1,686			1,688
Total property and equipment, net		25,598			25,419
Goodwill		753			753
Right-of-use assets		312			299
Investments		715			727
Other long-term assets		403			395
Total assets	$	32,543		$	31,599
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	975		$	790
Revenues and royalties payable		1,678			1,491
Short-term debt		999			998
Other current liabilities		1,082			807
Total current liabilities		4,734			4,086
Long-term debt		7,387			7,391
Lease liabilities		206			197
Asset retirement obligations		986			863
Other long-term liabilities		940			907
Deferred income taxes		2,862			2,627
Stockholders' equity:
Common stock, $0.10 par value. Authorized 1.0 billion shares; issued621 million and 622 million shares in 2026 and 2025, respectively		62			62
Additional paid-in capital		5,316			5,388
Retained earnings		10,171			10,200
Accumulated other comprehensive loss		(121	)		(122	)
Total stockholders’ equity		15,428			15,528
Total liabilities and equity	$	32,543		$	31,599

See accompanying notes to consolidated financial statements.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Three Months Ended March 31,
	2026			2025
	(Unaudited)
Cash flows from operating activities:
Net earnings	$	120		$	509
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation, depletion and amortization		904			912
Asset impairments		—			254
Leasehold impairments		3			5
Accretion of liabilities		4			6
Total losses on commodity derivatives		701			98
Cash settlements on commodity derivatives		(57	)		(10	)
Losses on asset dispositions		1			2
Deferred income tax expense		234			41
Share-based compensation		22			30
Other		22			(22	)
Changes in assets and liabilities, net		(299	)		117
Net cash from operating activities		1,655			1,942
Cash flows from investing activities:
Capital expenditures		(839	)		(934	)
Acquisitions of property and equipment		(190	)		(8	)
Divestitures of property and equipment		2			133
Distributions from investments		9			9
Contributions to investments and other		(2	)		(2	)
Net cash from investing activities		(1,020	)		(802	)
Cash flows from financing activities:
Repurchases of common stock		(69	)		(301	)
Dividends paid on common stock		(155	)		(163	)
Contributions from noncontrolling interests		—			14
Distributions to noncontrolling interests		—			(9	)
Repayment of finance leases		(3	)		(274	)
Shares exchanged for tax withholdings and other		(27	)		(19	)
Net cash from financing activities		(254	)		(752	)
Net change in cash, cash equivalents and restricted cash		381			388
Cash, cash equivalents and restricted cash at beginning of period		1,434			846
Cash, cash equivalents and restricted cash at end of period	$	1,815		$	1,234

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	1,763		$	1,198
Restricted cash		52			36
Total cash, cash equivalents and restricted cash	$	1,815		$	1,234

See accompanying no

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Item 2. . Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis addresses material changes in our results of operations for the three-month period ended March 31, 2026 compared to previous periods, and in our financial condition and liquidity since December 31, 2025. For information regarding our critical accounting policies and estimates, see our 2025 Annual Report on Form 10-K under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Executive Over****view

We are a leading independent oil and natural gas exploration and production company whose operations are focused onshore in the United States. Our operations are currently focused in four core areas: the Delaware Basin, Rockies, Eagle Ford and Anadarko Basin. Our asset base is underpinned by premium acreage in the economic core of the Delaware Basin and our diverse, top-tier resource plays, providing a deep inventory of opportunities for years to come.

On February 1, 2026, we entered into the Merger Agreement, providing for an all-stock merger of equals with Coterra. The Merger will create a leading large-cap shale operator with an asset base anchored by a premier position in the economic core of the Delaware Basin. The Merger is expected to unlock substantial value for shareholders by leveraging enhanced scale to improve margins, increase free cash flow and accelerate cash returns through the capture of $1.0 billion in sustainable annual synergies. As a company, we remain focused on building economic value by executing on our strategic priorities of moderating production growth, emphasizing capital and operational efficiencies, optimizing reinvestment rates to maximize free cash flow, maintaining low leverage, delivering cash returns to our shareholders and pursuing operational excellence. Our recent performance highlights for these priorities include the following items for the first quarter of 2026:

Oil production totaled 387 MBbls/d, delivering at the top end of guidance.

As of March 31, 2026, completed approximately 89% of our authorized $5.0 billion share repurchase program with approximately 102 million of our common shares purchased for approximately $4.5 billion, or $43.90 per share since inception of the plan.

Exited with $4.8 billion of liquidity, including $1.8 billion of cash.

Generated $1.7 billion of operating cash flow and $6.4 billion for the trailing twelve months.

Paid dividends of $155 million.

On track to achieve 100% of our $1.0 billion optimization plan ahead of schedule.

Earnings attributable to Devon were $120 million, or $0.19 per diluted share.

Core earnings (Non-GAAP) were $641 million, or $1.04 per diluted share.

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Our net earnings and operating cash flow are highly dependent upon oil, gas and NGL prices, which can be volatile due to several varying factors. As shown in the graph below, during the first quarter of 2026, commodity prices have experienced heightened volatility, driven primarily by significant geopolitical events, including conflict in the Middle East and disruptions to global oil supply, along with continued uncertainty in global trade policy and OPEC+ production decisions. As a result, our net earnings were reduced by a $0.6 billion non-cash valuation loss on our commodity derivatives.

