Devon Energy Earns $1.2 Billion in First Quarter 2010; Announces Initiation
of Share Repurchase Plan


    



    
</pre>
<p><span class="xn-location">OKLAHOMA CITY</span>, <span class="xn-chron">May 5</span> /CNW/ -- Devon Energy Corporation (NYSE:   DVN) today reported net earnings of <span class="xn-money">$1.2 billion</span> for the quarter ended <span class="xn-chron">March 31, 2010</span>, or <span class="xn-money">$2.67</span> per common share (<span class="xn-money">$2.66</span> per diluted common share). This compares with a first-quarter 2009 net loss of <span class="xn-money">$4.0 billion</span>, or <span class="xn-money">$8.92</span> per common share (<span class="xn-money">$8.92</span> per diluted common share).</p>
<p/>
<p>Devon also announced today that its board of directors has authorized the repurchase of up to <span class="xn-money">$3.5 billion</span> of the company's common stock. Devon plans to begin purchasing shares immediately. The shares will be acquired in the open market, and the timing of purchases may depend upon market conditions.</p>
<pre>
    

    Earnings of $1.85 per Share Excluding Items Not Estimated by Analysts

    
</pre>
<p>First-quarter 2010 reported net earnings of <span class="xn-money">$1.2 billion</span> were affected by certain items securities analysts typically exclude from their published estimates. Excluding these adjusting items, Devon earned <span class="xn-money">$831 million</span> or <span class="xn-money">$1.85</span> per diluted common share. The most significant of the adjusting items was a non-cash, unrealized gain on oil and natural gas derivative instruments of <span class="xn-money">$524 million</span> pre-tax (<span class="xn-money">$335 million</span> after tax). This and other adjusting items are discussed in more detail later in this release.</p>
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    Gulf of Mexico and International Divestitures Total $9.9 Billion to Date

    
</pre>
<p>In 2009, Devon announced it would divest its Gulf of <span class="xn-location">Mexico</span> and international properties. To date, the company has announced sale agreements for the majority of its divestiture assets with aggregate proceeds totaling <span class="xn-money">$9.9 billion</span>, before taxes. In the first quarter of 2010, Devon closed on the sale of three lower tertiary discoveries in the deepwater Gulf of <span class="xn-location">Mexico</span> receiving <span class="xn-money">$1.3 billion</span> pre-tax. Subsequent to quarter-end, the company closed on the sales of its remaining deepwater Gulf of <span class="xn-location">Mexico</span> properties. Devon has now essentially completed its exit of the deepwater Gulf of <span class="xn-location">Mexico</span>. The company expects to close on the remaining asset sales throughout 2010 and finalize the entire restructuring process by year-end. Devon now estimates the total pre-tax proceeds from the divestitures to exceed <span class="xn-money">$10 billion</span> with after-tax proceeds approximating <span class="xn-money">$8 billion</span>.</p>
<p/>
<p>"With Devon's strategic repositioning nearing completion, we could not be more pleased with the results," said J. <span class="xn-person">Larry Nichols</span>, chairman and chief executive officer. "Devon is emerging with a rock-solid balance sheet, a balanced portfolio of oil and gas projects and one of the lowest cost structures in the peer group. This positions the company to deliver low-risk, profitable, organic production growth on a sustainable basis."</p>
<p/>
<p>In accordance with accounting standards, Devon has reclassified the assets, liabilities and results of its international segment as discontinued operations for all accounting periods presented in this release. Although revenues and expenses for prior periods were reclassified, there was no impact upon previously reported net earnings. Included with this release is a table of revenues, expenses, and production categories and the amounts reclassified as discontinued operations for each period presented.</p>
<p/>
<p>Although Devon is in the process of selling all of its Gulf of <span class="xn-location">Mexico</span> assets, these assets do not qualify as discontinued operations under accounting standards. However, information is provided within this release to enable the reader to isolate results of the company's operations that will be retained following the divestitures.</p>
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    First-Quarter Operating Highlights

    
</pre>
<p>Devon drilled 454 wells in the first quarter of 2010 with a success rate of almost 100 percent. The following are highlights of first-quarter exploration and development activity:</p>
<pre>
    

