Item 1. Financial Statements

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Item 1. Financial Statements

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS


	Three Months Ended 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	)		5			(182	)		(17	)
Changes in assets and liabilities, net		924			134			625			251
Net cash from operating activities		3,674			1,545			5,329			3,487
Cash flows from investing activities:
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
Distributions from investments		13			11			22			20
Contributions to investments and other		(10	)		(8	)		(12	)		(10	)
Net cash from investing activities		(3,375	)		(597	)		(4,395	)		(1,399	)
Cash flows from financing activities:
Repayments of long-term debt		(500	)		—			(500	)		—
Repurchases of common stock		(197	)		(249	)		(266	)		(550	)
Dividends paid on common stock		(366	)		(156	)		(521	)		(319	)
Contributions from noncontrolling interests		—			—			—			14
Distributions to noncontrolling interests		—			(14	)		—			(23	)
Repayment of finance leases		(2	)		—			(5	)		(274	)
Shares exchanged for tax withholdings and other		(44	)		(5	)		(71	)		(24	)
Net cash from financing activities		(1,109	)		(424	)		(1,363	)		(1,176	)
Effect of exchange rate changes on cash		4			1			4			1
Net change in cash, cash equivalents and restricted cash		(806	)		525			(425	)		913
Cash, cash equivalents and restricted cash at beginning of period		1,815			1,234			1,434			846
Cash, cash equivalents and restricted cash at end of period	$	1,009		$	1,759		$	1,009		$	1,759

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	950		$	1,713		$	950		$	1,713
Restricted cash		59			46			59			46
Total cash, cash equivalents and restricted cash	$	1,009		$	1,759		$	1,009		$	1,759

See accompanying notes to consolidated financial statements.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY


													Other
							Additional						Comprehensive
	Common Stock						Paid-In			Retained			Earnings			Treasury			Noncontrolling			Total
	Shares			Amount			Capital			Earnings			(Loss)			Stock			Interests			Equity
	(Unaudited)
Three Months Ended June 30, 2026
Balance as of March 31, 2026		621		$	62		$	5,316		$	10,171		$	(121	)	$	—		$	—		$	15,428
Net earnings		—			—			—			1,911			—			—			—			1,911
Other comprehensive earnings, net of tax		—			—			—			—			1			—			—			1
Restricted stock grants, net of cancellations		2			—			—			—			—			—			—			—
Common stock repurchased		—			—			—			—			—			(240	)		—			(240	)
Common stock retired		(5	)		—			(235	)		—			—			235			—			—
Common stock dividends		—			—			—			(370	)		—			—			—			(370	)
Common stock issued		532			53			24,893			—			—			—			—			24,946
Share-based compensation		—			—			71			—			—			—			—			71
Balance as of June 30, 2026		1,150		$	115		$	30,045		$	11,712		$	(120	)	$	(5	)	$	—		$	41,747
Three Months Ended June 30, 2025
Balance as of March 31, 2025		644		$	64		$	6,096		$	8,506		$	(121	)	$	—		$	228		$	14,773
Net earnings		—			—			—			899			—			—			18			917
Other comprehensive earnings, net of tax		—			—			—			—			1			—			—			1
Common stock repurchased		—			—			(1	)		—			—			(254	)		—			(255	)
Common stock retired		(8	)		—			(254	)		—			—			254			—			—
Common stock dividends		—			—			—			(153	)		—			—			—			(153	)
Share-based compensation		—			—			23			—			—			—			—			23
Distributions to noncontrolling interests		—			—			—			—			—			—			(14	)		(14	)
Balance as of June 30, 2025		636		$	64		$	5,864		$	9,252		$	(120	)	$	—		$	232		$	15,292
Six Months Ended June 30, 2026
Balance as of December 31, 2025		622		$	62		$	5,388		$	10,200		$	(122	)	$	—		$	—		$	15,528
Net earnings		—			—			—			2,031			—			—			—			2,031
Other comprehensive earnings, net of tax		—			—			—			—			2			—			—			2
Restricted stock grants, net of cancellations		3			—			—			—			—			—			—			—
Common stock repurchased		—			—			—			—			—			(334	)		—			(334	)
Common stock retired		(7	)		—			(329	)		—			—			329			—			—
Common stock dividends		—			—			—			(519	)		—			—			—			(519	)
Common stock issued		532			53			24,893			—			—			—			—			24,946
Share-based compensation		—			—			93			—			—			—			—			93
Balance as of June 30, 2026		1,150		$	115		$	30,045		$	11,712		$	(120	)	$	(5	)	$	—		$	41,747
Six Months Ended June 30, 2025
Balance as of December 31, 2024		651		$	65		$	6,387		$	8,166		$	(122	)	$	—		$	208		$	14,704
Net earnings		—			—			—			1,393			—			—			33			1,426
Other comprehensive earnings, net of tax		—			—			—			—			2			—			—			2
Restricted stock grants, net of cancellations		2			—			—			—			—			—			—			—
Common stock repurchased		—			—			(4	)		—			—			(573	)		—			(577	)
Common stock retired		(17	)		(1	)		(572	)		—			—			573			—			—
Common stock dividends		—			—			—			(307	)		—			—			—			(307	)
Share-based compensation		—			—			53			—			—			—			—			53
Contributions from noncontrolling interests		—			—			—			—			—			—			14			14
Distributions to noncontrolling interests		—			—			—			—			—			—			(23	)		(23	)
Balance as of June 30, 2025		636		$	64		$	5,864		$	9,252		$	(120	)	$	—		$	232		$	15,292

