Devon Energy 10-Q 2026-06-30

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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 June 30, 2026

or

☐	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.)
Three Memorial City Plaza 840 Gessner Road**,** Suite 1400**,** Houston**,** Texas 77024
(Address of principal executive offices, including zip code)
(281) 589-4600
(Registrant’s telephone number, including area code)
333 West Sheridan Avenue**,** Oklahoma City**,** Oklahoma 73102-5015
(Former name, former address and former fiscal year, if changed since last report)

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	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 July 22, 2026, 1.1 billion 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	15
		Note 4 – Share-Based Compensation	17
		Note 5 – Asset Impairments	18
		Note 6 – Restructuring and Transaction Costs	18
		Note 7 – Income Taxes	19
		Note 8 – Net Earnings Per Share	19
		Note 9 – Other Comprehensive Earnings (Loss)	20
		Note 10 – Supplemental Information to Statements of Cash Flows	20
		Note 11 – Accounts Receivable	20
		Note 12 – Property and Equipment	21
		Note 13 – Investments	21
		Note 14 – Debt and Related Expenses	22
		Note 15 – Leases	24
		Note 16 – Asset Retirement Obligations	24
		Note 17 – Stockholders’ Equity	25
		Note 18 – Commitments and Contingencies	26
		Note 19 – Fair Value Measurements	28
		Note 20 – Reportable Segments	29
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
		Executive Overview	30
		Results of Operations	32
		Capital Resources, Uses and Liquidity	40
		Critical Accounting Estimates	45
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.		Controls and Procedures	46
Part II. Other Information
Item 1.		Legal Proceedings	47
Item 1A.		Risk Factors	47
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.		Defaults Upon Senior Securities	48
Item 4.		Mine Safety Disclosures	48
Item 5.		Other Information	48
Item 6.		Exhibits	49
Signatures			51

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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.

“Matterhorn” refers to Matterhorn Express Pipeline, LLC and, as applicable, its direct parent, MXP Parent, LLC.

“MBbls” means thousand barrels.

“MBoe” means thousand Boe.

“Mcf” means thousand cubic feet.

“Merger” means the merger of Merger Sub with and into Coterra, with 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.

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

“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.

“Producers Midstream” means Producers Midstream II, LLC.

“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.

“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 the impact of ongoing or escalating armed conflicts, wars, and geopolitical instabilities, and 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, litigation, 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 the risk that we may not realize the anticipated benefits of the Merger or successfully integrate the two legacy businesses; 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

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described elsewhere in this report and in other documents we file from time to time with the SEC. We cannot guarantee the accuracy 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. Based on guidance from the SEC, Devon may use the investors section of its website to communicate with investors about Devon. It is possible that the financial and other information posted there could be deemed to be material information. The information on Devon’s website is not part of this Form 10-Q.

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Part I. Financial Information

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

		Three Months Ended June 30,								Six Months Ended June 30,
		2026				2025				2026				2025
		(Unaudited)
Oil, gas and NGL sales		$	5,106			$	2,710			$	8,083			$	5,836
Oil, gas and NGL derivatives			414				236				(287	)			138
Marketing and midstream revenues			1,897				1,338				3,428				2,762
Total revenues			7,417				4,284				11,224				8,736
Production expenses			1,393				899				2,287				1,811
Exploration expenses			16				20				41				30
Marketing and midstream expenses			1,874				1,357				3,421				2,793
Depreciation, depletion and amortization			1,416				914				2,320				1,826
Asset impairments			—				—				—				254
Asset dispositions			(25	)			(307	)			(24	)			(305	)
General and administrative expenses			175				113				300				243
Financing costs, net			125				116				234				239
Restructuring and transaction costs			246				9				265				27
Other, net			(187	)			2				(170	)			11
Total expenses			5,033				3,123				8,674				6,929
Earnings before income taxes			2,384				1,161				2,550				1,807
Income tax expense			473				244				519				381
Net earnings			1,911				917				2,031				1,426
Net earnings attributable to noncontrolling interests			—				18				—				33
Net earnings attributable to Devon		$	1,911			$	899			$	2,031			$	1,393
Net earnings per share:
Basic net earnings per share		$	2.04			$	1.42			$	2.61			$	2.18
Diluted net earnings per share		$	2.03			$	1.41			$	2.60			$	2.17
Comprehensive earnings:
Net earnings		$	1,911			$	917			$	2,031			$	1,426
Other comprehensive earnings, net of tax:
Pension and postretirement plans			1				1				2				2
Other comprehensive earnings, net of tax			1				1				2				2
Comprehensive earnings:		$	1,912			$	918			$	2,033			$	1,428
Comprehensive earnings attributable to noncontrolling interests			—				18				—				33
Comprehensive earnings attributable to Devon		$	1,912			$	900			$	2,033			$	1,395

See accompanying notes to consolidated financial statements.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET****S

