DVN 10-K & 10-Q changes, risk factors and insider trading

geopolitical risks, including the conflict between Russia and Ukraine, the Israel-Gaza and Hezbollah conflicts and hostilities in Yemen and the Red Sea, as well as other hostilities or political and civil unrest in the Middle East, Africa, Europe and South AmericaAmerica, including Venezuela;

the overall economic environment, including inflationary pressures andpressures, fluctuations in interest ratesrates, economic slowdowns or recessions;

market and geopolitical uncertainty as a result of shifts or potential further shifts in domestic and international policies following the 2024 U.S. presidential and congressional elections;

changes in trade relations and policies, such as (i) the imposition of new or increased tariffs or other trade protection measures by the U.S., China or other countries, (ii) environmental performance standards or similar fossil fuel import restrictions in certain international markets, (iii) economic sanctions, including embargoes, on Russia or other producing countries or (iv) restrictions on oil, gas and NGL exports by the U.S.; and other governmental regulations and taxes.

Certain of the properties and investments in which we have an interest are operated by other companies and may involve third-party working interest owners. We have limited influence and control over the operation or future development of such properties and investments, including compliance with EHS regulations or the amount and timing of required future capital expenditures. In addition, we conduct certain of our operations through joint ventures in which we may share control with third parties, and the other joint venture participants may have interests or goals that are inconsistent with those of the joint venture or us. These limitations and our dependence on such third parties could result in unexpected future costs or liabilities and unplanned changes in operations or future development, which could adversely affect our financial condition and results of operations. Moreover, any bankruptcy involving, or any misconduct or other improper activities committed by, our business partners or other counterparties could negatively impact the value of our investments, as well as our own business or reputation.

Strong competition exists in all sectors of the oil and gas industry. We compete with major integrated and independent oil and gas companies for the acquisition of oil and gas leases and properties. We also compete for the equipment, materials, services and personnel required to explore, develop and operate properties, such as drilling rigs, well materials and oilfield services. The rising costs and scarcity caused by this competitive pressure will generally increase during periods of higher commodity prices and can be further exacerbated by higher inflation rates and supply chain disruptions in the broader economy, including as a result of tariffs or changes in trade policy. For example, we experienced highersome increase in operating costs throughout 20232025 due to steepthe costeconomic inflation. Although cost inflation moderated somewhatuncertainty in 2024,global suchtrade inflationaryarising pressuresfrom couldgeopolitical continueevents orand increaseshifting intrade 2025.policies. While we actively work to mitigate the impact of these potential risks through operational efficiencies gained from the scale of our operations as well as by leveraging long-standing relationships with our suppliers, the ultimate impacts remain uncertain. Competition is also prevalent in the marketing of oil, gas and NGLs. Certain of our competitors have resources substantially greater than ours and may have established superior strategic long-term positions and relationships. As a consequence, we may be at a competitive disadvantage in bidding for assets or services and accessing capital and downstream markets. In addition, many of our larger competitors may have a competitive advantage when responding to factors that affect demand for oil and gas production, such as changing worldwide price and production levels, the cost and availability of alternative energy sources and the application of government regulations.

Changes in public policy have affected, and in the future could further affect, our operations. For example, various policy makers have expressed support for, and have taken steps to implement, efforts to transition the economy away from fossil fuels and to promote stricter environmental regulations, and such proposals could impose new and more onerous burdens on our industry and business. The IRA, for instance, contains hundreds of billions of dollars in incentives for the development of renewable energy, clean fuels and carbon capture and sequestration, among other provisions, potentially further accelerating the transition toward lower-or zero-carbon emissions alternatives to fossil fuels. These and other regulatory and public policy developments could, among other things, restrict production levels, delay necessary permitting, impose price controls, change environmental protection requirements, impose restrictions on pipelines or other necessary infrastructure, raise taxes, royalties and other amounts payable to governments or governmental agencies and otherwise increase our operating costs. In addition, changes in public policy may indirectly impact our operations by, among other things, increasing the cost of supplies and equipment and fostering general economic uncertainty. While Congress and the current U.S. administration have taken various actions to slow or limit the availability of funding under the IRA, some of these efforts have been challenged and the ultimate effect of the IRA remains uncertain. For example, OBBB includes provisions that roll back certain aspects of the IRA, which could further restrict access to funding and incentives. Although we are unable to predict changes to existing laws and regulations, such changes could significantly impact our profitability, financial condition and liquidity, particularly changes related to the matters discussed in more detail below.

Federal Lands – Federal policy makers have from time to time expressed support for, and have taken steps to implement, additional regulation of oil and gas leasing, permitting and development on federal lands. For example, the Department of the Interior adopted a final rule in April 2024 revising various terms for future federal leases and wells, including by enhancing bonding requirements and increasing royalty rates, rental rates and minimum bids. Moreover, non-governmental organizations, trade groups and other private parties have filed lawsuits challenging leasing, permitting and other regulatory decisions relating to our and other industry participants’ oil and gas development on federal lands, which, if successful, could furtherhinder hinderor delay development activities or otherwise adversely impact operations. While it is not possible at this time to predict the ultimate impact of these actions or any other future regulatory changes, including any potential actions by the Trumpcurrent Administration,U.S. administration, any additional restrictions or burdens on our ability to operate on federal lands could adversely impact our business in the Delaware and Powder River Basins, as well as other areas where we operate under federal leases.

