Devon Energy Annual Report 2015

FY2015 Annual Report · Devon Energy

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Devon Energy
2015 Letter to Shareholders
and Form 10-K

Commitment Runs Deep

Letter to Shareholders

2015 was a year of extreme price volatility for our industry.
The success of U.S. resource plays, combined with unwavering
OPEC production, drove world oil markets to be oversupplied
by more than a million barrels a day. This imbalance pushed the
average benchmark WTI oil price down nearly 50 percent during
the year. With natural gas prices similarly depressed, cash flows
across the E&P sector were severely constrained. However, the
good news is that fundamental supply and demand dynamics
appear to be improving. Persistent growth in global oil demand
coupled with declines in production, led by North American
resource plays, are bringing balance back to the market.

Generating top-tier operating results

In spite of these tough economic conditions, Devon’s

strategy of operating in North America’s best resource plays with
a sharp focus on best-in-class execution is generating top-tier
results. We are seeing higher production rates, lower capital costs
and lower operating expenses across the company’s portfolio.
This strong performance has guided the company to consistently
exceed well type-curve expectations and driven peer-leading
results.

Our strong operating performance produced some notable

highlights in 2015:

• Record oil production – 275,000 barrels a day, up 28 percent
• Greater production value – reduced field-level operating

costs by nearly $400 million

• Lower capital costs – achieved $500 million of savings from
original budget expectations

Enhancing our world-class portfolio

Looking beyond our reported results, it was also a pivotal

year for Devon’s asset portfolio. Late in the year we moved
decisively to materially expand our position in the Oklahoma
Anadarko Basin. Also known as the STACK, this in our view is the
best emerging development opportunity in North America. I have
unwavering conviction that this strategic acquisition will further
Devon’s ability to deliver differentiating operating results for many
years to come.

The quality of our go-forward asset base is unmatched.
Our franchise properties in the STACK and Delaware Basin have
the scale and scope to deliver long-term, sustainable growth.
Complementing these are some of the best cash-flow-generating

assets in the U.S. – the Barnett Shale and Eagle Ford. With the
depth, diversity and quality of our premier portfolio, we are well
positioned to create significant value for our shareholders.

Responding with caution

As we look to 2016, given the low commodity-price
environment and the uncertain duration of this downturn, our
top priority is to protect the balance sheet by spending within our
available cash flow. We also see no reason to accelerate production
growth into weak commodity markets, so we have prudently
reduced our capital activity by 75 percent from last year.

To ensure the continued strength of our investment grade
balance sheet, we also trimmed more than $1 billion from our cost
structure and have a divestiture program under way with the intent
to monetize $2 billion to $3 billion of assets. With our financial
strength and flexibility intact, we are ready to move quickly once
the markets and economics turn favorable again for increased
investment.

A culture of success

Regardless of the business environment, Devon has a long
tradition of doing its work the right way. This commitment remains
strong today and starts with working safely. But creating a culture
of safety is just the beginning for us when it comes to doing things
the right way. Our efforts to care for the land, preserve wildlife,
conserve water, reduce emissions and be a good neighbor continue
to be a priority and our efforts have been widely recognized.
When I look to the coming years, I have every reason to
be optimistic about Devon’s future. We have a great collection
of assets, a strong commitment to superior execution and one
of the more advantaged capital structures in the E&P space. As
we continue to execute on our disciplined business plan, we are
well positioned to consistently generate outsized returns for our
shareholders.

Dave Hager
President and CEO

April 7, 2016

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K

(Mark One)
È

‘

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission File Number 001-32318

DEVON ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

333 West Sheridan Avenue, Oklahoma City, Oklahoma
(Address of principal executive offices)

73-1567067
(I.R.S. Employer identification No.)

73102-5015
(Zip code)

Registrant’s telephone number, including area code:
(405) 235-3611

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Name of each exchange on which registered

Common stock, par value $0.10 per share

The New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act. Yes È No ‘

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Act. Yes ‘ No È

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes È No ‘

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes È No ‘

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is
not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ‘

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act.
Large accelerated filer È

Smaller reporting company ‘

Non-accelerated filer ‘

Accelerated filer ‘

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No È
The aggregate market value of the voting common stock held by non-affiliates of the registrant as of June 30, 2015 was

approximately $24.3 billion, based upon the closing price of $59.49 per share as reported by the New York Stock Exchange on
such date. On February 10, 2016, 441.3 million shares of common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
Proxy statement for the 2016 annual meeting of stockholders – Part III

6
20
26
26
26

27
29
30
55
56
120
120
120

121
121

121
121
121

122
129

DEVON ENERGY CORPORATION
FORM 10-K
TABLE OF CONTENTS

Items 1 and 2. Business and Properties
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures

PART I

PART II

Selected Financial Data

Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information

Financial Statements and Supplementary Data

PART III

Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services

Item 15. Exhibits and Financial Statement Schedules
Signatures

PART IV

DEFINITIONS

Unless the context otherwise indicates, references to “us,” “we,” “our,” “ours,” “Devon” and the

“Company” refer to Devon Energy Corporation and its consolidated subsidiaries. In addition, the following are
other abbreviations and definitions of certain terms used within this Annual Report on Form 10-K:

“2009 Plan” means the Devon Energy Corporation 2009 Long-Term Incentive Plan, as amended and
restated.

“2015 Plan” means the Devon Energy Corporation 2015 Long-Term Incentive Plan.

“ASU” means Accounting Standards Update.

“Bbl” or “Bbls” means barrel or barrels.

“Bcf” means billion cubic feet.

“Boe” means barrel of oil equivalent. Gas proved reserves and production are converted to Boe, at the
pressure and temperature base standard of each respective state in which the gas is produced, at the rate of
six Mcf of gas per Bbl of oil, based upon the approximate relative energy content of gas and oil. Bitumen
and NGL proved reserves and production are converted to Boe on a one-to-one basis with oil.

“Btu” means British thermal units, a measure of heating value.

“Canada” means the division of Devon encompassing oil and gas properties located in Canada. All dollar
amounts associated with Canada are in U.S. dollars.

“Canadian Plan” means Devon Canada Corporation Incentive Savings Plan.

“Coronado” means Coronado Midstream Holdings LLC.

“Crosstex” means Crosstex Energy, Inc. together with Crosstex Energy L.P.

“DD&A” means depreciation, depletion and amortization expenses.

“Devon Financing” means Devon Financing Company, L.L.C.

“Devon Plan” means Devon Energy Corporation Incentive Savings Plan.

“DOE” means Department of Energy.

“E2” means E2 Energy Services, LLC together with E2 Appalachian Compression, LLC.

“EMH” means EnLink Midstream Holdings, LP.

“EnLink” means EnLink Midstream Partners, L.P., a master limited partnership.

“FASB” means Financial Accounting Standards Board.

“Federal Funds Rate” means the interest rate at which depository institutions lend balances at the Federal
Reserve to other depository institutions overnight.

“G&A” means general and administrative expenses.

“General Partner” means EnLink Midstream, LLC, the general partner entity of EnLink.

“GeoSouthern” means GeoSouthern Energy Corporation.

“Inside FERC” refers to the publication Inside F.E.R.C.’s Gas Market Report.

“LIBOR” means London Interbank Offered Rate.

“LOE” means lease operating expenses.

“LPC” means LPC Crude Oil Marketing LLC.

“Matador” means MRC Energy Company.

“MBbls” means thousand barrels.

“MBoe” means thousand Boe.

“Mcf” means thousand cubic feet.

“MLP” means master limited partnership.

“MMBbls” means million barrels.

“MMBoe” means million Boe.

“MMBtu” means million Btu.

“MMcf” means million cubic feet.

“NGL” or “NGLs” means natural gas liquids.

“NYMEX” means New York Mercantile Exchange.

“NYSE” means New York Stock Exchange.

“OPEC” means Organization of the Petroleum Exporting Countries.

“Pre-tax 10% present value” means the present value of Devon’s pre-tax future net revenue to be generated
from the production of proved reserves, net of estimated production and development costs and site
restoration and abandonment charges.

“SEC” means United States Securities and Exchange Commission.

“Senior Credit Facility” means Devon’s syndicated unsecured revolving line of credit.

“Standardized measure” means the present value of after-tax future net revenues discounted at 10% per
annum.

“S&P 500 Index” means Standard and Poor’s 500 index.

“Tall Oak” means Tall Oak Midstream, LLC.

“TSR” means total shareholder return.

“U.S.” means United States of America.

“VEX” means Victoria Express Pipeline and related truck terminal and storage assets.

“WTI” means West Texas Intermediate.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This report includes “forward-looking statements” as defined by the SEC. Such statements are those

concerning strategic plans, our expectations and objectives for future operations, as well as other future events or
conditions, and are often identified by use of the words “expects,” “believes,” “will,” “would,” “could,”
“forecasts,” “projections,” “estimates,” “plans,” “expectations,” “targets,” “opportunities,” “potential,”
“anticipates,” “outlook” and other similar terminology. Such forward-looking statements are based on our
examination of historical operating trends, the information used to prepare our December 31, 2015 reserve
reports and other data in our possession or available from third parties. Such statements are subject to a number
of assumptions, risks and uncertainties, many of which are beyond our control. Consequently, actual future
results could differ materially from our expectations due to a number of factors, including, but not limited to:

•

the volatility of oil, gas and NGL prices, including the currently depressed commodity price
environment;

uncertainties inherent in estimating oil, gas and NGL reserves;

the extent to which we are successful in acquiring and discovering additional reserves;

the uncertainties, costs and risks involved in exploration and development activities;

risks related to our hedging activities;

•

counterparty credit risks;

regulatory restrictions, compliance costs and other risks relating to governmental regulation, including
with respect to environmental matters;

risks relating to our indebtedness;

our ability to successfully complete mergers, acquisitions and divestitures;

the extent to which insurance covers any losses we may experience;

our limited control over third parties who operate our oil and gas properties;

• midstream capacity constraints and potential interruptions in production;

•

competition for leases, materials, people and capital;

cyberattacks targeting our systems and infrastructure; and

any of the other risks and uncertainties discussed in this report.

All subsequent written and oral forward-looking statements attributable to Devon, or persons acting on its

behalf, are expressly qualified in their entirety by the cautionary statements above. We assume no duty to update
or revise our forward-looking statements based on new information, future events or otherwise.

Items 1 and 2. Business and Properties

General

PART I

Devon is a leading independent energy company engaged primarily in the exploration, development and
production of oil, natural gas and NGLs. Our operations are concentrated in various North American onshore
areas in the U.S. and Canada. Our portfolio of oil and gas properties provides stable, environmentally responsible
production and a platform for future growth. We have doubled our onshore North American oil production since
2010 to more than 275 MBbls per day and have a deep inventory of development opportunities. Devon also
produces over 1.6 Bcf of natural gas a day and more than 136 MBbls of NGLs per day.

Additionally, we control EnLink, a leading integrated midstream business with significant size and scale in

key operating regions in the U.S. This MLP focuses on providing gathering, transmission, processing,
fractionation and marketing to producers of natural gas, NGLs, crude oil and condensate.

A Delaware corporation formed in 1971, we have been publicly held since 1988, and our common stock is
listed on the NYSE. Our principal and administrative offices are located at 333 West Sheridan, Oklahoma City,
OK 73102-5015 (telephone 405-235-3611). As of December 31, 2015, Devon and its consolidated subsidiaries
had approximately 6,600 employees. Approximately 1,400 of such employees are employed by EnLink (through
its subsidiaries).

Devon files or furnishes annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports

on Form 8-K as well as any amendments to these reports with the SEC. Through our website,
http://www.devonenergy.com, we make available electronic copies of the documents we file or furnish to the
SEC, the charters of the committees of our Board of Directors and other documents related to our corporate
governance (including our Code of Ethics for the Chief Executive Officer, Chief Financial Officer and Chief
Accounting Officer). Access to these electronic filings is available free of charge as soon as reasonably
practicable after filing or furnishing them to the SEC. Printed copies of our committee charters or other
governance documents and filings can be requested by writing to our corporate secretary at the address on the
cover of this report.

In addition, the public may read and copy any materials Devon files with the SEC at the SEC’s Public
Reference Room at 100 F Street, N.E., Washington D.C. 20549. The public may also obtain information about
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Reports filed with the SEC
are also made available on its website at www.sec.gov.

Strategy

Our primary goal is to build value per debt-adjusted share by:

•

exploring for undiscovered oil and natural gas reserves;

purchasing and developing oil and natural gas properties;

enhancing the value of production through marketing and midstream activities;

optimizing production operations to control costs; and

• maintaining a strong balance sheet.

During 2015, we continued to execute on this strategy and experienced a number of key achievements that
are outlined in this report. However, we, and the entire upstream energy sector, have faced both operational and
financial challenges as oil and natural gas prices weakened significantly throughout 2015 and continued into
2016. To navigate these turbulent times, we are using our focused strategy, flexible portfolio of assets and
leadership experience to execute on a number of initiatives that will ensure our long-term financial strength.

Specifically, after completing the STACK acquisition discussed in this report, we had approximately $3.9

billion of liquidity.

While we will continue to operate and develop our premier portfolio of assets, we are committed to

protecting our balance sheet and managing our capital programs to be within our cash inflows, including Access
Pipeline proceeds. As a result, we are significantly reducing our capital investment in response to lower
commodity prices. We plan to invest $900 million to $1.1 billion in our upstream programs, a decrease of
roughly 75% compared to our 2015 capital. We are also committed to reducing our G&A and field-level
operating costs commensurate with our reduced, but focused, activity level. Following a number of cost-
reduction initiatives culminating with our February 2016 workforce reduction, we are expecting a $700 million to
$900 million reduction in operating and G&A costs on an annualized basis.

Also, in February 2016, we reduced our quarterly common stock dividend 75% to $0.06 per share.

Oil and Gas Properties

Property Profiles

The locations of our core oil and gas properties are presented on the following map. Additional information

related to these properties follows this map, as well as information describing EnLink’s assets.

The following table outlines a summary of key data in each of our operating areas as of and for the year
ended December 31, 2015. Notes 20 and 21 to the financial statements included in “Item 8. Financial Statements
and Supplementary Data” of this report contain additional information on our segments and geographical areas.

Delaware Basin
STACK
Eagle Ford
Rockies Oil
Heavy Oil
Barnett Shale

Core assets

Other

Total

Proved Reserves

Production

MMBoe

% of
Total % Liquids MBoe/d

% of
Total

%
Liquids

Gross
Wells
Drilled

123
264
103
28
544
841

78%
6%
42%
12%
76%
4%
1%
66%
25% 100%
25%
39%

1,903
279

2,182

87%
13%

100%

55%
57%

56%

61
64
115
23
115
182

560
120

680

9% 79% 167
9% 42% 130
17% 79% 275
65
3% 70%
79
17% 97%
5
27% 27%

82% 61% 721
18% 58% 129

100% 60% 850

Delaware Basin – The Delaware Basin has been a legacy asset for Devon and continues to offer exploration

and low-risk development opportunities from many geologic reservoirs and play types, including the oil-rich
Bone Spring, Delaware, Wolfcamp and Leonard formations. These oil and liquids-rich opportunities across our
acreage in the Delaware Basin will offer high-margin growth potential for many years to come. In 2016, we plan
to invest approximately $200 million of capital in the Delaware Basin, primarily focused on the second Bone
Spring opportunity in the basin of southeast New Mexico.

STACK – In early January 2016, we increased our acreage in the Woodford Shale and Meramec plays by
acquiring 80,000 net acres in the STACK. The STACK development, located primarily in Oklahoma’s Canadian,
Kingfisher and Blaine counties, is named for the stacked pay in the area. Our Woodford Shale position is the
largest and one of the best in the industry. Recent well-completion design enhancements have resulted in greater
productivity and improved economics. Early drilling activity in the Meramec play has been encouraging across
our core position in the oil and liquids window. In 2016, we plan approximately $325 million of capital
investment.

Eagle Ford – We acquired our position in the Eagle Ford in early 2014 from GeoSouthern and have
approximately 66,000 net acres located in the DeWitt and Lavaca counties in south Texas. Since acquiring these
assets, we have delivered tremendous results, increasing production by 125%. Our excellent results are driven by
our development in DeWitt County which is located in the economic core of the play. In 2016, we expect our
Eagle Ford assets to once again deliver the highest operating margin of any asset in the portfolio and plan
approximately $200 million of capital investment.

Rockies Oil – Our operations are focused on emerging oil opportunities in the Powder River Basin and the
Wind River Basin. In the Powder River, we are currently targeting several Cretaceous oil objectives, including
the Turner, Parkman and Frontier formations. Recent drilling success in these formations has expanded our
drilling inventory, and we expect further growth as we continue to de-risk this emerging light-oil opportunity. In
December 2015, we acquired 253,000 net acres in the “core” of the oil fairway in the Powder River. This
acquisition delivers some of the best returns in our portfolio and is a significant resource opportunity. In 2016,
we plan approximately $75 million of capital investment.

Heavy Oil – Our operations in Canada are focused on our heavy oil assets in Alberta, Canada. Our most
significant Canadian operation is our Jackfish complex, a thermal heavy oil operation in the non-conventional oil
sands of east central Alberta. We employ a recovery method known as steam-assisted gravity drainage at
Jackfish. In 2014, we brought the third phase of Jackfish into operation, which ramped up to facility capacity by

the third quarter of 2015. We expect each phase to maintain a reasonably flat production profile for greater than
20 years at an average gross production rate of approximately 35 MBbls per day at each facility.

Our Pike oil sands acreage is situated directly to the southeast of our Jackfish acreage in east central Alberta

and has similar reservoir characteristics to Jackfish. The Pike leasehold is currently undeveloped and has no
proved reserves or production as of December 31, 2015. With our 50% partner, we are evaluating our
development timeline for Pike.

To facilitate the delivery of our heavy oil production, we have a 50% interest in the Access Pipeline

transportation system in Canada. This pipeline system allows us to blend our heavy oil production with
condensate or other blend-stock and transport the combined product to the Edmonton area for sale. The Access
Pipeline system has the capacity to transport approximately 170 MBbls of bitumen blend per day, net to our 50%
interest. As discussed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of this report, we have plans to monetize our interest in Access Pipeline in 2016. With any buyer of
Access Pipeline, we will also enter into a contractual arrangement to continue transporting our heavy oil volumes
on Access Pipeline.

In addition to Jackfish and Pike, we hold acreage and own producing assets in the Bonnyville region,

located to the south and east of Jackfish in eastern Alberta. Bonnyville is a low-risk, high margin oil development
play that produces heavy oil by conventional means, without the need for steam injection.

In 2016, we plan approximately $175 million of capital investment in our Canadian Heavy Oil business.

Barnett Shale – This is our largest property in terms of production and proved reserves. Our leases are
located primarily in Denton, Johnson, Parker, Tarrant and Wise counties in north Texas. Since acquiring a
substantial position in this field in 2002, we continue to introduce technology and new innovations to optimize
production operations and have transformed this into one of the top producing gas fields in North America.
Given the commodity price environment in 2015, we shifted focus to enhancing existing well performance
through re-fracturing, artificial lift and line pressure reduction projects. In 2015, we accelerated our horizontal
refrac program to test the re-stimulation of 25 wells and also had an active vertical refrac program, re-stimulating
140 vertical wells. In 2016, we plan on minimal refrac activity in the Barnett.

Other – Other assets are located primarily in the Midland Basin, east Texas, Granite Wash and
Mississippian-Lime areas. Substantially all of these properties have been identified for divestiture in 2016.

Proved Reserves

For estimates of our proved developed and proved undeveloped reserves and the discussion of the

contribution by each key property, see Note 21 in “Item 8. Financial Statements and Supplementary Data” of this
report.

Since the beginning of 2015, no estimates of our proved reserves have been filed with or included in reports
to any federal or foreign governmental authority or agency except in filings with the SEC and the DOE. Reserve
estimates filed with the SEC correspond with the estimates of our reserves contained in this report. Reserve
estimates filed with the DOE are based upon the same underlying technical and economic assumptions as the
estimates of our reserves included in this report. However, the DOE requires reports to include the interests of all
owners in wells that we operate and to exclude all interests in wells that we do not operate.

Proved oil and gas reserves are those quantities of oil, gas and NGLs which, by analysis of geoscience and

engineering data, can be estimated with reasonable certainty to be economically producible from known
reservoirs under existing economic conditions, operating methods and government regulations. To be considered
proved, oil and gas reserves must be economically producible before contracts providing the right to operate
expire, unless evidence indicates that renewal is reasonably certain. Also, the project to extract the hydrocarbons
must have commenced or the operator must be reasonably certain that it will commence the project within a
reasonable time.

The process of estimating oil, gas and NGL reserves is complex and requires significant judgment as

discussed in “Item 1A. Risk Factors” of this report. As a result, we have developed internal policies for
estimating and recording reserves. Such policies require proved reserves to be in compliance with the SEC
definitions and guidance. Our policies assign responsibilities for compliance in reserves bookings to our Reserve
Evaluation Group (the “Group”). These same policies also require that reserve estimates be made by
professionally qualified reserves estimators (“Qualified Estimators”), as defined by the Society of Petroleum
Engineers’ standards.

The Group, which is led by Devon’s Director of Reserves and Economics, is responsible for the internal
review and certification of reserves estimates. We ensure the Group’s Director and key members of the Group
have appropriate technical qualifications to oversee the preparation of reserves estimates, including any or all of
the following:

•

an undergraduate degree in petroleum engineering from an accredited university, or equivalent;

a petroleum engineering license, or similar certification;

• memberships in oil and gas industry or trade groups; and

•

relevant experience estimating reserves.

The current Director of the Group has all of the qualifications listed above. The current Director has been

involved with reserves estimation in accordance with SEC definitions and guidance since 1987. He has
experience in reserves estimation for projects in the U.S. (both onshore and offshore), as well as in Canada, Asia,
the Middle East and South America. He has been employed by Devon for the past fifteen years, including the
past eight in his current position. During his career, he has been responsible for reserves estimation as the
primary reservoir engineer for projects including, but not limited to:

• Hugoton Gas Field (Kansas);

•

Sho-Vel-Tum CO2 Flood (Oklahoma);

• West Loco Hills Unit Waterflood and CO2 Flood (New Mexico);
• Dagger Draw Oil Field (New Mexico);

• Clarke Lake Gas Field (Alberta, Canada);

•

Panyu 4-2 and 5-1 Joint Development (Offshore South China Sea); and

• ACG Unit (Caspian Sea).

From 2003 to 2010, he served as the reservoir engineering representative on our internal peer review team.

In this role, he reviewed reserves and resource estimates for projects including, but not limited to, the Mobile
Bay Norphlet Discoveries (Gulf of Mexico Shelf), Cascade Lower Tertiary Development (Gulf of Mexico
Deepwater) and Polvo Development (Campos Basin, Brazil).

The Group reports independently of any of our operating divisions and currently is in our Chief Financial

Officer’s organization. No portion of the Group’s compensation is directly dependent on the quantity of reserves
booked.

Throughout the year, the Group performs internal reserves audits of each operating division’s reserves.
Selection criteria of reserves that are audited include major fields and major additions and revisions to reserves.
In addition, the Group reviews reserve estimates with each of the third-party petroleum consultants discussed
below. The Group also ensures our Qualified Estimators obtain continuing education related to the fundamentals
of SEC proved reserves assignments.

The Group also oversees audits and reserves estimates performed by third-party petroleum consulting firms.

During 2015, we engaged two such firms to audit 95% of our proved reserves. LaRoche Petroleum Consultants,
Ltd. audited 94% of our 2015 U.S. reserves, and Deloitte LLP audited 96% of our Canadian reserves.

“Audited” reserves are those quantities of reserves that were estimated by our employees and audited by an
independent petroleum consultant. The Society of Petroleum Engineers’ definition of an audit is an examination
of a company’s proved oil and gas reserves and net cash flow by an independent petroleum consultant that is
conducted for the purpose of expressing an opinion as to whether such estimates, in aggregate, are reasonable and
have been estimated and presented in conformity with generally accepted petroleum engineering and evaluation
methods and procedures.

In addition to conducting these internal and external audits, we also have a Reserves Committee that
consists of three independent members of our Board of Directors. This committee provides additional oversight
of our reserves estimation and certification process. The Reserves Committee assists the Board of Directors with
its duties and responsibilities in evaluating and reporting our proved reserves, much like our Audit Committee
assists the Board of Directors in supervising our audit and financial reporting requirements. Besides being
independent, the members of our Reserves Committee also have educational backgrounds in geology or
petroleum engineering, as well as experience relevant to the reserves estimation process.

The Reserves Committee meets a minimum of twice a year to discuss reserves issues and policies and meets
at least once a year separately with our senior reserves engineering personnel and separately with our third-party
petroleum consultants. The responsibilities of the Reserves Committee include the following:

•

approve the scope of and oversee an annual review and evaluation of our oil, gas and NGL reserves;

oversee the integrity of our reserves evaluation and reporting system;

oversee and evaluate our compliance with legal and regulatory requirements related to our reserves;

review the qualifications and independence of our third-party petroleum consultants; and

• monitor the performance of our third-party petroleum consultants.

The following table presents our estimated pre-tax cash flow information related to our proved reserves.

These estimates correspond with the method used in presenting the “Supplemental Information on Oil and Gas
Operations” in Note 21 to our consolidated financial statements included in this report.

Pre-Tax Future Net Revenue (Non-GAAP) (1)
Proved Developed Reserves
Proved Undeveloped Reserves

Total Proved Reserves

Pre-Tax 10% Present Value (Non-GAAP) (1)
Proved Developed Reserves
Proved Undeveloped Reserves

Total Proved Reserves

Year Ended December 31, 2015

U.S.

Canada

Total

(Millions)

$6,382
459

$1,874
1,523

$ 8,256
1,982

$6,841

$3,397

$10,238

$4,609
259

$1,657
458

$ 6,266
717

$4,868

$2,115

$ 6,983

(1) Estimated pre-tax future net revenue represents estimated future revenue to be generated from the

production of proved reserves, net of estimated production and development costs and site restoration and
abandonment charges. The amounts shown do not give effect to DD&A, asset impairments or non-property
related expenses such as debt service and income tax expense.

Pre-tax future net revenue and pre-tax 10% present value are non-GAAP measures. The standardized
measure was $6.7 billion at the end of 2015. Included as part of the standardized measure were discounted
future income taxes of $0.3 billion. Excluding these taxes, the pre-tax 10% present value was $7.0 billion.
We believe the pre-tax 10% present value is a useful measure in addition to the after-tax standardized

measure. The pre-tax 10% present value assists in both the estimation of future cash flows of the current
reserves as well as in making relative value comparisons among peer companies. The after-tax standardized
measure is dependent on the unique tax situation of each individual company, while the pre-tax 10% present
value is based on prices and discount factors, which are more consistent from company to company.

Production, Production Prices and Production Costs

The following table presents production, price and cost information for each significant field, country and

continent.

Year Ended December 31,

Oil (MMBbls) Bitumen (MMBbls) Gas (Bcf) NGLs (MMBbls) Total (MMBoe)

Production

2015

2014

2013

Barnett Shale
Jackfish
U.S.
Canada
Total North America

—
—
60
10
70

—
47
10
57

—
28
15
43

—
31
—
31
31

—
20
—
20
20

—
19
—
19
19

291
—
579
8
587

332
—
660
41
701

374
—
709
165
874

17
—
50
—
50

20
—
50
1
51

20
—
41
4
45

66
31
206
42
248

76
20
207
39
246

83
19
189
64
253

Year Ended December 31,

Oil (Per Bbl) Bitumen (Per Bbl) Gas (Per Mcf) NGLs (Per Bbl)

Production Cost
(Per Boe) (1)

Average Sales Price

2015

2014

2013

Barnett Shale
Jackfish
U.S.
Canada
Total North America

$46.47
$ —
$44.01
$30.58
$42.12

$95.51
$ —
$85.64
$68.14
$82.47

$97.74
$ —
$94.52
$69.18
$86.02

$ —
$23.41
$ —
$23.41
$23.41

$ —
$55.88
$ —
$55.88
$55.88

$ —
$48.04
$ —
$48.04
$48.04

$2.00
$ —
$2.17
$0.67
$2.14

$3.78
$ —
$3.92
$3.64
$3.90

$2.90
$ —
$3.10
$3.05
$3.09

$ 9.62
$ —
$ 9.32
$ —
$ 9.32

$21.98
$ —
$24.46
$50.52
$24.89

$22.45
$ —
$25.75
$46.17
$27.33

$ 6.02
$12.43
$ 7.52
$13.18
$ 8.48

$ 5.25
$20.59
$ 7.52
$20.10
$ 9.49

$ 4.12
$17.98
$ 6.65
$15.78
$ 8.97

(1) Represents LOE per Boe and excludes severance and property taxes.

Drilling Statistics

The following table summarizes our development and exploratory drilling results.

Year Ended December 31,

Productive

Dry

Productive

Dry

Productive Dry

Total

Development Wells (1) Exploratory Wells (1)

Total Wells (1)

2015
U.S.
Canada

Total North America

2014
U.S.
Canada

Total North America

2013
U.S.
Canada

Total North America

298.6
79.0

377.6

474.4
190.8

665.2

555.3
211.9

767.2

1.8
—

1.8

0.4
1.0

1.4

—
1.0

1.0

40.7
—

40.7

5.0
—

5.0

56.1
7.4

63.5

—
—

—

1.2
0.5

1.7

7.0
—

7.0

339.3
1.8
79.0 —

341.1
79.0

418.3

1.8

420.1

479.4
190.8

670.2

611.4
219.3

830.7

1.6
1.5

3.1

7.0
1.0

8.0

481.0
192.3

673.3

618.4
220.3

838.7

(1) These well counts represent net wells completed during each year. Net wells are gross wells multiplied by

our fractional working interests in each well.

The following table presents the wells that were in progress on December 31, 2015. As of February 1, 2016,

these wells were still in progress.

U.S.
Canada

Total North America

Gross (1)

Net (2)

17.0
—

17.0

8.6
—

8.6

(1) Gross wells are the sum of all wells in which we own a working interest.
(2) Net wells are gross wells multiplied by our fractional working interests in each well.

Productive Wells

The following table sets forth our producing wells as of December 31, 2015.

U.S.
Canada

Oil Wells (1)

Natural Gas Wells

Total Wells (1)

Gross (2)(4)

Net (3) Gross (2)(4)

Net (3)

Gross (2)(4)

Net (3)

10,895
3,264

4,352
3,166

15,130
698

10,313
498

26,025
3,962

14,665
3,664

Total North America

14,159

7,518

15,828

10,811

29,987

18,329

Includes bitumen wells.

(1)
(2) Gross wells are the sum of all wells in which we own a working interest.
(3) Net wells are gross wells multiplied by our fractional working interests in each well.
(4)

Includes 809 and 1,565 oil and gas wells, respectively, which had multiple completions and were operated
by Devon.

The day-to-day operations of oil and gas properties are the responsibility of an operator designated under
pooling or operating agreements. The operator supervises production, maintains production records, employs
field personnel and performs other functions. We are the operator of approximately 19,000 wells. As operator,
we receive reimbursement for direct expenses incurred to perform our duties, as well as monthly per-well
producing and drilling overhead reimbursement at rates customarily charged in the respective areas. In presenting
our financial data, we record the monthly overhead reimbursements as a reduction of G&A, which is a common
industry practice.

Acreage Statistics

The following table sets forth our developed and undeveloped lease and mineral acreage as of December 31,

2015. Of our 5.5 million net acres, approximately 3.0 million acres are held by production. The acreage in the
table includes 0.2 million, 0.4 million and 0.1 million net acres subject to leases that are scheduled to expire
during 2016, 2017 and 2018, respectively. As of December 31, 2015, there were no proved undeveloped reserves
associated with our expiring acreage. Of the 0.7 million net acres set to expire by December 31, 2018, we will
perform operational and administrative actions to continue the lease terms for portions of the acreage that we
intend to further assess. However, we do expect to allow a portion of the acreage to expire in the normal course
of business. In 2015, we allowed approximately 0.8 million acres to expire.

U.S.
Canada

Total North America

Developed

Undeveloped

Total

Gross (1)

Net (2) Gross (1)

Net (2)

2,598
705

1,732
520

(Thousands)

4,654
2,147

2,207
1,026

7,252
2,852

3,939
1,546

3,303

2,252

6,801

3,233

10,104

5,485

(1) Gross acres are the sum of all acres in which we own a working interest.
(2) Net acres are gross acres multiplied by our fractional working interests in the acreage.

Title to Properties

Title to properties is subject to contractual arrangements customary in the oil and gas industry, liens for
taxes not yet due and, in some instances, other encumbrances. We believe that such burdens do not materially
detract from the value of properties or from the respective interests therein or materially interfere with their use
in the operation of the business.

As is customary in the industry, other than a preliminary review of local records, little investigation of
record title is made at the time of acquisitions of undeveloped properties. Investigations, which generally include
a title opinion of outside counsel, are made prior to the consummation of an acquisition of producing properties
and before commencement of drilling operations on undeveloped properties.

EnLink Properties

EnLink’s assets are comprised of systems and other assets located in four primary regions:

•

Texas – The Texas assets consist of transmission pipelines with a capacity of approximately 1.3 Bcf/d,
processing facilities with a total processing capacity of approximately 1.4 Bcf/d and gathering systems
with total capacity of approximately 2.9 Bcf/d.

• Oklahoma – The Oklahoma assets consist of processing facilities with a total processing capacity of

approximately 550 MMcf/d and gathering systems with total capacity of approximately 605 MMcf/d.

•

Louisiana – The Louisiana assets consist of transmission pipelines with a capacity of approximately 3.5
Bcf/d, processing facilities with a total processing capacity of approximately 1.7 Bcf/d, gathering

systems with total capacity of approximately 510 MMcf/d, 660 miles of liquids transport lines and four
fractionation assets with total fractionation capacity of 198 MBbls/d.