		June 30, 2026				December 31, 2025
		(Unaudited)
ASSETS
Current assets:
Cash, cash equivalents and restricted cash		$	1,009			$	1,434
Accounts receivable			3,162				1,792
Inventory			356				336
Other current assets			522				444
Total current assets			5,049				4,006
Oil and gas property and equipment, based on successful efforts accounting, net			60,899				23,731
Other property and equipment, net			2,199				1,688
Total property and equipment, net			63,098				25,419
Goodwill			753				753
Right-of-use assets			509				299
Investments			992				727
Other long-term assets			492				395
Total assets		$	70,893			$	31,599
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	1,626			$	790
Revenues and royalties payable			2,451				1,491
Short-term debt			1,497				998
Income taxes payable			414				152
Other current liabilities			1,052				655
Total current liabilities			7,040				4,086
Long-term debt			9,891				7,391
Lease liabilities			356				197
Asset retirement obligations			1,169				863
Other long-term liabilities			1,043				907
Deferred income taxes			9,647				2,627
Commitments and contingencies (Note 18)
Stockholders’ equity:
Common stock, $0.10 par value. Authorized 2.0 billion shares; issued1,150 million and 622 million shares in 2026 and 2025, respectively			115				62
Additional paid-in capital			30,045				5,388
Retained earnings			11,712				10,200
Accumulated other comprehensive loss			(120	)			(122	)
Treasury stock, at cost, 0.1 million shares in 2026			(5	)			—
Total stockholders’ equity			41,747				15,528
Total liabilities and equity		$	70,893			$	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 June 30,								Six Months Ended June 30,
		2026				2025				2026				2025
		(Unaudited)
Cash flows from operating activities:
Net earnings		$	1,911			$	917			$	2,031			$	1,426
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation, depletion and amortization			1,416				914				2,320				1,826
Asset impairments			—				—				—				254
Leasehold impairments			9				7				12				12
Accretion of liabilities			7				3				11				9
Total (gains) losses on commodity derivatives			(414	)			(236	)			287				(138	)
Cash settlements on commodity derivatives			(116	)			67				(173	)			57
Gains on asset dispositions			(25	)			(307	)			(24	)			(305	)
Deferred income tax expense			95				18				329				59
Share-based compensation			71				23				93				53
Other			(204

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The following discussion and analysis addresses material changes in our results of operations for the three-month and six-month periods ended June 30, 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 five core areas: Permian Basin, Rockies, Eagle Ford, Anadarko Basin and Marcellus Shale. Our asset base is underpinned by premium acreage in the economic core of the Permian 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, which successfully closed on May 7, 2026. The Merger created a leading large-cap shale operator with an asset base anchored by a premier position in the Permian Basin. We expect the combination 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 pre-tax synergies to be attained through an optimized capital program, operating margin improvements and streamlined corporate costs. In connection with the Merger, we also initiated a review of our combined asset portfolio. 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 second quarter of 2026:

Production totaled 1,359 MBoe/d, including oil production of 503 MBbls/d.

Generated $3.7 billion of operating cash flow.

Exited with $4.0 billion of liquidity, including $1.0 billion of cash.

Retired $500 million of debt.

Announced a new $8.0 billion share repurchase program and have repurchased approximately 4.4 million of our common shares for approximately $202 million, or $45.48 per share, since inception of the plan after closing of the Merger.

Paid dividends of $366 million.

Acquired approximately 16,300 net acres for approximately $2.6 billion through a federal lease sale, expanding our premier position in the Permian Basin.

On track to deliver $1.0 billion of annual pre-tax merger synergies by year-end 2027.

Earnings attributable to Devon were $1.9 billion, or $2.03 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 six months 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.

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 remain on track to deliver at least $1.0 billion of annual pre-tax run-rate synergies by year end 2027, with approximately $600 million expected to be captured in 2027. We are driving progress on capital optimization, operating margin improvements and a reduced corporate cost structure through the sharing of best practices and technology across the combined company. Through the sharing of best practices and technology across the combined company, we are driving progress on capital optimization, operating margin improvements and a reduced corporate cost structure.

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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.

Q2 2026 vs. Q1 2026

Our second quarter 2026 and first quarter 2026 net earnings were $1.9 billion and $120 million, respectively. The graph below shows the change in net earnings from the first quarter of 2026 to the second quarter of 2026. The material changes are further discussed by category on the following pages.

