DEVON ENERGY CORP/DE, 10-Q filed on 5/3/2017
Quarterly Report
Document And Entity Information
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Apr. 19, 2017
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2017 
 
Amendment Flag
false 
 
Trading Symbol
DVN 
 
Entity Registrant Name
DEVON ENERGY CORP/DE 
 
Entity Central Index Key
0001090012 
 
Current Fiscal Year End Date
--12-31 
 
Document Fiscal Year Focus
2017 
 
Entity Filer Category
Large Accelerated Filer 
 
Document Fiscal Period Focus
Q1 
 
Entity Common Stock, Shares Outstanding
 
525.7 
Consolidated Comprehensive Statements Of Earnings (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Income Statement [Abstract]
 
 
Oil, gas and NGL sales
$ 1,309 
$ 825 
Oil, gas and NGL derivatives
232 
33 
Marketing and midstream revenues
2,010 
1,268 
Asset dispositions and other
(4)
 
Total revenues and other
3,547 
2,126 
Lease operating expenses
386 
444 
Marketing and midstream operating expenses
1,803 
1,066 
General and administrative expenses
181 
194 
Production and property taxes
85 
78 
Depreciation, depletion and amortization
381 
542 
Asset impairments
3,035 
Restructuring and transaction costs
 
247 
Other operating items
(2)
20 
Total operating expenses
2,841 
5,626 
Operating income (loss)
706 
(3,500)
Net financing costs
127 
164 
Other nonoperating items
(19)
21 
Earnings (loss) before income taxes
598 
(3,685)
Income tax expense (benefit)
19 
(217)
Net earnings (loss)
579 
(3,468)
Net earnings (loss) attributable to noncontrolling interests
14 
(412)
Net earnings (loss) attributable to Devon
565 
(3,056)
Net earnings (loss) per share attributable to Devon:
 
 
Basic
$ 1.08 
$ (6.44)
Diluted
$ 1.07 
$ (6.44)
Comprehensive earnings (loss):
 
 
Net earnings (loss)
579 
(3,468)
Other comprehensive earnings, net of tax:
 
 
Foreign currency translation
(2)
23 
Pension and postretirement plans
Other comprehensive earnings, net of tax
27 
Comprehensive earnings (loss)
582 
(3,441)
Comprehensive earnings (loss) attributable to noncontrolling interests
14 
(412)
Comprehensive earnings (loss) attributable to Devon
$ 568 
$ (3,029)
Consolidated Statements Of Cash Flows (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Cash flows from operating activities:
 
 
Net earnings (loss)
$ 579 
$ (3,468)
Adjustments to reconcile net earnings (loss) to net cash from operating activities:
 
 
Depreciation, depletion and amortization
381 
542 
Asset impairments
3,035 
Gains and losses on asset sales
 
Deferred income tax benefit
(1)
(207)
Commodity derivatives
(232)
(33)
Cash settlements on commodity derivatives
19 
Other derivatives and financial instruments
(9)
227 
Cash settlements on other derivatives and financial instruments
(2)
(123)
Asset retirement obligation accretion
17 
19 
Amortization of stock-based compensation
46 
108 
Other
 
(194)
Net change in working capital
15 
214 
Change in long-term other assets
53 
Change in long-term other liabilities
20 
(27)
Net cash from operating activities
834 
165 
Cash flows from investing activities:
 
 
Capital expenditures
(747)
(749)
Acquisitions of property, equipment and businesses
(20)
(1,627)
Proceeds from sale of investment
190 
 
Divestitures of property and equipment
38 
18 
Other
(3)
(1)
Net cash from investing activities
(542)
(2,359)
Cash flows from financing activities:
 
 
Borrowings of long-term debt, net of issuance costs
813 
396 
Repayments of long-term debt
(587)
(259)
Payment of installment payable
(250)
 
Net short-term debt repayments
 
(626)
Issuance of common stock
 
1,469 
Issuance of subsidiary units
55 
727 
Dividends paid on common stock
(32)
(125)
Contributions from noncontrolling interests
21 
Distributions to noncontrolling interests
(81)
(73)
Taxes for share-based compensation
(61)
(18)
Other
(2)
(1)
Net cash from financing activities
(124)
1,493 
Effect of exchange rate changes on cash
(8)
26 
Net change in cash and cash equivalents
160 
(675)
Cash and cash equivalents at beginning of period
1,959 
2,310 
Cash and cash equivalents at end of period
$ 2,119 
$ 1,635 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Current assets:
 
 
Cash and cash equivalents
$ 2,119 
$ 1,959 
Accounts receivable
1,320 
1,356 
Assets held for sale
 
193 
Other current assets
336 
264 
Total current assets
3,775 
3,772 
Oil and gas, based on full cost accounting:
 
 
Subject to amortization
76,421 
75,648 
Not subject to amortization
3,096 
3,437 
Total oil and gas
79,517 
79,085 
Midstream and other
10,701 
10,455 
Total property and equipment, at cost
90,218 
89,540 
Less accumulated depreciation, depletion and amortization
(73,797)
(73,350)
Property and equipment, net
16,421 
16,190 
Goodwill
3,964 
3,964 
Other long-term assets
1,974 
1,987 
Total assets
26,134 
25,913 
Current liabilities:
 
 
Accounts payable
638 
642 
Revenues and royalties payable
991 
908 
Other current liabilities
841 
1,066 
Total current liabilities
2,470 
2,616 
Long-term debt
10,381 
10,154 
Asset retirement obligations
1,067 
1,226 
Other long-term liabilities
643 
894 
Deferred income taxes
651 
648 
Stockholders’ equity:
 
 
Common stock, $0.10 par value. Authorized 1.0 billion shares; issued 526 million and 523 million shares in 2017 and 2016, respectively
53 
52 
Additional paid-in capital
7,207 
7,237 
Accumulated deficit
(1,081)
(1,646)
Accumulated other comprehensive earnings
287 
284 
Total stockholders’ equity attributable to Devon
6,466 
5,927 
Noncontrolling interests
4,456 
4,448 
Total stockholders’ equity
10,922 
10,375 
Total liabilities and stockholders’ equity
$ 26,134 
$ 25,913 
Consolidated Balance Sheets (Parenthetical) (USD $)
Mar. 31, 2017
Dec. 31, 2016
Statement Of Financial Position [Abstract]
 
 
Common stock, par value (in dollars per share)
$ 0.10 
$ 0.10 
Common stock, shares authorized (in shares)
1,000,000,000 
1,000,000,000 
Common stock, shares issued (in shares)
526,000,000 
523,000,000 
Consolidated Statements Of Stockholders' Equity (USD $)
In Millions
Total
Common Stock [Member]
Additional Paid-In Capital [Member]
Retained Earnings (Accumulated Deficit) [Member]
Accumulated Other Comprehensive Earnings [Member]
Treasury Stock [Member]
Noncontrolling Interests [Member]
Balance at Dec. 31, 2015
$ 10,989 
$ 42 
$ 4,996 
$ 1,781 
$ 230 
 
$ 3,940 
Balance, shares at Dec. 31, 2015
 
418 
 
 
 
 
 
Net earnings (loss)
(3,468)
 
 
(3,056)
 
 
(412)
Other comprehensive earnings, net of tax
27 
 
 
 
27 
 
 
Restricted stock grants, net of cancellations, shares
 
 
 
 
 
 
Common stock repurchased
(12)
 
 
 
 
(12)
 
Common stock retired
 
 
(12)
 
 
12 
 
Common stock dividends
(125)
 
 
(125)
 
 
 
Common stock issued
2,127 
10 
2,117 
 
 
 
 
Common stock issued, shares
 
103 
 
 
 
 
 
Share-based compensation
99 
 
99 
 
 
 
 
Subsidiary equity transactions
944 
 
301 
 
 
 
643 
Distributions to noncontrolling interests
(73)
 
 
 
 
 
(73)
Balance at Mar. 31, 2016
10,508 
52 
7,501 
(1,400)
257 
 
4,098 
Balance, shares at Mar. 31, 2016
 
524 
 
 
 
 
 
Balance at Dec. 31, 2016
10,375 
52 
7,237 
(1,646)
284 
 
4,448 
Balance, shares at Dec. 31, 2016
 
523 
 
 
 
 
 
Net earnings (loss)
579 
 
 
565 
 
 
14 
Other comprehensive earnings, net of tax
 
 
 
 
 
Restricted stock grants, net of cancellations, value
 
 
 
 
 
Restricted stock grants, net of cancellations, shares
 
 
 
 
 
 
Common stock repurchased
(38)
 
 
 
 
(38)
 
Common stock retired
 
 
(38)
 
 
38 
 
Common stock dividends
(32)
 
(32)
 
 
 
 
Share-based compensation
30 
 
30 
 
 
 
 
Share-based compensation, shares
 
 
 
 
 
 
Subsidiary equity transactions
85 
 
10 
 
 
 
75 
Distributions to noncontrolling interests
(81)
 
 
 
 
 
(81)
Balance at Mar. 31, 2017
$ 10,922 
$ 53 
$ 7,207 
$ (1,081)
$ 287 
 
$ 4,456 
Balance, shares at Mar. 31, 2017
 
526 
 
 
 
 
 
Summary Of Significant Accounting Policies
Summary Of Significant Accounting Policies

1.Summary of Significant Accounting Policies

The accompanying unaudited interim financial statements and notes of Devon have been prepared pursuant to the rules and regulations of the SEC. Pursuant to such rules and regulations, certain disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted. The accompanying unaudited interim financial statements and notes should be read in conjunction with the financial statements and notes included in Devon’s 2016 Annual Report on Form 10-K.

The accompanying unaudited interim financial statements furnished in this report reflect all adjustments that are, in the opinion of management, necessary for a fair statement of Devon’s results of operations and cash flows for the three-month periods ended March 31, 2017 and 2016 and Devon’s financial position as of March 31, 2017.

Recently Adopted Accounting Standards

In January 2017, Devon adopted ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. Its objective is to simplify several aspects of the accounting for share-based payments, including income taxes when awards vest or are settled, statutory withholding and forfeitures. As the result of adoption, Devon made certain income tax presentation changes, most notably prospectively presenting excess tax benefits and deficiencies in the consolidated comprehensive statements of earnings and as operating cash flows in the consolidated statements of cash flows. Devon also retrospectively applied the new cash flow statement guidance dictating the presentation of shares traded for tax-withholding purposes as a financing activity. The adoption of the new guidance did not materially impact the consolidated financial statements for the three months ended March 31, 2017 or previously reported financial information but could have a more material future impact.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill And Other (Topic 350)Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the requirement to compare the implied fair value of goodwill with its carrying amount as part of step two of the goodwill impairment test. As a result, under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. However, the impairment loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, including any interim impairment tests within those annual periods, with early application for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. In January 2017, Devon elected to early adopt ASU 2017-04, and the adoption had no impact on the consolidated financial statements. Devon will perform future goodwill impairment tests according to ASU 2017-04.

Recently Issued Accounting Standards

The FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition and industry-specific guidance in Subtopic 932-605, Extractive Activities – Oil and Gas – Revenue Recognition. This ASU provides guidance concerning the recognition and measurement of revenue from contracts with customers. Its objective is to increase the usefulness of information in the financial statements regarding the nature, timing and uncertainty of revenues. The effective date for ASU 2014-09 was delayed through the issuance of ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, to annual and interim periods beginning in 2018, with early adoption permitted in 2017. Devon does not plan on early adopting this ASU. The ASU is required to be adopted using either the retrospective transition method, which requires restating previously reported results or the cumulative effect (modified retrospective) transition method, which utilizes a cumulative-effect adjustment to retained earnings in the period of adoption to account for prior period effects rather than restating previously reported results. Devon intends to use the cumulative effect transition method and does not anticipate this ASU will have a material impact on its balance sheet or related consolidated statement of earnings, stockholders’ equity or cash flows. Devon continues to evaluate the impact of the disclosures required by this ASU. Devon does not expect its annual disclosures will materially change upon adopting this ASU. However, Devon’s quarterly disclosures will materially expand upon adoption of this ASU. Devon is implementing a process to gather and provide the quarterly disclosures required by the ASU.

The FASB issued ASU 2016-02, Leases (Topic 842). This ASU will supersede the lease requirements in Topic 840, Leases. Its objective is to increase transparency and comparability among organizations. This ASU provides guidance requiring lessees to recognize most leases on their balance sheet. Lessor accounting does not significantly change, except for some changes made to align with new revenue recognition requirements. This ASU is effective for Devon beginning January 1, 2019 and will be applied using a modified retrospective transition method, which requires applying the new guidance to leases that exist or are entered into after the beginning of the earliest period in the financial statements. Early adoption is permitted, but Devon does not plan to early adopt. Devon has begun the process of evaluating contracts and gathering the necessary terms and data elements for purposes of determining the impact this ASU will have on its consolidated financial statements and related disclosures. Based on initial research, Devon estimates more than 7,500 contracts and a large number of data elements must be gathered and reviewed to ensure proper accounting of these contracts once this ASU is effective. Furthermore, Devon anticipates complying with this standard will significantly impact its systems, processes and controls and is evaluating technology requirements and solutions needed to comply with the requirements of this ASU.

The FASB issued ASU No. 2017-07, Compensation – Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU will require entities to present the service cost component of net periodic benefit cost in the same line item as other employee compensation costs and present the other components of net periodic benefit cost outside of operating income in the income statement. Only the service cost component of net periodic benefit cost is eligible for capitalization. This ASU is effective for Devon beginning January 1, 2018, and income statement presentation changes will be applied retrospectively, while service cost component capitalization will be applied prospectively. Upon adoption of this ASU, Devon will reclassify $7 million, $14 million and $16 million of non-service cost components of net periodic benefit costs for 2017, 2016 and 2015, respectively, as other nonoperating items. Such amounts are currently classified in Devon’s G&A. No other changes upon adopting this ASU are expected to be material.  

Acquisitions And Divestitures
Acquisitions and Divestitures

2.