• Crude and Condensate – The Crude and Condensate assets consist of approximately 350 miles of crude
oil and condensate pipelines with total capacity of approximately 101 MBbls/d, 900 MBbls of above
ground storage and eight condensate stabilization and natural gas compression stations with combined
capacities of approximately 36 MBbls/d of condensate stabilization and 780 MMcf/d of natural gas
compression.

Marketing and Midstream Activities

Midstream Operations

Comprising approximately 98% of our 2015 midstream operating profit, EnLink is the primary component

of our midstream operations. EnLink’s operations primarily focus on providing midstream energy services,
which consist of gathering, transmission, processing, fractionation and marketing, to producers of natural gas,
NGLs, crude oil and condensate, including Devon. EnLink connects the wells of natural gas producers in its
market areas to its gathering systems, processes natural gas for the removal of NGLs, fractionates NGLs into
purity products and markets those products for a fee, transports natural gas and ultimately provides natural gas to
a variety of markets. Furthermore, EnLink purchases natural gas from natural gas producers and other supply
sources and sells that natural gas to utilities, industrial consumers, other marketers and pipelines.

Oil, Gas and NGL Marketing

The spot markets for oil, gas and NGLs are subject to volatility as supply and demand factors fluctuate. As

detailed below, we sell our production under both long-term (one year or more) and short-term (less than one
year) agreements at prices negotiated with third parties. Regardless of the term of the contract, the vast majority
of our production is sold at variable, or market-sensitive, prices.

Additionally, we may periodically enter into financial hedging arrangements or fixed-price contracts
associated with a portion of our oil, gas and NGL production. These activities are intended to support targeted
price levels and to manage our exposure to price fluctuations. See Note 3 in “Item 8. Financial Statements and
Supplementary Data” of this report for further information.

As of January 2016, our production was sold under the following contract terms.

Oil and bitumen
Natural gas
NGLs

Delivery Commitments

Short-Term

Long-Term

Variable

Fixed

Variable

Fixed

72% —
36%
52%

4%
10%

28% —
60% —
38% —

A portion of our production is sold under certain contractual arrangements that specify the delivery of a
fixed and determinable quantity. As of December 31, 2015, we were committed to deliver the following fixed
quantities of production.

Total

Less Than 1 Year

1-3 Years

3-5 Years More Than 5 Years

Oil and bitumen (MMBbls)
Natural gas (Bcf)
NGLs (MMBbls)

Total (MMBoe)

38
439
12

123

56
287
—

104

46
10
—

—
—

145
736
12

280

We expect to fulfill our delivery commitments primarily with production from our proved developed
reserves. In certain regions, such as in our Heavy Oil operation in Canada, we expect to fulfill these longer-term
delivery commitments with our proved undeveloped reserves.

Generally, our proved reserves have been sufficient to satisfy our delivery commitments during the three

most recent years, and we expect such reserves will continue to be the primary means of fulfilling our future
commitments. However, where our proved reserves are not sufficient to satisfy our delivery commitments, we
may be subject to deficiency payments. In such instances, we can and may use spot market purchases to satisfy
the commitments.

Customers

During 2015, 2014 and 2013, no purchaser accounted for over 10% of our consolidated operating revenues.

Competition

See “Item 1A. Risk Factors.”

Public Policy and Government Regulation

Our industry is subject to a wide range of regulations. Laws, rules, regulations, taxes, fees and other policy

implementation actions affecting our industry have been pervasive and are under constant review for amendment
or expansion. Numerous government agencies have issued extensive regulations which are binding on our
industry and its individual members, some of which carry substantial penalties for failure to comply. These laws
and regulations increase the cost of doing business and consequently affect profitability. Because public policy
changes are commonplace, and existing laws and regulations are frequently amended, we are unable to predict
the future cost or impact of compliance. However, we do not expect that any of these laws and regulations will
affect our operations materially differently than they would affect other companies with similar operations, size
and financial strength. The following are significant areas of government control and regulation affecting our
operations.

Exploration and Production Regulation

Our operations are subject to federal, tribal, state, provincial and local laws and regulations. These laws and

regulations relate to matters that include:

•

acquisition of seismic data;

location, drilling and casing of wells;

• well design;

•

hydraulic fracturing;

• well production;

•

spill prevention plans;

emissions and discharge permitting;

use, transportation, storage and disposal of fluids and materials incidental to oil and gas operations;

surface usage and the restoration of properties upon which wells have been drilled;

calculation and disbursement of royalty payments and production taxes;

plugging and abandoning of wells;

•

transportation of production; and

endangered species and habitat.

Our operations also are subject to conservation regulations, including the regulation of the size of drilling

and spacing units or proration units; the number of wells that may be drilled in a unit; the rate of production
allowable from oil and gas wells; and the unitization or pooling of oil and gas properties. In the U.S., some states
allow the forced pooling or integration of tracts to facilitate exploration, while other states rely on voluntary
pooling of lands and leases, which may make it more difficult to develop oil and gas properties. In addition, state
conservation laws generally limit the venting or flaring of natural gas and impose certain requirements regarding
the ratable purchase of production. These regulations limit the amounts of oil and gas we can produce from our
wells and the number of wells or the locations at which we can drill.

Certain of our U.S. natural gas and oil leases are granted by the federal government and administered by the

Bureau of Land Management of the Department of the Interior. Such leases require compliance with detailed
federal regulations and orders that regulate, among other matters, drilling and operations on lands covered by
these leases and calculation and disbursement of royalty payments to the federal government. The federal
government has been particularly active in recent years in evaluating and, in some cases, promulgating new rules
and regulations regarding competitive lease bidding, venting and flaring and royalty payment obligations for
production from federal lands.

Royalties and Incentives in Canada

The royalty system in Canada is a significant factor in the profitability of Canadian oil and gas production.

Crown royalties are determined by government regulations and are generally calculated as a percentage of the
value of the gross production, net of allowed deductions. The royalty percentage is determined on a sliding-scale
based on crown posted prices. The regulations prescribe lower royalty rates for oil sands projects until allowable
capital costs have been recovered. Recently, the province of Alberta released the findings of the Royalty Review
Advisory Panel, which concluded that the royalties for oil sands were appropriate and should be maintained in
the new royalty system to be implemented in 2017.

Marketing in Canada

Any oil or gas export that exceeds a certain duration or a certain quantity requires an exporter to obtain
export authorizations from Canada’s National Energy Board. The governments of Alberta, British Columbia and
Saskatchewan also regulate the volume of natural gas that may be removed from those provinces for
consumption elsewhere.

Environmental and Occupational Regulations

We are subject to many federal, state, provincial, tribal and local laws and regulations concerning

occupational safety and health as well as the discharge of materials into, and the protection of, the environment.
Environmental laws and regulations relate to:

•

the discharge of pollutants into federal and state waters;

assessing the environmental impact of seismic acquisition, drilling or construction activities;

the generation, storage, transportation and disposal of waste materials, including hazardous substances;

the emission of certain gases into the atmosphere;

the monitoring, abandonment, reclamation and remediation of well and other sites, including sites of
former operations;

the development of emergency response and spill contingency plans; and

• worker protection.

Failure to comply with these laws and regulations can lead to the imposition of remedial liabilities,
administrative, civil or criminal fines or penalties or injunctions limiting our operations in affected areas. We
consider the costs of environmental protection and safety and health compliance necessary, manageable parts of
our business. We have been able to plan for and comply with environmental, safety and health initiatives without
materially altering our operating strategy or incurring significant unreimbursed expenditures. However, based on
regulatory trends and increasingly stringent laws, our capital expenditures and operating expenses related to the
protection of the environment and safety and health compliance have increased over the years and will likely
continue to increase. We cannot predict with any reasonable degree of certainty our future exposure concerning
such matters.

Item 1A. Risk Factors

Our business and operations, and our industry in general, are subject to a variety of risks. The risks
described below may not be the only risks we face, as our business and operations may also be subject to risks
that we do not yet know of, or that we currently believe are immaterial. If any of the following risks should
occur, our business, financial condition, results of operations and liquidity could be materially and adversely
impacted. As a result, holders of our securities could lose part or all of their investment in Devon.

Oil, Gas and NGL Prices Are Volatile

Our financial results and the value of our properties are highly dependent on the general supply and demand
for oil, gas and NGLs, which impact the prices we ultimately realize on our sales of these commodities. Since the
second half of 2014, there has been a significant decline in oil, gas and NGL prices, which has adversely affected
our 2015 operating results and contributed to a reduction in our anticipated future capital expenditures. In
addition, this decline in commodity prices has adversely impacted our estimated proved reserves and resulted in
substantial impairments to our oil and gas properties during 2015. A sustained weakness or further deterioration
in commodity prices could materially and adversely impact our business by resulting in, or exacerbating, the
following effects:

•

reducing the amount of oil, gas and NGLs that we can produce economically;

limiting our financial flexibility, liquidity and access to sources of capital, such as equity and debt;

reducing our revenues, operating cash flows and profitability;

causing us to further decrease our capital expenditures or maintain reduced capital spending for an
extended period, resulting in lower future production of oil, gas and NGLs; and

reducing the carrying value of our properties, resulting in additional noncash write-downs.

Historically, market prices and our realized prices have been volatile and are likely to continue to be volatile

in the future due to numerous factors beyond our control. These factors include, but are not limited to:

•

supply of and demand for oil, gas and NGLs, including consumer demand in emerging markets, such as
China;

conservation and environmental protection efforts;

• OPEC production levels;

•

geopolitical risks;

adverse weather conditions and natural disasters, such as tornadoes, earthquakes and hurricanes;

regional pricing differentials;

differing quality of oil produced (i.e., sweet crude versus heavy or sour crude);

differing quality and NGL content of gas produced;

the level of imports and exports of oil, gas and NGLs, and the level of global oil, gas and NGL
inventories;

the price and availability of alternative fuels;

the overall economic environment; and

governmental regulations and taxes.

Estimates of Oil, Gas and NGL Reserves Are Uncertain

The process of estimating oil, gas and NGL reserves is complex and requires significant judgment in the

evaluation of available geological, engineering and economic data for each reservoir, particularly for new
discoveries. Because of the high degree of judgment involved, different reserve engineers may develop different
estimates of reserve quantities and related revenue based on the same data. In addition, the reserve estimates for a
given reservoir may change substantially over time as a result of several factors, including additional
development activity, the viability of production under varying economic conditions, including commodity price
declines, and variations in production levels and associated costs. Consequently, material revisions to existing
reserve estimates may occur as a result of changes in any of these factors. Such revisions to proved reserves
could have a material adverse effect on our estimates of future net revenue, as well as our financial condition and
profitability. Our policies and internal controls related to estimating and recording reserves are included in “Items
1 and 2. Business and Properties” of this report.

Discoveries or Acquisitions of Reserves Are Needed to Avoid a Material Decline in Reserves and
Production

The production rates from oil and gas properties generally decline as reserves are depleted, while related per

unit production costs generally increase, due to decreasing reservoir pressures and other factors. Therefore, our
estimated proved reserves and future oil, gas and NGL production will decline materially as reserves are
produced unless we conduct successful exploration and development activities, such as identifying additional
producing zones in existing wells, utilizing secondary or tertiary recovery techniques or acquiring additional
properties containing proved reserves. Consequently, our future oil, gas and NGL production and related per unit
production costs are highly dependent upon our level of success in finding or acquiring additional reserves.

Future Exploration and Drilling Results Are Uncertain and Involve Substantial Costs

Our exploration and development activities are subject to numerous costs and risks, including the risk that

we will not encounter commercially productive oil or gas reservoirs. Drilling for oil, gas and NGLs can be
unprofitable, not only from dry holes, but from productive wells that do not return a profit because of insufficient
revenue from production or high costs. Substantial costs are required to locate, acquire and develop oil and gas
properties, and we are often uncertain as to the amount and timing of those costs. Our cost of drilling,
completing, equipping and operating wells is often uncertain before drilling commences. Declines in commodity
prices and overruns in budgeted expenditures are common risks that can make a particular project uneconomic or
less economic than forecasted. While both exploratory and developmental drilling activities involve these risks,
exploratory drilling involves greater risks of dry holes or failure to find commercial quantities of hydrocarbons.
In addition, our oil and gas properties can become damaged, our drilling operations may be curtailed, delayed or
canceled and the costs of such operations may increase as a result of a variety of factors, including, but not
limited to:

•

unexpected drilling conditions;

unexpected pressure conditions or irregularities in reservoir formations;

equipment failures or accidents;

fires, explosions, blowouts and surface cratering;

adverse weather conditions and natural disasters, such as tornadoes, earthquakes and hurricanes;

issues with title or in receiving governmental permits or approvals;

lack of access to pipelines or other transportation methods;

environmental hazards or liabilities;

restrictions in access to, or disposal of, water resources used in drilling and completion operations; and

shortages or delays in the availability of services or delivery of equipment.

A significant occurrence of one of these factors could result in a partial or total loss of our investment in a
particular property, and certain of these events, particularly equipment failures or accidents, could impact third
parties, including persons living in proximity to our operations, our employees and employees of our contractors,
leading to possible injuries, death or significant property damage.

Hedging Limits Participation in Commodity Price Increases

We periodically enter into hedging activities with respect to a portion of our production to manage our
exposure to oil, gas and NGL price volatility. To the extent that we engage in price risk management activities to
protect ourselves from commodity price declines, we may be prevented from fully realizing the benefits of
commodity price increases above the prices established by our hedging contracts. In addition, our hedging
arrangements may expose us to the risk of financial loss in certain circumstances, including instances in which
the contract counterparties fail to perform under the contracts.

The Credit Risk of Our Counterparties Could Adversely Affect Us

We enter into a variety of transactions that expose us to counterparty credit risk. For example, we have

exposure to financial institutions and insurance companies through our hedging arrangements, our syndicated
revolving credit facility and our insurance policies. Disruptions in the financial markets or otherwise may impact
these counterparties and affect their ability to fulfill their existing obligations and their willingness to enter into
future transactions with us.

In addition, we are exposed to the risk of financial loss from trade, joint interest billing and other

receivables. We sell our oil, gas and NGLs to a variety of purchasers, and, as an operator, we pay expenses and
bill our non-operating partners for their respective shares of costs. We also frequently look to buyers of oil and
gas properties from us to perform certain obligations associated with the disposed assets, including the removal
of production facilities and plugging and abandonment of wells. Certain of these counterparties may experience
liquidity problems and may not be able to meet their financial obligations to us, particularly if commodity prices
remain depressed or decline further. Any such default by these counterparties could adversely impact our
financial results.

We Are Subject to Extensive Governmental Regulation, Which Can Change and Could Adversely Impact
Our Business

Our operations are subject to extensive federal, state, provincial, tribal, local and other laws, rules and
regulations, including with respect to environmental, health and safety, wildlife conservation, gathering and
transportation of oil, gas and NGLs, conservation policies, reporting obligations, royalty payments, unclaimed
property and the imposition of taxes. Such regulations include requirements for permits to drill and to conduct
other operations and for provision of financial assurances (such as bonds) covering drilling and well operations.
If permits are not issued, or if unfavorable restrictions or conditions are imposed on our drilling activities, we
may not be able to conduct our operations as planned. In addition, we may be required to make large
expenditures to comply with applicable governmental rules, regulations, permits or orders. For example, certain
regulations require the plugging and abandonment of wells and removal of production facilities by current and
former operators, which may result in significant costs associated with the removal of tangible equipment and
other restorative actions at the end of operations.

In addition, changes in public policy have affected, and at times in the future could affect, our operations.

Regulatory developments could, among other things, restrict production levels, enact price controls, change
environmental protection requirements and increase taxes, royalties and other amounts payable to governments
or governmental agencies. Our operating and other compliance costs could increase further if existing laws and
regulations are revised or reinterpreted or if new laws and regulations become applicable to our operations.
Although we are unable to predict changes to existing laws and regulations, such changes could significantly
impact our profitability, financial condition and liquidity, particularly changes related to hydraulic fracturing,
seismic activity, income taxes and climate change as discussed below.

Hydraulic Fracturing – The U.S. Environmental Protection Agency (“EPA”) and other federal agencies,
including the Bureau of Land Management (“BLM”) have made proposals that, if implemented, could either
restrict the practice of hydraulic fracturing or subject the process to further regulation. For example, the EPA has
also issued final regulations under the federal Clean Air Act establishing performance standards, including
standards for the capture of air emissions released during hydraulic fracturing and proposed in April 2015 to
prohibit the discharge of wastewater from hydraulic fracturing operations to publicly owned wastewater
treatment plants. The BLM and many states have already adopted and more states are considering adopting laws
and/or regulations that require disclosure of chemicals used in hydraulic fracturing and impose stringent
permitting, disclosure and well-construction requirements on hydraulic fracturing operations. In addition, some
states and municipalities have significantly limited drilling activities and/or hydraulic fracturing, or are
considering doing so. Although it is not possible at this time to predict the final outcome of these proposals, any
new federal, state or local restrictions on hydraulic fracturing that may be imposed in areas in which we conduct
business could potentially result in increased compliance costs, delays in development or restrictions on our
operations.

Pipeline Safety – The pipeline assets in which we own interests are subject to stringent and complex
regulations related to pipeline safety and integrity management. The Department of Transportation, through the
Pipeline and Hazardous Materials Safety Administration (“PHMSA”), has established a series of rules that
require pipeline operators to develop and implement integrity management programs for gas, NGL and
condensate transmission pipelines as well as certain low stress pipelines and gathering lines transporting
hazardous liquids, such as oil, that, in the event of a failure, could affect “high consequence areas.” Additional
action by PHMSA with respect to pipeline integrity management requirements may occur in the future. At this
time, we cannot predict the cost of such requirements, but they could be significant. Moreover, violations of
pipeline safety regulations can result in the imposition of significant penalties.

Seismic Activity – Recent earthquakes in north-central Oklahoma and elsewhere have prompted concerns

about seismic activity and possible relationships with the energy industry, specifically disposal wells used to
inject, into the subsurface, water that is produced along with oil and natural gas. Legislative and regulatory
initiatives intended to address these concerns may result in additional levels of regulation that could limit or
eliminate our ability to inject produced water into certain disposal wells. Restrictions on such disposal wells
could lead to operational delays, increase our operating and compliance costs or otherwise adversely affect our
operations. In addition, we could be subject to third-party lawsuits seeking alleged property damages as a result
of induced seismic activity in our areas of operation.

Income Taxes – We are subject to U.S. federal income tax as well as income or capital taxes in various state
and foreign jurisdictions, and our operating cash flow is sensitive to the amount of income taxes we must pay. In
the jurisdictions in which we operate, income taxes are assessed on our earnings after consideration of all
allowable deductions and credits. Changes in the types of earnings that are subject to income tax, the types of
costs that are considered allowable deductions or the rates assessed on our taxable earnings would all impact our
income taxes and resulting operating cash flow. The U.S. President and other policy makers have proposed
provisions that would, if enacted, make significant changes to U.S. tax laws applicable to us. One significant
proposal that has recently been considered at the federal level would eliminate the immediate deduction for
intangible drilling and development costs. The adoption of this proposal or other tax changes could have a
material adverse effect on our profitability, financial condition and liquidity.

Climate Change – Policy makers in the U.S. and Canada are increasingly focusing on whether the emissions

of greenhouse gases, such as carbon dioxide and methane, are contributing to harmful climatic changes. Policy
makers at both the U.S. federal and state levels have introduced legislation and proposed new regulations that are
designed to quantify and limit the emission of greenhouse gases through inventories, limitations and/or taxes on
greenhouse gas emissions. For example, both the EPA and the BLM have proposed regulations for the control of
methane emissions, which also include leak detection and repair requirements, for the oil and gas industry.
Legislative and state initiatives to date have generally focused on the development of cap-and-trade and/or
carbon tax programs. A cap-and-trade program generally would cap overall greenhouse gas emissions on an

economy-wide basis and require major sources of greenhouse gas emissions or major fuel producers to acquire
and surrender emission allowances. Carbon taxes could likewise affect us by being based on emissions from our
equipment and/or emissions resulting from use of our products by our customers. Although it is not possible at
this time to predict how legislation or new regulations that may be adopted to address greenhouse gas emissions
would impact our business, any such future laws and regulations imposing reporting obligations on, or limiting
emissions of greenhouse gases from, our equipment and operations could require us to incur costs to reduce
emissions of greenhouse gases associated with our operations. Severe limitations on greenhouse gas emissions
could also adversely affect demand for oil and natural gas, which could have a material adverse effect our
profitability, financial condition and liquidity.

Currently, the Alberta Government is developing a new strategy on climate change based on

recommendations put forward by the Climate Change Advisory Panel. It is expected that these recommendations
will create additional costs for the Canadian oil and gas industry. Presently, it is not possible to accurately
estimate the costs we could incur to comply with any law or regulations developed.

Our Debt May Limit Our Liquidity and Financial Flexibility, and Any Downgrade of Our Credit Rating
Could Adversely Impact Us

As of December 31, 2015, we had total consolidated indebtedness of $13.1 billion. Our indebtedness and

other financial commitments have important consequences to our business, including, but not limited to:

•

requiring us to dedicate a significant portion of our cash flows from operations to debt service
payments, thereby limiting our ability to fund working capital, capital expenditures, investments or
acquisitions and other general corporate purposes;

increasing our vulnerability to general adverse economic and industry conditions, including low
commodity price environments; and

limiting our ability to obtain additional financing due to higher costs and more restrictive covenants.

In addition, we receive credit ratings from rating agencies in the U.S. with respect to our debt. Factors that
may impact our credit ratings include, among others, debt levels, planned assets sales and purchases, liquidity,
forecasted production growth and commodity prices. A ratings downgrade could adversely impact our ability to
access financing and trade credit and increase our interest rate under any credit facility borrowing as well as the
cost of any other future debt. A ratings downgrade to a rating below investment-grade made by one or more
rating agencies could potentially require us to post collateral under certain contractual arrangements.

Environmental Matters and Related Costs Can Be Significant

As an owner, lessee or operator of oil and gas properties, we are subject to various federal, state, provincial,

tribal and local laws and regulations relating to discharge of materials into, and protection of, the environment.
These laws and regulations may, among other things, impose liability on us for the cost of remediating pollution
that results from our operations. Environmental laws may impose strict, joint and several liability, and failure to
comply with environmental laws and regulations can result in the imposition of administrative, civil, or criminal
fines and penalties, as well as injunctions limiting operations in affected areas. Any future environmental costs of
fulfilling our commitments to the environment are uncertain and will be governed by several factors, including
future changes to regulatory requirements. Changes in or additions to public policy regarding the protection of
the environment could have a significant impact on our operations and profitability.

Our Acquisition and Divestiture Activities Involve Substantial Risks

Our business depends, in part, on making acquisitions that complement or expand our current business and
successfully integrating any acquired assets or businesses. If we are unable to make attractive acquisitions, then
our future growth could be limited. Furthermore, even if we do make acquisitions, they may not result in an

increase in our cash flow from operations or otherwise result in the benefits anticipated due to various risks,
including, but not limited to:

• mistaken estimates or assumptions about reserves, potential drilling locations, revenues and costs,

including synergies and the overall costs of equity or debt;

•

difficulties in integrating the operations, technologies, products and personnel of the acquired assets or
business; and

unknown and unforeseen liabilities or other issues related to any acquisition for which contractual
protections prove inadequate, including environmental liabilities and title defects.

In addition, from time to time, we may sell or otherwise dispose of certain of our properties as a result of an

evaluation of our asset portfolio and to help enhance our liquidity. These transactions also have inherent risks,
including possible delays in closing, the risk of lower-than-expected sales proceeds for the disposed assets and
potential post-closing claims for indemnification. Moreover, the current commodity price environment may
result in fewer potential bidders, unsuccessful sales efforts and a higher risk that buyers may seek to terminate a
transaction prior to closing. In addition, we may not realize any expected cost savings from asset dispositions, in
part because of revenue losses from the divested properties.

Insurance Does Not Cover All Risks

Our business is hazardous and is subject to all of the operating risks normally associated with the
exploration, development, production, processing and transportation of oil, natural gas and NGLs. Such risks
include potential blowouts, cratering, fires, loss of well control, mishandling of fluids and chemicals and possible
underground migration of hydrocarbons and chemicals. The occurrence of any of these risks could result in
environmental pollution, damage to or destruction of our property, equipment and natural resources, injury to
people or loss of life. Additionally, for our non-operated properties, we generally depend on the operator for
operational safety and regulatory compliance.

To mitigate financial losses resulting from these operational hazards, we maintain comprehensive general
liability insurance, as well as insurance coverage against certain losses resulting from physical damages, loss of
well control, business interruption and pollution events that are considered sudden and accidental. We also
maintain workers’ compensation and employer’s liability insurance. However, our insurance coverage does not
provide 100% reimbursement of potential losses resulting from these operational hazards. Additionally,
insurance coverage is generally not available to us for pollution events that are considered gradual, and we have
limited or no insurance coverage for certain risks such as political risk, war and terrorism. Our insurance does not
cover penalties or fines assessed by governmental authorities. The occurrence of a significant event against
which we are not fully insured could have a material adverse effect on our profitability, financial condition and
liquidity.

Limited Control on Properties Operated by Others

Certain of the properties in which we have an interest are operated by other companies and involve third-
party working interest owners. We have limited influence and control over the operation or future development
of such properties, including compliance with environmental, health and safety regulations or the amount and
timing of required future capital expenditures. These limitations and our dependence on the operator and other
working interest owners for these properties could result in unexpected future costs and adversely affect our
financial condition and results of operations.

Midstream Capacity Constraints and Interruptions Impact Commodity Sales

We rely on midstream facilities and systems to process our natural gas production and to transport our oil,
natural gas and NGL production to downstream markets. Such midstream systems include EnLink’s systems, as

well as other systems operated by us or third parties. Regardless of who operates the midstream systems we rely
upon, a portion of our production in any region may be interrupted or shut in from time to time from losing
access to plants, pipelines or gathering systems. Such access could be lost due to a number of factors, including,
but not limited to, weather conditions and natural disasters, accidents, field labor issues or strikes. Additionally,
we and third parties may be subject to constraints that limit our or their ability to construct, maintain or repair
midstream facilities needed to process and transport our production. Such interruptions or constraints could
negatively impact our production and associated profitability.

Competition for Assets, Materials, People and Capital Can Be Significant

Strong competition exists in all sectors of the oil and gas industry. We compete with major integrated and
independent oil and gas companies for the acquisition of oil and gas leases and properties. We also compete for
the equipment and personnel required to explore, develop and operate properties. Competition is also prevalent in
the marketing of oil, gas and NGLs. Certain of our competitors have financial and other resources substantially
greater than ours. They also may have established strategic long-term positions and relationships in areas in
which we may seek new entry. As a consequence, we may be at a competitive disadvantage in bidding for assets
or services. In addition, many of our larger competitors may have a competitive advantage when responding to
factors that affect demand for oil and gas production, such as changing worldwide price and production levels,
the cost and availability of alternative fuels and the application of government regulations.

Cyber Attacks Targeting Our Systems and Infrastructure May Adversely Impact Our Operations

Our industry has become increasingly dependent on digital technologies to conduct daily operations.

Concurrently, the industry has become the subject of increased levels of cyber-attack activity. Cyber attacks
often attempt to gain unauthorized access to digital systems for purposes of misappropriating assets or sensitive
information, corrupting data or causing operational disruption and may be carried out by third parties or insiders.
The techniques utilized range from highly sophisticated efforts to electronically circumvent network security to
more traditional intelligence gathering and social engineering aimed at obtaining information necessary to gain
access. Cyber attacks may also be carried out in a manner that does not require gaining unauthorized access, such
as by causing denial-of-service attacks. Although we have not suffered material losses related to cyber attacks to
date, if we were successfully attacked, we might incur substantial remediation and other costs or suffer other
negative consequences. Moreover, as the sophistication of cyber attacks continues to evolve, we may be required
to expend significant additional resources to further enhance our digital security or to remediate vulnerabilities.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 3. Legal Proceedings

We are involved in various routine legal proceedings incidental to our business. However, to our knowledge
as of the date of this report, there were no material pending legal proceedings to which we are a party or to which
any of our property is subject.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is traded on the NYSE. On February 10, 2016, there were 8,307 holders of record of our
common stock. We began paying regular quarterly cash dividends on our common stock in the second quarter of
1993. The following table sets forth the quarterly high and low sales prices for our common stock as reported by
the NYSE during 2015 and 2014, as well as the quarterly dividends per share paid during 2015 and 2014.

Quarter Ended 2015:
December 31, 2015
September 30, 2015
June 30, 2015
March 31, 2015
Quarter Ended 2014:
December 31, 2014
September 30, 2014
June 30, 2014
March 31, 2014

Price Range of Common Stock

High

Low

Dividends

Per Share

$48.68
$59.80
$70.48
$67.08

$68.80
$80.01
$80.63
$66.95

$28.00
$36.01
$58.77
$56.35

$51.76
$67.58
$66.75
$57.67

$0.24
$0.24
$0.24
$0.24

$0.24
$0.24
$0.24
$0.22

In February 2016, we reduced our quarterly common stock dividend 75% to $0.06 per share.

Performance Graph

The following graph compares the cumulative TSR over a five-year period on Devon’s common stock with
the cumulative total returns of the S&P 500 Index, our new peer group and our old peer group of companies. Our
new peer group includes Anadarko Petroleum Corporation, Apache Corporation, Chesapeake Energy Corporation,
Concho Resources, Inc., Continental Resources, Inc., ConocoPhillips, Encana Corporation, EOG Resources, Inc.,
Hess Corporation, Marathon Oil Corporation, Murphy Oil Corporation, Noble Energy, Inc., Occidental Petroleum
Corporation and Pioneer Natural Resources Company. Concho Resources, Inc. and Continental Resources, Inc.
replaced Newfield Exploration Company and Talisman Energy, Inc. from our old peer group. The graph was
prepared assuming $100 was invested on December 31, 2010 in Devon’s common stock, the S&P 500 Index and
the peer groups, and dividends have been reinvested subsequent to the initial investment.

Comparison of 5-Year Cumulative Total Return
Devon, S&P 500 Index and Peer Groups

$200

$150

$100

$50

Devon

S&P 500

New Peer
Group
Old Peer
Group

2010

$100.00

2011

$79.71

$102.11

$98.47

2012

$67.80

$118.45

$98.66

2013

$81.83

$156.82

$127.29

2014

$82.13

$178.29

$115.16

2015

$43.86

$180.75

$80.44

$100.00

$96.89

$96.75

$123.42

$113.12

$79.21

The graph and related information should not be deemed “soliciting material” or to be “filed” with the SEC,
nor should such information be incorporated by reference into any future filing under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically
incorporate such information by reference into such a filing. The graph and information is included for historical
comparative purposes only and should not be considered indicative of future stock performance.

Issuer Purchases of Equity Securities

The following table provides information regarding purchases of our common stock that were made by us

during the fourth quarter of 2015.

Period

October 1 – October 31
November 1 – November 30
December 1 – December 31

Total

Total Number of
Shares Purchased (1)

Average Price Paid
per Share

5,404
128,025
113,085

246,514

$41.78
$45.99
$44.94

$45.41

(1) Share repurchases represent shares received by us from employees and directors for the payment of personal

income tax withholding on restricted stock vesting.

Under the Devon Plan, eligible employees may purchase shares of our common stock through an investment

in the Devon Stock Fund, which is administered by an independent trustee. Eligible employees purchased
approximately 71,500 shares of our common stock in 2015, at then-prevailing stock prices, that they held through
their ownership in the Devon Stock Fund. We acquired the shares of our common stock sold under the Devon
Plan through open-market purchases.

Similarly, eligible Canadian employees may purchase shares of our common stock through an investment in

the Canadian Plan, which is administered by an independent trustee, Sun Life Assurance Company of Canada.
Shares sold under the Canadian Plan were acquired through open-market purchases. These shares and any
interest in the Canadian Plan were offered and sold in reliance on the exemptions for offers and sales of securities
made outside of the U.S., including under Regulation S for offers and sales of securities to employees pursuant to
an employee benefit plan established and administered in accordance with the law of a country other than the
U.S. In 2015, there were no shares purchased by Canadian employees.

Item 6. Selected Financial Data

The financial information below should be read in conjunction with “Item 7. Management’s Discussion and

Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and
Supplementary Data” of this report.

Year Ended December 31,

2015

2014

2013

2012

2011

(Millions, except per share amounts)
$ 13,145 $19,566 $10,397 $ 9,501 $11,445
Operating revenues
Earnings (loss) from continuing operations (1)
(20) $ (185) $ 2,134
$(15,203) $ 1,691 $
(20) $ (185) $ 2,134
$(14,454) $ 1,607 $
Earnings (loss) from continuing operations attributable to Devon
5.12
Earnings (loss) from continuing operations per share attributable to Devon – Basic
$ (35.55) $
5.10
Earnings (loss) from continuing operations per share attributable to Devon – Diluted $ (35.55) $
0.67
0.96 $
Cash dividends per common share
417
412
Weighted average common shares outstanding – Basic
Weighted average common shares outstanding – Diluted
418
412
Total assets (1)
$ 29,532 $50,637 $42,877 $43,326 $41,117
Long-term debt (2)
$ 12,137 $ 9,830 $ 7,956 $ 8,455 $ 5,969
$ 10,989 $26,341 $20,499 $21,278 $21,430
Stockholders’ equity

3.93 $ (0.06) $ (0.47) $
3.91 $ (0.06) $ (0.47) $
0.80 $
0.86 $
0.94 $
404
406
409
404
406
411

(1) During 2015, we recorded noncash asset impairments totaling $20.8 billion. During 2014, 2013 and 2012, we recorded noncash

asset impairments totaling $2.0 billion in each year.

(2) Debt balances at December 31, 2015 and 2014 include $3.1 billion and $2.0 billion, respectively, of EnLink debt that is non-

recourse to Devon.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The following discussion and analysis presents management’s perspective of our business, financial condition and
overall performance. This information is intended to provide investors with an understanding of our past performance,
current financial condition and outlook for the future and should be read in conjunction with “Item 8. Financial Statements
and Supplementary Data” of this report.