    --  Gross production from Devon's first Jackfish oil sands project reached
        design capacity of 35,000 barrels per day in the first quarter of
2010.
        Located in Alberta, Jackfish is 100-percent owned by Devon and has an
        estimated 300 million gross barrels of recoverable resource.
    --  Construction for the second Jackfish project remains on schedule and
is
        now over 75-percent complete. Devon expects Jackfish 2, which is also
        sized to produce 35,000 barrels of gross production per day, will
        commence steam injection in the second quarter of 2011. The company
        also expects to file a regulatory application for a third,
        similarly-sized Jackfish project in the third quarter of 2010.
    --  In March, Devon announced it will add to its Canadian oil position by
        acquiring 50 percent of BP's interest in the Kirby oil sands leases
for
        $500 million. The Kirby leasehold lies adjacent to the company's
highly
        successful Jackfish project and has estimated gross recoverable
        resources of up to 1.5 billion barrels. Devon will operate the
project,
        and delineation drilling at Kirby is expected to begin in the second
        half of 2010.
    --  In its emerging Wolfberry oil play in the Permian Basin, the company
        drilled 20 wells and increased net production to approximately 5,000
        barrels per day.
    --  Also in the first quarter, Devon increased its lease position in the
        Cana-Woodford Shale to 180,000 net acres. The company added 16 new
        wells to production in the quarter, increasing average net production
        in the play to 73 million cubic feet of gas equivalent per day.
    --  The company's net production from the Barnett Shale field in north
        Texas averaged 1.1 billion cubic feet of natural gas equivalent per
day
        in the first quarter of 2010. This was five percent greater than
        production in the fourth quarter of 2009.
    --  Devon completed three Haynesville Shale wells within Shelby and
        Nacogdoches counties in the first quarter. Initial 24-hour production
        rates for the three horizontal wells averaged six million cubic feet
of
        gas equivalent. Devon has a 100 percent working interest in the wells.


    Higher Prices Increase Oil and Gas Sales

    
</pre>
<p>Sales of oil, natural gas, and natural gas liquids from continuing operations were <span class="xn-money">$2.1 billion</span> in the first quarter of 2010. Comparable sales for the same period in 2009 were <span class="xn-money">$1.4 billion</span>. This 50 percent increase in sales was attributable to higher realized oil, natural gas, and natural gas liquids pricing.</p>
<p/>
<p>Devon's average realized oil price increased 115 percent in the first quarter of 2010, to <span class="xn-money">$67.58</span> per barrel. This compares with an average realized price of <span class="xn-money">$31.41</span> per barrel in the first quarter of 2009. The company's average realized natural gas price increased 29 percent to <span class="xn-money">$4.80</span> per thousand cubic feet in the first quarter of 2010, as compared to <span class="xn-money">$3.73</span> per thousand cubic feet in the year-ago period.</p>
<p/>
<p>Marketing and midstream operating profit was <span class="xn-money">$133 million</span> in the first quarter of 2010. This was a nine percent decrease compared to the first quarter of 2009. The decrease resulted from lower gas marketing margins partially offset by higher commodity prices.</p>
<pre>
    

    Lower Costs in Most Expense Categories

    
</pre>
<p>First-quarter 2010 expenses in most categories decreased from the first quarter of 2009. Lease operating expenses in the first quarter of 2010 were <span class="xn-money">$414 million</span>, or six percent lower than the year-ago quarter.</p>
<p/>
<p>Taxes other than income taxes increased 13 percent, to <span class="xn-money">$101 million</span> in the first quarter of 2010. This increase was driven by higher production taxes resulting from higher oil and gas revenues.</p>
<p/>
<p>First quarter depreciation, depletion and amortization expense declined by 24 percent in 2010, to <span class="xn-money">$426 million</span>. Unit DD&A was <span class="xn-money">$7.63</span> per Boe in the first quarter of 2010.</p>
<p/>
<p>Devon also reduced costs related to general and administrative expenses (G&A) in the most recent quarter. First-quarter 2010 G&A expense was <span class="xn-money">$138 million</span>, or 16 percent lower than the first quarter of 2009. Operational efficiencies realized through restructuring led to lower G&A expenses for the quarter.</p>
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    Cash Flow Increases 45 Percent; Debt Repayments Further Strengthen Balance
Sheet

    
</pre>
<p>Cash flow before balance sheet changes reached <span class="xn-money">$1.4 billion</span> in the first quarter of 2010, a 45 percent increase over the first quarter of 2009. In addition, Devon received <span class="xn-money">$1.3 billion</span> of pre-tax proceeds from the sale of three lower tertiary discoveries in the deepwater Gulf of <span class="xn-location">Mexico</span>. Devon utilized this cash in the first-quarter to fully fund its capital program and repay <span class="xn-money">$1.2 billion</span> of commercial paper borrowings. The company ended the quarter with cash on hand of <span class="xn-money">$1.2 billion</span> and a net debt to adjusted capitalization ratio of 22 percent. Reconciliations of cash flow before balance sheet changes, net debt and adjusted capitalization, which are non-GAAP measures, are provided in this release.</p>
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    Items Excluded from Published Earnings Estimates

