Core Viewpoint - Devon Energy Corp. reported second-quarter 2025 earnings per share (EPS) of 84 cents, exceeding the Zacks Consensus Estimate of 83 cents by 1.2%, despite a year-over-year decline of 40.4% from $1.41 per share [1][8]. Financial Performance - Total revenues for the quarter were $4.28 billion, surpassing the Zacks Consensus Estimate of $4.01 billion by 6.75% [3]. - GAAP EPS for the quarter was $1.41, compared to 77 cents in the same quarter last year, with differences attributed to asset disposition gains and fair value changes [2]. - Net cash from operating activities was $1.54 billion, slightly up from $1.53 billion in the second quarter of 2024 [11]. Production Metrics - Net production totaled 841,000 barrels of oil equivalent per day (Boe/d), an increase of 18.9% year over year, exceeding the guidance range of 810,000-828,000 Boe/d [4][8]. - Natural gas liquids production rose 21.9% year over year to 222,000 barrels per day (Bbl/d), while oil production increased 15.5% to 387,000 Bbl/d [5]. Pricing and Costs - Realized oil prices were $62.97 per barrel, down 20.24% from $78.95 a year ago, while realized prices for natural gas liquids were $17.82 per barrel, down 9.6% [6]. - Total production expenses were $899 million, a decrease of 1.4% year over year, with production costs averaging $11.75 per Boe, down 5% from the prior year [7]. Strategic Actions - Devon repurchased shares worth $249 million and paid dividends of $156 million to shareholders during the quarter [7]. - The company divested its equity interest in the Matterhorn Pipeline for $372 million, resulting in a gain of $307 million [9]. Future Guidance - Third-quarter production is expected to be in the range of 829,000-847,000 Boe/d, with capital spending estimated between $0.87 billion and $0.93 billion [12]. - The 2025 production forecast has been raised to 825,000-842,000 Boe/d, up from the previous range of 810,000-828,000 Boe/d [12][13].

Financial Data and Key Metrics Changes - In Q2, the company reported core earnings of $0.84 per share, EBITDAX of $1.8 billion, and operating cash flow of $1.5 billion, with free cash flow of $589 million generated after funding capital requirements [15][18] - The net debt to EBITDAX ratio improved to 0.9 times, reflecting a strong balance sheet focus [18] - The company exited the quarter with $4.8 billion in total liquidity, including $1.8 billion in cash [18] Business Line Data and Key Metrics Changes - Production exceeded guidance, driven by strong performance in the Delaware Basin, with capital spending coming in 7% below guidance [10][15] - Operational efficiencies led to a 12% year-over-year improvement in drilling costs and a 15% improvement in completion costs [11][12] - The company achieved $1 million in savings per well in the Williston Basin since the Grayson Mill acquisition [12] Market Data and Key Metrics Changes - The company is focused on maximizing realizations in gas marketing, with new agreements to diversify its natural gas sales portfolio [20][21] - The company expects to generate approximately $3 billion in free cash flow for the year, supported by a competitive breakeven funding level of less than $45 WTI [22] Company Strategy and Development Direction - The company aims to create an incremental $1 billion of annual free cash flow by the end of next year through business optimization initiatives [6][8] - Recent transactions, including the sale of the Matterhorn pipeline and acquisition of Cottondraw Midstream, are seen as value-enhancing and support future growth [9][19] - The company is committed to leveraging technology and operational excellence to drive efficiency and value creation [5][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the $1 billion target for free cash flow and highlighted the importance of maintaining focus amid market volatility [6][8] - The company anticipates stable production of 387,000 barrels of oil per day in Q3, with lower capital costs expected compared to the first two quarters [25] - Management noted the positive impact of recent federal legislation on tax benefits, enhancing the free cash flow profile in 2025 and beyond [22][23] Other Important Information - The company plans to retire $485 million in senior notes earlier than planned, saving $7 million in