Overview of 2015 Results

By executing on our strategy outlined in “Items 1 and 2. Business and Properties” of this report, we strive to optimize
value for our shareholders by growing cash flow, earnings, production and reserves, all on a per debt-adjusted share basis.
During 2015, we had several key operating and financial achievements:

• Delivered record crude oil and bitumen production, representing 41% of our total production

• Grew U.S. oil production 28% compared to 2014

• Achieved top-quartile well results in the Delaware Basin of southeast New Mexico

• Exceeded 35 MBbls per day nameplate capacity at Jackfish 3

• Expanded and improved our positions in the STACK and Powder River Basin areas with two separate

acquisitions completed for approximately $2 billion of cash and common equity in late 2015 and early 2016

•

Sold EnLink units and dropped our interest in VEX to EnLink, generating $821 million in total cash inflows to
Devon

• Realized $2.4 billion in cash settlements on our commodity hedge positions

• Reduced LOE $228 million, or 10%, primarily through cost reduction initiatives

• Exited 2015 with $4.7 billion of liquidity consisting of $2.3 billion of cash and $2.4 billion of capacity on our

Senior Credit Facility. We have managed our debt maturity schedule to provide maximum flexibility with near-
term liquidity; we have no major long-term debt maturities until December 2018.

Average Benchmark Prices

$/Bbl

$120

$100

l
i

I
T
W
W

$80

$60

$40
$40

$20

2013
2013

2014
2014

2015
2015

Jan 16
Jan-16*

Feb 16
Feb-16*

WTI (Oil)

Henry Hub (Natural Gas)

*First of month pricing

$/Mcf

$5.00

$4.50

$4.00

$3.50

$3.00

$2.50

$2.00

s
a
G

-
b
u
H
y
r
n
e
H

In spite of these and other
operating achievements, weak
commodity prices made 2015 a
challenging year for the upstream
energy sector, including us. As
presented in the graph at left, the
significant decline in crude oil prices
that began in the third quarter of 2014
continued throughout 2015 and
weakened further during the first two
months of 2016. The 2015 WTI crude
oil index was approximately 50% lower
than the 2014 average. The downward
pressure on oil prices has largely
resulted from increased global supply,
from both OPEC and non-OPEC
countries, and a global economic
slowdown that has decreased demand
for oil. Similarly, the Henry Hub natural
gas and OPIS Mont Belvieu, Texas
indices decreased significantly since the
end of 2014 as a result of an imbalance
between supply and demand across
North America.

As a result of these large commodity price declines and in spite of our operating achievements, we

recognized $21 billion of noncash asset impairments throughout 2015 that have negatively impacted our financial
earnings and retained earnings. Additionally, our core earnings, core earnings per share and operating cash flow
for 2015 decreased significantly compared to 2014. Key measures of our financial performance in 2015 are
summarized in the following table:

Net earnings (loss) attributable to Devon
Core earnings attributable to Devon (1)
Earnings (loss) per share attributable to Devon
Core earnings per share attributable to Devon (1)
Core production (MBoe/d) (2)
Total production (MBoe/d)
Realized price per Boe (3)
Operating cash flow
Capitalized costs, including acquisitions
Shareholder and noncontrolling interests distributions
Reserves (MMBoe)

Year Ended December 31,

2015

Change

2014

Change

2013

(Millions, except per share and per Boe amounts)

$(14,454) N/M $ 1,607
-48% $ 2,017
$ 1,044
3.91
$ (35.55) N/M $
4.91
-49% $
$
489
+15%
673
+1%
-46% $ 40.33
-10% $ 5,981
-54% $13,559
621
+5% $
2,754
-21%

2.52
560
680
$ 21.68
$ 5,383
$ 6,233
650
$
2,182

N/M $ (20)
+16% $1,734
N/M $ (0.06)
+15% $ 4.26
423
+16%
693
-3%
+20% $33.70
+10% $5,436
+104% $6,643
+78% $ 348
-7% 2,963

(1) Core earnings and core earnings per share attributable to Devon are financial measures not prepared in accordance with
accounting principles generally accepted in the U.S. (“GAAP”). For a description of core earnings and core earnings per
share attributable to Devon, as well as reconciliations to the comparable GAAP measures, see “Non-GAAP Measures” in
this Item 7.

(2) Core production is comprised of production in our key operating areas as outlined and discussed in “Items 1 and 2.

Business and Properties” of this report.

(3) Excludes any impact of oil, gas and NGL derivatives.

Business and Industry Outlook

Market prices for crude oil and natural gas are inherently volatile. Therefore, we cannot predict with

certainty the future prices for the commodities we produce and sell. However, current market fundamentals
indicate prices for crude oil and natural gas will continue to be depressed for much of 2016. Although changes in
OPEC production strategies, macro-economic forecasts, geopolitical risks or other factors could impact current
forecasts, we anticipate weak oil and natural gas prices throughout the majority of 2016.

In 2015, Devon marked its 44th anniversary in the oil and gas business and its 27th year as a public

company. As an established company with a strong leadership team, we have experience operating in periods of
weak commodity prices. With our focused strategy and portfolio of quality assets, we are prepared to
successfully navigate the current pricing challenges and ensure our long-term financial strength.

Specifically, after completing the STACK acquisition, we began 2016 with approximately $3.9 billion of

liquidity, consisting of cash and borrowing capacity under our credit facility. We expect to bolster this liquidity
in 2016 by monetizing our interest in Access Pipeline and other non-core upstream assets for targeted total
proceeds of $2 billion to $3 billion.

While we will continue to operate and develop our premier portfolio of assets, we are committed to

We are also committed to reducing our G&A and field-level operating costs commensurate with our
reduced, but focused, activity level. In the first quarter of 2016, we announced plans to significantly reduce our

workforce and other G&A costs to better align with the activity level of our core business in the current
commodity price environment. The reductions are expected to decrease gross G&A costs by approximately $400
million to $500 million on an annualized basis, excluding associated employee severance and other restructuring
costs. Following a number of cost-reduction initiatives culminating with our February 2016 workforce reduction,
we are expecting a $700 million to $900 million reduction in operating and G&A costs on an annualized basis.

We estimate we will incur approximately $225 million to $275 million of restructuring costs as a result of
the workforce reduction. We expect to recognize the majority of these restructuring costs in the first quarter of
2016 and will recognize the remaining costs throughout 2016 until our planned divestiture transactions have
closed and further workforce reductions occur.

Also, in February 2016, we reduced our quarterly common stock dividend 75% to $0.06 per share.

Results of Operations

Oil, Gas and NGL Production

Year Ended December 31,

2015

Change

2014

Change

2013

Oil (MBbls/d)

Delaware Basin
STACK
Eagle Ford
Rockies Oil
Heavy Oil
Barnett Shale

Core assets

Other (1)

Total

Bitumen (MBbls/d)
Heavy Oil
Gas (MMcf/d)

Delaware Basin
STACK
Eagle Ford
Rockies Oil
Heavy Oil
Barnett Shale

Core assets

Other (1)

Total

NGLs (MBbls/d)

Delaware Basin
STACK
Eagle Ford
Rockies Oil
Barnett Shale

Core assets

Other (1)

Total

Combined (MBoe/d)
Delaware Basin
STACK
Eagle Ford
Rockies Oil
Heavy Oil
Barnett Shale

Core assets

Other (1)

Total

39
6
66
15
27
1

154
37

191

+48%
+6%
+66%
+39%
+3%
-38%

+33%
+23%

26
6
39 N/M
10
26
2

-1%
-7%
-2%

+42% 109
49
-25%

+66%
-5%

20
5
—
11
28
2

66
51

+20% 158

+36% 117

+51%

+8%

73
226
148
40
22
797

1,306
304

1,610

9
21
25
1
48

104
32

136

61
64
115
23
115
182

560
120

680

+9%
67
-3% 234

+16%
57
+14% 205
—
61
-22%
-19%
28
-11% 1,025

87 N/M
+70%
47
-17%
-5%
23
-12% 909

-4% 1,367
-45% 553

-1% 1,376
-46% 1,017

-16% 1,920

-20% 2,393

+24%
-8%
+115%
+33%
-12%

+7%
-25%

+24%
+33%

8
22
11 N/M

1
55

97
42

+27%
-1%

+23%
-11%

6
17
—

1
55

79
47

-2% 139

+10% 126

+27%
+21%

45
+35%
67
-4%
65 N/M
+75%
18
+29%
+34%
86
-13% 208

36
56
—
19
-6%
+2%
85
-9% 228

+14% 489
-35% 184

+15% 424
-32% 269

+1% 673

-3% 693

(1) Other assets are located primarily in the Midland Basin, east Texas, Granite Wash and Mississippian-Lime

areas. Substantially all of these properties have been identified for divestiture in 2016.

Oil, Gas and NGL Pricing

Oil (per Bbl)
U.S.
Canada
Total

Bitumen (per Bbl)
Canada
Gas (per Mcf)
U.S.
Canada (2)
Total
NGLs (per Bbl)
U.S.
Canada
Total

Combined (per Boe)

U.S.
Canada
Total

Year Ended December 31,

2015 (1)

Change

2014 (1)

Change

2013 (1)

$44.01
$30.58
$42.12

-49% $85.64
-55% $68.14
-49% $82.47

-9% $94.52
-1% $69.18
-4% $86.02

$23.41

-58% $55.88

+16% $48.04

$ 2.17
$ 0.67
$ 2.14

-45% $ 3.92
-82% $ 3.64
-45% $ 3.90

+27% $ 3.10
+19% $ 3.05
+26% $ 3.09

$ 9.32
-62% $24.46
$ — N/M $50.52
-63% $24.89
$ 9.32

-5% $25.75
+9% $46.17
-9% $27.33

$21.12
$24.46
$21.68

-44% $37.96
-54% $53.11
-46% $40.33

+20% $31.59
+33% $39.91
+20% $33.70

(1) Prices presented exclude any effects of oil, gas and NGL derivatives.
(2) The reported Canadian gas volumes include 12, 21 and 25 MMcf per day for the years ended 2015, 2014
and 2013, respectively, that are produced from certain of our leases and then transported to our Jackfish
operations where the gas is used as fuel. However, the revenues and expenses related to this consumed gas
are eliminated in our consolidated financial results. With the sale of the vast majority of the Canadian gas
business in the second quarter of 2014, the eliminated gas revenues subsequently impacted our gas price
more significantly.

Commodity Sales

The volume and price changes in the tables above caused the following changes to our oil, gas and NGL

sales.

2013 sales

Change due to volumes
Change due to prices

2014 sales

Change due to volumes
Change due to prices

2015 sales

Oil

Bitumen

Gas

NGLs

Total

$ 3,668
1,311
(206)

$ 4,773
976
(2,813)

(Millions)
$ 2,698
(533)
572

902
76
160

$ 1,138
584
(1,000)

$ 2,737
(443)
(1,034)

$1,254
131
(123)

$1,262
(23)
(775)

$ 8,522
985
403

$ 9,910
1,094
(5,622)

$ 2,936

722

$ 1,260

$ 464

$ 5,382

Volumes 2015 vs. 2014 Oil, gas and NGL sales increased due to volumes in 2015 because of strong

production growth from our U.S. oil properties. The growth was primarily driven by the continued development
of our Eagle Ford, Delaware Basin and Rockies Oil properties. Additionally, our bitumen production increased
primarily due to Jackfish 3 coming on-line late in the third quarter of 2014 and reaching nameplate capacity in
the third quarter of 2015. Lower royalties resulting from the significant price decrease also increased our heavy

oil production. The increases were partially offset by a decrease in our gas production, which resulted primarily
from asset divestitures in 2014 and natural reservoir declines.

Volumes 2014 vs. 2013 Oil, gas and NGL sales increased due to volumes primarily because of a 66%
increase in our core assets oil production. Such growth resulted from our Eagle Ford properties and the continued
development of our properties in the Delaware Basin. In addition, we continued to grow our NGL production
from the Delaware Basin and STACK, which resulted in $131 million of additional sales. Bitumen sales
increased due to development of our Jackfish thermal heavy oil projects in Canada, including Jackfish 3 which
had first sales in 2014. These increases were partially offset by a 20% decrease in our 2014 gas production,
which was impacted by our asset divestitures and natural declines.

Prices 2015 vs. 2014 Oil, gas and NGL sales decreased in 2015 as a result of significantly lower prices for
all commodities. The decrease in oil and bitumen sales primarily resulted from significantly lower average WTI
crude oil index prices, which were approximately 50% lower in 2015 as compared to 2014. The decreases in gas
and NGL sales were driven by lower North American regional index prices upon which our gas sales are based
and lower NGL prices at the Mont Belvieu, Texas hub.

Prices 2014 vs. 2013 Oil, gas and NGL sales increased primarily because of a 20% increase in our realized
prices without hedges. Our gas sales were the most significantly impacted. The change in our realized gas price
was largely due to higher North American regional index prices upon which our gas sales are based.
Additionally, our bitumen sales increased as a result of a 16% increase in our realized price, as a result of tighter
bitumen and heavy oil differentials. These increases were partially offset by lower oil and NGL realized prices
resulting from lower WTI crude oil index prices and lower NGL prices at the Mont Belvieu, Texas hub.

Oil, Gas and NGL Derivatives

The following tables provide financial information associated with our oil, gas and NGL hedges. The first
table presents the cash settlements and fair value gains and losses recognized as components of our revenues. The
subsequent tables present our oil, gas and NGL prices with and without the effects of the cash settlements. The
prices do not include the effects of fair value gains and losses.

Year Ended December 31,

2015

2014

2013

(Millions)

$ 2,083
333
—

2,416

90
(36)
1

$ 55
139
1

195

(1,687)
(226)
—

(1,913)

1,721
213
—

1,934

(243)
(139)
(4)

(386)

503

$1,989

$(191)

Cash settlements:

Oil derivatives
Gas derivatives
NGL derivatives

Total cash settlements

Gains (losses) on fair value changes:

Oil derivatives
Gas derivatives
NGL derivatives

Total gains (losses) on fair value changes

Oil, gas and NGL derivatives

Realized price without hedges
Cash settlements of hedges

Realized price, including cash settlements

Realized price without hedges
Cash settlements of hedges

Year Ended December 31, 2015

Oil
(Per Bbl)

Bitumen
(Per Bbl)

Gas
(Per Mcf)

NGLs
(Per Bbl)

Boe
(Per Boe)

$42.12
29.88

$23.41
—

$72.00

$23.41

$2.14
0.57

$2.71

$9.32
—

$9.32

$21.68
9.74

$31.42

Year Ended December 31, 2014

Oil
(Per Bbl)

Bitumen
(Per Bbl)

Gas
(Per Mcf)

NGLs
(Per Bbl)

Boe
(Per Boe)

$82.47
1.56

$55.88
—

$ 3.90
(0.05)

$24.89
0.02

$40.33
0.22

Realized price, including cash settlements

$84.03

$55.88

$ 3.85

$24.91

$40.55

Realized price without hedges
Cash settlements of hedges

Realized price, including cash settlements

Year Ended December 31, 2013

Oil
(Per Bbl)

Bitumen
(Per Bbl)

Gas
(Per Mcf)

NGLs
(Per Bbl)

Boe
(Per Boe)

$86.02
1.30

$48.04
—

$87.32

$48.04

$3.09
0.16

$3.25

$27.33
0.01

$33.70
0.77

$27.34

$34.47

Cash settlements as presented in the tables above represent realized gains or losses related to these various
instruments. A summary of our open commodity derivative positions is included in Note 3 in “Item 8. Financial
Statements and Supplementary Data” of this report. Our oil, gas and NGL derivatives include price swaps,
costless collars, basis swaps and call options. To facilitate a portion of our price swaps, we sold gas and oil call
options for 2015 through 2016. The call options give counterparties the right to purchase production at a
predetermined price.

In addition to cash settlements, we also recognize fair value changes on our oil, gas and NGL derivative
instruments in each reporting period. The changes in fair value resulted from new positions and settlements that
occurred during each period, as well as the relationships between contract prices and the associated forward
curves. Including the cash settlements discussed above, our oil, gas and NGL derivatives generated net gains in
2015 and 2014 and incurred a net loss in 2013.

Marketing and Midstream Revenues and Operating Expenses

Year Ended December 31,

2015

Change

2014

Change

2013

Operating revenues
Product purchases
Operations and maintenance expenses

Operating profit

Devon profit
EnLink profit

Total profit

$ 7,260
(6,028)
(392)

(Millions)
+271% $ 2,066
-5% $ 7,667
-8% (6,540) +382% (1,356)
(197)

+40%

(275)

+43%

840

-1% $

852

+66% $

513

14
826

840

-84% $
+8%

-1% $

88
764

852

-5% $

+82%

+66% $

93
420

513

2015 vs. 2014 Marketing and midstream operating profit changes were largely driven by a full year of
EnLink’s legacy asset operations compared to prior year and facility expansions coming online in late 2014,
along with assets acquired during 2015. The change was offset by a decrease in Devon’s marketing activities due
to a decrease in commodity prices.

2014 vs. 2013 Marketing and midstream operating profit largely increased as a result of higher prices and

volumes, partially offset by higher operations and maintenance expenses. Of the $339 million increase, $344
million was attributed to EnLink’s operations. Higher profits from EnLink’s Texas segment, which includes the
Bridgeport facility, and Louisiana segment were the largest drivers of the increase. The Louisiana segment
operating profit increased because of acquisitions and completions of additional pipelines.

Devon’s marketing activities were the primary driver of the increases in both operating revenues and
product purchases. The higher marketing revenues and product purchases are primarily due to commitments we
entered into to secure capacity on downstream oil pipelines. Marketing activities of EnLink also contributed to
these increases.

Lease Operating Expenses

LOE:

U.S.
Canada

Total

LOE per Boe:
U.S.
Canada
Total

Year Ended December 31,

2015

Change

2014

Change

2013

(Millions, except per Boe amounts)

$1,551
553

$2,104

$ 7.52
$13.18
$ 8.48

-0% $1,559
773
-28%

+24% $1,257
1,011
-24%

-10% $2,332

+3% $2,268

+0% $ 7.52
-34% $20.10
-11% $ 9.49

+13% $ 6.65
+27% $15.78
+6% $ 8.97

2015 vs. 2014 LOE per Boe decreased during 2015 primarily as a result of higher Jackfish 3 volumes, our

well optimization and cost reduction initiatives, lower royalties and changes in the Canadian to U.S. foreign
exchange rate. As Canadian royalties decrease, our net production volumes increase, causing improvements to
our per-unit operating costs. The flat U.S. rate is primarily related to our 2014 non-core natural gas asset
divestitures and our oil production growth, where projects generate higher margins but generally require a higher
cost to produce per unit than our retained and divested gas projects.

2014 vs. 2013 Our absolute LOE changed largely as a result of our portfolio transformation initiatives,
including our February 2014 purchase of Eagle Ford assets and our 2014 divestitures of non-core gas properties
in the U.S. and Canada. Higher volumes from development of our Eagle Ford assets, as well as our Delaware
Basin assets, caused U.S. LOE to increase. This increase was partially offset by the decrease resulting from the
U.S. divestitures. The Canadian divestitures were the primary cause of the decrease in Canadian LOE.

Total LOE increased $0.52 per Boe primarily because of higher unit costs related to our Canadian

operations. The higher Canadian unit costs largely resulted from the divestiture of the conventional natural gas
assets in the second quarter of 2014 which resulted in lower total volumes while retaining the relatively higher-
cost thermal heavy oil operations. Additionally, higher Jackfish royalties paid in 2014 also contributed to higher
Canadian unit costs. The higher unit cost in the U.S. was primarily related to our liquids production growth,
particularly in the Delaware Basin and Mississippian-Woodford Trend, where projects generate higher revenues
but generally require a higher cost to produce per unit than our gas projects. Additionally, we experienced
inflationary pressures on costs in certain operating areas, which also contributed to the higher LOE per Boe.

General and Administrative Expenses

Gross G&A
Capitalized G&A
Reimbursed G&A

Net G&A

Net G&A per Boe

Year Ended December 31,

2015

Change

2014

Change

2013

(Millions, except per Boe amounts)

$1,347
(372)
(120)

$ 855

-2% $1,369
(376)
-1%
(146)
-18%

+21% $1,128
(368)
(143)

+2%
+2%

+1% $ 847

+37% $ 617

$ 3.45

+0% $ 3.45

+41% $ 2.44

2015 vs. 2014 Gross G&A decreased during 2015 largely because of a lower employee performance bonus

pool and our cost reduction initiatives. Furthermore, $22 million in one-time costs related to the EnLink and
GeoSouthern transactions contributed to higher costs in the first quarter of 2014. These decreases were offset by
an increase in EnLink G&A of approximately $40 million primarily resulting from a workforce increase
associated with EnLink’s 2015 acquisitions. Reimbursed G&A decreased subsequent to our 2014 asset
divestitures.

2014 vs. 2013 Net G&A and net G&A per Boe increased largely due to higher employee compensation and
benefits and $22 million of 2014 costs related to the EnLink and GeoSouthern transactions. The higher employee
compensation and benefits costs were primarily related to share-based awards, which cause our G&A to be
higher in the period in which our annual share-based grant is made. The grant related to our 2013 compensation
cycle was made in the first quarter of 2014. The grant related to our 2012 compensation cycle was made in the
fourth quarter of 2012. Additionally, the expansion of our workforce as a part of growing production operations
at certain of our key areas also contributed to the increase.

Production and Property Taxes

Production
Property and other

Production and property taxes

Percentage of oil, gas and NGL sales:
Production
Property and other

Total

Year Ended December 31,

2015

Change

2014

Change

2013

(Millions)

$198
190

$388

-45% $360
+8% 175

+31% $275
186

-6%

-28% $535

+16% $461

3.7%
+1%
3.5% +100%

3.6% +13%
1.8% -19%

7.2% +33%

5.4%

-0%

3.2%
2.2%

5.4%

2015 vs. 2014 Our absolute production taxes decreased during 2015 primarily because of a decrease in our
U.S. revenues, on which the majority of our production taxes are assessed. Property taxes as a percentage of oil,
gas and NGL sales increased during 2015 primarily due to ad valorem and other taxes that do not change in
direct correlation with oil, gas and NGL sales.

2014 vs. 2013 Production and property taxes increased primarily as a result of an increase in our U.S.

revenues.

Depreciation, Depletion and Amortization

DD&A:

Oil and gas properties
Other assets

Total

DD&A per Boe:

Oil and gas properties
Other assets

Total

Year Ended December 31,

2015

Change

2014

Change

2013

(Millions, except per Boe amounts)

$2,580
549

$3,129

$10.40
2.21

$12.61

-11% $2,896
423
+30%

+18% $2,465
315
+34%

-6% $3,319

+19% $2,780

-12% $11.79
1.72
+28%

+21% $ 9.75
1.24
+38%

-7% $13.51

+23% $10.99

A description of how DD&A of our oil and gas properties is calculated is included in Note 1 in “Item 8.
Financial Statements and Supplementary Data” of this report. Generally, when reserve volumes are revised up or
down, the DD&A rate per unit of production will change inversely. However, when the depletable base changes,
the DD&A rate moves in the same direction. The per unit DD&A rate is not affected by production volumes.
Absolute or total DD&A, as opposed to the rate per unit of production, generally moves in the same direction as
production volumes.

2015 vs. 2014 DD&A from our oil and gas properties decreased in 2015 compared to 2014 largely because
of the 2014 divestitures of certain U.S. and Canadian assets and the oil and gas asset impairments recognized in
2015. Other DD&A increased primarily due to EnLink’s acquisitions in 2014 and 2015.

2014 vs. 2013 DD&A from our oil and gas properties increased in 2014 largely because of higher DD&A

rates. The higher rates resulted from our oil and gas drilling and development activities and the GeoSouthern
acquisition, which were partially offset by the asset impairments recognized in 2013 and the 2014 asset
divestitures. Other DD&A increased primarily due to the formation of EnLink in 2014.

Asset Impairments

During 2015, 2014 and 2013, we recognized asset impairments of $20.8 billion, $2.0 billion and $2.0
billion, respectively. For discussion on asset impairments, see Note 5 in “Item 8. Financial Statements and
Supplementary Data” of this report.

Restructuring Costs

During 2015, 2014 and 2013, we recognized restructuring costs of $78 million, $46 million and $54 million,

respectively. For discussion of our reorganization programs and the associated restructuring costs, see Note 6 in
“Item 8. Financial Statements and Supplementary Data” of this report.

Gains on Asset Sales

In conjunction with the divestiture of certain Canadian properties, we recognized gains of $1.1 billion in
2014. For further discussion, see Note 2 in “Item 8. Financial Statements and Supplementary Data” of this report.

Net Financing Costs

Year Ended December 31,

2015

Change

2014

Change

2013

(Millions)

Interest based on debt outstanding
Early retirement of debt
Capitalized interest
Other fees and expenses

Interest expense

Interest income

Net financing costs

$565
—
(62)
20

523
(6)

$517

N/M

+6% $532
48
(70)
26

-11%
-24%

+14% $466
—
N/M
(56)
+26%
27
-1%

-3% 536
(10)
-41%

+23% 437
(20)
-49%

-2% $526

+26% $417

2015 vs. 2014 Net financing costs decreased during 2015 primarily as a result of the retirement premium

and costs related to the early redemption of senior notes in 2014, which is further discussed in Note 13 in “Item
8. Financial Statements and Supplementary Data” of this report. Interest on outstanding borrowings increased
during 2015 primarily due to an increase of $51 million in EnLink interest expense as a result of an increase in
fixed-rate borrowings, partially offset by a $18 million decrease in Devon interest expense as a result of a
decrease in its average fixed-rate borrowings.

2014 vs. 2013 Net financing costs increased primarily because of higher average borrowings resulting from

the EnLink and GeoSouthern transactions and the 2014 early retirement premium and costs.

Income Taxes

Total income tax expense (benefit) (millions)

Effective income tax rate

Year Ended December 31,

2015

2014

2013

$(6,065)

$2,368

$169

(29)%

58% 113%

For discussion on income taxes, see Note 7 in “Item 8. Financial Statements and Supplementary Data” of

this report.

Capital Resources, Uses and Liquidity

Sources and Uses of Cash

The following table presents the major source and use categories of our cash and cash equivalents.

Devon

EnLink

Consolidated

2015

2014

2015

2014

2015

2014

2013 (1)

Operating cash flow
Sale of subsidiary units
Divestitures of property and equipment
Capital expenditures
Acquisitions of property, equipment and businesses
Short-term investment activity, net
Debt activity, net
Shareholder and noncontrolling interests distributions
EnLink and General Partner distributions
EnLink dropdowns
Stock option proceeds
Issuance of subsidiary units
Effect of exchange rate and other

—

(Millions)
$ 4,756 $ 5,467 $ 627 $ 514 $ 5,383 $ 5,981 $ 5,436
—
—
419
1 —
(6,502)
(256)
2,343
361
(348)
—
—
3
—
(27)

(573)
(524)
—
1,061
(254)
(268)
(167) —
—
—
410
36

654
106
(4,735)
(583)
—
770
(396)
268
167
4
—
(131)

—
5,120
(6,192)
(6,104)
—
(2,789)
(486)
158
—
93
—
79

—
5,120
(6,988)
(6,462)
—
(2,234)
(621)
—
—
93
410
115

654
107
(5,308)
(1,107)
—
1,831
(650)
—
—
4
25
(109)

(796)
(358)
—
555
(135)
(158)

25
22

Net change in cash and cash equivalents

880 $(4,654) $ (50) $ 68 $

830 $(4,586) $ 1,429

Cash and cash equivalents at end of period

$ 2,292 $ 1,412 $

18 $ 68 $ 2,310 $ 1,480 $ 6,066

(1) 2013 amounts for EnLink consist of legacy Devon midstream assets.

Operating Cash Flow

Net cash provided by operating activities continued to be a significant source of capital and liquidity in
2015. Our operating cash flow decreased 10% during 2015 primarily due to lower commodity prices. The effects
of lower commodity prices were partially offset by the collection of $425 million of income taxes receivable in
the first quarter of 2015 and $2.4 billion of cash settlements associated with our commodity derivatives during
2015.

Our operating cash flow increased 10% during 2014 primarily because of higher realized prices and liquids

production growth, partially offset by higher expenses.

Excluding payments made for acquisitions, our consolidated operating cash flow funded 100% and

approximately 86% of our capital expenditures during 2015 and 2014, respectively. In 2015 and 2014, leveraging
our liquidity and other capital resources, we also used cash balances, short-term debt, proceeds from EnLink
transactions and divestiture proceeds to fund our acquisitions, dividends and capital requirements.

Sale of Subsidiary Units

In early 2015, we conducted an underwritten secondary public offering of 26.2 million common units
representing limited partner interests in EnLink, raising proceeds of $654 million, net of underwriting discount.
See Note 17 in “Item 8. Financial Statements and Supplementary Data” of this report.

Divestitures of Property and Equipment

During 2014, we completed our Canadian asset divestiture program and received proceeds of approximately

$2.9 billion. Additionally, we completed the divestment of certain of our U.S. assets and received proceeds of
approximately $2.2 billion.

During 2013, we sold our Thunder Creek operations in Wyoming for approximately $148 million and our
Bear Paw Basin assets in Havre, Montana for approximately $73 million. We also sold other minor oil and gas
assets.

Capital Expenditures

Oil and gas
Midstream
Corporate and other

Devon capital expenditures

EnLink capital expenditures

Total capital expenditures

Devon acquisitions
EnLink acquisitions

Total acquisitions

Year Ended December 31,

2015

2014

2013

$4,577
56
102

4,735
573

(Millions)
$5,735
348
109

6,192
796

$5,710
455
93

6,258
244

$5,308

$6,988

$6,502

$ 583
524

$6,104
358

$ 256
—

$1,107

$6,462

$ 256

Capital expenditures consist of amounts related to our oil and gas exploration and development operations,

our midstream operations, other corporate activities and EnLink growth and maintenance activities.

The vast majority of our capital expenditures are for the acquisition, drilling and development of oil and gas
properties. In response to lower commodity prices, Devon’s 2015 capital program was designed to be lower than
2014, particularly compared to the second half of 2014 when oil prices began to significantly decline. This
change is evidenced by a 48% decrease in exploration and development costs from the fourth quarter of 2014 to
the fourth quarter of 2015, as well as a 24% decrease in total capital expenditures from 2014 to 2015, excluding
acquisitions. Excluding acquisitions, oil and gas capital spending was flat from 2013 to 2014, primarily due to
utilization of the drilling carries in 2014 from our joint venture arrangements.

Capital expenditures for Devon’s midstream operations are primarily for the construction and expansion of
oil and gas gathering facilities and pipelines and are largely impacted by Devon’s oil and gas drilling activities.
Our 2014 and 2013 midstream capital expenditures largely related to the expansion of our Access Pipeline in
Canada. The majority of our midstream capital is incurred by EnLink. EnLink’s 2015 capital expenditures
decreased compared to 2014 primarily as a result of pipeline construction and expansion projects that went into
service in 2014. EnLink’s 2013 capital expenditures primarily related to expansions of plants serving the Barnett
Shale and Cana-Woodford Shale.

Acquisition capital spend in 2015 primarily consisted of the Powder River Basin asset acquisition in the
fourth quarter. The majority of the acquisition capital in 2014 related to the GeoSouthern acquisition in the Eagle
Ford. EnLink’s acquisitions in 2015 and 2014 consisted of additional oil and gas pipeline assets, including
gathering, transportation and processing facilities. For further discussion on EnLink acquisition activity, see Note
2 in “Item 8. Financial Statements and Supplementary Data” of this report.

Short-Term Investment Activity, Net

During 2013, we purchased approximately $1.1 billion of short-term investments and redeemed

approximately $3.4 billion. We consider securities with original contract maturities in excess of three months but
less than one year to be short-term investments.

Debt Activity, Net

During 2015, our consolidated net debt borrowings increased $1.8 billion. In June 2015, we issued $750
million of 5.0% senior notes. We used these proceeds to repay the aggregate principal amount of our floating rate
senior notes upon maturity on December 15, 2015, as well as outstanding commercial paper balances. In
December 2015, we issued $850 million of 5.85% senior notes to fund acquisitions announced in the fourth
quarter. EnLink’s net debt borrowings increased $1.1 billion primarily from borrowings made to fund
acquisitions and dropdowns.

During 2014, we decreased our net debt borrowings by $2.2 billion. The decrease was primarily related to

the repayment of debt used to fund the GeoSouthern transaction. This was partially offset by $555 million of net
borrowings from EnLink to fund its operations.

During 2013, we increased our debt borrowings by $361 million as a result of issuing $2.25 billion of debt
related to the planned Eagle Ford acquisition and repaying approximately $1.9 billion of outstanding short-term
debt.

Shareholder and Noncontrolling Interests Distributions

The following table summarizes our common stock dividends. The quarterly cash dividend was $0.20 per

share in the first quarter of 2013. We increased the dividend rate to $0.22 per share in the second quarter of 2013
and to $0.24 per share in the second quarter of 2014.

Dividends

2015

2014

2013

Amount

Per Share Amount

Per Share

(Millions, except per share amounts)

$ 396

$0.96

$386

$0.94

$348

$0.86

In conjunction with the formation of EnLink in the first quarter of 2014, we made a payment of $100

million to noncontrolling interests. Furthermore, EnLink and the General Partner distributed $254 and $135
million to non-Devon unitholders during 2015 and 2014, respectively.

EnLink and General Partner Distributions

Devon received $268 million and $158 million in distributions from EnLink and the General Partner during

2015 and 2014, respectively.

EnLink Dropdowns

In the second quarter of 2015, Devon received $167 million in cash from EnLink in exchange for VEX. For

further discussion, see Note 2 in “Item 8. Financial Statements and Supplementary Data” of this report.

Stock Option Proceeds

We received $4 million, $93 million and $3 million from stock option proceeds in 2015, 2014 and 2013,

respectively.

