Energy Prospectus

Devon Energy Reports First-Quarter Results and Declares Quarterly Fixed Dividend

KEY HIGHLIGHTS
• Delivered $494 million of net earnings, or $0.77 per share; $779 million of core earnings, or $1.21 per share < Compares to my forecast of $807 million net income.
• Achieved production of 388,000 barrels of oil per day, exceeding the top-end of guidance < Beat my forecast of 383,050 bpd of oil.
• Invested $964 million of capital, 5 percent lower than midpoint guidance
• Generated $1.9 billion of operating cash flow and $1.0 billion of free cash flow
• Returned $464 million to shareholders through the fixed dividend and share repurchases
• Strengthened the balance sheet with cash balances increasing $388 million to a total of $1.2 billion
• On April 22nd, announced business optimization plan targeting $1 billion in annual pre-tax free cash flow improvements
• On May 5th, agreed to sell equity interest in the Matterhorn Pipeline for approximately $375 million

“Devon delivered a strong first quarter, driven by operating excellence and financial discipline,” said Clay Gaspar, president and CEO.
“Oil production once again exceeded our expectations driven by robust base performance and exceptional well results across our
assets. This resulted in significant free cash flow, with $464 million returned to shareholders through dividends and share buybacks.
We stayed focused on capital allocation, prioritizing high-return investments to build sustainable value for shareholders with a
resilient portfolio positioned to thrive in any market environment.”

“Furthermore, I’m excited about our recently announced business optimization plan, which is on track to deliver $1 billion in annual
pre-tax free cash flow improvements by the end of 2026. We are pulling forward some progress into this year and are cutting 2025 full
year capital by $100 million while maintaining our productive capacity for the remainder of the year. With this, our team has already
secured the majority of our 2025 year-end target. We have clear visibility into the remaining goals, and I am confident in our ability to
execute this plan effectively,” Gaspar added.

“Looking ahead, our strategic priorities are clear: executing on our high-quality portfolio through operating excellence, maintaining
financial strength and rewarding our shareholders, and cultivating a culture of success. With our focused strategy and dedicated team,
we are confident we are well-equipped to navigate challenging markets and deliver lasting value," Gaspar concluded.

FINANCIAL RESULTS
Devon reported net earnings of $494 million, or $0.77 per diluted share, in the first quarter of 2025. Adjusting for items analysts
typically exclude from estimates, the company’s core earnings were $779 million, or $1.21 per diluted share.

Operating cash flow was $1.9 billion in the first quarter, representing a 17 percent increase compared to the prior quarter. This level
of cash flow funded Devon’s capital requirements and resulted in $1.0 billion of free cash flow in the quarter.

During the quarter, Devon’s investment-grade financial position strengthened with cash balances increasing by $388 million to a total
of $1.2 billion. The company ended the quarter with outstanding debt of $8.9 billion and a net debt-to-EBITDAX ratio of 1.0 times.

OPERATING RESULTS
Devon’s capital activity in the first quarter averaged 23 operated drilling rigs and 6 completion crews across its asset portfolio. This
level of activity resulted in 136 gross operated wells being placed online, with an average lateral length of 10,700 feet. Total capital
investment was $964 million, or 5 percent below guidance. This positive variance was attributable to effective cost management and
lower infrastructure spend primarily in the Delaware Basin.

Devon’s oil production in the first quarter reached 388,000 barrels per day, exceeding guidance by 5,000 barrels. This positive result
was driven by strong base performance in the Rockies and better-than-expected well performance in the Eagle Ford. Total
companywide production averaged 815,000 oil-equivalent barrels (Boe) per day. < Total production was in line with my forecast.

For the first quarter, Devon’s oil, gas and NGL sales totaled $3.1 billion, a 1 percent increase in revenues compared to the prior
quarter. The company’s realized price during the period, including commodity hedges, was $42.45 per Boe, up $2.13 per Boe
from prior quarter. The improvement was primarily due to higher natural gas liquids (NGL) and natural gas pricing. Natural gas
pricing benefited from improved basin differentials primarily in the Delaware.

Production costs, including taxes, averaged $12.42 per Boe in the first quarter. The largest component of production costs is lease
operating expense and gathering, processing and transportation costs, which totaled $9.31 per Boe in the quarter.

In the first quarter, Devon divested two corporate real estate assets that resulted in a total impairment of $254 million and sale
proceeds of $120 million. As a result of these transactions, Devon's annual DD&A will decrease by approximately $15 million,
and its run-rate financing costs will be reduced by $20 million from the extinguishment of an associated financing lease.

PORTFOLIO UPDATES
On Apr. 1, 2025, the company closed its previously announced Eagle Ford partnership dissolution. Upon close, Devon holds
approximately 46,000 net acres with greater than a 95 percent working interest and operatorship in the Blackhawk Field.

On May 5, 2025, Devon agreed to sell its equity interest in the Matterhorn Pipeline for approximately $375 million. The
transaction is subject to customary terms and conditions and is expected to close in the second quarter of 2025. Proceeds from
the divestiture will be used to further strengthen the company’s investment-grade financial position. The monetization of
Devon’s equity ownership will not change the terms or conditions of the company’s secured capacity on the pipeline.

2025 OUTLOOK
Based on the strength of first quarter results, Devon is increasing its full-year 2025 oil production forecast by 1 percent to a range of
382,000 to 388,000 barrels per day. The company is also increasing its total production outlook and now expects volumes to be in the
range of 810,000 to 828,000 Boe per day. Devon has also revised its full-year capital guidance to a range of $3.7 billion to $3.9 billion,
down from the previous estimate of approximately $3.9 billion. This $100 million reduction reflects the early success of the company's
recently launched business optimization plan.

In the second quarter of 2025, Devon expects oil production to average 381,000 to 387,000 barrels per day. Capital spending in
the second quarter is expected to be approximately $1.0 billion and includes $50 million related to multiple land trades in the
Delaware Basin that will increase interest on greater than 30 wells. < My Q2 production forecast is 820,000 Boepd with 385,400 bpd of oil.

With the ongoing market and price volatility, Devon will continue to monitor the macro environment and has significant flexibility to
adjust its activity and capital programs. Given the company’s investment grade financial position along with low breakeven funding
levels, Devon is well positioned to execute on its disciplined plan.
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Bottomline: Devon is a large-cap that is rock solid. I will be updating my forecast/valuation model on Wednesday.