Tax Matters – We are subject to U.S. federal income tax as well as income, capital and other taxes in various U.S. state and foreign jurisdictions, and our operating cash flow is sensitive to the amount of taxes we must pay. In the jurisdictions in which we or any of our subsidiaries operate or previously operated, income taxes are assessed on our earnings after consideration of all allowable deductions and credits. Changes in the types of earnings that are subject to income tax, the types of costs that are considered allowable deductions and the timing of such deductions, or the rates assessed on our taxable earnings could significantly increase our tax obligations, adversely impacting our financial condition, results of operations and cash flows. Additionally, more generally, a change in any U.S. federal, state or local or foreign tax law, treaty, policy, statute, rule, regulation or ordinance, or in the interpretation thereof, in any jurisdiction in which we or any of our subsidiaries operate, or in which we or any of our subsidiaries are organized, could result in us incurring a materially higher tax expense, which would also adversely impact our financial condition, results of operations and cash flows. For example, the IRA included a 15% CAMT on certain financial statement income,income. and the Organization for Economic Co-operation and Development has adopted a set of model international tax rules known as the “Pillar Two” framework, a central component of which is the imposition of a global minimum corporate tax rate of 15% on certain multinational enterprises. While we are still assessing the potential impacts of the CAMT and the Pillar Two rules to our business, anyAny incremental taxes attributable to CAMT, Pillar TwoCAMT or any other tax law changes, or a change in our current interpretation thereof, could be significant and adversely impact our financial condition, results of operations and cash flows. Moreover, we are regularly audited by tax authorities. Although we believe our tax positions are reasonable and properly supported, if one or more of our tax positions are challenged by the IRS or other tax authorities (in a tax audit or otherwise), material cash payments or adjustments to tax expense may occur, which could adversely affect our financial condition, results of operations and cash flows.

Continuing and increasing political and social attention to the issue of climate change has resulted in legislative, regulatory and other initiatives, including international agreements, to reduce GHG emissions, such as carbon dioxide and methane. Policy makers and regulators at both the U.S. federal and state levels have from time to time imposed, or stated intentions to impose, laws and regulations designed to quantify and limit the emission of GHG. For example, in December 2023, the EPA finalized more stringent methane rules for new, modified and reconstructed facilities, known as OOOOb, as well as standards for existing sources for the first time ever, known as OOOOc. The final rule includes, among other things, enhanced leak detection survey requirements using optical gas imaging and other advanced monitoring, zero-emission requirements for certain devices, and reduction of emissions by 95% through capture and control systems. The final rule also establishes a “super emitter” response program that allows third parties to make reports to the EPA of large methane emissions events, triggering certain investigation and repair requirements. Fines and penalties for violations of these rules can be substantial. The rules have been subject to legal challenge, although OOOOb is already in effect. Relatedly, the IRA imposed a new charge or fee with respect to excess methane emissions from certain petroleum and natural gas facilities starting in 2024 and annually increasing through 2026,2026. andAlthough the current U.S. administration delayed the imposition of the fee until 2034, we cannot predict whether this or howany thefuture Trump Administrationadministration may seek to revise or repeal thesethis rulesdelay or the timing of any such actions. In addition to these federal efforts, the states where we operate have already imposed, or stated intentions to impose, laws or regulations designed to reduce methane emissions from oil and gas exploration and production activities, including by mandating new leak detection and retrofitting requirements.

Policy makers have also advocated for expanding existing, or creating new, reporting and disclosure requirements regarding GHG emissions and other climate-related matters. For example, the EPA adopted amendments in May 2024 to its GHG Reporting Program, which, among other things, added well blowouts and other abnormal events as new categories of sources for GHG emissions reporting. In addition, the SEC finalized rules in March 2024 that requirewould have required public companies to include extensive climate-related disclosures in their SEC filings, such as new disclosures on (i) material Scope 1 and 2 GHG emissions, including an independent assurance report, and (ii) financial statement information regarding the effects of severe weather events and other natural conditions.filings. In April 2024, the SEC stayed the effectiveness of these rules pending the completion of a judicial review of certain legal challenges.challenges, and the current U.S. administration has declined to defend the rules in the legal challenges, which has resulted in a stay of the challenges that will remain in effect until the rules are withdrawn or the government resumes its defense of the rules. Similarly, California enacted legislation in October 2023 requiring extensive climate-related disclosures for companies deemed to be doing business in California, and other states are considering similar laws. The European Union has also recently adopted a set of policy initiatives, including the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive, which impose expansive sustainability reporting and due diligence requirements for both European Union and certain non-European Union companies. While we are still assessing the applicability of the European Union directives and California legislation and are awaiting resolution of the review of the SEC climate change rules,directives, we would expect to incur substantial additional compliance costs to the extent these or similar disclosure requirements apply to us. We further anticipate the costs and other risks associated with any such disclosure requirements to be particularly heightened, given that reporting frameworks on GHG emissions and other climate-related metrics are still maturing and often require the use of numerous assumptions and judgments.

