DEVON ENERGY CORP/DE, 10-Q filed on 11/3/2021
Quarterly Report
v3.21.2
Document And Entity Information - shares
shares in Millions
9 Months Ended
Sep. 30, 2021
Oct. 20, 2021
Cover [Abstract]    
Document Type 10-Q  
Document Period End Date Sep. 30, 2021  
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 2021  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Document Fiscal Period Focus Q3  
Entity Common Stock, Shares Outstanding   677.0
Entity Current Reporting Status Yes  
Entity Shell Company false  
Entity File Number 001-32318  
Entity Tax Identification Number 73-1567067  
Entity Address, Address Line One 333 West Sheridan Avenue  
Entity Address, City or Town Oklahoma City  
Entity Address, State or Province OK  
Entity Address, Postal Zip Code 73102-5015  
City Area Code 405  
Local Phone Number 235-3611  
Entity Interactive Data Current Yes  
Title of 12(b) Security Common Stock, par value $0.10 per share  
Security Exchange Name NYSE  
Entity Incorporation, State or Country Code DE  
Document Quarterly Report true  
Document Transition Report false  
v3.21.2
Consolidated Statements of Comprehensive Earnings - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Revenues from contracts with customers $ 3,801 $ 1,154 $ 9,499 $ 3,276
Oil, gas and NGL derivatives (335) (87) (1,566) 272
Total revenues 3,466 1,067 7,933 3,548
Production expenses 555 271 1,526 852
Exploration expenses 3 39 9 163
Depreciation, depletion and amortization 578 299 1,581 999
Asset impairments       2,666
Asset dispositions     (119)  
General and administrative expenses 95 75 296 256
Financing costs, net 86 66 243 200
Restructuring and transaction costs 18 32 230 32
Other, net 2   (41) (35)
Total expenses 2,502 1,260 6,697 6,528
Earnings (loss) from continuing operations before income taxes 964 (193) 1,236 (2,980)
Income tax expense (benefit) 120 (90) (85) (510)
Net earnings (loss) from continuing operations 844 (103) 1,321 (2,470)
Net earnings (loss) from discontinued operations, net of income taxes   13   (103)
Net earnings (loss) 844 (90) 1,321 (2,573)
Net earnings attributable to noncontrolling interests 6 2 14 5
Net earnings (loss) attributable to Devon $ 838 $ (92) $ 1,307 $ (2,578)
Basic net earnings (loss) per share:        
Basic earnings (loss) from continuing operations per share $ 1.24 $ (0.29) $ 1.95 $ (6.58)
Basic earnings (loss) from discontinued operations per share   0.04   (0.27)
Basic net earnings (loss) per share 1.24 (0.25) 1.95 (6.85)
Diluted net earnings (loss) per share:        
Diluted earnings (loss) from continuing operations per share 1.24 (0.29) 1.95 (6.58)
Diluted earnings (loss) from discontinued operations per share   0.04   (0.27)
Diluted net earnings (loss) per share $ 1.24 $ (0.25) $ 1.95 $ (6.85)
Comprehensive earnings (loss):        
Net earnings (loss) $ 844 $ (90) $ 1,321 $ (2,573)
Other comprehensive earnings, net of tax:        
Pension and postretirement plans 1 1 27 3
Other comprehensive earnings, net of tax 1 1 27 3
Comprehensive earnings (loss): 845 (89) 1,348 (2,570)
Comprehensive earnings attributable to noncontrolling interests 6 2 14 5
Comprehensive earnings (loss) attributable to Devon 839 (91) 1,334 (2,575)
Oil, Gas and NGL Sales [Member]        
Revenues from contracts with customers 2,635 678 6,546 1,909
Marketing and Midstream Revenues [Member]        
Revenues from contracts with customers 1,166 476 2,953 1,367
Marketing and Midstream Expenses [Member]        
Expenses $ 1,165 $ 478 $ 2,972 $ 1,395
v3.21.2
Consolidated Statements Of Cash Flows - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Cash flows from operating activities:        
Net earnings (loss) $ 844 $ (90) $ 1,321 $ (2,573)
Adjustments to reconcile net earnings (loss) to net cash from operating activities:        
Net (earnings) loss from discontinued operations, net of income taxes   (13)   103
Depreciation, depletion and amortization 578 299 1,581 999