interest expense in 2025 [18] - The company is open to additional opportunities in the midstream space to create further value [20] Q&A Session Summary Question: What is the company doing to capture better realizations on the non-oil side? - Management highlighted efforts to move natural gas away from Waha to demand centers, with less than 15% of gas having direct Waha exposure [35][36] Question: How does the company view the progress on the business optimization plan? - Management reported achieving 40% of the $1 billion goal in just four months, with ongoing improvements expected to show up in financials [38][39] Question: What is the plan for allocating the cash from the expected tax benefits? - The company plans to maintain its shareholder return framework, focusing on sustaining dividends and accelerating debt reduction [71][72] Question: Can management elaborate on the new gas marketing agreement with CPV? - Management confirmed no current agreement to purchase power from CPV but noted the potential for future negotiations [59][60] Question: What is the outlook for production in the Bakken and Eagle Ford? - Management indicated that well productivity in the Bakken is consistent with expectations, while production in the Eagle Ford is set to grow back to pre-split levels [64][66]

Part I. Financial Information [Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) This section presents Devon Energy Corporation's unaudited consolidated financial statements, including earnings, balance sheets, cash flows, equity, and detailed notes [Consolidated Statements of Comprehensive Earnings](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Earnings) Devon reported net earnings attributable to the company of $899 million for Q2 2025, an increase from $844 million in Q2 2024, positively impacted by a significant gain on asset dispositions Consolidated Earnings Summary (in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $4,284 | $3,917 | $8,736 | $7,513 | | **Net Earnings** | $917 | $855 | $1,426 | $1,464 | | **Net Earnings Attributable to Devon** | $899 | $844 | $1,393 | $1,440 | | **Diluted Net Earnings Per Share** | $1.41 | $1.34 | $2.17 | $2.29 | [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, Devon's total assets increased to $31.39 billion, primarily due to increased cash, with total equity rising to $15.29 billion Balance Sheet Summary (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Cash, cash equivalents and restricted cash** | $1,759 | $846 | | **Total Current Assets** | $4,323 | $3,427 | | **Total Assets** | $31,390 | $30,489 | | **Long-Term Debt** | $8,393 | $8,398 | | **Total Liabilities** | $16,098 | $15,785 | | **Total Stockholders' Equity** | $15,292 | $14,704 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash from operating activities was $3.49 billion, funding capital expenditures, share repurchases, and dividends, partially offset by divestitures Cash Flow Summary (in millions) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $3,487 | $3,273 | | **Net Cash from Investing Activities** | $(1,399) | $(1,940) | | **Net Cash from Financing Activities** | $(1,176) | $(1,036) | | **Net Change in Cash** | $913 | $294 | | **Cash at End of Period** | $1,759 | $1,169 | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of financial statements, covering the Grayson Mill acquisition, Matterhorn gain, derivative positions, debt, share repurchase program, and contingent liabilities - On September 27, 2024, Devon acquired the Williston Basin business of Grayson Mill for approximately **$5.0 billion**, consisting of **$3.5 billion** in cash and **37.3 million** shares of common stock[60](index=60&type=chunk) - In Q2 2025, Devon sold its investment in Matterhorn for **$372 million**, recognizing a pre-tax gain of **$307 million**[66](index=66&type=chunk)[101](index=101&type=chunk) - As of June 30, 2025, Devon has a **$5.0 billion** share repurchase program authorized through June 30, 2026; to date, the company has repurchased **85.4 million** shares for approximately **$3.9 billion**[121](index=121&type=chunk)[122](index=122&type=chunk) - In Q1 2025, Devon recorded a contingent liability of **$125 million** for decommissioning assets in the East Bay Field, offset by an expected **$100 million** receivable from