With respect to more comprehensive regulation, policy makers and political leaders have made, or expressed support for, a variety of proposals, such as the development of cap-and-trade or carbon tax programs. At the international level, over 190 countries have signed the Paris Agreement, which requires member nations to submit non-binding GHG emissions reduction goals every five years. Subsequent United Nations climate conferences have called for additional action to transition away from fossil fuels or otherwise reduce GHG emissions. The Trumpcurrent AdministrationU.S. administration re-withdrew the United States from the Paris Agreement in January 2025, and, in January 2026, the current U.S. administration announced that the United States was withdrawing from the United Nations Framework Convention on Climate Change and the various climate-related programs under this Framework. As a result, the United States’ participation in future United Nations climate-related efforts is unclear. At the state level, there have been attempts to introduce legislation whereby certain entities found responsible for contributing toward climate change over a period of time are required to pay into a fund used for climate-related projects. For example, in December 2024, New York passed its “Climate Superfund Law,” which provides for the assessment of a fee for emitters that have a sufficient nexus to the state and are found to have released more than one billion tons of carbon dioxide during 2000 through 2018. Vermont passed a similar law in May 2024, and similar legislation has been proposed in California, Massachusetts and New Jersey. We have been identified by New York as a potentially responsible party under the law; however, to date, we have not received any cost recovery demand. These and other initiatives could negatively impact our business through restrictions or cancellations of oil and natural gas activities, a requirement to pay damages, greater costs of compliance or consumption (thereby reducing demand for our products) or an impairment in our ability to continue our operations in an economic manner.

Our Environmental Performance Targets and Other ESGSustainability Initiatives May Expose Us to Risks

We have developed, and may continue to develop, voluntary targets related to our ESGsustainability initiatives, including our environmental performance targets and strategy. Any public statements related to these initiatives reflect our current plans and expectations and are not a guarantee the targets will be achieved or achieved on the currently anticipated timeline. Additionally, such statements are often based on assumptions or hypothetical scenarios which are necessarily uncertain. Our ability to achieve any targets is subject to numerous risks and uncertainties, many of which are beyond our control, including market factors, unanticipated changes in societal behavior, capital constraints, the pace of technological advancement and governmental policies or priorities. Moreover, as emission measurement protocols mature and related technologies continue to develop, we may be required to revise our emissions estimates and reduction goals or otherwise revise the strategies outlined in our ESGsustainability initiatives. If our ESGsustainability initiatives do not meet our investors’ or other stakeholders’ evolving expectations and standards,standards (including those in support of or in opposition to ESG principles), investment in us may be viewed as less attractive and our reputation and business may be adversely impacted.

Additionally, public statements with respect to environmental targets or other ESG-related goals are becoming increasingly subject to heightened scrutiny from public and governmental authorities, as well as other parties, with respect to the risk of potential “greenwashing,” i.e., misleading information or false claims overstating potential ESG benefits. Certain regulators, such as the SEC and various state agencies, as well as non-governmental organizations and other private actors have filed lawsuits under various securities and consumer protection laws alleging that certain ESG statements were misleading, false or otherwise deceptive. Conversely, “anti-ESG” sentiment has gained momentum among some governmental and private actors, and various federal and state policy makers have enacted or proposed “anti-ESG” policies, legislation and other initiatives, including efforts targeting certain practices and programs related to diversity, equity and inclusion. As a result, we may also face heightened scrutiny, reputational risk, lawsuits or market access restrictions from these parties regarding our ESGsustainability initiatives.

Domestic and foreign governmental bodies have from time to time intervened in energy markets by imposing price controls, restricting exports, limiting production or otherwise taking actions to impact the availability and price of oil, natural gas and NGLs. For instance, members of the European Union agreed to a price-cap framework in December 2022 for the trading of natural gas in response to rising energy costs in Europe. Similarly, during 2021 and 2022, former President Biden authorized several releases from the U.S. Strategic Petroleum Reserve in an effort to lower domestic energy prices. More recently, in May 2024, the European Union approved new regulations imposing fossil fuel import standards, which include disclosure, emission mitigation work practices and methane intensity threshold requirements, which could impact our ability to sell production in European markets. Governments may take similar actions in the future, particularly in the event of disruption in energy markets or national emergency. Any such interventions could adversely impact our business, including by depressing the price of our production and generally introducing greater uncertainty to our operations.

We enter into a variety of transactions that expose us to counterparty credit risk. For example, we have exposure to financial institutions and insurance companies through our hedging arrangements, our 2023 Senior Credit Facility and our insurance policies. Disruptions in the financial markets or otherwise may impact these counterparties and affect their ability to fulfill their existing obligations and their willingness to enter into future transactions with us.