Asset impairments       2,666
Leasehold impairments 1 36 3 149
(Amortization) accretion of liabilities (7) 8 (21) 24
Total (gains) losses on commodity derivatives 335 87 1,566 (272)
Cash settlements on commodity derivatives (370) 10 (969) 343
Gains on asset dispositions     (119)  
Deferred income tax expense (benefit) 119   (100) (311)
Share-based compensation 19 31 80 70
Early retirement of debt     (30)  
Other 11 1 13 5
Changes in assets and liabilities, net 68 58 (42) (97)
Net cash from operating activities - continuing operations 1,598 427 3,283 1,106
Cash flows from investing activities:        
Capital expenditures (474) (204) (1,477) (936)
Acquisitions of property and equipment (10)   (15) (5)
Divestitures of property and equipment 1 1 65 29
WPX acquired cash     344  
Distributions from equity method investments 9   27  
Net cash from investing activities - continuing operations (474) (203) (1,056) (912)
Cash flows from financing activities:        
Repayments of long-term debt     (1,243)  
Early retirement of debt     (59)  
Repurchases of common stock       (38)
Dividends paid on common stock (329) (43) (761) (119)
Contributions from noncontrolling interests 1 1 4 12
Distributions to noncontrolling interests (6) (4) (15) (10)
Acquisition of noncontrolling interests     (24)  
Shares exchanged for tax withholdings and other (3)   (45) (17)
Net cash from financing activities - continuing operations (337) (46) (2,143) (172)
Effect of exchange rate changes on cash - continuing operations (5)      
Net change in cash, cash equivalents and restricted cash of continuing operations 782 178 84 22
Cash flows from discontinued operations:        
Operating activities 0 45 0 (129)
Investing activities 0 1 0 171
Financing activities 0 0 0 0
Effect of exchange rate changes on cash 0 4 0 (11)
Net change in cash, cash equivalents and restricted cash of discontinued operations 0 50 0 31
Net change in cash, cash equivalents and restricted cash 782 228 84 53
Cash, cash equivalents and restricted cash at beginning of period 1,539 1,669 2,237 1,844
Cash, cash equivalents and restricted cash at end of period 2,321 1,897 2,321 1,897
Reconciliation of cash, cash equivalents and restricted cash:        
Cash and cash equivalents 2,144 1,707 2,144 1,707
Restricted cash 177 190 177 190
Cash, cash equivalents and restricted cash at end of period $ 2,321 $ 1,897 $ 2,321 $ 1,897
v3.21.2
Consolidated Balance Sheets - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
ASSETS    
Cash, cash equivalents and restricted cash $ 2,321 $ 2,237
Accounts receivable 1,517 601
Income taxes receivable 80 174
Other current assets 309 248
Total current assets 4,227 3,260
Oil and gas property and equipment, based on successful efforts accounting, net 13,613 4,436
Other property and equipment, net ($106 million and $102 million related to CDM in 2021 and 2020, respectively) [1] 1,465 957
Total property and equipment, net 15,078 5,393
Goodwill 753 753
Right-of-use assets 244 223
Investments 388 12
Other long-term assets 367 271
Total assets 21,057 9,912
LIABILITIES AND EQUITY    
Accounts payable 537 242
Revenues and royalties payable 1,443 662
Other current liabilities 1,525 536
Total current liabilities 3,505 1,440
Long-term debt 6,492 4,298
Lease liabilities 256 246
Asset retirement obligations 462 358
Other long-term liabilities 1,281 551
Stockholders' equity:    
Common stock, $0.10 par value. Authorized 1.0 billion shares; issued 677 million and 382 million shares in 2021 and 2020, respectively 68 38
Additional paid-in capital 8,206 2,766
Retained earnings 750 208
Accumulated other comprehensive loss (100) (127)
Total stockholders’ equity attributable to Devon 8,924 2,885
Noncontrolling interests 137 134
Total equity 9,061 3,019
Total liabilities and equity $ 21,057 $ 9,912
[1] $106 million and $102 million related to CDM in 2021 and 2020, respectively.
v3.21.2
