Devon Energy Reports Third-Quarter 2018 Results

Devon Energy Corp. (NYSE: DVN) today reported operational and financial results for the third quarter of 2018. Also included within the release is the companys guidance outlook for the fourth quarter of 2018.

Devon continued to execute at a high level on its U.S.-focused growth initiatives, said Dave Hager, president and CEO. Our third-quarter performance was highlighted by improving well productivity and capital efficiency that drove U.S. production above the high end of guidance with a total capital investment well below forecast. Furthermore, our unwavering commitment to capital discipline allowed us to comfortably fund our drilling programs and generate free cash flow in the quarter.

In addition to our strong operational and financial results, we also made significant progress building per-share value through our industry-leading $4 billion share-repurchase program, Hager said. Given the value proposition of our current share price, we opportunistically accelerated the buyback of our shares and are on track to repurchase approximately 20 percent of the companys outstanding shares by the time we complete the program in the first quarter of 2019.

Delaware Basin and Eagle Ford Drive U.S. Production Outperformance

Devons total companywide production averaged 522,000 oil-equivalent barrels (Boe) per day in the third quarter. With the companys capital programs focused on expanding higher-margin production, oil and natural gas liquids (NGLs) volumes increased to 67 percent of the product mix.

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Third-quarter production was highlighted by results from Devons U.S. resource plays, which are attaining the highest returns in the companys portfolio. U.S. production averaged 418,000 Boe per day in the quarter, exceeding the companys third-quarter guidance range, adjusted for asset sales, of 398,000 to 417,000 Boe per day.

Within Devons diversified U.S. portfolio, the strongest asset-level performance was achieved by the companys Delaware Basin operations in southeast New Mexico. Oil production from this world-class asset increased 45 percent year over year, driving volumes in the Delaware to 79,000 Boe per day. A key driver of growth was seven prolific Wolfcamp wells around the state-line area that averaged initial 30-day rates of 4,000 Boe per day per well.

Devons Eagle Ford assets in south Texas also delivered strong results, with production advancing 12 percent compared to the second quarter of 2018. The growth was driven by 20 high-rate wells brought online during the quarter that averaged initial 30-day rates of approximately 3,000 Boe per day per well.

With the strong well productivity Devon has achieved year to date in the U.S., light-oil production growth from retained assets is on track to advance 17 percent in 2018. This growth rate is trending at approximately 200 basis points above the companys original budget expectations, adjusted for asset sales.

For additional details on Devons E&P operations and preliminary 2019 outlook, please refer to the companys third-quarter 2018 operations report at www.devonenergy.com.

Capital Spending Below Q3 Guidance; No Change to 2018 Outlook

In addition to the strong U.S. production performance, the company maintained discipline with its capital program. Devons upstream capital spending was $523 million in the third quarter, which was $52 million, or 9 percent below the companys midpoint guidance.

For the full year, Devon has made no modifications to its capital outlook and expects its upstream capital spending to be approximately $2.4 billion in 2018.

Premium Gulf Coast Pricing Drives Upstream Revenue Higher

Devons upstream revenue, excluding commodity derivatives, totaled $1.6 billion in the third quarter, a 29 percent improvement compared to the year-ago quarter. Contributing factors to revenue growth were higher commodity price realizations and growth in higher-margin, liquids production.

Revenue associated with NGLs production delivered the highest growth, advancing 134 percent year over year. The companys NGLs volumes are benefitting from direct access to premium Mont Belvieu pricing through fixed, low-cost transportation and fractionation agreements.

Also contributing to higher revenues were firm transport and marketing agreements that provide the majority of Devons U.S. oil production direct access to advantaged Gulf Coast pricing. Combined with price protection provided by regional basis swaps, oil realizations in the U.S. averaged approximately 97 percent of the West Texas Intermediate (WTI) benchmark.

The companys heavy-oil business in Canada continues to benefit from Western Canadian Select (WCS) basis swaps on approximately 50 percent of its estimated oil production in 2018. These attractive WCS basis swaps are locked in at $15 off WTI pricing and have generated cash settlements of $193 million year to date.