See accompanying notes to consolidated financial statements.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

S****ummary of Significant Accounting Policies

The accompanying unaudited interim financial statements and notes of Devon have been prepared pursuant to the rules and regulations of the SEC. Pursuant to such rules and regulations, certain disclosures previously included in financial statements prepared in accordance with U.S. GAAP have been omitted. The accompanying unaudited interim financial statements and notes should be read in conjunction with the financial statements and notes included in Devon’s 2025 Annual Report on Form 10-K. The accompanying unaudited interim financial statements in this report reflect all adjustments that are, in the opinion of management, necessary for a fair statement of Devon’s results of operations and cash flows for the three-month and six-month periods ended June 30, 2026 and 2025 and Devon’s financial position as of June 30, 2026. Such adjustments are considered to be of a normal recurring nature unless otherwise noted.

Devon and Coterra completed an all-stock merger of equals on May 7, 2026. On the closing date of the Merger, each share of Coterra common stock was automatically converted into the right to receive 0.70 of a share of Devon common stock. The transaction has been accounted for using the acquisition method of accounting, with Devon as the accounting acquirer. See Note 2 for further discussion.

Variable Interest Entity

CDM was a joint venture entity formed by Devon and an affiliate of QL Capital Partners, LP (“QLCP”). Devon held a controlling interest in CDM and the portions of CDM’s net earnings and equity not attributable to Devon’s controlling interest were shown separately as noncontrolling interests in the accompanying consolidated statements of comprehensive earnings and consolidated balance sheets. CDM was considered a VIE to Devon. On August 1, 2025, Devon completed the acquisition of all outstanding noncontrolling interests in CDM for $260 million. As a result of this transaction, Devon owns 100% of the equity interests in CDM.

Disaggregation of Revenue

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Oil	$	4,354	$	2,174	$	6,777	$	4,588
Gas		104		178		309		487
NGL		648		358		997		761
Oil, gas and NGL sales		5,106		2,710		8,083		5,836

Oil		1,411		859		2,412		1,777
Gas		156		246		410		517
NGL		330		233		606		468
Marketing and midstream revenues		1,897		1,338		3,428		2,762
Total revenues from contracts with customers	$	7,003	$	4,048	$	11,511	$	8,598

Transaction Price Allocated to Remaining Performance Obligations

As of June 30, 2026, Devon had $5.3 billion of unsatisfied performance obligations related to natural gas sales that have a fixed pricing component and a contract term greater than one year. These obligations were assumed by Devon in connection with the Merger and are expected to be recognized ratably over the next 13 years.

Recently Issued Accounting Standards Not Yet Adopted

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

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Acquisitions and Dive****stitures

Coterra Merger

On May 7, 2026, Devon completed an all-stock merger of equals with Coterra, an oil and gas exploration and production company with assets in the Permian Basin in Texas and New Mexico, the Marcellus Shale in Pennsylvania and the Anadarko Basin in Oklahoma. On the closing date of the Merger, each share of Coterra common stock was converted into the right to receive 0.70 of a share of Devon common stock. No fractional shares of Devon’s common stock were issued in the Merger, and holders of shares of Coterra common stock instead received cash in lieu of fractional shares of Devon common stock. Based on the closing price of Devon’s common stock on May 6, 2026, the total value of Devon common stock issued to holders of Coterra common stock as part of this transaction was approximately $24.8 billion.

Purchase Price Allocation

This transaction has been accounted for using the acquisition method of accounting, with Devon as the accounting acquirer. Under the acquisition method of accounting, the assets and liabilities of Coterra have been recorded at their respective fair values as of the date of completion of the Merger and added to Devon’s assets and liabilities. The preliminary purchase price assessment remains an ongoing process and is subject to change for up to one year subsequent to the closing date of the acquisition. Determining the fair value of the assets and liabilities of Coterra requires judgment and certain assumptions to be made, the most significant of these being related to the valuation of Coterra’s oil and gas properties. The inputs and assumptions related to the oil and gas properties are categorized as level 3 in the fair value hierarchy.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

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


	Preliminary Purchase
	Price Allocation
Consideration:
Coterra common stock outstanding		759.4
Exchange Ratio		0.70
Devon common stock issued		531.6
Devon closing price on May 6, 2026	$	46.60
Total common equity consideration	$	24,772
Share-based replacement awards		174
Total consideration	$	24,946
Assets acquired:
Cash, cash equivalents and restricted cash	$	581
Accounts receivable		1,110
Inventory		31
Other current assets		204
Proved oil and gas property and equipment		20,356
Unproved and properties under development		14,099
Other property and equipment, net		505
Right-of-use assets		131
Investments		100
Other long-term assets		133
Total assets acquired	$	37,250
Liabilities assumed:
Accounts payable		723
Revenues and royalties payable		478
Short-term debt		249
Income taxes payable		27
Other current liabilities		425
Long-term debt		3,256
Lease liabilities		100
Asset retirement obligations		164
Other long-term liabilities		192
Deferred income taxes		6,690
Total liabilities assumed		12,304
Net assets acquired	$	24,946