Issuance of Subsidiary Units

During 2015 and 2014, EnLink issued and sold approximately 1.3 million and 14.8 million common units

through general public offerings and its “at the market” equity program, generating net proceeds of
approximately $25 million and $410 million, respectively. Furthermore, in October 2015, EnLink issued
approximately 2.8 million common units in a private placement transaction with the General Partner, generating
approximately $50 million in proceeds.

Liquidity

Historically, our primary sources of capital and liquidity have been our operating cash flow, asset divestiture

proceeds and cash on hand. Additionally, we maintain a commercial paper program, supported by our revolving
line of credit, which can be accessed as needed to supplement operating cash flow and cash balances. Other
available sources of capital and liquidity include, among other things, debt and equity securities that can be
issued pursuant to our shelf registration statement filed with the SEC, as well as the sale of a portion of our
common units representing interests in our investment in EnLink and the General Partner. We estimate the
combination of these sources of capital will continue to be adequate to fund future capital expenditures, debt
repayments and other contractual commitments as discussed in this section.

Operating Cash Flow

Our operating cash flow is sensitive to many variables, the most volatile of which are the prices of the oil,
bitumen, gas and NGLs we produce and sell. Our consolidated operating cash flow decreased 10% in 2015 as a
result of the significant decrease in commodity prices. In spite of this decline, we expect operating cash flow to
continue to be a primary source of liquidity as we adjust our capital program in response to lower commodity
prices. Additionally, we anticipate utilizing divestiture proceeds and our credit availability to provide additional
liquidity as needed.

Commodity Prices – Prices are determined primarily by prevailing market conditions. Regional and
worldwide economic activity, weather and other substantially variable factors influence market conditions for
these products. These factors, which are difficult to predict, create volatility in prices and are beyond our control.
We expect lower prices to continue throughout 2016, and currently, our production is largely unhedged. If
commodity prices remain consistent with 2015 and we are unable to obtain favorable hedge contracts for our
2016 production, our 2016 operating cash flow could materially decline from what it was in 2015.

The key terms to our oil, gas and NGL derivative financial instruments as of December 31, 2015 are

presented in Note 3 in “Item 8. Financial Statements and Supplementary Data” of this report.

Commodity prices can also affect our operating cash flow through an indirect effect on operating expenses.
Significant commodity price decreases can lead to a decrease in drilling and development activities. As a result,
the demand and cost for people, services, equipment and materials may also decrease, causing a positive impact
on our cash flow as the prices paid for services and equipment decline. However, the inverse is also generally
true during periods of rising commodity prices.

Divestitures of Property and Equipment – In the fourth quarter of 2015, we announced our intention to
monetize up to 80 MBoe per day of certain non-core upstream assets across our portfolio in 2016. In addition, we
also intend to market our Access Pipeline in Canada. We anticipate these divestitures will generate
approximately $2 billion to $3 billion of proceeds to further strengthen our financial position in 2016.

Interest Rates – Our operating cash flow can also be impacted by interest rate fluctuations. As of

December 31, 2015, we had total debt of $13.1 billion with an overall weighted-average borrowing rate of 4.9%.
Of the $13.1 billion of total debt, $1.4 billion is comprised of floating rate debt instruments that bear interest
rates averaging 1.1%.

Credit Losses – Our operating cash flow is also exposed to credit risk in a variety of ways. We are exposed
to the credit risk of the customers who purchase our oil, gas and NGL production. We are also exposed to credit
risk related to the collection of receivables from our joint-interest partners for their proportionate share of
expenditures made on projects we operate. Additionally, we are exposed to the credit risk of counterparties to our
derivative financial contracts. We utilize a variety of mechanisms to limit our exposure to the credit risks of our
customers, partners and counterparties. Such mechanisms include, under certain conditions, requiring letters of
credit, prepayments or collateral postings.

As recent years indicate, we have a history of investing more than 100% of our operating cash flow into

capital development activities to grow our company and maximize value for our shareholders. Therefore,
negative movements in any of the variables discussed above would not only impact our operating cash flow but
also would likely impact the amount of capital investment we could or would make. In the current environment,
assuming current pricing expectations, our 2016 exploration and development capital budget is expected to be
approximately $900 million to $1.1 billion, or roughly 75% less than our 2015 capital program. With our 2016
capital focused primarily on oil development, we anticipate our oil production will remain relatively flat from
2015 to 2016, but our natural gas and NGL production will decline, resulting in a 6% production decline in our
core assets.

At the end of 2015, we held approximately $2.3 billion of cash. Included in this total was $646 million of

cash held by our foreign subsidiaries. If we were to repatriate a portion or all of the cash held by our foreign
subsidiaries, we would recognize and pay current income taxes in accordance with current U.S. tax law. The
payment of such additional income tax would decrease the amount of cash ultimately available to fund our
business.

Credit Availability

We have a $3.0 billion Senior Credit Facility. The maturity date for $30 million of the Senior Credit Facility

is October 24, 2017. The maturity date for $164 million of the Senior Credit Facility is October 24, 2018. The
maturity date for the remaining $2.8 billion is October 24, 2019. This credit facility supports our $3.0 billion
commercial paper program. Amounts borrowed under the Senior Credit Facility may, at our election, bear
interest at various fixed rate options for periods of up to twelve months. Such rates are generally less than the
prime rate. However, we may elect to borrow at the prime rate. As of December 31, 2015, there were no
borrowings under the Senior Credit Facility.

The Senior Credit Facility contains only one material financial covenant. This covenant requires us to
maintain a ratio of total funded debt to total capitalization, as defined in the credit agreement, of no more than
65%. The credit agreement defines total funded debt as funds received through the issuance of debt securities
such as debentures, bonds, notes payable, credit facility borrowings and short-term commercial paper
borrowings. In addition, total funded debt includes all obligations with respect to payments received in
consideration for oil, gas and NGL production yet to be acquired or produced at the time of payment. Funded
debt excludes our outstanding letters of credit and trade payables. The credit agreement defines total
capitalization as the sum of funded debt and stockholders’ equity adjusted for noncash financial write-downs,
such as full cost ceiling and goodwill impairments. As of December 31, 2015, we were in compliance with this
covenant. Our debt-to-capitalization ratio at December 31, 2015, as calculated pursuant to the terms of the
agreement, was 23.7%.

Our access to funds from the Senior Credit Facility is not restricted under any “material adverse effect”

clauses. It is not uncommon for credit agreements to include such clauses. These clauses can remove the
obligation of the banks to fund the credit line if any condition or event would reasonably be expected to have a
material and adverse effect on the borrower’s financial condition, operations, properties or business considered as
a whole, the borrower’s ability to make timely debt payments or the enforceability of material terms of the credit

agreement. While our credit facility includes covenants that require us to report a condition or event having a
material adverse effect, the obligation of the banks to fund the credit facility is not conditioned on the absence of
a material adverse effect.

Our Senior Credit Facility supports our $3.0 billion of short-term credit under our commercial paper

program. Commercial paper debt generally has a maturity of between 1 and 90 days, although it can have a
maturity of up to 365 days, and bears interest at rates agreed to at the time of the borrowing. The interest rate is
generally based on a standard index such as the Federal Funds Rate, LIBOR or the money market rate as found in
the commercial paper market. As of December 31, 2015, we had $626 million of borrowings under our
commercial paper program.

EnLink has a $1.5 billion unsecured revolving credit facility. The General Partner has a $250 million
revolving credit facility. As of December 31, 2015, there were $11 million in outstanding letters of credit and
$414 million borrowed under the $1.5 billion credit facility and no outstanding borrowings under the $250
million credit facility. All of EnLink’s and the General Partner’s debt is non-recourse to Devon.

As market conditions warrant and subject to our contractual restrictions, liquidity position and other factors,

we may from time to time seek to repurchase or retire our outstanding debt through cash purchases and/or
exchanges for other debt or equity securities in open market transactions, privately negotiated transactions, by
tender offer or otherwise. Any such cash repurchases by us may be funded by cash on hand or incurring new
debt. The amounts involved in any such transactions, individually or in the aggregate, may be material.
Furthermore, any such repurchases or exchanges may result in our acquiring and retiring a substantial amount of
such indebtedness, which would impact the trading liquidity of such indebtedness.

Debt Ratings

Devon and EnLink are rated by the major debt ratings agencies in the U.S. However, the General Partner
does not receive debt ratings. In determining those debt ratings, the agencies consider a number of qualitative and
quantitative items including, but not limited to, commodity pricing levels, liquidity, asset quality, reserve mix,
debt levels, cost structure, planned asset sales, near-term and long-term growth opportunities and capital
allocation challenges.

There are no “rating triggers” in any of our or EnLink’s contractual debt obligations that would accelerate

scheduled maturities should debt ratings fall below a specified level. However, a ratings downgrade could
adversely impact our and EnLink’s interest rate on any credit facility borrowings and the ability to economically
access debt markets in the future.

Capital Expenditures

In January 2016, Devon acquired Anadarko Basin STACK assets for approximately $1.5 billion in cash and

equity, subject to certain adjustments. Including this acquisition but excluding EnLink, our 2016 capital
expenditures are expected to range from $1.2 billion to $1.4 billion, including $900 million to $1.1 billion for our
oil and gas capital program. To a certain degree, the ultimate timing of these capital expenditures is within our
control. Therefore, if commodity prices fluctuate from our current estimates, we could choose to defer a portion
of these planned 2016 capital expenditures until later periods or accelerate capital expenditures planned for
periods beyond 2016 to achieve the desired balance between sources and uses of liquidity. Based upon current
price expectations for 2016, available cash balances and credit availability and proceeds from our divestiture
program, we anticipate having adequate capital resources to fund our 2016 capital expenditures.

In connection with our acquisition of the STACK play and Powder River Basin assets, we issued 23,470,000

shares of our common stock (the “STACK Acquisition Shares”) and 6,857,488 shares of our common stock (the
“PRB Acquisition Shares”), respectively. Pursuant to the terms of these acquisitions, we agreed to register for
resale with the SEC the STACK Acquisition Shares and the PRB Acquisition Shares. Following such respective
registrations, the STACK Acquisition Shares and the PRB Acquisition Shares can generally be freely sold in the
public markets at any time on or after February 21, 2016 and March 16, 2016, respectively.

EnLink Capital Resources and Expenditures

In January 2016, EnLink acquired Tall Oak, a gathering and processing midstream company with assets in

central Oklahoma, for approximately $1.5 billion in cash and equity, subject to certain adjustments.

Excluding this acquisition, EnLink’s 2016 capital budget includes approximately $445 million to $570

million of identified growth projects. EnLink’s primary capital projects for 2016 include completing the
construction of the Riptide plant in Texas, acquired as part of the Coronado transaction, commencing
construction on an NGL pipeline in Louisiana and development of its Tall Oak assets.

EnLink expects to fund the growth capital expenditures from the proceeds of borrowings under its bank
credit facility and proceeds from other debt and equity sources. EnLink expects to fund its 2016 maintenance
capital expenditures from operating cash flows. In 2016, it is possible that not all of the planned projects will be
commenced or completed. EnLink’s ability to pay distributions to its unitholders, fund planned capital
expenditures and make acquisitions will depend upon its future operating performance, which will be affected by
prevailing economic conditions in the industry and financial, business and other factors, some of which are
beyond its control.

Contractual Obligations

The following table presents a summary of our contractual obligations as of December 31, 2015.

Payments Due by Period

Total

Less Than
1 Year

1-3 Years

3-5 Years

More Than
5 Years

Devon debt (1)
EnLink debt (2)
Interest expense (3)
Purchase obligations (4)
Operational agreements (5)
Asset retirement obligations (6)
Drilling and facility obligations (7)
Lease obligations (8)
Other (9)

$10,051
3,077
9,804
3,905
4,601
1,414
189
443
140

$ 976
—
630
557
994
44
69
70
2

(Millions)
$ 875
—
1,252
1,494
1,908
104
85
134
92

Total (10)

$33,624

$3,342

$5,944

$ 700
814
1,115
1,648
657
102
7
110
39

$5,192

$ 7,500
2,263
6,807
206
1,042
1,164
28
129
7

$19,146

(1) Debt amounts represent scheduled maturities of Devon’s debt obligations at December 31, 2015, excluding
$28 million of net discounts included in the carrying value of debt. Debt due less than one year includes
$626 million of commercial paper, which can be renewed beyond one year.

(2) Debt amounts represent scheduled maturities of EnLink’s debt obligations at December 31, 2015, excluding
$13 million of net premiums included in the carrying value of debt. All of EnLink’s debt is non-recourse to
Devon.
Interest expense represents the scheduled cash payments on long-term, fixed-rate debt and an estimate of
our floating-rate notes. These amounts include $1.8 billion of interest expense related to EnLink.

(3)

(4) Purchase obligation amounts represent contractual commitments primarily to purchase condensate at market

prices for use at our heavy oil projects in Canada. We have entered into these agreements because
condensate is an integral part of the heavy oil transportation process. Any disruption in our ability to obtain
condensate could negatively affect our ability to transport heavy oil at these locations. Our total obligation
related to condensate purchases expires in 2021. The value of the obligation in the table above is based on
the contractual volumes and our internal estimate of future condensate market prices.

(5) Operational agreements represent commitments to transport or process certain volumes of oil, gas and
NGLs for a fixed fee. We have entered into these agreements to aid the movement of our production to
downstream markets. Operational agreements include approximately $1.7 billion of minimum volume
commitments between Devon and EnLink. The initial terms of the gas volume contracts with EnLink are
summarized in the following table. In addition, Devon and EnLink have a 30 MBbls/d minimum
transportation volume commitment for the VEX pipeline. All contracts with EnLink expire in 2019.

Contract

Minimum
Gathering
Volume
Commitment
(MMcf/d)

Minimum
Processing
Volume
Commitment
(MMcf/d)

Minimum
Volume
Commitment
Term
(Years)

Contract
Terms
(Years)

Annual
Rate
Escalators

Bridgeport gathering and processing contract
East Johnson County gathering contract
Cana gathering and processing contract

10
10
10

850
125
330

650
—
330

5
5
5

CPI
CPI
CPI

(6) Asset retirement obligations represent estimated discounted costs for future dismantlement, abandonment

and rehabilitation costs. These obligations are recorded as liabilities on our December 31, 2015 balance
sheet.

(7) Drilling and facility obligations represent gross contractual agreements with third-party service providers to
procure drilling rigs and other related services for developmental and exploratory drilling and facilities
construction.

(8) Lease obligations consist primarily of non-cancelable leases for office space and equipment used in our

daily operations.

(9) These amounts include $133 million related to uncertain tax positions.
(10) This table excludes approximately $1.7 billion of cash payments made on January 7, 2016 upon closing the

STACK acquisition and EnLink’s acquisition of Tall Oak. The table also excludes the $500 million of future
cash installment payments required to be paid by EnLink within 24 months as part of the Tall Oak
acquisition.

Contingencies and Legal Matters

For a detailed discussion of contingencies and legal matters, see Note 18 in “Item 8. Financial Statements

and Supplementary Data” of this report.

Critical Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the

U.S. requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual amounts could differ from these estimates,
and changes in these estimates are recorded when known. We consider the following to be our most critical
accounting estimates that involve judgment and have reviewed these critical accounting estimates with the Audit
Committee of our Board of Directors.

Full Cost Method of Accounting and Proved Reserves

Our estimates of proved reserves are a major component of the depletion and full cost ceiling calculations.

Additionally, our proved reserves represent the element of these calculations that require the most subjective
judgments. Estimates of reserves are forecasts based on engineering data, projected future rates of production and
the timing of future expenditures. The process of estimating oil, gas and NGL reserves requires substantial
judgment, resulting in imprecise determinations, particularly for new discoveries. Different reserve engineers
may make different estimates of reserve quantities based on the same data. Our engineers prepare our reserve
estimates. We then subject certain of our reserve estimates to audits performed by third-party petroleum
consulting firms. In 2015, 95% of our reserves were subjected to such audits.

The passage of time provides more qualitative information regarding estimates of reserves, when revisions

are made to prior estimates to reflect updated information. In the past five years, annual performance revisions to
our reserve estimates, which have been both increases and decreases in individual years, have averaged less than
3% of the previous year’s estimate. However, there can be no assurance that more significant revisions will not
be necessary in the future. The data for a given reservoir may also change substantially over time as a result of
numerous factors including, but not limited to, additional development activity, evolving production history and
continual reassessment of the viability of production under varying economic conditions.

While the quantities of proved reserves require substantial judgment, the associated prices of oil, gas and

NGL reserves, and the applicable discount rate, that are used to calculate the discounted present value of the
reserves do not require judgment. Applicable rules require future net revenues to be calculated using prices that
represent the average of the first-day-of-the-month price for the 12-month period prior to the end of each
quarterly period. Such rules also dictate that a 10% discount factor be used. Therefore, the discounted future net
revenues associated with the estimated proved reserves are not based on our assessment of future prices or costs
or our enterprise risk.

Because the ceiling calculation dictates the use of prices that are not representative of future prices and
requires a 10% discount factor, the resulting value is not indicative of the true fair value of the reserves. Oil and
gas prices have historically been cyclical and, for any particular 12-month period, can be either higher or lower
than our long-term price forecast, which is a more appropriate input for estimating fair value. Therefore, oil and
gas property write-downs that result from applying the full cost ceiling limitation, and that are caused by
fluctuations in price as opposed to reductions to the underlying quantities of reserves, should not be viewed as
absolute indicators of a reduction of the ultimate value of the related reserves.

Because of the volatile nature of oil and gas prices, it generally is not possible to predict the timing or
magnitude of full cost write-downs. In addition, because of the inter-relationship of the various judgments made
to estimate proved reserves, it is impractical to provide quantitative analyses of the effects of potential changes in
these estimates. However, decreases in estimates of proved reserves would generally increase our depletion rate
and, thus, our depletion expense. Decreases in our proved reserves may also increase the likelihood of
recognizing a full cost ceiling write-down.

Based on prices for the last nine months of 2015 and the short-term pricing outlook for the first quarter of
2016, we expect to recognize additional U.S. and Canadian full cost impairments in the first quarter of 2016. The
estimated U.S. impairment would be material to our net earnings, but we believe it will not be as large as the $3.7
billion impairment we recognized in the fourth quarter of 2015. We also expect to recognize an impairment
related to our Canadian oil and gas properties that will approximate the impairment recognized in the fourth
quarter of 2015. While difficult to measure, we estimate that the first quarter 2016 impairments will approximate
$3 billion in the aggregate. Our full cost impairments have no impact to our cash flow or liquidity.

Derivative Financial Instruments

We periodically enter into derivative financial instruments with respect to a portion of our oil, gas and NGL

production to hedge future prices received. Additionally, EnLink periodically enters into derivative financial
instruments with respect to its oil, gas and NGL marketing activity. These commodity derivative financial
instruments include financial price swaps, basis swaps, costless price collars and call options.

The estimates of the fair values of our derivative instruments require substantial judgment. We estimate the

fair values of our commodity derivative financial instruments primarily by using internal discounted cash flow
calculations. The most significant variable to our cash flow calculations is our estimate of future commodity
prices. We base our estimate of future prices upon published forward commodity price curves such as the Inside
FERC Henry Hub forward curve for gas instruments and the NYMEX WTI forward curve for oil instruments.
Another key input to our cash flow calculations is our estimate of volatility for these forward curves, which we

base primarily upon implied volatility. The resulting estimated future cash inflows or outflows over the lives of
the contracts are discounted primarily using U.S. Treasury bill rates. These pricing and discounting variables are
sensitive to the period of the contract and market volatility as well as changes in forward prices and regional
price differentials.

We periodically enter into interest rate swaps to manage our exposure to interest rate volatility. We estimate

the fair values of our interest rate swap financial instruments primarily by using internal discounted cash flow
calculations based upon forward interest rate yields. The most significant variable to our cash flow calculations is
our estimate of future interest rate yields. We base our estimate of future yields upon our own internal model that
utilizes forward curves such as the LIBOR or the Federal Funds Rate provided by third parties. The resulting
estimated future cash inflows or outflows over the lives of the contracts are discounted using the LIBOR and
money market futures rates. These yield and discounting variables are sensitive to the period of the contract and
market volatility.

We periodically enter into foreign exchange forward contracts to manage our exposure to fluctuations in
exchange rates. Under the terms of our foreign exchange forward contracts, we generally receive U.S. dollars and
pay Canadian dollars based on a total notional amount. We estimate the fair values of our foreign exchange
forward contracts primarily by using internal discounted cash flow calculations based upon forward exchange
rates. The most significant variable to our cash flow calculations is our observation of forward foreign exchange
rates. The resulting future cash inflows or outflows at maturity of the contracts are discounted using Treasury
rates. These discounting variables are sensitive to the period of the contract and market volatility.

We periodically validate our valuation techniques by comparing our internally generated fair value

estimates with those obtained from contract counterparties.

Counterparty credit risk has not had a significant effect on our cash flow calculations and derivative
valuations. This is primarily the result of two factors. First, we have mitigated our exposure to any single
counterparty by contracting with numerous counterparties. Our oil, gas and NGL commodity derivative contracts
are held with thirteen separate counterparties, and our foreign exchange forward contracts are held with six
separate counterparties. Second, our derivative contracts generally require cash collateral to be posted if either
our or the counterparty’s credit rating falls below certain credit rating levels.

Because we have chosen not to qualify our derivatives for hedge accounting treatment, changes in the fair
values of derivatives can have a significant impact on our reported results of operations. Generally, changes in
derivative fair values will not impact our liquidity or capital resources.

Settlements of derivative instruments, regardless of whether they qualify for hedge accounting, do have an
impact on our liquidity and results of operations. Generally, if actual market prices are higher than the price of
the derivative instruments, our net earnings and cash flow from operations will be lower relative to the results
that would have occurred absent these instruments. The opposite is also true. Additional information regarding
the effects that changes in market prices can have on our derivative financial instruments, net earnings and cash
flow from operations is included in “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” of
this report.

Business Combinations

Accounting for the acquisition of a business requires the assets and liabilities of the acquired business to be
recorded at fair value. Deferred taxes are recorded for any differences between the fair value and the tax basis of
the acquired assets and liabilities. Any excess of the purchase price over the fair values of the tangible and
intangible net assets acquired is recorded as goodwill.

There are various assumptions we make in determining the fair values of an acquired company’s assets and

liabilities. The most significant assumptions, and the ones requiring the most judgment, involve the estimated fair
values of the oil and gas properties acquired. To determine the fair values of these properties, we prepare
estimates of oil, natural gas and NGL reserves. These estimates are based on work performed by our engineers
and that of outside consultants. The judgments associated with these estimated reserves are described earlier in
this section in connection with the full cost ceiling calculation.

However, there are factors involved in estimating the fair values of acquired oil, natural gas and NGL
properties that require more judgment than that involved in the full cost ceiling calculation. As stated above, the
full cost ceiling calculation applies a historical 12-month average price to the reserves to arrive at the ceiling
amount. By contrast, the fair value of reserves acquired in a business combination must be based on our estimates
of future oil, natural gas and NGL prices. Our estimates of future prices are based on our own analysis of pricing
trends. These estimates are based on current data obtained with regard to regional and worldwide supply and
demand dynamics such as economic growth forecasts. They are also based on industry data regarding natural gas
storage availability, drilling rig activity, changes in delivery capacity, trends in regional pricing differentials and
other fundamental analysis. Forecasts of future prices from independent third parties are noted when we make
our pricing estimates.

We estimate future prices to apply to the estimated reserve quantities acquired, and estimate future operating
and development costs, to arrive at estimates of future net revenues. For estimated proved reserves, the future net
revenues are then discounted using a rate determined appropriate at the time of the business combination based
upon our cost of capital.

We also apply these same general principles to estimate the fair value of unproved properties acquired in a

business combination. These unproved properties generally represent the value of probable and possible reserves.
Because of their very nature, probable and possible reserve estimates are more imprecise than those of proved
reserves. To compensate for the inherent risk of estimating and valuing unproved reserves, the discounted future
net revenues of probable and possible reserves are reduced by what we consider to be an appropriate risk-
weighting factor in each particular instance.

In addition, our acquisitions have involved other entities whose operations included substantial midstream

activities. In these transactions, the purchase price is allocated to the fair value of midstream facilities and
equipment, generally consisting of processing facilities and pipeline systems. Estimating the fair value of these
assets requires certain assumptions to be made regarding future quantities of commodities estimated to be
processed and transported through these facilities and pipelines, as well as estimates of future expected prices
and operating and capital costs.

Goodwill

We test goodwill for impairment annually at October 31, or more frequently if events or changes in

circumstances dictate that the carrying value of goodwill may not be recoverable. While we use data as of
October 31 for our test, we typically complete the test in late December or early January as the October 31
market data used in our test becomes available. We first assess the qualitative factors to determine whether it is
more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for
determining whether it is necessary to perform the two-step goodwill impairment test. If we determine that it is
more likely than not that its fair value is less than its carrying amount, then the two-step goodwill impairment test
is performed.

In the first step of the impairment test, the fair value of a reporting unit is compared to its carrying value.
Because quoted market prices are not available for our reporting units, the fair values of the reporting units are
estimated based upon several valuation analyses, including comparable companies, comparable transactions and
premiums paid. If the carrying value of a reporting unit exceeds its fair value, the second step of the impairment

test is performed for purposes of measuring the impairment. In the second step, the fair value of the reporting
unit is allocated to all of the assets and liabilities of the reporting unit to determine an implied goodwill value.
This allocation is similar to a purchase price allocation. If the carrying amount of the reporting unit’s goodwill
exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to that excess.
The determination of fair value requires judgment and involves the use of significant estimates and assumptions
about expected future cash flows derived from internal forecasts and the impact of market conditions on those
assumptions. Critical assumptions primarily include revenue growth rates driven by future commodity prices and
volume expectations, operating margins and capital expenditures.

For our October 31, 2015 impairment test, step one of our impairment analysis showed that the fair value of

our U.S. reporting unit exceeded its carrying value.

Sustained weakness in the overall energy sector beginning in the fourth quarter of 2014 and continuing into

2015 driven by low commodity prices, together with a decline in the EnLink unit price, caused a change in
circumstances warranting an interim impairment test for EnLink’s reporting units, as well as an update performed
as of December 31. Based on the results of the impairment analysis, it was determined that the estimated fair
value of EnLink’s Crude and Condensate, Louisiana and Texas reporting units were less than their carrying
amounts, primarily due to changes in assumptions related to commodity prices and discount rates. Through the
analysis, goodwill impairments of $492 million, $787 million and $49 million for EnLink’s Texas, Louisiana and
Crude and Condensate reporting units, respectively, were recognized in 2015. Subsequent to the impairments,
EnLink had $93 million and $704 million of goodwill allocated to the Crude and Condensate and Texas reporting
units, respectively. The Louisiana reporting unit’s goodwill was entirely written off. As of December 31, 2015,
the fair value of EnLink’s Texas reporting unit exceeded its carrying value by approximately 7%, and the
carrying value of EnLink’s Crude and Condensate reporting unit approximated its fair value.

The impairment of goodwill has no effect on liquidity or capital resources. However, it adversely affects our

results of operations in the period recognized.

Other Intangible Assets

In 2015, the assessment of customer relationships was updated due to the factors described in the
aforementioned goodwill section. This assessment resulted in a $223 million impairment of other intangible
assets related to EnLink’s Crude and Condensate reporting unit. Level 3 fair value measurements were utilized
for the impairment analysis of definite-lived intangible assets, which included discounted cash flow estimates,
consistent with those utilized in the goodwill impairment assessment.

The other intangible assets impairment has no effect on liquidity or capital resources. However, it adversely

affects our results of operations in the period recognized.

Income Taxes

The amount of income taxes recorded requires interpretations of complex rules and regulations of federal,

state, provincial and foreign tax jurisdictions. We recognize current tax expense based on estimated taxable
income for the current period and the applicable statutory tax rates. We routinely assess potential uncertain tax
positions and, if required, estimate and establish accruals for such amounts. We have recognized deferred tax
assets and liabilities for temporary differences, operating losses and other tax carryforwards. We routinely assess
our deferred tax assets and reduce such assets by a valuation allowance if we deem it is more likely than not that
some portion or all of the deferred tax assets will not be realized. At the end of 2015, we had deferred tax assets
that largely resulted from the full cost impairments recognized in the fourth quarter of 2015. As a result of our
recent cumulative losses, we recorded a 100% valuation allowance against our U.S. deferred tax assets as of
December 31, 2015.

The accruals for deferred tax assets and liabilities are often based on assumptions that are subject to a
significant amount of judgment by management. These assumptions and judgments are reviewed and adjusted as
facts and circumstances change. Material changes to our income tax accruals may occur in the future based on
the progress of ongoing audits, changes in legislation or resolution of pending matters.

We also assess factors relative to whether our foreign earnings are considered indefinitely reinvested. These
factors include forecasted and actual results for both our U.S. and Canadian operations, borrowing conditions in
the U.S. and existing U.S. income tax laws, particularly the laws pertaining to the deductibility of intangible
drilling costs and repatriations of foreign earnings. Changes in any of these factors could require recognition of
additional deferred, or even current, U.S. income tax expense. We accrue deferred U.S. income tax expense on
our foreign earnings when the factors indicate that these earnings are no longer considered indefinitely
reinvested.

For our foreign earnings deemed indefinitely reinvested, we do not calculate a hypothetical deferred tax
liability on these earnings. Calculating a hypothetical tax on these accumulated earnings is much different from
the calculation of the deferred tax liability on our earnings deemed not indefinitely reinvested. A hypothetical tax
calculation on the indefinitely reinvested earnings would require the following additional activities:

•

separate analysis of a diverse chain of foreign entities;

relying on tax rates on a future remittance that could vary significantly depending on alternative
approaches available to repatriate the earnings;

determining the nature of a yet-to-be-determined future remittance, such as whether the distribution
would be a non-taxable return of capital or a distribution of taxable earnings and calculation of
associated withholding taxes, which would vary significantly depending on the circumstances at the
deemed time of remittance; and

further analysis of a variety of other inputs such as the earnings, profits, U.S./foreign country tax treaty
provisions and the related foreign taxes paid by our foreign subsidiaries, whose earnings are deemed
permanently reinvested, over a lengthy history of operations.

Because of the administrative burden required to perform these additional activities, it is impractical to
calculate a hypothetical tax on the foreign earnings associated with this separate and more complicated chain of
companies.

Non-GAAP Measures

We make reference to “core earnings attributable to Devon” and “core earnings per share attributable to

Devon” in “Overview of 2015 Results” in this Item 7. that are not required by or presented in accordance with
GAAP. These non-GAAP measures should not be considered as alternatives to GAAP measures. Core earnings
attributable to Devon, as well as the per share amount, represent net earnings excluding certain noncash or non-
recurring items that are typically excluded by securities analysts in their published estimates of our financial
results. Our non-GAAP measures are typically used as a quarterly performance measure. Items may appear to be
recurring when comparing on an annual basis. In the table below, restructuring costs were incurred in each of the
three year periods; however, these costs relate to different restructuring programs. Amounts excluded for 2015
relate to derivatives and financial instrument fair value changes, asset impairments (including an impairment of
goodwill), deferred tax asset valuation allowance, restructuring costs and repatriation of funds to the U.S.
Amounts excluded for 2014 relate to derivatives and financial instrument fair value changes, asset impairments
(including an impairment of goodwill), our divestiture programs and related gains on asset sales and restructuring
costs, repatriation of proceeds to the U.S., loss on early retirement of debt and deferred income tax on the
formation of the General Partner. Amounts excluded for 2013 relate to derivatives and financial instrument fair
value changes, asset impairments, our divestiture programs and related repatriation of proceeds to the U.S. and
restructuring costs. For more information on our restructuring programs, see Note 6 in “Item 8. Financial

Statements and Supplementary Data” of this report. We believe these non-GAAP measures facilitate
comparisons of our performance to earnings estimates published by securities analysts. We also believe these
non-GAAP measures can facilitate comparisons of our performance between periods and to the performance of
our peers.

Below are reconciliations of our core earnings and earnings per share to their comparable GAAP measures.

Net earnings (loss) attributable to Devon (GAAP)
Adjustments (net of taxes and noncontrolling interests):

Derivatives and other financial instruments
Cash settlements on derivatives and financial instruments

Noncash effect of derivatives and financial instruments

Asset impairments
Deferred tax asset valuation allowance
Gain on asset sales and repatriations
Investment in General Partner deferred income tax
Restructuring costs
Early retirement of debt

Year Ended December 31,

2015

2014

2013

(Millions, except per share amounts)
$ (20)
$ 1,607
$(14,454)

(206)
1,552

1,346
13,100
967
33
—
52
—

(1,262)
31

(1,231)
1,948
—
(421)
48
35
31

131
139

270
1,353
—
97
—
34

—

Core earnings attributable to Devon (non-GAAP)

$ 1,044

$ 2,017

$1,734

Earnings (loss) per share attributable to Devon (GAAP)
Adjustments (net of taxes and noncontrolling interests):

Derivatives and other financial instruments
Cash settlements on derivatives and financial instruments

Noncash effect of derivatives and financial instruments

Asset impairments
Deferred tax asset valuation allowance
Gain on asset sales and repatriations
Investment in General Partner deferred income tax
Restructuring costs
Early retirement of debt

$ (35.55)

$ 3.91

$ (0.06)

(0.49)
3.80

3.31
32.18
2.37
0.08
—
0.13
—

(3.07)
0.08

(2.99)
4.74
—
(1.02)
0.12
0.08
0.07

0.31
0.34

0.65
3.35
—
0.24
—
0.08
—

Core earnings per share attributable to Devon (non-GAAP)

2.52

$ 4.91

$ 4.26

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The primary objective of the following information is to provide forward-looking quantitative and

qualitative information about our potential exposure to market risks. The term “market risk” refers to our risk of
loss arising from adverse changes in oil, gas and NGL prices, interest rates and foreign currency exchange rates.
The following disclosures are not meant to be precise indicators of expected future losses but rather indicators of
reasonably possible losses. This forward-looking information provides indicators of how we view and manage
our ongoing market risk exposures. All of our market risk sensitive instruments were entered into for purposes
other than speculative trading.