    
</pre>
<p>Devon's reported net earnings include items of income and expense that are typically excluded by securities analysts in their published estimates of the company's financial results. These items and their effects upon reported earnings for the first quarter of 2010 were as follows:</p>
<pre>
    

    Items affecting continuing operations:
    --  A change in the fair value of oil and natural gas derivative
        instruments increased first-quarter earnings by $524 million pre-tax
        ($335 million after tax).
    --  A change in the fair value of other financial instruments decreased
        first-quarter earnings by $1 million pre-tax ($1 million after tax).


    Items affecting discontinued operations:
    --  The decision to divest all international assets generated financial
        benefits that increased first-quarter earnings by $41 million pre-tax
        ($27 million after tax).


    
</pre>
<p>The following tables summarize the effects of these items on first-quarter 2010 earnings, income taxes and cash flow. Included in the tables are the tax effects resulting from oil and gas property divestitures that did not affect net earnings.</p>
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</pre>
<p> </p>
<p> </p>
<p>Summary of Items Typically Excluded by Securities Analysts (in millions)</p>
<p> </p>
<pre>
    
    Continuing Operations - First Quarter 2010                   
                                                                   Cash Flow
                                                                    Before
                                                          After-   Balance
                      Pre-tax       Income Tax Effect      tax      Sheet
                      Earnings      -----------------    Earnings   Changes
                       Effect   Current  Deferred  Total  Effect    Effect
                       -------  -------  --------  -----  ------    ------
    Change in
     fair value
     of oil and
     gas derivative
     instruments         $524       -        189     189      335      -
    Change in
     fair value
     of other
     financial
     instruments           (1)      -          -       -       (1)     -
    Effects of
     oil and gas
     property
     divestitures           -     161       (161)      -        -   (161)
    -------------         ---     ---       ----     ---      ---   ----
         Totals          $523     161         28     189      334   (161)
                         ----     ---        ---     ---      ---    ---



    
</pre>
<p> </p>
<p> </p>
<p>Discontinued Operations - First Quarter  2010             </p>
<p> </p>
<pre>
    
                                                                   Cash Flow
                                                                    Before
                                                          After-    Balance
                      Pre-tax       Income Tax Effect      tax      Sheet
                      Earnings      -----------------    Earnings   Changes
                       Effect   Current  Deferred  Total  Effect    Effect
                       -------  -------  --------  -----  ------    ------
    Financial
     benefits of
     decision to
     divest assets       $41       -       14        14       27       -
    --------------       ---      ---     ---       ---      ---     ---
           Totals        $41       -       14        14       27       -
           ------        ---      ---     ---       ---      ---     ---



    
</pre>
<p>In aggregate, these items increased first-quarter 2010 net earnings by <span class="xn-money">$361 million</span>, or 81 cents per common share (81 cents per diluted share). These items and their associated tax effects decreased first-quarter 2010 cash flow before balance sheet changes by <span class="xn-money">$161 million</span>.</p>
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    Conference Call to be Webcast Today
    
</pre>
<p>Devon will discuss its first-quarter 2010 financial and operating results in a conference call webcast today. The webcast will begin at <span class="xn-chron">10 a.m. Central Time</span> (<span class="xn-chron">11 a.m. Eastern Time</span>). The webcast may be accessed from Devon's internet home page at <a href="http://www.devonenergy.com">www.devonenergy.com</a>.</p>
<p/>
<p>This press release includes "forward-looking statements" as defined by the Securities and Exchange Commission. Such statements are those concerning strategic plans, expectations and objectives for future operations. 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 future drilling and production 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, natural gas and NGL prices; uncertainties inherent in estimating oil, natural gas and NGL reserves; drilling risks; environmental risks; and political or regulatory changes. 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 press release are made as of the date of this press 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.</p>
<p/>
<p>Effective <span class="xn-chron">January 1, 2010</span>, the <span class="xn-location">United States</span> Securities and Exchange Commission 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. This release may contain certain terms, such as resource potential and exploration target size. These 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. U.S. investors are urged to consider closely the disclosure in our Form 10-K for the fiscal year ended <span class="xn-chron">December 31, 2009</span>, available from us at Devon Energy Corporation, Attn. Investor Relations, 20 North Broadway, <span class="xn-location">Oklahoma City</span>, OK 73102. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or from the SEC's website at <a href="http://www.sec.gov">www.sec.gov</a>.</p>
<p/>
<p>Devon Energy Corporation is an Oklahoma City-based independent energy company engaged in oil and gas exploration and production. Devon is a leading U.S.-based independent oil and gas producer and is included in the S&P 500 Index. For more information about Devon, please visit our website at <a href="http://www.devonenergy.com">www.devonenergy.com</a>.</p>
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</pre>
<p> </p>
<p> </p>
<pre>
    
