Devon Energy(US:DVN)2025-08-06 16:00Part I. Financial Information Financial Statements 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 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 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 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 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 stock60 - In Q2 2025, Devon sold its investment in Matterhorn for $372 million, recognizing a pre-tax gain of $307 million66101 - 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 billion121122 - 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 accounts138 Management's Discussion and Analysis of Financial Condition and Results of Operations 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 shareholders157 - 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 2025159 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 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 acquisition184 Capital Resources, Uses and Liquidity 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 covenants224 - The capital expenditures budget for the remainder of 2025 is expected to be approximately $1.7 billion to $1.9 billion230 Quantitative and Qualitative Disclosures About Market Risk 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 million246 - 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 risk247 Controls and Procedures 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, 2025249 - No material changes were made to the internal control over financial reporting during the second quarter of 2025250 Part II. Other Information Legal Proceedings 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 date252 Risk Factors 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 reported255 Unregistered Sales of Equity Securities and Use of Proceeds 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 This section lists the exhibits filed with the Form 10-Q, including management compensation agreements and Sarbanes-Oxley Act certifications