Acquisitions and Divestitures

Devon Acquisitions

On January 7, 2016, Devon acquired approximately 80,000 net acres (unaudited) and assets in the STACK play for approximately $1.5 billion. Devon funded the acquisition with $849 million of cash, after adjustments, and $659 million of common equity shares. The purchase price allocation was approximately $1.3 billion to unproved properties and approximately $200 million to proved properties.

 

 

EnLink Acquisitions

On January 7, 2016, EnLink acquired Anadarko Basin gathering and processing midstream assets, along with dedicated acreage service rights and service contracts, for approximately $1.4 billion. The purchase price allocation was $1.0 billion to intangible assets and approximately $400 million to property and equipment. EnLink funded the acquisition with approximately $215 million of General Partner common units and approximately $800 million of cash, primarily funded with the issuance of EnLink preferred units. The remaining $500 million of the purchase price was to be paid within one year with the option to defer $250 million of the final payment 24 months from the close date. The first installment payment of $250 million was paid in January 2017. The remaining $250 million payment is reported in other current liabilities in the accompanying consolidated balance sheets. The accretion of the discount is reported within net financing costs in the accompanying consolidated comprehensive statement of earnings.

EnLink Asset Divestitures

During the first quarter of 2017, EnLink divested its ownership interest in Howard Energy Partners for approximately $190 million.


Devon Upstream Asset Divestitures

 

In May 2017, Devon announced its intent to divest approximately $1 billion of upstream assets. The non-core assets identified for monetization include select portions of the Barnett Shale focused primarily around Johnson County and other properties located principally within Devon’s U.S. resource base. Devon expects the divestiture process will take up to 12 to 18 months to complete. Devon plans to deploy divestiture proceeds toward its U.S. resource plays and to further strengthen its investment-grade financial position. The non-core divestiture plan is also expected to accelerate Devon’s transition to higher-margin production.

Derivative Financial Instruments
Derivative Financial Instruments

3.

Derivative Financial Instruments

Objectives and Strategies

Devon periodically enters into derivative financial instruments with respect to a portion of its oil, gas and NGL production to hedge future prices received. Additionally, Devon and EnLink periodically enter into derivative financial instruments with respect to a portion of their oil, gas and NGL marketing activities. These commodity derivative financial instruments include financial price swaps, basis swaps and costless price collars. Devon periodically enters into interest rate swaps to manage its exposure to interest rate volatility and foreign exchange forward contracts to manage its exposure to fluctuations in the U.S. and Canadian dollar exchange rates. As of March 31, 2017, Devon did not have any open foreign exchange contracts.

Devon does not intend to hold or issue derivative financial instruments for speculative trading purposes and has elected not to designate any of its derivative instruments for hedge accounting treatment.

Counterparty Credit Risk

By using derivative financial instruments, Devon is exposed to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, the hedging instruments are placed with a number of counterparties whom Devon believes are acceptable credit risks. It is Devon’s policy to enter into derivative contracts only with investment-grade rated counterparties deemed by management to be competent and competitive market makers. Additionally, Devon’s derivative contracts generally contain provisions that provide for collateral payments, if Devon’s or its counterparty’s credit rating falls below certain credit rating levels.

As of March 31, 2017, Devon held $13 million of cash collateral, which represented the estimated fair value of certain derivative positions in excess of Devon’s credit guidelines and is reported in other current liabilities in the accompanying consolidated balance sheets. As of December 31, 2016, Devon held no collateral from counterparties.

Commodity Derivatives

As of March 31, 2017, Devon had the following open oil derivative positions. The first table presents Devon’s oil derivatives that settle against the average of the prompt month NYMEX WTI futures price. The second table presents Devon’s oil derivatives that settle against the respective indices noted within the table.

 

 

 

Price Swaps

 

 

Price Collars

 

Period

 

Volume

(Bbls/d)

 

 

Weighted

Average

Price ($/Bbl)

 

 

Volume

(Bbls/d)

 

 

Weighted

Average Floor

Price ($/Bbl)

 

 

Weighted

Average

Ceiling Price

($/Bbl)

 

Q2-Q4 2017

 

 

73,945

 

 

$

54.34

 

 

 

61,665

 

 

$

45.53

 

 

$

57.96

 

Q1-Q4 2018

 

 

5,592

 

 

$

53.38

 

 

 

12,921

 

 

$

46.69

 

 

$

56.69

 

 

 

 

Oil Basis Swaps

 

Period

 

Index

 

Volume (Bbls/d)

 

 

Weighted Average

Differential to WTI

($/Bbl)

 

Q2-Q4 2017

 

Western Canadian Select

 

 

63,244

 

 

$

(14.83

)

Q2-Q4 2017

 

Midland Sweet

 

 

20,000

 

 

$

(0.41

)

 

As of March 31, 2017, Devon had the following open natural gas derivative positions. The first table presents Devon’s natural gas derivatives that settle against the Inside FERC first of the month Henry Hub index. The second table presents Devon’s natural gas derivatives that settle against the respective indices noted within the table.

 

 

 

Price Swaps

 

 

Price Collars

 

Period

 

Volume (MMBtu/d)

 

 

Weighted Average Price ($/MMBtu)

 

 

Volume (MMBtu/d)

 

 

Weighted Average Floor Price ($/MMBtu)

 

 

Weighted Average

Ceiling Price ($/MMBtu)

 

Q2-Q4 2017

 

 

193,218

 

 

$

3.17

 

 

 

411,418

 

 

$

2.98

 

 

$

3.38

 

Q1-Q4 2018

 

 

68,890

 

 

$

3.17

 

 

 

36,986

 

 

$

3.29

 

 

$

3.63

 

 

 

 

Natural Gas Basis Swaps

 

Period

 

Index

 

Volume

(MMBtu/d)

 

 

Weighted Average

Differential to

Henry Hub

($/MMBtu)

 

Q2-Q4 2017

 

Panhandle Eastern Pipe Line

 

 

150,000

 

 

$

(0.34

)

Q2-Q4 2017

 

El Paso Natural Gas

 

 

80,000

 

 

$

(0.13

)

Q2-Q4 2017

 

Houston Ship Channel

 

 

35,000

 

 

$

0.06

 

Q2-Q4 2017

 

Transco Zone 4

 

 

205,000

 

 

$

0.03

 

Q1-Q4 2018

 

Panhandle Eastern Pipe Line

 

 

50,000

 

 

$

(0.29

)

 

As of March 31, 2017, Devon had the following open NGL derivative positions. Devon’s NGL positions settle against the average of the prompt month OPIS Mont Belvieu, Texas index.

 

 

 

 

 

Price Swaps

 

 

Price Collars

 

Period

 

Product

 

Volume (Bbls/d)

 

 

Weighted Average Price ($/Bbl)

 

 

Volume (Bbls/d)

 

 

Weighted Average Floor Price ($/Bbl)

 

 

Weighted Average Ceiling Price ($/Bbl)

 

Q2-Q4 2017

 

Propane

 

 

1,662

 

 

$

27.24

 

 

 

1,662

 

 

$

26.30

 

 

$

28.40

 

 

Interest Rate Derivatives

As of March 31, 2017, Devon had the following open interest rate derivative positions:

 

Notional

 

 

Rate Received

 

 

Rate Paid

 

 

Expiration

(Millions)

 

 

 

 

 

 

 

 

 

 

 

$

750

 

 

Three Month LIBOR

 

 

 

2.98%

 

 

December 2048 (1)

$

100

 

 

 

1.76%

 

 

Three Month LIBOR

 

 

January 2019

 

(1)

Mandatory settlement in December 2018.

 

Financial Statement Presentation

The following table presents the net gains and losses by derivative financial instrument type followed by the corresponding individual consolidated comprehensive statements of earnings caption.

 

 

 

Three Months Ended March 31,

 

 

 

2017

 

 

2016

 

 

 

(Millions)

 

Commodity derivatives:

 

 

 

 

 

 

 

 

Oil, gas and NGL derivatives

 

$

232

 

 

$

33

 

Marketing and midstream revenues

 

 

4

 

 

 

 

Interest rate derivatives:

 

 

 

 

 

 

 

 

Other nonoperating items

 

 

5

 

 

 

(72

)

Foreign currency derivatives:

 

 

 

 

 

 

 

 

Other nonoperating items

 

 

 

 

 

(155

)

Net gains (losses) recognized

 

$

241

 

 

$

(194

)

 

The following table presents the derivative fair values by derivative financial instrument type followed by the corresponding individual consolidated balance sheet caption.

 

 

 

March 31, 2017

 

 

December 31, 2016

 

 

 

(Millions)

 

Commodity derivative assets:

 

 

 

 

 

 

 

 

Other current assets

 

$

79

 

 

$

9

 

Other long-term assets

 

 

5

 

 

 

1

 

Interest rate derivative assets:

 

 

 

 

 

 

 

 

Other current assets

 

 

1

 

 

 

1

 

Total derivative assets

 

$

85

 

 

$

11

 

Commodity derivative liabilities:

 

 

 

 

 

 

 

 

Other current liabilities

 

$

46

 

 

$

187

 

Other long-term liabilities

 

 

 

 

 

16

 

Interest rate derivative liabilities:

 

 

 

 

 

 

 

 

Other long-term liabilities

 

 

36

 

 

 

41

 

Total derivative liabilities

 

$

82

 

 

$

244

 

 

Share-Based Compensation
Share-Based Compensation

4.

Share-Based Compensation

The following table presents the effects of share-based compensation included in Devon’s accompanying consolidated comprehensive statements of earnings. Gross G&A expense for the first three months of 2017 and 2016 includes $14 million and $6 million, respectively, of unit-based compensation related to grants made under EnLink’s long-term incentive plans.

The vesting for certain share-based awards was accelerated in 2016 in conjunction with the reduction of workforce described in Note 6. For the three months ended March 31, 2016, approximately $67 million of associated expense for these accelerated awards is included in restructuring and transaction costs in the accompanying consolidated comprehensive statements of earnings.

 

 

 

Three Months Ended March 31,

 

 

 

2017

 

 

2016

 

 

 

(Millions)

 

Gross G&A for share-based compensation

 

$

50

 

 

$

45

 

Share-based compensation expense capitalized pursuant to

   the full cost method of accounting for oil and gas properties

 

$

9

 

 

$

12

 

Related income tax benefit

 

$

1

 

 

$

9

 

 

Under its approved long-term incentive plan, Devon granted share-based awards to certain employees in the first three months of 2017. The following table presents a summary of Devon’s unvested restricted stock awards and units, performance-based restricted stock awards and performance share units granted under the plan.

 

 

 

Restricted Stock

 

 

Performance-Based

 

 

Performance

 

 

 

Awards and Units

 

 

Restricted Stock Awards

 

 

Share Units

 

 

 

Awards and

Units

 

 

Weighted

Average

Grant-Date

Fair Value

 

 

Awards

 

 

Weighted

Average

Grant-Date

Fair Value

 

 

Units

 

 

 

 

Weighted

Average

Grant-Date

Fair Value

 

 

 

(Thousands, except fair value data)

 

Unvested at 12/31/16

 

 

6,407

 

 

$

34.40

 

 

 

585

 

 

$

37.60

 

 

 

2,604

 

 

 

 

$

46.66

 

Granted

 

 

2,571

 

 

$

45.41

 

 

 

205

 

 

$

45.41

 

 

 

1,010

 

 

 

 

$

52.58

 

Vested

 

 

(2,001

)

 

$

38.33

 

 

 

(178

)

 

$

42.43

 

 

 

(832

)

 

 

 

$

78.19

 

Forfeited

 

 

(59

)

 

$

36.06

 

 

 

 

 

$

 

 

 

 

 

 

 

$

 

Unvested at 3/31/17

 

 

6,918

 

 

$

37.34

 

 

 

612

 

 

$

38.81

 

 

 

2,782

 

 

(1

)

$

41.21

 

 

(1)

A maximum of 5.6 million common shares could be awarded based upon Devon’s final TSR ranking relative to Devon’s peer group established under applicable award agreements.

The following table presents the assumptions related to the performance share units granted in 2017, as indicated in the previous summary table.

 

 

 

2017

 

Grant-date fair value

 

$

51.05

 

 

 

$

53.12

 

Risk-free interest rate

 

1.50%

 

Volatility factor

 

45.8%

 

Contractual term (years)

 

2.89

 

 

The following table presents a summary of the unrecognized compensation cost and the related weighted average recognition period associated with unvested awards and units as of March 31, 2017.

 

 

 

 

 

 

 

Performance-Based

 

 

 

 

 

 

 

Restricted Stock

 

 

Restricted Stock

 

 

Performance

 

 

 

Awards and Units

 

 

Awards

 

 

Share Units

 

Unrecognized compensation cost (millions)

 

$

209

 

 

$

11

 

 

$

54

 

Weighted average period for recognition (years)

 

 

2.9

 

 

 

2.3

 

 

 

2.3

 

EnLink Share-Based Awards

In March 2017, the General Partner and EnLink issued restricted incentive units as bonus payments to officers and certain employees. The combined grant fair value was $10 million, and the total cost was recognized in the first quarter of 2017 due to the awards vesting immediately.

The following table presents a summary of the unrecognized compensation cost and the related weighted average recognition period associated with the General Partner’s and EnLink’s unvested restricted incentive units and performance units as of March 31, 2017.

 

 

 

General Partner

 

 

EnLink

 

 

 

Restricted

 

 

Performance

 

 

Restricted

 

 

Performance

 

 

 

Incentive Units

 

 

Units

 

 

Incentive Units

 

 

Units

 

Unrecognized compensation cost (millions)

 

$

20

 

 

$

8

 

 

$

21

 

 

$

8

 

Weighted average period for recognition (years)

 

 

2.0

 

 

 

2.3

 

 

 

2.0

 

 

 

2.3

 

 

Asset Impairments
Asset Impairments

5.

Asset Impairments

Oil and Gas Impairments

Under the full cost method of accounting, capitalized costs of oil and gas properties, net of accumulated DD&A and deferred income taxes, may not exceed the full cost “ceiling” at the end of each quarter. The ceiling is calculated separately for each country and is based on the present value of estimated future net cash flows from proved oil and gas reserves, discounted at 10% per annum, net of related tax effects. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months.