In addition, we receive credit ratings from rating agencies in the U.S. with respect to our debt. Factors that may impact our credit ratings include, among others, debt levels, planned asset sales and purchases, liquidity, size and scale of our production and commodity prices. Certain of our contractual obligations require us to provide letters of credit or other assurances. Any credit downgrades could adversely impact our ability to access financing and trade credit, require us to provide additional letters of credit or other assurances under contractual arrangements and increase our interest rate under the 2023 Senior Credit Facility and the Term Loan, as well as the cost of any other future debt.

We rely heavily on information systems, operational technologies and other digital technologies to conduct our business, and we anticipateare expanding the use of and reliance on these systems and technologies, including through artificial intelligence, process automation and data analytics. Concurrent with the growing dependence on technology is a greater sensitivity to cyberattacks and other cyber-related incidents, which have increasingly targeted our industry. Perpetrators of cyberattacks often attempt to gain unauthorized access to digital systems for purposes of misappropriating confidential, proprietary or personal information, intellectual property or financial assets, corrupting data or causing operational disruptions, as well as preventing users from accessing systems or information for the purpose of demanding payment in order for users to regain access. A wide variety of individuals or groups may perpetuate cyberattacks, ranging from highly sophisticated criminal organizations and state-sponsored actors to disgruntled employees, and the nature of, and methods used in, cyberattacks are similarly diverse and constantly evolving, with examples including phishing attempts, distributed denial of service attacks or ransomware.ransomware, which could be enhanced or facilitated by artificial intelligence. In addition, our vendors (including third-party cloud and IT service providers), midstream providers and other business partners may separately suffer disruptions or breaches from cyberattacks or other cyber-related incidents, which, in turn, could adversely impact our operations and compromise our information. Moreover, we and other upstream companies rely on extensive oil and gas infrastructure and distribution systems to deliver our production to market, which, in turn, depend upon digital technologies; we also rely on other critical infrastructure to operate our business, such as communication networks and power grids. Any cyberattack directed at such infrastructure or systems could adversely impact our business and operations, including by limiting our ability to transport and market our production. Furthermore, human error by our employees, contractors or third-party business partners may also cause or exacerbate a cybersecurity incident, and geopolitical instability may heighten the risk of cyberattacks against us or the infrastructure we rely upon.

InPublicly recenttraded years,companies proxyare contestsincreasingly andsubject otherto formscampaigns by activist shareholders advocating corporate actions, such as operational, governance or management changes, sales of shareholderassets activismor haveentire beenbusiness directedunits againstor numerousbusiness publiccombination companies.transactions. InvestorsActivist mayshareholders from time to timecould seek to involve themselvesengage in theproxy governance,solicitations, strategicadvance directionshareholder proposals or otherwise attempt to assert influence on our Board of Directors and operations of the Company, whether by stockholder proposals, public campaigns, proxy solicitations or otherwise.management. These actions may be prompted or exacerbated by unfavorable recommendations or ratings from proxy advisory firms or other third parties, including with respect to our performance (or the perception of our performance) under ESG metrics.parties. Such actions could adversely impact our business by distracting our Board of Directors and employees from our long-term strategy, requiring us to incur increased advisory fees and related costs, interfering with our ability to successfully execute on core business operations and strategic transactions or plans and provoking perceived uncertainty about the future direction of our business. Such perceived uncertainty may, in turn, make it more difficult to retain employees and could result in significant fluctuation in the market price of our common stock.

Our business depends, in part, on making acquisitions, including by merger and other similar transactions, that complement or expand our current business and successfully integrating any acquired assets or businesses. We cannot ensure that any acquisitions we attempt will be completed on the terms announced, or at all. If we are unable to make attractive acquisitions, our future growth could be limited. Furthermore, even if we do make acquisitions, such as the recently completed Grayson Mill acquisition, they may not result in an increase in our cash flow from operations or otherwise result in the benefits anticipated due to various risks, including, but not limited to:

We are a leading independent oil and natural gas exploration and production company whose operations are focused onshore in the United States. Our operations are currently focused in four core areas: the Delaware Basin, Rockies, Eagle Ford and Anadarko.Anadarko Basin. Our asset base is underpinned by premium acreage in the economic core of the Delaware Basin and our diverse, top-tier resource playsplays, provideproviding a deep inventory of opportunities for years to come.

On September 27, 2024, we acquired the Williston Basin business of Grayson Mill for total consideration of approximately $5.0 billion, consisting of $3.5 billion of cash and approximately 37.3 million shares of Devon common stock, including purchase price adjustments. The acquisition willhas allowallowed us to efficiently expand our oil production and operating scale, creating immediate and long-term, sustainable value to shareholders over time.shareholders.

AsOn evidencedFebruary 1, 2026, we entered into the Merger Agreement, providing for an all-stock merger of equals with Coterra. The Merger will create a leading large-cap shale operator with an asset base anchored by thisa acquisition,premier position in the economic core of the Delaware Basin. The Merger is expected to unlock substantial value for shareholders by leveraging enhanced scale to improve margins, increase free cash flow and accelerate cash returns through the capture of $1.0 billion in sustainable annual synergies. As a company, we remain focused on building economic value by executing on our strategic priorities of moderating production growth, emphasizing capital and operational efficiencies, optimizing reinvestment rates to maximize free cash flow, maintaining low leverage, delivering cash returns to our shareholders and pursuing operational excellence. Our recent performance highlights for these priorities include the following items for 20242025:

Oil production totaled 347389 MBbls/d, ana 8%12% increase year over year.