Coterra Revenues and Net Earnings

From the closing date of the Merger through June 30, 2026, revenues and net earnings included in Devon’s consolidated statements of comprehensive earnings associated with these assets totaled $1.3 billion and $230 million, respectively.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Pro Forma Financial Information

The following unaudited pro forma financial information is based on our historical consolidated financial statements adjusted to reflect as if the Coterra merger had occurred on January 1, 2025. The information below reflects pro forma adjustments to conform Coterra’s historical financial information to Devon’s financial statement presentation. The unaudited pro forma financial information is not necessarily indicative of what would have occurred if the acquisition had been completed as of the beginning of the periods presented, nor is it indicative of future results.


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
	(Unaudited)
Total revenues	$	8,150	$	6,240	$	13,894	$	12,586
Net earnings	$	2,048	$	1,298	$	2,464	$	2,138
Net earnings per share:
Basic net earnings per share	$	1.79	$	1.11	$	2.15	$	1.83
Diluted net earnings per share	$	1.78	$	1.11	$	2.14	$	1.82

Lease Acquisition

During the second quarter of 2026, Devon acquired approximately 16,300 net undeveloped acres in the core of the Permian Basin in Lea and Eddy Counties, New Mexico through the Bureau of Land Management (“BLM”) oil and gas lease sale for approximately $2.6 billion, which was funded with cash on hand.

Asset Exchange

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

Divestiture of Matterhorn Investment

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

Contingent Earnout Payments

Devon was entitled to contingent earnout payments associated with the sale of its Barnett Shale assets in 2020 with upside participation beginning at a $2.75 Henry Hub natural gas price or a $50 WTI oil price. The contingent payment period commenced on January 1, 2021, and had a term of four years. Devon received $20 million in contingent earnout payments related to this transaction in the first six months of 2025. As of June 30, 2026, Devon had no other open contingent earnout arrangements.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Derivative Fin****ancial Instruments

Objectives and Strategies

Devon enters into derivative financial instruments with respect to a portion of its oil, gas and NGL production to hedge future prices received. Additionally, Devon periodically enters into derivative financial instruments with respect to a portion of its oil, gas and NGL marketing activities. These commodity derivative financial instruments include financial price swaps, basis swaps and costless price collars.

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

Counterparty Credit Risk

By using derivative financial instruments, Devon is exposed to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, the hedging instruments are placed with a number of counterparties whom Devon believes are acceptable credit risks. It is Devon’s policy to enter into derivative contracts only with investment-grade rated counterparties deemed by management to be competent and competitive market makers. Additionally, Devon’s derivative contracts generally contain provisions that provide for collateral payments if Devon’s or its counterparty’s credit rating falls below certain credit rating levels. As of June 30, 2026, Devon neither held cash collateral of its counterparties nor posted cash collateral to its counterparties. Given Devon's current credit ratings and the terms of the underlying contracts, Devon is not required to post collateral to its counterparties with respect to its open derivative positions and would not be required to post any such collateral as a result of any change to the amount of Devon’s net liability for such positions.

Commodity Derivatives

As of June 30, 2026, Devon had the following open oil derivative positions. The first two tables present Devon’s oil derivatives that settle against the average of the prompt month NYMEX WTI futures price. The third table presents Devon’s oil derivatives that settle against the respective indices noted within the table.


	Price Swaps				Price Collars
Period	Volume (Bbls/d)		Weighted Average Price ($/Bbl)		Volume (Bbls/d)		Weighted Average Floor Price ($/Bbl)		Weighted Average Ceiling Price ($/Bbl)
Q3-Q4 2026		10,000	$	66.13		84,500	$	56.25	$	73.11
Q1-Q4 2027		—	$	—		38,466	$	59.04	$	85.41


	Three-Way Price Collars
Period	Volume (Bbls/d)		Weighted Average Floor Sold Price ($/Bbl)		Weighted Average Floor Purchased Price ($/Bbl)		Weighted Average Ceiling Price ($/Bbl)
Q3-Q4 2026		113,000	$	49.36	$	59.36	$	72.36
Q1-Q4 2027		57,397	$	47.25	$	57.25	$	73.14


	Oil Basis Swaps
Period	Index	Volume (Bbls/d)		Weighted Average Differential to WTI ($/Bbl)
Q3-Q4 2026	WTI/NYMEX		83,500	$	0.95
Q3-Q4 2026	Midland Sweet		46,000	$	1.10
Q3-Q4 2026	WTI/Brent		8,000	$	(5.66	)
Q3-Q4 2026	NYMEX Roll		95,000	$	1.74
Q1-Q4 2027	WTI/NYMEX		32,466	$	1.04
Q1-Q4 2027	Magellan East Houston		27,000	$	1.85
Q1-Q4 2027	Midland Sweet		48,000	$	1.02

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

As of June 30, 2026, Devon had the following open natural gas derivative positions. The first table presents Devon’s natural gas derivatives that settle against the Inside FERC first of the month Henry Hub index and the end of month NYMEX index. The second table presents Devon’s natural gas derivatives that settle against the respective indices noted within the table.