In the first quarter of 2016, Devon recognized $1.6 billion and $554 million in oil and gas asset impairments for its U.S. and Canadian operations, respectively. The oil and gas impairments resulted from declines in the U.S. and Canada full cost ceilings. The lower ceiling values resulted primarily from significant decreases in the 12-month average trailing prices for oil, bitumen, gas and NGLs, which significantly reduced proved reserves values and, to a lesser degree, proved reserves.

EnLink Goodwill Impairments

In the first quarter of 2016, EnLink recognized $873 million in goodwill impairments. See Note 12 for additional details.

Restructuring And Transaction Costs
Restructuring And Transaction Costs

6.      Restructuring and Transaction Costs

Reduction in Workforce

In the first quarter of 2016, Devon recognized $234 million in employee-related costs associated with a reduction in workforce. Of these employee-related costs, approximately $67 million resulted from accelerated vesting of share-based grants, which are noncash charges. Additionally, approximately $30 million resulted from estimated defined benefit settlements.

Transaction Costs

In the first quarter of 2016, Devon and EnLink recognized $13 million in transaction costs primarily associated with the closing of the acquisitions discussed in Note 2.

The following table summarizes Devon’s restructuring liabilities.

 

 

 

Other

 

 

Other

 

 

 

 

 

 

 

Current

 

 

Long-term

 

 

 

 

 

 

 

Liabilities

 

 

Liabilities

 

 

Total

 

 

 

(Millions)

 

Balance as of December 31, 2016

 

$

48

 

 

$

62

 

 

$

110

 

Changes due to 2016 workforce reductions

 

 

(18

)

 

 

 

 

 

(18

)

Changes related to prior years' restructurings

 

 

3

 

 

 

(5

)

 

 

(2

)

Balance as of March 31, 2017

 

$

33

 

 

$

57

 

 

$

90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2015

 

 

13

 

 

 

63

 

 

 

76

 

Changes due to 2016 workforce reductions

 

 

149

 

 

 

 

 

 

149

 

Changes related to prior years' restructurings

 

 

2

 

 

 

(2

)

 

 

 

Balance as of March 31, 2016

 

$

164

 

 

$

61

 

 

$

225

 

 

Income Taxes
Income Taxes

7.

Income Taxes

The following table presents Devon’s total income tax expense (benefit) and a reconciliation of its effective income tax rate to the U.S. statutory income tax rate.

 

 

 

Three Months Ended March 31,

 

 

 

2017

 

 

2016

 

 

 

(Millions)

 

Current income tax expense (benefit)

 

$

20

 

 

$

(10

)

Deferred income tax benefit

 

 

(1

)

 

 

(207

)

Total income tax expense (benefit)

 

$

19

 

 

$

(217

)

 

 

 

 

 

 

 

 

 

U.S. statutory income tax rate

 

 

35

%

 

 

35

%

Deferred tax asset valuation allowance

 

 

(32

%)

 

 

(22

%)

Non-deductible goodwill impairments

 

 

0

%

 

 

(8

%)

Taxation on Canadian operations

 

 

0

%

 

 

(2

%)

State income taxes

 

 

1

%

 

 

1

%

Other

 

 

(1

%)

 

 

2

%

Effective income tax rate

 

 

3

%

 

 

6

%

 

Devon estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which it operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur.

Throughout 2016 and into the first quarter of 2017, Devon continued to maintain a 100% valuation allowance against its U.S. deferred tax assets resulting from prior year cumulative financial losses largely due to full cost impairments. Furthermore, a partial allowance continues to be held against certain Canadian segment deferred tax assets. Devon provided an additional $808 million and a reduction of $192 million to the U.S. segment valuation allowance in the first quarters of 2016 and 2017, respectively, based on the financial loss and income recorded during those periods.     

In the first quarter of 2016, EnLink recorded goodwill impairments totaling $873 million. These impairments are not deductible for purposes of calculating income tax and, therefore, have an impact on the effective tax rate.

Devon is under audit in the U.S. and various foreign jurisdictions as part of its normal course of business. The timing of resolution of income tax examinations is uncertain as are the amounts and timing of tax payments that are part of any audit settlement process. Devon believes that within the next 12 months, it is reasonably possible that certain tax examinations will be resolved by settlement with the taxing authorities.

 

Net Earnings (Loss) Per Share Attributable to Devon
Net Earnings (Loss) Per Share Attributable to Devon

8.

Net Earnings (Loss) Per Share Attributable to Devon

The following table reconciles net earnings (loss) attributable to Devon and weighted-average common shares outstanding used in the calculations of basic and diluted net earnings (loss) per share.

 

 

 

Three Months Ended March 31,

 

 

 

2017

 

 

2016

 

 

 

(Millions, except per share amounts)

 

Net earnings (loss):

 

 

 

 

 

 

 

 

Net earnings (loss) attributable to Devon

 

$

565

 

 

$

(3,056

)

Attributable to participating securities

 

 

(6

)

 

 

 

Basic and diluted earnings (loss)

 

$

559

 

 

$

(3,056

)

Common shares:

 

 

 

 

 

 

 

 

Common shares outstanding - total

 

 

525

 

 

 

479

 

Attributable to participating securities

 

 

(6

)

 

 

(5

)

Common shares outstanding - basic

 

 

519

 

 

 

474

 

Dilutive effect of potential common shares issuable

 

 

3

 

 

 

 

Common shares outstanding - diluted

 

 

522

 

 

 

474

 

Net earnings (loss) per share attributable to Devon:

 

 

 

 

 

 

 

 

Basic

 

$

1.08

 

 

$

(6.44

)

Diluted

 

$

1.07

 

 

$

(6.44

)

Antidilutive options (1)

 

 

2

 

 

 

3

 

 

(1)

Amounts represent options to purchase shares of Devon’s common stock that are excluded from the diluted net earnings (loss) per share calculations because the options are antidilutive.

Other Comprehensive Earnings
Other Comprehensive Earnings

9.

Other Comprehensive Earnings

Components of other comprehensive earnings consist of the following:

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2017

 

 

2016

 

 

 

(Millions)

 

Foreign currency translation:

 

 

 

 

 

 

 

 

Beginning accumulated foreign currency translation

 

$

456

 

 

$

424

 

Change in cumulative translation adjustment

 

 

1

 

 

 

51

 

Income tax expense

 

 

(3

)

 

 

(28

)

Ending accumulated foreign currency translation

 

 

454

 

 

 

447

 

Pension and postretirement benefit plans:

 

 

 

 

 

 

 

 

Beginning accumulated pension and postretirement benefits

 

 

(172

)

 

 

(194

)

Recognition of net actuarial loss and prior service cost in earnings (1)

 

 

5

 

 

 

6

 

Income tax expense

 

 

 

 

 

(2

)

Ending accumulated pension and postretirement benefits

 

 

(167

)

 

 

(190

)

Accumulated other comprehensive earnings, net of tax

 

$

287

 

 

$

257

 

 

(1)

These accumulated other comprehensive earnings components are included in the computation of net periodic benefit cost, which is a component of G&A on the accompanying consolidated comprehensive statements of earnings. See Note 16 for additional details.

Supplemental Information To Statements Of Cash Flows
Supplemental Information To Statements Of Cash Flows

10.

Supplemental Information to Statements of Cash Flows

 

 

 

Three Months Ended March 31,

 

 

 

2017

 

 

2016

 

 

 

(Millions)

 

Net change in working capital accounts, net of assets and liabilities assumed:

 

 

 

 

 

 

 

 

Accounts receivable

 

$

48

 

 

$

146

 

Income taxes receivable

 

 

1

 

 

 

115

 

Other current assets

 

 

(22

)

 

 

251

 

Accounts payable

 

 

4

 

 

 

(121

)

Revenues and royalties payable

 

 

73

 

 

 

(101

)

Other current liabilities

 

 

(89

)

 

 

(76

)

Net change in working capital

 

$

15

 

 

$

214

 

Interest paid (net of capitalized interest)

 

$

92

 

 

$

115

 

Income taxes paid (received)

 

$

3

 

 

$

(128

)

 

Devon’s acquisition of certain STACK assets during the first three months of 2016 included the noncash issuance of Devon common stock. See Note 2 for additional details.

EnLink’s acquisition of Anadarko Basin gathering and processing midstream assets during the first three months of 2016 included noncash issuance of General Partner common units. See Note 2 for additional details.

 

Accounts Receivable
Accounts Receivable

11.

Accounts Receivable

Components of accounts receivable include the following:

 

 

 

March 31, 2017

 

 

December 31, 2016

 

 

 

(Millions)

 

Oil, gas and NGL sales

 

$

495

 

 

$

487

 

Joint interest billings

 

 

104

 

 

 

110

 

Marketing and midstream revenues

 

 

672

 

 

 

708

 

Other

 

 

67

 

 

 

69

 

Gross accounts receivable

 

 

1,338

 

 

 

1,374

 

Allowance for doubtful accounts

 

 

(18

)

 

 

(18

)

Net accounts receivable

 

$

1,320

 

 

$

1,356

 

 

Goodwill And Other Intangible Assets
Goodwill And Other Intangible Assets

12.

Goodwill and Other Intangible Assets

Goodwill

Devon performs an annual impairment test of goodwill at October 31, or more frequently if events or changes in circumstances indicate that the carrying value of a reporting unit may not be recoverable. Sustained weakness in the overall energy sector driven by low commodity prices, together with a decline in EnLink’s unit price, caused a noncash goodwill impairment of $873 million in the first quarter of 2016. This consisted of a full impairment charge of $93 million related to EnLink’s Crude and Condensate reporting unit and partial impairment to EnLink’s Texas and General Partner reporting units of $473 million and $307 million, respectively.

Other Intangible Assets

The following table presents other intangible assets reported in other long-term assets in the accompanying consolidated balance sheets.

 

 

 

March 31, 2017

 

 

December 31, 2016

 

 

 

(Millions)

 

Customer relationships

 

$

1,796

 

 

$

1,796

 

Accumulated amortization

 

 

(201

)

 

 

(172

)

Net intangibles

 

$

1,595

 

 

$

1,624

 

 

The weighted-average amortization period for other intangible assets is 14 years. Amortization expense for intangibles was approximately $29 million and $28 million for the three months ended March 31, 2017 and 2016, respectively. The remaining amortization expense is estimated to be $118 million for each of the next five years.

Other Current Liabilities
Other Current Liabilities

13.

Other Current Liabilities

Components of other current liabilities include the following:

 

 

March 31, 2017

 

 

December 31, 2016

 

 

(Millions)

 

Installment payment - see Note 2

$

230

 

 

$

249

 

Derivative liabilities

 

46

 

 

 

187

 

Accrued interest payable

 

156

 

 

 

130

 

Restructuring liabilities

 

33

 

 

 

48

 

Other

 

376

 

 

 

452

 

Other current liabilities

$

841

 

 

$

1,066

 

 

Asset Retirement Obligations
Asset Retirement Obligations

15.

Asset Retirement Obligations

The following table presents the changes in Devon’s asset retirement obligations.

 

 

 

Three Months Ended March 31,

 

 

 

2017

 

 

2016

 

 

 

 

 

Asset retirement obligations as of beginning of period

 

$

1,272

 

 

$

1,414

 

Liabilities incurred and assumed through acquisitions

 

 

10

 

 

 

12

 

Liabilities settled and divested

 

 

(13

)

 

 

(17

)

Revision of estimated obligation

 

 

(184

)

 

 

77

 

Accretion expense on discounted obligation

 

 

17

 

 

 

19

 

Foreign currency translation adjustment

 

 

4

 

 

 

29

 

Asset retirement obligations as of end of period

 

 

1,106

 

 

 

1,534

 

Less current portion

 

 

39

 

 

 

43

 

Asset retirement obligations, long-term

 

$

1,067

 

 

$

1,491

 

 

          During the first quarter of 2017, Devon reduced its estimated asset retirement obligations by $184 million primarily due to changes in the assumed inflation rate and retirement dates for its oil and gas assets.

Retirement Plans
Retirement Plans

16.

Retirement Plans

The following table presents the components of net periodic benefit cost for Devon’s pension benefit plans. There was no net periodic benefit cost for postretirement benefit plans for all periods presented below.

 

 

Pension Benefits

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

4

 

 

$

6

 

Interest cost

 

 

11

 

 

 

12

 

Expected return on plan assets

 

 

(14

)

 

 

(13

)

Amortization of prior service cost (1)

 

 

1

 

 

 

1

 

Net actuarial loss (1)

 

 

4

 

 

 

5

 

Net periodic benefit cost (2)

 

$

6

 

 

$

11

 

 

(1)

These net periodic benefit costs were reclassified out of other comprehensive earnings in the current period.

(2)

Net periodic benefit cost is a component of G&A in the accompanying consolidated comprehensive statements of earnings.

 

Stockholders' Equity
Stockholders' Equity

17.

Stockholders’ Equity

Common Stock Issued

In January 2016, Devon issued approximately 23 million shares of common stock in conjunction with the STACK asset acquisition discussed in Note 2.

In February 2016, Devon issued 79 million shares of common stock to the public, inclusive of 10 million shares sold as part of the underwriters’ option. Net proceeds from the offering were $1.5 billion.

Dividends

Devon paid common stock dividends of $32 million and $125 million in the first three months of 2017 and 2016, respectively. Devon decreased its quarterly cash dividend rate from $0.24 per share to $0.06 per share beginning in the second quarter of 2016.

Noncontrolling Interests
Noncontrolling interests

18.

Noncontrolling Interests

Subsidiary Equity Transactions

EnLink has the ability to sell common units through an “at the market” equity offering program. During the first quarter of 2017, EnLink issued and sold 3 million common units though its “at the market” program and generated $55 million in net proceeds. During the first quarter of 2016, EnLink issued preferred units in conjunction with its acquisition of Anadarko Basin gathering and processing midstream assets as discussed in Note 2. As of March 31, 2017, Devon’s ownership interest in EnLink was 24%, excluding the interest held by the General Partner. Devon’s ownership interest in the General Partner as of March 31, 2017 was 64%. The net gains and losses and related income taxes resulting from these transactions have been recorded as an adjustment to equity, with the change in ownership reflected as an adjustment to noncontrolling interests.