Production Volumes

		Q2 2026				% of Total				Q1 2026				Change
Oil (MBbls/d)
Permian			329				65	%			225				46	%
Rockies			105				21	%			103				2	%
Eagle Ford			48				10	%			43				13	%
Anadarko			17				3	%			12				38	%
Other			4				1	%			4			N/M
Total			503				100	%			387				30	%

		Q2 2026				% of Total				Q1 2026				Change
Gas (MMcf/d)
Permian			1,274				39	%			831				53	%
Rockies			237				7	%			230				3	%
Eagle Ford			85				3	%			76				11	%
Anadarko			396				12	%			235				68	%
Marcellus			1,258				39	%			—			N/M
Other			2				0	%			1			N/M
Total			3,252				100	%			1,373				137	%

		Q2 2026				% of Total				Q1 2026				Change
NGLs (MBbls/d)
Permian			206				66	%			137				50	%
Rockies			47				15	%			46				4	%
Eagle Ford			15				5	%			11				37	%
Anadarko			45				14	%			24				90	%
Other			1				0	%			—			N/M
Total			314				100	%			218				44	%

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		Q2 2026				% of Total				Q1 2026				Change
Combined (MBoe/d)
Permian			748				55	%			501				49	%
Rockies			192				15	%			187				3	%
Eagle Ford			77				6	%			66				17	%
Anadarko			128				9	%			75				70	%
Marcellus			210				15	%			—			N/M
Other			4				0	%			4			N/M
Total			1,359				100	%			833				63	%

From the first quarter of 2026 to the second quarter of 2026, the change in volumes contributed to a $1.2 billion increase in earnings. Due to the Merger closing on May 7, 2026, volumes now include Coterra legacy assets in the Permian, Anadarko and Marcellus. Volumes associated with these Coterra legacy assets were approximately 488 MBoe/d in the second quarter of 2026. Volumes in the third quarter for the combined company are expected to range from approximately 1,660 to 1,690 MBoe/d, driven by a full quarter of production associated with Coterra legacy assets.

Realized Prices

		Q2 2026				Realization		Q1 2026				Change
Oil (per Bbl)
WTI index		$	92.47					$	72.10				28	%
Realized price, unhedged		$	95.10			103%		$	69.66				37	%
Cash settlements		$	(7.01	)				$	(1.72	)
Realized price, with hedges		$	88.09			95%		$	67.94				30	%

		Q2 2026				Realization		Q1 2026				Change
Gas (per Mcf)
Henry Hub index		$	2.90					$	5.05				-43	%
Realized price, unhedged		$	0.35			12%		$	1.66				-79	%
Cash settlements		$	0.70					$	0.02
Realized price, with hedges		$	1.05			36%		$	1.68				-38	%

		Q2 2026				Realization		Q1 2026				Change
NGLs (per Bbl)
WTI index		$	92.47					$	72.10				28	%
Realized price, unhedged		$	22.70			25%		$	17.80				28	%
Cash settlements		$	—					$	—
Realized price, with hedges		$	22.70			25%		$	17.80				28	%

		Q2 2026				Q1 2026				Change
Combined (per Boe)
Realized price, unhedged		$	41.30			$	39.70				4	%
Cash settlements		$	(0.94	)		$	(0.76	)
Realized price, with hedges		$	40.36			$	38.94				4	%

From the first quarter of 2026 to the second quarter of 2026, realized prices contributed to a $918 million increase in earnings. Unhedged oil and NGL prices increased primarily due to higher WTI and Mont Belvieu index prices, while unhedged gas prices decreased primarily due to lower Henry Hub index prices and expanded regional gas price differentials in the Permian, including negative spot pricing at the Waha hub in the second quarter of 2026. Basis differentials began improving in June 2026, and we expect basis differentials to continue to improve as additional takeaway capacity commences service in the second half of 2026 and early 2027. The increase in index prices was partially offset by oil hedge cash settlements.

We currently have approximately 30% and 25% of our remaining anticipated 2026 oil and gas production hedged, respectively. For 2027, we currently have approximately 15% and 10% of our anticipated oil and gas production hedged, respectively.

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Hedge Settlements

		Q2 2026				Q1 2026				Change
Oil		$	(321	)		$	(60	)			435	%
Natural gas			205				3			N/M
Total cash settlements (1)		$	(116	)		$	(57	)			104	%

(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

		Q2 2026				Q1 2026				Change
LOE		$	626			$	486				29	%
Gathering, processing & transportation			391				191				105	%
Production taxes			357				205				74	%
Property taxes			19				12				58	%
Total		$	1,393			$	894				56	%
Per Boe:
LOE		$	5.06			$	6.48				-22	%
Gathering, processing & transportation		$	3.16			$	2.54				24	%
Percent of oil, gas and NGL sales:
Production taxes			7.0	%			6.9	%			1	%

Production expenses increased primarily due to the Merger closing on May 7, 2026. LOE per Boe decreased and gathering, processing & transportation per Boe increased due to a different post-merger asset and product mix. Production taxes also increased due to the increase in WTI and Mont Belvieu index prices.

DD&A

		Q2 2026				Q1 2026				Change
Oil and gas per Boe		$	11.19			$	11.71				-4	%
Oil and gas		$	1,383			$	878				57	%
Other property and equipment			33				26				25	%
Total DD&A		$	1,416			$	904				57	%

DD&A increased in the second quarter of 2026 primarily due to the Merger closing on May 7, 2026. The increase was driven by higher oil and gas production volumes attributable to the assets acquired in the Merger. For additional information regarding the Merger, see Note 2 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

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G&A

		Q2 2026				Q1 2026				Change
G&A per Boe		$	1.41			$	1.67				-15	%
Labor and benefits		$	95			$	64				48	%
Non-labor			80				61				31	%
Total		$	175			$	125				40	%

G&A increased primarily due to the Merger closing on May 7, 2026. However, Devon’s G&A per Boe rate decreased due to a shift in asset mix following the Merger, as increased production volumes drove Boe growth at a faster rate than the corresponding increase in G&A.