                       DEVON ENERGY CORPORATION
                FINANCIAL AND OPERATIONAL INFORMATION
    
</pre>
<p> </p>
<pre>
    
    PRODUCTION (net of royalties)                Quarter Ended
    Excludes discontinued operations               March 31,
                                                   ---------
                                                 2010          2009
                                                 ----          ----
    Total Period Production
    -----------------------
    Natural Gas (Bcf)
      U.S. Onshore                              165.9         181.1
      Canada                                     50.8          52.7
                                                 ----          ----
      North American Onshore                    216.7         233.8
      U.S. Offshore                               9.8          10.7
                                                  ---          ----
      Total Natural Gas                         226.5         244.5
      -----------------                         -----         -----
    Oil (MMBbls)
      U.S. Onshore                                3.0           3.0
      Canada                                      6.4           6.3
                                                  ---           ---
      North American Onshore                      9.4           9.3
      U.S. Offshore                               1.1           1.1
                                                  ---           ---
      Total Oil                                  10.5          10.4
      ---------                                  ----          ----
    Natural Gas Liquids (MMBbls)
      U.S. Onshore                                6.5           6.2
      Canada                                      0.9           0.9
                                                  ---           ---
      North American Onshore                      7.4           7.1
      U.S. Offshore                               0.2           0.2
                                                  ---           ---
      Total Natural Gas Liquids                   7.6           7.3
      -------------------------                   ---           ---
    Oil Equivalent (MMBoe)
      U.S. Onshore                               37.1          39.3
      Canada                                     15.7          16.1
                                                 ----          ----
      North American Onshore                     52.8          55.4
      U.S. Offshore                               3.0           3.1
                                                  ---           ---
      Total Oil Equivalent                       55.8          58.5
      --------------------                       ----          ----
    Average Daily Production
    ------------------------
    Natural Gas (MMcf)
      U.S. Onshore                            1,842.9       2,011.7
      Canada                                    564.1         585.5
                                                -----         -----
      North American Onshore                  2,407.0       2,597.2
      U.S. Offshore                             109.3         119.4
                                                -----         -----
      Total Natural Gas                       2,516.3       2,716.6
      -----------------                       -------       -------
    Oil (MBbls)
      U.S. Onshore                               33.0          33.0
      Canada                                     70.8          70.5
                                                 ----          ----
      North American Onshore                    103.8         103.5
      U.S. Offshore                              12.9          12.1
                                                 ----          ----
      Total Oil                                 116.7         115.6
      ---------                                 -----         -----
    Natural Gas Liquids (MBbls)
      U.S. Onshore                               72.5          68.7
      Canada                                      9.8          10.5
                                                  ---          ----
      North American Onshore                     82.3          79.2
      U.S. Offshore                               1.9           2.4
                                                  ---           ---
      Total Natural Gas Liquids                  84.2          81.6
      -------------------------                  ----          ----
    Oil Equivalent (MBoe)
      U.S. Onshore                              412.7         437.0
      Canada                                    174.7         178.5
                                                -----         -----
      North American Onshore                    587.4         615.5
      U.S. Offshore                              33.0          34.4
                                                 ----          ----
      Total Oil Equivalent                      620.4         649.9
      --------------------                      -----         -----



    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
    BENCHMARK PRICES                                        Quarter Ended
     (average prices)                                         March 31,
                                                              ---------
                                                          2010          2009
                                                          ----          ----
    Natural Gas ($/Mcf) - Henry Hub                      $5.30         $4.91
    Oil ($/Bbl) - West Texas Intermediate (Cushing)     $78.54        $43.18
    -----------------------------------------------     ------        ------