Distributions to Noncontrolling Interests

EnLink and the General Partner distributed $81 million and $73 million to non-Devon unitholders during the first three months of 2017 and 2016, respectively.

Commitments And Contingencies
Commitments And Contingencies

19.

Commitments and Contingencies

Devon is party to various legal actions arising in the normal course of business. Matters that are probable of unfavorable outcome to Devon and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, Devon’s estimates of the outcomes of such matters and its experience in contesting, litigating and settling similar matters. None of the actions are believed by management to involve future amounts that would be material to Devon’s financial position or results of operations after consideration of recorded accruals. Actual amounts could differ materially from management’s estimates.

Royalty Matters

Numerous oil and natural gas producers and related parties, including Devon, have been named in various lawsuits alleging royalty underpayments. The suits allege that the producers and related parties used below-market prices, made improper deductions, used improper measurement techniques and entered into gas purchase and processing arrangements with affiliates that resulted in underpayment of royalties in connection with oil, natural gas and NGLs produced and sold. Devon is also involved in governmental agency proceedings and is subject to related contracts and regulatory controls in the ordinary course of business, some that may lead to additional royalty claims. Devon does not currently believe that it is subject to material exposure with respect to such royalty matters.

Environmental Matters

Devon is subject to certain environmental, health and safety laws and regulations, including with respect to environmental remediation activities associated with past operations, such as the Comprehensive Environmental Response, Compensation, and Liability Act and similar state statutes. In response to liabilities associated with these activities, loss accruals primarily consist of estimated uninsured remediation costs. Devon’s monetary exposure for environmental matters is not expected to be material.

Other Matters

Devon is involved in other various legal proceedings incidental to its business. However, to Devon’s knowledge, there were no other material pending legal proceedings to which Devon is a party or to which any of its property is subject.

Fair Value Measurements
Fair Value Measurements

20.

Fair Value Measurements

The following table provides carrying value and fair value measurement information for certain of Devon’s financial assets and liabilities. None of the items below are measured using Level 3 inputs. The carrying values of cash, accounts receivable, other current receivables, accounts payable, other current payables and accrued expenses included in the accompanying consolidated balance sheets approximated fair value at March 31, 2017 and December 31, 2016. Therefore, such financial assets and liabilities are not presented in the following table. Additionally, the fair values of oil and gas assets, goodwill and other intangible assets and related impairments are measured as of the impairment date using Level 3 inputs. More information on these items is provided in Note 5 and Note 12, respectively.

 

 

 

 

 

 

 

 

 

 

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

Measurements Using:

 

 

 

Carrying

 

 

Total Fair

 

 

Level 1

 

 

Level 2

 

 

 

Amount

 

 

Value

 

 

Inputs

 

 

Inputs

 

 

 

(Millions)

 

March 31, 2017 assets (liabilities):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

1,734

 

 

$

1,734

 

 

$

1,558

 

 

$

176

 

Commodity derivatives

 

$

84

 

 

$

84

 

 

$

 

 

$

84

 

Commodity derivatives

 

$

(46

)

 

$

(46

)

 

$

 

 

$

(46

)

Interest rate derivatives

 

$

1

 

 

$

1

 

 

$

 

 

$

1

 

Interest rate derivatives

 

$

(36

)

 

$

(36

)

 

$

 

 

$

(36

)

Debt

 

$

(10,381

)

 

$

(11,184

)

 

$

 

 

$

(11,184

)

Installment payment

 

$

(230

)

 

$

(233

)

 

$

 

 

$

(233

)

Capital lease obligations

 

$

(5

)

 

$

(4

)

 

$

 

 

$

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016 assets (liabilities):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

1,542

 

 

$

1,542

 

 

$

1,298

 

 

$

244

 

Commodity derivatives

 

$

10

 

 

$

10

 

 

$

 

 

$

10

 

Commodity derivatives

 

$

(203

)

 

$

(203

)

 

$

 

 

$

(203

)

Interest rate derivatives

 

$

1

 

 

$

1

 

 

$

 

 

$

1

 

Interest rate derivatives

 

$

(41

)

 

$

(41

)

 

$

 

 

$

(41

)

Debt

 

$

(10,154

)

 

$

(10,760

)

 

$

 

 

$

(10,760

)

Installment payment

 

$

(473

)

 

$

(477

)

 

$

 

 

$

(477

)

Capital lease obligations

 

$

(7

)

 

$

(6

)

 

$

 

 

$

(6

)

 

The following methods and assumptions were used to estimate the fair values in the table above.

Level 1 Fair Value Measurements

Cash equivalents – Amounts consist primarily of money market investments and U.S. and Canadian treasury securities. The fair value approximates the carrying value.

Level 2 Fair Value Measurements

Cash equivalents – Amounts consist primarily of commercial paper and Canadian agency and provincial securities investments. The fair value approximates the carrying value.

Commodity, interest rate and foreign currency derivatives – The fair values of commodity, interest rate and foreign currency derivatives are estimated using internal discounted cash flow calculations based upon forward curves and data obtained from independent third parties for contracts with similar terms or data obtained from counterparties to the agreements.

Debt – Devon’s debt instruments do not actively trade in an established market. The fair values of its debt are estimated based on rates available for debt with similar terms and maturity. The fair values of commercial paper and credit facility balances are the carrying values.

Installment payment – The fair value of the EnLink installment payment was based on Level 2 inputs from third-party market quotations.

Capital lease obligations – The fair value was calculated using inputs from third-party banks.

Segment Information
Segment Information

21.

Segment Information

Devon manages its operations through distinct operating segments, which are defined primarily by geographic areas. For financial reporting purposes, Devon aggregates its U.S. operating segments into one reporting segment due to the similar nature of the businesses. However, Devon’s Canadian E&P operating segment is reported as a separate reporting segment primarily due to the significant differences between the U.S. and Canadian regulatory environments. Devon’s U.S. and Canadian segments are both primarily engaged in oil and gas E&P activities.

Devon considers EnLink, combined with the General Partner, to be an operating segment that is distinct from the U.S. and Canadian operating segments. EnLink’s operations consist of midstream assets and operations located across the U.S. Additionally, EnLink has a management team that is primarily responsible for capital and resource allocation decisions. Therefore, EnLink is presented as a separate reporting segment.

 

 

 

U.S.

 

 

Canada

 

 

EnLink

 

 

Eliminations

 

 

Total

 

 

 

(Millions)

 

Three Months Ended March 31, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$

2,081

 

 

$

319

 

 

$

1,151

 

 

$

 

 

$

3,551

 

Intersegment revenues

 

$

 

 

$

 

 

$

171

 

 

$

(171

)

 

$

 

Depreciation, depletion and amortization

 

$

181

 

 

$

72

 

 

$

128

 

 

$

 

 

$

381

 

Interest expense

 

$

80

 

 

$

20

 

 

$

45

 

 

$

(15

)

 

$

130

 

Asset impairments

 

$

 

 

$

 

 

$

7

 

 

$

 

 

$

7

 

Earnings before income taxes

 

$

557

 

 

$

29

 

 

$

12

 

 

$

 

 

$

598

 

Income tax expense

 

$

3

 

 

$

13

 

 

$

3

 

 

$

 

 

$

19

 

Net earnings

 

$

554

 

 

$

16

 

 

$

9

 

 

$

 

 

$

579

 

Net earnings attributable to noncontrolling interests

 

$

 

 

$

 

 

$

14

 

 

$

 

 

$

14

 

Net earnings (loss) attributable to Devon

 

$

554

 

 

$

16

 

 

$

(5

)

 

$

 

 

$

565

 

Property and equipment, net

 

$

7,452

 

 

$

2,573

 

 

$

6,396

 

 

$

 

 

$

16,421

 

Total assets

 

$

12,648

 

 

$

3,364

 

 

$

10,177

 

 

$

(55

)

 

$

26,134

 

Capital expenditures, including acquisitions

 

$

437

 

 

$

96

 

 

$

248

 

 

$

 

 

$

781

 

Three Months Ended March 31, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$

1,302

 

 

$

117

 

 

$

707

 

 

$

 

 

$

2,126

 

Intersegment revenues

 

$

 

 

$

 

 

$

183

 

 

$

(183

)

 

$

 

Depreciation, depletion and amortization

 

$

311

 

 

$

109

 

 

$

122

 

 

$

 

 

$

542

 

Interest expense

 

$

107

 

 

$

34

 

 

$

44

 

 

$

(20

)

 

$

165

 

Asset impairments

 

$

1,608

 

 

$

554

 

 

$

873

 

 

$

 

 

$

3,035

 

Restructuring and transaction costs

 

$

236

 

 

$

6

 

 

$

5

 

 

$

 

 

$

247

 

Loss before income taxes

 

$

(2,065

)

 

$

(749

)

 

$

(871

)

 

$

 

 

$

(3,685

)

Income tax benefit

 

$

(5

)

 

$

(208

)

 

$

(4

)

 

$

 

 

$

(217

)

Net loss

 

$

(2,060

)

 

$

(541

)

 

$

(867

)

 

$

 

 

$

(3,468

)

Net loss attributable to noncontrolling interests

 

$

 

 

$

 

 

$

(412

)

 

$

 

 

$

(412

)

Net loss attributable to Devon

 

$

(2,060

)

 

$

(541

)

 

$

(455

)

 

$

 

 

$

(3,056

)

Property and equipment, net

 

$

8,901

 

 

$

4,246

 

 

$

6,117

 

 

$

 

 

$

19,264

 

Total assets

 

$

13,717

 

 

$

4,933

 

 

$

10,066

 

 

$

(79

)

 

$

28,637

 

Capital expenditures, including acquisitions

 

$

1,893

 

 

$

81

 

 

$

545

 

 

$

 

 

$

2,519

 

 

Summary Of Significant Accounting Policies (Policies)

Recently Adopted Accounting Standards

In January 2017, Devon adopted ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. Its objective is to simplify several aspects of the accounting for share-based payments, including income taxes when awards vest or are settled, statutory withholding and forfeitures. As the result of adoption, Devon made certain income tax presentation changes, most notably prospectively presenting excess tax benefits and deficiencies in the consolidated comprehensive statements of earnings and as operating cash flows in the consolidated statements of cash flows. Devon also retrospectively applied the new cash flow statement guidance dictating the presentation of shares traded for tax-withholding purposes as a financing activity. The adoption of the new guidance did not materially impact the consolidated financial statements for the three months ended March 31, 2017 or previously reported financial information but could have a more material future impact.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill And Other (Topic 350)Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the requirement to compare the implied fair value of goodwill with its carrying amount as part of step two of the goodwill impairment test. As a result, under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. However, the impairment loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, including any interim impairment tests within those annual periods, with early application for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. In January 2017, Devon elected to early adopt ASU 2017-04, and the adoption had no impact on the consolidated financial statements. Devon will perform future goodwill impairment tests according to ASU 2017-04.

Recently Issued Accounting Standards

The FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition and industry-specific guidance in Subtopic 932-605, Extractive Activities – Oil and Gas – Revenue Recognition. This ASU provides guidance concerning the recognition and measurement of revenue from contracts with customers. Its objective is to increase the usefulness of information in the financial statements regarding the nature, timing and uncertainty of revenues. The effective date for ASU 2014-09 was delayed through the issuance of ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, to annual and interim periods beginning in 2018, with early adoption permitted in 2017. Devon does not plan on early adopting this ASU. The ASU is required to be adopted using either the retrospective transition method, which requires restating previously reported results or the cumulative effect (modified retrospective) transition method, which utilizes a cumulative-effect adjustment to retained earnings in the period of adoption to account for prior period effects rather than restating previously reported results. Devon intends to use the cumulative effect transition method and does not anticipate this ASU will have a material impact on its balance sheet or related consolidated statement of earnings, stockholders’ equity or cash flows. Devon continues to evaluate the impact of the disclosures required by this ASU. Devon does not expect its annual disclosures will materially change upon adopting this ASU. However, Devon’s quarterly disclosures will materially expand upon adoption of this ASU. Devon is implementing a process to gather and provide the quarterly disclosures required by the ASU.

The FASB issued ASU 2016-02, Leases (Topic 842). This ASU will supersede the lease requirements in Topic 840, Leases. Its objective is to increase transparency and comparability among organizations. This ASU provides guidance requiring lessees to recognize most leases on their balance sheet. Lessor accounting does not significantly change, except for some changes made to align with new revenue recognition requirements. This ASU is effective for Devon beginning January 1, 2019 and will be applied using a modified retrospective transition method, which requires applying the new guidance to leases that exist or are entered into after the beginning of the earliest period in the financial statements. Early adoption is permitted, but Devon does not plan to early adopt. Devon has begun the process of evaluating contracts and gathering the necessary terms and data elements for purposes of determining the impact this ASU will have on its consolidated financial statements and related disclosures. Based on initial research, Devon estimates more than 7,500 contracts and a large number of data elements must be gathered and reviewed to ensure proper accounting of these contracts once this ASU is effective. Furthermore, Devon anticipates complying with this standard will significantly impact its systems, processes and controls and is evaluating technology requirements and solutions needed to comply with the requirements of this ASU.

The FASB issued ASU No. 2017-07, Compensation – Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU will require entities to present the service cost component of net periodic benefit cost in the same line item as other employee compensation costs and present the other components of net periodic benefit cost outside of operating income in the income statement. Only the service cost component of net periodic benefit cost is eligible for capitalization. This ASU is effective for Devon beginning January 1, 2018, and income statement presentation changes will be applied retrospectively, while service cost component capitalization will be applied prospectively. Upon adoption of this ASU, Devon will reclassify $7 million, $14 million and $16 million of non-service cost components of net periodic benefit costs for 2017, 2016 and 2015, respectively, as other nonoperating items. Such amounts are currently classified in Devon’s G&A. No other changes upon adopting this ASU are expected to be material.  

Devon is party to various legal actions arising in the normal course of business. Matters that are probable of unfavorable outcome to Devon and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, Devon’s estimates of the outcomes of such matters and its experience in contesting, litigating and settling similar matters. None of the actions are believed by management to involve future amounts that would be material to Devon’s financial position or results of operations after consideration of recorded accruals. Actual amounts could differ materially from management’s estimates.