Other Items

		Q2 2026				Q1 2026				Change in earnings
Commodity hedge valuation changes (1)		$	530			$	(644	)		$	1,174
Marketing and midstream operations			23				(16	)			39
Exploration expenses			16				25				9
Asset dispositions			(25	)			1				26
Net financing costs			125				109				(16	)
Restructuring and transaction costs			246				19				(227	)
Other, net			(187	)			17				204
										$	1,209

(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.

Restructuring and transaction costs reflect employee related costs and various transaction costs related to the Merger. For additional information, see Note 6 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

During the second quarter of 2026, we recognized a gain on our Fervo investment of approximately $201 million in other, net. For additional information, see Note 13 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Income Taxes

		Q2 2026				Q1 2026
Current expense (benefit)		$	378			$	(188	)
Deferred expense			95				234
Total expense		$	473			$	46
Current tax rate			16	%			-114	%
Deferred tax rate			4	%			142	%
Effective income tax rate			20	%			28	%

For discussion on income taxes, see Note 7 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

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June 30, 2026 YTD vs. June 30, 2025 YTD

Our six months ended June 30, 2026 net earnings were $2.0 billion, compared to net earnings of $1.4 billion for the first six months ended June 30, 2025. The graph below shows the change in net earnings from the six months ended June 30, 2025 to the six months ended June 30, 2026. The material changes are further discussed by category on the following pages.

Production Volumes

		Six Months Ended June 30,
		2026				% of Total				2025				Change
Oil (MBbls/d)
Permian			278				63	%			222				25	%
Rockies			104				23	%			108				-4	%
Eagle Ford			45				10	%			42				8	%
Anadarko			14				3	%			12				19	%
Other			4				1	%			4			N/M
Total			445				100	%			388				15	%

		Six Months Ended June 30,
		2026				% of Total				2025				Change
Gas (MMcf/d)
Permian			1,054				45	%			784				34	%
Rockies			233				10	%			230				1	%
Eagle Ford			80				3	%			89				-10	%
Anadarko			316				14	%			263				20	%
Marcellus			633				27	%			—			N/M
Other			2				1	%			1			N/M
Total			2,318				100	%			1,367				70	%

		Six Months Ended June 30,
		2026				% of Total				2025				Change
NGLs (MBbls/d)
Permian			172				65	%			126				37	%
Rockies			47				17	%			46				2	%
Eagle Ford			13				5	%			13				0	%
Anadarko			34				13	%			28				21	%
Other			—				0	%			—			N/M
Total			266				100	%			213				25	%

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		Six Months Ended June 30,
		2026				% of Total				2025				Change
Combined (MBoe/d)
Permian			625				57	%			478				31	%
Rockies			190				17	%			192				-1	%
Eagle Ford			71				6	%			70				2	%
Anadarko			101				9	%			84				20	%
Marcellus			105				10	%			—			N/M
Other			5				1	%			4				26	%
Total			1,097				100	%			828				33	%

From the six months ended June 30, 2025 to the six months ended June 30, 2026, the change in volumes contributed to a $1.2 billion increase in earnings. Due to the Merger closing on May 7, 2026, volumes now include Coterra legacy assets in the Permian, Anadarko and Marcellus. Volumes associated with these Coterra legacy assets were approximately 245 MBoe/d in the six months ended June 30, 2026.

Realized Prices

		Six Months Ended June 30,
		2026				Realization		2025				Change
Oil (per Bbl)
WTI index		$	82.29					$	67.72				22	%
Realized price, unhedged		$	84.11			102%		$	65.40				29	%
Cash settlements		$	(4.72	)				$	0.64
Realized price, with hedges		$	79.39			96%		$	66.04				20	%

		Six Months Ended June 30,
		2026				Realization		2025				Change
Gas (per Mcf)
Henry Hub index		$	3.98					$	3.55				12	%
Realized price, unhedged		$	0.74			19%		$	1.97				-62	%
Cash settlements		$	0.49					$	0.04
Realized price, with hedges		$	1.23			31%		$	2.01				-39	%

		Six Months Ended June 30,
		2026				Realization		2025				Change
NGLs (per Bbl)
WTI index		$	82.29					$	67.72				22	%
Realized price, unhedged		$	20.71			25%		$	19.76				5	%
Cash settlements		$	—					$	0.01
Realized price, with hedges		$	20.71			25%		$	19.77				5	%

		Six Months Ended June 30,
		2026				2025				Change
Combined (per Boe)
Realized price, unhedged		$	40.69			$	38.93				5	%
Cash settlements		$	(0.87	)		$	0.38
Realized price, with hedges		$	39.82			$	39.31				1	%

From the six months ended June 30, 2025 to the six months ended June 30, 2026, realized prices contributed to a $1.0 billion increase in earnings. This increase was primarily due to higher unhedged realized oil and NGL prices. This increase was partially offset by lower unhedged realized gas prices and oil hedge cash settlements.