Commodity Price Risk

Our major market risk exposure is the pricing applicable to our oil, gas and NGL production. Realized
pricing is primarily driven by the prevailing worldwide price for crude oil and spot market prices applicable to
our U.S. and Canadian gas production. Pricing for oil and gas production has been volatile and unpredictable as
discussed in “Item 1A. Risk Factors” of this report. Consequently, we periodically hedge a portion of our
production through various financial transactions. The key terms to all our oil and gas derivative financial
instruments as of December 31, 2015 are presented in Note 3 in “Item 8. Financial Statements and
Supplementary Data” of this report.

The fair values of our commodity derivatives are largely determined by estimates of the forward curves of

the relevant price indices. At December 31, 2015, a 10% change in the forward curves associated with our
commodity derivative instruments would not have materially impacted our balance sheet at December 31, 2015.

Interest Rate Risk

At December 31, 2015, we had total debt of $13.1 billion. Of this amount, $11.7 billion bears fixed interest
rates averaging 5.3%, and $1.4 billion is comprised of floating rate debt with interest rates averaging 1.1%. Our
commercial paper borrowings typically have maturities between 1 and 90 days.

As of December 31, 2015, we had open interest rate swap positions that are presented in Note 3 in “Item 8.

Financial Statements and Supplementary Data” of this report. The fair values of our interest rate swaps are
largely determined by estimates of the forward curves of the 3 month LIBOR rate. A 10% change in these
forward curves would not have materially impacted our balance sheet at December 31, 2015.

Foreign Currency Risk

Our net assets, net earnings and cash flows from our Canadian subsidiaries are based on the U.S. dollar
equivalent of such amounts measured in the Canadian dollar functional currency. Assets and liabilities of the
Canadian subsidiaries are translated to U.S. dollars using the applicable exchange rate as of the end of a reporting
period. Revenues, expenses and cash flow are translated using an average exchange rate during the reporting
period. A 10% unfavorable change in the Canadian-to-U.S. dollar exchange rate would not have materially
impacted our December 31, 2015 balance sheet.

Our non-Canadian foreign subsidiaries have a U.S. dollar functional currency. However, some of our
subsidiaries hold Canadian-dollar cash and engage in intercompany loans with Canadian subsidiaries that are
based in Canadian dollars. The value of the Canadian-dollar cash and intercompany loans increases or decreases
from the remeasurement of the cash and loans into the U.S. dollar functional currency. Additionally, at
December 31, 2015, we held foreign currency exchange forward contracts to hedge exposures to fluctuations in
exchange rates on the Canadian-dollar cash and intercompany loans. The increase or decrease in the value of the
forward contracts is offset by the increase or decrease to the U.S. dollar equivalent of the Canadian-dollar cash
and intercompany loans. Based on the amount of the cash and intercompany loans as of December 31, 2015, a
10% change in the foreign currency exchange rates would not have materially impacted our balance sheet.

Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

Report of Independent Registered Public Accounting Firm

Consolidated Financial Statements

Consolidated Comprehensive Statements of Earnings
Consolidated Statements of Cash Flows
Consolidated Balance Sheets
Consolidated Statements of Stockholders’ Equity
Notes to Consolidated Financial Statements

58
59
60
61
62

All financial statement schedules are omitted as they are inapplicable or the required information has been

included in the consolidated financial statements or notes thereto.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Devon Energy Corporation:

We have audited the accompanying consolidated balance sheets of Devon Energy Corporation and
subsidiaries as of December 31, 2015 and 2014, and the related consolidated comprehensive statements of
earnings, cash flows, and stockholders’ equity for each of the years in the three-year period ended December 31,
2015. We also have audited Devon Energy Corporation’s internal control over financial reporting as of
December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Devon Energy Corporation’s
management is responsible for these consolidated financial statements, for maintaining effective internal control
over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,
included in Management’s Annual Report contained in “Item 9A. Controls and Procedures” of Devon Energy
Corporation’s Annual Report on Form 10-K. Our responsibility is to express an opinion on these consolidated
financial statements and an opinion on the Company’s internal control over financial reporting based on our
audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight

Board (United States). Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement and whether effective internal
control over financial reporting was maintained in all material respects. Our audits of the consolidated financial
statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of Devon Energy Corporation and subsidiaries as of December 31, 2015 and 2014, and the
results of its operations and its cash flows for each of the years in the three-year period ended December 31,
2015, in conformity with U.S generally accepted accounting principles. Also in our opinion, Devon Energy
Corporation maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission.

Oklahoma City, Oklahoma
February 17, 2016

/s/ KPMG LLP

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED COMPREHENSIVE STATEMENTS OF EARNINGS

Oil, gas and NGL sales
Oil, gas and NGL derivatives
Marketing and midstream revenues

Total operating revenues

Lease operating expenses
Marketing and midstream operating expenses
General and administrative expenses
Production and property taxes
Depreciation, depletion and amortization
Asset impairments
Restructuring costs
Gains and losses on asset sales
Other operating items

Total operating expenses

Operating income (loss)
Net financing costs
Other nonoperating items

Earnings (loss) before income taxes

Income tax expense (benefit)

Net earnings (loss)
Net earnings (loss) attributable to noncontrolling interests

Net earnings (loss) per share attributable to Devon:

Basic
Diluted

Comprehensive earnings (loss):

Net earnings (loss)
Other comprehensive earnings (loss), net of tax:

Foreign currency translation
Pension and postretirement plans

Other comprehensive loss, net of tax

Year Ended December 31,

2015

2014

2013

(Millions, except per share amounts)
$ 8,522
$ 9,910
$ 5,382
(191)
1,989
503
2,066
7,667
7,260

13,145

19,566

10,397

2,104
6,420
855
388
3,129
20,820
78

—

2,332
6,815
847
535
3,319
1,953
46
(1,072)
93

33,872

14,868

(20,727)
517
24

(21,268)
(6,065)

(15,203)
(749)

4,698
526
113

4,059
2,368

1,691
84

$ (35.55) $
$ (35.55) $

3.93
3.91

$ (0.06)
$ (0.06)

$(15,203) $ 1,691

(20)

(559)
10

(549)

(465)
(24)

(489)

2,268
1,553
617
461
2,780
1,976
54
9
112

9,830

567
417
1

149
169

(20)
—

(20)

(548)
45

(503)

(523)
—

Comprehensive earnings (loss)
Comprehensive earnings (loss) attributable to noncontrolling interests

(15,752)
(749)

1,202
84

Comprehensive earnings (loss) attributable to Devon

$(15,003) $ 1,118

$ (523)

See accompanying notes to consolidated financial statements.

Net earnings (loss) attributable to Devon

$(14,454) $ 1,607

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash flows from operating activities:

Net earnings (loss)
Adjustments to reconcile net earnings (loss) to net cash from operating

$(15,203) $ 1,691

(20)

Year Ended December 31,

2015

2014

2013

(Millions)

activities:

Depreciation, depletion and amortization
Asset impairments
Gains and losses on asset sales
Deferred income tax expense (benefit)
Derivatives and other financial instruments
Cash settlements on derivatives and financial instruments
Other noncash charges
Net change in working capital
Change in long-term other assets
Change in long-term other liabilities

Net cash from operating activities

Cash flows from investing activities:

Capital expenditures
Acquisitions of property, equipment and businesses
Divestitures of property and equipment
Purchases of short-term investments
Redemptions of short-term investments
Redemptions of long-term investments
Other

Net cash from investing activities

Cash flows from financing activities:

Borrowings of long-term debt, net of issuance costs
Repayments of long-term debt
Net short-term debt repayments
Stock option exercises
Sale of subsidiary units
Issuance of subsidiary units
Dividends paid on common stock
Distributions to noncontrolling interests
Other

Net cash from financing activities

Effect of exchange rate changes on cash

Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

3,129
20,820
—
(5,828)
(738)
2,688
537
(301)
285
(6)

3,319
1,953
(1,072)
1,891
(2,070)
104
457
50
(421)
79

2,780
1,976
9
97
135
277
309
(298)
10
161

5,383

5,981

5,436

(5,308)
(1,107)
107
—
—
—
(16)

(6,988)
(6,462)
5,120
—
—
57
89

(6,502)
(256)
419
(1,076)
3,419
—

(3)

(6,324)

(8,184)

(3,999)

4,772
(2,634)
(307)
4
654
25
(396)
(254)
(16)

5,340
(7,189)
(385)
93
—
410
(386)
(235)
(2)

1,848

(2,354)

(77)

(29)

2,233
—
(1,872)
3

—
—
(348)
—
4

(28)

830
1,480

(4,586)
6,066

1,429
4,637

$ 2,310

$ 1,480

$ 6,066

See accompanying notes to consolidated financial statements.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2015 December 31, 2014

(Millions, except share data)

ASSETS

Current assets:

Cash and cash equivalents
Accounts receivable
Derivatives, at fair value
Income taxes receivable
Other current assets

Total current assets

Property and equipment, at cost:

Oil and gas, based on full cost accounting:

Subject to amortization
Not subject to amortization

Total oil and gas
Midstream and other

Total property and equipment, at cost
Less accumulated depreciation, depletion and amortization

Property and equipment, net

Goodwill
Other long-term assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable
Revenues and royalties payable
Short-term debt
Deferred income taxes
Other current liabilities

Total current liabilities

Long-term debt
Asset retirement obligations
Other long-term liabilities
Deferred income taxes
Stockholders’ equity:

Common stock, $0.10 par value. Authorized 1.0 billion shares; issued
418 million and 409 million shares in 2015 and 2014, respectively

Additional paid-in capital
Retained earnings
Accumulated other comprehensive earnings

Total stockholders’ equity attributable to Devon

Noncontrolling interests

Total stockholders’ equity

Commitments and contingencies (Note 18)
Total liabilities and stockholders’ equity

$ 2,310
1,105
43
147
421

4,026

78,190
2,584

80,774
10,380

91,154
(72,086)

19,068

5,032
1,406

$ 1,480
1,959
1,993
522
544

6,498

75,738
2,752

78,490
9,695

88,185
(51,889)

36,296

6,303
1,540

$ 29,532

$ 50,637

906
763
976
—
650

3,295

12,137
1,370
853
888

42
4,996
1,781
230

7,049
3,940

10,989

$ 1,400
1,193
1,432
730
1,180

5,935

9,830
1,339
948
6,244

41
4,088
16,631
779

21,539
4,802

26,341

$ 29,532

$ 50,637

See accompanying notes to consolidated financial statements.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Common Stock

Shares Amount

Additional
Paid-In
Capital

Retained
Earnings

Balance as of December 31, 2012

Net loss
Other comprehensive loss,

406
—

$ 41
—

$3,688
—

$ 15,778
(20)

net of tax

—
Stock option exercises
—
Common stock repurchased —
—
Common stock retired
—
Common stock dividends
Share-based compensation
—
Share-based compensation

tax benefits

Balance as of December 31, 2013

Net earnings
Other comprehensive loss,

net of tax

Stock option exercises
Restricted stock grants, net

of cancellations

—

406

—

—
1

Common stock repurchased —
—
Common stock retired
—
Common stock dividends
Share-based compensation
—
Share-based compensation

tax expense
Acquisition of

noncontrolling interests

Subsidiary equity
transactions
Distributions to

noncontrolling interests

Other

—

—
—

—
—
—
—
—
—

—

—
3

—
(36)
—
121

3,780

—

—
—

—
—
—
—
—

—

—
—

—

—
93

—
—
(27)
—
151

(3)

—

—
1

—
—
—
—
(348)
—

—

15,410

1,607

—
—

—
—
—
(386)
—

—

—
—

Balance as of December 31, 2014

409

4,088

16,631

—

—
—

Net loss
Other comprehensive loss,

net of tax

Stock option exercises
Restricted stock grants, net

of cancellations

Common stock repurchased —
—
Common stock retired
Common stock dividends
—
Common stock issued
Share-based compensation
Share-based compensation

—

tax expense
Subsidiary equity
transactions
Distributions to

noncontrolling interests

—

—
—

—
—
—
—

—

—
4

—
—
(35)
—
198
165

(9)

585

—

(14,454)

—
—

—
—
—
(396)
—
—

—

Accumulated
Other
Comprehensive
Earnings
(Millions)
$1,771
—

Treasury
Stock

Noncontrolling
Interests

Total
Stockholders’
Equity

$—
—

$ —
—

$ 21,278
(20)

(503)
—
—
—
—
—

—

1,268

—

(489)
—

—
—
—
—
—

—

—
—

779

—

(549)
—

—
—
—
—
—
—

—

—
—
(36)
36
—
—

—

—
—

—
(27)
27
—
—

—

—
—

—

—
—

—
(35)
35
—
—
—

—

—
—
—
—
—
—

—

—
—

—
—
—
—
—

—

4,670

277

(235)
6

4,802

(749)

—
—

—
—
—
—
—
—

—

141

(254)

$3,940

(503)
3
(36)
—
(348)
121

20,499

1,691

(489)
93

—
(27)
—
(386)
151

(3)

4,670

370

(235)
7

26,341

(15,203)

(549)
4

—
(35)
—
(396)
199
165

(9)

726

(254)

$ 10,989

Balance as of December 31, 2015

418

$ 42

$4,996

$ 1,781

$ 230

$—

See accompanying notes to consolidated financial statements.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summary of Significant Accounting Policies

Devon is a leading independent energy company engaged primarily in the exploration, development and
production of oil, natural gas and NGLs. Devon’s operations are concentrated in various North American onshore
areas in the U.S. and Canada. Devon also owns natural gas pipelines, plants and treatment facilities through its
ownership in EnLink and the General Partner.

Accounting policies used by Devon and its subsidiaries conform to accounting principles generally accepted

in the U.S. and reflect industry practices. The more significant of such policies are discussed below.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Devon and entities in which it

holds a controlling interest. All intercompany transactions have been eliminated. Undivided interests in oil and
natural gas exploration and production joint ventures are consolidated on a proportionate basis. Investments in
non-controlled entities, over which Devon has the ability to exercise significant influence over operating and
financial policies, are accounted for using the equity method. In applying the equity method of accounting, the
investments are initially recognized at cost and subsequently adjusted for Devon’s proportionate share of
earnings, losses and distributions. Investments accounted for using the equity method and cost method are
reported as a component of other long-term assets.

As discussed more fully in Note 2, Devon completed a business combination in 2014 whereby Devon

controls both EnLink and the General Partner. Devon controls both the General Partner’s and EnLink’s
operations; therefore, the General Partner’s and EnLink’s accounts are included in Devon’s accompanying
consolidated financial statements subsequent to the completion of the transaction. The portions of the General
Partner’s and EnLink’s net earnings and stockholders’ equity not attributable to Devon’s controlling interest are
shown separately as noncontrolling interests in the accompanying consolidated comprehensive statements of
earnings and consolidated balance sheets.

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
amounts could differ from these estimates, and changes in these estimates are recorded when known. Significant
items subject to such estimates and assumptions include the following:

•

proved reserves and related present value of future net revenues;

the carrying value of oil and gas properties, midstream assets and product and equipment inventories;

derivative financial instruments;

the fair value of reporting units and related assessment of goodwill for impairment;

the fair value of intangible assets other than goodwill;

income taxes;

asset retirement obligations;

obligations related to employee pension and postretirement benefits;

legal and environmental risks and exposures; and

general credit risk associated with receivables and other assets.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Revenue Recognition

Oil, gas and NGL sales are recognized when production is sold to a purchaser at a fixed or determinable
price, delivery has occurred, title has transferred and collectability of the revenue is probable. Delivery occurs
and title typically is transferred when production has been delivered to a pipeline, railcar or truck. Cash received
relating to future production is deferred and recognized when all revenue recognition criteria are met. Taxes
assessed by governmental authorities on oil, gas and NGL sales are presented separately from such revenues in
the accompanying consolidated comprehensive statements of earnings.

Marketing and midstream revenues are recorded at the time products are sold or services are provided to

third parties at a fixed or determinable price, delivery or performance has occurred, title has transferred and
collectability of the revenue is probable. Revenues and expenses attributable to oil, gas and NGL purchases,
transportation and processing contracts are reported on a gross basis when Devon takes title to the products and
has risks and rewards of ownership.

During 2015, 2014 and 2013, no purchaser accounted for more than 10% of Devon’s operating revenues.

Derivative Financial Instruments

Devon is exposed to certain risks relating to its ongoing business operations, including risks related to

commodity prices, interest rates and Canadian to U.S. dollar exchange rates. As discussed more fully below,
Devon uses derivative instruments primarily to manage commodity price risk, interest rate risk and foreign
exchange risk. Devon does not intend to issue or hold derivative financial instruments for speculative trading
purposes.

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
instruments are used to manage the inherent uncertainty of future revenues resulting from commodity price
volatility. Devon’s derivative financial instruments typically include financial price swaps, basis swaps, costless
price collars and call options. Under the terms of the price swaps, Devon receives a fixed price for its production
and pays a variable market price to the contract counterparty. For the basis swaps, Devon receives a fixed
differential between two regional index prices and pays a variable differential on the same two index prices to the
contract counterparty. The price collars set a floor and ceiling price for the hedged production. If the applicable
monthly price indices are outside of the ranges set by the floor and ceiling prices in the various collars, Devon
will cash-settle the difference with the counterparty to the collars. The call options give counterparties the right to
purchase production at a predetermined price.

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.

All derivative financial instruments are recognized at their current fair value as either assets or liabilities in

the balance sheet. Changes in the fair value of these derivative financial instruments are recorded in earnings
unless specific hedge accounting criteria are met. For derivative financial instruments held during the three-year
period ended December 31, 2015, Devon chose not to meet the necessary criteria to qualify its derivative
financial instruments for hedge accounting treatment. Cash settlements with counterparties on Devon’s derivative
financial instruments are also recorded in earnings. Cash settlements that Devon is entitled to are accrued for in
other current assets in the accompanying consolidated balance sheets. As of December 31, 2015, Devon accrued
$236 million that it received in January 2016 related to cash settlements.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

By using derivative financial instruments to hedge exposures to changes in commodity prices, interest rates

and foreign currency rates, 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 require cash collateral to be
posted if either its or the counterparty’s credit rating falls below certain credit rating levels. As of December 31,
2015 and December 31, 2014, Devon held $75 million and $524 million, respectively, of cash collateral, which
represented the estimated fair value of certain derivative positions in excess of Devon’s credit guidelines. The
collateral is reported in other current liabilities in the accompanying consolidated balance sheets.

General and Administrative Expenses

G&A is reported net of amounts reimbursed by working interest owners of the oil and gas properties

operated by Devon and net of amounts capitalized pursuant to the full cost method of accounting.

Share-Based Compensation

Independent of EnLink, Devon grants share-based awards to independent members of its Board of Directors
and selected employees. EnLink and the General Partner also grant share-based awards to independent members
of its Board of Directors and selected employees. All such awards are measured at fair value on the date of grant
and are generally recognized as a component of G&A in the accompanying consolidated comprehensive
statements of earnings over the applicable requisite service periods. As a result of Devon’s restructuring activity
discussed in Note 6, certain share-based awards were accelerated and recognized as a component of restructuring
costs in the accompanying consolidated comprehensive statements of earnings.

Generally, Devon uses new shares from approved incentive programs to grant share-based awards and to
issue shares upon stock option exercises. Shares repurchased under approved programs are available to be issued
as part of Devon’s share-based awards. However, Devon has historically canceled these shares upon repurchase.

Income Taxes

Devon is subject to current income taxes assessed by the federal and various state jurisdictions in the U.S.

and by other foreign jurisdictions. In addition, Devon accounts for deferred income taxes related to these
jurisdictions using the asset and liability method. Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and
carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment date.

Deferred tax assets are also recognized for the future tax benefits attributable to the expected utilization of
existing tax net operating loss carryforwards and other types of carryforwards. If the future utilization of some
portion of the deferred tax assets is determined to be unlikely, a valuation allowance is provided to reduce the
recorded tax benefits from such assets. Devon periodically weighs the positive and negative evidence to
determine if it is more likely than not that some or all of the deferred tax assets will be realized. Forming a
conclusion that a valuation allowance is not required is difficult when there is negative evidence, such as
cumulative losses in recent years. See Note 7 for further discussion.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Devon does not recognize U.S. deferred income taxes on the unremitted earnings of its foreign subsidiaries
that are deemed to be indefinitely reinvested. When such earnings are no longer deemed indefinitely reinvested,
Devon recognizes the appropriate deferred, or even current, income tax liabilities.

Devon recognizes the financial statement effects of tax positions when it is more likely than not, based on
the technical merits, that the position will be sustained upon examination by a taxing authority. Recognized tax
positions are initially and subsequently measured as the largest amount of tax benefit that is more likely than not
of being realized upon ultimate settlement with a taxing authority. Liabilities for unrecognized tax benefits
related to such tax positions are included in other long-term liabilities unless the tax position is expected to be
settled within the upcoming year, in which case the liabilities are included in other current liabilities. Interest and
penalties related to unrecognized tax benefits are included in current income tax expense.

Net Earnings (Loss) Per Share Attributable to Devon

Devon’s basic earnings per share amounts have been computed based on the average number of shares of

common stock outstanding for the period. Basic earnings per share includes the effect of participating securities,
which primarily consist of Devon’s outstanding restricted stock awards, as well as performance-based restricted
stock awards that have met the requisite performance targets. Diluted earnings per share is calculated using the
treasury stock method to reflect the assumed issuance of common shares for all potentially dilutive securities.
Such securities primarily consist of outstanding stock options.

Cash and Cash Equivalents

Devon considers all highly liquid investments with original contractual maturities of three months or less to

be cash equivalents.

Accounts Receivable

Devon’s accounts receivable balance primarily consists of oil and gas sales receivables, marketing and
midstream revenue receivables and joint interest receivables for which Devon does not require collateral security.
Devon has established an allowance for bad debts equal to the estimable portions of accounts receivable for
which failure to collect is considered probable. When a portion of the receivable is deemed uncollectible, the
write-off is made against the allowance.

Investments

Devon periodically invests excess cash in U.S. and Canadian treasury securities and other marketable
securities. Devon considers securities with original contractual maturities in excess of three months but less than
one year to be short-term investments. Investments with contractual maturities in excess of one year are
classified as long-term, unless such investments are classified as trading or available-for-sale. Devon reports its
investments and other marketable securities at fair value.

Property and Equipment

Devon follows the full cost method of accounting for its oil and gas properties. Accordingly, all costs

incidental to the acquisition, exploration and development of oil and gas properties, including costs of
undeveloped leasehold, dry holes and leasehold equipment, are capitalized. Internal costs incurred that are
directly identified with acquisition, exploration and development activities undertaken by Devon for its own
account, and that are not related to production, general corporate overhead or similar activities, are also

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

capitalized. Interest costs incurred and attributable to unproved oil and gas properties under current evaluation
and major development projects of oil and gas properties are also capitalized. All costs related to production
activities, including workover costs incurred solely to maintain or increase levels of production from an existing
completion interval, are charged to expense as incurred.

Capitalized costs are depleted by an equivalent unit-of-production method, converting gas to oil at the ratio
of six Mcf of gas to one Bbl of oil. Depletion is calculated using the capitalized costs, including estimated asset
retirement costs, plus the estimated future expenditures (based on current costs) to be incurred in developing
proved reserves, net of estimated salvage values.

Costs associated with unproved properties are excluded from the depletion calculation until it is determined

whether or not proved reserves can be assigned to such properties. Devon assesses its unproved properties for
impairment quarterly. Significant unproved properties are assessed individually. Costs of insignificant unproved
properties are transferred into the depletion calculation over holding periods ranging from three to four years.

Sales or dispositions of oil and gas properties are generally accounted for as adjustments to capitalized costs

with no gain or loss recognized upon disposal of oil and gas properties unless such disposal significantly alters
the relationship between capitalized costs and proved reserves in a particular country. As discussed more fully in
Note 2, the 2014 divestitures of certain Canadian assets significantly altered such relationship, and Devon
recognized a gain, which is included as a separate item in the accompanying consolidated comprehensive
statements of earnings.

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. The estimated future net
revenues exclude future cash outflows associated with settling asset retirement obligations included in the net
book value of oil and gas properties.

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. Prices are held constant
indefinitely and are not changed except where different prices are fixed and determinable from applicable
contracts for the remaining term of those contracts, including derivative contracts in place that qualify for hedge
accounting treatment. None of Devon’s derivative contracts held during the three-year period ended
December 31, 2015 qualified for hedge accounting treatment.

Any excess of the net book value, less related deferred taxes, over the ceiling is written off as an expense.
An expense recorded in one period may not be reversed in a subsequent period even though higher commodity
prices may have increased the ceiling applicable to the subsequent period.

Costs for midstream assets that are in use are depreciated over the assets’ estimated useful lives, using either

the unit-of-production or straight-line method. Depreciation and amortization of other property and equipment,
including corporate and leasehold improvements, are provided using the straight-line method based on estimated
useful lives ranging from three to 60 years. Interest costs incurred and attributable to major midstream and
corporate construction projects are also capitalized.

Devon recognizes liabilities for retirement obligations associated with tangible long-lived assets, such as
producing well sites and midstream pipelines and processing plants when there is a legal obligation associated
with the retirement of such assets and the amount can be reasonably estimated. The initial measurement of an

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

asset retirement obligation is recorded as a liability at its fair value, with an offsetting asset retirement cost
recorded as an increase to the associated property and equipment on the consolidated balance sheet. When the
assumptions used to estimate a recorded asset retirement obligation change, a revision is recorded to both the
asset retirement obligation and the asset retirement cost. Devon’s asset retirement obligations include estimated
environmental remediation costs which arise from normal operations and are associated with the retirement of
such long-lived assets. The asset retirement cost is depreciated using a systematic and rational method similar to
that used for the associated property and equipment.

Goodwill

Goodwill represents the excess of the purchase price of business combinations over the fair value of the net

assets acquired and is tested for impairment annually, or more frequently if events or changes in circumstances
dictate that the carrying value of goodwill may not be recoverable. Such test includes an assessment of
qualitative and quantitative factors. The impairment test requires allocating goodwill and all other assets and
liabilities to assigned reporting units. The fair value of each reporting unit is estimated and compared to the net
book value of the reporting unit. If the estimated fair value of the reporting unit is less than the net book value,
including goodwill, then the goodwill is written down to the implied fair value of the goodwill through a charge
to expense. Because quoted market prices are not available for Devon’s reporting units, the fair values of the
reporting units are estimated based upon several valuation analyses, including comparable companies,
comparable transactions and premiums paid.

Devon performed annual impairment tests of goodwill in the fourth quarters of 2015, 2014 and 2013. No

impairment of goodwill was required in 2013. However, write-downs were required in 2015 and 2014 based on
the annual impairment test. EnLink’s Texas, Louisiana and Crude and Condensate reporting segment goodwill
were deemed impaired in 2015, and Devon’s Canadian reporting unit goodwill was deemed impaired in 2014.
See Note 12 for further discussion.

Intangible Assets

Unamortized capitalized intangible assets, consisting of EnLink customer relationships, are presented in
other long-term assets in the accompanying consolidated balance sheets. These assets are amortized on a straight-
line basis over the expected periods of benefits, which range from 10-20 years. During 2015, EnLink’s customer
relationships were also evaluated for impairment, and a portion of these intangibles was considered impaired. See
Note 12 for further discussion.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation or other sources are recorded
when it is probable that a liability has been incurred and the amount can be reasonably estimated. Liabilities for
environmental remediation or restoration claims resulting from improper operation of assets are recorded when it
is probable that obligations have been incurred and the amounts can be reasonably estimated. Expenditures
related to such environmental matters are expensed or capitalized in accordance with Devon’s accounting policy
for property and equipment.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Fair Value Measurements

Certain of Devon’s assets and liabilities are measured at fair value at each reporting date. Fair value

represents the price that would be received to sell the asset or paid to transfer the liability in an orderly
transaction between market participants. This price is commonly referred to as the “exit price.” Fair value
measurements are classified according to a hierarchy that prioritizes the inputs underlying the valuation
techniques. This hierarchy consists of three broad levels:

• Level 1 – Inputs consist of unadjusted quoted prices in active markets for identical assets and liabilities
and have the highest priority. When available, Devon measures fair value using Level 1 inputs because
they generally provide the most reliable evidence of fair value.

• Level 2 – Inputs consist of quoted prices that are generally observable for the asset or liability.

Common examples of Level 2 inputs include quoted prices for similar assets and liabilities in active
markets or quoted prices for identical assets and liabilities in markets not considered to be active.

• Level 3 – Inputs are not observable from objective sources and have the lowest priority. The most

common Level 3 fair value measurement is an internally developed cash flow model.

Foreign Currency Translation Adjustments

The U.S. dollar is the functional currency for Devon’s consolidated operations except its Canadian
subsidiaries, which use the Canadian dollar as the functional currency. Assets and liabilities of the Canadian
subsidiaries are translated to U.S. dollars using the applicable exchange rate as of the end of a reporting period.
Revenues, expenses and cash flow are translated using an average exchange rate during the reporting period.
Translation adjustments have no effect on net income and are included in accumulated other comprehensive
earnings in stockholders’ equity.

Noncontrolling Interests

Noncontrolling interests represent third-party ownership in the net assets of Devon’s consolidated

subsidiaries and are presented as a component of equity. Changes in Devon’s ownership interests in subsidiaries
that do not result in deconsolidation are recognized in equity.

Recently Issued Accounting Standards

The FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU
supersedes 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
and is required to be adopted using either the retrospective or cumulative effect (modified retrospective)
transition method, with early adoption permitted in 2017. Devon is evaluating the impact this ASU will have on
its consolidated financial statements and related disclosures and does not plan on early adopting.

The FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis.

This ASU provides additional guidance to reporting entities in evaluating whether certain legal entities, such as
limited partnerships, limited liability corporations and securitization structures, should be consolidated. The ASU

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

is considered to be an improvement on current accounting requirements as it reduces the number of existing
consolidation models. This ASU is effective for Devon beginning January 1, 2016 and will be applied using the
retrospective approach. This ASU will not have a material impact on Devon’s consolidated financial statements
and related disclosures.

The FASB issued ASU 2015-03, Interest – Imputation of Interest (Topic 835): Simplifying the Presentation

of Debt Issuance Costs and ASU 2015-15, Interest – Imputation of Interest (Topic 835): Presentation and
Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. These ASUs
require debt issuance costs related to a recognized debt liability, except for those related to revolving credit
facilities, to be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability
rather than as an asset. These ASUs are effective for Devon beginning January 1, 2016 and will be applied using
the retrospective approach. These ASUs will not have a material impact on Devon’s consolidated financial
statements and related disclosures.

The FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. This ASU requires that all

deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the
balance sheet. This ASU is effective for annual and interim periods beginning in 2017 and can be applied
prospectively or retrospectively, with early adoption permitted. This ASU will be early-adopted by Devon,
effective January 1, 2016 and will be applied using the retrospective approach. This ASU will not have a material
impact on Devon’s consolidated financial statements and related disclosures.

2. Acquisitions and Divestitures

Formation of EnLink and the General Partner

On March 7, 2014, Devon and Crosstex completed a transaction to combine substantially all of Devon’s

U.S. midstream assets with Crosstex’s assets to form a midstream business that consists of the General Partner
and EnLink, which are both publicly traded.

In exchange for a controlling interest in both EnLink and the General Partner, Devon contributed its equity
interest in a newly formed Devon subsidiary, EMH, and $100 million in cash. EMH owned midstream assets in
the Barnett Shale in north Texas and the Cana- and Arkoma-Woodford Shales in Oklahoma, as well as an
economic interest in Gulf Coast Fractionators in Mont Belvieu, Texas.

This business combination was accounted for using the acquisition method of accounting. Under the
acquisition method of accounting, EMH was the accounting acquirer because its parent company, Devon,
obtained control of EnLink and the General Partner as a result of the business combination. Consequently,
EMH’s assets and liabilities retained their carrying values. Additionally, the Crosstex assets acquired and
liabilities assumed by the General Partner and EnLink in the business combination, as well as the General
Partner’s noncontrolling interest in EnLink, were recorded at their fair values which were measured as of the
acquisition date, March 7, 2014. The excess of the purchase price over the estimated fair values of Crosstex’s net
assets acquired was recorded as goodwill.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table summarizes the purchase price (millions, except unit price).

Crosstex Energy, Inc. outstanding common shares:

Held by public shareholders
Restricted shares

Total subject to conversion

Exchange ratio

Converted shares
Crosstex Energy, Inc. common share price (1)

Crosstex Energy, Inc. consideration
Fair value of noncontrolling interests in E2 (2)

Total Crosstex Energy, Inc. consideration and fair value of noncontrolling interests

Crosstex Energy, LP outstanding units:

Common units held by public unitholders
Preferred units held by third party (3)
Restricted units

Total

Crosstex Energy, LP common unit price (4)

Crosstex Energy, LP common units value
Crosstex Energy, LP outstanding unit options value

Total fair value of noncontrolling interests in Crosstex Energy, LP (4)

Total consideration and fair value of noncontrolling interests

48.0
0.4

48.4

1.0x

48.4
$37.60

$1,823
18

$1,841

75.1
17.1
0.4

92.6
$30.51

$2,825
4

2,829

$4,670

(1) The final purchase price is based on the fair value of Crosstex Energy, Inc.’s common shares as of the

closing date, March 7, 2014.

(2) Represents the value of noncontrolling interests related to the General Partner’s equity investment in E2.
(3) Crosstex Energy, LP converted the preferred units to common units in February 2014.
(4) The final purchase price is based on the fair value of Crosstex Energy, LP’s common units as of the closing

date, March 7, 2014.