    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
    Quarter Ended March 31, 2010  Oil    Gas   NGLs   Total
                                  (Per   (Per   (Per   (Per
                                  Bbl)   Mcf)   Bbl)   Boe)
                                 -----  -----  -----  -----
    U.S. Onshore                 $74.81  $4.66 $34.22 $32.81
    Canada                       $62.50  $5.08 $48.95 $44.50
    ------                       ------  ----- ------ ------
    North American Onshore       $66.41  $4.76 $35.98 $36.29
    U.S. Offshore                $76.99  $5.63 $40.59 $51.07
    ----------------------       ------  ----- ------ ------
    Realized price without
     hedges                      $67.58  $4.80 $36.09 $37.07
    Cash settlements                 $-  $0.42     $-  $1.71
    ----------------                ---  -----    ---  -----
    Realized price, including
     cash settlements            $67.58  $5.22 $36.09 $38.78
    -------------------------    ------  ----- ------ ------



    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
    Quarter Ended March 31, 2009  Oil    Gas   NGLs   Total
                                  (Per   (Per   (Per   (Per
                                  Bbl)   Mcf)   Bbl)   Boe)
                                 -----  -----  -----  -----
    U.S. Onshore                 $34.88  $3.43 $17.43 $21.16
    Canada                       $27.89  $4.48 $25.85 $27.21
    ------                       ------  ----- ------ ------
    North American Onshore       $30.12  $3.67 $18.54 $22.92
    U.S. Offshore                $42.38  $5.15 $20.48 $34.21
    ----------------------       ------  ----- ------ ------
    Realized price without
     hedges                      $31.41  $3.73 $18.60 $23.51
    Cash settlements                 $-  $0.48     $-  $2.02
    ----------------                ---  -----    ---  -----
    Realized price, including
     cash settlements            $31.41  $4.21 $18.60 $25.53
    -------------------------    ------  ----- ------ ------




    
</pre>
<p> </p>
<p> </p>
<pre>
    
    CAPITAL EXPENDITURES (in millions)
    Quarter Ended March 31,
     2010
                                   U.S.              U.S.
                                 Onshore  Canada   Offshore  Total
                                --------  ------  ---------  -----
    Capital Expenditures
    --------------------
      Exploration                     $99      81         22   $202
      Development                     563     273        188  1,024
      -----------                     ---     ---        ---  -----
      Exploration and
       development capital           $662     354        210 $1,226
      Capitalized G&A                                            79
      Capitalized interest                                       14
      Midstream capital                                          59
      Other capital                                              25
      -------------                                             ---
    Total Continuing
     Operations                                              $1,403
    ----------------                                         ------
      Discontinued operations                                   170
      -----------------------                                   ---
    Total Operations                                         $1,573
    ----------------                                         ------




    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
    CONSOLIDATED STATEMENTS OF OPERATIONS                    Quarter Ended
     (in millions, except per share amounts)                   March 31,
                                                               ---------
                                                           2010          2009
                                                           ----          ----
    Revenues
    --------
      Oil, gas, and NGL sales                            $2,070        $1,375
      Net gain on oil and gas derivative financial
       instruments                                          620           154
      Marketing and midstream revenues                      530           371
      --------------------------------                      ---           ---
           Total revenues                                 3,220         1,900
           --------------                                 -----         -----
    Expenses and other income, net
    ------------------------------
      Lease operating expenses                              414           440
      Taxes other than income taxes                         101            89
      Marketing and midstream operating costs and
       expenses                                             397           224
      Depreciation, depletion and amortization of
       oil and gas properties                               426           560
      Depreciation and amortization of non-oil and
       gas properties                                        63            70
      Accretion of asset retirement obligation               26            23
      General and administrative expenses                   138           163
      Interest expense                                       86            83
      Change in fair value of other financial
       instruments                                          (15)           (5)
      Reduction of carrying value of oil and gas
       properties                                             -         6,408
      Other (income) expense, net                            (4)            7
      ---------------------------                           ---           ---
           Total expenses and other income, net           1,632         8,062
           ------------------------------------           -----         -----
    Earnings (loss) from continuing operations
     before income taxes                                  1,588        (6,162)
    ------------------------------------------            -----        ------
    Income tax expense (benefit)
    ----------------------------
      Current                                               299            (8)
      Deferred                                              215        (2,272)
           Total income tax expense (benefit)               514        (2,280)
           ----------------------------------               ---        ------
    Earnings (loss) from continuing operations            1,074        (3,882)
    ------------------------------------------            -----        ------
    Discontinued operations
    -----------------------
      Earnings (loss) from discontinued operations
       before income taxes                                  137           (66)
      Discontinued operations income tax expense             19            11
      ------------------------------------------            ---           ---
           Earnings (loss) from discontinued operations     118           (77)
           --------------------------------------------     ---           ---
    Net earnings (loss)                                  $1,192       $(3,959)
    -------------------                                  ------       -------
    