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Hedge Settlements

		Six Months Ended June 30,
		2026				2025				Change
Oil		$	(381	)		$	45				-947	%
Natural gas			208				12				1633	%
Total cash settlements (1)		$	(173	)		$	57				-404	%

(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

		Six Months Ended June 30,
		2026				2025				Change
LOE		$	1,112			$	962				16	%
Gathering, processing & transportation			582				423				38	%
Production taxes			562				392				43	%
Property taxes			31				34				-9	%
Total		$	2,287			$	1,811				26	%
Per Boe:
LOE		$	5.60			$	6.42				-13	%
Gathering, processing & transportation		$	2.93			$	2.82				4	%
Percent of oil, gas and NGL sales:
Production taxes			7.0	%			6.7	%			3	%

Production expenses increased primarily due to the Merger closing on May 7, 2026, partially offset by positive results from the recently completed pre-merger business optimization plan. LOE per Boe decreased due to a different post-merger asset and product mix. Production taxes increased due to the increase in WTI and Mont Belvieu index prices.

DD&A and Asset Impairments

		Six Months Ended June 30,
		2026				2025				Change
Oil and gas per Boe		$	11.39			$	11.85				-4	%
Oil and gas		$	2,261			$	1,776				27	%
Other property and equipment			59				50				17	%
Total DD&A		$	2,320			$	1,826				27	%
Asset impairments		$	—			$	254			N/M

DD&A increased in the first six months of 2026 primarily due to higher volumes driven by the Merger and new well activity in the Permian.

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

		Six Months Ended June 30,
		2026				2025				Change
G&A per Boe		$	1.51			$	1.62				-7	%
Labor and benefits		$	159			$	126				26	%
Non-labor			141				117				21	%
Total		$	300			$	243				23	%

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G&A increased primarily due to the Merger closing on May 7, 2026. However, Devon’s G&A per Boe rate decreased due to a shift in asset mix following the Merger, as increased production volumes drove Boe growth at a faster rate than the corresponding increase in G&A.

Other Items

		Six Months Ended June 30,
		2026				2025				Change in earnings
Commodity hedge valuation changes (1)		$	(114	)		$	81			$	(195	)
Marketing and midstream operations			7				(31	)			38
Exploration expenses			41				30				(11	)
Asset dispositions			(24	)			(305	)			(281	)
Net financing costs			234				239				5
Restructuring and transaction costs			265				27				(238	)
Other, net			(170	)			11				181
										$	(501	)

(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.

During the second quarter of 2025, we sold our 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. For additional information, see Note 2 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Restructuring and transaction costs reflect employee related costs and various transaction costs related to the Merger. The majority of these costs were recorded in the second quarter of 2026. For additional information, see Note 6 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

During the first six months of 2026, we recognized a gain on our Fervo investment of approximately $201 million in other, net. For additional information, see Note 13 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Income Taxes

		Six Months Ended June 30,
		2026				2025
Current expense		$	190			$	322
Deferred expense			329				59
Total expense		$	519			$	381
Current tax rate			7	%			18	%
Deferred tax rate			13	%			3	%
Effective income tax rate			20	%			21	%

For information on income taxes, see Note 7 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 and six months ended June 30, 2026 and 2025.

		Three Months Ended June 30,								Six Months Ended June 30,
		2026				2025				2026				2025
Operating cash flow		$	3,674			$	1,545			$	5,329			$	3,487
Cash acquired in Merger			581				—				581				—
Capital expenditures			(1,318	)			(956	)			(2,157	)			(1,890	)
Acquisitions of property and equipment			(2,729	)			(16	)			(2,919	)			(24	)
Divestitures of property, equipment and investments			88				372				90				505
Investment activity, net			3				3				10				10
Debt activity			(500	)			—				(500	)			—
Repurchases of common stock			(197	)			(249	)			(266	)			(550	)
Common stock dividends			(366	)			(156	)			(521	)			(319	)
Noncontrolling interest activity, net			—				(14	)			—				(9	)
Repayment of finance leases			(2	)			—				(5	)			(274	)
Other			(40	)			(4	)			(67	)			(23	)
Net change in cash, cash equivalents and restricted cash		$	(806	)		$	525			$	(425	)		$	913
Cash, cash equivalents and restricted cash at end of period		$	1,009			$	1,759			$	1,009			$	1,759

Operating Cash Flow and Cash Acquired in Merger

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 grew approximately 53% during the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was due to the Merger and prices significantly increasing in the first half of 2026. 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, dividends and debt retirements.

