Devon Energy(DVN) - 2025 Q2 - Quarterly Results

Financial Statements Consolidated Statements of Earnings 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 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] | 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] - Total income tax expense for Q2 2025 was $244 million, comprised of $226 million in current expense and $18 million in deferred expense[7] Consolidated Balance Sheets 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 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] Operational and Financial Metrics 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] Capital Expenditures 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][13] - 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] Realized Pricing 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 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 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 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] | 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 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] - The reinvestment rate (Non-GAAP) for Q2 2025 was 61%, up from 50% in Q1 2025[36] Forward-Looking Information Third-Quarter and Full-Year 2025 Guidance 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] - 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] 2025 & 2026 Hedging Positions 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] - 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] - 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][45]