The allocation of the purchase price is as follows (millions):

Assets acquired:

Current assets
Property, plant and equipment, net
Intangible assets
Equity investment
Goodwill (1)
Other long-term assets

Liabilities assumed:

Current liabilities
Long-term debt
Deferred income taxes
Other long-term liabilities

Total consideration and fair value of noncontrolling interests

437
2,438
569
222
3,283
1

(515)
(1,454)
(210)
(101)

$ 4,670

(1) Goodwill is the excess of the consideration transferred over the net assets recognized and represents the
future economic benefits arising from other assets acquired that could not be individually identified and
separately recognized. Goodwill is not amortized and is not deductible for tax purposes.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

EnLink Acquisitions

The following table presents a summary of EnLink’s acquisition activity for 2015.

Purchase Price
(Millions)

Allocation
(Millions)

Date

January 31
March 16
October 1

Acquiree

LPC
Coronado
Matador

Cash

$108
$240
$145

EnLink
Units

—
$360
—

PP&E

$ 30
$302
$ 36

Goodwill

Intangibles

Other

$30
$18
$ 9

$ 43
$281
$ 99

$ 5
$(1)
$ 1

On January 7, 2016, EnLink also acquired Anadarko Basin gathering and processing midstream assets from
Tall Oak for approximately $1.5 billion, subject to certain adjustments. EnLink paid approximately $800 million
of cash at the time of closing, primarily funded with the issuance of EnLink preferred units, with another
$500 million of cash to be paid within 24 months. The remainder of the purchase price consisted of
approximately 15.6 million General Partner common units.

EnLink Dropdowns

In February 2015, EnLink acquired a 25% equity interest in EMH from the General Partner in exchange for
units valued at approximately $925 million. In May 2015, EnLink acquired the remaining 25% equity interest in
EMH from the General Partner in exchange for units valued at approximately $900 million.

In April 2015, EnLink acquired VEX from Devon for approximately $176 million in cash and equity.
EnLink also assumed approximately $35 million in certain future construction costs to expand the system to full
capacity. Because Devon controls EnLink and the General Partner, the acquisition of VEX by EnLink from
Devon was accounted for as a transfer of net assets between entities under common control.

Devon Acquisitions

On February 28, 2014, Devon completed its acquisition of interests in certain affiliates of GeoSouthern for

approximately $6.0 billion. Devon funded the acquisition with cash on hand and debt financing. In connection
with the GeoSouthern transaction, Devon acquired approximately 82,000 net acres (unaudited) located in DeWitt
and Lavaca counties in south Texas. The transaction was accounted for using the acquisition method, which
requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of
the acquisition date.

The allocation of the purchase price is as follows (millions).

Cash and cash equivalents
Other current assets
Proved properties
Unproved properties
Midstream assets
Current liabilities
Long-term liabilities

Net assets acquired

95
256
5,026
1,007
86
(434)
(6)

$6,030

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

On December 17, 2015, Devon acquired approximately 253,000 net acres (unaudited) and assets in the
Powder River Basin for approximately $499 million. Devon funded the acquisition with $300 million of cash and
$199 million of equity. A preliminary allocation of the purchase price at December 31, 2015 was $386 million to
unproved properties and $113 million to proved properties and gathering systems.

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 $850 million of cash and $659 million of
equity.

Pro Forma Financial Information

The following unaudited pro forma financial information has been prepared assuming both the EnLink

formation and the GeoSouthern acquisition occurred on January 1, 2013. The pro forma information is not
intended to reflect the actual results of operations that would have occurred if the business combination and
acquisition had been completed at the dates indicated. In addition, they do not project Devon’s results of
operations for any future period.

Total operating revenues
Net earnings
Noncontrolling interests
Net earnings (loss) attributable to Devon
Net earnings (loss) per common share attributable to Devon

Year Ended December 31,

2014

2013

(Millions)

$20,213
$ 1,716
97
$
$ 1,619
3.94
$

$12,979
35
$
45
$
$
(10)
$ (0.02)

Asset Divestitures

During 2014, Devon divested certain properties located throughout Canada and the U.S. as part of its asset

portfolio transformation.

Canada

In the second quarter of 2014, Devon sold Canadian conventional assets for $2.8 billion ($3.125 billion

Canadian dollars) and recognized a gain totaling $1.1 billion ($0.6 billion after-tax). This gain is included as a
separate item in the accompanying consolidated comprehensive statements of earnings. Included in the gain
calculation were asset retirement obligations of approximately $700 million assumed by the purchaser as well as
the derecognition of approximately $700 million of goodwill allocated to the sold assets. In conjunction with the
divestiture, Devon repatriated approximately $2.8 billion of proceeds to the U.S. in the second quarter of 2014,
which was utilized to repay commercial paper and term loan balances. Between collecting the divestiture
proceeds and repatriating funds to the U.S., Devon recognized an $84 million foreign currency exchange loss and
a $29 million foreign exchange currency derivative loss. These losses are included in other nonoperating items in
the accompanying consolidated comprehensive statements of earnings.

U.S.

In the third quarter of 2014, Devon sold certain U.S. assets for $2.2 billion. Additionally, approximately

$200 million of asset retirement obligations were assumed by the purchaser. No gain or loss was recognized on
the sale. These proceeds were used toward the early retirement of $1.9 billion in senior notes in November 2014
as discussed in Note 13.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

3. Derivative Financial Instruments

Commodity Derivatives

As of December 31, 2015, 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.

Period

Q1-Q4 2016

Period

Q1-Q4 2016
Q1-Q4 2016
Q1-Q4 2016

Call Options Sold

Volume (Bbls/d)

Weighted Average
Price ($/Bbl)

18,500

$73.18

Oil Basis Swaps

Index

Volume (Bbls/d)

Weighted Average
Differential to WTI
($/Bbl)

Western Canadian Select
West Texas Sour
Midland Sweet

5,249
5,000
13,000

$(13.67)
$ (0.53)
$ 0.25

As of December 31, 2015, 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.

Period

Q1-Q4 2016

Period

Q1-Q4 2016
Q1-Q4 2016
Q1-Q4 2016
Q1-Q4 2016
Q1-Q4 2017
Q1-Q4 2017
Q1-Q4 2017
Q1-Q4 2017

Price Swaps

Call Options Sold

Volume (MMBtu/d)

Weighted Average
Price ($/MMBtu)

Volume
(MMBtu/d)

Weighted Average
Price ($/MMBtu)

54,650

$3.17

400,000

$4.30

Natural Gas Basis Swaps

Index

Volume (MMBtu/d)

Weighted Average
Differential to Henry
Hub ($/MMBtu)

Panhandle Eastern Pipe Line
El Paso Natural Gas
Houston Ship Channel
Transco Zone 4
Panhandle Eastern Pipe Line
El Paso Natural Gas
Houston Ship Channel
Transco Zone 4

175,000
125,000
30,000
70,000
150,000
50,000
35,000
185,000

$(0.34)
$(0.12)
$ 0.11
$ 0.01
$(0.34)
$(0.14)
$ 0.06
$ 0.03

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As of December 31, 2015, EnLink had the following open derivative positions associated with gas

processing and fractionation. EnLink’s NGL positions settle by purity product against the average of the prompt
month OPIS Mont Belvieu, Texas index. EnLink’s natural gas positions settle against the Henry Hub Gas Daily
index.

Period

Q1 2016-Q4 2016
Q1 2016-Q4 2016
Q1 2016-Q4 2016
Q1 2016-Q4 2016
Q1 2016-Q1 2017

Product

Volume (Total)

Weighted Average
Price Paid

Weighted Average
Price Received

Ethane
Propane
Normal Butane
Natural Gasoline
Natural Gas

571 MBbls
812 MBbls
113 MBbls
61 MBbls
13,829 MMBtu/d

0.29/gal
Index
Index
Index
$2.65/MMBtu

Index
$0.81/gal
$0.61/gal
$1.02/gal
Index

Interest Rate Derivatives

As of December 31, 2015, Devon had the following open interest rate derivative positions:

Notional

(Millions)
$100
$100
$750

Rate Received

Rate Paid

Expiration

Three Month LIBOR

0.92%

1.76%

Three Month LIBOR

2.98%

December 2016
January 2019
December 2048 (1)

(1) Mandatory settlement in December 2018.

Foreign Currency Derivatives

As of December 31, 2015, Devon had the following open foreign currency derivative position:

Currency

Canadian Dollar

Financial Statement Presentation

Forward Contract

Contract
Type

Sell

CAD
Notional

(Millions)
$3,560

Weighted Average
Fixed Rate Received

Expiration

(CAD-USD)
0.723

March 2016

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.

Commodity derivatives:

Oil, gas and NGL derivatives
Marketing and midstream revenues

Interest rate derivatives:

Other nonoperating items
Foreign currency derivatives:
Other nonoperating items

Net gains (losses) recognized

Year Ended December 31,

2015

2014

2013

(Millions)

$503
9

$1,989
22

$(191)
—

(20)

246

(1)

—

$738

$2,070

$(135)

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents the derivative fair values by derivative financial instrument type followed by

the corresponding individual consolidated balance sheet caption.

Commodity derivative assets:
Derivatives, at fair value
Other long-term assets

Interest rate derivative assets:
Derivatives, at fair value
Other long-term assets
Foreign currency derivative assets:
Derivatives, at fair value

Total derivative assets

Commodity derivative liabilities:
Other current liabilities
Other long-term liabilities

Interest rate derivative liabilities:
Other current liabilities
Other long-term liabilities
Foreign currency derivative liabilities:

Other current liabilities

Total derivative liabilities

December 31,
2015

December 31,
2014

(Millions)

$ 34
1

$1,984
11

1
1

—

$ 45

$2,004

$ 14
4

—
22

$ 48

28
28

—

Share-Based Compensation

In the second quarter of 2015, Devon’s stockholders approved the 2015 Long-Term Incentive Plan. The
2015 Plan replaces the 2009 Long-Term Incentive Plan, as amended. From the effective date of the 2015 Plan, no
further awards may be made under the 2009 Plan, and awards previously granted will continue to be governed by
the terms of the 2009 Plan. Subject to the terms of the 2015 Plan, awards may be made under the 2015 Plan for a
total of 28 million shares of Devon common stock, plus the number of shares available for issuance under the
2009 Plan (including shares subject to outstanding awards under the 2009 Plan that are subsequently forfeited,
canceled or expire). The 2015 Plan authorizes the Compensation Committee, which consists of independent, non-
management members of Devon’s Board of Directors, to grant nonqualified and incentive stock options,
restricted stock awards or units, Canadian restricted stock units, performance awards or units and stock
appreciation rights to eligible employees. The 2015 Plan also authorizes the grant of nonqualified stock options,
restricted stock awards or units and stock appreciation rights to non-employee directors. To calculate the number
of shares that may be granted in awards under the 2015 Plan, options and stock appreciation rights represent one
share and other awards represent three shares.

Devon also has a stock option plan that was adopted in 2005 under which stock options were issued to
certain employees. Options granted under this plan remain exercisable by the employees owning such options,
but no new options or restricted stock awards will be granted under this plan.

Devon did not have an annual long-term incentive grant in 2013 due to revisions in the timing of the
employee compensation cycle. The annual long-term incentive grant related to 2013 performance was granted in
February 2014.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents the effects of share-based compensation included in Devon’s accompanying

consolidated comprehensive statements of earnings. Gross G&A for the years ended December 31, 2015 and
2014 includes $31 million and $17 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 2014 in conjunction with the divestiture of
Devon’s Canadian conventional assets. For the year ended December 31, 2014, approximately $15 million of
associated expense for these accelerated awards is included in restructuring costs in the accompanying
consolidated comprehensive statements of earnings.

Gross general and administrative expense for share-based compensation
Share-based compensation expense capitalized pursuant to the full cost

method of accounting for oil and gas properties

Related income tax benefit

Year Ended December 31,

2015

2014

2013

(Millions)
$199

$ 53
$ 42

$157

$ 60
$ 29

$225

$ 63
$ 45

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 plans.

Restricted Stock
Awards and Units

Performance-Based
Restricted Stock Awards

Performance Share
Units

Unvested at 12/31/14

Granted
Vested
Forfeited

Awards
and
Units

4,304
2,771
(1,834)
(503)

Unvested at 12/31/15

4,738

$62.49

Weighted
Average
Grant-Date
Fair Value

Awards

Weighted
Average
Grant-Date
Fair Value

Units

(Thousands, except fair value data)

$60.85
$63.57
$60.33
$62.22

380
236
(153)
(29)

434

$59.41
$62.02
$59.49
$64.18

1,477
786
(337)
(67)

$70.90
$84.14
$66.00
$79.20

$60.48

1,859(1) $76.17

(1) A maximum of 3.7 million common shares could be awarded based upon Devon’s final TSR ranking.

The following table presents the aggregate fair value of awards and units that vested during the indicated

period.

Restricted stock awards and units
Performance-based restricted stock awards
Performance share units

2015

2014

2013

(Millions)
$112
$ 10
$—

$141
$
5
$—

$101
$
8
$ 22

The following table presents the unrecognized compensation cost and the related weighted average

recognition period associated with unvested awards and units as of December 31, 2015.

Unrecognized compensation cost (millions)
Weighted average period for recognition (years)

$198
2.5

$ 6
2.6

$ 45
1.8

Restricted Stock
Awards and Units

Performance-Based
Restricted Stock
Awards

Performance
Share Units

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Restricted Stock Awards and Units

Restricted stock awards and units are subject to the terms, conditions, restrictions and limitations, if any,

that the Compensation Committee deems appropriate, including restrictions on continued employment.
Generally, the service requirement for vesting ranges from zero to four years. During the vesting period,
recipients of restricted stock awards receive dividends that are not subject to restrictions or other limitations.
Devon estimates the fair values of restricted stock awards and units as the closing price of Devon’s common
stock on the grant date of the award or unit, which is expensed over the applicable vesting period.

Performance-Based Restricted Stock Awards

Performance-based restricted stock awards are granted to certain members of Devon’s senior management.

Vesting of the awards is dependent on Devon meeting certain internal performance targets and the recipient
meeting certain service requirements. Generally, the service requirement for vesting ranges from zero to four
years. In order for awards to vest, the performance target must be met in the first year, and if met, recipients are
entitled to dividends on the awards over the remaining service vesting period. If the performance target and
service period requirements are not met, the award does not vest. Devon estimates the fair values of the awards
as the closing price of Devon’s common stock on the grant date of the award, which is expensed over the
applicable vesting period.

Performance Share Units

Performance share units are granted to certain members of Devon’s senior management. Each unit that vests

entitles the recipient to one share of Devon common stock. The vesting of these units is based on comparing
Devon’s TSR to the TSR of a predetermined group of fourteen peer companies over the specified two- or three-
year performance period. The vesting of units may be between zero and 200% of the units granted depending on
Devon’s TSR as compared to the peer group on the vesting date.

At the end of the vesting period, recipients receive dividend equivalents with respect to the number of units

vested. The fair value of each performance share unit is estimated as of the date of grant using a Monte Carlo
simulation with the following assumptions used for all grants made under the plan: (i) a risk-free interest rate
based on U.S. Treasury rates as of the grant date; (ii) a volatility assumption based on the historical realized price
volatility of Devon and the designated peer group; and (iii) an estimated ranking of Devon among the designated
peer group. The fair value of the unit on the date of grant is expensed over the applicable vesting period. The
following table presents the assumptions related to performance share units granted.

Grant-date fair value
Risk-free interest rate
Volatility factor
Contractual term (years)

2015

2014

2013

$81.99 – $85.05
1.06%
26.2%
2.89

$70.18 – $81.05
0.54%
28.8%
2.89

$61.27 – $63.48
0.26% – 0.36%
30.3%
3.0

Stock Options

In accordance with Devon’s incentive plans, the exercise price of stock options granted may not be less than

the market value of the stock at the date of grant. In addition, options granted are exercisable during a period
established for each grant, which may not exceed eight years from the date of grant. The recipient must pay the
exercise price in cash or in common stock, or a combination thereof, at the time that the option is exercised.
Generally, the service requirement for vesting ranges from zero to four years. The fair value of stock options on

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

the date of grant is expensed over the applicable vesting period. Devon estimates the fair values of stock options
granted using a Black-Scholes option valuation model, which requires Devon to make several assumptions,
including a volatility factor, dividend yield rate, risk-free interest rate and expected term. No stock options were
granted in 2015, 2014 and 2013. The following table presents a summary of Devon’s outstanding stock options.

Outstanding at December 31, 2014

Granted
Exercised
Expired
Forfeited

Outstanding at December 31, 2015

Vested and expected to vest at December 31, 2015

Exercisable at December 31, 2015

Weighted Average

Exercise
Price

Remaining
Term

Intrinsic
Value

(Years)

(Millions)

$70.56
$ —
$64.25
$84.36
$66.71

$67.98

2.41

$—

Options

(Thousands)
4,218
—
(63)
(680)
(27)

3,448

The aggregate intrinsic value of stock options that were exercised during 2015, 2014 and 2013 was $0.2

million, $9 million and $0.3 million, respectively. As of December 31, 2015, Devon had no unrecognized
compensation cost related to unvested stock options.

EnLink Share-Based Awards

In March 2015, the General Partner and EnLink issued restricted incentive units as bonus payments to
officers and certain employees for 2014. The combined grant fair value was $7 million, and the total cost was
recognized in the first quarter of 2015 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 December 31, 2015.

Unrecognized compensation cost (millions)
Weighted average period for recognition (years)

$ 17
1.6

$ 3
2.0

$ 16
1.6

$ 3
2.0

General Partner

EnLink

Restricted
Incentive Units

Performance
Units

Restricted
Incentive Units

Performance
Units

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

5. Asset Impairments

The following table presents the asset impairments recognized in 2015, 2014 and 2013.

U.S. oil and gas assets
Canada oil and gas assets
Canada goodwill
EnLink goodwill
EnLink other intangible assets
Other assets

Total asset impairments

Year Ended December 31,

2015

2014

2013

$17,992
1,257
—
1,328
223
20

(Millions)
$ —
—
1,941
—
—
12

$1,110
843
—
—
—
23

$20,820

$1,953

$1,976

Oil and Gas Impairments

Under the full cost method of accounting, capitalized costs of oil and gas properties are subject to a

quarterly full cost ceiling test, which is discussed in Note 1.

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, natural gas and NGLs, which significantly reduced proved reserves values and, to a lesser degree,
proved reserves. For further information, see Note 21.

Goodwill and Other Intangible Assets Impairments

In 2015, Devon recognized goodwill and other intangible asset impairments related to EnLink’s business. In

2014, Devon recognized a goodwill impairment related to its Canadian reporting unit. Additional information
regarding these impairments is discussed in Note 12.

6. Restructuring Costs

Canadian Reduction in Work Force

In 2015, Devon recognized $24 million of employee related and other costs associated with the reduction in

work force made subsequent to the completion of the Jackfish development projects and a decrease in planned
capital investment resulting from the drop in commodity prices. Devon incurred employee severance, lease
obligation and other costs related to the vacated office space as part of the cost reduction plan.

Canadian Divestitures

During 2014, Devon recognized $46 million of employee related and other costs associated with its
divestiture of certain Canadian assets. Approximately $15 million of the employee related costs resulted from
accelerated vesting of share-based grants, which are noncash charges.

Office Consolidation

Near the end of 2012, Devon consolidated its U.S. personnel into a single operations group centrally located

at the company’s corporate headquarters in Oklahoma City. As a result, Devon closed its office in Houston,

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

transferred operational responsibilities for assets in south Texas, east Texas and Louisiana to Oklahoma City and
incurred $134 million of restructuring costs associated with the consolidation. The employee severance and
retention costs included amounts related to cash severance costs and accelerated vesting of share-based grants.
The lease obligations and other costs are associated with certain office space that is subject to non-cancellable
operating lease agreements that Devon ceased using as part of the office consolidation.

Due to a lack of demand for vacated office space in which Devon’s remaining leases are located, in 2015,

Devon recognized an additional $54 million expense as a result of its inability to fully sublease remaining office
space.

Financial Statement Presentation

The following table summarizes restructuring costs presented in the accompanying consolidated

comprehensive statements of earnings.

Office consolidation and offshore divestiture:
Employee severance and retention
Lease obligations and other

Canada divestitures:

Employee severance and retention
Lease obligations and other

Restructuring costs

The following table summarizes Devon’s restructuring liabilities.

Balance as of December 31, 2013

Changes due to office consolidation and offshore divestiture
Changes due to Canadian divestitures

Balance as of December 31, 2014

Changes due to office consolidation and offshore divestiture
Changes due to Canadian divestitures

Balance as of December 31, 2015

Year Ended December 31,

2015

2014

2013

(Millions)

$—
54

$—
—

11
13

42
4

$ 13
41

—
—

$ 78

$ 46

$ 54

Other
Current
Liabilities

Other
Long-term
Liabilities Total

(Millions)
$ 18
(11)
—

$ 27
(18)
4

13
1
(1)

7
46
10

$ 45
(29)
4

20
47
9

$ 13

$ 63

$ 76

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Income Taxes

Income Tax Expense (Benefit)

The following table presents Devon’s income tax components.

Current income tax expense (benefit):

U.S. federal
Various states
Canada and various provinces

Total current tax expense (benefit)

Deferred income tax expense (benefit):

U.S. federal
Various states
Canada and various provinces

Total deferred tax expense (benefit)

Total income tax expense (benefit)

Year Ended December 31,

2015

2014

2013

(Millions)

$ (243)
(8)
14

$ 152
18
307

$ 73
(5)
4

(237)

477

(5,033)
(336)
(459)

(5,828)

1,610
93
188

1,891

198
59
(160)

$(6,065)

$2,368

$ 169

Total income tax expense (benefit) differed from the amounts computed by applying the U.S. federal

income tax rate to earnings before income taxes as a result of the following:

Total income tax expense (benefit) (millions)

U.S. statutory income tax rate
Non-deductible goodwill and intangible impairment
Taxation on Canadian operations
State income taxes
Repatriations
Deferred tax asset valuation allowance
Other

Effective income tax rate

Year Ended December 31,

2015

2014

2013

$(6,065)

$2,368

$169

(35)%
2%
1%
(1)%
0%
4%
0%

(29)%

35%
35%
0%
23%
9%
(4)%
23%
2%
65%
2%
0%
0%
0% (19)%

58% 113%

Devon estimates its annual effective income tax rate in recording its 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 period in which they occur.

Devon and its subsidiaries are subject to U.S. federal income tax as well as income or capital taxes in
various state and foreign jurisdictions. Devon’s tax reserves are related to tax years that may be subject to
examination by the relevant taxing authority. Devon is under audit in the U.S. and various foreign jurisdictions as
part of its normal course of business.

Devon assesses the realizability of its deferred tax assets. If Devon concludes that it is more likely than not

that some portion or all of the deferred tax assets will not be realized, the asset is reduced by a valuation

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

allowance. Numerous judgements and assumptions are inherent in the determination of future taxable income,
including factors such as future operation conditions (particularly as related to prevailing oil and gas prices) and
changing tax laws.

2015

In the third and fourth quarters of 2015, EnLink recorded goodwill and intangibles impairments of
approximately $1.6 billion. These impairments are not deductible for purposes of calculating income tax and,
therefore, have an impact on the effective tax rate.

During 2015, Devon recorded approximately $18 billion of oil and gas impairments related to its U.S.
operations. These impairments resulted in deferred tax assets against which we recognized a $967 million
valuation allowance that impacted the effective tax rate and is discussed in the next section.

2014

In the second and fourth quarters of 2014, goodwill was removed in conjunction with the Canadian
conventional asset divestitures, and Devon recorded a goodwill impairment in the Canadian reporting unit,
respectively. These transactions are not deductible for purposes of calculating income tax and therefore have an
impact on the effective tax rate.

Additionally, during 2014, Devon repatriated to the U.S. $2.8 billion of cash relating to the Canadian asset

divestiture. In conjunction with the repatriation, Devon recognized approximately $105 million of additional
income tax expense for the full year. Prior to the repatriation, Devon had recognized a $143 million deferred
income tax liability associated with the planned repatriation. When the repatriation was made, Devon retained a
larger property basis in Canada than was previously estimated, resulting in the incremental tax. After the use of
foreign tax credits, the current income tax on the repatriation was $67 million.

Furthermore, Devon completed its divestiture program of certain assets in the U.S. In conjunction with the

divestiture closing and due to the availability of additional tax deductions, Devon recognized $294 million of
current income tax expense. The current tax expense was entirely offset by the recognition of deferred tax
benefits.

Devon also recorded a $46 million deferred tax liability in conjunction with the formation of EnLink in

2014.

2013

In the second and fourth quarters of 2013, Devon repatriated to the U.S. a total of $4.3 billion of its cash

held outside of the U.S. In the fourth quarter of 2013, Devon announced plans to divest of its Canadian
conventional assets. These events resulted in an incremental income tax expense of $97 million. The incremental
expense included $180 million of current income tax expense offset by $83 million of deferred income tax
benefit. The $83 million deferred tax benefit was comprised of $180 million of deferred tax benefits that offset
the incremental current income tax expense and an additional $97 million of deferred income tax expense
accrued in the fourth quarter for assumed repatriations.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Deferred Tax Assets and Liabilities

The following table presents the tax effects of temporary differences that gave rise to Devon’s deferred tax

assets and liabilities.

Deferred tax assets:

Property and equipment
Asset retirement obligations
Accrued liabilities
Net operating loss carryforwards
Pension benefit obligations
Other

Total deferred tax assets before valuation allowance
Less: valuation allowance

Net deferred tax assets

Deferred tax liabilities:

Property and equipment
Fair value of financial instruments
Long-term debt
Other

Total deferred tax liabilities

Net deferred tax liability

December 31,

2015

2014

(Millions)

490
485
160
175
106
162

1,578
(967)

611

$ —

458
150
200
113
180

1,101
—

1,101

(1,187)
—
(36)
(271)

(6,940)
(699)
(115)
(160)

(1,494)

(7,914)

$ (883) $(6,813)

At December 31, 2015, Devon has $175 million of deferred tax assets related to various net operating loss

carryforwards available to offset future income taxes. The net operating loss carryforwards consist of $495
million of Canadian carryforwards that expire between 2030 and 2035, $275 million of U.S. state carryforwards
that expire between 2018 and 2035 and $205 million of carryforwards related to EnLink’s operations that expire
between 2028 and 2035. In the current environment, Devon expects the tax benefits from the Canadian and
EnLink net operating loss carryforwards to be utilized in 2017 and beyond. Devon also has $6 million of deferred
tax assets related to alternative minimum tax credits, which have no expiration date and will be available for use
against tax on future taxable income.

At the end of 2015, Devon had deferred tax assets that largely resulted from the full cost impairments
recognized during 2015. As a result of the recent cumulative financial losses, Devon recorded a $967 million, or
100%, valuation allowance against the U.S. deferred tax assets as of December 31, 2015. In the event Devon
were to determine that it would be able to realize the deferred income tax assets in the future, Devon would
adjust the valuation allowance, reducing the provision for income taxes in the period of such adjustment.

As of December 31, 2015, Devon’s unremitted foreign earnings from its other international operations

totaled approximately $1.2 billion. All but $37 million of the $1.2 billion was deemed to be indefinitely
reinvested into the development and growth of Devon’s Canadian business. Therefore, Devon has not recognized
a deferred tax liability for U.S. income taxes associated with such earnings. If such earnings were to be
repatriated to the U.S., Devon may be subject to U.S. income taxes and foreign withholding taxes. However, it is
not practical to estimate the amount of such additional taxes that may be payable due to the inter-relationship of
the various factors involved in making such an estimate.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the remaining $37 million of unremitted earnings deemed not to be indefinitely reinvested, Devon has

recognized a $10 million deferred tax liability associated with such unremitted earnings as of December 31,
2015.

Unrecognized Tax Benefits

The following table presents changes in Devon’s unrecognized tax benefits.

Balance at beginning of year

Tax positions taken in prior periods
Tax positions taken in current year
Accrual of interest related to tax positions taken
Settlements
Foreign currency translation

Balance at end of year

December 31,

2015

2014

(Millions)

$ 241

$243

(19) —
—
31
2
(5)
(108) —

(9)

(4)

$ 131

$241

Devon’s unrecognized tax benefit balance at December 31, 2015 and 2014 included $29 million and $34
million, respectively, of interest and penalties. If recognized, $131 million of Devon’s unrecognized tax benefits
as of December 31, 2015 would affect Devon’s effective income tax rate. Included below is a summary of the tax
years, by jurisdiction, that remain subject to examination by taxing authorities.

Jurisdiction

U.S. Federal
Various U.S. states
Canada Federal
Various Canadian provinces

Tax Years Open

2008-2015
2008-2015
2003-2015
2003-2015

Certain statute of limitation expirations are scheduled to occur in the next twelve months. However, Devon
is currently in various stages of the administrative review process for certain open tax years. In addition, Devon
is currently subject to various income tax audits that have not reached the administrative review process. As a
result, Devon cannot reasonably anticipate the extent that the liabilities for unrecognized tax benefits will
increase or decrease within the next twelve months.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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 per share.

Net earnings (loss):

Net earnings (loss) attributable to Devon
Attributable to participating securities

Basic and diluted earnings (loss)

Common shares:

Common shares outstanding - total
Attributable to participating securities

Common shares outstanding - basic
Dilutive effect of potential common shares issuable

Common shares outstanding - diluted

Net earnings (loss) per share attributable to Devon:

Basic
Diluted

Antidilutive options (1)

Year Ended December 31,

2015

2014

2013

(Millions, except per share amounts)

$(14,454) $1,607
(17)
(5)

$(14,459) $1,590

$ (20)
(2)

$ (22)

412
(5)

407
—

407

409
(4)

405
2

407

406
(4)

402
—

402

$ (35.55) $ 3.93
$ (35.55) $ 3.91
3
4

$(0.06)
$(0.06)
7

(1) Amounts represent options to purchase shares of Devon’s common stock that are excluded from the diluted

net earnings per share calculations because the options are antidilutive.

9. Other Comprehensive Earnings

Components of other comprehensive earnings consist of the following:

Foreign currency translation:

Beginning accumulated foreign currency translation
Change in cumulative translation adjustment
Income tax benefit

Ending accumulated foreign currency translation

Pension and postretirement benefit plans:

Year Ended December 31,

2015

2014

2013

(Millions)

$ 983
(621)
62

$1,448
(499)
34

$1,996
(574)
26

424

983

1,448

Beginning accumulated pension and postretirement benefits
Net actuarial gain (loss) and prior service cost arising in current year
Recognition of net actuarial loss and prior service cost in earnings (1)
Income tax benefit (expense)

Ending accumulated pension and postretirement benefits

(204)
(5)
21
(6)

(194)

(180)
(57)
20
13

(204)

(225)
48
24
(27)

(180)

Accumulated other comprehensive earnings, net of tax

$ 230

$ 779

$1,268

(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 15 for additional details.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

10. Supplemental Information to Statements of Cash Flows

Net change in working capital accounts:

Accounts receivable
Income taxes receivable
Other current assets
Accounts payable
Revenues and royalties payable
Income taxes payable
Other current liabilities

Net change in working capital

Interest paid (net of capitalized interest)
Income taxes paid (received)

Year Ended December 31,

2015

2014

2013

(Millions)

$ 942
384
(57)
(190)
(526)
(275)
(579)

$ 128
(467)
(222)
(68)
133
30
516

$(288)
29
20
26
35

—
(120)

$(301)

$ 50

$(298)

$ 494
$(279)

$ 514
$ 899

$ 406
$ 13

On March 7, 2014, Devon completed a business combination to form EnLink. With the exception of a $100

million cash payment to noncontrolling interests, the business combination was a non-monetary transaction.
EnLink’s noncash acquisition activity during 2015 included a portion of the Coronado transaction.

As discussed in Note 2, Devon’s acquisition of certain Powder River Basin assets included noncash

common stock issuance totaling $199 million.

11. Accounts Receivable

Components of accounts receivable include the following:

December 31, 2015

December 31, 2014

(Millions)

Oil, gas and NGL sales
Joint interest billings
Marketing and midstream revenues
Other

Gross accounts receivable

Allowance for doubtful accounts

Net accounts receivable

$ 362
211
520
30

1,123
(18)

$1,105

$ 723
475
706
71

1,975
(16)

$1,959

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

12. Goodwill and Other Intangible Assets

Goodwill

The following table presents a summary of Devon’s goodwill.

Balance as of December 31, 2013
Acquired during period
Asset divestitures
Impairment
Foreign currency translation adjustments

Balance as of December 31, 2014
Acquired during period
Impairment

Balance as of December 31, 2015

U.S.

Canada

EnLink

Total

$2,618
—
—
—
—

$2,618
—
—

(Millions)

$ 2,838

—
(706)
(1,941)
(191)

402
3,283
—
—
—

$ —
—
—

$ 3,685
57
(1,328)

$ 5,858
3,283
(706)
(1,941)
(191)

$ 6,303
57
(1,328)

$2,618

$ —

$ 2,414

$ 5,032

The following table presents the General Partner’s and EnLink’s goodwill activity by reporting unit.

Texas

Louisiana Oklahoma

Crude and
Condensate

General
Partner

Total

(Millions)

Balance as of December 31, 2013
Acquired during period

Balance as of December 31, 2014
Acquired during period
Impairment

$ 326
842

$1,168
28
(492)

$ —
787

$ 787
—
(787)

Balance as of December 31, 2015

$ 704

$ —

$ 76
114

$190
—
—

$190

$—
113

$113
29
(49)

$ 93

$ — $
1,427

402
3,283

$1,427
—
—

$ 3,685
57
(1,328)

$1,427

$ 2,414

Acquired During Period

Included in the assets Devon contributed to EMH was $402 million of goodwill. See Note 2 for discussion

of acquired goodwill resulting from EnLink’s formation in 2014 and acquisitions in 2015.

Asset Divestitures

In conjunction with the Canadian conventional asset divestitures in 2014, Devon removed $706 million of

goodwill, which was allocated to these assets.