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 June 30,								Six Months Ended June 30,
		2026				2025				2026				2025
Permian		$	786			$	488			$	1,235			$	956
Rockies			197				233				420				455
Eagle Ford			117				142				233				293
Anadarko			109				39				138				84
Marcellus			64				—				64				—
Other			1				1				2				2
Total oil and gas			1,274				903				2,092				1,790
Midstream			30				34				46				66
Other			14				19				19				34
Total capital expenditures		$	1,318			$	956			$	2,157			$	1,890

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 six months of 2026 represented approximately 40% of our operating cash flow. Capital expenditures increased in 2026 primarily due to the Merger closing on May 7, 2026 and results now include activity related to Coterra legacy assets in the Permian, Anadarko and Marcellus.

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Acquisitions of Property and Equipment

During the first six months of 2026, we completed acquisitions of property primarily related to state and federal land sales in the Permian for approximately $2.6 billion. For additional information, see Note 2 in “Part I. Financial Information - Item 1. Financial Statements” in this report.

Divestitures of Property, Equipment and Investments

During the first six months of 2026, we received proceeds of $88 million from asset dispositions. For additional information, see Note 13 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

During the first six months of 2025, we generated additional cash flow by monetizing our investment in Matterhorn for $372 million and divesting headquarters-related real estate assets for $134 million as part of our real estate rationalization initiatives. For additional information regarding these divestitures, see Note 2 and Note 5, respectively, in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Investment Activity

During the first six months of 2026 and 2025, we received distributions from our investments of $22 million and $20 million, respectively. We contributed $12 million and $10 million to our investments during the first six months of 2026 and 2025, respectively.

Debt Activity

In the second quarter of 2026, we repaid $250 million of the outstanding principal on the Term Loan, reducing the outstanding balance to $750 million. We also early redeemed the $250 million of 3.77% senior notes due in September 2026. For additional information, see Note 14 in “Part I. Financial Information - Item 1. Financial Statements” in this report.

Shareholder Distributions and Stock Activity

We repurchased approximately 6.3 million shares of common stock for $271 million and approximately 16.4 million shares of common stock for $550 million under the share repurchase programs authorized by our Board of Directors in the first six months of 2026 and 2025, respectively. For additional information, see Note 17 in “Part I. Financial Information - Item 1. Financial Statements” in this report.

The following table summarizes our common stock dividends during the second quarter of 2026 and 2025. In connection with the Merger, Devon raised its fixed dividend by approximately 33% from $0.24 to $0.32 per share in the second quarter of 2026.

		Dividends				Rate Per Share
2026:
First quarter		$	155			$	0.24
Second quarter			366			$	0.32
Total year-to-date		$	521
2025:
First quarter		$	163			$	0.24
Second quarter			156			$	0.24
Total year-to-date		$	319

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 six months of 2025, we distributed $23 million to, and received $14 million in contributions from, our noncontrolling interests in CDM.

Repayment of Finance Lease

During the first six 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.

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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.

On May 7, 2026, Devon and Coterra completed an all-stock merger of equals transaction. 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 successful completion of the Merger, we announced an $8.0 billion share repurchase program that expires on June 30, 2029. We also raised our fixed dividend by approximately 33% from $0.24 to $0.32 per share in the second quarter of 2026. In connection with the Merger, we initiated a review of our combined asset portfolio.

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.

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 second quarter of 2026, we held approximately $1.0 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 June 30, 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.

Cost savings and synergies resulting from the Merger are expected to be attained through an optimized capital program, operating margin improvements and streamlined corporate costs. We are on track to deliver at least $1.0 billion of annual pre-tax run-rate synergies by year-end 2027, with approximately $600 million expected to be captured in 2027. Shared best practices and technology are driving progress across these initiatives, strengthening margins and maximizing capital efficiency across the combined portfolio.

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 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.

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Restructuring and Transaction Related Costs – Merger-related restructuring and transaction cost cash outflows were paid in the first six months of 2026, with additional costs expected to be paid primarily through the end of 2027. Payments extending beyond 2026 relate primarily to employee severance benefits. These payments relate to employee costs and the associated employee severance benefits, costs to modify or abandon vendor contracts and the acceleration of certain employee benefits triggered by the Merger.

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.

Assumption of Coterra Debt

In conjunction with the Merger closing on May 7, 2026, we assumed a principal value of approximately $3.5 billion of Coterra debt.

Repayment of Debt

In June 2026, Devon repaid $250 million of the outstanding principal on the Term Loan, reducing the outstanding balance to $750 million. In July 2026, Devon repaid the remaining $750 million of outstanding principal, retiring the Term Loan in full. Following these repayments, we have no outstanding debt maturities until the second quarter of 2027.

Credit Availability

As of June 30, 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 June 30, 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 stable 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% to 15% 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.

In August 2026, Devon announced a cash dividend in the amount of $0.32 per share payable in the third quarter of 2026 and will total approximately $366 million.