Despite the potential negative impacts of higher inflation rates and supply chain disruptions created by these developments, we remain committed to capital discipline and delivering the objectives that underpin our current plan. Our disciplined, returns-driven strategy is designed to adapt to market fluctuations by reducing activity when necessary to maximize free cash flow generation. We will continue to prioritize value creation through moderated capital investment and production growth, particularly with a view of the volatility in commodity prices, supply chain constraints and the economic uncertainty arising from inflation and geopolitical events. Our cash-return objectives remain focused on opportunistic share repurchases, funding our dividends, repaying debt at upcoming maturities and building cash balances. To emphasize our commitment to maximizing free cash flow and creating value for shareholders, we implemented a business optimization plan early in 2025 targeting a $1.0 billion improvement in annual pre-tax cash flow. The plan included actions to achieve more efficient field-level operations and improvements in drilling and completion costs, along with enhanced operating margins and reduced corporate costs. We are on track to achieve the full $1.0 billion target ahead of our original year-end 2026 timeline.

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Res****ults of Operations

The following graphs, discussion and analysis are intended to provide an understanding of our results of operations and current financial condition. To facilitate the review, these numbers are being presented before consideration of noncontrolling interests.

Q1 2026 vs. Q4 2025

Our first quarter 2026 and fourth quarter 2025 net earnings were $120 million and $562 million, respectively. The graph below shows the change in net earnings from the fourth quarter of 2025 to the first quarter of 2026. The material changes are further discussed by category on the following pages.

Production Volumes


	Q1 2026		% of Total			Q4 2025		Change
Oil (MBbls/d)
Delaware Basin		225		58	%		234		-4	%
Rockies		103		27	%		102		1	%
Eagle Ford		43		11	%		39		10	%
Anadarko Basin		12		3	%		12		0	%
Other		4		1	%		3	N/M
Total		387		100	%		390		-1	%


	Q1 2026		% of Total			Q4 2025		Change
Gas (MMcf/d)
Delaware Basin		831		60	%		848		-2	%
Rockies		230		17	%		234		-2	%
Eagle Ford		76		6	%		56		35	%
Anadarko Basin		235		17	%		246		-4	%
Other		1		0	%		1	N/M
Total		1,373		100	%		1,385		-1	%


	Q1 2026		% of Total			Q4 2025		Change
NGLs (MBbls/d)
Delaware Basin		137		63	%		146		-7	%
Rockies		46		21	%		51		-10	%
Eagle Ford		11		5	%		10		12	%
Anadarko Basin		24		11	%		24		0	%
Other		—		0	%		—	N/M
Total		218		100	%		231		-6	%

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	Q1 2026		% of Total			Q4 2025		Change
Combined (MBoe/d)
Delaware Basin		501		60	%		521		-4	%
Rockies		187		23	%		192		-2	%
Eagle Ford		66		8	%		57		14	%
Anadarko Basin		75		9	%		77		-2	%
Other		4		0	%		4	N/M
Total		833		100	%		851		-2	%

From the fourth quarter of 2025 to the first quarter of 2026, the change in volumes contributed to a $94 million decrease in earnings. The decrease in volumes was driven by natural declines and winter weather-related downtime, primarily in the Delaware Basin.

Realized Prices


	Q1 2026			Realization	Q4 2025		Change
Oil (per Bbl)
WTI index	$	72.10			$	59.09		22	%
Realized price, unhedged	$	69.66		97%	$	57.19		22	%
Cash settlements	$	(1.72	)		$	2.47
Realized price, with hedges	$	67.94		94%	$	59.66		14	%


	Q1 2026		Realization	Q4 2025		Change
Gas (per Mcf)
Henry Hub index	$	5.05		$	3.55		42	%
Realized price, unhedged	$	1.66	33%	$	1.33		25	%
Cash settlements	$	0.02		$	0.25
Realized price, with hedges	$	1.68	33%	$	1.58		6	%


	Q1 2026		Realization	Q4 2025		Change
NGLs (per Bbl)
WTI index	$	72.10		$	59.09		22	%
Realized price, unhedged	$	17.80	25%	$	16.86		6	%
Cash settlements	$	—		$	0.23
Realized price, with hedges	$	17.80	25%	$	17.09		4	%


	Q1 2026			Q4 2025		Change
Combined (per Boe)
Realized price, unhedged	$	39.70		$	32.92		21	%
Cash settlements	$	(0.76	)	$	1.60
Realized price, with hedges	$	38.94		$	34.52		13	%

From the fourth quarter of 2025 to the first quarter of 2026, realized prices contributed to a $493 million increase in earnings. Unhedged realized oil, gas and NGL prices increased primarily due to higher WTI, Henry Hub and Mont Belvieu index prices.

We currently have approximately 30% and 35% of our remaining anticipated 2026 oil and gas production hedged, respectively.

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Hedge Settlements


	Q1 2026			Q4 2025		Change
	Q
Oil	$	(60	)	$	89		-167	%
Natural gas		3			31		-90	%
NGL		—			5	N/M
Total cash settlements (1)	$	(57	)	$	125		-146	%

(1)

Included as a component of oil, gas and NGL derivatives on the consolidated statements of comprehensive earnings.