bonds and security accounts[138](index=138&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Devon's Q2 2025 performance, production exceeding guidance, commodity price impacts, the Matterhorn divestiture, and a $1.0 billion business optimization plan - Devon's strategic priorities include moderating production growth, maximizing free cash flow, maintaining low leverage, and delivering cash returns to shareholders[157](index=157&type=chunk) - The company announced a business optimization plan expected to improve annual pre-tax cash flow by **$1.0 billion** by the end of 2026, with **$400 million** in savings anticipated by the end of 2025[159](index=159&type=chunk) Q2 2025 Performance Highlights | Metric | Value | | :--- | :--- | | Production | 841 MBoe/d (exceeding guidance by 3%) | | Operating Cash Flow | $1.5 billion | | Earnings Attributable to Devon | $899 million ($1.41/share) | | Dividends Paid | $156 million | | Liquidity at Quarter-End | $4.8 billion (including $1.8 billion cash) | [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Net earnings increased in Q2 2025 due to the Matterhorn divestiture gain, offsetting lower commodity prices, while production volumes increased quarter-over-quarter and year-over-year Production Volumes by Basin (Q2 2025 vs Q1 2025) | Basin | Q2 2025 (MBoe/d) | Q1 2025 (MBoe/d) | % Change | | :--- | :--- | :--- | :--- | | Delaware Basin | 498 | 458 | 9% | | Rockies | 189 | 195 | -3% | | Eagle Ford | 60 | 79 | -24% | | Anadarko Basin | 90 | 79 | 14% | | **Total** | **841** | **815** | **3%** | Realized Prices (Q2 2025 vs Q1 2025) | Commodity | Q2 2025 Realized (with hedges) | Q1 2025 Realized (with hedges) | % Change | | :--- | :--- | :--- | :--- | | Oil (per Bbl) | $62.97 | $69.15 | -9% | | Gas (per Mcf) | $1.56 | $2.48 | -37% | | NGLs (per Bbl) | $17.82 | $21.93 | -19% | | **Combined (per Boe)** | **$36.30** | **$42.45** | **-14%** | - For the first six months of 2025, total production increased **21%** year-over-year to **828 MBoe/d**, driven by a **143%** increase in the Rockies region following the Grayson Mill acquisition[184](index=184&type=chunk) [Capital Resources, Uses and Liquidity](index=43&type=section&id=Capital%20Resources%2C%20Uses%20and%20Liquidity) Devon's liquidity is primarily from operating cash flow, funding capital expenditures, share repurchases, and dividends, with strong cash and credit facility availability Sources and Uses of Cash (Six Months Ended June 30, 2025, in millions) | Item | Amount | | :--- | :--- | | **Operating Cash Flow** | $3,487 | | Capital Expenditures | $(1,890) | | Divestitures | $505 | | Repurchases of Common Stock | $(550) | | Common Stock Dividends | $(319) | | Repayment of Finance Lease | $(274) | - As of June 30, 2025, Devon had approximately **$3.0 billion** of available borrowing capacity under its Senior Credit Facility and was in compliance with all financial covenants[224](index=224&type=chunk) - The capital expenditures budget for the remainder of 2025 is expected to be approximately **$1.7 billion** to **$1.9 billion**[230](index=230&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Devon is exposed to commodity price and interest rate risks, mitigated by derivative instruments and a predominantly fixed-rate debt structure - As of June 30, 2025, a **10%** change in the forward curves for commodity prices would change the net value of the company's derivative instruments by approximately **$270 million**[246](index=246&type=chunk) - The company's debt structure consists of **$7.9 billion** in fixed-rate notes and debentures and a **$1.0 billion** variable-rate Term Loan, mitigating significant exposure to interest rate risk[247](index=247&type=chunk) [Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The principal executive and financial officers concluded that disclosure controls and procedures were effective as of June 30, 2025[249](index=249&type=chunk) - No material changes were made to the internal control over financial reporting during the second quarter of 2025[250](index=250&type=chunk) Part II. Other Information [Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no new material pending legal proceedings, with previously disclosed matters resolved below $300,000 penalties - There are no material pending legal proceedings