</pre>
<p> </p>
<pre>
    
    Basic net earnings (loss) per share
      Earnings (loss) from continuing operations per
       share                                              $2.40        $(8.74)
      Earnings (loss) from discontinued operations
       per share                                           0.27         (0.18)
      Net earnings (loss) per share                       $2.67        $(8.92)
      -----------------------------                       -----        ------
    
</pre>
<p> </p>
<pre>
    
    Diluted net earnings (loss) per share
      Earnings (loss) from continuing operations per
       share                                              $2.39        $(8.74)
      Earnings (loss) from discontinued operations
       per share                                           0.27         (0.18)
      Net earnings (loss) per share                       $2.66        $(8.92)
      -----------------------------                       -----        ------
    
</pre>
<p> </p>
<pre>
    
    Weighted average common shares outstanding
      Basic                                                 447           444
      Diluted                                               448           444




    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
    CONSOLIDATED BALANCE SHEETS
                                                      March         December
     (in millions)                                     31,             31,
                                                        2010             2009
                                                        ----             ----
    Assets                                                         (Audited)
    ------                                                         ---------
    Current assets
    --------------
      Cash and cash equivalents                         $724             $646
      Accounts receivable                              1,296            1,208
      Derivative financial instruments                   733              211
      Current assets held for sale                       731              657
      Other current assets                               264              270
    
</pre>
<p> </p>
<pre>
    
           Total current assets                        3,748            2,992
           --------------------                        -----            -----
    Property and equipment, at cost, based on the
     full cost method of accounting for oil and
     gas properties ($3,266 and $4,078 excluded
     from amortization in 2010 and 2009,
     respectively)                                    61,392        60,475
      Less accumulated depreciation, depletion and
       amortization                                   42,580           41,708
      Property and equipment, net                     18,812           18,767
      ---------------------------                     ------           ------
    Goodwill                                           6,018            5,930
    Long-term assets held for sale                     1,409            1,250
    Other long-term assets                               690              747
                                                         ---              ---
    Total Assets                                     $30,677          $29,686
    ------------                                     -------          -------
    Liabilities and Stockholders' Equity
    ------------------------------------
    Current liabilities
    -------------------
      Accounts payable - trade                        $1,199           $1,137
      Revenues and royalties due to others               546              486
      Short-term debt                                    240            1,432
      Current portion of asset retirement
       obligations                                        90               95
      Current liabilities associated with assets
       held for sale                                     303              234
      Other current liabilities                          730              418
           Total current liabilities                   3,108            3,802
           -------------------------                   -----            -----
    Long-term debt                                     5,845            5,847
    Asset retirement obligations                       1,637            1,418
    Liabilities associated with assets held for
     sale                                                208              213
    Other long-term liabilities                          921              937
    Deferred income taxes                              2,003            1,899
    
</pre>
<p> </p>
<pre>
    
    Stockholders' equity
    --------------------
      Common stock                                        45               45
      Additional paid-in capital                       6,577            6,527
      Retained earnings                                8,733            7,613
      Accumulated other comprehensive earnings         1,600            1,385
      ----------------------------------------         -----            -----
    Total Stockholders' Equity                        16,955           15,570
    --------------------------                        ------           ------
    Total Liabilities and Stockholders' Equity       $30,677          $29,686
    ------------------------------------------       -------          -------
    Common Shares Outstanding                            447              447
    -------------------------                            ---              ---