Including variable dividends, paidPaid dividends of $937$619 million.

Our net earnings and operating cash flow are highly dependent upon oil, gas and NGL pricesprices, which can be incredibly volatile due to several varying factors. Commodity pricing remained stable through 2023 and 2024. During 2025, however, commodity prices werehave strongexperienced duringheightened 2022volatility and declines, driven primarily by economic uncertainty in global trade arising from geopolitical events and shifting trade policies, such as the continuedimposition recoveryof fromtariffs by the COVID-19U.S. pandemicand increased demand forplanned oil andoutput gasincreases commodities, while economic sanctions imposed on Russia and restraint fromby OPEC+ on production growth both simultaneously impacted the supply of these commodities. In 2023, commodity prices weakened primarily due to economic uncertainty surrounding inflation and increased interest rates as well as certain geopolitical events. During 2024, oil and NGL prices remained stable from the prior year while gas prices decreased primarily due to warmer weather impacts and excess supply.. The graphs below show the trends in commodity prices over the past three years and their related impact on our net earnings, operating cash flow and capital investments.

As we dependably generate strong cash flow results as shown above, we will continue to prioritize delivering cash returns to shareholders through share repurchases and dividends while maintaining a strong liquidity position. Since the inception of our authorized $5.0 billion share repurchase program, we have repurchased approximately 69100 million common shares for approximately $3.3$4.4 billion, or $48.46$44.02 per share. We also returned value to shareholders by paying dividends of $937$619 million during 2024.2025. We exited 20242025 with $3.8$4.4 billion of liquidity, comprised of $0.8$1.4 billion of cash and $3.0 billion of available credit under our 2023 Senior Credit Facility. We currently have $8.9$8.4 billion of debt outstanding, of which approximately $485$1.0 millionbillion is classified as short-term. Additionally, to help mitigate the volatility of commodity prices and protect ourselves from downside risk, we currently have approximately 30% of our anticipated 20252026 oil and gas production hedged.

We remain committed to continuing our track record of industry leading return ofindustry-leading capital returns to our shareholders, underpinnedsupported by low capital reinvestment ratesdiscipline and a disciplined, returns-driven strategy which is designed to be successfulsucceed through economiccommodity cycles. In 2024,2025, we returned approximately $2.0$1.7 billion of cash to shareholders through cash dividends and share repurchases, and will continue to prioritize thisshareholder shareholdercash return strategy in 2025.2026.

In 2024,2025, WTI oil prices averaged $75.79$64.87 per Bbl versus $77.62$75.79 per Bbl in 2023,2024, reflectingan aapproximately downward14% trenddecline asamid oilcontinued market volatility. Oil prices remained volatile even with continued capital discipline by global oil producers. Oil isare expected to remain volatile in 20252026 due to ongoing geopolitical riskssupply torisks, supply,including developments in key producing regions, stronger forecasted stronger non-OPEC supply,production, and improving global demand growth expectations.demand. Henry Hub natural gas prices fellincreased significantly in 2024,2025, averaging $2.27$3.43 per Mcf compared to $2.74$2.27 per Mcf in 2023.2024. For 2025, naturalNatural gas prices are expected to increasestrengthen comparedfurther within 2024 prices due to increased demand,2026 driven by risingincreased LNG exports,export capacity, strong powerburnpower asgeneration welldemand asacross disciplinemultiple fromsectors, naturaland gascontinued producers.producer discipline. Our 20252026 cash flow is partly protected from commodity price volatility due to our current hedge position that covers approximately 30% of our anticipated oil and gas volumes. In order to further insulate our cash flow, we continue to examine and, when appropriate, execute attractive regional basis swap hedges to protect price realizations across our portfolio. With continued capital efficiency gains and operational improvements, we expect to generate material amounts of free cash flow at current commodity price levels.

Our 2026 capital program reflects our continued commitment to capital discipline and capitalefficiency. efficiencyTo remainsmaximize unchangedfree withcash flow generation, our 20252026 capital program. Similar to 2024, the majority of our 2025 capital, or approximately 55%, is expected to be focused on our highest returning oil play, the Delaware Basin. Our Williston Basin assets will receive additional capital allocation through 2025 as we work to develop the newly acquired Grayson Mill assets. The remainder of our 20252026 capital will continue to be deployed to our other core areas of Rockies, Eagle Ford, Anadarko BasinFord and Powder RiverAnadarko Basin. Our 20252026 capital budget is expected to be approximately 7%4% higherlower than 20242025, primarilydriven dueby continued capital efficiency gains and optimized activity levels. Our disciplined approach to increasedcapital activityallocation inis the Williston Basin. Due to our strategy of spending within cash flow, we expectexpected to continue generating material amounts ofsubstantial free cash flow for 2025.flow.

From 20232024 to 2024,2025, the change in volumes contributed to a $1.1$1.4 billion increase in earnings. TheVolumes increase in volumes wasincreased primarily due to increased activity in the Delaware Basin and Eagle Ford as well as the Grayson Mill acquisition in the Rockies, which closed in the third quarter of 2024.2024, as well as new well activity in the Delaware Basin.