Cash settlements as presented in the tables above represent realized gains or losses related to the instruments described in Note 3 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Production Expenses


	Q1 2026			Q4 2025			Change
LOE	$	486		$	479			1	%
Gathering, processing & transportation		191			195			-2	%
Production taxes		205			172			19	%
Property taxes		12			15			-20	%
Total	$	894		$	861			4	%
Per Boe:
LOE	$	6.48		$	6.11			6	%
Gathering, processing & transportation	$	2.54		$	2.49			2	%
Percent of oil, gas and NGL sales:
Production taxes		6.9	%		6.7	%		3	%

Production expenses increased during the first quarter of 2026 primarily due to higher production taxes resulting from an increase in WTI, Henry Hub and Mont Belvieu index prices.

Field-Level Cash Margin

The table below presents the field-level cash margin for each of our operating areas. Field-level cash margin is computed as oil, gas and NGL sales less production expenses and is not a measure defined by GAAP. A reconciliation to the comparable GAAP measures is found in “Non-GAAP Measures” in this Item 2. The changes in production volumes, realized prices and production expenses, shown above, had the following impact on our field-level cash margins by asset.


	Q1 2026		$ per BOE		Q4 2025		$ per BOE
Field-level cash margin (Non-GAAP)
Delaware Basin	$	1,253	$	27.77	$	1,083	$	22.60
Rockies		451	$	26.80		341	$	19.32
Eagle Ford		238	$	40.18		177	$	33.51
Anadarko Basin		129	$	19.18		106	$	15.02
Other		12	N/M			10	N/M
Total	$	2,083	$	27.78	$	1,717	$	21.93

DD&A


	Q1 2026		Q4 2025		Change
Oil and gas per Boe	$	11.71	$	10.85		8	%

Oil and gas	$	878	$	850		3	%
Other property and equipment		26		40		-35	%
Total DD&A	$	904	$	890		2	%

DD&A increased in the first quarter of 2026 primarily due to an increase in the oil and gas DD&A rate. The largest contributor to the higher rate was our 2025 drilling and development activity.

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G&A


	Q1 2026		Q4 2025		Change
G&A per Boe	$	1.67	$	1.72		-3	%

Labor and benefits	$	64	$	70		-9	%
Non-labor		61		65		-6	%
Total	$	125	$	135		-7	%

Other Items


	Q1 2026			Q4 2025			Change in earnings
Commodity hedge valuation changes (1)	$	(644	)	$	59		$	(703	)
Marketing and midstream operations		(16	)		(30	)		14
Exploration expenses		25			5			(20	)
Asset dispositions		1			(1	)		(2	)
Net financing costs		109			107			(2	)
Restructuring and transaction costs		19			—			(19	)
Other, net		17			(12	)		(29	)
							$	(761	)

(1)

Included as a component of oil, gas and NGL derivatives on the consolidated statements of comprehensive earnings.

We recognize fair value changes on our oil, gas and NGL derivative instruments in each reporting period. The changes in fair value resulted from new positions and settlements that occurred during each period, as well as the relationship between contract prices and the associated forward curves. For additional information, see Note 3 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

In the first quarter of 2026, we incurred transaction costs of approximately $19 million, which included various legal, advisory and other consulting costs associated with the Merger.

Income Taxes


	Q1 2026			Q4 2025
Current expense (benefit)	$	(188	)	$	23
Deferred expense		234			162
Total expense	$	46		$	185
Current tax rate		-114	%		3	%
Deferred tax rate		142	%		22	%
Effective income tax rate		28	%		25	%

For discussion on income taxes, see Note 6 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

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Q1 2026 vs. Q1 2025

Our first quarter 2026 and first quarter 2025 net earnings were $120 million and $509 million, respectively. The graph below shows the change in net earnings from the first quarter of 2025 to the first quarter of 2026. The material changes are further discussed by category on the following pages.

Production Volumes


	Q1 2026		% of Total			Q1 2025		Change
Oil (MBbls/d)
Delaware Basin		225		58	%		216		4	%
Rockies		103		27	%		112		-8	%
Eagle Ford		43		11	%		45		-5	%
Anadarko Basin		12		3	%		11		5	%
Other		4		1	%		4	N/M
Total		387		100	%		388		0	%


	Q1 2026		% of Total			Q1 2025		Change
Gas (MMcf/d)
Delaware Basin		831		60	%		744		12	%
Rockies		230		17	%		233		-1	%
Eagle Ford		76		6	%		117		-35	%
Anadarko Basin		235		17	%		252		-6	%
Other		1		0	%		—	N/M
Total		1,373		100	%		1,346		2	%


	Q1 2026		% of Total			Q1 2025		Change
NGLs (MBbls/d)
Delaware Basin		137		63	%		118		16	%
Rockies		46		21	%		44		3	%
Eagle Ford		11		5	%		15		-29	%
Anadarko Basin		24		11	%		26		-8	%
Other		—		0	%		—	N/M
Total		218		100	%		203		7	%


	Q1 2026		% of Total			Q1 2025		Change
Combined (MBoe/d)
Delaware Basin		501		60	%		458		9	%
Rockies		187		23	%		195		-4	%
Eagle Ford		66		8	%		79		-17	%
Anadarko Basin		75		9	%		79		-5	%
Other		4		0	%		4	N/M
Total		833		100	%		815		2	%

From the first quarter of 2025 to the first quarter of 2026, the change in volumes contributed to a $26 million increase in earnings. Volumes increased primarily due to new well activity in the Delaware Basin.