Operating Costs Improve and Field-Level Margins Expand

Devons largest field-level cost, lease operating expense and transportation, totaled $453 million, or $9.45 per Boe in the third quarter. This represents a $40 million improvement compared to the previous quarter and was 2 percent below guidance. The field-level cost savings were achieved in both the U.S. and Canada.

The improving operating costs coupled with the benefits of improved price realizations and higher-margin liquids production resulted in margin expansion for Devon. Field-level cash margin reached $22 per Boe in the third quarter, a 34 percent increase compared to the year-ago period. Field-level cash margin is computed as upstream revenues, excluding commodity derivatives, less production expenses with the result divided by oil-equivalent production volumes.

Corporate Cost Savings Initiatives Enhancing Profitability

Further enhancing Devons profitability is its improving general and administrative (G&A) cost structure. G&A expenses totaled $147 million in the third quarter, which was below the low end of guidance and represents a 13 percent improvement compared to the third quarter of 2017. The lower overhead costs were driven by reduced personnel expenses.

With the retirement of $828 million of debt year to date, the company expects to reduce net financing costs by $66 million on an annual basis. With reduced debt balances, Devons net borrowing costs (net financing costs plus capitalized interest) improved 17 percent year over year to $81 million.

The aforementioned cost savings, combined with the financial benefits related to the sale of EnLink Midstream, position Devons go-forward G&A and interest expense to improve by approximately $475 million annually.

Earnings Exceeds Wall Street Consensus

The company reported net earnings attributable to Devon of $2.5 billion or $5.14 per diluted share in the third quarter. Adjusting for items securities analysts typically exclude from their published estimates, the companys core earnings totaled $324 million or $0.65 per diluted share, exceeding the consensus estimates of analysts.

With the closing of the EnLink transaction, EnLinks financial results are no longer consolidated with Devons upstream business, and historical results related to EnLink are presented as discontinued operations in the companys consolidated financial statements.

Operating Cash Flow Increases 61 Percent; Free Cash Flow Reaches $249 Million

Devons operating cash flow from continuing operations totaled $807 million in the third quarter, a 61 percent increase compared to the same period a year ago. This level of operating cash flow fully funded the companys total capital investments and generated $249 million of free cash flow in the quarter.

The company also generated additional cash inflows through its ongoing divestiture activity. With the closing of the EnLink transaction in July, asset sale proceeds exceeded $3 billion in the third quarter. To date, total proceeds from Devons divestiture program have now reached $4.7 billion, and the company expects to achieve its $5 billion divestiture target around year-end.

Industry-Leading $4 Billion Share-Repurchase Program Advances

The companys $4 billion share-repurchase authorization represents the largest in the upstream industry when measured as a percentage of market capitalization. To date, Devon has repurchased 67 million shares, or nearly 13 percent of outstanding shares, at a total cost of approximately $2.7 billion. The company expects to complete its $4 billion share-repurchase program during the first quarter of 2019.

Devon exited the third quarter with $3.1 billion of cash on hand and an undrawn credit facility of $3 billion. Devon has a debt balance of $6.0 billion and no significant debt maturities until mid-2021. Overall, Devons financial position remains exceptionally strong, with investment-grade credit ratings and excellent liquidity.

Conference Call Webcast and Supplemental Earnings Materials

Also provided with todays release is the companys detailed operations report that is available on the companys website at www.devonenergy.com. The companys third-quarter conference call will be held at 10 a.m. Central (11 a.m. Eastern) on Wednesday, Nov. 7, 2018, and will serve primarily as a forum for analyst and investor questions and answers.

Non-GAAP Disclosures

This release may include non-GAAP (generally accepted accounting principles) financial measures. Such non-GAAP measures are not alternatives to GAAP measures, and you should not consider these non-GAAP measures in isolation or as a substitute for analysis of our results as reported under GAAP. Reconciliations of these non-GAAP measures and other disclosures are provided below in this release.