	Price Swaps (1)				Price Collars (2)
Period	Volume (MMBtu/d)		Weighted Average Price ($/MMBtu)		Volume (MMBtu/d)		Weighted Average Floor Price ($/MMBtu)		Weighted Average Ceiling Price ($/MMBtu)
Q3-Q4 2026		247,500	$	3.80		1,130,000	$	3.36	$	5.47
Q1-Q4 2027		—	$	—		490,000	$	3.17	$	5.33

(1)

Price swaps settle against the Inside FERC first of month Henry Hub index.

(2)

Related to the 2026 open positions, 230,000 MMBtu/d settle against the Inside FERC first of month Henry Hub index at a weighted average floor price of $3.26 and ceiling price of $4.90, and 900,000 MMBtu/d settle against the end of month NYMEX index at a weighted average floor price of $3.39 and ceiling price of $5.61. Related to the 2027 open positions, 110,000 MMBtu/d settle against the Inside FERC first of month Henry Hub index at a weighted average floor price of $3.45 and ceiling price of $4.25, and 380,000 MMBtu/d settle against the end of month NYMEX index at a weighted average floor price of $3.08 and ceiling price of $5.65.


	Natural Gas Basis Swaps
Period	Index	Volume (MMBtu/d)		Weighted Average Differential to Henry Hub ($/MMBtu)
Q3-Q4 2026	Houston Ship Channel		50,000	$	(0.29	)
Q3-Q4 2026	Transco Leidy		250,000	$	(0.78	)
Q3-Q4 2026	Transco Zone 6 Non-NY		250,000	$	(0.16	)
Q3-Q4 2026	WAHA		350,000	$	(1.86	)
Q1-Q4 2027	Transco Leidy		47,500	$	(0.65	)
Q1-Q4 2027	Transco Zone 6 Non-NY		150,000	$	0.35
Q1-Q4 2027	WAHA		135,041	$	(1.30	)

Financial Statement Presentation

All derivative financial instruments are recognized at their current fair value as either assets or liabilities on the consolidated balance sheets. Amounts related to contracts allowed to be netted upon payment subject to a master netting arrangement with the same counterparty are reported on a net basis on the consolidated balance sheets. The table below presents a summary of these positions as of June 30, 2026 and December 31, 2025.


	June 30, 2026									December 31, 2025
	Gross Fair Value			Amounts Netted			Net Fair Value			Gross Fair Value			Amounts Netted			Net Fair Value			Balance Sheet Classification
Commodity derivatives:
Short-term derivative asset	$	174		$	(31	)	$	143		$	199		$	(7	)	$	192		Other current assets
Long-term derivative asset		70			(5	)		65			2			—			2		Other long-term assets
Short-term derivative liability		(209	)		31			(178	)		(8	)		7			(1	)	Other current liabilities
Long-term derivative liability		(29	)		5			(24	)		—			—			—		Other long-term liabilities
Total derivative asset	$	6		$	—		$	6		$	193		$	—		$	193

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Share-Base****d Compensation

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


	Six Months Ended June 30,
	2026		2025
G&A	$	56	$	46
Restructuring and transaction costs		37		7
Total	$	93	$	53

Related income tax benefit	$	18	$	8

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


	Restricted Stock Awards & Units					Performance Share Units
	Awards/Units			Weighted Average Grant-Date Fair Value		Units				Weighted Average Grant-Date Fair Value
	(Thousands, except fair value data)
Unvested at 12/31/25		4,653		$	40.79		1,293			$	58.82
Granted (1)		9,201		$	45.95		439			$	61.73
Vested		(3,690	)	$	45.75		(200	)		$	81.70
Forfeited		(139	)	$	42.90		(117	)		$	81.70
Unvested at 6/30/26		10,025		$	43.67		1,415		(2)	$	54.59

(1)

Pursuant to the terms of the Merger Agreement, certain of Coterra’s outstanding time-based and performance-based equity awards converted into the right to receive Devon restricted stock units based, in part, on the 0.70 exchange ratio. As a result, approximately 7.2 million awards relate to the conversion of Coterra equity awards to Devon restricted stock unit awards.

(2)

A maximum of 2.8 million common shares could be awarded based upon Devon’s final TSR ranking.

The following table presents the assumptions related to the performance share units granted in 2026, as indicated in the previous summary table.


	2026
Grant-date fair value	$	61.73
Risk-free interest rate		3.52	%
Volatility factor		33.80	%
Contractual term (years)		2.89

The following table presents a summary of the unrecognized compensation cost and the related weighted average recognition period associated with unvested awards and units as of June 30, 2026.


	Restricted Stock		Performance
	Awards/Units		Share Units
Unrecognized compensation cost	$	295	$	35
Weighted average period for recognition (years)		2.5		2.1

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Asset Impairments

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

Restructuring and Transaction Costs

The following table summarizes Devon’s restructuring and transaction costs.