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Realized Prices


	Q1 2026			Realization	Q1 2025		Change
Oil (per Bbl)
WTI index	$	72.10			$	71.50		1	%
Realized price, unhedged	$	69.66		97%	$	69.13		1	%
Cash settlements	$	(1.72	)		$	0.02
Realized price, with hedges	$	67.94		94%	$	69.15		-2	%


	Q1 2026		Realization	Q1 2025			Change
Gas (per Mcf)
Henry Hub index	$	5.05		$	3.65			38	%
Realized price, unhedged	$	1.66	33%	$	2.55			-35	%
Cash settlements	$	0.02		$	(0.07	)
Realized price, with hedges	$	1.68	33%	$	2.48			-32	%


	Q1 2026		Realization	Q1 2025			Change
NGLs (per Bbl)
WTI index	$	72.10		$	71.50			1	%
Realized price, unhedged	$	17.80	25%	$	22.03			-19	%
Cash settlements	$	—		$	(0.10	)
Realized price, with hedges	$	17.80	25%	$	21.93			-19	%


	Q1 2026			Q1 2025			Change
Combined (per Boe)
Realized price, unhedged	$	39.70		$	42.58			-7	%
Cash settlements	$	(0.76	)	$	(0.13	)
Realized price, with hedges	$	38.94		$	42.45			-8	%

From the first quarter of 2025 to the first quarter of 2026, realized prices contributed to a $175 million decrease in earnings. This decrease was primarily due to lower unhedged realized gas and NGL prices. This decrease was partially offset by an increase in unhedged realized oil prices. Realized prices were also negatively impacted by oil hedge cash settlements.

Hedge Settlements


	Q1 2026			Q1 2025			Change
Oil	$	(60	)	$	—		N/M
Natural gas		3			(8	)		138	%
NGL		—			(2	)	N/M
Total cash settlements (1)	$	(57	)	$	(10	)		-470	%

(1)

Included as a component of oil, gas and NGL derivatives on the consolidated statements of comprehensive earnings.

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Production Expenses


	Q1 2026			Q1 2025			Change
LOE	$	486		$	479			1	%
Gathering, processing & transportation		191			204			-6	%
Production taxes		205			212			-3	%
Property taxes		12			17			-29	%
Total	$	894		$	912			-2	%
Per Boe:
LOE	$	6.48		$	6.53			0	%
Gathering, processing & transportation	$	2.54		$	2.78			-9	%
Percent of oil, gas and NGL sales:
Production taxes		6.9	%		6.8	%		2	%

Field-Level Cash Margin


	Q1 2026		$ per BOE		Q1 2025		$ per BOE
Field-level cash margin (Non-GAAP)
Delaware Basin	$	1,253	$	27.77	$	1,283	$	31.13
Rockies		451	$	26.80		509	$	29.01
Eagle Ford		238	$	40.18		270	$	37.98
Anadarko Basin		129	$	19.18		136	$	19.13
Other		12	N/M			16	N/M
Total	$	2,083	$	27.78	$	2,214	$	30.16

DD&A and Asset Impairments


	Q1 2026		Q1 2025		Change
Oil and gas per Boe	$	11.71	$	12.07		-3	%

Oil and gas	$	878	$	886		-1	%
Other property and equipment		26		26		0	%
Total DD&A	$	904	$	912		-1	%

Asset impairments	$	—	$	254	N/M

In the first quarter of 2025, Devon rationalized two headquarters-related real estate assets resulting in total asset impairments of $254 million. See Note 5 in "Part I. Financial Information – Item 1. Financial Statements" of this report for further discussion.

G&A


	Q1 2026		Q1 2025		Change
G&A per Boe	$	1.67	$	1.77		-6	%

Labor and benefits	$	64	$	70		-9	%
Non-labor		61		60		2	%
Total	$	125	$	130		-4	%

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Other Items


	Q1 2026			Q1 2025			Change in earnings
Commodity hedge valuation changes (1)	$	(644	)	$	(88	)	$	(556	)
Marketing and midstream operations		(16	)		(12	)		(4	)
Exploration expenses		25			10			(15	)
Asset dispositions		1			2			1
Net financing costs		109			123			14
Restructuring and transaction costs		19			18			(1	)
Other, net		17			9			(8	)
							$	(569	)

(1)

Included as a component of oil, gas and NGL derivatives on the consolidated statements of comprehensive earnings.

Income Taxes


	Q1 2026			Q1 2025
Current expense	$	(188	)	$	96
Deferred expense		234			41
Total expense	$	46		$	137
Current tax rate		-114	%		15	%
Deferred tax rate		142	%		6	%
Effective income tax rate		28	%		21	%

For information on income taxes, see Note 6 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

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Cap****ital Resources, Uses and Liquidity

Sources and Uses of Cash

The following table presents the major changes in cash and cash equivalents for the three months ended March 31, 2026 and 2025.