Forward-Looking Statements

This release includes “forward-looking statements” as defined by the Securities and Exchange Commission (SEC). Such statements include those concerning strategic plans, expectations and objectives for future operations, and are often identified by use of the words expects, believes, will, would, could, forecasts, projections, estimates, plans, expectations, targets, opportunities, potential, anticipates, outlook and other similar terminology. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the company expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company. Statements regarding our business and operations are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to: the volatility of oil, gas and NGL prices; uncertainties inherent in estimating oil, gas and NGL reserves; the extent to which we are successful in acquiring and discovering additional reserves; the uncertainties, costs and risks involved in oil and gas operations; regulatory restrictions, compliance costs and other risks relating to governmental regulation, including with respect to environmental matters; risks related to our hedging activities; counterparty credit risks; risks relating to our indebtedness; cyberattack risks; our limited control over third parties who operate our oil and gas properties; midstream capacity constraints and potential interruptions in production; the extent to which insurance covers any losses we may experience; competition for leases, materials, people and capital; our ability to successfully complete mergers, acquisitions and divestitures; and any of the other risks and uncertainties identified in our Form 10-K and our other filings with the SEC. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this release are made as of the date of this release, even if subsequently made available by Devon on its website or otherwise. Devon does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise. The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC’s definitions for such terms, and price and cost sensitivities for such reserves, and prohibits disclosure of resources that do not constitute such reserves.┬áThis release may contain certain terms, such as resource potential, potential locations, risked and unrisked locations, estimated ultimate recovery (or EUR), exploration target size and other similar terms.┬áThese estimates are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being actually realized. The SEC guidelines strictly prohibit us from including these estimates in filings with the SEC. Investors are urged to consider closely the disclosure in our Form 10-K, available at www.devonenergy.com. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or from the SECs website at www.sec.gov.

About Devon Energy

Devon Energy is a leading independent energy company engaged in finding and producing oil and natural gas. Based in Oklahoma City and included in the S&P 500, Devon operates in several of the most prolific oil and natural gas plays in the U.S. and Canada with an emphasis on achieving strong returns and capital-efficient cash-flow growth. For more information, please visit www.devonenergy.com.

DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
PRODUCTION NET OF ROYALTIES
Quarter EndedNine Months Ended
September 30,September 30,
2018201720182017
Oil and bitumen (MBbls/d)
U. S.125101121106
Heavy Oil102121113127
Retained assets227222234233
U.S. divested assets811911
Total235233243244
Natural gas liquids (MBbls/d)
U. S.107829784
U.S. divested assets612912
Total1139410696
Gas (MMcf/d)
U. S.990967966966
Heavy Oil11161217
Retained assets1,001983978983
U.S. divested assets45218139229
Total1,0461,2011,1171,212
Total oil equivalent (MBoe/d)
U. S.396343379349
Heavy Oil104124115130
Retained assets500467494479
U.S. divested assets22604263
Total522527536542
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
PRODUCTION TREND
20172018
Quarter 3Quarter 4Quarter 1Quarter 2Quarter 3
Oil and bitumen (MBbls/d)
STACK2629343429
Delaware Basin3030344544
Rockies Oil912151315
Heavy Oil121132129109102
Eagle Ford2827232831
Barnett Shale1
Other76676
Retained assets222236241236227
U.S. divested assets11101098
Total233246251245235
Natural gas liquids (MBbls/d)
STACK3134353740
Delaware Basin1012111519
Rockies Oil11112
Eagle Ford121381315
Barnett Shale2633293130
Other22111
Retained assets82958598107
U.S. divested assets121112116
Total9410697109113
Gas (MMcf/d)
STACK304307324329337
Delaware Basin86849394103
Rockies Oil68121318
Heavy Oil1615121211
Eagle Ford8687637484
Barnett Shale484453458447447
Other11111
Retained assets9839559639701,001
U.S. divested assets21822021415845
Total1,2011,1751,1771,1281,046
Total oil equivalent (MBoe/d)
STACK108114123125126
Delaware Basin5557617679
Rockies Oil1114181619
Heavy Oil124134131111104
Eagle Ford5455415460
Barnett Shale107109105105105
Other87787
Retained assets467490486495500
U.S. divested assets6058584622
Total527548544541522
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
BENCHMARK PRICES
(average prices)Quarter 3September YTD
2018201720182017
Oil ($/Bbl) – West Texas Intermediate (Cushing)$69.60$48.14$66.79$49.48
Natural Gas ($/Mcf) – Henry Hub$2.91$2.99$2.90$3.17
REALIZED PRICESQuarter Ended September 30, 2018
Oil /BitumenNGLGasTotal
(Per Bbl)(Per Bbl)(Per Mcf)(Per Boe)
United States$64.80$29.59$2.19$34.06
Canada$31.77N/MN/M$31.24
Realized price without hedges$50.47$29.59$2.19$33.50
Cash settlements$(3.04)$(2.50)$0.01$(1.89)
Realized price, including cash settlements$47.43$27.09$2.20$31.61
Quarter Ended September 30, 2017
Oil /BitumenNGLGasTotal
(Per Bbl)(Per Bbl)(Per Mcf)(Per Boe)
United States$47.12$15.15$2.45$23.85
Canada$32.25N/MN/M$31.59
Realized price without hedges$39.36$15.15$2.45$25.67
Cash settlements$0.54$(0.03)$0.12$0.52
Realized price, including cash settlements$39.90$15.12$2.57$26.19
Nine Months Ended September 30, 2018
Oil /BitumenNGLGasTotal
(Per Bbl)(Per Bbl)(Per Mcf)(Per Boe)
United States$64.09$25.60$2.21$32.16
Canada$27.22N/MN/M$26.79
Realized price without hedges$46.95$25.60$2.21$31.00
Cash settlements$(2.97)$(1.62)$0.10$(1.44)
Realized price, including cash settlements$43.98$23.98$2.31$29.56
Nine Months Ended September 30, 2017
Oil /BitumenNGLGasTotal
(Per Bbl)(Per Bbl)(Per Mcf)(Per Boe)
United States$47.84$14.62$2.54$24.44
Canada$29.10N/MN/M$28.50
Realized price without hedges$38.08$14.62$2.54$25.41
Cash settlements$0.45$(0.02)$0.05$0.29
Realized price, including cash settlements$38.53$14.60$2.59$25.70
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except per share amounts)Quarter EndedNine Months Ended
September 30,September 30,
2018201720182017
Upstream revenues$1,332$1,101$3,720$3,974
Marketing revenues1,2478323,3062,524
Total revenues2,5791,9337,0266,498
Production expenses5544481,6691,360
Exploration expenses3257133209
Marketing expenses1,2178433,2502,571
Depreciation, depletion and amortization4163701,2351,139
Asset impairments2156
Asset dispositions(6)(170)5(200)
General and administrative expenses147170499546
Financing costs, net7578524238
Restructuring and transaction costs11105
Other expenses(31)(70)14(92)
Total expenses2,4171,7267,5905,771
Earnings (loss) from continuing operations before income taxes162207(564)727
Income tax expense (benefit)(138)13(179)13
Net earnings (loss) from continuing operations300194(385)714
Net earnings from discontinued operations, net of income tax expense2,263182,46060
Net earnings2,5632122,075774
Net earnings attributable to noncontrolling interests261916059
Net earnings attributable to Devon$2,537$193$1,915$715
Basic net earnings (loss) per share:
Basic earnings (loss) from continuing operations per share$0.61$0.37$(0.76)$1.36
Basic earnings from discontinued operations per share4.564.50
Basic net earnings per share$5.17$0.37$3.74$1.36
Diluted net earnings (loss) per share:
Diluted earnings (loss) from continuing operations per share$0.61$0.37$(0.76)$1.35
Diluted earnings from discontinued operations per share4.534.47
Diluted net earnings per share$5.14$0.37$3.71$1.35
Weighted average common shares outstanding:
Basic491526513525
Diluted494529516528
UPSTREAM REVENUES
(in millions)Quarter EndedNine Months Ended
September 30,September 30,
2018201720182017
Oil, gas and NGL sales$1,608$1,245$4,534$3,760
Derivative cash settlements(91)24(211)43
Derivative valuation changes(185)(168)(603)171
Upstream revenues$1,332$1,101$3,720$3,974
PRODUCTION EXPENSES
(in millions)Quarter EndedNine Months Ended
September 30,September 30,
2018201720182017
Lease operating expense$234$229$744$691
Gathering, processing & transportation219162671485
Production taxes8246208142
Property taxes19114642
Production expense$554$448$1,669$1,360
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)Quarter EndedNine Months Ended
September 30,September 30,
2018201720182017
Cash flows from operating activities:
Net earnings$2,563$212$2,075$774