    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                          Quarter Ended March
     (in millions)                                                31,
                                                         --------------------
                                                           2010          2009
                                                           ----          ----
    Cash Flows From Operating Activities
    ------------------------------------
      Earnings (loss) from continuing operations         $1,074       $(3,882)
      Adjustments to reconcile earnings (loss) from
       continuing operations
      to net cash provided by operating activities:
           Depreciation, depletion and amortization         489           630
           Deferred income tax expense (benefit)            215        (2,272)
           Reduction of carrying value of oil and gas
            properties                                        -         6,408
           Net unrealized gain on oil and gas derivative
            financial instruments                          (524)          (36)
           Other noncash charges                             57            63
           Net decrease in working capital                   50           128
           Increase in long-term other assets                (2)            -
           Decrease in long-term other liabilities          (18)          (29)
           ---------------------------------------          ---           ---
      Cash provided by operating activities -
       continuing operations                              1,341         1,010
      Cash provided by operating activities -
       discontinued operations                              154            37
      ---------------------------------------               ---           ---
    Net cash provided by operating activities             1,495         1,047
    -----------------------------------------             -----         -----
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    Cash Flows From Investing Activities
    ------------------------------------
      Proceeds from property and equipment
       divestitures                                       1,257             1
      Capital expenditures                               (1,247)       (1,926)
      Redemptions of long-term investments                    8             2
      ------------------------------------                  ---           ---
      Cash provided by (used) in investing activities
       -continuing operations                                18        (1,923)
      Cash used in investing activities -
       discontinued operations                             (107)         (107)
      -----------------------------------                  ----          ----
    Net cash used in investing activities                   (89)       (2,030)
    -------------------------------------                   ---        ------
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    Cash Flows From Financing Activities
    ------------------------------------
      Proceeds from borrowings of long term debt, net
       of issuance costs                                      -         1,187
      Net commercial paper repayments                    (1,192)         (111)
      Debt repayments                                         -            (1)
      Proceeds from stock option exercises                    8             4
      Dividends paid on common stock                        (72)          (70)
      Excess tax benefits related to share-based
       compensation                                           3             2
      ------------------------------------------            ---           ---
    Net cash (used in) provided by financing
     activities                                          (1,253)        1,011
    ----------------------------------------             ------         -----
    
</pre>
<p> </p>
<pre>
    
    Effect of exchange rate changes on cash                  18           (11)
    ---------------------------------------                 ---           ---
    Net increase in cash and cash equivalents               171            17
    Cash and cash equivalents at beginning of
     period (including assets held for sale)              1,011           384
    -----------------------------------------             -----           ---
    Cash and cash equivalents at end of period
     (including assets held for sale)                    $1,182          $401
    ------------------------------------------           ------          ----



    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
    DRILLING ACTIVITY                               Quarter Ended
    Gross wells drilled                               March 31,
                                                      ---------
                                                  2010       2009
                                                  ----       ----
    Exploration Wells Drilled
    -------------------------
      U.S. Onshore                                   4          6
      Canada                                        24         22
      ------                                       ---        ---
      North American Onshore                        28         28
      U.S. Offshore                                  -          1
      Total                                         28         29
      -----                                        ---        ---
    Exploration Wells Success Rate
    ------------------------------
      U.S. Onshore                                 100%       100%
      Canada                                        96%       100%
      ------                                       ---        ---
      North American Onshore                        96%       100%
      U.S. Offshore                                  -          0%
      Total                                         96%        97%
      -----                                        ---        ---
    Development Wells Drilled
    -------------------------
      U.S. Onshore                                 297        291
      Canada                                       128        121
      ------                                       ---        ---
      North American Onshore                       425        412
      U.S. Offshore                                  1          3
      -------------                                ---
      Total                                        426        415
      -----                                        ---        ---
    Development Wells Success Rate
    ------------------------------
      U.S. Onshore                                 100%        99%
      Canada                                       100%        98%
      ------                                       ---        ---
      North American Onshore                       100%        99%
      U.S. Offshore                                100%        33%
      -------------                                ---        ---
      Total                                        100%        99%
      -----                                        ---        ---
    Total Wells Drilled
    -------------------
      U.S. Onshore                                 301        297
      Canada                                       152        143
      ------                                       ---        ---
      North American Onshore                       453        440
      U.S. Offshore                                  1          4
      Total                                        454        444
      -----                                        ---        ---
    Total Wells Success Rate
    ------------------------
      U.S. Onshore                                 100%        99%
      Canada                                        99%        99%
      ------                                       ---        ---
      North American Onshore                       100%        99%
      U.S. Offshore                                100%        25%
      Total                                        100%        99%
      -----                                        ---        ---


    
</pre>
<p> </p>
<p> </p>
<pre>
    
    COMPANY OPERATED RIGS                           Quarter Ended
                                                      March 31,
                                                      ---------
                                                   2010       2009
                                                   ----       ----
    Number of Company Operated Rigs Running
    ---------------------------------------
      U.S. Onshore                                   53         24
      Canada                                          6          2
      ------                                        ---        ---
      North American Onshore                         59         26
      U.S. Offshore                                   1          2
      Total                                          60         28
      -----                                         ---        ---