	Three Months Ended March 31,
	2026			2025
Operating cash flow	$	1,655		$	1,942
Capital expenditures		(839	)		(934	)
Acquisitions of property and equipment		(190	)		(8	)
Divestitures of property, equipment and investments		2			133
Investment activity, net		7			7
Repurchases of common stock		(69	)		(301	)
Common stock dividends		(155	)		(163	)
Noncontrolling interest activity, net		—			5
Repayment of finance leases		(3	)		(274	)
Other		(27	)		(19	)
Net change in cash, cash equivalents and restricted cash	$	381		$	388
Cash, cash equivalents and restricted cash at end of period	$	1,815		$	1,234

Operating Cash Flow

As presented in the table above, net cash provided by operating activities continued to be a significant source of capital and liquidity. Operating cash flow funded our capital expenditures, and we continued to return value to our shareholders by utilizing cash flow and cash balances for share repurchases and dividends.

Capital Expenditures

The amounts in the table below reflect cash payments for capital expenditures, including cash paid for capital expenditures incurred in prior periods.


	Three Months Ended March 31,
	2026		2025
Delaware Basin	$	449	$	468
Rockies		223		222
Eagle Ford		116		151
Anadarko Basin		29		45
Other		1		1
Total oil and gas		818		887
Midstream		16		32
Other		5		15
Total capital expenditures	$	839	$	934

Capital expenditures consist primarily of amounts related to our oil and gas exploration and development operations, midstream operations and other corporate activities. Our capital investment program is driven by a disciplined allocation process focused on moderating our production growth and maximizing our returns. As such, our capital expenditures for the first three months of 2026 represented approximately 51% of our operating cash flow.

Acquisitions of Property and Equipment

During the first three months of 2026, we completed acquisitions of property primarily related to state and federal land sales in the Delaware Basin.

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Divestitures of Property and Equipment

During the first three months of 2025, we generated $133 million in proceeds primarily from the sale of headquarters-related real estate assets as part of our real estate rationalization initiatives. For additional information, see Note 5 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Investment Activity

During the first three months of 2026 and 2025, we received distributions from our investments of $9 million and $9 million, respectively. We contributed $2 million and $2 million to our investments during the first three months of 2026 and 2025, respectively.

Shareholder Distributions and Stock Activity

We repurchased approximately 1.9 million shares of common stock for $69 million and approximately 8.5 million shares of common stock for $301 million under the share repurchase program authorized by our Board of Directors in the first three months of 2026 and 2025, respectively. For additional information, see Note 16 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

The following table summarizes our common stock dividends during the first quarter of 2026 and 2025.


	Dividends		Rate Per Share
2026:
First quarter	$	155	$	0.24
2025:
First quarter	$	163	$	0.24

Noncontrolling Interest Activity, net

On August 1, 2025, Devon completed the acquisition of all outstanding noncontrolling interests in CDM for $260 million. Accordingly, all future net income and cash flows from CDM are fully attributable to Devon and there will be no further distributions to or contributions from noncontrolling interest holders.

During the first three months of 2025, we distributed $9 million to our noncontrolling interests in CDM. During the first three months of 2025, we received $14 million in contributions from our noncontrolling interests.

Repayment of Finance Lease

During the first three months of 2025, we paid $274 million in cash to extinguish a finance lease related to a headquarters-related real estate asset as part of our real estate rationalization initiatives. For additional information, see Note 14 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

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Liquidity

The business of exploring for, developing and producing oil and natural gas is capital intensive. Because oil, natural gas and NGL reserves are a depleting resource, we, like all upstream operators, must continually make capital investments to grow and even sustain production. Generally, our capital investments are focused on drilling and completing new wells and maintaining production from existing wells. At opportunistic times, we also acquire operations and properties from other operators or landowners to enhance our existing portfolio of assets.

To emphasize our commitment to maximizing free cash flow and creating value for shareholders, we implemented a business optimization plan targeting a $1.0 billion improvement in annual pre-tax cash flow. The optimization initiatives were primarily focused on capital efficiencies, production optimization, commercial opportunities and corporate cost reductions. We are on track to achieve 100% of our $1.0 billion optimization plan ahead of our original year-end 2026 timeline.

Historically, our primary sources of capital funding and liquidity have been our operating cash flow and cash on hand. Additionally, we maintain a commercial paper program, supported by our revolving line of credit, which can be accessed as needed to supplement operating cash flow and cash balances. If needed, we can also issue debt and equity securities, including through transactions under our shelf registration statement filed with the SEC. We estimate the combination of our sources of capital will continue to be adequate to fund our planned capital requirements, as discussed in this section, as well as execute our cash-return business model.

Strategic Merger of Equals

On February 1, 2026, Devon and Coterra entered into the Merger Agreement to combine in an all-stock merger of equals transaction expected to close on May 7, 2026. The strategic combination is expected to unlock substantial value for shareholders by leveraging enhanced scale to improve margins, increase free cash flow and accelerate cash returns through the capture of $1.0 billion in sustainable annual synergies. Following the Merger and subject to the approval of the board of directors of the combined company, we expect to enhance cash returns to shareholders through a planned quarterly dividend of $0.315 per share and a new share repurchase authorization exceeding $5 billion.