to which the company is a party as of the report date[252](index=252&type=chunk) [Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to risk factors from the 2024 Form 10-K were reported[255](index=255&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, Devon repurchased 7.9 million shares for $249 million under its $5.0 billion share repurchase program authorized through June 2026 Share Repurchases (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | April 2025 | 2,719,000 | $30.14 | 2,584,000 | | May 2025 | 2,398,000 | $32.02 | 2,396,000 | | June 2025 | 2,891,000 | $32.93 | 2,886,000 | | **Q2 Total** | **8,008,000** | **$31.71** | **7,866,000** | [Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including management compensation agreements and Sarbanes-Oxley Act certifications

Financial Data and Key Metrics Changes - In Q2 2025, the company reported core earnings of $0.84 per share, EBITDAX of $1.8 billion, and operating cash flow of $1.5 billion, with free cash flow of $589 million generated after funding capital requirements [15][16] - The net debt to EBITDAX ratio improved to 0.9 times, reflecting ongoing efforts to maintain a strong balance sheet [17] - The company exited the quarter with total liquidity of $4.8 billion, including $1.8 billion in cash [16] Business Line Data and Key Metrics Changes - Production in the Delaware Basin drove performance, with capital spending coming in 7% below guidance, resulting in significant free cash flow [8][15] - Operational efficiencies led to a 12% year-over-year improvement in drilling costs and a 15% improvement in completion costs [10][11] - The company achieved $1 million in savings per well in the Williston Basin since the Grayson Mill acquisition [11] Market Data and Key Metrics Changes - The company raised its full-year oil production outlook to a range of 384,000 to 390,000 barrels per day, while reducing total capital guidance by $100 million to a range of $3.6 billion to $3.8 billion [22] - The breakeven funding level remains competitive at less than $45 WTI, positioning the company to generate approximately $3 billion in free cash flow for the year [22] Company Strategy and Development Direction - The company is focused on operational excellence, financial strength, and delivering value to shareholders, with a business optimization plan aimed at generating an additional $1 billion in annual free cash flow by the end of next year [5][6] - Recent transactions, including the sale of the Matterhorn pipeline and acquisition of Cottondraw Midstream, are intended to enhance asset portfolio and support future growth [6][19] - The company is pursuing additional opportunities in the midstream space and maximizing gas production realizations through new marketing agreements [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the $1 billion free cash flow target on time, emphasizing a culture of continuous improvement and technology-driven operational enhancements [6][15] - The company anticipates stable production of 387,000 barrels of oil per day in Q3, with lower capital costs expected compared to the first two quarters [24] - Management highlighted the positive impact of recent federal legislation on tax benefits, projecting a current tax rate of around 10% for 2025, down from 15% [23] Other Important Information - The company is committed to a capital allocation framework that balances high-return investments with substantial cash returns to shareholders, including dividends and share repurchases [16][22] - The business optimization plan is on track, with 40% of the $1 billion goal achieved within four months [25][40] Q&A Session Summary Question: Non-oil realizations and marketing agreements - Management acknowledged the challenges with NGLs and local gas prices, emphasizing efforts to move gas production away from Waha to Gulf Coast demand centers [32][34] Question: Business optimization progress - Management expressed encouragement with the 40% achievement in the business optimization plan, highlighting the role of technology and AI in driving efficiencies [38][39] Question: Production maintenance levels for 2026 - Management indicated that while production output is improving, they are not resetting maintenance levels but rather seeking to balance production and capital investment [45][46] Question: Bakken and Eagle Ford production outlook - Management confirmed that well productivity in the Bakken is consistent with expectations, while in the Eagle Ford, they are focused on growing production back to pre-split levels [64][66] Question: Allocation of incremental cash flow from tax benefits - Management stated that the priority remains on sustaining dividends and debt reduction, with no immediate changes to the shareholder return framework [71][89]