Derivative Financial Instruments (Tables)

The following table presents the net gains and losses by derivative financial instrument type followed by the corresponding individual consolidated comprehensive statements of earnings caption.

 

 

 

Three Months Ended March 31,

 

 

 

2017

 

 

2016

 

 

 

(Millions)

 

Commodity derivatives:

 

 

 

 

 

 

 

 

Oil, gas and NGL derivatives

 

$

232

 

 

$

33

 

Marketing and midstream revenues

 

 

4

 

 

 

 

Interest rate derivatives:

 

 

 

 

 

 

 

 

Other nonoperating items

 

 

5

 

 

 

(72

)

Foreign currency derivatives:

 

 

 

 

 

 

 

 

Other nonoperating items

 

 

 

 

 

(155

)

Net gains (losses) recognized

 

$

241

 

 

$

(194

)

 

The following table presents the derivative fair values by derivative financial instrument type followed by the corresponding individual consolidated balance sheet caption.

 

 

 

March 31, 2017

 

 

December 31, 2016

 

 

 

(Millions)

 

Commodity derivative assets:

 

 

 

 

 

 

 

 

Other current assets

 

$

79

 

 

$

9

 

Other long-term assets

 

 

5

 

 

 

1

 

Interest rate derivative assets:

 

 

 

 

 

 

 

 

Other current assets

 

 

1

 

 

 

1

 

Total derivative assets

 

$

85

 

 

$

11

 

Commodity derivative liabilities:

 

 

 

 

 

 

 

 

Other current liabilities

 

$

46

 

 

$

187

 

Other long-term liabilities

 

 

 

 

 

16

 

Interest rate derivative liabilities:

 

 

 

 

 

 

 

 

Other long-term liabilities

 

 

36

 

 

 

41

 

Total derivative liabilities

 

$

82

 

 

$

244

 

 

 

Notional

 

 

Rate Received

 

 

Rate Paid

 

 

Expiration

(Millions)

 

 

 

 

 

 

 

 

 

 

 

$

750

 

 

Three Month LIBOR

 

 

 

2.98%

 

 

December 2048 (1)

$

100

 

 

 

1.76%

 

 

Three Month LIBOR

 

 

January 2019

 

(1)

Mandatory settlement in December 2018.

 

 

 

Price Swaps

 

 

Price Collars

 

Period

 

Volume

(Bbls/d)

 

 

Weighted

Average

Price ($/Bbl)

 

 

Volume

(Bbls/d)

 

 

Weighted

Average Floor

Price ($/Bbl)

 

 

Weighted

Average

Ceiling Price

($/Bbl)

 

Q2-Q4 2017

 

 

73,945

 

 

$

54.34

 

 

 

61,665

 

 

$

45.53

 

 

$

57.96

 

Q1-Q4 2018

 

 

5,592

 

 

$

53.38

 

 

 

12,921

 

 

$

46.69

 

 

$

56.69

 

 

 

 

Oil Basis Swaps

 

Period

 

Index

 

Volume (Bbls/d)

 

 

Weighted Average

Differential to WTI

($/Bbl)

 

Q2-Q4 2017

 

Western Canadian Select

 

 

63,244

 

 

$

(14.83

)

Q2-Q4 2017

 

Midland Sweet

 

 

20,000

 

 

$

(0.41

)

 

 

 

 

Price Swaps

 

 

Price Collars

 

Period

 

Volume (MMBtu/d)

 

 

Weighted Average Price ($/MMBtu)

 

 

Volume (MMBtu/d)

 

 

Weighted Average Floor Price ($/MMBtu)

 

 

Weighted Average

Ceiling Price ($/MMBtu)

 

Q2-Q4 2017

 

 

193,218

 

 

$

3.17

 

 

 

411,418

 

 

$

2.98

 

 

$

3.38

 

Q1-Q4 2018

 

 

68,890

 

 

$

3.17

 

 

 

36,986

 

 

$

3.29

 

 

$

3.63

 

 

 

 

Natural Gas Basis Swaps

 

Period

 

Index

 

Volume

(MMBtu/d)

 

 

Weighted Average

Differential to

Henry Hub

($/MMBtu)

 

Q2-Q4 2017

 

Panhandle Eastern Pipe Line

 

 

150,000

 

 

$

(0.34

)

Q2-Q4 2017

 

El Paso Natural Gas

 

 

80,000

 

 

$

(0.13

)

Q2-Q4 2017

 

Houston Ship Channel

 

 

35,000

 

 

$

0.06

 

Q2-Q4 2017

 

Transco Zone 4

 

 

205,000

 

 

$

0.03

 

Q1-Q4 2018

 

Panhandle Eastern Pipe Line

 

 

50,000

 

 

$

(0.29

)

 

 

 

 

 

 

Price Swaps

 

 

Price Collars

 

Period

 

Product

 

Volume (Bbls/d)

 

 

Weighted Average Price ($/Bbl)

 

 

Volume (Bbls/d)

 

 

Weighted Average Floor Price ($/Bbl)

 

 

Weighted Average Ceiling Price ($/Bbl)

 

Q2-Q4 2017

 

Propane

 

 

1,662

 

 

$

27.24

 

 

 

1,662

 

 

$

26.30

 

 

$

28.40

 

 

Share-Based Compensation (Tables)

 

 

 

Three Months Ended March 31,

 

 

 

2017

 

 

2016

 

 

 

(Millions)

 

Gross G&A for share-based compensation

 

$

50

 

 

$

45

 

Share-based compensation expense capitalized pursuant to

   the full cost method of accounting for oil and gas properties

 

$

9

 

 

$

12

 

Related income tax benefit

 

$

1

 

 

$

9

 

 

 

 

 

Restricted Stock

 

 

Performance-Based

 

 

Performance

 

 

 

Awards and Units

 

 

Restricted Stock Awards

 

 

Share Units

 

 

 

Awards and

Units

 

 

Weighted

Average

Grant-Date

Fair Value

 

 

Awards

 

 

Weighted

Average

Grant-Date

Fair Value

 

 

Units

 

 

 

 

Weighted

Average

Grant-Date

Fair Value

 

 

 

(Thousands, except fair value data)

 

Unvested at 12/31/16

 

 

6,407

 

 

$

34.40

 

 

 

585

 

 

$

37.60

 

 

 

2,604

 

 

 

 

$

46.66

 

Granted

 

 

2,571

 

 

$

45.41

 

 

 

205

 

 

$

45.41

 

 

 

1,010

 

 

 

 

$

52.58

 

Vested

 

 

(2,001

)

 

$

38.33

 

 

 

(178

)

 

$

42.43

 

 

 

(832

)

 

 

 

$

78.19

 

Forfeited

 

 

(59

)

 

$

36.06

 

 

 

 

 

$

 

 

 

 

 

 

 

$

 

Unvested at 3/31/17

 

 

6,918

 

 

$

37.34

 

 

 

612

 

 

$

38.81

 

 

 

2,782

 

 

(1

)

$

41.21

 

 

(1)

A maximum of 5.6 million common shares could be awarded based upon Devon’s final TSR ranking relative to Devon’s peer group established under applicable award agreements.

 

 

 

2017

 

Grant-date fair value

 

$

51.05

 

 

 

$

53.12

 

Risk-free interest rate

 

1.50%

 

Volatility factor

 

45.8%

 

Contractual term (years)

 

2.89

 

 

 

 

 

 

 

 

 

Performance-Based

 

 

 

 

 

 

 

Restricted Stock

 

 

Restricted Stock

 

 

Performance

 

 

 

Awards and Units

 

 

Awards

 

 

Share Units

 

Unrecognized compensation cost (millions)

 

$

209

 

 

$

11

 

 

$

54

 

Weighted average period for recognition (years)

 

 

2.9

 

 

 

2.3

 

 

 

2.3

 

 

 

 

 

General Partner

 

 

EnLink

 

 

 

Restricted

 

 

Performance

 

 

Restricted

 

 

Performance

 

 

 

Incentive Units

 

 

Units

 

 

Incentive Units

 

 

Units

 

Unrecognized compensation cost (millions)

 

$

20

 

 

$

8

 

 

$

21

 

 

$

8

 

Weighted average period for recognition (years)

 

 

2.0

 

 

 

2.3

 

 

 

2.0

 

 

 

2.3

 

 

Restructuring And Transaction Costs (Tables)
Schedule Of The Activity And Balances Associated With Restructuring Liabilities

 

 

 

Other

 

 

Other

 

 

 

 

 

 

 

Current

 

 

Long-term

 

 

 

 

 

 

 

Liabilities

 

 

Liabilities

 

 

Total

 

 

 

(Millions)

 

Balance as of December 31, 2016

 

$

48

 

 

$

62

 

 

$

110

 

Changes due to 2016 workforce reductions

 

 

(18

)

 

 

 

 

 

(18

)

Changes related to prior years' restructurings

 

 

3

 

 

 

(5

)

 

 

(2

)

Balance as of March 31, 2017

 

$

33

 

 

$

57

 

 

$

90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2015

 

 

13

 

 

 

63

 

 

 

76

 

Changes due to 2016 workforce reductions

 

 

149

 

 

 

 

 

 

149

 

Changes related to prior years' restructurings

 

 

2

 

 

 

(2

)

 

 

 

Balance as of March 31, 2016

 

$

164

 

 

$

61

 

 

$

225

 

 

Income Taxes (Tables)
Schedule Of Effective Income Tax Rate Reconciliation

 

 

 

Three Months Ended March 31,

 

 

 

2017

 

 

2016

 

 

 

(Millions)

 

Current income tax expense (benefit)

 

$

20

 

 

$

(10

)

Deferred income tax benefit

 

 

(1

)

 

 

(207

)

Total income tax expense (benefit)

 

$

19

 

 

$

(217

)

 

 

 

 

 

 

 

 

 

U.S. statutory income tax rate

 

 

35

%

 

 

35

%

Deferred tax asset valuation allowance

 

 

(32

%)

 

 

(22

%)

Non-deductible goodwill impairments

 

 

0

%

 

 

(8

%)

Taxation on Canadian operations

 

 

0

%

 

 

(2

%)

State income taxes

 

 

1

%

 

 

1

%

Other

 

 

(1

%)

 

 

2

%

Effective income tax rate

 

 

3

%

 

 

6

%

 

Net Earnings (Loss) Per Share Attributable to Devon (Tables)
Net Earnings (Loss) Per Share Computations

 

 

 

Three Months Ended March 31,

 

 

 

2017

 

 

2016

 

 

 

(Millions, except per share amounts)

 

Net earnings (loss):

 

 

 

 

 

 

 

 

Net earnings (loss) attributable to Devon

 

$

565

 

 

$

(3,056

)

Attributable to participating securities

 

 

(6

)

 

 

 

Basic and diluted earnings (loss)

 

$

559

 

 

$

(3,056

)

Common shares:

 

 

 

 

 

 

 

 

Common shares outstanding - total

 

 

525

 

 

 

479

 

Attributable to participating securities

 

 

(6

)

 

 

(5

)

Common shares outstanding - basic

 

 

519

 

 

 

474

 

Dilutive effect of potential common shares issuable

 

 

3

 

 

 

 

Common shares outstanding - diluted

 

 

522

 

 

 

474

 

Net earnings (loss) per share attributable to Devon:

 

 

 

 

 

 

 

 

Basic

 

$

1.08

 

 

$

(6.44

)

Diluted

 

$

1.07

 

 

$

(6.44

)

Antidilutive options (1)

 

 

2

 

 

 

3

 

 

(1)

Amounts represent options to purchase shares of Devon’s common stock that are excluded from the diluted net earnings (loss) per share calculations because the options are antidilutive.

Other Comprehensive Earnings (Tables)
Components Of Other Comprehensive Earnings

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2017

 

 

2016

 

 

 

(Millions)

 

Foreign currency translation:

 

 

 

 

 

 

 

 

Beginning accumulated foreign currency translation

 

$

456

 

 

$

424

 

Change in cumulative translation adjustment

 

 

1

 

 

 

51

 

Income tax expense

 

 

(3

)

 

 

(28

)

Ending accumulated foreign currency translation

 

 

454

 

 

 

447

 

Pension and postretirement benefit plans:

 

 

 

 

 

 

 

 

Beginning accumulated pension and postretirement benefits

 

 

(172

)

 

 

(194

)

Recognition of net actuarial loss and prior service cost in earnings (1)

 

 

5

 

 

 

6

 

Income tax expense

 

 

 

 

 

(2

)

Ending accumulated pension and postretirement benefits

 

 

(167

)

 

 

(190

)

Accumulated other comprehensive earnings, net of tax

 

$

287

 

 

$

257

 

 

(1)

These accumulated other comprehensive earnings components are included in the computation of net periodic benefit cost, which is a component of G&A on the accompanying consolidated comprehensive statements of earnings. See Note 16 for additional details.