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Restructuring	$	198	$	9	$	198	$	27
Transaction costs		48		—		67		—
Total	$	246	$	9	$	265	$	27

In conjunction with the Merger closing, Devon recognized $198 million of restructuring expenses during the first six months of 2026 primarily related to employee severance, termination and relocation benefits and contract terminations. Of these expenses, $37 million resulted from accelerated vesting of share-based grants, which are non-cash charges. Additionally, in conjunction with the Merger closing, Devon recognized $67 million of transaction costs primarily comprised of bank, legal and advisory fees associated with the Merger.

The following table summarizes Devon’s restructuring liabilities.


	Other			Other
	Current			Long-term
	Liabilities			Liabilities		Total
Balance as of December 31, 2025	$	1		$	—	$	1
Changes related to 2026 merger-related employee costs		78			48		126
Changes related to prior years’ restructurings		(1	)		—		(1	)
Balance as of June 30, 2026	$	78		$	48	$	126

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Inco****me Taxes

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Earnings before income taxes	$	2,384		$	1,161		$	2,550		$	1,807

Current income tax expense	$	378		$	226		$	190		$	322
Deferred income tax expense		95			18			329			59
Total income tax expense	$	473		$	244		$	519		$	381

U.S. statutory income tax rate		21	%		21	%		21	%		21	%
State income taxes		(1	%)		1	%		(1	%)		1	%
Other		—			(1	%)		—			(1	%)
Effective income tax rate		20	%		21	%		20	%		21	%

In the second quarter of 2026, state income taxes included a $56 million deferred tax benefit from the release of valuation allowances against legacy Devon state deferred tax assets in connection with the Merger. The release reflected a change in judgment regarding the realizability of legacy Devon state deferred tax assets, driven by increased forecasted future state taxable income of the combined company.

On February 18, 2026, the IRS issued additional interim CAMT guidance through Notice 2026-7 (the “Notice”). In addition to other provisions, the Notice includes a new Adjusted Financial Statement Income (“AFSI”) adjustment beginning in 2025 for amortization of domestic research costs, including accelerated amortization under the OBBB transition rule. Accordingly, Devon’s six months ended June 30, 2026 income tax expense included a current tax benefit of approximately $218 million and a corresponding deferred tax expense associated with the deferral of income taxes resulting from the Notice.

Net Earnings Per Share

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Net earnings available to common shareholders - basic and diluted	$	1,911	$	899	$	2,031	$	1,393
Common shares:
Average common shares outstanding - basic		937		635		778		640
Dilutive effect of potential common shares issuable		3		1		2		1
Average common shares outstanding - diluted		940		636		780		641
Net earnings per share available to common shareholders:
Basic	$	2.04	$	1.42	$	2.61	$	2.18
Diluted	$	2.03	$	1.41	$	2.60	$	2.17

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Other Comprehensive Earnings (Loss)

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Pension and postretirement benefit plans:
Beginning accumulated pension and postretirement benefits	$	(121	)	$	(121	)	$	(122	)	$	(122	)
Recognition of net actuarial loss and prior service cost in earnings (1)		1			2			3			3
Income tax expense		—			(1	)		(1	)		(1	)
Accumulated other comprehensive loss, net of tax	$	(120	)	$	(120	)	$	(120	)	$	(120	)

(1)

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

10.

Supplemental Information to Statements of Cash Flows


	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Changes in assets and liabilities, net:
Accounts receivable	$	197		$	183		$	(265	)	$	120
Other current assets		(16	)		15			(4	)		(20	)
Other long-term assets		49			(16	)		42			(101	)
Accounts payable and revenues and royalties payable		267			(162	)		646			86
Income taxes payable		387			72			236			167
Other current liabilities		90			69			29			(83	)
Other long-term liabilities		(50	)		(27	)		(59	)		82
Total	$	924		$	134		$	625		$	251
Supplementary cash flow data:
Interest paid	$	103		$	101		$	255		$	261
Income taxes paid (refunded)	$	(43	)	$	152		$	(39	)	$	152

As of June 30, 2026, Devon had approximately $610 million of accrued capital expenditures included in total property and equipment, net and accounts payable on the consolidated balance sheets. As of December 31, 2025 (pre-merger), Devon had approximately $360 million of accrued capital expenditures in total property and equipment, net and accounts payable on the consolidated balance sheets. As of May 7, 2026, Devon assumed approximately $320 million of accrued capital expenditures included in accounts payable.

11.

Accounts Receivable

Components of accounts receivable include the following:


	June 30, 2026			December 31, 2025
Oil, gas and NGL sales	$	1,798		$	865
Joint interest billings		601			245
Marketing and midstream revenues		744			669
Other		30			20
Gross accounts receivable		3,173			1,799
Allowance for credit losses		(11	)		(7	)
Net accounts receivable	$	3,162		$	1,792

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

12.