    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
    PRODUCTION FROM DISCONTINUED OPERATIONS         Quarter Ended
                                                      March 31,
                                                      ---------
                                                   2010       2009
                                                   ----       ----
    Production from Discontinued Operations
    ---------------------------------------
      Oil (MMBbls)                                  2.8        3.1
      Natural Gas (Bcf)                             0.5        0.3
      Total Oil Equivalent (MMBoe)                  2.9        3.1
      ----------------------------                  ---        ---



    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
    STATEMENTS OF DISCONTINUED OPERATIONS            Quarter Ended
    (in millions)                                      March 31,
                                                       ---------
                                                   2010        2009
                                                   ----        ----
    Revenues
      Oil sales                                    $209        $127
      Gas sales                                       3           1
      Total revenues                                212         128
      --------------                                ---         ---
    
</pre>
<p> </p>
<pre>
    
    Expenses and other income, net
    ------------------------------
      Operating expenses                             75          85
      Reduction of carrying value of oil and gas
       properties                                     -         109
      Total expenses                                 75         194
      --------------                                ---         ---
    Earnings (loss) before income taxes             137         (66)
    -----------------------------------             ---         ---
    Income tax expense
    ------------------
      Current                                        15          10
      Deferred                                        4           1
      Total income tax expense                       19          11
      ------------------------                      ---         ---
    Earnings (loss) from discontinued
     operations                                    $118        $(77)
    ---------------------------------              ----        ----




    NON-GAAP FINANCIAL MEASURES

    
</pre>
<p>The <span class="xn-location">United States</span> Securities and Exchange Commission has adopted disclosure requirements for public companies such as Devon concerning Non-GAAP financial measures. (GAAP refers to generally accepted accounting principles.) The company must reconcile the Non-GAAP financial measure to related GAAP information. Cash flow before balance sheet changes is a Non-GAAP financial measure. Devon believes cash flow before balance sheet changes is relevant because it is a measure of cash available to fund the company's capital expenditures, dividends and to service its debt. Cash flow before balance sheet changes is also used by certain securities analysts as a measure of Devon's financial results.</p>
<p/>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
    RECONCILIATION TO GAAP INFORMATION                Quarter Ended
    (in millions)                                       March 31,
                                                        ---------
                                                    2010        2009
                                                    ----        ----
    Net Cash Provided By Operating Activities
     (GAAP)                                       $1,495      $1,047
    -----------------------------------------     ------      ------
      Changes in assets and liabilities -
       continuing operations                         (30)        (99)
      Changes in assets and liabilities -
       discontinued operations                       (32)         40
      -----------------------------------            ---         ---
    Cash flow before balance sheet changes (Non-
     GAAP)                                        $1,433        $988
    --------------------------------------------  ------        ----




    
</pre>
<p>Devon believes that using net debt for the calculation of "net debt to adjusted capitalization" provides a better measure than using debt. Devon defines net debt as debt less cash and cash equivalents. Devon believes that because cash and cash equivalents can be used to repay indebtedness, netting cash and cash equivalents against debt provides a clearer picture of the future demands on cash to repay debt.</p>
<pre>
    


    
</pre>
<p> </p>
<p> </p>
<pre>
    
    RECONCILIATION TO GAAP INFORMATION
     (in millions)
                                                              March 31,
                                                              ---------
                                                          2010         2009
                                                          ----         ----
    Total debt (GAAP)                                   $6,085       $6,924
    Adjustments:
      Cash and cash equivalents (including cash from
       discontinued operations)                          1,182          401
      Net debt (Non-GAAP)                               $4,903       $6,523
      -------------------                               ------       ------
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    Total debt                                          $6,085       $6,924
    Stockholders' equity                                16,955       12,942
    --------------------                                ------       ------
      Total capitalization (GAAP)                      $23,040      $19,866
      ---------------------------                      -------      -------
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    Net debt                                            $4,903       $6,523
    Stockholders' equity                                16,955       12,942
    --------------------                                ------       ------
      Adjusted capitalization (Non-GAAP)               $21,858      $19,465
      ----------------------------------               -------      -------





    

For further information: For further information: Investors, Shea Snyder, +1-405-552-4782, or Media, Chip Minty, +1-405-228-8647, both of Devon Energy Corporation Web Site: http://www.devonenergy.com

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DEVON ENERGY CORPORATION

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