Operating Cash Flow

Key inputs into determining our planned capital investment are the amount of cash we hold and operating cash flow we expect to generate over the next one to three or more years. At the end of the first quarter of 2026, we held approximately $1.8 billion of cash. Our operating cash flow forecasts are sensitive to many variables and include a measure of uncertainty as actual results may differ from our expectations.

Commodity Prices – The most uncertain and volatile variables for our operating cash flow are the prices of the oil, gas and NGLs we produce and sell. Prices are determined primarily by prevailing market conditions. Regional and worldwide economic uncertainty arising from geopolitical events, including conflict in the Middle East and related disruptions to global oil supply, weather, changes in public policy and other highly variable factors influence market conditions for these products. These factors, which are difficult to predict, create volatility in prices and are beyond our control.

To mitigate some of the risk inherent in prices, we utilize various derivative financial instruments to protect a portion of our production against downside price risk. The key terms to our oil, gas and NGL derivative financial instruments as of March 31, 2026 are presented in Note 3 in “Part I. Financial Information – Item 1. Financial Statements” of this report.

Further, when considering the current commodity price environment and our current hedge position, we expect to achieve our capital investment priorities. We remain committed to capital discipline and focused on delivering the objectives that underpin our capital plan for 2026.

Operating Expenses – Commodity prices can also affect our operating cash flow through an indirect effect on operating expenses. Significant commodity price decreases can lead to a decrease in drilling and development activities. As a result, the demand and cost for people, services, equipment and materials may also decrease, causing a positive impact on our cash flow as the prices paid for services and equipment decline. However, the inverse is also generally true during periods of rising commodity prices.

Additionally, the economic uncertainty arising from geopolitical events, including conflict in the Middle East and related disruptions to global oil supply, as well as evolving U.S. trade policies and tariff actions, may contribute to higher inflation rates and disrupt supply chains, negatively impacting our cash flow. While we actively work to mitigate the impact of these potential risks

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through operational efficiencies gained from the scale of our operations, as well as by leveraging long-standing relationships with our suppliers, the ultimate impacts remain uncertain.

Credit Losses – Our operating cash flow is also exposed to credit risk in a variety of ways. This includes the credit risk related to customers who purchase our oil, gas and NGL production, the collection of receivables from our joint interest owners for their proportionate share of expenditures made on projects we operate and counterparties to our derivative financial contracts. We utilize a variety of mechanisms to limit our exposure to the credit risks of our customers, joint interest owners and counterparties. Such mechanisms include, under certain conditions, requiring letters of credit, prepayments or cash collateral postings.

Credit Availability

As of March 31, 2026, we had approximately $3.0 billion of available borrowing capacity under our Senior Credit Facility. This credit facility supports our $3.0 billion of short-term credit under our commercial paper program. At March 31, 2026, there were no borrowings under our commercial paper program, and we were in compliance with the Senior Credit Facility’s financial covenant.

Debt Ratings

We receive debt ratings from the major ratings agencies in the U.S. In determining our debt ratings, the agencies consider a number of qualitative and quantitative items including, but not limited to, commodity pricing levels, our liquidity, asset quality, reserve mix, debt levels, cost structure, planned asset sales and the size and scale of our production. Our credit rating from Standard and Poor’s Financial Services is BBB with a positive outlook. Our credit rating from Fitch is BBB+ with a positive outlook. Our credit rating from Moody’s Investor Service is Baa2 with a positive outlook. Any rating downgrades may result in additional letters of credit or cash collateral being posted under certain contractual arrangements.

There are no “rating triggers” in any of our contractual debt obligations that would accelerate scheduled maturities should our debt rating fall below a specified level. However, a downgrade could adversely impact our interest rate on our Term Loan or any credit facility borrowings and the ability to economically access debt markets in the future.

Cash Returns to Shareholders

We are committed to returning cash to shareholders through dividends and share repurchases. Our Board of Directors will consider a number of factors when setting the quarterly dividend, if any, including a general target of paying out approximately 10% of operating cash flow through the fixed dividend. In addition to the fixed quarterly dividend, we may pay a variable dividend or complete share repurchases. The declaration and payment of any future dividend, whether fixed or variable, will remain at the full discretion of our Board of Directors and will depend on our financial results, cash requirements, future prospects and other factors deemed relevant by the Board.

Our Board of Directors has authorized a $5.0 billion share repurchase program that expires on June 30, 2026. Through April 2026, we had executed $4.5 billion of the authorized program. Pursuant to the terms of the Merger Agreement, our share repurchase activity has been suspended and is expected to remain suspended through the completion of the Merger.

Capital Expenditures

Our capital expenditures budget for the remainder of 2026 is expected to be consistent with our current operating plans, exclusive of merger-related impacts. Our capital expenditures budget reflecting the combined company will be finalized and communicated following the close of the Merger.