Supplemental Information To Statements Of Cash Flows (Tables)
Schedule Of Supplemental Information To Statements Of Cash Flows

 

 

 

Three Months Ended March 31,

 

 

 

2017

 

 

2016

 

 

 

(Millions)

 

Net change in working capital accounts, net of assets and liabilities assumed:

 

 

 

 

 

 

 

 

Accounts receivable

 

$

48

 

 

$

146

 

Income taxes receivable

 

 

1

 

 

 

115

 

Other current assets

 

 

(22

)

 

 

251

 

Accounts payable

 

 

4

 

 

 

(121

)

Revenues and royalties payable

 

 

73

 

 

 

(101

)

Other current liabilities

 

 

(89

)

 

 

(76

)

Net change in working capital

 

$

15

 

 

$

214

 

Interest paid (net of capitalized interest)

 

$

92

 

 

$

115

 

Income taxes paid (received)

 

$

3

 

 

$

(128

)

 

Accounts Receivable (Tables)
Schedule Of Components Of Accounts Receivable

Components of accounts receivable include the following:

 

 

 

March 31, 2017

 

 

December 31, 2016

 

 

 

(Millions)

 

Oil, gas and NGL sales

 

$

495

 

 

$

487

 

Joint interest billings

 

 

104

 

 

 

110

 

Marketing and midstream revenues

 

 

672

 

 

 

708

 

Other

 

 

67

 

 

 

69

 

Gross accounts receivable

 

 

1,338

 

 

 

1,374

 

Allowance for doubtful accounts

 

 

(18

)

 

 

(18

)

Net accounts receivable

 

$

1,320

 

 

$

1,356

 

 

Goodwill And Other Intangible Assets (Tables)
Schedule Of Other Intangible Assets

 

 

 

March 31, 2017

 

 

December 31, 2016

 

 

 

(Millions)

 

Customer relationships

 

$

1,796

 

 

$

1,796

 

Accumulated amortization

 

 

(201

)

 

 

(172

)

Net intangibles

 

$

1,595

 

 

$

1,624

 

 

Other Current Liabilities (Tables)
Schedule Of Other Current Liabilities

 

 

March 31, 2017

 

 

December 31, 2016

 

 

(Millions)

 

Installment payment - see Note 2

$

230

 

 

$

249

 

Derivative liabilities

 

46

 

 

 

187

 

Accrued interest payable

 

156

 

 

 

130

 

Restructuring liabilities

 

33

 

 

 

48

 

Other

 

376

 

 

 

452

 

Other current liabilities

$

841

 

 

$

1,066

 

 

Asset Retirement Obligations (Tables)
Summary Of Changes In Asset Retirement Obligations

 

 

Three Months Ended March 31,

 

 

 

2017

 

 

2016

 

 

 

 

 

Asset retirement obligations as of beginning of period

 

$

1,272

 

 

$

1,414

 

Liabilities incurred and assumed through acquisitions

 

 

10

 

 

 

12

 

Liabilities settled and divested

 

 

(13

)

 

 

(17

)

Revision of estimated obligation

 

 

(184

)

 

 

77

 

Accretion expense on discounted obligation

 

 

17

 

 

 

19

 

Foreign currency translation adjustment

 

 

4

 

 

 

29

 

Asset retirement obligations as of end of period

 

 

1,106

 

 

 

1,534

 

Less current portion

 

 

39

 

 

 

43

 

Asset retirement obligations, long-term

 

$

1,067

 

 

$

1,491

 

 

Retirement Plans (Tables)
Schedule Of Net Periodic Benefit Cost For Pension And Postretirement Benefit Plans

 

 

Pension Benefits

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

4

 

 

$

6

 

Interest cost

 

 

11

 

 

 

12

 

Expected return on plan assets

 

 

(14

)

 

 

(13

)

Amortization of prior service cost (1)

 

 

1

 

 

 

1

 

Net actuarial loss (1)

 

 

4

 

 

 

5

 

Net periodic benefit cost (2)

 

$

6

 

 

$

11

 

 

(1)

These net periodic benefit costs were reclassified out of other comprehensive earnings in the current period.

(2)

Net periodic benefit cost is a component of G&A in the accompanying consolidated comprehensive statements of earnings.

Fair Value Measurements (Tables)
Schedule Of Carrying Value And Fair Value Measurement Information For Financial Assets And Liabilities

 

 

 

 

 

 

 

 

 

 

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

Measurements Using:

 

 

 

Carrying

 

 

Total Fair

 

 

Level 1

 

 

Level 2

 

 

 

Amount

 

 

Value

 

 

Inputs

 

 

Inputs

 

 

 

(Millions)

 

March 31, 2017 assets (liabilities):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

1,734

 

 

$

1,734

 

 

$

1,558

 

 

$

176

 

Commodity derivatives

 

$

84

 

 

$

84

 

 

$

 

 

$

84

 

Commodity derivatives

 

$

(46

)

 

$

(46

)

 

$

 

 

$

(46

)

Interest rate derivatives

 

$

1

 

 

$

1

 

 

$

 

 

$

1

 

Interest rate derivatives

 

$

(36

)

 

$

(36

)

 

$

 

 

$

(36

)

Debt

 

$

(10,381

)

 

$

(11,184

)

 

$

 

 

$

(11,184

)

Installment payment

 

$

(230

)

 

$

(233

)

 

$

 

 

$

(233

)

Capital lease obligations

 

$

(5

)

 

$

(4

)

 

$

 

 

$

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016 assets (liabilities):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

1,542

 

 

$

1,542

 

 

$

1,298

 

 

$

244

 

Commodity derivatives

 

$

10

 

 

$

10

 

 

$

 

 

$

10

 

Commodity derivatives

 

$

(203

)

 

$

(203

)

 

$

 

 

$

(203

)

Interest rate derivatives

 

$

1

 

 

$

1

 

 

$

 

 

$

1

 

Interest rate derivatives

 

$

(41

)

 

$

(41

)

 

$

 

 

$

(41

)

Debt

 

$

(10,154

)

 

$

(10,760

)

 

$

 

 

$

(10,760

)

Installment payment

 

$

(473

)

 

$

(477

)

 

$

 

 

$

(477

)

Capital lease obligations

 

$

(7

)

 

$

(6

)

 

$

 

 

$

(6

)

 

Segment Information (Tables)
Condensed Statements Of Comprehensive Earnings And Balance Sheets Of Reportable Segments

 

 

 

U.S.

 

 

Canada

 

 

EnLink

 

 

Eliminations

 

 

Total

 

 

 

(Millions)

 

Three Months Ended March 31, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$

2,081

 

 

$

319

 

 

$

1,151

 

 

$

 

 

$

3,551

 

Intersegment revenues

 

$

 

 

$

 

 

$

171

 

 

$

(171

)

 

$

 

Depreciation, depletion and amortization

 

$

181

 

 

$

72

 

 

$

128

 

 

$

 

 

$

381

 

Interest expense

 

$

80

 

 

$

20

 

 

$

45

 

 

$

(15

)

 

$

130

 

Asset impairments

 

$

 

 

$

 

 

$

7

 

 

$

 

 

$

7

 

Earnings before income taxes

 

$

557

 

 

$

29

 

 

$

12

 

 

$

 

 

$

598

 

Income tax expense

 

$

3

 

 

$

13

 

 

$

3

 

 

$

 

 

$

19

 

Net earnings

 

$

554

 

 

$

16

 

 

$

9

 

 

$

 

 

$

579

 

Net earnings attributable to noncontrolling interests

 

$

 

 

$

 

 

$

14

 

 

$

 

 

$

14

 

Net earnings (loss) attributable to Devon

 

$

554

 

 

$

16

 

 

$

(5

)

 

$

 

 

$

565

 

Property and equipment, net

 

$

7,452

 

 

$

2,573

 

 

$

6,396

 

 

$

 

 

$

16,421

 

Total assets

 

$

12,648

 

 

$

3,364

 

 

$

10,177

 

 

$

(55

)

 

$

26,134

 

Capital expenditures, including acquisitions

 

$

437

 

 

$

96

 

 

$

248

 

 

$

 

 

$

781

 

Three Months Ended March 31, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$

1,302

 

 

$

117

 

 

$

707

 

 

$

 

 

$

2,126

 

Intersegment revenues

 

$

 

 

$

 

 

$

183

 

 

$

(183

)

 

$

 

Depreciation, depletion and amortization

 

$

311

 

 

$

109

 

 

$

122

 

 

$

 

 

$

542

 

Interest expense

 

$

107

 

 

$

34

 

 

$

44

 

 

$

(20

)

 

$

165

 

Asset impairments

 

$

1,608

 

 

$

554

 

 

$

873

 

 

$

 

 

$

3,035

 

Restructuring and transaction costs

 

$

236

 

 

$

6

 

 

$

5

 

 

$

 

 

$

247

 

Loss before income taxes

 

$

(2,065

)

 

$

(749

)

 

$

(871

)

 

$

 

 

$

(3,685

)

Income tax benefit

 

$

(5

)

 

$

(208

)

 

$

(4

)

 

$

 

 

$

(217

)

Net loss

 

$

(2,060

)

 

$

(541

)

 

$

(867

)

 

$

 

 

$

(3,468

)

Net loss attributable to noncontrolling interests

 

$

 

 

$

 

 

$

(412

)

 

$

 

 

$

(412

)

Net loss attributable to Devon

 

$

(2,060

)

 

$

(541

)

 

$

(455

)

 

$

 

 

$

(3,056

)

Property and equipment, net

 

$

8,901

 

 

$

4,246

 

 

$

6,117

 

 

$

 

 

$

19,264

 

Total assets

 

$

13,717

 

 

$

4,933

 

 

$

10,066

 

 

$

(79

)

 

$

28,637

 

Capital expenditures, including acquisitions

 

$

1,893

 

 

$

81

 

 

$

545

 

 

$

 

 

$

2,519

 

 

Summary Of Significant Accounting Policies (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Mar. 31, 2017
ASU 2016-02, Leases [Member]
Minimum [Member]
Contract
Dec. 31, 2016
ASU 2017-07, Compensation – Retirement Benefits [Member]
Dec. 31, 2015
ASU 2017-07, Compensation – Retirement Benefits [Member]
Dec. 31, 2017
ASU 2017-07, Compensation – Retirement Benefits [Member]
Scenario, Forecast [Member]
Summary Of Significant Accounting Policies [Line Items]
 
 
 
 
Number of lease contracts
7,500 
 
 
 
Reclassification of non-service cost components of net periodic benefit costs
 
$ 14 
$ 16 
$ 7 
Acquisitions And Divestitures (Narrative) (Details) (USD $)
3 Months Ended 1 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended 1 Months Ended 3 Months Ended 0 Months Ended
Mar. 31, 2017
Mar. 31, 2016
May 31, 2017
Scenario, Forecast [Member]
Mar. 31, 2017
EnLink [Member]
Howard Energy Partners [Member]
Jan. 7, 2016
STACK [Member]
acre
Mar. 31, 2017
STACK [Member]
Jan. 7, 2016
STACK [Member]
Common Stock [Member]
Equity Issued in Business Combination [Member]
Jan. 7, 2016
Anadarko Basin [Member]
EnLink [Member]
Jan. 31, 2017
Anadarko Basin [Member]
EnLink [Member]
Mar. 31, 2017
Anadarko Basin [Member]
EnLink [Member]
Jan. 7, 2016
Anadarko Basin [Member]
Installment Payable, Noncurrent [Member]
EnLink [Member]
Jan. 7, 2016
Anadarko Basin [Member]
Equity Issued in Business Combination [Member]
General Partner [Member]
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Close date of acquisition
 
 
 
 
 
Jan. 07, 2016 
 
 
 
Jan. 07, 2016 
 
 
Number of net acres acquired
 
 
 
 
80,000 
 
 
 
 
 
 
 
Aggregate purchase price
 
 
 
 
$ 1,500,000,000 
 
 
$ 1,400,000,000 
 
 
 
 
Cash payment to acquire interest
 
 
 
 
849,000,000 
 
 
800,000,000 
 
 
 
 
Equity units value
 
 
 
 
 
 
659,000,000 
 
 
 
 
215,000,000 
Unproved properties
 
 
 
 
 
1,300,000,000 
 
 
 
 
 
 
Proved properties
 
 
 
 
 
200,000,000 
 
 
 
 
 
 
Intangible assets
 
 
 
 
 
 
 
 
 
1,000,000,000 
 
 
Property, plant and equipment
 
 
 
 
 
 
 
 
 
400,000,000 
 
 
Amount committed to pay
 
 
 
 
 
 
 
500,000,000 
 
 
 
 
Commitment to pay cash due date
 
 
 
 
 
 
 
1 year 
 
 
24 months 
 
Installment payable, current
 
 
 
 
 
 
 
 
 
250,000,000 
 
 
Installment payment, paid
250,000,000 
 
 
 
 
 
 
 
250,000,000 
 
 
 
Installment payable, noncurrent
 
 
 
 
 
 
 
 
 
 
250,000,000 
 
Proceeds from sale of investment
190,000,000 
 
 
190,000,000 
 
 
 
 
 
 
 
 
Divestitures of upstream assets
$ 38,000,000 
$ 18,000,000 
$ 1,000,000,000 
 
 
 
 
 
 
 
 
 
Derivative Financial Instruments (Narrative) (Details) (USD $)
Mar. 31, 2017
Dec. 31, 2016
Derivative Instruments And Hedging Activities Disclosure [Abstract]
 
 
Derivative collateral held
$ 13,000,000 
$ 0 
Derivative Financial Instruments (Schedule Of Open Oil Derivative Positions) (Details)
3 Months Ended
Mar. 31, 2017
bbl
NYMEX West Texas Intermediate Price Swaps Oil Q2-Q4 2017 [Member]
 
Derivative [Line Items]
 
Volume Per Day (Bbls/d)
73,945 
Weighted Average Price Swap
54.34 
NYMEX West Texas Intermediate Price Swaps Oil Q1-Q4 2018 [Member]
 
Derivative [Line Items]
 
Volume Per Day (Bbls/d)
5,592 
Weighted Average Price Swap
53.38 
NYMEX West Texas Intermediate Price Collars Oil Q2-Q4 2017 [Member]
 
Derivative [Line Items]
 
Volume Per Day (Bbls/d)
61,665 
Weighted Average Floor Price
45.53 
Weighted Average Ceiling Price
57.96 
NYMEX West Texas Intermediate Price Collars Oil Q1-Q4 2018 [Member]
 
Derivative [Line Items]
 
Volume Per Day (Bbls/d)
12,921 
Weighted Average Floor Price
46.69 
Weighted Average Ceiling Price
56.69 
Western Canadian Select Basis Swaps Oil Q2-Q4 2017 [Member]
 
Derivative [Line Items]
 
Volume Per Day (Bbls/d)
63,244 
Weighted Average Differential To WTI
(14.83)
Midland Sweet Basis Swaps Oil Q2-Q4 2017 [Member]
 
Derivative [Line Items]
 
Volume Per Day (Bbls/d)
20,000 
Weighted Average Differential To WTI
(0.41)
Derivative Financial Instruments (Schedule Of Open Natural Gas Derivative Positions) (Details)
3 Months Ended
Mar. 31, 2017
MMBTU
FERC Henry Hub Price Swaps Natural Gas Q2-Q4 2017 [Member]
 
Derivative [Line Items]
 