Financial Performance - The company's total production averaged 841,000 BOE per day[2], with oil production reaching 387,000 barrels per day[2] - The company increased cash balances by $525 million to $1.8 billion[2] - Free cash flow was $589 million[12] - Q2 2025 core earnings were $0.84 per share[18] - The company paid $156 million in dividends and $249 million in share buybacks[19] Capital Management - Capital spending was $932 million, 7% under midpoint guidance[2, 13] - The company realized $400 million of annual benefit from Business Optimization Plan[3] - Full-year capital guidance lowered to a midpoint of $3.7 billion[3] - The company expects to retire $2.5 billion in absolute debt[22] Operational Efficiency - The company achieved 40% of its Business Optimization Plan[3] - Williston Basin 2-mile well costs improved by $1 million[15] - Delaware capital efficiencies improved by 12% for drilling and 15% for completions (2025 YTD vs FY 2024)[15]

Group 1: Earnings Performance - Devon Energy reported quarterly earnings of $0.84 per share, exceeding the Zacks Consensus Estimate of $0.83 per share, but down from $1.41 per share a year ago, representing an earnings surprise of +1.20% [1] - The company posted revenues of $4.28 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 6.75%, compared to year-ago revenues of $3.92 billion [2] - Over the last four quarters, Devon Energy has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Group 2: Stock Performance and Outlook - Devon Energy shares have declined approximately 2.4% since the beginning of the year, while the S&P 500 has gained 7.6% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $1.00 on revenues of $4.21 billion, and for the current fiscal year, it is $4.14 on revenues of $16.93 billion [7] Group 3: Industry Context - The Zacks Industry Rank for Oil and Gas - Exploration and Production - United States is currently in the bottom 31% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The estimate revisions trend for Devon Energy was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6]

Financial Statements [Consolidated Statements of Earnings](index=2&type=section&id=Consolidated%20Statements%20of%20Earnings) Devon Energy reported Q2 2025 net earnings of $917 million ($1.41 per diluted share), with total revenues of $4.28 billion, reflecting lower commodity sales | Financial Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Total Revenues | $4,284 M | $4,452 M | $3,917 M | | Total Expenses | $3,123 M | $3,806 M | $2,877 M | | Net Earnings | $917 M | $509 M | $855 M | | Diluted Net Earnings Per Share | $1.41 | $0.77 | $1.34 | [Supplemental Information for Consolidated Statements of Earnings](index=3&type=section&id=Supplemental%20Information%20for%20Consolidated%20Statements%20of%20Earnings) Q2 2025 supplemental earnings show $236 million from derivatives, $899 million in production expenses, $116 million in net financing costs, and $244 million in income tax - Oil, gas, and NGL derivatives had a positive impact of **$236 million** in Q2 2025, consisting of **$67 million** in cash settlements and **$169 million** in positive valuation changes[4](index=4&type=chunk) | Production Expenses Breakdown (Q2 2025) | Amount (in millions) | | :--- | :--- | | Lease operating expense | $483 | | Gathering, processing & transportation | $219 | | Production taxes | $180 | | Property taxes | $17 | | **Total Production Expenses** | **$899** | - Net financing costs for Q2 2025 were **$116 million**, slightly down from **$123 million** in Q1 2025[6](index=6&type=chunk) - Total income tax expense for Q2 2025 was **$244 million**, comprised of **$226 million** in current expense and **$18 million** in deferred expense[7](index=7&type=chunk) [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Q2 