Following the completion of the Merger, we announced a new $8.0 billion share repurchase program that expires on June 30, 2029. Through July 2026, we had executed approximately $300 million of the authorized program.

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Capital Expenditures

Our capital expenditures budget for the remainder of 2026 is expected to be approximately $2.7 billion to $2.9 billion.

Contractual Obligations

As a result of the Merger, we increased our material contractual obligations, which include debt and related interest expense, asset retirement obligations, lease obligations, operational agreements, drilling and facility obligations, various tax obligations and other obligations. As discussed above, we estimate the combination of our sources of capital will continue to be adequate to fund our short- and long-term contractual obligations.

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, the CRA is making 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

Purchase Accounting

Periodically, we acquire assets and assume liabilities in transactions accounted for as business combinations, such as the Merger with Coterra. In connection with the Merger, we allocated the $24.9 billion of purchase price consideration to the assets acquired and liabilities assumed based on estimated fair values as of the date of the acquisition.

We made a number of assumptions in estimating the fair value of assets acquired and liabilities assumed in the Merger. The most significant assumptions relate to the estimated fair values of proved and unproved oil and gas properties. Since sufficient market data was not available regarding the fair values of proved and unproved oil and gas properties, we prepared estimates and engaged third-party valuation experts. Significant judgments and assumptions are inherent in these estimates and include, among other things, estimates of reserve quantities, estimates of future commodity prices, drilling plans, expected development costs, lease operating costs, reserve risk adjustment factors and an estimate of an applicable market participant discount rate that reflects the risk of the underlying cash flow estimates.

Estimated fair values ascribed to assets acquired can have a significant impact on future results of operations presented in Devon’s financial statements. A higher fair value ascribed to a property results in higher DD&A expense, which results in lower net earnings. Fair values are based on estimates of future commodity prices, reserve quantities, development costs and operating costs. In the event that future commodity prices or reserve quantities are lower than those used as inputs to determine estimates of acquisition date fair values, the likelihood increases that certain costs may be determined to not be recoverable.

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 second quarter 2026 for Devon; however, the Merger resulted in an ownership change for Coterra, which increases the likelihood Devon could experience an ownership change over the next three years.

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

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Commodity Price Risk

As of June 30, 2026, we have commodity derivatives that pertain to a portion of our estimated production for the last six 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 June 30, 2026, a 10% change in the forward curves associated with our commodity derivative instruments would have changed our net positions by approximately $350 million.

Interest Rate Risk

At June 30, 2026, we had total debt of $11.4 billion. Of this debt, $10.7 billion was comprised of debentures and notes that have fixed interest rates which averaged 5.49%. We also have a $750 million Term Loan which has a variable interest rate that is adjusted monthly. The interest rate on the Term Loan was 4.96% at June 30, 2026.

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 June 30, 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

In connection with the Merger, we are in the process of integrating Coterra’s operations, processes and systems into our internal control structure. As this integration progresses, we anticipate changes to our combined internal control environment that may affect our internal control over financial reporting. For additional information regarding the Merger, see Note 2 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Other than as described above in connection with the Merger, there were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2026 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 and the matters described below, 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 18 in “Part I. Financial Information – Item 1. Financial Statements” of this report.

Environmental Matters

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.

On June 26, 2023, we received a NOV from the EPA relating to alleged air emission violations by Coterra Energy Operating Co. (f/k/a Cimarex Energy Co.), a subsidiary of the Company, during 2020 and 2022 in Texas and New Mexico. On July 25, 2023, we subsequently received a letter from the U.S. Department of Justice that the EPA has referred this matter for civil enforcement proceedings. On August 17, 2023, we received a separate NOV from the EPA relating to alleged air emission violations by Coterra Energy Operating Co. during 2023 in New Mexico. The Company has been engaging with the EPA to resolve each of these matters, which remain ongoing, and management cannot predict their ultimate outcome; however, resolution of each of these matters may result in a fine or penalty in excess of $1 million.

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

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 second 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)
April 1 - April 30			—			$	—				—			$	538
May 1 - May 31			2,914			$	47.62				2,148			$	7,899
June 1 - June 30			2,290			$	44.11				2,286			$	7,798
Total			5,204			$	46.07				4,434

(1)

In addition to shares purchased under the share repurchase program described below, these amounts include approximately 770 thousand shares received by us from employees for the payment of personal income tax withholdings on vesting transactions.

(2)

On November 2, 2021, Devon announced a $1.0 billion share repurchase program that would expire on December 31, 2022. Through subsequent approvals, most recently in July 2024, Devon’s Board of Directors expanded the share repurchase program authorization to $5.0 billion. Of the $5.0 billion authorized amount, we repurchased 102 million common shares for $4.5 billion, or $43.90 per share, prior to this program’s termination effective May 7, 2026. On May 7, 2026, Devon announced a new $8.0 billion share repurchase program, which expires on June 30, 2029. During the second quarter of 2026, we repurchased 4.4 million common shares for $202 million, or $45.48 per share, under the new program. For additional information, see Note 17 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

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

Not applicable.