From 20232024 to 2024,2025, realized prices contributed to an approximately $700$1.3 millionbillion decrease in earnings. This decrease was due to lower unhedged realized oil, gasoil and NGL prices which decreased primarily due to lower WTI and Mont Belvieu index prices, respectively. This decrease was partially offset by an increase in unhedged realized gas prices which was primarily due to higher Henry Hub index prices. Additionally, gas prices were impacted by expanded regional gas price differentials in the Delaware Basin driven by infrastructure constraints. Realized prices were strengthenedalso positively impacted by oil, gas and NGL hedge cash settlements across all commodities.settlements.

LOEProduction and gathering, processing and transportation and production taxesexpenses increased in 2025 primarily due to increased activity andin the Rockies related to the Grayson Mill acquisition in addition to new well activity in the Rockies.Delaware Basin.

During the third quarter of 2024, we issued $3.25 billion of debt to partially fund the Grayson Mill acquisition. Additionally, we retired $472 million of debt in the third quarter of 2024. TheDuring netthe impactthird quarter of this2025, debtDevon activityearly isredeemed expectedthe $485 million of 5.85% senior notes due in December 2025 pursuant to increasethe our"par-call" annualrights netset financingforth costsin bythe approximatelyindenture $180 million.document. For additional information, see Note 13 in "Part I. Financial Information - “Item 1.8. Financial Statements" and Supplementary Data” in this report.

We repurchased 30.8 million shares of common stock for $1.1 billion in 2025 and 24.2 million shares of common stock for $1.1 billion in 2024 and 19.1 million shares of common stock for $979 million in 2023 under the share repurchase program authorized by our Board of Directors. For additional information, see Note 17 in “Item 8. Financial Statements and Supplementary Data” in this report.

The following table summarizes our common stock dividends in 20242025 and 2023.2024. Devon most recently raised its fixed dividend by 10%9% from $0.20$0.22 to $0.22$0.24 per share in the first quarter of 2024. In addition to the fixed quarterly dividend, we paid a variable dividend in the first, second and third quarters of 2024 and each quarter of 2023. For additional information, see Note 17 in “Item 8. Financial Statements and Supplementary Data” of this report.2025.

The business of exploring for, developing and producing oil and natural gas is capital intensive. Because oil, natural gas and NGL reserves are a depleting resource, we, like all upstream operators, must continually make capital investments to grow and even sustain production. Generally, our capital investments are focused on drilling and completing new wells and maintaining production from existing wells. At opportunistic times, we also acquire operations and properties from other operators or land ownerslandowners to enhance our existing portfolio of assets.

Key inputs into determining our planned capital investment is the amount of cash we hold and operating cash flow we expect to generate over the next one to three or more years. At the end of 2024,2025, we held approximately $850$1.4 millionbillion of cash. Our operating cash flow forecasts are sensitive to many variables and include a measure of uncertainty as actual results may differ from our expectations.

Further, when considering the current commodity price environment and our current hedge position, we expect to achieve our capital investment priorities. Additionally, we remain committed to capital discipline and focused on delivering the objectives that underpin our capital plan for 2025.2026. However, if commodity prices decline further, we will adapt our plan by reducing activity in order to maximize free cash flow.

Operating Expenses – Commodity prices can also affect our operating cash flow through an indirect effect on operating expenses. Significant commodity price decreases can lead to a decrease in drilling and development activities. As a result, the demand and cost for people, services, equipment and materials may also decrease, causing a positive impact on our cash flow as the prices paid for services and equipment decline. However, the inverse is also generally true during periods of rising commodity prices. We expect to mitigate the impact of cost inflation through efficiencies gained from the scale of our operations as well as by leveraging our long-standing relationships with our suppliers.

We had approximately $3.0 billion of available borrowing capacity under our 2023 Senior Credit Facility at December 31, 2024.2025. In the first quarter of 2024,2025, Devon exercised its option to extend the 2023 Senior Credit Facility maturity date from March 24, 20282029 to March 24, 2029.2030. Devon has the option to extend the March 24, 20292030 maturity date by twoan additional one-year periodsyear subject to lender consent. The 2023 Senior Credit Facility supports our $3.0 billion of short-term credit under our commercial paper program. As of December 31, 2024,2025, thereDevon werehad no outstanding borrowings under ourthe commercialSenior paperCredit program.Facility and had less than $1.0 million in outstanding letters of credit under this facility. See Note 13 in “Item 8. Financial Statements and Supplementary Data” of this report for further discussion.

The 2023 Senior Credit Facility contains only one material financial covenant. This covenant requires us to maintain a ratio of total funded debt to total capitalization, as defined in the credit agreement, of no more than 65%. As of December 31, 2024,2025, we were in compliance with this covenant with a 26.5%24.8% debt-to-capitalization ratio.