2025 balance sheet shows total assets at $31.39 billion, liabilities at $16.10 billion, and equity at $15.29 billion, with cash increasing to $1.76 billion | Balance Sheet Item | Q2 2025 (in millions) | Q1 2025 (in millions) | | :--- | :--- | :--- | | **Total Current Assets** | **$4,323** | **$3,905** | | Cash, cash equivalents and restricted cash | $1,759 | $1,234 | | Total Property and Equipment, net | $25,115 | $25,082 | | **Total Assets** | **$31,390** | **$30,928** | | **Total Current Liabilities** | **$3,537** | **$3,618** | | Long-term Debt | $8,393 | $8,395 | | **Total Liabilities** | **$16,098** | **$16,155** | | **Total Equity** | **$15,292** | **$14,773** | [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Q2 2025 operating cash flow was $1.55 billion, investing used $597 million, and financing used $424 million, leading to a $525 million net cash increase | Cash Flow Activity (Q2 2025) | Amount (in millions) | | :--- | :--- | | Net Cash from Operating Activities | $1,545 | | Net Cash from Investing Activities | $(597) | | Net Cash from Financing Activities | $(424) | | **Net Change in Cash** | **$525** | - Key uses of cash in financing activities for Q2 2025 included **$249 million** for stock repurchases and **$156 million** for dividend payments[9](index=9&type=chunk) Operational and Financial Metrics [Production](index=6&type=section&id=Production) Q2 2025 total oil equivalent production averaged 841 MBoe/d, driven by NGL and gas increases, with the Delaware Basin contributing 498 MBoe/d | Production by Type | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Oil (MBbls/d) | 387 | 388 | | NGL (MBbls/d) | 222 | 203 | | Gas (MMcf/d) | 1,388 | 1,346 | | **Total (MBoe/d)** | **841** | **815** | - The Delaware Basin remains the primary production area, contributing **498 MBoe/d** in Q2 2025, an increase from **458 MBoe/d** in the prior quarter[10](index=10&type=chunk) [Capital Expenditures](index=7&type=section&id=Capital%20Expenditures) Q2 2025 total capital expenditures were $932 million, with $860 million for upstream, primarily in the Delaware Basin, and 113 wells spudded | Capital Expenditures by Area (Q2 2025) | Amount (in millions) | | :--- | :--- | | Delaware Basin | $472 | | Rockies | $224 | | Eagle Ford | $118 | | Anadarko Basin | $44 | | **Total Upstream Capital** | **$860** | - Operational activity in Q2 2025 included **113** gross operated spuds and **110** gross operated wells tied-in, with the Delaware Basin leading with **57** spuds and **57** tie-ins[12](index=12&type=chunk)[13](index=13&type=chunk) - The average lateral length of wells tied-in during Q2 2025 was **10,300 feet**, with the Rockies having the longest laterals at **12,300 feet**[15](index=15&type=chunk) [Realized Pricing](index=8&type=section&id=Realized%20Pricing) Q2 2025 WTI benchmark was $63.95/Bbl, with Devon's realized oil price at $62.97/Bbl and total realized price per Boe at $36.30 | Benchmark Prices | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | WTI Oil ($/Bbl) | $63.95 | $71.50 | | Henry Hub Gas ($/Mcf) | $3.44 | $3.65 | | Mont Belvieu NGL ($/Bbl) | $25.58 | $29.65 | | Realized Prices (incl. cash settlements) | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Oil ($/Bbl) | $62.97 | $69.15 | | NGL ($/Bbl) | $17.82 | $21.93 | | Gas ($/Mcf) | $1.56 | $2.48 | | **Total ($/Boe)** | **$36.30** | **$42.45** | [Asset Margins](index=9&type=section&id=Asset%20Margins) Q2 2025 total field-level cash margin per Boe was $23.68, down from Q1, with Eagle Ford at $35.84/Boe and Delaware Basin at $24.58/Boe | Field-Level Cash Margin per Boe | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Delaware Basin | $24.58 | $31.13 | | Rockies | $21.45 | $29.01 | | Eagle Ford | $35.84 | $37.98 | | Anadarko Basin | $14.85 | $19.13 | | **Devon - Total** | **$23.68** | **$30.16** | Non-GAAP Measures [Core Earnings](index=10&type=section&id=Core%20Earnings) Q2 2025 core earnings (non-GAAP) were $536 million ($0.84 per diluted share), adjusted from GAAP net earnings by excluding specific gains | Core Earnings Reconciliation (Q2 2025) | Amount (in millions) | Per Share | | :--- | :--- | :--- | | **Earnings (GAAP)** | **$899** | **$1.41** | | Asset dispositions | $(239) | $(0.38) | | Fair value changes in financial instruments | $(133) | $(0.21) | | Other