Property and Equipment

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


	June 30, 2026			December 31, 2025
Property and equipment:
Proved	$	82,437		$	58,573
Unproved and properties under development		17,475			1,910
Total oil and gas		99,912			60,483
Less accumulated DD&A		(39,013	)		(36,752	)
Oil and gas property and equipment, net		60,899			23,731
Other property and equipment		2,954			2,624
Less accumulated DD&A		(755	)		(936	)
Other property and equipment, net		2,199			1,688
Property and equipment, net	$	63,098		$	25,419

13.

Investments

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


	% Interest	Carrying Amount
Investments	June 30, 2026	June 30, 2026		December 31, 2025
Fervo	12%	$	359	$	162
WaterBridge	13%		243		268
Catalyst	50%		233		247
Producers Midstream	15%		94		—
Other	Various		63		50
Total		$	992	$	727

During the second quarter of 2026, Fervo completed its initial public offering, which diluted Devon’s equity interest in Fervo from 15% to approximately 12%. Devon accounts for its investment in Fervo under the equity method, and because the offering price per share exceeded Devon’s per share carrying value, Devon’s investment increased by approximately $201 million, which was recorded to other, net in the accompanying consolidated statements of comprehensive earnings.

In conjunction with Merger, Devon acquired an investment in Producers Midstream, a joint venture that provides natural gas gathering and processing services in Lea County, New Mexico, in the Permian Basin. Devon’s investment does not give it the ability to exercise significant influence over Producers Midstream.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

14.

Debt and Re****lated Expenses

See below for a summary of debt instruments and balances. The notes, debentures and Term Loan reflected below are senior, unsecured obligations of Devon.


	June 30, 2026			December 31, 2025
3.90% due May 15, 2027 (1)	$	750		$	—
7.50% due September 15, 2027		73			73
5.25% due October 15, 2027		390			390
5.875% due June 15, 2028		325			325
4.375% due March 15, 2029 (1)		500			—
4.50% due January 15, 2030		585			585
7.875% due September 30, 2031		675			675
7.95% due April 15, 2032		366			366
5.60% due March 15, 2034 (1)		500			—
5.20% due September 15, 2034		1,250			1,250
5.40% due February 15, 2035 (1)		750			—
5.60% due July 15, 2041		1,250			1,250
4.75% due May 15, 2042		750			750
5.00% due June 15, 2045		750			750
5.75% due September 15, 2054		1,000			1,000
5.90% due February 15, 2055 (1)		750			—
Term Loan due September 25, 2026		750			1,000
Net premium on debentures and notes		22			23
Debt issuance costs		(48	)		(48	)
Total debt	$	11,388		$	8,389
Less amount classified as short-term debt		1,497			998
Total long-term debt	$	9,891		$	7,391

(1)

These instruments were assumed by Devon in May 2026 in conjunction with the Merger. Approximately $277 million and $27 million of these instruments remain the unsecured and unsubordinated obligations of Coterra and Coterra Energy Operating Co., respectively, each of which is a subsidiary of Devon.

The following schedule includes the summary of the Coterra debt Devon assumed upon closing of the Merger on May 7, 2026.


	Face Value		Fair Value
3.77% due September 18, 2026	$	250	$	249
3.90% due May 15, 2027		750		747
4.375% due March 15, 2029		500		499
5.60% due March 15, 2034		500		516
5.40% due February 15, 2035		750		762
5.90% due February 15, 2055		750		732
	$	3,500	$	3,505

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Exchange Offers

In connection with the completed Merger, Devon commenced private exchange offers (the “Exchange Offers”) in May 2026 to exchange any and all of certain outstanding notes previously issued by Coterra and Coterra Energy Operating Co. (collectively, the “Existing Coterra Notes”) for newly issued Devon notes (the “New Devon Notes”) with the same stated interest rates, interest payment dates, maturity dates and redemption provisions as the corresponding series of Existing Coterra Notes.

On June 25, 2026, Devon issued $2.95 billion aggregate principal amount of New Devon Notes in exchange for a like amount of Existing Coterra Notes validly tendered. The New Devon Notes are general unsecured obligations of Devon and rank equally with Devon’s other unsecured and unsubordinated indebtedness. Following settlement, approximately $277 million and $27 million aggregate principal amount of Existing Coterra Notes remained outstanding as obligations of Coterra and Coterra Energy Operating Co., respectively. The New Devon Notes were issued as unregistered securities subject to a registration rights agreement.

Credit Lines

Devon has a $3.0 billion revolving Senior Credit Facility. In the first quarter of 2026, Devon amended the credit agreement governing the Senior Credit Facility to, among other things, extend the maturity date from March 24, 2030 to March 24, 2031, with the option to extend the maturity date by three additional one-year periods, subject to lender consent. As of June 30, 2026, Devon had no outstanding borrowings under the Senior Credit Facility and had less than $1.0 million in outstanding letters of credit under this facility. The Senior Credit Facility contains only one material financial covenant. This covenant requires Devon's ratio of total funded debt to total capitalization, as defined in the credit agreement, to be no greater than 65%. Under the terms of the credit agreement, total capitalization is adjusted to add back non-cash financial write-downs such as impairments. As of June 30, 2026, Devon was in compliance with this covenant with a debt-to-capitalization ratio of 18.1%.