Tax Contingencies

As we are regularly audited by tax authorities, we have and will continue to have our tax positions challenged. Certain tax authorities require material cash deposits be made to further dispute and respond to any of our challenged tax positions. The Canada Revenue Agency (“CRA”) proposed several material adjustments to prior tax years relating to our legacy Canadian business. We have been engaging with the CRA to resolve these matters, but, based on recent communications, we expect the CRA to make formal assessments for such adjustments. We disagree with the proposed adjustments and intend to vigorously contest any related assessments, which may require us to make material cash deposits while the matters are being resolved.

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Critical Accounting Est****imates

Income Taxes

The amount of income taxes recorded requires interpretations of complex rules and regulations of federal, state, provincial and foreign tax jurisdictions. We recognize current tax expense based on estimated taxable income for the current period and the applicable statutory tax rates. We routinely assess potential uncertain tax positions and, if required, estimate and establish accruals for such amounts. We have recognized deferred tax assets and liabilities for temporary differences, operating losses and other tax carryforwards. We routinely assess our deferred tax assets and reduce such assets by a valuation allowance if we deem it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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 deduction of intangible drilling costs as part of the computation of the CAMT beginning in 2026. On February 18, 2026, the IRS issued additional interim CAMT guidance through Notice 2026-7. In addition to other provisions, the Notice includes a new AFSI adjustment beginning in 2025 for amortization of domestic research costs, including accelerated amortization under the OBBB transition rule, the impact of which was recorded in the first quarter of 2026. We continue to monitor for additional OBBB guidance.

Further, in the event we were to undergo an “ownership change” (as defined in Section 382 of the Internal Revenue Code of 1986, as amended), our ability to use net operating losses and tax credits generated prior to the ownership change may be limited. Generally, an “ownership change” occurs if one or more shareholders, each of whom owns five percent or more in value of a corporation’s stock, increase their aggregate percentage ownership by more than 50 percent over the lowest percentage of stock owned by those shareholders at any time during the preceding three-year period. Based on currently available information, we do not believe an ownership change has occurred during first quarter 2026 for Devon.

For additional information regarding our critical accounting policies and estimates, see our 2025 Annual Report on Form 10-K.

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Non-GA****AP Measures

We utilize “core earnings attributable to Devon” and “core earnings per share attributable to Devon” that are not required by or presented in accordance with GAAP. These non-GAAP measures are not alternatives to GAAP measures and should not be considered in isolation or as a substitute for analysis of our results reported under GAAP. Core earnings attributable to Devon, as well as the per share amount, represent net earnings excluding certain non-cash and other items that are typically excluded by securities analysts in their published estimates of our financial results. Our non-GAAP measures are typically used as a quarterly performance measure. Amounts excluded relate to asset dispositions, non-cash asset impairments (including unproved asset impairments), fair value changes in derivative financial instruments and restructuring and transaction costs.

We believe these non-GAAP measures facilitate comparisons of our performance to earnings estimates published by securities analysts. We also believe these non-GAAP measures can facilitate comparisons of our performance between periods and to the performance of our peers.

Below are reconciliations of core earnings and core earnings per share attributable to Devon to comparable GAAP measures.


	Three Months Ended March 31,
	Before Tax		After Tax		After NCI		Per Diluted Share
2026:
Earnings attributable to Devon (GAAP)	$	166	$	120	$	120	$	0.19
Adjustments:
Asset dispositions		1		1		1		—
Asset and exploration impairments		2		2		2		0.01
Fair value changes in financial instruments		644		499		499		0.81
Restructuring and transaction costs		19		19		19		0.03
Core earnings attributable to Devon (Non-GAAP)	$	832	$	641	$	641	$	1.04
2025:
Earnings attributable to Devon (GAAP)	$	646	$	509	$	494	$	0.77
Adjustments:
Asset dispositions		2		1		1		—
Asset and exploration impairments		259		202		202		0.31
Fair value changes in financial instruments		88		68		68		0.11
Restructuring and transaction costs		18		14		14		0.02
Core earnings attributable to Devon (Non-GAAP)	$	1,013	$	794	$	779	$	1.21

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EBITDAX and Field-Level Cash Margin

To assess the performance of our assets, we use EBITDAX and Field-Level Cash Margin. We compute EBITDAX as net earnings before income tax expense; financing costs, net; exploration expenses; DD&A; asset impairments; asset disposition gains and losses; non-cash share-based compensation; non-cash valuation changes for derivatives and financial instruments; restructuring and transaction costs; accretion on discounted liabilities; and other items not related to our normal operations. Field-Level Cash Margin is computed as oil, gas and NGL sales less production expenses. Production expenses consist of lease operating, gathering, processing and transportation expenses, as well as production and property taxes.

We exclude financing costs from EBITDAX to assess our operating results without regard to our financing methods or capital structure. Exploration expenses and asset disposition gains and losses are excluded from EBITDAX because they generally are not indicators of operating efficiency for a given reporting period. DD&A and impairments are excluded from EBITDAX because capital expenditures are evaluated at the time capital costs are incurred. We exclude share-based compensation, valuation changes, restructuring and transaction costs, accretion on discounted liabilities and other items from EBITDAX because they are not considered a measure of asset operating performance.

We believe EBITDAX and Field-Level Cash Margin provide information useful in assessing our operating and financial performance across periods. EBITDAX and Field-Level Cash Margin as defined by Devon may not be comparable to similarly titled measures used by other companies and should be considered in conjunction with net earnings from operations.