Our access to funds from the 2023 Senior Credit Facility is not subject to a specific funding condition requiring the absence of a “material adverse effect”. It is not uncommon for credit agreements to include such provisions. In general, these provisions can remove the obligation of the banks to fund the credit line if any condition or event would reasonably be expected to have a material and adverse effect on the borrower’s financial condition, operations, properties or business considered as a whole, the borrower’s ability to make timely debt payments or the enforceability of material terms of the credit agreement. While our credit agreement includes provisions qualified by material adverse effect as well as a covenant that requires us to report a condition or event having a material adverse effect, the obligation of the banks to fund the 2023 Senior Credit Facility is not conditioned on the absence of a material adverse effect.

We receive debt ratings from the major ratings agencies in the U.S. In determining our debt ratings, the agencies consider a number of qualitative and quantitative items including, but not limited to, commodity pricing levels, our liquidity, asset quality, reserve mix, debt levels, cost structure, planned asset sales and size and scale of our production. Our credit rating from Standard and Poor’s Financial Services is BBB with a stablepositive outlook. Our credit rating from Fitch is BBB+ with a stablepositive outlook. Our credit rating from Moody’s Investor Service is Baa2 with a stablepositive outlook. Any rating downgrades may result in additional letters of credit or cash collateral being posted under certain contractual arrangements.

In February 2025,2026, we raisedannounced oura fixedcash dividend by 9%, toof $0.24 per share, beginning in the first quarter of 2025. The dividend isshare payable in the first quarter of 20252026, andwhich is expected to total approximately $156$149 million.

Our Board of Directors has authorized a $5.0 billion share repurchase program that expires on June 30, 2026. Through February 14,1, 2025,2026, we had executed $3.4$4.5 billion of the authorized program. Pursuant to the terms of the Merger Agreement, our share repurchase activity has been suspended and is expected to remain suspended through the completion of the Merger.

Our 20252026 capital expenditure budget is expected to be approximately $3.8$3.5 billion to $4.0$3.7 billion, which is approximately 7%4% higherlower than our 20242025 capital expendituresexpenditures, primarilydriven dueby tocontinued thecapital Graysonefficiency Millgains acquisition.and operational improvements.

Periodically, we acquire assets and assume liabilities in transactions accounted for as business combinations, such as the acquisition of the Williston Basin business of Grayson Mill. In connection with the acquisition, we allocated the $5.0 billion of purchase price consideration to the assets acquired and liabilities assumed based on estimated fair values as of the date of the acquisition. The preliminary purchase price assessment remains an ongoing process and is subject to change for up to one year subsequent to the closing date of the acquisition.

The following discussion and analysis addresses material changes in our results of operations for the three-month periodand six-month periods ended MarchJune 31,30, 2026 compared to previous periods, and in our financial condition and liquidity since December 31, 2025. For information regarding our critical accounting policies and estimates, see our 2025 Annual Report on Form 10-K under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We are a leading independent oil and natural gas exploration and production company whose operations are focused onshore in the United States. Our operations are currently focused in fourfive core areas: the DelawarePermian Basin, Rockies, Eagle FordFord, Anadarko Basin and AnadarkoMarcellus Basin.Shale. Our asset base is underpinned by premium acreage in the economic core of the DelawarePermian Basin and our diverse, top-tier resource plays, providing a deep inventory of opportunities for years to come.

On February 1, 2026, we entered into the Merger Agreement,Agreement providing for an all-stock merger of equals with Coterra.Coterra, which successfully closed on May 7, 2026. The Merger will createcreated a leading large-cap shale operator with an asset base anchored by a premier position in the economicPermian coreBasin. ofWe expect the Delaware Basin. The Merger is expectedcombination to unlock substantial value for shareholders by leveraging enhanced scale to improve margins, increase free cash flow and accelerate cash returns through the capture of $1.0 billion in sustainable annual synergies.pre-tax synergies to be attained through an optimized capital program, operating margin improvements and streamlined corporate costs. In connection with the Merger, we also initiated a review of our combined asset portfolio. As a company, we remain focused on building economic value by executing on our strategic priorities of moderating production growth, emphasizing capital and operational efficiencies, optimizing reinvestment rates to maximize free cash flow, maintaining low leverage, delivering cash returns to our shareholders and pursuing operational excellence. Our recent performance highlights for these priorities include the following items for the firstsecond quarter of 2026:

Generated $1.7$3.7 billion of operating cash flow and $6.4 billion for the trailing twelve months.flow.

On track to achieve 100% of ourdeliver $1.0 billion optimization plan ahead of schedule.annual pre-tax merger synergies by year-end 2027.

Earnings attributable to Devon were $120$1.9 million,billion, or $0.19$2.03 per diluted share.

Our net earnings and operating cash flow are highly dependent upon oil, gas and NGL prices, which can be volatile due to several varying factors. As shown in the graph below, during the first quartersix months of 2026, commodity prices have experienced heightened volatility, driven primarily by significant geopolitical events, including conflict in the Middle East and disruptions to global oil supply, along with continued uncertainty in global trade policy and OPEC+ production decisions. As a result, our net earnings were reduced by a $0.6 billion non-cash valuation loss on our commodity derivatives.