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Sep. 30, 2021
Dec. 31, 2020
Other property and equipment, net [1] $ 1,465 $ 957
Common stock, par value (in dollars per share) $ 0.10 $ 0.10
Common stock, shares authorized (in shares) 1,000,000,000.0 1,000,000,000.0
Common stock, shares issued (in shares) 677,000,000 382,000,000
CDM [Member]    
Other property and equipment, net $ 106 $ 102
[1] $106 million and $102 million related to CDM in 2021 and 2020, respectively.
v3.21.2
Consolidated Statements Of Equity - USD ($)
shares in Millions, $ in Millions
Total
Common Stock [Member]
Additional Paid-In Capital [Member]
Retained Earnings [Member]
Other Comprehensive Earnings (Loss) [Member]
Treasury Stock [Member]
Noncontrolling Interests [Member]
Balance at Dec. 31, 2019 $ 5,920 $ 38 $ 2,735 $ 3,148 $ (119)   $ 118
Balance, shares at Dec. 31, 2019   382          
Net earnings (loss) (2,573)     (2,578)     5
Other comprehensive earnings (loss), net of tax 3       3    
Restricted stock grants, net of cancellations, shares   3          
Common stock repurchased (55)         $ (55)  
Common stock retired     (55)     55  
Common stock retired, shares   (3)          
Common stock dividends (219)     (219)      
Share-based compensation 70   70        
Share-based compensation, shares   1          
Contributions from noncontrolling interests 12           12
Distributions to noncontrolling interests (10)           (10)
Balance at Sep. 30, 2020 3,148 $ 38 2,750 351 (116)   125
Balance, shares at Sep. 30, 2020   383          
Balance at Jun. 30, 2020 3,353 $ 38 2,720 586 (117)   126
Balance, shares at Jun. 30, 2020   383          
Net earnings (loss) (90)     (92)     2
Other comprehensive earnings (loss), net of tax 1       1    
Common stock repurchased (1)         (1)  
Common stock retired     (1)     1  
Common stock dividends (143)     (143)      
Share-based compensation 31   31        
Contributions from noncontrolling interests 1           1
Distributions to noncontrolling interests (4)           (4)
Balance at Sep. 30, 2020 3,148 $ 38 2,750 351 (116)   125
Balance, shares at Sep. 30, 2020   383          
Balance at Dec. 31, 2020 3,019 $ 38 2,766 208 (127)   134
Balance, shares at Dec. 31, 2020   382          
Net earnings (loss) 1,321     1,307     14
Other comprehensive earnings (loss), net of tax 27       27    
Restricted stock grants, net of cancellations, value (1) $ 1 (2)        
Restricted stock grants, net of cancellations, shares   6          
Common stock repurchased (41)         (41)  
Common stock retired     (41)     41  
Common stock retired, shares   (2)          
Common stock dividends (765)     (765)      
Common stock issued 5,432 $ 29 5,403        
Common stock issued, Shares   290          
Share-based compensation 80   80        
Share-based compensation, shares   1          
Contributions from noncontrolling interests 3           3
Distributions to noncontrolling interests (14)           (14)
Balance at Sep. 30, 2021 9,061 $ 68 8,206 750 (100)   137
Balance, shares at Sep. 30, 2021   677          
Balance at Jun. 30, 2021 8,535 $ 68 8,189 243 (101)   136
Balance, shares at Jun. 30, 2021   677          
Net earnings (loss) 844     838     6
Other comprehensive earnings (loss), net of tax 1       1    
Restricted stock grants, net of cancellations, value (1)   (1)        
Common stock repurchased (1)         (1)  
Common stock retired     (1)     $ 1  
Common stock dividends (331)     (331)      
Share-based compensation 19   19        
Contributions from noncontrolling interests 1           1
Distributions to noncontrolling interests (6)           (6)
Balance at Sep. 30, 2021 $ 9,061 $ 68 $ 8,206 $ 750 $ (100)   $ 137
Balance, shares at Sep. 30, 2021   677          
v3.21.2
Summary Of Significant Accounting Policies
9 Months Ended
Sep. 30, 2021
Accounting Policies [Abstract]  
Summary Of Significant Accounting Policies