Commercial Paper

Devon’s Senior Credit Facility supports its $3.0 billion of short-term credit under its commercial paper program. Commercial paper debt generally has a maturity of between 1 and 90 days, although it can have a maturity of up to 365 days, and bears interest at rates agreed to at the time of the borrowing. As of June 30, 2026, Devon had no outstanding commercial paper borrowings.

Term Loan Credit Agreement

In August 2024, Devon entered into a delayed draw term loan credit agreement (the “Term Loan Credit Agreement”), providing for delayed draw term loans in an aggregate principal amount not to exceed $2.0 billion, including a 364-day tranche of $500 million and a two-year tranche of $1.5 billion. On September 27, 2024, Devon borrowed $1.0 billion on the two-year tranche (the “Term Loan”) to partially fund the closing of the Grayson Mill acquisition. The Term Loan bears interest at a rate based on term SOFR plus a spread adjustment that varies based on Devon’s credit ratings. The interest rate on the Term Loan was 4.96% as of June 30, 2026. The Term Loan Credit Agreement contains substantially the same financial covenant as the Senior Credit Facility. As of June 30, 2026, Devon was in compliance with this covenant with a debt-to-capitalization ratio of 18.1%.

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.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

Retirement of Senior Notes

In June 2026, Devon early redeemed the $250 million of 3.77% senior notes due in September 2026 pursuant to the “make-whole” provisions in the governing document.

Net Financing Costs

The following schedule includes the components of net financing costs.


	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Net financing costs:
Interest based on debt outstanding	$	144		$	126		$	262		$	253
Interest income		(22	)		(14	)		(36	)		(24	)
Other		3			4			8			10
Total net financing costs	$	125		$	116		$	234		$	239

15.

Le****ases

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

The following table presents Devon’s right-of-use assets and lease liabilities as of June 30, 2026 and December 31, 2025.


	June 30, 2026						December 31, 2025
	Finance		Operating		Total		Finance		Operating		Total
Right-of-use assets	$	47	$	462	$	509	$	23	$	276	$	299
Lease liabilities:
Current lease liabilities (1)	$	10	$	139	$	149	$	7	$	95	$	102
Long-term lease liabilities		30		326		356		16		181		197
Total lease liabilities (2)	$	40	$	465	$	505	$	23	$	276	$	299

(1)

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

(2)

Devon has entered into certain leases of equipment related to the exploration, development and production of oil and gas that had terms not yet commenced as of June 30, 2026 and are therefore excluded from the amounts shown above.

16.

Asset Retir****ement Obligations

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


	Six Months Ended June 30,
	2026			2025
Asset retirement obligations as of beginning of period	$	906		$	807
Assumed Coterra obligations		177			—
Liabilities incurred		26			21
Liabilities settled and divested		(24	)		(22	)
Revision and reclassification of estimated obligation		107			55
Accretion expense on discounted obligation		31			24
Asset retirement obligations as of end of period		1,223			885
Less current portion		54			46
Asset retirement obligations, long-term	$	1,169		$	839

During the first six months of 2026 and 2025, Devon increased its asset retirement obligations by approximately $107 million and $55 million, respectively, primarily due to changes in current cost estimates for its oil and gas assets.

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

17.

Stockhol****ders’ Equity

On May 4, 2026, Devon’s shareholders approved an amendment to Devon’s Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 1.0 billion to 2.0 billion. The amendment became effective on May 7, 2026. The par value of Devon’s common stock remains $0.10 per share.

Coterra Merger

On May 7, 2026, Devon completed an all-stock merger of equals with Coterra. On the closing date of the Merger, each share of Coterra common stock was converted into the right to receive 0.70 of a share of Devon common stock. Consequently, Devon issued approximately 532 million shares of Devon common stock to holders of Coterra common stock to effect the Merger on May 7, 2026.

Share Repurchases

On May 7, 2026, Devon’s Board of Directors authorized a new $8.0 billion share repurchase program, which expires on June 30, 2029. The table below provides information regarding purchases of Devon’s common stock in the first six months of 2025 and 2026, respectively (shares in thousands).


	Total Number of Shares Purchased		Dollar Value of Shares Purchased		Average Price Paid per Share
2025:
First quarter		8,505	$	301	$	35.33
Second quarter		7,866		249	$	31.78
2025 Total		16,371		550	$	33.62
2026:
First quarter (1)		1,850		69	$	37.39
Second quarter		4,434		202	$	45.48
2026 Total		6,284	$	271	$	43.10

(1)

In connection with the Merger, Devon’s previous $5.0 billion share repurchase plan was terminated on May 7, 2026. Under this program, Devon repurchased 1.9 million shares of common stock for $69 million, or $37.39 per share, during the first quarter of 2026 and 102 million common shares for $4.5 billion, or $43.90 per share, since the program’s inception in November 2021.

Dividends

Devon pays a quarterly fixed dividend. 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. The following table summarizes Devon’s dividends for the first six months of 2026 and 2025, respectively.


	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

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DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

18.