Item 4. Mine Saf****ety Disclosures

Not applicable.

During the three months ended June 30, 2026, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) 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), except as described below.

On June 12, 2026, Thomas E. Jorden, chair of Devon’s Board of Directors, as trustee of the Thomas E. and Tamara Jacks Jorden Revocable Trust, adopted a Rule 10b5-1 trading arrangement intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The arrangement provides for the potential sale of up to 250,000 shares of Devon common stock, subject to certain conditions, during the period from September 14, 2026 through March 15, 2027.

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Exhibit Number		Description
3.1	Restated Certificate of Incorporation of Devon Energy Corporation.
4.1	Third Supplemental Indenture, dated as of June 25, 2026, between Devon Energy Corporation and U.S. Bank Trust Company, National Association, as Trustee (incorporated by reference to Exhibit 4.2 of Registrant’s Current Report on Form 8-K, filed June 25, 2026; File No. 001-32318).
4.2	Registration Rights Agreement, dated as of June 25, 2026, by and among Devon Energy Corporation, Wells Fargo Securities, LLC, BofA Securities, Inc. and Citigroup Global Markets Inc. (incorporated by reference to Exhibit 4.8 of Registrant’s Current Report on Form 8-K, filed June 25, 2026; File No. 001-32318).
4.3	Certificate of Designations to 8 ⅛% Series A Cumulative Perpetual Convertible Preferred Stock of Coterra Energy Operating Co. (f/k/a Cimarex Energy Co.) (incorporated by reference to Exhibit 4.3 of Coterra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021; File No. 1-10447).
4.4	Amendment to Certificate of Designations to 8 ⅛% Series A Cumulative Perpetual Convertible Preferred Stock of Coterra Energy Operating Co. (incorporated by reference to Exhibit 4.4 of Coterra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021; File No. 1-10447).
4.5	Amendment to Certificate of Designations to 8 ⅛% Series A Cumulative Perpetual Convertible Preferred Stock of Coterra Energy Operating Co. (incorporated by reference to Exhibit 4.3 of Coterra’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2022; File No. 1-10447).
4.6	Amendment to Certificate of Designations 8 ⅛% Series A Cumulative Perpetual Convertible Preferred Stock of Coterra Energy Operating Co. In connection with the Merger, Coterra and Coterra Energy Operating Co. became consolidated subsidiaries of Devon. Coterra and Coterra Energy Operating Co. are each parties to debt instruments under which the total amount of securities authorized does not exceed 10 percent of Devon’s total consolidated assets. Pursuant to paragraph (4)(iii)(A) of Item 601(b) of Regulation S-K, Devon agrees to furnish a copy of any of those instruments to the SEC upon its request.
10.1*	2026 Form of Notice of Grant of Restricted Stock Award and Award Agreement under the 2022 Long-Term Incentive Plan between the Company and non-management directors for restricted stock awarded.
10.2*	2026 Form of Notice of Grant of Restricted Stock Unit Award and Award Agreement under the 2022 Long-Term Incentive Plan between the Company and non-management directors for restricted stock units awarded.
10.3*	Cabot Oil & Gas Corporation 2014 Incentive Plan, effective May 1, 2014 (incorporated by reference to Exhibit 10.1 of Coterra’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2014; File No. 1-10447).
10.4*	Form of Non-Employee Director Restricted Unit Award Agreement (incorporated by reference to Exhibit 10.2 of Coterra’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2014; File No. 1-10447).
10.5*	Coterra Energy Inc. 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 of Coterra’s Current Report on Form 8-K, filed May 5, 2023; File No. 1-10447).
10.6*	Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.4(a) of Coterra’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2025; File No. 1-10447).
10.7*	Form of Performance Stock Unit Award Agreement (incorporated by reference to Exhibit 10.4(b) of Coterra’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2025; File No. 1-10447).
10.8*	Form of Amended and Restated Severance Compensation Agreement between Coterra Energy Inc. and certain officers (incorporated by reference to Exhibit 10.2 of Coterra’s Current Report on Form 8-K, filed February 2, 2026; File No. 1-10447).
10.9*	Non-Employee Director Deferred Compensation Plan effective May 4, 2023 (incorporated by reference to Exhibit 10.3 of Coterra’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023; File No. 1-10447).

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10.10*	Form of Non-Employee Director Deferred Restricted Stock Unit Award Agreement (Annual RSU Grant) (incorporated by reference to Exhibit 10.3(b) of Coterra’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023; File No. 1-10447).
10.11*	Deferred Compensation Plan of Cabot Oil & Gas Corporation, as amended and restated, effective January 1, 2011 (incorporated by reference to Exhibit 10.1 of Coterra’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2011; File No. 1-10447).
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).

*Indicates management contract or compensatory plan or arrangement.

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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: August 5, 2026				/s/ Gregory F. Conaway
				Gregory F. Conaway
				Vice President and Chief Accounting Officer