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

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 2020 Annual Report on Form 10-K. The accompanying unaudited interim financial statements 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 and nine-month periods ended September 30, 2021 and 2020 and Devon’s financial position as of September 30, 2021.

Devon and WPX completed an all-stock merger of equals on January 7, 2021. On the closing date of the Merger, each share of WPX common stock was automatically converted into the right to receive 0.5165 of a share of Devon common stock. The transaction has been accounted for using the acquisition method of accounting, with Devon being treated as the accounting acquirer. See Note 2 for further discussion.

As further discussed in Note 17, Devon closed on the sale of its Barnett Shale assets in October 2020. Prior to December 31, 2020, activity relating to Devon’s Barnett Shale assets is classified as discontinued operations within Devon’s consolidated statements of comprehensive earnings and consolidated statements of cash flows.

As of September 30, 2021, Devon classified approximately $165 million of cash as restricted cash on the consolidated balance sheets for obligations retained related to the Barnett Shale assets and the Canadian business. Cash payments for these charges related to the Barnett assets and Canada business total approximately $10 million per quarter.

 

Variable Interest Entity

Cotton Draw Midstream, L.L.C. (“CDM”) is a joint venture entity formed by Devon and an affiliate of QL Capital Partners, LP. CDM provides gathering, compression and dehydration services for natural gas production in the Cotton Draw area of the Delaware Basin. Devon holds a controlling interest in CDM and the portions of CDM’s net earnings and equity not attributable to Devon’s controlling interest are shown separately as noncontrolling interests in the accompanying consolidated statements of comprehensive earnings and consolidated balance sheets. CDM is considered a VIE to Devon. The assets of CDM cannot be used by Devon for general corporate purposes and are included in, and disclosed parenthetically, on Devon's consolidated balance sheets. The carrying amount of liabilities related to CDM for which the creditors do not have recourse to Devon's assets are also included in, and disclosed parenthetically, if material, on Devon's consolidated balance sheets.

 

Investments

In conjunction with the Merger, Devon acquired an interest in Catalyst which is a joint venture established between WPX and Howard Energy Partners (“HEP”) to develop oil gathering and natural gas processing infrastructure in the Stateline area of the Delaware Basin. Under the terms of the arrangement, Devon and HEP each have a 50 percent voting interest in the joint venture legal entity, and HEP serves as the operator. Through 2038, Devon’s production from 50,000 net acres in the Stateline area of the Delaware Basin has been dedicated to Catalyst subject to fixed-fee oil gathering and natural gas processing agreements. The agreements do not include any minimum volume commitments. Devon accounts for the investment in Catalyst as an equity method investment. Devon’s investment in Catalyst is shown within investments on the consolidated balance sheet and Devon’s share of Catalyst earnings are reflected as a component of other, net in the accompanying consolidated statements of comprehensive earnings.         

Disaggregation of Revenue

 

The following table presents revenue from contracts with customers that are disaggregated based on the type of good or service.

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Oil

 

$

1,900

 

 

$

504

 

 

$

4,917

 

 

$

1,462

 

Gas

 

 

309

 

 

 

79

 

 

 

699

 

 

 

221

 

NGL

 

 

426

 

 

 

95

 

 

 

930

 

 

 

226

 

Oil, gas and NGL sales

 

 

2,635

 

 

 

678

 

 

 

6,546

 

 

 

1,909

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil

 

 

649

 

 

 

233

 

 

 

1,758

 

 

 

702

 

Gas

 

 

196

 

 

 

100

 

 

 

477

 

 

 

275

 

NGL

 

 

321

 

 

 

143

 

 

 

718

 

 

 

390

 

Marketing and midstream revenues

 

 

1,166

 

 

 

476

 

 

 

2,953

 

 

 

1,367

 

Total revenues from contracts with customers

 

$

3,801

 

 

$

1,154

 

 

$

9,499

 

 

$

3,276

 

 

v3.21.2
Acquisition and Divestitures
9 Months Ended
Sep. 30, 2021
Business Combinations [Abstract]  
Acquisition and Divestitures

2.Acquisitions and Divestitures

 

WPX Merger

On January 7, 2021, Devon and WPX completed an all-stock merger of equals. WPX was an oil and gas exploration and production company with assets in the Delaware Basin in Texas and New Mexico and the Williston Basin in North Dakota. On the closing date of the Merger, each share of WPX common stock was automatically converted into the right to receive 0.5165 of a share of Devon common stock. No fractional shares of Devon’s common stock were issued in the Merger, and holders of WPX common stock instead received cash in lieu of fractional shares of Devon common stock, if any. Based on the closing price of Devon’s common stock on January 7, 2021, the total value of Devon common stock issued to holders of WPX common stock as part of this transaction was approximately $5.4 billion. The Merger was structured as a tax-free reorganization for United States federal income tax purposes.