Com****mitments and Contingencies

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

Royalty Matters

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

Environmental and Climate Change Matters

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

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

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

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

Other Indemnifications and Legacy Matters

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

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coast of Louisiana in the Gulf of America. These assets are generally referred to as the East Bay Field. The current operator of the East Bay Field filed for protection under Chapter 11 of the U.S. Bankruptcy Code and was unable to satisfy the eventual decommissioning obligations associated with the East Bay Field. Other companies in the chain of title of the East Bay Field have also sought bankruptcy protection and will also likely be unable to satisfy the eventual decommissioning obligations associated with the East Bay Field.

In March 2025, Devon received an order from the Department of the Interior, Bureau of Safety and Environmental Enforcement (“BSEE”) to decommission assets located on certain federal leases in the East Bay Field (the “Federal Assets”). As a result, during the first quarter of 2025, Devon recorded a contingent liability of $125 million within other liabilities in the consolidated balance sheet, reflecting the estimated costs of decommissioning the Federal Assets. The Company expects to be able to access funds available under certain bonds and a cash security account as and when Devon performs and pays these decommissioning obligations. Devon believes the funds will likely cover approximately $100 million of the estimated decommissioning costs for the Federal Assets. Accordingly, during the first quarter of 2025, Devon recorded an approximately $100 million receivable related to these sources of funds within other assets in the consolidated balance sheet. The remaining $25 million difference of the recorded decommissioning obligation and such sources of funds was recognized in the first quarter of 2025 in other, net on the consolidated statement of comprehensive earnings. In April 2026, we entered into a decommissioning agreement with BSEE and the surety for certain of these bonds, pursuant to which Devon commenced decommissioning activities on the Federal Assets and, subsequent to the end of the second quarter of 2026, began receiving reimbursement for the associated costs under applicable bonds.

Devon may be required to perform or fund decommissioning obligations associated with the East Bay Field under state and federal regulations applicable to predecessor operators beyond amounts accrued. Factors impacting this contingency include, among others: (i) the ultimate outcome of the ongoing bankruptcy proceedings, including with respect to state lease assets included in the East Bay Field, (ii) the actual costs to decommission the Federal Assets relative to the estimates, which are subject to numerous assumptions and uncertainties, and (iii) Devon's ability to successfully access additional funds under decommissioning bonds and other sources.

As of June 30, 2026, Devon has accrued approximately $150 million of contingent liabilities related to such decommissioning legacy matters, including liabilities associated with the East Bay Field.

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19.

Fair Value Measurements

The following table provides carrying value and fair value measurement information for certain of Devon’s financial assets and liabilities. The carrying values of cash, accounts receivable, other current receivables, accounts payable, other current payables, accrued expenses and lease liabilities included in the accompanying consolidated balance sheets approximated fair value at June 30, 2026 and December 31, 2025, as applicable. Therefore, such financial assets and liabilities are not presented in the following table.


							Fair Value Measurements Using:
	Carrying			Total Fair			Level 1		Level 2			Level 3
	Amount			Value			Inputs		Inputs			Inputs
June 30, 2026 assets (liabilities):
Cash equivalents	$	621		$	621		$	621	$	—		$	—
Commodity derivatives	$	208		$	208		$	—	$	208		$	—
Commodity derivatives	$	(202	)	$	(202	)	$	—	$	(202	)	$	—
Debt	$	(11,388	)	$	(11,340	)	$	—	$	(11,340	)	$	—
December 31, 2025 assets (liabilities):
Cash equivalents	$	764		$	764		$	764	$	—		$	—
Commodity derivatives	$	194		$	194		$	—	$	194		$	—
Commodity derivatives	$	(1	)	$	(1	)	$	—	$	(1	)	$	—
Debt	$	(8,389	)	$	(8,290	)	$	—	$	(8,290	)	$	—

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

Level 1 Fair Value Measurements

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

Level 2 Fair Value Measurements

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

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

Level 3 Fair Value Measurements

Devon had no fair value measurements using Level 3 inputs at June 30, 2026 or December 31, 2025.

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20.

Reportable Segments

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

Devon’s chief operating decision maker is an executive committee, which includes, among others, the Chief Executive Officer, Chief Financial Officer, Chief Corporate Development Officer and the Executive Vice Presidents, Exploration and Production. To assess the performance of its assets, Devon uses net earnings. Devon believes net earnings provides information useful in assessing its operating and financial performance across periods.

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


	Three Months Ended June 30,					Six Months Ended June 30,
	2026		2025			2026		2025
Total revenues	$	7,417	$	4,284		$	11,224	$	8,736

LOE		626		483			1,112		962
Gathering, processing & transportation		391		219			582		423
Production and property taxes		376		197			593		426
Total significant expenses		1,393		899			2,287		1,811
Marketing and midstream expenses		1,874		1,357			3,421		2,793
DD&A		1,416		914			2,320		1,826
G&A		175		113			300		243
Financing costs, net		125		116			234		239
Income tax expense		473		244			519		381
Other segment items (1)		50		(276	)		112		17
Total expenses		5,506		3,367			9,193		7,310

Net earnings	$	1,911	$	917		$	2,031	$	1,426

Total assets	$	70,893	$	31,390		$	70,893	$	31,390

Capital expenditures, including acquisitions	$	3,998	$	948		$	4,997	$	1,920

(1)

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

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