Despite the potential negative impacts of higher inflation rates and supply chain disruptions created by these developments, we remain committed to capital discipline and delivering the objectives that underpin our current plan. Our disciplined, returns-driven strategy is designed to adapt to market fluctuations by reducing activity when necessary to maximize free cash flow generation. We will continue to prioritize value creation through moderated capital investment and production growth, particularly with a view of the volatility in commodity prices, supply chain constraints and the economic uncertainty arising from inflation and geopolitical events. Our cash-return objectives remain focused on opportunistic share repurchases, funding our dividends, repaying debt at upcoming maturities and building cash balances. To emphasize our commitment to maximizing free cash flow and creating value for shareholders, we implemented a business optimization plan early in 2025 targeting a $1.0 billion improvement in annual pre-tax cash flow. The plan included actions to achieve more efficient field-level operations and improvements in drilling and completion costs, along with enhanced operating margins and reduced corporate costs. We areremain on track to achievedeliver theat fullleast $1.0 billion targetof aheadannual pre-tax run-rate synergies by year end 2027, with approximately $600 million expected to be captured in 2027. We are driving progress on capital optimization, operating margin improvements and a reduced corporate cost structure through the sharing of ourbest originalpractices year-endand 2026technology timeline.across the combined company. Through the sharing of best practices and technology across the combined company, we are driving progress on capital optimization, operating margin improvements and a reduced corporate cost structure.

Our second quarter 2026 and first quarter 2026 and fourth quarter 2025 net earnings were $120$1.9 millionbillion and $562$120 million, respectively. The graph below shows the change in net earnings from the fourthfirst quarter of 20252026 to the firstsecond quarter of 2026. The material changes are further discussed by category on the following pages.

We currently have approximately 30% and 35%25% of our remaining anticipated 2026 oil and gas production hedged, respectively. For 2027, we currently have approximately 15% and 10% of our anticipated oil and gas production hedged, respectively.

Production expenses increased during the first quarter of 2026 primarily due to higherthe productionMerger closing on May 7, 2026. LOE per Boe decreased and gathering, processing & transportation per Boe increased due to a different post-merger asset and product mix. Production taxes resultingalso fromincreased andue to the increase in WTI, Henry HubWTI and Mont Belvieu index prices.

Restructuring and transaction costs reflect employee related costs and various transaction costs related to the Merger. For discussionadditional on income taxes,information, see Note 6 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

Q1June 30, 2026 YTD vs. Q1June 30, 2025 YTD

Our firstsix quartermonths ended June 30, 2026 and first quarter 2025 net earnings were $120$2.0 millionbillion, andcompared $509to million,net respectively.earnings of $1.4 billion for the first six months ended June 30, 2025. The graph below shows the change in net earnings from the firstsix quartermonths ofended June 30, 2025 to the firstsix quartermonths ofended June 30, 2026. The material changes are further discussed by category on the following pages.

From the firstsix quartermonths ofended June 30, 2025 to the firstsix quartermonths ofended June 30, 2026, realized prices contributed to a $175$1.0 millionbillion decreaseincrease in earnings. This decreaseincrease was primarily due to lowerhigher unhedged realized gasoil and NGL prices. This decreaseincrease was partially offset by an increase inlower unhedged realized oil prices. Realizedgas prices were also negatively impacted byand oil hedge cash settlements.

ForDuring informationthe first six months of 2026, we recognized a gain on incomeour taxes,Fervo investment of approximately $201 million in other, net. For additional information, see Note 613 in “Part I. Financial Information – Item 1. Financial Statements” in this report.

The following table presents the major changes in cash and cash equivalents for the three and six months ended MarchJune 31,30, 2026 and 2025.

Operating Cash Flow and Cash Acquired in Merger

As presented in the table above, net cash provided by operating activities continued to be a significant source of capital and liquidity. Operating cash flow grew approximately 53% during the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was due to the Merger and prices significantly increasing in the first half of 2026. Operating cash flow funded our capital expenditures, and we continued to return value to our shareholders by utilizing cash flow and cash balances for share repurchasesrepurchases, dividends and dividends.debt retirements.

Capital expenditures consist primarily of amounts related to our oil and gas exploration and development operations, midstream operations and other corporate activities. Our capital investment program is driven by a disciplined allocation process focused on moderating our production growth and maximizing our returns. As such, our capital expenditures for the first threesix months of 2026 represented approximately 51%40% of our operating cash flow. Capital expenditures increased in 2026 primarily due to the Merger closing on May 7, 2026 and results now include activity related to Coterra legacy assets in the Permian, Anadarko and Marcellus.

During the first threesix months of 2025,2026, we generatedcompleted $133acquisitions millionof property primarily related to state and federal land sales in proceeds primarily from the salePermian offor headquarters-relatedapproximately real$2.6 estate assets as part of our real estate rationalization initiatives.billion. For additional information, see Note 52 in “Part I. Financial Information –- Item 1. Financial Statements” in this report.

During the first threesix months of 2026 and 2025, we received distributions from our investments of $9$22 million and $9$20 million, respectively. We contributed $2$12 million and $2$10 million to our investments during the first threesix months of 2026 and 2025, respectively.