Volume Per Day (MMBtu/d)
193,218 
Weighted Average Price Swap
3.17 
FERC Henry Hub Price Swaps Natural Gas Q1-Q4 2018 [Member]
 
Derivative [Line Items]
 
Volume Per Day (MMBtu/d)
68,890 
Weighted Average Price Swap
3.17 
FERC Henry Hub Price Collars Natural Gas Q2-Q4 2017 [Member]
 
Derivative [Line Items]
 
Volume Per Day (MMBtu/d)
411,418 
Weighted Average Floor Price
2.98 
Weighted Average Ceiling Price
3.38 
FERC Henry Hub Price Collars Natural Gas Q1-Q4 2018 [Member]
 
Derivative [Line Items]
 
Volume Per Day (MMBtu/d)
36,986 
Weighted Average Floor Price
3.29 
Weighted Average Ceiling Price
3.63 
PEPL Basis Swaps Natural Gas Q2-Q4 2017 [Member]
 
Derivative [Line Items]
 
Volume Per Day (MMBtu/d)
150,000 
Weighted Average Differential To Henry Hub
(0.34)
El Paso Natural Gas Basis Swaps Q2-Q4 2017 [Member]
 
Derivative [Line Items]
 
Volume Per Day (MMBtu/d)
80,000 
Weighted Average Differential To Henry Hub
(0.13)
Houston Ship Channel Natural Gas Basis Swaps Q2-Q4 2017 [Member]
 
Derivative [Line Items]
 
Volume Per Day (MMBtu/d)
35,000 
Weighted Average Differential To Henry Hub
0.06 
Transco Zone 4 Natural Gas Basis Swaps Q2-Q4 2017 [Member]
 
Derivative [Line Items]
 
Volume Per Day (MMBtu/d)
205,000 
Weighted Average Differential To Henry Hub
0.03 
PEPL Basis Swaps Natural Gas Q1-Q4 2018 [Member]
 
Derivative [Line Items]
 
Volume Per Day (MMBtu/d)
50,000 
Weighted Average Differential To Henry Hub
(0.29)
Derivative Financial Instruments (Schedule Of Open NGL Derivative Positions) (Details)
3 Months Ended
Mar. 31, 2017
bbl
OPIS Mont Belvieu Texas Propane Price Swaps NGL Q2-Q4 2017 [Member]
 
Derivative [Line Items]
 
Volume Per Day (Bbls/d)
1,662 
Weighted Average Price Swap
27.24 
OPIS Mont Belvieu Texas Propane Price Collars NGL Q2- Q4 2017 [Member]
 
Derivative [Line Items]
 
Volume Per Day (Bbls/d)
1,662 
Weighted Average Floor Price
26.30 
Weighted Average Ceiling Price
28.40 
Derivative Financial Instruments (Schedule Of Open Interest Rate Swap Derivative Positions) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Interest Rate Contract 2.98% Expiration December 2048 [Member]
 
Derivative [Line Items]
 
Notional
$ 750 
Rate Received
Three Month LIBOR 
Rate Paid, percent
2.98% 
Expiration
Dec. 31, 2018 
Reference period end date
Dec. 31, 2048 1
Interest Rate Contract 1.76% Expiration January 2019 [Member]
 
Derivative [Line Items]
 
Notional
$ 100 
Rate Received, percent
1.76% 
Rate Paid
Three Month LIBOR 
Expiration
Jan. 31, 2019 
Derivative Financial Instruments (Schedule Of Derivative Financial Instruments Included In The Consolidated Comprehensive Statements Of Earnings) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Derivative [Line Items]
 
 
Net gains (losses) recognized in consolidated comprehensive statements of earnings
$ 241 
$ (194)
Commodity Derivatives [Member] |
Oil, Gas And NGL Derivatives [Member]
 
 
Derivative [Line Items]
 
 
Net gains (losses) recognized in consolidated comprehensive statements of earnings
232 
33 
Commodity Derivatives [Member] |
Marketing And Midstream Revenues [Member]
 
 
Derivative [Line Items]
 
 
Net gains (losses) recognized in consolidated comprehensive statements of earnings
 
Interest Rate Derivatives [Member] |
Other Nonoperating Items [Member]
 
 
Derivative [Line Items]
 
 
Net gains (losses) recognized in consolidated comprehensive statements of earnings
(72)
Foreign Currency Derivatives [Member] |
Other Nonoperating Items [Member]
 
 
Derivative [Line Items]
 
 
Net gains (losses) recognized in consolidated comprehensive statements of earnings
 
$ (155)
Derivative Financial Instruments (Schedule Of Derivative Financial Instruments Included In The Consolidated Balance Sheets) (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Derivatives Fair Value [Line Items]
 
 
Fair value of derivative assets
$ 85 
$ 11 
Fair value of derivative liabilities
82 
244 
Other Current Liabilities [Member]
 
 
Derivatives Fair Value [Line Items]
 
 
Fair value of derivative liabilities
46 
187 
Commodity Derivatives [Member] |
Other Current Assets [Member]
 
 
Derivatives Fair Value [Line Items]
 
 
Fair value of derivative assets
79 
Commodity Derivatives [Member] |
Other Long-Term Assets [Member]
 
 
Derivatives Fair Value [Line Items]
 
 
Fair value of derivative assets
Commodity Derivatives [Member] |
Other Current Liabilities [Member]
 
 
Derivatives Fair Value [Line Items]
 
 
Fair value of derivative liabilities
46 
187 
Commodity Derivatives [Member] |
Other Long-Term Liabilities [Member]
 
 
Derivatives Fair Value [Line Items]
 
 
Fair value of derivative liabilities
 
16 
Interest Rate Derivatives [Member] |
Other Current Assets [Member]
 
 
Derivatives Fair Value [Line Items]
 
 
Fair value of derivative assets
Interest Rate Derivatives [Member] |
Other Long-Term Liabilities [Member]
 
 
Derivatives Fair Value [Line Items]
 
 
Fair value of derivative liabilities
$ 36 
$ 41 
Share-Based Compensation (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Unit-based compensation
$ 50 
$ 45 
Reduction of workforce [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Expense associated with accelerated awards
 
67 
EnLink [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Unit-based compensation
14 
General Partner And EnLink [Member] |
Restricted Stock Awards And Units [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Unit-based compensation
$ 10 
 
Share-Based Compensation (Schedule Of The Effects Of Share Based Compensation Included In The Consolidated Comprehensive Statement Of Earnings) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Share Based Compensation [Abstract]
 
 
Gross G&A for share-based compensation
$ 50 
$ 45 
Share-based compensation expense capitalized pursuant to the full cost method of accounting for oil and gas properties
12 
Related income tax benefit
$ 1 
$ 9 
Share-Based Compensation (Summary Of Unvested Restricted Stock Awards and Units, Performance-Based Restricted Stock Awards And Performance Share Units) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Restricted Stock Awards And Units [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Unvested at December 31, 2016
6,407 
Granted, awards and units
2,571 
Vested, awards and units
(2,001)
Forfeited, awards and units
(59)
Unvested at March 31, 2017
6,918 
Unvested weighted average grant-date fair value at December 31, 2016
$ 34.40 
Granted, weighted average grant-date fair value
$ 45.41 
Vested, weighted average grant-date fair value
$ 38.33 
Forfeited, weighted average grant-date fair value
$ 36.06 
Unvested weighted average grant-date fair value at March 31, 2017
$ 37.34 
Performance-Based Restricted Stock Awards [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Unvested at December 31, 2016
585 
Granted, awards and units
205 
Vested, awards and units
(178)
Unvested at March 31, 2017
612 
Unvested weighted average grant-date fair value at December 31, 2016
$ 37.60 
Granted, weighted average grant-date fair value
$ 45.41 
Vested, weighted average grant-date fair value
$ 42.43 
Unvested weighted average grant-date fair value at March 31, 2017
$ 38.81 
Performance Share Units [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Unvested at December 31, 2016
2,604 
Granted, awards and units
1,010 
Vested, awards and units
(832)
Unvested at March 31, 2017
2,782 1
Unvested weighted average grant-date fair value at December 31, 2016
$ 46.66 
Granted, weighted average grant-date fair value
$ 52.58 
Vested, weighted average grant-date fair value
$ 78.19 
Unvested weighted average grant-date fair value at March 31, 2017
$ 41.21 
Share-Based Compensation (Summary Of Unvested Restricted Stock Awards and Units, Performance-Based Restricted Stock Awards And Performance Share Units) (Parenthetical) (Details) (Performance Share Units [Member], Maximum [Member])
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Performance Share Units [Member] |
Maximum [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Maximum common shares that could be awarded based upon total shareholder return
5.6 
Share-Based Compensation (Summary of Unrecognized Compensation Cost And Weighted Average Period For Recognition) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Restricted Stock Awards And Units [Member]
 
Unrecognized Compensation And Weighted Average Recognition [Line Items]
 
Unrecognized compensation cost (millions)
$ 209 
Weighted average period for recognition (years)
2 years 10 months 24 days 
Performance-Based Restricted Stock Awards [Member]
 
Unrecognized Compensation And Weighted Average Recognition [Line Items]
 
Unrecognized compensation cost (millions)
11 
Weighted average period for recognition (years)
2 years 3 months 18 days 
Performance Share Units [Member]
 
Unrecognized Compensation And Weighted Average Recognition [Line Items]
 
Unrecognized compensation cost (millions)
$ 54 
Weighted average period for recognition (years)
2 years 3 months 18 days 
Share-Based Compensation (Summary of Unrecognized Compensation Cost And Weighted Average Period For Recognition General Partner And EnLink) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Restricted Stock Awards And Units [Member]
 
Unrecognized Compensation And Weighted Average Recognition [Line Items]
 
Unrecognized compensation cost (millions)
$ 209 
Weighted average period for recognition (years)
2 years 10 months 24 days 
Performance Share Units [Member]
 
Unrecognized Compensation And Weighted Average Recognition [Line Items]
 
Unrecognized compensation cost (millions)
54 
Weighted average period for recognition (years)
2 years 3 months 18 days 
General Partner [Member] |
Restricted Stock Awards And Units [Member]
 
Unrecognized Compensation And Weighted Average Recognition [Line Items]
 
Unrecognized compensation cost (millions)
20 
Weighted average period for recognition (years)
2 years 
General Partner [Member] |
Performance Share Units [Member]
 
Unrecognized Compensation And Weighted Average Recognition [Line Items]
 
Unrecognized compensation cost (millions)
Weighted average period for recognition (years)
2 years 3 months 18 days 
EnLink [Member] |
Restricted Stock Awards And Units [Member]
 
Unrecognized Compensation And Weighted Average Recognition [Line Items]
 
Unrecognized compensation cost (millions)
21 
Weighted average period for recognition (years)
2 years 
EnLink [Member] |
Performance Share Units [Member]
 
Unrecognized Compensation And Weighted Average Recognition [Line Items]
 
Unrecognized compensation cost (millions)
$ 8 
Weighted average period for recognition (years)
2 years 3 months 18 days 
Asset Impairments (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Impaired Long-Lived Assets Held and Used [Line Items]
 
 
Asset impairment charges
$ 7 
$ 3,035 
General Partner And EnLink [Member]
 
 
Impaired Long-Lived Assets Held and Used [Line Items]
 
 
Goodwill, impairment loss
 
873 
U.S. Oil And Gas Assets [Member]
 
 
Impaired Long-Lived Assets Held and Used [Line Items]
 
 
Asset impairment charges
 
1,600 
Canada Oil And Gas Assets [Member]
 
 
Impaired Long-Lived Assets Held and Used [Line Items]
 
 
Asset impairment charges
 
$ 554 
Restructuring And Transaction Costs (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Restructuring Cost And Reserve [Line Items]
 
Restructuring and transaction costs
$ 247 
Reduction of workforce [Member]
 
Restructuring Cost And Reserve [Line Items]
 
Expense associated with accelerated awards
67 
Employee Related Costs [Member] |
Reduction of workforce [Member]
 
Restructuring Cost And Reserve [Line Items]
 
Restructuring and transaction costs
234 
Estimated Defined Benefit Settlements [Member] |
Reduction of workforce [Member]
 
Restructuring Cost And Reserve [Line Items]
 
Restructuring and transaction costs
30 
Transaction Costs For Acquisition Closings [Member]
 
Restructuring Cost And Reserve [Line Items]
 
Restructuring and transaction costs
$ 13 
Restructuring And Transaction Costs (Schedule Of The Activity And Balances Associated With Restructuring Liabilities) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 3 Months Ended 3 Months Ended
Mar. 31, 2017
Dec. 31, 2016
Mar. 31, 2016
Dec. 31, 2015
Mar. 31, 2017
Reduction of workforce [Member]
Mar. 31, 2016
Reduction of workforce [Member]
Mar. 31, 2017
Prior years' restructurings [Member]
Mar. 31, 2017
Other Current Liabilities [Member]
Dec. 31, 2016
Other Current Liabilities [Member]
Mar. 31, 2016
Other Current Liabilities [Member]
Dec. 31, 2015
Other Current Liabilities [Member]
Mar. 31, 2017
Other Current Liabilities [Member]
Reduction of workforce [Member]
Mar. 31, 2016
Other Current Liabilities [Member]
Reduction of workforce [Member]
Mar. 31, 2017
Other Current Liabilities [Member]
Prior years' restructurings [Member]
Mar. 31, 2016
Other Current Liabilities [Member]
Prior years' restructurings [Member]
Mar. 31, 2017
Other Long-Term Liabilities [Member]
Dec. 31, 2016
Other Long-Term Liabilities [Member]
Mar. 31, 2016
Other Long-Term Liabilities [Member]
Dec. 31, 2015
Other Long-Term Liabilities [Member]
Mar. 31, 2017
Other Long-Term Liabilities [Member]
Prior years' restructurings [Member]
Mar. 31, 2016
Other Long-Term Liabilities [Member]
Prior years' restructurings [Member]
Restructuring Cost And Reserve [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$ 90 
$ 110 
$ 225 
$ 76 
 
 
 
$ 33 
$ 48 
$ 164 
$ 13 
 
 
 