 

Purchase Price Allocation

The transaction has been accounted for using the acquisition method of accounting, with Devon being treated as the accounting acquirer. Under the acquisition method of accounting, the assets and liabilities of WPX and its subsidiaries have been recorded at their respective fair values as of the date of completion of the Merger and added to Devon’s. The preliminary purchase price assessment remains an ongoing process and is subject to change for up to one year subsequent to the closing date of the Merger. Determining the fair value of the assets and liabilities of WPX requires judgment and certain assumptions to be made, the most significant of these being related to the valuation of WPX’s oil and gas properties. The inputs and assumptions related to the oil and gas properties are categorized as level 3 in the fair value hierarchy.

The following table represents the preliminary allocation of the total purchase price of WPX to the identifiable assets acquired and the liabilities assumed based on the fair values as of the acquisition date.

 

 

Preliminary Purchase

 

 

 

Price Allocation

 

 

 

as of September 30, 2021

 

Consideration:

 

 

 

 

WPX Common Stock outstanding

 

 

561.2

 

Exchange Ratio

 

 

0.5165

 

Devon common stock issued

 

 

289.9

 

Devon closing price on January 7, 2021

 

$

18.57

 

Total common equity consideration

 

 

5,383

 

Share-based replacement awards

 

 

49

 

Total consideration

 

$

5,432

 

Assets acquired:

 

 

 

 

Cash, cash equivalents and restricted cash

 

$

344

 

Accounts receivable

 

 

425

 

Other current assets

 

 

49

 

Right-of-use assets

 

 

38

 

Proved oil and gas property and equipment

 

 

7,017

 

Unproved and properties under development

 

 

2,362

 

Other property and equipment

 

 

485

 

Investments

 

 

400

 

Other long-term assets

 

 

43

 

Total assets acquired

 

$

11,163

 

Liabilities assumed:

 

 

 

 

Accounts payable

 

$

346

 

Revenue and royalties payable

 

 

223

 

Other current liabilities

 

 

454

 

Debt

 

 

3,562

 

Lease liabilities

 

 

38

 

Asset retirement obligations

 

 

94

 

Deferred income taxes

 

 

249

 

Other long-term liabilities

 

 

765

 

Total liabilities assumed

 

 

5,731

 

Net assets acquired

 

$

5,432

 

 

WPX Revenues and Earnings

 

The following table represents WPX’s revenues and earnings included in Devon’s consolidated statements of comprehensive earnings subsequent to the closing date of the Merger.

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2021

 

Total revenues

 

$

1,564

 

 

$

3,977

 

Net earnings

 

$

414

 

 

$

969

 

 

Pro Forma Financial Information

 

Due to the Merger closing on January 7, 2021, all activity in the first nine months of 2021 except for the first six days of January is included in Devon’s consolidated statements of comprehensive earnings for the nine months ended September 30, 2021. The following unaudited pro forma financial information for the three and nine months ended September 30, 2020 is based on our historical consolidated financial statements adjusted to reflect as if the Merger had occurred on January 1, 2020. The information below reflects pro forma adjustments to conform WPX’s historical financial information to Devon’s financial statement presentation.

The unaudited pro forma financial information is not necessarily indicative of what would have occurred if the Merger had been completed as of the beginning of the periods presented, nor is it indicative of future results.

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

Continuing operations:

 

2020

 

 

2020

 

Total revenues

 

$

1,540

 

 

$

5,452

 

Net loss

 

$

(281

)

 

$

(3,247

)

Basic net loss per share

 

$

(0.42

)

 

$

(4.87

)

 

Divestitures

 

In the first quarter of 2021, Devon completed the sale of non-core assets in the Rockies for proceeds of $9 million, net of purchase price adjustments, and recognized a $35 million gain related to the sale. The transaction includes contingent earnout payments of up to $8 million. The total estimated proved reserves associated with these divested assets was approximately 3 MMBoe. As of December 31, 2020, the associated assets and liabilities were classified as assets held for sale and included in other current assets and other current liabilities, respectively.