Impairment

As further discussed in Note 1, 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 change in circumstances warranting an interim impairment test of EnLink’s
reporting units. Furthermore, due to the continued impact of declining commodity prices and EnLink unit price, an
update was performed as of December 31, 2015. As a result of these tests, noncash goodwill impairments were
recorded related to EnLink’s Texas, Louisiana and Crude and Condensate reporting units in 2015.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

In the fourth quarter of 2014, as a result of its annual impairment test of goodwill, Devon concluded the
implied fair value of its Canadian goodwill was zero and wrote off the remaining goodwill. This conclusion was
largely based on the significant decline in benchmark oil prices, particularly after OPEC’s decision not to reduce
its production targets that was announced in late November 2014. Devon’s Canadian goodwill was originally
recognized in 2001 as a result of a business combination consisting almost entirely of conventional gas assets
that Devon no longer owns.

Other Intangible Assets

During 2015, EnLink’s customer relationships were also evaluated for impairment due to the factors in the

aforementioned goodwill impairment analysis. Level 3 fair value measurements were utilized for the impairment
analysis of definite-lived intangible assets, which included discounted cash flow estimates, consistent with those
utilized in the goodwill impairment assessment. This assessment resulted in a $223 million noncash impairment
related to EnLink’s Crude and Condensate customer relationships in 2015.

The following table presents other intangible assets reported in other long-term assets in the accompanying

consolidated balance sheets.

Customer relationships
Accumulated amortization

Net intangibles

December 31, 2015

December 31, 2014

(Millions)

$745
(55)

$690

$569
(36)

$533

The weighted-average amortization period for the customer relationships is 12.6 years. Amortization
expense for intangibles was approximately $56 million and $36 million for the years ended December 31, 2015
and December 31, 2014, respectively. The remaining aggregate amortization expense is estimated to be
approximately $46 million each of the next five years.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

13. Debt and Related Expenses

A summary of debt is as follows:

December 31, 2015

December 31, 2014

Devon debt

Commercial paper
Floating rate due December 15, 2015
Floating rate due December 15, 2016
8.25% due July 1, 2018
2.25% due December 15, 2018
6.30% due January 15, 2019
4.00% due July 15, 2021
3.25% due May 15, 2022
5.85% due December 15, 2025
7.50% due September 15, 2027
7.875% due September 30, 2031
7.95% due April 15, 2032
5.60% due July 15, 2041
4.75% due May 15, 2042
5.00% due June 15, 2045
Net discount on debentures and notes

Total Devon debt

EnLink debt

Credit facilities
2.70% due April 1, 2019
7.125% due June 1, 2022
4.40% due April 1, 2024
4.15% due June 1, 2025
5.60% due April 1, 2044
5.05% due April 1, 2045

Net premium on debentures and notes

Total EnLink debt

Total debt

Less amount classified as short-term debt (1)

Total long-term debt

(Millions)

932
500
350
125
750
700
500
1,000
—
150
1,250
1,000
1,250
750
—
(18)

9,239

237
400
163
550
—
350
300
23

2,023

11,262
1,432

$ 9,830

626
—
350
125
750
700
500
1,000
850
150
1,250
1,000
1,250
750
750
(28)

10,023

414
400
163
550
750
350
450
13

3,090

13,113
976

$12,137

(1) 2015 short-term debt consists of $626 million of commercial paper and the $350 million floating rate due on
December 15, 2016. 2014 short-term debt consists of $932 million of commercial paper and $500 million
floating rate due on December 15, 2015.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Debt maturities as of December 31, 2015, excluding premiums and discounts, are as follows (millions):

2016
2017
2018
2019
2020
Thereafter

Total

976
—
875
1,100
414
9,763

$13,128

Credit Lines

Devon has a $3.0 billion Senior Credit Facility. The maturity date for $30 million of the Senior Credit
Facility is October 24, 2017. The maturity date for $164 million of the Senior Credit Facility is October 24, 2018.
The maturity date for the remaining $2.8 billion is October 24, 2019. Amounts borrowed under the Senior Credit
Facility may, at the election of Devon, bear interest at various fixed rate options for periods of up to twelve
months. Such rates are generally less than the prime rate. However, Devon may elect to borrow at the prime rate.
The Senior Credit Facility currently provides for an annual facility fee of $3.8 million that is payable quarterly in
arrears. As of December 31, 2015, there were no borrowings under the Senior Credit Facility.

The Senior Credit Facility contains only one material financial covenant. This covenant requires Devon’s
ratio of total funded debt to total capitalization, as defined in the credit agreement, to be no greater than 65%.
The credit agreement contains definitions of total funded debt and total capitalization that include adjustments to
the respective amounts reported in the accompanying consolidated financial statements. Also, total capitalization
is adjusted to add back noncash financial write-downs such as full cost ceiling impairments or goodwill
impairments. As of December 31, 2015, Devon was in compliance with this covenant with a debt-to-
capitalization ratio of 23.7%.

Commercial Paper

Devon’s Senior Credit Facility supports its $3.0 billion of short-term credit under its commercial paper
program. Commercial paper debt generally has a maturity of between 1 and 90 days, although it can have a
maturity of up to 365 days, and bears interest at rates agreed to at the time of the borrowing. The interest rate is
generally based on a standard index such as the Federal Funds Rate, LIBOR or the money market rate as found in
the commercial paper market. As of December 31, 2015, Devon’s outstanding commercial paper borrowings had
a weighted-average borrowing rate of 0.63%.

Issuance of Senior Notes

In June 2015, Devon issued $750 million of 5.0% senior notes due 2045 that are unsecured and

unsubordinated obligations. Devon used the net proceeds to repay the floating rate senior notes that matured on
December 15, 2015, as well as outstanding commercial paper balances.

In December 2015, in conjunction with the announcement of the Powder River Basin and STACK

acquisitions, Devon issued $850 million of 5.85% senior notes due 2025 that are unsecured and unsubordinated
obligations. Devon used the net proceeds to fund the cash portion of these acquisitions.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Retirement of Senior Notes

In November 2014, Devon redeemed $1.9 billion of senior notes prior to their scheduled maturity, primarily

with proceeds received from its asset divestitures. The redemption includes the 2.4% $500 million senior notes
due 2016, the 1.2% $650 million senior notes due 2016 and the 1.875% $750 million senior notes due 2017. The
notes were redeemed for $1.9 billion, which included 100% of the principal amount and a make-whole premium
of $40 million. On the date of redemption, these notes also had an unamortized discount of $2 million and
unamortized debt issuance costs of $6 million. The make-whole premium, unamortized discounts and debt
issuance costs are included in net financing costs on the accompanying 2014 consolidated comprehensive
statement of earnings.

Other Debentures and Notes

Following are descriptions of the various other debentures and notes outstanding at December 31, 2015 and

2014, as listed in the table presented at the beginning of this note.

GeoSouthern Debt

In December 2013, in conjunction with the planned GeoSouthern acquisition, Devon issued $2.25 billion
aggregate principal amount of fixed and floating rate senior notes. Devon repaid the floating rate senior notes due
2015 upon maturity and redeemed the 1.2% senior notes due December 15, 2016 in November 2014. As of
December 31, 2015, the floating rate senior notes due 2016 and the 2.25% senior notes due December 15, 2018
were outstanding. The floating rate senior notes due 2016 bear interest at a rate equal to three-month LIBOR plus
0.54%, which will be reset quarterly.

Other Notes

In 2012, 2011, 2009 and 2002, Devon issued senior notes that are unsecured and unsubordinated obligations

of Devon. Devon used the net proceeds to repay outstanding commercial paper, credit facility borrowings and
other long-term debt. The schedule below summarizes the key terms of these notes (millions).

May 2012

July 2011

January 2009 March 2002

Date Issued

3.25% due May 15, 2022
4.75% due May 15, 2042
4.00% due July 15, 2021
5.60% due July 15, 2041
6.30% due January 15, 2019
7.95% due April 15, 2032
Discount and issuance costs

$1,000
750
—
—
—
—
(28)

$ —
—
500
1,250
—
—
(24)

Net proceeds

$1,722

$1,726

$—
—
—
—
700
—

(8)

$692

$ —
—
—
—
—
1,000
(14)

$ 986

Ocean Debt

On April 25, 2003, Devon merged with Ocean Energy, Inc. and assumed certain debt instruments. The table
below summarizes the debt assumed that remains outstanding as of December 31, 2015, including the fair value
of the debt at April 25, 2003 and the effective interest rate of the debt after determining the fair values using

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

April 25, 2003 market interest rates. The premiums resulting from fair values exceeding face values are being
amortized using the effective interest method. Both notes are general unsecured obligations of Devon.

Debt Assumed

8.25% due July 2018 (principal of $125 million)
7.50% due September 2027 (principal of $150 million)

Fair Value of
Debt Assumed

Effective Rate of
Debt Assumed

(Millions)

$147
$169

5.5%
6.5%

7.875% Debentures due September 30, 2031

In October 2001, Devon, through Devon Financing, a wholly owned finance subsidiary, sold debentures,
which are unsecured and unsubordinated obligations of Devon Financing. Devon has fully and unconditionally
guaranteed, on an unsecured and unsubordinated basis, the obligations of Devon Financing under the debt
securities. The proceeds were used to fund a portion of the Anderson Exploration acquisition.

EnLink Debt

All of EnLink’s and the General Partner’s debt is non-recourse to Devon.

The table below summarizes the fair value of EnLink’s debt as of March 7, 2014, the formation date of

EnLink. The premiums are being amortized using the effective interest method.

8.875% due February 2018 (principal of $725 million) (1)
7.125% due June 2022 (principal of $197 million)
Credit facilities

Total long-term debt

(1) The 2018 senior notes were redeemed on April 18, 2014.

March 7, 2014
Fair Value
of Debt

Effective
Rate of Debt

(Millions)
$ 760
226
468

$1,454

7.7%
5.3%

In February 2015, the commitments under EnLink’s $1.0 billion unsecured revolving credit facility were
increased to $1.5 billion, and the maturity date was extended by a year to March 6, 2020. As of December 31,
2015, there were $11 million in outstanding letters of credit and $414 million outstanding borrowings, with a
weighted-average borrowing rate of 1.7%, under the $1.5 billion credit facility. The General Partner has a $250
million revolving credit facility that will mature on March 7, 2019. As of December 31, 2015, the General
Partner had no outstanding borrowings under the $250 million credit facility. EnLink and the General Partner
were in compliance with all financial covenants in their respective credit facilities as of December 31, 2015.

In March 2014, EnLink issued $1.2 billion aggregate principal amount of unsecured senior notes, consisting

of $400 million of its 2.70% senior notes due 2019, $450 million of its 4.40% senior notes due 2024 and $350
million of its 5.60% senior notes due 2044, at discounts of their face value. EnLink used the net proceeds to
redeem the 2018 senior notes, reduce outstanding credit facility borrowings, for capital expenditures and for
general operations.

In November 2014, EnLink issued $100 million of its 4.40% senior notes due 2024 and $300 million of its
5.05% senior notes due 2045, at a premium and discount, respectively, of their face value. The 2024 notes were

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

offered as an additional issue of EnLink’s outstanding 4.40% senior notes due 2024, issued in March 2014. The
2024 notes issued in March 2014 and November 2014 are treated as a single class of debt securities and have
identical terms, other than the issue date. EnLink used the net proceeds for capital expenditures and for general
operations.

In May 2015, EnLink issued $900 million principal amount of unsecured senior notes, consisting of $750

million principal amount of its 4.15% senior notes due 2025 and an additional $150 million principal amount of
its 5.05% senior notes due 2045. EnLink used the net proceeds to repay outstanding revolving credit facility
borrowings, for capital expenditures and for general operations.

Net Financing Costs

The following schedule includes the components of net financing costs.

Interest based on debt outstanding
Early retirement of debt
Capitalized interest
Other fees and expenses

Interest expense

Interest income

Net financing costs

14. Asset Retirement Obligations

The following table presents the changes in asset retirement obligations.

Asset retirement obligations as of beginning of period

Liabilities incurred
Liabilities settled and divested (1)
Revision of estimated obligation
Accretion expense on discounted obligation
Foreign currency translation adjustment

Asset retirement obligations as of end of period
Less current portion

Year Ended December 31,

2015

2014

2013

$565
—
(62)
20

523
(6)

(Millions)
$532
48
(70)
26

536
(10)

$466
—
(56)
27

437
(20)

$517

$526

$417

Year Ended December 31,

2015

2014

(Millions)

$1,399
63
(89)
62
75
(96)

1,414
44

$ 2,228
97
(1,009)
70
89
(76)

1,399
60

Asset retirement obligations, long-term

$1,370

$ 1,339

(1) During 2014, Devon reduced its asset retirement obligation by $953 million for those obligations that were

assumed by purchasers of Devon’s Canadian and U.S. divested oil and gas properties.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

15. Retirement Plans

Devon has various non-contributory defined benefit pension plans, including qualified plans and
nonqualified plans. The qualified plans provide retirement benefits for certain U.S. and Canadian employees
meeting certain age and service requirements. Benefits for the qualified plans are based on the employees’ years
of service and compensation and are funded from assets held in the plans’ trusts.

The nonqualified plans provide retirement benefits for certain employees whose benefits under the qualified

plans are limited by income tax regulations. The nonqualified plans’ benefits are based on the employees’ years
of service and compensation. For certain nonqualified plans, Devon has established trusts to fund these plans’
benefit obligations. The total value of these trusts was $22 million and $25 million at December 31, 2015 and
2014, respectively and is included in other long-term assets in the accompanying consolidated balance sheets.
For the remaining nonqualified plans for which trusts have not been established, benefits are funded from
Devon’s available cash and cash equivalents.

Devon also has defined benefit postretirement plans that provide benefits for substantially all qualifying
U.S. retirees. The plans provide medical and, in some cases, life insurance benefits and are either contributory or
non-contributory, depending on the type of plan. Benefit obligations for such plans are estimated based on
Devon’s future cost-sharing intentions. Devon’s funding policy for the plans is to fund the benefits as they
become payable with available cash and cash equivalents.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Benefit Obligations and Funded Status

The following table presents the funded status of Devon’s qualified and nonqualified pension and

postretirement benefit plans. The benefit obligation for pension plans represents the projected benefit obligation,
while the benefit obligation for the postretirement benefit plans represents the accumulated benefit obligation.
The accumulated benefit obligation differs from the projected benefit obligation in that the former includes no
assumption about future compensation levels. The accumulated benefit obligation for pension plans was $1.2
billion at December 31, 2015 and 2014. Devon’s benefit obligations and plan assets are measured each year as of
December 31. The projected benefit obligations for Devon’s qualified plans were fully funded as of
December 31, 2015 and 2014.

Pension Benefits

Postretirement Benefits

2015

2014

2015

2014

(Millions)

Change in benefit obligation:

Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial loss (gain)
Plan amendments
Plan settlements
Foreign exchange rate changes
Participant contributions
Benefits paid

$1,377
33
52
(68)
—
—

(6)

—
(80)

$1,177
30
55
203
—

(4)
(3)

—
(81)

Benefit obligation at end of year

1,308

1,377

Change in plan assets:

Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Participant contributions
Plan settlements
Benefits paid
Foreign exchange rate changes

Fair value of plan assets at end of year

1,149
(16)
11
—
—
(80)
(5)

1,059

1,006
200
29
—

(4)
(81)
(1)

1,149

$ 24
1
1
(2)
1

—
—

2
(4)

—
—

2
2

—

(4)

—

$ 24
1
1
—
—
—
—

2
(4)

—
—

2
2

—

(4)

—

Funded status at end of year

$ (249)

$ (228)

$ (23)

$ (24)

Amounts recognized in balance sheet:

Other long-term assets
Other current liabilities
Other long-term liabilities

Net amount

Amounts recognized in accumulated other

comprehensive earnings:

Net actuarial loss (gain)
Prior service cost (credit)

Total

2
(12)
(239)

22
(10)
(240)

$—

(3)
(20)

$—

(3)
(21)

$ (249)

$ (228)

$ (23)

$ (24)

$ 302
14

$ 317
19

$ 316

$ 336

$ (11)
(6)

$ (17)

$ (11)
(9)

$ (20)

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The plan assets for pension benefits in the table above exclude the assets held in trusts for the nonqualified

plans. However, employer contributions for pension benefits in the table above include $11 million and $10
million for 2015 and 2014, respectively, which were transferred from the trusts established for the nonqualified
plans.

Certain of Devon’s pension plans have a projected benefit obligation and accumulated benefit obligation in

excess of plan assets at December 31, 2015 and 2014, as presented in the following table.

Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets

December 31,

2015

2014

(Millions)

$244
$199
$—

$250
$191
$—

Net Periodic Benefit Cost and Other Comprehensive Earnings

The following table presents the components of net periodic benefit cost and other comprehensive earnings.

Pension Benefits

Postretirement Benefits

2015

2014

2013

2015

2014

2013

(Millions)

Net periodic benefit cost:

Service cost
Interest cost
Expected return on plan assets
Curtailment and settlement expense
Recognition of net actuarial loss (gain) (1)
Recognition of prior service cost (1)

$ 33
52
(58)
—
20
4

$ 30
55
(54)

$ 36
51
(62) —
—

1 —
22
4

18
4

1
1

—
—

(1)
(2)

—
—

(1)
(1)

(1) —

(1)
(2)

(1)

Total net periodic benefit cost (2)

Other comprehensive loss (earnings):

Actuarial loss (gain) arising in current year
Prior service cost (credit) arising in current year
Recognition of net actuarial loss, including

—

(39)
2

(1) —
1 —

settlement expense, in net periodic benefit cost

(20)

(19)

(22)

Recognition of prior service cost, including
curtailment, in net periodic benefit cost

Total other comprehensive loss (earnings)

Total recognized

(4)

(19)

(4)

(63)

$ 32

$ 88

$ (12) $

(3)
(8)

(9)

$ (9)

(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 on the accompanying consolidated comprehensive

statements of earnings.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents the estimated net actuarial loss and prior service cost that will be amortized

from accumulated other comprehensive earnings into net periodic benefit cost during 2016.

Net actuarial loss (gain)
Prior service cost (credit)

Total

Pension
Benefits

Postretirement
Benefits

(Millions)

$22
4

$26

$(2)
(1)

$(3)

Assumptions

The following table presents the weighted-average actuarial assumptions used to determine obligations and

periodic costs.

Pension Benefits

Postretirement Benefits

2015

2014

2013

2015

2014

2013

Assumptions to determine benefit obligations:

Discount rate
Rate of compensation increase

Assumptions to determine net periodic benefit cost:

Discount rate
Rate of compensation increase
Expected return on plan assets

4.25% 3.90% 4.80% 3.63% 3.25% 3.65%
4.49% 4.49% 4.48% N/A

N/A

3.90% 4.80% 3.85% 3.25% 3.65% 3.30%
4.49% 4.49% 4.48% N/A
5.22% 5.42% 5.48% N/A

N/A
N/A

Discount rate – Future pension and postretirement obligations are discounted at the end of each year based

on the rate at which obligations could be effectively settled, considering the timing of estimated future cash flows
related to the plans. This rate is based on high-quality bond yields, after allowing for call and default risk.

At the end of 2015, Devon changed the approach used to measure service and interest costs for pension and

other postretirement benefits. For 2015, Devon measured service and interest costs utilizing a single weighted-
average discount rate derived from the yield curve used to measure the plan obligations. For 2016, Devon elected
to measure service and interest costs by applying the specific spot rates along that yield curve to the plans’
liability cash flows. Devon believes the new approach provides a more precise measurement of service and
interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield
curve. This change does not affect the measurement of the plan obligations nor the funded status of the plans.
The change in the service and interest costs going forward is not expected to be significant. This change has been
accounted for as a change in accounting estimate.

Rate of compensation increase – For measurement of the 2015 benefit obligation for the pension plans, a

4.49% compensation increase was assumed.

Expected return on plan assets – The expected rate of return on plan assets was determined by evaluating
input from external consultants and economists, as well as long-term inflation assumptions. Devon expects the
long-term asset allocation to approximate the targeted allocation. Therefore, the expected long-term rate of return
on plan assets is based on the target allocation of investment types. See the pension plan assets section below for
more information on Devon’s target allocations.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Mortality rate assumptions – In 2014, the Society of Actuaries issued updated versions of its mortality
tables and mortality improvement scale, reflecting the increasing life expectancies in the U.S. While not required
to strictly adhere to this data, Devon utilized actuary-produced mortality tables and an improvement scale derived
from the updated tables and the actuary’s best estimate of mortality for the population of participants in Devon’s
plans.

Other assumptions – For measurement of the 2015 benefit obligation for the other postretirement medical

plans, a 7.6% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2016.
The rate was assumed to decrease annually to an ultimate rate of 5% in the year 2029 and remain at that level
thereafter. Assumed health care cost-trend rates affect the amounts reported for retiree health care costs. A one-
percentage-point change in the assumed health care cost-trend rates would have changed the postretirement
benefits obligation as of December 31, 2015 by less than $1 million and would change the 2015 service and
interest cost components of net periodic benefit cost by less than $1 million.

Pension Plan Assets

Devon’s overall investment objective for its pension plans’ assets is to achieve stability of the plans’ funded
status while providing long-term growth of invested capital and income to ensure benefit payments can be funded
when required. To assist in achieving this objective, Devon has established certain investment strategies,
including target allocation percentages and permitted and prohibited investments, designed to mitigate risks
inherent with investing. Derivatives or other speculative investments considered high risk are generally
prohibited. The following table presents Devon’s target allocation for its pension plan assets.

Fixed income
Equity
Other

December 31,

2015

2014

70%
20%
10%

The following tables present the fair values of Devon’s pension assets by asset class.

Fixed-income securities:

U.S. Treasury obligations
Corporate bonds
Other bonds

Total fixed-income securities

Equity securities:

December 31, 2015

Fair Value Measurements Using:

Actual
Allocation

Total

Level 1
Inputs

Level 2
Inputs

Level 3
Inputs

(Millions)

17% $ 179
507
48%
35
3%

68%

721

$ 88
371
35

494

$ 91
136
—

227

$—
—
—

—

Global (large, mid, small cap)

18%

186

—

186

—

Other securities:

Hedge fund and alternative investments
Short-term investments

Total other securities

Total investments

11%
3%

14%

120
32

152

—
6

—
26

120
—

120

100% $1,059

$500

$439

$120

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2014

Fair Value Measurements
Using:

Actual
Allocation

Total

Level 1
Inputs

Level 2
Inputs

Level 3
Inputs

(Millions)

Fixed-income securities:

U.S. Treasury obligations
Corporate bonds
Other bonds

35% $ 405
364
32%
30
3%

$355

$ 50
269
30 —

$—
95 —
—

Total fixed-income securities

70%

799

349

450 —

Equity securities:

Global (large, mid, small cap)

17%

197 —

Other securities:

Hedge fund and alternative investments
Short-term investments

Total other securities

Total investments

10%
3%

13%

112 —
15
41

—
112
26 —

153

112

100% $1,149

$364

$673

$112

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

Fixed-income securities – Devon’s fixed-income securities consist of U.S. Treasury obligations, bonds
issued by investment-grade companies from diverse industries and asset-backed securities. These fixed-income
securities are actively traded securities that can be redeemed upon demand. The fair values of these Level 1
securities are based upon quoted market prices.

Devon’s fixed income securities also include commingled funds that primarily invest in long-term bonds

and U.S. Treasury securities. These fixed income securities can be redeemed on demand but are not actively
traded. The fair values of these Level 2 securities are based upon the net asset values provided by the investment
managers.

Equity securities – Devon’s equity securities include a commingled global equity fund that invests in large,
mid and small capitalization stocks across the world’s developed and emerging markets. These equity securities
can be redeemed on demand but are not actively traded. The fair values of these Level 2 securities are based upon
the net asset values provided by the investment managers.

Other securities – Devon’s other securities include cash and commingled, short-term investment funds. The

short-term investment funds’ securities can be redeemed on demand but are not actively traded. The fair values
of these Level 2 securities are based upon the net asset values provided by investment managers.

Devon’s hedge fund and alternative investments include an investment in an actively traded global mutual
fund that focuses on alternative investment strategies and a hedge fund of funds that invests both long and short
using a variety of investment strategies. Devon’s hedge fund of funds is not actively traded, and Devon is subject
to redemption restrictions with regards to this investment. The fair value of this Level 3 investment represents the
fair value as determined by the hedge fund manager.

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents a summary of the changes in Devon’s Level 3 plan assets (millions).

December 31, 2013
Disbursements
Investment returns

December 31, 2014
Purchases
Investment returns

December 31, 2015

$ 112
(6)
6

112
5
3

$ 120

Expected Cash Flows

The following table presents expected cash flow information for Devon’s pension and postretirement benefit

plans.

Devon’s 2016 contributions
Benefit payments:

2016
2017
2018
2019
2020
2021 to 2025

Pension
Benefits

Postretirement
Benefits

(Millions)

$ 12

$ 73
$ 75
$ 77
$ 78
$ 83
$446

$3
$3
$3
$3
$2
$7

Expected contributions included in the table above include amounts related to Devon’s qualified plans,
nonqualified plans and postretirement plans. Of the benefits expected to be paid in 2016, the $12 million of
pension benefits is expected to be funded from the trusts established for the nonqualified plans, and the $3
million of postretirement benefits is expected to be funded from Devon’s available cash and cash equivalents.
Expected employer contributions and benefit payments for other postretirement benefits are presented net of
employee contributions.

Defined Contribution Plans

Independent of EnLink, Devon maintains defined contribution plans covering its employees in the U.S. and
Canada. Such plans include Devon’s 401(k) plan, enhanced contribution plan and Canadian pension and savings
plan. Contributions are primarily based upon percentages of annual compensation and years of service. In
addition, each plan is subject to regulatory limitations by each respective government. EnLink also maintains a
401(k) plan covering eligible employees. The following table presents expense related to these defined
contribution plans.

401(k) and enhanced contribution plans
Canadian pension and savings plans

Total

100

Year Ended December 31,

2015

2014

2013

(Millions)
$49
20

$69

$41
26

$67

$63
16

$79

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

16. Stockholders’ Equity

The authorized capital stock of Devon consists of 1.0 billion shares of common stock, par value $0.10 per
share and 4.5 million shares of preferred stock, par value $1.00 per share. The preferred stock may be issued in
one or more series, and the terms and rights of such stock will be determined by the Board of Directors.

Common Stock Issued

In December 2015, Devon issued approximately 7 million shares of common stock as part of the Powder
River Basin asset acquisition discussed in Note 2. Additionally, in January 2016, Devon issued approximately
23 million shares of common stock in conjunction with the STACK asset acquisition.

Dividends

Devon paid common stock dividends of $396 million, $386 million and $348 million in 2015, 2014 and
2013, respectively. The quarterly cash dividend was $0.20 per share in the first quarter of 2013. Devon increased
the dividend rate to $0.22 per share in the second quarter of 2013 and to $0.24 per share in the second quarter of
2014.

Stock Option Proceeds

Devon received $4 million, $93 million and $3 million from stock option proceeds in 2015, 2014 and 2013,

respectively.

17. Noncontrolling Interests

Acquisition of Noncontrolling Interests

In March 2014, EnLink was formed as a publicly traded consolidated subsidiary of Devon to provide

midstream services to Devon and third parties. Devon obtained approximately 120.5 million units, or a 52%
ownership interest, as a result of this transaction. Approximately 92.7 million units were issued to the public for a
41% ownership interest, with the remaining 7% ownership interest held by the General Partner.

Subsidiary Equity Transactions

Through its equity distribution agreements, EnLink has the ability to sell common units through an “at the
market” equity offering program. During 2015 and 2014, EnLink issued and sold approximately 1.3 million and
14.8 million common units through its at the market program and general public offerings, generating net
proceeds of $25 million and $410 million, respectively. Furthermore, in October 2015, EnLink issued
approximately 2.8 million common units in a private placement transaction with the General Partner, generating
approximately $50 million in proceeds.

In 2015, Devon conducted an underwritten secondary public offering of 26.2 million common units

representing limited partner interests in EnLink, raising net proceeds of $654 million.

101

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As a result of these transactions, the Coronado acquisition and dropdown transactions discussed in Note 2,

the ownership of EnLink at December 31, 2015 is approximately:

•

28% – Devon

27% – General Partner (controlled by Devon)

45% – Public unitholders

The net gains and losses and related income taxes resulting from these transactions have been recorded as an

adjustment to equity, and the change in ownership reflected as an adjustment to noncontrolling interests.

As further discussed in Note 2, in January 2016, EnLink acquired midstream assets in exchange for cash and

equity. Subsequent to this transaction, the ownership of the General Partner is approximately:

•

64% – Devon

36% – Public unitholders

Subsequent to this transaction, the ownership of EnLink is approximately:

•

25% – Devon

23% – General Partner (controlled by Devon)

52% – Public unitholders

Distributions to Noncontrolling Interests

In conjunction with the formation of the General Partner in 2014, Devon made a payment of $100 million to
noncontrolling interests. Furthermore, EnLink and the General Partner distributed $254 million and $135 million
to non-Devon unitholders during 2015 and 2014, respectively.

18. 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 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.

102

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Environmental Matters

Devon is subject to certain laws and regulations relating 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 routine 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.

Commitments

The following table presents Devon’s commitments that have initial or remaining noncancelable terms in

excess of one year as of December 31, 2015.

Year Ending December 31,

2016
2017
2018
2019
2020
Thereafter

Total

Purchase
Obligations

Drilling
and
Facility
Obligations

Operational
Agreements

Office and
Equipment
Leases

(Millions)

$ 557
703
791
803
845
206

$3,905

$ 69
51
34
5
2
28

$189

$ 994
972
936
402
255
1,042

$4,601

$ 70
58
76
68
42
129

$443

Purchase obligation amounts represent contractual commitments primarily to purchase condensate at market

prices for use at Devon’s heavy oil projects in Canada. Devon has entered into these agreements because
condensate is an integral part of the heavy oil transportation process. Any disruption in Devon’s ability to obtain
condensate could negatively affect its ability to transport heavy oil at these locations. Devon’s total obligation
related to condensate purchases expires in 2021. The value of the obligation in the table above is based on the
contractual volumes and Devon’s internal estimate of future condensate market prices.

Devon has certain drilling and facility obligations under contractual agreements with third-party service

providers to procure drilling rigs and other related services for developmental and exploratory drilling and
facilities construction. The value of the drilling obligations reported is based on gross contractual value.

Devon has certain operational agreements whereby Devon has committed to transport or process certain
volumes of oil, gas and NGLs for a fixed fee. Devon has entered into these agreements to aid the movement of its
production to downstream markets.

Devon leases certain office space and equipment under operating lease arrangements. Total rental expense

included in G&A under operating leases, net of sublease income, was $88 million, $64 million and $26 million in
2015, 2014 and 2013, respectively.

103

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

19. Fair Value Measurements

The following table provides carrying value and fair value measurement information for certain of Devon’s

financial assets and liabilities. 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 December 31, 2015 and December 31, 2014. Therefore, such financial
assets and liabilities are not presented in the following table. Additionally, information regarding the fair values
of oil and gas assets, goodwill and other intangible assets and pension plan assets is provided in Note 5, Note 12
and Note 15, respectively.

Fair Value Measurements Using:

Carrying
Amount

Total Fair
Value

Level 1
Inputs

Level 2
Inputs

Level 3
Inputs

(Millions)

December 31, 2015 assets (liabilities):

Cash equivalents
Commodity derivatives
Commodity derivatives
Interest rate derivatives
Interest rate derivatives
Foreign currency derivatives
Foreign currency derivatives
Debt
Capital lease obligations

December 31, 2014 assets (liabilities):

Cash equivalents
Commodity derivatives
Commodity derivatives
Interest rate derivatives
Interest rate derivatives
Foreign currency derivatives
Debt
Capital lease obligations

400
$1,471
$
$ 1,871
$ 1,871
35
35
35
$
$ — $
$
(18)
(18) $ — $
(18) $
$
2
$ — $
$
2
$
(22)
(22) $ — $
(22) $
$
8
8
8
$
$ — $
$
$
(8)
(8) $ — $
(8) $
$(13,113) $(11,927) $ — $(11,927)
(16)
$

(16) $ — $

(17) $

$
950
$ 1,995

$
950
$ 340
610
$
$ 1,995
$ — $ 1,995
$
(56)
$
1
$
(1)
8
$
$(11,262) $(12,472) $ — $(12,472)
(20)
$

(56) $ — $
1
$ — $
(1) $ — $
$ — $
8

(56) $
1
$
(1) $
$
8

(20) $ — $

(20) $

$—
$—
$—
$—
$—
$—
$—
$—
$—

$—
$—
$—
$—
$—
$—
$—
$—

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

Level 1 Fair Value Measurements

Cash equivalents – Amounts consist primarily of money market investments. 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.

104

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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.

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

20. 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 exploration and
production 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 exploration and production activities, and certain information regarding
such activities for each segment is included in Note 21.

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. For the reporting
periods prior to the formation of EnLink, Devon has reclassified, from its U.S. segment to the EnLink segment,
all asset-level amounts related to the midstream assets that it contributed to EnLink.