adjustments | $9 | $0.02 | | **Core Earnings (Non-GAAP)** | **$536** | **$0.84** | [EBITDAX, Net Debt and Net Debt-to-EBITDAX](index=11&type=section&id=EBITDAX%2C%20Net%20Debt%20and%20Net%20Debt-to-EBITDAX) Q2 2025 EBITDAX was $1.77 billion, net debt decreased to $7.12 billion, and the net debt-to-EBITDAX ratio improved to 0.9x on a trailing twelve-month basis - EBITDAX (Non-GAAP) for Q2 2025 was **$1,768 million**, compared to **$2,086 million** in Q1 2025 and **$1,964 million** in Q2 2024[26](index=26&type=chunk) | Net Debt & Leverage | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Total Debt (GAAP) | $8,878 M | $8,880 M | | Less: Cash | $(1,759) M | $(1,234) M | | **Net Debt (Non-GAAP)** | **$7,119 M** | **$7,646 M** | | TTM EBITDAX (Non-GAAP) | $7,838 M | $8,034 M | | **Net Debt-to-EBITDAX (Non-GAAP)** | **0.9x** | **1.0x** | [Free Cash Flow, Adjusted Free Cash Flow and Reinvestment Rate](index=12&type=section&id=Free%20Cash%20Flow%2C%20Adjusted%20Free%20Cash%20Flow%20and%20Reinvestment%20Rate) Q2 2025 free cash flow (non-GAAP) was $589 million, adjusted free cash flow was $463 million, and the reinvestment rate was 61% | Cash Flow Metrics (Q2 2025) | Amount (in millions) | | :--- | :--- | | Total Operating Cash Flow (GAAP) | $1,545 | | Less: Capital Expenditures | $(956) | | **Free Cash Flow (Non-GAAP)** | **$589** | - Adjusted free cash flow (Non-GAAP) was **$463 million** in Q2 2025, compared to **$853 million** in Q1 2025[34](index=34&type=chunk) - The reinvestment rate (Non-GAAP) for Q2 2025 was **61%**, up from **50%** in Q1 2025[36](index=36&type=chunk) Forward-Looking Information [Third-Quarter and Full-Year 2025 Guidance](index=13&type=section&id=Third-Quarter%20and%20Full-Year%202025%20Guidance) Devon projects Q3 and full-year 2025 total oil equivalent production between 825-847 MBoe/d and total capital expenditures between $870 million and $3.8 billion | Full-Year 2025 Guidance | Low | High | | :--- | :--- | :--- | | Total Production (MBoe/d) | 825 | 842 | | Total Capital ($ millions) | $3,600 | $3,800 | - Full-year 2025 price realization guidance expects oil to be **95-99%** of WTI, NGLs to be **28-32%** of WTI, and natural gas to be **50-55%** of Henry Hub[39](index=39&type=chunk) - Full-year 2025 guidance for DD&A is projected at **$3,575-$3,675 million**, and G&A expenses are expected to be between **$450-$490 million**[40](index=40&type=chunk) [2025 & 2026 Hedging Positions](index=14&type=section&id=2025%20%26%202026%20Hedging%20Positions) Devon holds significant 2025-2026 hedging positions, including 105,000 Bbls/d of oil with price collars and 302,000 MMBtu/d of natural gas with price swaps - For the second half of 2025, Devon has hedged **105,000 Bbls/d** of oil production using price collars with a weighted average floor of **$66.35/Bbl** and a ceiling of **$75.36/Bbl**[42](index=42&type=chunk) - Natural gas hedges for Q3 2025 cover **302,000 MMBtu/d** via price swaps at a weighted average price of **$3.40/MMBtu** and an additional **170,000 MMBtu/d** in collars[44](index=44&type=chunk) - The company has also entered into basis swaps to manage regional price differentials, including **63,000 Bbls/d** at Midland Sweet and **200,000 MMBtu/d** at WAHA for the remainder of 2025[43](index=43&type=chunk)[45](index=45&type=chunk)

Core Viewpoint - Devon Energy Corp. reported its financial and operational results for the second quarter of 2025, declared its quarterly dividend, and provided an updated outlook for the year [1]. Financial Results - The company’s second-quarter earnings release, supplemental financial tables, guidance, and related earnings presentation are available on its Investor Relations website [1]. Conference Call - A conference call to discuss the second-quarter results will take place on August 6, 2025, at 10:00 a.m. Central time, primarily for analyst and investor questions [2]. Company Overview - Devon Energy is a leading oil and gas producer in the U.S., with a diversified multi-basin portfolio, particularly noted for its strong position in the Delaware Basin [3]. - The company employs a disciplined cash-return business model aimed at achieving strong returns, generating free cash flow, and returning capital to shareholders while maintaining safe and sustainable operations [3].