Adjustments to reconcile net earnings to net cash from operating activities:

Earnings from discontinued operations, net of tax(2,263)(18)(2,460)(60)
Depreciation, depletion and amortization4163701,2351,139
Asset impairments2156
Leasehold impairments15167680
Accretion on discounted liabilities15154647
Total (gains) losses on commodity derivatives276144814(214)
Cash settlements on commodity derivatives(91)24(211)43
(Gains) losses on asset dispositions(6)(170)5(200)
Deferred income tax benefit(114)(25)(132)(57)
Share-based compensation3133127114
Early retirement of debt312
Total (gains) losses on foreign exchange(28)(74)53(138)
Settlements of intercompany foreign denominated assets/liabilities(243)10
Other42(14)(8)(3)
Changes in assets and liabilities, net(51)(12)(159)121
Net cash from operating activities – continuing operations8075011,6861,656
Cash flows from investing activities:
Capital expenditures(598)(467)(1,851)(1,298)
Acquisitions of property and equipment(19)(6)(35)(39)
Divestitures of property and equipment89280696387
Net cash from investing activities – continuing operations(528)(193)(1,190)(950)
Cash flows from financing activities:
Repayments of long-term debt principal(21)(828)
Early retirement of debt(304)
Repurchases of common stock(1,698)(2,197)
Dividends paid on common stock(38)(30)(112)(95)
Shares exchanged for tax withholdings(3)(1)(47)(57)
Net cash from financing activities – continuing operations(1,760)(31)(3,488)(152)
Effect of exchange rate changes on cash:
Settlements of intercompany foreign denominated assets/liabilities243(10)
Other1012(21)22
Total effect of exchange rate changes on cash – continuing operations101222212
Net change in cash, cash equivalents and restricted cash of continuing operations(1,471)289(2,770)566
Cash flows from discontinued operations:
Operating activities46200476528
Investing activities2,950(191)2,548(475)
Financing activities71187183276
Net change in cash, cash equivalents and restricted cash of discontinued operations3,0671963,207329
Net change in cash, cash equivalents and restricted cash1,596485437895
Cash, cash equivalents and restricted cash at beginning of period1,5252,3692,6841,959
Cash, cash equivalents and restricted cash at end of period$3,121$2,854$3,121$2,854
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$3,102$2,639$3,102$2,639
Restricted cash included in other current assets19731973
Cash and cash equivalents included in current assets held for sale142142
Total cash, cash equivalents and restricted cash$3,121$2,854$3,121$2,854
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(in millions)September 30,December 31,
20182017
Current assets:
Cash and cash equivalents$3,102$2,642
Accounts receivable1,226989
Current assets held for sale760
Other current assets429400
Total current assets4,7574,791
Oil and gas property and equipment, based on successful efforts accounting, net13,05613,318
Other property and equipment, net1,1461,266
Total property and equipment, net14,20214,584
Goodwill841841
Other long-term assets372296
Long-term assets held for sale9,729
Total assets$20,172$30,241
Current liabilities:
Accounts payable$777$633
Revenues and royalties payable947748
Short-term debt257115
Current liabilities held for sale991
Other current liabilities1,243828
Total current liabilities3,2243,315
Long-term debt5,7916,749
Asset retirement obligations1,1031,099
Other long-term liabilities613549
Long-term liabilities held for sale3,936
Deferred income taxes543489
Equity:
Common stock4753
Additional paid-in capital5,2177,333
Retained earnings2,505702
Accumulated other comprehensive earnings1,1641,166
Treasury stock, at cost, 0.9 million shares in 2018(35)
Total stockholders equity attributable to Devon8,8989,254
Noncontrolling interests4,850
Total equity8,89814,104
Total liabilities and equity$20,172$30,241
Common shares outstanding474525
CAPITAL EXPENDITURES
(in millions)Quarter EndedNine Months Ended
September 30, 2018September 30, 2018
Upstream capital$523$1,794
Land and other acquisitions2239
Exploration and production (E&P) capital5451,833
Capitalized interest641
Other730
Devon capital expenditures$558$1,904
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION

NON-GAAP FINANCIAL MEASURES

This press release includes non-GAAP financial measures. These non-GAAP measures are not alternatives to GAAP measures, and you should not consider these non-GAAP measures in isolation or as a substitute for analysis of our results as reported under GAAP. Below is additional disclosure regarding each of the non-GAAP measures used in this press release, including reconciliations to their most directly comparable GAAP measure.

CORE EARNINGS

Devons reported net earnings include items of income and expense that are typically excluded by securities analysts in their published estimates of the companys financial results. Accordingly, the company also uses the measures of core earnings and core earnings per share attributable to Devon. Devon believes these non-GAAP measures facilitate comparisons of its performance to earnings estimates published by securities analysts. Devon also believes these non-GAAP measures can facilitate comparisons of its performance between periods and to the performance of its peers. The following table summarizes the effects of these items on third-quarter 2018 earnings.

(in millions, except per share amounts)Quarter Ended September 30, 2018
Before-taxAfter-tax

After Noncontrolling Interests

Per Diluted Share
Continuing Operations
Earnings attributable to Devon (GAAP)$162$300$300$0.61
Adjustments:
Asset dispositions(6)(5)(5)(0.01)
Asset and exploration impairments2017170.03
Deferred tax asset valuation allowance(130)(130)(0.27)
Fair value changes in financial instruments and foreign currency1581191190.25
Restructuring and transaction costs11880.02
Core earnings attributable to Devon (Non-GAAP)$345$309$309$0.63
Discontinued Operations
Earnings attributable to Devon (GAAP)$2,650$2,263$2,237$4.53
Adjustments:
Gain on sale of EnLink and the General Partner(2,607)(2,222)(2,222)(4.51)
Core earnings attributable to Devon (Non-GAAP)$43$41$15$0.02
Total
Earnings attributable to Devon (GAAP)$2,812$2,563$2,537$5.14
Adjustments:
Continuing Operations183990.02
Discontinued Operations(2,607)(2,222)(2,222)(4.51)
Core earnings attributable to Devon (Non-GAAP)$388$350$324$0.65

NET DEBT

Devon defines net debt as debt less cash and cash equivalents. Devon believes that netting these sources of cash against debt provides a clearer picture of the future demands on cash from Devon to repay debt.

(in millions)
September 30, 2018
Total debt (GAAP)$6,048
Less cash and cash equivalents(3,102)
Net debt (Non-GAAP)$2,946
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION

FREE CASH FLOW

Devon defines free cash flow as operating cash flow from continuing operations less capital expenditures. Devon believes that free cash flow provides a useful measure of available cash generated by operating activities for other investing and financing activities.

(in millions)Quarter Ended

September 30, 2018

Operating cash flow from continuing operations$807
Less capital expenditures:
Upstream capital(523)
Land and other acquisitions(22)
Capitalized interest(6)
Other(7)
Free cash flow$249
DEVON ENERGY CORPORATION
FORWARD LOOKING GUIDANCE
PRODUCTION GUIDANCE
Quarter 4
LowHigh
Oil and bitumen (MBbls/d)
U.S.127131
Heavy Oil(1)

110

(1)

115

(1)