 
$ 57 
$ 62 
$ 61 
$ 63 
 
 
Restructuring reserve activity
 
 
 
 
(18)
149 
(2)
 
 
 
 
(18)
149 
 
 
 
 
(5)
(2)
Ending balance
$ 90 
$ 110 
$ 225 
$ 76 
 
 
 
$ 33 
$ 48 
$ 164 
$ 13 
 
 
 
 
$ 57 
$ 62 
$ 61 
$ 63 
 
 
Income Taxes (Schedule Of Effective Income Tax Rate Reconciliation) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Income Tax Disclosure [Abstract]
 
 
Current income tax expense (benefit)
$ 20 
$ (10)
Deferred income tax benefit
(1)
(207)
Total income tax expense (benefit)
$ 19 
$ (217)
U.S. statutory income tax rate
35.00% 
35.00% 
Deferred tax asset valuation allowance
(32.00%)
(22.00%)
Non-deductible goodwill impairments
0.00% 
(8.00%)
Taxation on Canadian operations
0.00% 
(2.00%)
State income taxes
1.00% 
1.00% 
Other
(1.00%)
2.00% 
Effective income tax rate
3.00% 
6.00% 
Income Taxes (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended 3 Months Ended
Mar. 31, 2017
Dec. 31, 2016
Mar. 31, 2016
General Partner And EnLink [Member]
Mar. 31, 2017
United States [Member]
Mar. 31, 2016
United States [Member]
Income Tax [Line Items]
 
 
 
 
 
Valuation allowance against U.S. deferred tax assets, percent
100.00% 
100.00% 
 
 
 
Change in deferred tax valuation allowance
 
 
 
$ (192)
$ 808 
Goodwill, impairment loss
 
 
$ 873 
 
 
Net Earnings (Loss) Per Share Attributable To Devon (Earnings Per Share Computations) (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Net earnings (loss):
 
 
Net earnings (loss) attributable to Devon
$ 565 
$ (3,056)
Attributable to participating securities
(6)
 
Basic and diluted earnings (loss)
$ 559 
$ (3,056)
Common shares:
 
 
Common shares outstanding - total
525 
479 
Attributable to participating securities
(6)
(5)
Common shares outstanding - basic
519 
474 
Dilutive effect of potential common shares issuable
 
Common shares outstanding - diluted
522 
474 
Net earnings (loss) per share attributable to Devon:
 
 
Basic
$ 1.08 
$ (6.44)
Diluted
$ 1.07 
$ (6.44)
Antidilutive options
1
1
Other Comprehensive Earnings (Components Of Other Comprehensive Earnings) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Dec. 31, 2016
Foreign currency translation:
 
 
 
Beginning accumulated foreign currency translation
$ 456 
$ 424 
 
Change in cumulative translation adjustment
51 
 
Income tax expense
(3)
(28)
 
Ending accumulated foreign currency translation
454 
447 
 
Pension and postretirement benefit plans:
 
 
 
Beginning accumulated pension and postretirement benefits
(172)
(194)
 
Recognition of net actuarial loss and prior service cost in earnings
1
1
 
Income tax expense
 
(2)
 
Ending accumulated pension and postretirement benefits
(167)
(190)
 
Accumulated other comprehensive earnings, net of tax
$ 287 
$ 257 
$ 284 
Supplemental Information To Statements Of Cash Flows (Schedule Of Supplemental Information To Statements Of Cash Flows) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Net change in working capital accounts, net of assets and liabilities assumed:
 
 
Accounts receivable
$ 48 
$ 146 
Income taxes receivable
115 
Other current assets
(22)
251 
Accounts payable
(121)
Revenues and royalties payable
73 
(101)
Other current liabilities
(89)
(76)
Net change in working capital
15 
214 
Interest paid (net of capitalized interest)
92 
115 
Income taxes paid (received)
$ 3 
$ (128)
Accounts Receivable (Schedule Of Components Of Accounts Receivable) (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Joint interest billings
$ 104 
$ 110 
Other
67 
69 
Gross accounts receivable
1,338 
1,374 
Allowance for doubtful accounts
(18)
(18)
Net accounts receivable
1,320 
1,356 
Oil, Gas And NGL Sales [Member]
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Gross accounts receivable
495 
487 
Marketing And Midstream Revenues [Member]
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Gross accounts receivable
$ 672 
$ 708 
Goodwill And Other Intangible Assets (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Goodwill [Line Items]
 
 
Weighted average amortization period, other intangible assets
14 years 
 
Amortization expense of intangible assets
$ 29 
$ 28 
Amortization Expense, Next Five Years
118 
 
General Partner And EnLink [Member]
 
 
Goodwill [Line Items]
 
 
Goodwill impairments
 
873 
Crude And Condensate [Member] |
General Partner And EnLink [Member]
 
 
Goodwill [Line Items]
 
 
Goodwill impairments
 
93 
Texas [Member] |
General Partner And EnLink [Member]
 
 
Goodwill [Line Items]
 
 
Goodwill impairments
 
473 
General Partner [Member] |
General Partner And EnLink [Member]
 
 
Goodwill [Line Items]
 
 
Goodwill impairments
 
$ 307 
Goodwill And Other Intangible Assets (Schedule Of Other Intangible Assets) (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Goodwill And Intangible Assets Disclosure [Abstract]
 
 
Customer relationships
$ 1,796 
$ 1,796 
Accumulated amortization
(201)
(172)
Net intangibles
$ 1,595 
$ 1,624 
Other Current Liabilities (Schedule Of Other Current Liabilities) (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Other Liabilities, Current [Abstract]
 
 
Derivative liabilities
$ 82 
$ 244 
Accrued interest payable
156 
130 
Restructuring liabilities
33 
48 
Other
376 
452 
Other current liabilities
841 
1,066 
Installment Payable, Current [Member]
 
 
Other Liabilities, Current [Abstract]
 
 
Installment payment - see Note 2
230 
249 
Other Current Liabilities [Member]
 
 
Other Liabilities, Current [Abstract]
 
 
Derivative liabilities
$ 46 
$ 187 
Asset Retirement Obligations (Summary Of Changes In Asset Retirement Obligations) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Dec. 31, 2016
Asset Retirement Obligation Disclosure [Abstract]
 
 
 
Asset retirement obligations as of beginning of period
$ 1,272 
$ 1,414 
 
Liabilities incurred and assumed through acquisitions
10 
12 
 
Liabilities settled and divested
(13)
(17)
 
Revision of estimated obligation
(184)
77 
 
Accretion expense on discounted obligation
17 
19 
 
Foreign currency translation adjustment
29 
 
Asset retirement obligations as of end of period
1,106 
1,534 
 
Less current portion
39 
43 
 
Asset retirement obligations, long-term
$ 1,067 
$ 1,491 
$ 1,226 
Asset Retirement Obligations (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Asset Retirement Obligation [Abstract]
 
 
Revisions of asset retirement obligations
$ (184)
$ 77 
Retirement Plans (Narrative) (Details) (Postretirement Benefits [Member], USD $)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Postretirement Benefits [Member]
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
Net periodic benefit cost
$ 0 
$ 0 
Retirement Plans (Schedule Of Net Periodic Benefit Cost For Pension And Postretirement Benefit Plans) (Details) (Pension Benefits [Member], USD $)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Pension Benefits [Member]
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
Service cost
$ 4,000,000 
$ 6,000,000 
Interest cost
11,000,000 
12,000,000 
Expected return on plan assets
(14,000,000)
(13,000,000)
Amortization of prior service cost
1,000,000 1
1,000,000 1
Net actuarial loss
4,000,000 1
5,000,000 1
Net periodic benefit cost
$ 6,000,000 2
$ 11,000,000 2
Stockholders' Equity (Narrative) (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 1 Months Ended
Mar. 31, 2017
Jun. 30, 2016
Mar. 31, 2016
Mar. 31, 2016
Common Stock [Member]
Feb. 29, 2016
Common Stock Offering [Member]
Feb. 29, 2016
Common Stock Offering [Member]
Underwriters [Member]
Jan. 31, 2016
Equity Issued in Business Combination [Member]
Common Stock [Member]
STACK [Member]
Stockholders Equity [Abstract]
 
 
 
 
 
 
 
Equity issued for acquisition
 
 
 
 
 
 
23 
Common stock, shares issued
 
 
 
103 
79 
10 
 
Net proceeds from offering
 
 
$ 1,469 
 
$ 1,500 
 
 
Payments of ordinary dividends
$ 32 
 
$ 125 
 
 
 
 
Dividends paid per share
 
$ 0.06 
$ 0.24 
 
 
 
 
Noncontrolling Interests (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Noncontrolling Interest [Line Items]
 
 
Net proceeds of common units sold
$ 55 
$ 727 
Distributions to unitholders other than Devon
81 
73 
EnLink [Member]
 
 
Noncontrolling Interest [Line Items]
 
 
Ownership interest by Devon
24.00% 
 
EnLink [Member] |
Equity Distribution Agreements [Member]
 
 
Noncontrolling Interest [Line Items]
 
 
Common units sold
 
Net proceeds of common units sold
55 
 
General Partner [Member]
 
 
Noncontrolling Interest [Line Items]
 
 
Ownership interest by Devon
64.00% 
 
General Partner And EnLink [Member]
 
 
Noncontrolling Interest [Line Items]
 
 
Distributions to unitholders other than Devon
$ 81 
$ 73 
Fair Value Measurements (Schedule Of Carrying Value And Fair Value Measurement Information For Financial Assets And Liabilities) (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Derivatives, assets
$ 85 
$ 11 
Derivatives, liabilities
(82)
(244)
Carrying Amount [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
1,734 
1,542 
Debt
(10,381)
(10,154)
Installment payment
(230)
(473)
Capital lease obligations
(5)
(7)
Carrying Amount [Member] |
Commodity Derivatives [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Derivatives, assets
84 
10 
Derivatives, liabilities
(46)
(203)
Carrying Amount [Member] |
Interest Rate Derivatives [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Derivatives, assets
Derivatives, liabilities
(36)
(41)
Total Fair Value [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
1,734 
1,542 
Debt
(11,184)
(10,760)
Installment payment
(233)
(477)
Capital lease obligations
(4)
(6)
Total Fair Value [Member] |
Commodity Derivatives [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Derivatives, assets
84 
10 
Derivatives, liabilities
(46)
(203)
Total Fair Value [Member] |
Interest Rate Derivatives [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Derivatives, assets
Derivatives, liabilities
(36)
(41)
Level 1 Inputs [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
1,558 
1,298 
Level 2 Inputs [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
176 
244 
Debt
(11,184)
(10,760)
Installment payment
(233)
(477)
Capital lease obligations
(4)
(6)
Level 2 Inputs [Member] |
Commodity Derivatives [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Derivatives, assets
84 
10 
Derivatives, liabilities
(46)
(203)
Level 2 Inputs [Member] |
Interest Rate Derivatives [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Derivatives, assets
Derivatives, liabilities
$ (36)
$ (41)
Segment information (Condensed Statements Of Comprehensive Earnings And Balance Sheets Of Reportable Segments) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Dec. 31, 2016
Segment Reporting Information [Line Items]
 
 
 
Revenues from external customers
$ 3,551 
$ 2,126 
 
Depreciation, depletion and amortization
381 
542 
 
Interest expense
130 
165 
 
Asset impairments
3,035 
 
Restructuring and transaction costs
 
247 
 
Earnings (loss) before income taxes
598 
(3,685)
 
Income tax expense (benefit)
19 
(217)
 
Net earnings (loss)
579 
(3,468)
 
Net earnings (loss) attributable to noncontrolling interests
14 
(412)
 
Net earnings (loss) attributable to Devon
565 
(3,056)
 
Property and equipment, net
16,421 
19,264 
16,190 
Total assets
26,134 
28,637 
25,913 
Capital expenditures, including acquisitions
781 
2,519 
 
Eliminations [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Interest expense
(15)
(20)
 
Total assets
(55)
(79)
 
Eliminations [Member] |
Intersegment [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Revenues from external customers
(171)
(183)
 
United States [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Number of reportable segments
 
 
United States [Member] |
Operating Segments [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Revenues from external customers
2,081 
1,302 
 
Depreciation, depletion and amortization
181 
311 
 
Interest expense
80 
107 
 
Asset impairments
 
1,608 
 
Restructuring and transaction costs
 
236 
 
Earnings (loss) before income taxes
557 
(2,065)
 
Income tax expense (benefit)
(5)
 
Net earnings (loss)
554 
(2,060)
 
Net earnings (loss) attributable to Devon
554 
(2,060)
 
Property and equipment, net
7,452 
8,901 
 
Total assets
12,648 
13,717 
 
Capital expenditures, including acquisitions
437 
1,893 
 
Canada [Member] |
Operating Segments [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Revenues from external customers
319 
117 
 
Depreciation, depletion and amortization
72 
109 
 
Interest expense
20 
34 
 
Asset impairments
 
554 
 
Restructuring and transaction costs
 
 
Earnings (loss) before income taxes
29 
(749)
 
Income tax expense (benefit)
13 
(208)
 
Net earnings (loss)
16 
(541)
 
Net earnings (loss) attributable to Devon
16 
(541)
 
Property and equipment, net
2,573 
4,246 
 
Total assets
3,364 
4,933 
 
Capital expenditures, including acquisitions
96 
81 
 
General Partner And EnLink [Member] |
Operating Segments [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Revenues from external customers
1,151 
707 
 
Depreciation, depletion and amortization
128 
122 
 
Interest expense
45 
44 
 
Asset impairments
873 
 
Restructuring and transaction costs
 
 
Earnings (loss) before income taxes
12 
(871)
 
Income tax expense (benefit)
(4)
 
Net earnings (loss)
(867)
 
Net earnings (loss) attributable to noncontrolling interests
14 
(412)
 
Net earnings (loss) attributable to Devon
(5)
(455)
 
Property and equipment, net
6,396 
6,117 
 
Total assets
10,177 
10,066 
 
Capital expenditures, including acquisitions
248 
545 
 
General Partner And EnLink [Member] |
Operating Segments [Member] |
Intersegment [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Revenues from external customers
$ 171 
$ 183