Core Viewpoint - Devon Energy Corporation (DVN) is anticipated to show an increase in revenue but a decrease in earnings for the second quarter of 2025, with a negative earnings surprise of 4.72% reported in the previous quarter [1]. Factors Influencing Q2 Earnings - Strong production from a diverse multi-basin portfolio, especially the Delaware Basin, is expected to support solid second-quarter results [2]. - The company has hedged its second-quarter production to mitigate market volatility in oil, natural gas liquids (NGL), and natural gas prices, providing stability to earnings [2]. - A disciplined approach to cost management has kept operating expenses in check, while robust cash flow generation has supported share repurchase efforts, likely boosting quarterly earnings [3]. - Restructuring NGL contracts and enhancing downstream oil realizations through expanded access to export markets are expected to positively impact earnings [4]. Q2 Expectations - Devon Energy expects second-quarter production volume to be between 810,000 and 828,000 barrels of oil equivalents per day (Mboe/d), with a Zacks Consensus Estimate of 817.7 Mboe/d, indicating a year-over-year growth of 15.7% [5]. - The Zacks Consensus Estimate for second-quarter revenues is $4.01 billion, reflecting a growth of 2.46% from the previous year [5]. - The consensus estimate for earnings is 83 cents per share, indicating a decline of 41.13% from the year-ago figure [6]. Earnings Prediction Model - The model does not predict a likely earnings beat for DVN this quarter, as it has an Earnings ESP of 0.00% and a Zacks Rank of 3 (Hold) [7][8]. Summary of Expectations - Devon Energy anticipates Q2 revenues of $4.01 billion, up 2.46%, but expects EPS to drop 41.13% to 83 cents, supported by strong output from the Delaware Basin and cost discipline [10]. - The company is working on restructuring NGL contracts and expanding export capabilities to enhance pricing and downstream margins [10].

Industry Overview - The Zacks Oil and Gas Exploration and Production – United States industry is crucial to the U.S. energy framework, focusing on identifying and extracting oil and gas reserves [2] - The U.S. is a leading global producer of oil and natural gas, with significant production areas including the Permian Basin and Eagle Ford [2] - Innovations like hydraulic fracturing and horizontal drilling have significantly boosted domestic production, reducing reliance on imports [2] Environmental and Regulatory Challenges - The industry is facing increasing environmental challenges, stricter regulations, and a global shift towards renewable energy [3] - Volatile commodity prices impact investment decisions and operational strategies [3] - U.S. E&P companies are enhancing efficiency, reducing emissions, and adopting sustainable practices to remain competitive [3] Company Profiles Devon Energy Corporation (DVN) - Devon Energy is recognized as a top-tier U.S. onshore oil and gas producer with a diversified asset base and strong capital management [4] - The company consistently generates robust free cash flow and engages in shareholder-friendly initiatives, including a variable dividend program [4] - Devon's low-cost operating structure and strong balance sheet position it well to benefit from ongoing hydrocarbon demand [4] - The Zacks Consensus Estimate indicates a year-over-year earnings decline of 14.11% for 2025, with a modest growth of 2.09% for 2026 [7] - Devon's current ROE is 21.9%, outperforming both Diamondback Energy and the industry average of 16.74% [13] - The company plans to invest between $3.7 billion and $3.9 billion in capital expenditures for 2025 [19] - Devon Energy trades at a lower EV/EBITDA of 3.6X compared to Diamondback's 6.84X [16] Diamondback Energy Inc. (FANG) - Diamondback Energy is a low-cost operator in the Permian Basin, focusing on capital discipline and shareholder value [5] - The company has high-margin assets and consistently produces strong free cash flow [5] - The Zacks Consensus Estimate indicates a year-over-year earnings decline of 19.19% for 2025 and 12.63% for 2026 [10] - Diamondback's current ROE is 11.22%, which is lower than Devon's [13] - The company has reduced its 2025 capital budget by $400 million, resulting in a total investment range of $3.4 billion to $3.8 billion [19] Financial Metrics Comparison - Devon Energy's dividend yield is 2.88%, while Diamondback Energy's is 2.75%, both exceeding the S&P 500's yield of 1.46% [12] - Devon has a debt to capital ratio of 36.24%, compared to Diamondback's 23.74% [14] - Devon's liquidity ratio is 1.08, indicating sufficient liquidity to meet near-term obligations, while Diamondback's is 0.86 [14] Conclusion - Devon Energy is favored due to its multi-basin portfolio, cheaper valuation, higher dividend yield, and better ROE compared to Diamondback Energy [21]