 

In the fourth quarter of 2020, Devon completed the sale of its Barnett Shale assets to BKV for proceeds, net of purchase price adjustments, of $490 million. The agreement with BKV also provides for contingent earnout payments to Devon of up to $260 million based upon future commodity prices, with upside participation beginning at a $2.75 Henry Hub natural gas price or a $50 WTI oil price. The contingent payment period commenced on January 1, 2021 and has a term of four years. The valuation of the future contingent earnout payments included within other current assets and other long-term assets in the September 30, 2021 consolidated balance sheet was $46 million and $85 million, respectively. During the first nine months of 2021, Devon recorded a $65 million increase to the fair value within asset dispositions on the consolidated statements of comprehensive earnings. The value was derived utilizing a Monte Carlo valuation model and qualifies as a level 3 fair value measurement. Additional information can be found in Note 17.

 

v3.21.2
Derivative Financial Instruments
9 Months Ended
Sep. 30, 2021
Derivative Instruments And Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments

3.Derivative Financial Instruments

Objectives and Strategies

Devon enters into derivative financial instruments with respect to a portion of its oil, gas and NGL production to hedge future prices received. Additionally, Devon periodically enters into derivative financial instruments with respect to a portion of its oil, gas and NGL marketing activities. These commodity derivative financial instruments include financial price swaps, price swaptions, basis swaps, costless price collars and call options. Devon periodically enters into interest rate swaps to manage its exposure to interest rate volatility. As of September 30, 2021, Devon did not have any open interest rate swap 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 September 30, 2021, Devon neither held cash collateral of its counterparties nor posted cash collateral to its counterparties.

Commodity Derivatives

As of September 30, 2021, 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 Swaptions

 

 

Price Collars

 

 

Call Options Sold

 

Period

 

Volume

(Bbls/d)

 

 

Weighted

Average

Price ($/Bbl)

 

 

Volume

(Bbls/d)

 

 

Weighted

Average

Price ($/Bbl)

 

 

Volume

(Bbls/d)

 

 

Weighted

Average Floor

Price ($/Bbl)

 

 

Weighted

Average

Ceiling Price

($/Bbl)

 

 

Volume

(Bbls/d)

 

 

Weighted

Average Price

($/Bbl)

 

Q4 2021

 

 

66,460

 

 

$

41.24

 

 

 

 

 

$

 

 

 

48,250

 

 

$

38.82

 

 

$

48.82

 

 

 

5,000

 

 

$

39.50

 

Q1-Q4 2022

 

 

26,112

 

 

$

43.75

 

 

 

10,000

 

 

$

46.67

 

 

 

20,233

 

 

$

46.41

 

 

$

56.41

 

 

 

 

 

$

 

 

 

 

 

Oil Basis Swaps

 

Period

 

Index

 

Volume

(Bbls/d)

 

 

Weighted Average

Differential to WTI

($/Bbl)

 

Q4 2021

 

Midland Sweet

 

 

23,000

 

 

$

0.84

 

Q4 2021

 

Guernsey Light Sweet

 

 

4,000

 

 

$

(1.49

)

Q4 2021

 

BRENT

 

 

1,000

 

 

$

(8.00

)

Q4 2021

 

NYMEX Roll

 

 

13,000

 

 

$

0.39

 

Q1-Q4 2022

 

BRENT

 

 

1,000

 

 

$

(7.75

)

Q1-Q4 2022

 

NYMEX Roll

 

 

29,000

 

 

$

0.45

 

As of September 30, 2021, 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 and the end of month NYMEX index. The second table presents Devon’s natural gas derivatives that settle against the respective indices noted within the table.