Below are reconciliations of net earnings to EBITDAX and a further reconciliation to Field-Level Cash Margin.


	Three Months Ended March 31,
	2026		2025
Net earnings (GAAP)	$	120	$	509
Financing costs, net		109		123
Income tax expense		46		137
Exploration expenses		25		10
Depreciation, depletion and amortization		904		912
Asset impairments		—		254
Asset dispositions		1		2
Share-based compensation		22		24
Derivative and financial instrument non-cash valuation changes		644		88
Restructuring and transaction costs		19		18
Accretion on discounted liabilities and other		17		9
EBITDAX (Non-GAAP)		1,907		2,086
Marketing and midstream revenues and expenses, net		16		12
Commodity derivative cash settlements		57		10
General and administrative expenses, cash-based		103		106
Field-level cash margin (Non-GAAP)	$	2,083	$	2,214

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity Price Risk

As of March 31, 2026, we have commodity derivatives that pertain to a portion of our estimated production for the last nine months of 2026, as well as for 2027. The key terms to our open oil, gas and NGL derivative financial instruments are presented in Note 3 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

The fair values of our commodity derivatives are largely determined by the forward curves of the relevant price indices. At March 31, 2026, a 10% change in the forward curves associated with our commodity derivative instruments would have changed our net positions by approximately $300 million.

Interest Rate Risk

At March 31, 2026, we had total debt of $8.4 billion. Of this debt, $7.4 billion was comprised of debentures and notes that have fixed interest rates which averaged 5.7%. We also have a $1.0 billion Term Loan which has a variable interest rate that is adjusted monthly. The interest rate on the Term Loan was 5.2% at March 31, 2026.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We have established disclosure controls and procedures to ensure that material information relating to Devon, including its consolidated subsidiaries, is made known to the officers who certify Devon’s financial reports and to other members of senior management and the Board of Directors.

Based on their evaluation, our principal executive and principal financial officers have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of March 31, 2026 to ensure that the information required to be disclosed by Devon in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.

Changes in Internal Control Over Financial Reporting

On January 1, 2026, Devon completed the implementation of an upgraded enterprise resource planning software. As a result of this implementation, corresponding changes to our business processes and information systems have been made, updating applicable internal controls over financial reporting where necessary.

Except as described above, there were no other changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. Other Information

Item 1. Legal Proceedings

We are involved in various legal proceedings incidental to our business. However, to our knowledge as of the date of this report and subject to the environmental matters noted in Part I, Item 3. Legal Proceedings of our 2025 Annual Report on Form 10-K, there were no material pending legal proceedings to which we are a party or to which any of our property is subject. For more information on our legal contingencies, see Note 17 in “Part I. Financial Information – Item 1. Financial Statements” of this report.

Devon has elected to use a $1 million threshold for disclosing certain proceedings arising under federal, state or local environmental laws when a governmental authority is a party. Devon believes proceedings under this threshold are not material to Devon’s business, financial condition and results of operations.

Please see our 2025 Annual Report on Form 10-K and other SEC filings for additional information.

Item 1A. Risk Factors

There have been no material changes to the information included in Item 1A. “Risk Factors” in our 2025 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equi****ty Securities and Use of Proceeds

The following table provides information regarding purchases of our common stock that were made by us during the first quarter of 2026 (shares in thousands).


Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
January 1 - January 31		1,851	$	37.39		1,850	$	538
February 1 - February 28		577	$	43.48		—	$	538
March 1 - March 31		2	$	43.76		—	$	538
Total		2,430	$	38.84		1,850

(1)

In addition to shares purchased under the share repurchase program described below, these amounts include approximately 0.6 million shares received by us from employees for the payment of personal income tax withholdings on vesting transactions.

(2)

On November 2, 2021, we announced a $1.0 billion share repurchase program that would expire on December 31, 2022. Through subsequent approvals, including most recently in July 2024, Devon's Board of Directors expanded the share repurchase program authorization to $5.0 billion, with a June 30, 2026 expiration date. In the first quarter of 2026, we repurchased 1.9 million common shares for $69 million, or $37.39 per share, under this share repurchase program. For additional information, see Note 16 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Item 3. Defaults Upo****n Senior Securities

Not applicable.

Item 4. Mine Saf****ety Disclosures

Not applicable.

Item 5. Other Information

During the three months ended March 31, 2026, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

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Item 6. Exhibits


Exhibit Number		Description

2.1	Agreement and Plan of Merger, dated as of February 1, 2026, by and among Devon Energy Corporation, Cubs Merger Sub, Inc., and Coterra Energy Inc. (incorporated by reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K, filed February 2, 2026; File No. 001-32318).

10.1	First Amendment to Amended and Restated Credit Agreement, dated as of March 24, 2026, by and among Devon Energy Corporation, as borrower, the lenders and letter of credit issuers party thereto and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K, filed March 24, 2026; File No. 001-32318).

31.1	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certification of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certification of principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	Inline XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH	Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents.

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

SIGNAT****URES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


				DEVON ENERGY CORPORATION

Date: May 6, 2026				/s/ John B. Sherrer
				John B. Sherrer
				Vice President, Accounting and Controller