Retained assets237246
U.S. divested assets68
Total243254
Natural gas liquids (MBbls/d)
Retained assets106110
U.S. divested assets35
Total109115
Gas (MMcf/d)
U.S.9501,000
Heavy Oil510
Retained assets9551,010
U.S. divested assets2535
Total9801,045
Total oil equivalent (MBoe/d)
U.S.391408
Heavy Oil111116
Retained assets502524
U.S. divested assets1319
Total515543
(1) Guidance assumes Jackfish complex curtailments continue throughout December
PRICE REALIZATIONS GUIDANCE
Quarter 4
LowHigh
Oil and bitumen – % of WTI
U.S.90%100%
Canada10%20%
NGL – realized price$23$28
Natural gas – % of Henry Hub70%80%
OTHER GUIDANCE ITEMS
Quarter 4
($ millions, except Boe and %)LowHigh
Marketing & midstream operating profit$20$30
LOE & GP&T per BOE$9.50$9.75
Production & Property Tax$85$95
Exploration expenses$25$35
Depreciation, depletion and amortization$420$460
General & administrative expenses$140$160
Financing costs, net$75$85
Other expenses$15$20
Current income tax rate0%5%
Deferred income tax rate20%25%
Total income tax rate20%30%
Average basic share count outstanding (MM)450460
CAPITAL EXPENDITURES GUIDANCE
Quarter 4
(in millions)LowHigh
Upstream capital$550$650
Other515
Devon capital expenditures$555$665
DEVON ENERGY CORPORATION
FORWARD LOOKING GUIDANCE
Oil Commodity Hedges
Price SwapsPrice Collars
PeriodVolume (Bbls/d)

Weighted Average Price ($/Bbl)

Volume (Bbls/d)

Weighted Average Floor Price ($/Bbl)

Weighted Average Ceiling Price ($/Bbl)

Q4 201893,800$58.95110,200$53.95$64.49
Q1-Q4 201957,130$59.7385,904$54.72$64.72
Q1-Q4 20201,740$62.884,973$59.94$69.94
Oil Basis Swaps
Oil Basis SwapsOil Basis Collars
PeriodIndexVolume (Bbls/d)

Weighted Average Differential to WTI ($/Bbl)

Volume (Bbls/d)

Weighted Average Floor Differential to WTI ($/Bbl)

Weighted Average Ceiling Differential to WTI ($/Bbl)

Q4 2018Midland Sweet23,000$(1.02)$$
Q4 2018Argus LLS12,000$3.95$$
Q4 2018Argus MEH16,000$2.84$$
Q4 2018Western Canadian Select62,109$(16.41)1,000$(15.50)$(13.93)
Q1-Q4 2019Midland Sweet28,000$(0.46)$$
Q1-Q4 2019Argus LLS15,000$4.88$$
Q1-Q4 2019Argus MEH16,000$2.84$$
Q1-Q4 2019Western Canadian Select10,647$(23.39)$$
Natural Gas Commodity Hedges – Henry Hub
Price SwapsPrice Collars
PeriodVolume (MMBtu/d)

Weighted Average Price ($/MMBtu)

Volume (MMBtu/d)

Weighted Average Floor Price ($/MMBtu)

Weighted Average Ceiling Price ($/MMBtu)

Q4 2018304,000$2.92267,000$2.76$3.09
Q1-Q4 2019220,129$2.81205,241$2.65$3.03
Q1-Q4 20209,075$2.8114,545$2.66$2.96
Natural Gas Basis Swaps
PeriodIndexVolume (MMBtu/d)

Weighted Average Differential to Henry Hub ($/MMBtu)

Q4 2018Panhandle Eastern Pipe Line120,000$(0.51)
Q4 2018El Paso Natural Gas100,000$(1.25)
Q4 2018Houston Ship Channel110,000$0.01
Q4 2018Transco Zone 430,000$(0.03)
Q1-Q4 2019Panhandle Eastern Pipe Line74,384$(0.75)
Q1-Q4 2019El Paso Natural Gas130,000$(1.46)
Q1-Q4 2019Houston Ship Channel137,637$0.01
Q1-Q4 2019Transco Zone 47,397$(0.03)

Devons oil derivatives settle against the average of the prompt month NYMEX West Texas Intermediate futures price. Devons natural gas derivatives settle against the Inside FERC first of the month Henry Hub index. Commodity hedge positions are shown as of November 1, 2018.

Devon Energy Corporation
Investor Contacts
Scott Coody,
405-552-4735
Chris Carr, 405-228-2496
Media Contact
John
Porretto, 405-228-7506