 

 

 

Price Swaps (1)

 

 

Price Swaptions (2)

 

 

Price Collars (2)

 

 

Call Options Sold (2)

 

Period

 

Volume (MMBtu/d)

 

 

Weighted Average Price ($/MMBtu)

 

 

Volume (MMBtu/d)

 

 

Weighted Average Price ($/MMBtu)

 

 

Volume (MMBtu/d)

 

 

Weighted Average Floor Price ($/MMBtu)

 

 

Weighted Average

Ceiling Price ($/MMBtu)

 

 

Volume (MMBtu/d)

 

 

Weighted Average Price ($/MMBtu)

 

Q4 2021

 

 

254,000

 

 

$

2.63

 

 

 

 

 

$

 

 

 

133,000

 

 

$

2.55

 

 

$

3.05

 

 

 

50,000

 

 

$

2.68

 

Q1-Q4 2022

 

 

3,452

 

 

$

2.85

 

 

 

100,000

 

 

$

2.70

 

 

 

145,507

 

 

$

2.69

 

 

$

3.40

 

 

 

 

 

$

 

Q1-Q4 2023

 

 

 

 

$

 

 

 

 

 

$

 

 

 

10,603

 

 

$

3.11

 

 

$

4.56

 

 

 

 

 

$

 

 

 

(1)

Related to the 2021 open positions, 14,000 MMBtu/d settle against the Inside FERC first of month Henry Hub index at an average price of $2.85 and 240,000 MMBtu/d settle against the end of month NYMEX index at an average price of $2.62. All 2022 open positions settle against the Inside FERC first of month Henry Hub index.

 

(2)

Price swaptions and call options settle against end of month NYMEX index. Price collars settle against the Inside FERC first of month Henry Hub Index.

 

 

 

Natural Gas Basis Swaps

 

Period

 

Index

 

Volume

(MMBtu/d)

 

 

Weighted Average

Differential to

Henry Hub

($/MMBtu)

 

Q4 2021

 

El Paso Natural Gas

 

 

35,000

 

 

$

(0.92

)

Q4 2021

 

WAHA

 

 

80,000

 

 

$

(0.65

)

Q1-Q4 2022

 

WAHA

 

 

70,000

 

 

$

(0.57

)

Q1-Q4 2023

 

WAHA

 

 

70,000

 

 

$

(0.51

)

Q1-Q4 2024

 

WAHA

 

 

40,000

 

 

$

(0.51

)

 

 

 

As of September 30, 2021, 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

 

Period

 

Product

 

Volume (Bbls/d)

 

 

Weighted Average Price ($/Bbl)

 

Q4 2021

 

Natural Gasoline

 

 

1,000

 

 

$

47.57

 

Q4 2021

 

Normal Butane

 

 

1,000

 

 

$

31.40

 

Q4 2021

 

Propane

 

 

1,000

 

 

$

27.88

 

 

Financial Statement Presentation

All derivative financial instruments are recognized at their current fair value as either assets or liabilities in the consolidated balance sheets. Amounts related to contracts allowed to be netted upon payment subject to a master netting arrangement with the same counterparty are reported on a net basis in the consolidated balance sheets. The tables below present a summary of these positions as of September 30, 2021 and December 31, 2020.

 

September 30, 2021

 

 

December 31, 2020

 

 

 

 

Gross Fair Value

 

 

Amounts Netted

 

 

Net Fair Value

 

 

Gross Fair Value

 

 

Amounts Netted

 

 

Net Fair Value

 

 

Balance Sheet Classification

Commodity derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term derivative asset

$

3

 

 

$

(1

)

 

$

2

 

 

$

23

 

 

$

(18

)

 

$

5

 

 

Other current assets

Long-term derivative asset

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

Other long-term assets

Short-term derivative liability

 

(984

)

 

 

1

 

 

 

(983

)

 

 

(161

)

 

 

18

 

 

 

(143

)

 

Other current liabilities

Long-term derivative liability

 

(103

)

 

 

 

 

 

(103

)

 

 

(5

)

 

 

 

 

 

(5

)

 

Other long-term liabilities

Total derivative liability

$

(1,084

)

 

$

 

 

$

(1,084

)

 

$

(142

)

 

$

 

 

$

(142

)

 

 

 

v3.21.2
Share-Based Compensation
9 Months Ended
Sep. 30, 2021
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Share-Based Compensation

4.Share-Based Compensation

 

The table below presents the share-based compensation expense included in Devon’s accompanying consolidated statements of comprehensive earnings. The vesting for certain share-based awards was accelerated in conjunction with the reduction of workforce described in Note 6 and is included in restructuring and transaction costs in the accompanying consolidated statements of comprehensive earnings.

 

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

G&A

 

$

58