105

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

U.S. (1)

Canada

EnLink (1) Eliminations

Total

(Millions)

Year Ended December 31, 2015:
Revenues from external customers
Intersegment revenues
Depreciation, depletion and amortization
Asset impairments
Interest expense
Loss before income taxes
Income tax expense (benefit)
Net loss
Net earnings (loss) attributable to noncontrolling interests
Net loss attributable to Devon
Property and equipment, net
Total assets
Capital expenditures

Year Ended December 31, 2014:
Revenues from external customers
Intersegment revenues
Depreciation, depletion and amortization
Asset impairments
Gains and losses on asset sales
Interest expense
Earnings (loss) before income taxes
Income tax expense
Net earnings (loss)
Net earnings attributable to noncontrolling interests
Net earnings (loss) attributable to Devon
Property and equipment, net
Total assets
Capital expenditures

Year Ended December 31, 2013:
Revenues from external customers
Intersegment revenues
Depreciation, depletion and amortization
Asset impairments
Interest expense
Earnings (loss) before income taxes
Income tax expense (benefit)
Net earnings (loss)
Property and equipment, net
Total assets
Capital expenditures

$ 1,012

$ 3,773
$ 8,360
679
$ — $ — $
387
$
522
$
$ 2,220
$ 1,563
$ 1,257
$ 18,000
$
$
107
94
$
368
$ (1,384)
$(18,214) $ (1,670)
$
$ (5,650) $ (445)
30
$ (1,414)
$(12,564) $ (1,225)
$ — $ (750)
$
$ (664)
$(12,565) $ (1,225)
$ 5,667
$ 4,590
$ 8,811
$ 9,565
$ 5,464
$ 14,600
978
$
680
$
$ 4,575

(46)

$ —
$ (679)
$ —
$ —
$
$ —
$ —
$ —
$ —
$ —
$ —
$
$ —

(97)

$ 2,063

$ 2,649
$ 14,854
859
$ — $ — $
$
$
$ 2,475
284
560
$ —
$ 1,941
12
$
$ —
$ (1,077)
5
$
54
$
$
$
85
441
326
$
$ (657)
$ 4,390
76
$
$
$ 1,797
495
250
$
$ (1,152)
$ 2,593
83
$ — $
$
1
$
$ (1,152)
$ 2,592
167
$ 5,043
$ 6,790
$ 24,463
$10,207
$ 8,517
$ 32,037
$ 1,001
$ 1,344
$ 11,214

$ 6,807
934
$ 2,656
$ — $ — $ 1,362
187
$ 1,744
$
$ —
$ 1,133
$ —
392
$
186
$
495
$
67
$
258
$
$
$
119
237
$ 1,768
$ 18,201
$ 2,237
$ 27,080
213
$
$ 4,589

849
$
843
$
$
80
$ (532)
$ (156)
$ (376)
$ 8,478
$13,560
$ 1,841

(44)

$ —
$ (859)
$ —
$ —
$ —
$
$ —
$ —
$ —
$ —
$ —
$ —
$ (124)
$ —

(35)

$ —
$(1,362)
$ —
$ —
$
$ —
$ —
$ —
$ —
$ —
$ —

$ 13,145
$ —
$ 3,129
$ 20,820
$
523
$(21,268)
$ (6,065)
$(15,203)
(749)
$
$(14,454)
$ 19,068
$ 29,532
$ 6,233

$ 19,566
$ —
$ 3,319
$ 1,953
$ (1,072)
$
536
$ 4,059
$ 2,368
$ 1,691
$
84
$ 1,607
$ 36,296
$ 50,637
$ 13,559

$ 10,397
$ —
$ 2,780
$ 1,976
437
$
149
$
169
$
$
(20)
$ 28,447
$ 42,877
$ 6,643

(1) Due to Devon’s control of EnLink through its control of the General Partner, the acquisition of VEX by EnLink from

Devon in the second quarter of 2015 was considered a transfer of net assets between entities under common control, and
EnLink was required to recast its financial statements as of December 31, 2015 to include the activities of such assets
from the date of common control. Therefore, the results of VEX have been moved from the U.S. segment to the EnLink
segment for the recasted periods.

106

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

21. Supplemental Information on Oil and Gas Operations (Unaudited)

Supplemental unaudited information regarding Devon’s oil and gas activities is presented in this note. The

information is provided separately by country.

Costs Incurred

The following tables reflect the costs incurred in oil and gas property acquisition, exploration and

development activities.

Property acquisition costs:
Proved properties
Unproved properties

Exploration costs
Development costs

Costs incurred

Property acquisition costs:
Proved properties
Unproved properties

Exploration costs
Development costs

Costs incurred

Property acquisition costs:
Proved properties
Unproved properties

Exploration costs
Development costs

Costs incurred

Year Ended December 31, 2015

U.S.

Canada

Total

(Millions)

193
634
478
3,269

2
83
109
402

195
717
587
3,671

$ 4,574

$ 596

$ 5,170

Year Ended December 31, 2014

U.S.

Canada

Total

(Millions)

$ 5,210
1,176
270
4,400

$ —

1
52
1,063

$ 5,210
1,177
322
5,463

$11,056

$1,116

$12,172

Year Ended December 31, 2013

U.S.

Canada

Total

(Millions)

19
213
443
3,838

3
3
152
1,251

22
216
595
5,089

$ 4,513

$1,409

$ 5,922

Costs incurred in the tables above include additions and revisions to Devon’s asset retirement obligations.

Pursuant to the full cost method of accounting, Devon capitalizes certain of its G&A that is related to
property acquisition, exploration and development activities. Such capitalized expenses, which are included in
the costs shown in the preceding tables, were $372 million, $376 million and $368 million in 2015, 2014 and
2013, respectively. Also, Devon capitalizes interest costs incurred and attributable to unproved oil and gas
properties and major development projects of oil and gas properties. Capitalized interest expenses, which are
included in the costs shown in the preceding tables, were $54 million, $45 million and $42 million in 2015, 2014
and 2013, respectively.

107

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Capitalized Costs

The following tables reflect the aggregate capitalized costs related to oil and gas activities.

Proved properties
Unproved properties

Total oil and gas properties

Accumulated DD&A

Net capitalized costs

Proved properties
Unproved properties

Total oil and gas properties

Accumulated DD&A

Net capitalized costs

December 31, 2015

U.S.

$ 64,443
1,352

Canada

(Millions)
$ 13,747
1,232

Total

$ 78,190
2,584

65,795
(58,312)

14,979
(11,185)

80,774
(69,497)

$ 7,483

$ 3,794

$ 11,277

December 31, 2014

U.S.

$ 59,849
1,460

Canada

(Millions)
$ 15,889
1,292

Total

$ 75,738
2,752

61,309
(38,213)

17,181
(11,347)

78,490
(49,560)

$ 23,096

$ 5,834

$ 28,930

The following table presents a summary of Devon’s oil and gas properties not subject to amortization as of

December 31, 2015.

Acquisition costs
Exploration costs
Development costs
Capitalized interest

Costs Incurred In

2015

2014

2013

Prior to
2013

Total

$672
191
9
50

$412
132
28
37

(Millions)
$ 61
69
17
32

$510
170
128
66

$1,655
562
182
185

Total oil and gas properties not subject to amortization

$922

$609

$179

$874

$2,584

Included in the $2.6 billion of oil and gas properties not subject to amortization are approximately $1.9

billion of costs that Devon deems significant for individual assessment. These costs primarily relate to
investments in the Pike thermal oil project in Canada and the newly acquired Powder River Basin assets. Devon
anticipates determining its Pike development timeline in mid-2016, with its 50% partner. Based on the
development plans, Pike costs will begin to be included in the amortization computation when the first phase of
this project is fully approved and Devon subsequently begins recognizing the associated proved reserves. Devon
is evaluating and plans to develop the newly acquired Powder River Basin properties over the next four to five
years.

108

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Results of Operations

The following tables include revenues and expenses associated with Devon’s oil and gas producing

activities. They do not include any allocation of Devon’s interest costs or general corporate overhead and,
therefore, are not necessarily indicative of the contribution to net earnings of Devon’s oil and gas operations.
Income tax expense has been calculated by applying statutory income tax rates to oil, gas and NGL sales after
deducting costs, including DD&A and after giving effect to permanent differences.

Oil, gas and NGL sales
Lease operating expenses
General and administrative expenses
Production and property taxes
Depreciation, depletion and amortization
Asset impairments
Accretion of asset retirement obligations
Income tax benefit

Results of operations

December 31, 2015

U.S.

Canada

Total

$ 4,356
(1,551)
(196)
(309)
(2,107)
(17,992)
(47)
5,547
$(12,299)

(Millions)
$ 1,026
(553)
(28)
(33)
(474)
(1,257)
(27)
314
$(1,032)

$ 5,382
(2,104)
(224)
(342)
(2,581)
(19,249)
(74)
5,861
$(13,331)

Depreciation, depletion and amortization per Boe

$ 10.21

$ 11.30

$ 10.40

Oil, gas and NGL sales
Lease operating expenses
General and administrative expenses
Production and property taxes
Depreciation, depletion and amortization
Gain on sale of assets
Accretion of asset retirement obligations
Income tax expense

Results of operations (1)

December 31, 2014

U.S.

Canada

Total

$ 7,867
(1,559)
(153)
(466)
(2,365)
—
(49)
(1,199)
$ 2,076

(Millions)
$ 2,043
(773)
(57)
(37)
(531)
1,077
(39)
(568)
$ 1,115

$ 9,910
(2,332)
(210)
(503)
(2,896)
1,077
(88)
(1,767)
$ 3,191

Depreciation, depletion and amortization per Boe

$ 11.41

$ 13.80

$ 11.79

December 31, 2013

U.S.

Canada

Total

$ 5,964
(1,257)
(125)
(380)
(1,640)
(1,110)
(47)
(510)
895

(Millions)
$ 2,558
(1,011)
(77)
(59)
(825)
(843)
(64)
88
$ (233)

$ 8,522
(2,268)
(202)
(439)
(2,465)
(1,953)
(111)
(422)
662

Depreciation, depletion and amortization per Boe

8.69

$ 12.87

9.75

(1) During 2014, Devon recognized a Canadian goodwill impairment, which is not reflected in these tables. See

Note 5 for additional information.

109

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Proved Reserves

The following tables present Devon’s estimated proved reserves by product by country.

Oil (MMBbls)

U.S.

Canada

Total

205
1

65
270
(1) —

(18) —
69
1
(28)
(1) —

—
(15)

229

56
(1) —
(38)
94
132
(48)
(17)

—
(10)
(29)

1
5

351
(53)
(52)
51
5
(60)

242

166
194
255
203

155
178
224
192

39
35
96
39

23
4
2
3

—
(10)

62
56
23
22

56
51
19
19

—
—
—

(18)
76
1
(43)
(1)

285
(1)
(37)
99
132
(58)
(46)

374
(49)
(50)
54
5
(70)

264

228
250
278
225

211
229
243
211

42
35
96
39

Proved developed and undeveloped reserves:
December 31, 2012

Revisions due to prices
Revisions other than price
Extensions and discoveries
Purchase of reserves
Production
Sale of reserves

December 31, 2013

Revisions due to prices
Revisions other than price
Extensions and discoveries
Purchase of reserves
Production
Sale of reserves

December 31, 2014

Revisions due to prices
Revisions other than price
Extensions and discoveries
Purchase of reserves
Production

December 31, 2015

Proved developed reserves as of:

December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015

Proved developed-producing reserves as of:

December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015

Proved undeveloped reserves as of:

December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015

110

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Bitumen (MMBbls)

U.S.

Canada

Total

—
—
—
—
—

—

—
—
—
—

528
(11)
16
38
(19)

552
(37)
18
8
(20)

521
103
(84)
11
(31)

520

99
111
137
219

429
441
384
301

528
(11)
16
38
(19)

552
(37)
18
8
(20)

521
103
(84)
11
(31)

520

99
111
137
219

429
441
384
301

Proved developed and undeveloped reserves:
December 31, 2012

Revisions due to prices
Revisions other than price
Extensions and discoveries
Production

December 31, 2013

Revisions due to prices
Revisions other than price
Extensions and discoveries
Production

December 31, 2014

Revisions due to prices
Revisions other than price
Extensions and discoveries
Production

December 31, 2015

Proved developed reserves as of:

December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015

Proved developed-producing reserves as of:

December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015

Proved undeveloped reserves as of:

December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015

111

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Gas (Bcf)

U.S.

Canada

Total

8,762
405
(299)
471
1
(709)
(81)

8,550
191
(299)
335
457
(660)
(923)

684
161
67
19

—
(165)
(8)

758
45
4
8

—
(41)
(738)

36
(9)
(6)

7,651
(1,412)
(3)
171
17
(579)
(37) —

—
—

(8)

5,808

7,391
7,707
6,948
5,694

7,091
7,425
6,746
5,546

1,371
843
703
114

679
752
36
13

624
680
34
13

5
6

—
—

9,446
566
(232)
490
1
(874)
(89)

9,308
236
(295)
343
457
(701)
(1,661)

7,687
(1,421)
(9)
171
17
(587)
(37)

5,821

8,070
8,459
6,984
5,707

7,715
8,105
6,780
5,559

1,376
849
703
114

Proved developed and undeveloped reserves:
December 31, 2012

Revisions due to prices
Revisions other than price
Extensions and discoveries
Purchase of reserves
Production
Sale of reserves

December 31, 2013

Revisions due to prices
Revisions other than price
Extensions and discoveries
Purchase of reserves
Production
Sale of reserves

December 31, 2014

Revisions due to prices
Revisions other than price
Extensions and discoveries
Purchase of reserves
Production
Sale of reserves

December 31, 2015

Proved developed reserves as of:

December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015

Proved developed-producing reserves as of:

December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015

Proved undeveloped reserves as of:

December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015

112

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Natural Gas Liquids (MMBbls)

U.S.

Canada

Total

571
8
(50)
64
(41)

552
7
2
47
57
(50)
(37)

578
(119)
(6)
24
1
(50)

428

431
468
486
411

406
442
467
393

140
84
92
17

20
3
3
1
(4)

23
1

—
—
—

(1)
(23)

—
—
—
—
—
—

—

20
23
—
—

19
21
—
—

—
—
—
—

591
11
(47)
65
(45)

575
8
2
47
57
(51)
(60)

578
(119)
(6)
24
1
(50)

428

451
491
486
411

425
463
467
393

140
84
92
17

Proved developed and undeveloped reserves:
December 31, 2012

Revisions due to prices
Revisions other than price
Extensions and discoveries
Production

December 31, 2013

Revisions due to prices
Revisions other than price
Extensions and discoveries
Purchase of reserves
Production
Sale of reserves

December 31, 2014

Revisions due to prices
Revisions other than price
Extensions and discoveries
Purchase of reserves
Production

December 31, 2015

Proved developed reserves as of:

December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015

Proved developed-producing reserves as of:

December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015

Proved undeveloped reserves as of:

December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015

113

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Proved developed and undeveloped reserves:
December 31, 2012

Revisions due to prices
Revisions other than price
Extensions and discoveries
Purchase of reserves
Production
Sale of reserves

December 31, 2013

Revisions due to prices
Revisions other than price
Extensions and discoveries
Purchase of reserves
Production
Sale of reserves

December 31, 2014

Revisions due to prices
Revisions other than price
Extensions and discoveries
Purchase of reserves
Production
Sale of reserves

December 31, 2015

Proved developed reserves as of:

December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015

Proved developed-producing reserves as of:

December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015

Proved undeveloped reserves as of:

December 31, 2012
December 31, 2013
December 31, 2014
December 31, 2015

Total (MMBoe) (1)

U.S.

Canada

Total

2,236
76
(117)
212
1
(189)
(14)

2,205
38
(86)
197
265
(207)
(207)

2,205
(408)
(59)
104
9
(206)

727
18
29
49

—
(64)
(1)

758
(29)
21
14

—
(39)
(176)

549
106
(83)
14

—
(42)

(7) —

1,638

544

1,829
1,947
1,900
1,563

1,743
1,857
1,815
1,509

407
258
305
75

294
315
165
243

278
297
162
240

433
443
384
301

2,963
94
(88)
261
1
(253)
(15)

2,963
9
(65)
211
265
(246)
(383)

2,754
(302)
(142)
118
9
(248)
(7)

2,182

2,123
2,262
2,065
1,806

2,021
2,154
1,977
1,749

840
701
689
376

(1) Gas reserves are converted to Boe at the rate of six Mcf per Bbl of oil, based upon the approximate relative
energy content of gas and oil. This rate is not necessarily indicative of the relationship of natural gas and oil
prices. Bitumen and NGL reserves are converted to Boe on a one-to-one basis with oil.

114

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Proved Undeveloped Reserves

The following table presents the changes in Devon’s total proved undeveloped reserves during 2015

(MMBoe).

Proved undeveloped reserves as of December 31, 2014

Extensions and discoveries
Revisions due to prices
Revisions other than price
Conversion to proved developed reserves

Proved undeveloped reserves as of December 31, 2015

U.S.

Canada

Total

305
13
(115)
(40)
(88)

384
11
80
(80)
(94)

301

689
24
(35)
(120)
(182)

376

Proved undeveloped reserves decreased 45% from year-end 2014 to year-end 2015, and the year-end 2015
balance represents 17% of total proved reserves. Drilling and development activities increased Devon’s proved
undeveloped reserves 24 MMBoe and resulted in the conversion of 182 MMBoe, or 26%, of the 2014 proved
undeveloped reserves to proved developed reserves. Costs incurred to develop and convert Devon’s proved
undeveloped reserves were approximately $2.2 billion for 2015. Additionally, revisions other than price
decreased Devon’s proved undeveloped reserves 120 MMBoe primarily due to evaluations of certain properties
in the U.S. and Canada. The largest revisions, which reduced reserves by 80 MMBoe, relate to evaluations of
Jackfish bitumen reserves. Of the 40 MMBoe revisions recorded for U.S. properties, a reduction of
approximately 27 MMBoe represents reserves that Devon now does not expect to develop in the next five years,
including 20 MMBoe attributable to the Eagle Ford.

A significant amount of Devon’s proved undeveloped reserves at the end of 2015 related to its Jackfish
operations. At December 31, 2015 and 2014, Devon’s Jackfish proved undeveloped reserves were 301 MMBoe
and 384 MMBoe, respectively. Development schedules for the Jackfish reserves are primarily controlled by the
need to keep the processing plants at their 35 MBbl daily facility capacity. Processing plant capacity is controlled
by factors such as total steam processing capacity and steam-oil ratios. Furthermore, development of these
projects involves the up-front construction of steam injection/distribution and bitumen processing facilities. Due
to the large up-front capital investments and large reserves required to provide economic returns, the project
conditions meet the specific circumstances requiring a period greater than 5 years for conversion to developed
reserves. As a result, these reserves are classified as proved undeveloped for more than five years. Currently, the
development schedule for these reserves extends through to 2030. At the end of 2015, approximately 184
MMBoe of proved undeveloped reserves at Jackfish have remained undeveloped for five years or more since the
initial booking. No other projects have proved undeveloped reserves that have remained undeveloped more than
five years from the initial booking of the reserves. Furthermore, approximately 180 MMBoe of proved
undeveloped reserves at Jackfish will require in excess of five years, from the date of this filing, to develop.

Price Revisions

2015 – Reserves decreased 302 MMBoe primarily due to lower commodity prices across all products. The
lower bitumen price increased Canadian reserves due to the decline in royalties, which increases Devon’s after-
royalty volumes.

2014 – Reserves increased 9 MMBoe primarily due to higher gas prices in the Barnett Shale and the
Anadarko Basin, partially offset by higher bitumen prices, which result in lower after-royalty volumes, in
Canada.

115

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

2013 – Reserves increased 94 MMBoe primarily due to higher gas prices. Of this increase, 43 MMBoe

related to the Barnett Shale and 19 MMBoe related to the Rocky Mountain area.

Revisions Other Than Price

Total revisions other than price for 2015 primarily related to evaluations of Eagle Ford and Jackfish.
Negative revisions other than price at Jackfish are primarily due to a refined reserves methodology that resulted
in a reduced recovery factor. Revisions other than price in 2014 and 2013 primarily related to Devon’s evaluation
of certain dry gas regions, with the largest revisions being made in the Cana-Woodford Shale and Barnett Shale.

Extensions and Discoveries

2015 – Of the 118 MMBoe of extensions and discoveries, 38 MMBoe related to the Delaware Basin, 30
MMBoe related to the Anadarko Basin, 21 MMBoe related to the Eagle Ford and 11 MMBoe related to Jackfish.

The 2015 extensions and discoveries included 13 MMBoe related to additions from Devon’s infill drilling

activities, primarily consisting of 11 MMBoe at Jackfish.

2014 – Of the 211 MMBoe of extensions and discoveries, 70 MMBoe related to the Permian Basin, 54
MMBoe related to the Eagle Ford, 36 MMBoe related to the Barnett Shale, 14 MMBoe related to the Anadarko
Basin, 8 MMBoe related to Jackfish and 14 MMBoe related to the Mississippian-Woodford Trend.

The 2014 extensions and discoveries included 5 MMBoe related to additions from Devon’s infill drilling

activities, primarily consisting of 4 MMBoe at the Permian Basin.

2013 – Of the 261 MMBoe of extensions and discoveries, 76 MMBoe related to the Permian Basin, 54
MMBoe related to the Barnett Shale, 42 MMBoe related to the Anadarko Basin, 38 MMBoe related to Jackfish
and 32 MMBoe related to the Mississippian-Woodford Trend.

The 2013 extensions and discoveries included 175 MMBoe related to additions from Devon’s infill drilling

activities, including 23 MMBoe at the Cana-Woodford Shale, 54 MMBoe at the Barnett Shale, 38 MMBoe at
Jackfish, 33 MMBoe at the Permian Basin and 20 MMBoe at the Mississippian-Woodford Trend.

Purchase of Reserves

2015 – Of the 9 MMBoe of reserves purchases, 6 MMBoe related to Devon’s acquisition in the Powder

River Basin.

2014 – Of the 265 MMBoe of reserves purchases, 246 MMBoe related to Devon’s GeoSouthern acquisition

in the Eagle Ford.

Sale of Reserves

2015 – The 7 MMBoe of reserves sales related to Devon’s asset divestitures in the San Juan Basin.

2014 – The total 383 MMBoe of reserves sales related to Devon’s asset divestitures in the U.S. and Canada.

116

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Standardized Measure

The following tables reflect Devon’s standardized measure of discounted future net cash flows from its

proved reserves.

Future cash inflows
Future costs:

Development
Production
Future income tax expense

Future net cash flow
10% discount to reflect timing of cash flows

Year Ended December 31, 2015

U.S.

$ 27,398

Canada

(Millions)
$13,047

Total

$ 40,445

(3,306)
(17,251)
—

6,841
(1,973)

(2,759)
(6,891)
(475)

2,922
(1,102)

(6,065)
(24,142)
(475)

9,763
(3,075)

Standardized measure of discounted future net cash flows

$ 4,868

$ 1,820

$ 6,688

Future cash inflows
Future costs:

Development
Production
Future income tax expense

Future net cash flow
10% discount to reflect timing of cash flows

Year Ended December 31, 2014

U.S.

$ 75,847

Canada

(Millions)
$ 31,371

Total

$107,218

(7,168)
(29,740)
(11,021)

27,918
(12,819)

(3,619)
(14,232)
(3,026)

10,494
(5,119)

(10,787)
(43,972)
(14,047)

38,412
(17,938)

Standardized measure of discounted future net cash flows

$ 15,099

$ 5,375

$ 20,474

Future cash inflows
Future costs:

Development
Production
Future income tax expense

Future net cash flow
10% discount to reflect timing of cash flows

Year Ended December 31, 2013

U.S.

$ 61,983

Canada

(Millions)
$ 33,305

Total

$ 95,288

(5,448)
(26,663)
(9,046)

20,826
(10,346)

(5,308)
(15,709)
(2,327)

9,961
(4,700)

(10,756)
(42,372)
(11,373)

30,787
(15,046)

Standardized measure of discounted future net cash flows

$ 10,480

$ 5,261

$ 15,741

Future cash inflows, development costs and production costs were computed using the same assumptions for
prices and costs that were used to estimate Devon’s proved oil and gas reserves at the end of each year. For 2015
estimates, Devon’s future realized prices were assumed to be $44.33 per Bbl of oil, $23.84 per Bbl of bitumen,
$2.06 per Mcf of gas and $10.11 per Bbl of NGLs. Of the $6.1 billion of future development costs as of the end
of 2015, $0.6 billion, $0.6 billion and $0.4 billion are estimated to be spent in 2016, 2017 and 2018, respectively.

117

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Future development costs include not only development costs but also future asset retirement costs.
Included as part of the $6.1 billion of future development costs are $1.2 billion of future asset retirement costs.
The future income tax expenses have been computed using statutory tax rates, giving effect to allowable tax
deductions and tax credits under current laws.

The principal changes in Devon’s standardized measure of discounted future net cash flows are as follows:

Beginning balance
Net changes in prices and production costs
Oil, bitumen, gas and NGL sales, net of production costs
Changes in estimated future development costs
Extensions and discoveries, net of future development costs
Purchase of reserves
Sales of reserves in place
Revisions of quantity estimates
Previously estimated development costs incurred during the period
Accretion of discount
Foreign exchange and other
Net change in income taxes

Ending balance

Year Ended December 31,

2015

2014

2013

(Millions)
$ 20,474 $15,741 $13,221
3,018
(20,756)
(5,613)
(2,704)
399
1,313
4,047
1,129
14
95
(44)
(79)
(1,040)
(1,451)
1,986
2,158
1,940
567
(583)
(1,254)
(1,604)
7,196

2,561
(6,865)
(768)
4,836
6,422
(2,384)
(746)
1,933
1,746
(107)
(1,895)

$ 6,688 $20,474 $15,741

22. Supplemental Quarterly Financial Information (Unaudited)

The following tables present a summary of Devon’s unaudited interim results of operations.

2015

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Full
Year

(Millions, except per share amounts)
$ 3,265
$ 13,145
$ 3,601
$ 3,393
$(5,624) $(4,479) $(5,623) $(5,542) $(21,268)
$(3,599) $(2,816) $(3,507) $(4,532) $(14,454)
$ (8.88) $ (6.94) $ (8.64) $(11.12) $ (35.55)
$ (8.88) $ (6.94) $ (8.64) $(11.12) $ (35.55)

$ 2,886

2014

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Full
Year

$ 3,725
560
$
$
324
$ 0.80
$ 0.79

(Millions, except per share amounts)
$ 5,336
$ 4,510
$ 1,654
$ 1,554
$ 1,016
$
675
$ 2.48
$ 1.65
$ 2.47
$ 1.64

$ 19,566
$ 5,995
$
$ 4,059
291
$ (408) $ 1,607
3.93
$ (1.01) $
3.91
$ (1.01) $

Operating revenues
Loss before income taxes
Net loss attributable to Devon
Basic net loss per share attributable to Devon
Diluted net loss per share attributable to Devon

Operating revenues
Earnings before income taxes
Net earnings (loss) attributable to Devon
Basic net earnings (loss) per share attributable to Devon
Diluted net earnings (loss) per share attributable to Devon

118

DEVON ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Net Earnings (Loss) Attributable to Devon

The 2015 quarterly results include asset impairments of $5.5 billion (or $13.46 per diluted share), $4.2
billion (or $10.27 per diluted share), $5.9 billion ($14.41 per diluted share) and $5.3 billion (or $13.09 per diluted
share) for the first quarter through the fourth quarter of 2015, respectively, as discussed in Note 5.

The fourth quarter of 2014 includes asset impairments of $1.9 billion (or $4.79 per diluted share) as

discussed in Note 5.

119

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not Applicable.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

We have established disclosure controls and procedures to ensure that material information relating to
Devon, including its consolidated subsidiaries, is made known to the officers who certify Devon’s financial
reports and to other members of senior management and the Board of Directors.

Based on their evaluation, our principal executive and principal financial officers have concluded that our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934) were effective as of December 31, 2015 to ensure that the information required to be disclosed by
Devon in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the SEC rules and forms.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial
reporting for Devon, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act
of 1934. Under the supervision and with the participation of Devon’s management, including our principal
executive and principal financial officers, we conducted an evaluation of the effectiveness of our internal control
over financial reporting based on the framework in Internal Control – Integrated Framework issued in 2013 by
the Committee of Sponsoring Organizations of the Treadway Commission (the “2013 COSO Framework”).
Based on this evaluation under the 2013 COSO Framework, which was completed on February 17, 2016,
management concluded that its internal control over financial reporting was effective as of December 31, 2015.

The effectiveness of our internal control over financial reporting as of December 31, 2015 has been audited

by KPMG LLP, an independent registered public accounting firm who audited our consolidated financial
statements as of and for the year ended December 31, 2015, as stated in their report, which is included under
“Item 8. Financial Statements and Supplementary Data” of this report.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting during the fourth quarter of 2015 that
has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

Not Applicable.

120

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information called for by this Item 10 is incorporated herein by reference to the definitive Proxy

Statement to be filed by Devon pursuant to Regulation 14A of the General Rules and Regulations under the
Securities Exchange Act of 1934 not later than April 29, 2016.

Item 11. Executive Compensation

The information called for by this Item 11 is incorporated herein by reference to the definitive Proxy

Statement to be filed by Devon pursuant to Regulation 14A of the General Rules and Regulations under the
Securities Exchange Act of 1934 not later than April 29, 2016.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information called for by this Item 12 is incorporated herein by reference to the definitive Proxy

Statement to be filed by Devon pursuant to Regulation 14A of the General Rules and Regulations under the
Securities Exchange Act of 1934 not later than April 29, 2016.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information called for by this Item 13 is incorporated herein by reference to the definitive Proxy

Statement to be filed by Devon pursuant to Regulation 14A of the General Rules and Regulations under the
Securities Exchange Act of 1934 not later than April 29, 2016.

Item 14. Principal Accountant Fees and Services

The information called for by this Item 14 is incorporated herein by reference to the definitive Proxy

Statement to be filed by Devon pursuant to Regulation 14A of the General Rules and Regulations under the
Securities Exchange Act of 1934 not later than April 29, 2016.

121

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this report:

1. Consolidated Financial Statements

Reference is made to the Index to Consolidated Financial Statements and Consolidated Financial Statement

Schedules appearing at “Item 8. Financial Statements and Supplementary Data” in this report.

2. Consolidated Financial Statement Schedules

All financial statement schedules are omitted as they are inapplicable, or the required information has been

included in the consolidated financial statements or notes thereto.

3. Exhibits

Exhibit No.

Description

1.1

1.2

2.1

2.2

2.3

2.4

3.1

3.2

4.1

Underwriting Agreement dated June 11, 2015, by and among Registrant and Goldman, Sachs &
Co. and J.P. Morgan Securities LLC, as representatives of the several underwriters named therein
(incorporated by reference to Exhibit 1.1 to Registrant’s Form 8-K filed June 16, 2015; File
No. 001-32318).

Underwriting Agreement dated December 10, 2015, by and among Registrant and Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. LLC, as representatives of the
several underwriters named therein (incorporated by reference to Exhibit 1.1 to Registrant’s Form
8-K filed December 15, 2015; File No. 001-32318).

Agreement and Plan of Merger dated October 21, 2013, by and among Registrant, Devon Gas
Services, L.P., Acacia Natural Gas Corp I, Inc., Crosstex Energy, Inc., New Public Rangers
L.L.C., Boomer Merger Sub, Inc. and Rangers Merger Sub, Inc. (incorporated by reference to
Exhibit 2.1 to Registrant’s Form 8-K filed October 22, 2013; File No. 001-32318).

Contribution Agreement dated October 21, 2013, by and among Registrant, Devon Gas
Corporation, Devon Gas Services, L.P., Southwestern Gas Pipeline, Inc., Crosstex Energy, L.P.
and Crosstex Energy Services, L.P. (incorporated by reference to Exhibit 2.2 to Registrant’s Form
8-K filed October 22, 2013; File No. 001-32318).

Purchase and Sale Agreement dated November 20, 2013, among GeoSouthern Intermediate
Holdings, LLC, GeoSouthern Energy Corporation (solely with respect to certain sections specified
therein), and Devon Energy Production Company, L.P. (incorporated by reference to Exhibit 10.1
to Registrant’s Form 8-K/A filed May 19, 2014; File No. 001-32318).

Letter Agreement dated February 28, 2014 amending certain provisions of the Purchase and Sale
Agreement dated November 20, 2013 among GeoSouthern Intermediate Holdings, LLC,
GeoSouthern Energy Corporation and Devon Energy Production Company, L.P (incorporated by
reference to Exhibit 2.4 to Registrant’s Form 10-K filed February 20, 2015; File No. 001-32318).

Registrant’s Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of
Registrant’s 10-K for the fiscal year ending December 31, 2012; File No. 001-32318).

Registrant’s Bylaws (incorporated by reference to Exhibit 3.1 of Registrant’s Form 8-K filed
January 27, 2016; File No. 001-32318).

Registration Rights Agreement dated January 7, 2016, among Registrant and EnCap FEx
Holdings, LLC, Felix Stack Investments, LLC, Felix STACK Holdings, LLC and the other selling
stockholders from time to time party thereto.

122

Exhibit No.

Description

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

4.10

4.11

4.12

4.13

Registration Rights Agreement dated December 17, 2015, among Registrant and NewWoods
Petroleum, LLC and the other selling stockholders from time to time party thereto.

Indenture, dated as of July 12, 2011, between Registrant and UMB Bank, National Association, as
Trustee (incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K filed July 12, 2011;
File No. 001-32318).

Supplemental Indenture No. 1, dated as of July 12, 2011, to Indenture dated as of July 12, 2011,
between Registrant and UMB Bank, National Association, as Trustee, relating to the 4.00% Senior
Notes due 2021 and the 5.60% Senior Notes due 2041 (incorporated by reference to Exhibit 4.2 to
Registrant’s Form 8-K filed July 12, 2011; File No. 001-32318).

Supplemental Indenture No. 2, dated as of May 14, 2012, to Indenture dated as of July 12, 2011,
between Registrant and UMB Bank, National Association, as Trustee, relating to the 3.250%
Senior Notes due 2022 and the 4.750% Senior Notes due 2042 (incorporated by reference to
Exhibit 4.1 to Registrant’s Form 8-K filed May 14, 2012; File No. 001-32318).

Supplemental Indenture No. 3, dated as of December 19, 2013, to Indenture dated as of July 12,
2011, between Registrant and UMB Bank, National Association, as Trustee, relating to the
Floating Rate Senior Notes due 2016 and the 2.25% Senior Notes due 2018 (incorporated by
reference to Exhibit 4.1 to Registrant’s Form 8-K filed December 19, 2013; File No. 001-32318).

Supplemental Indenture No. 4, dated as of June 16, 2015, to Indenture dated as of July 12, 2011,
between Registrant and UMB Bank, National Association, as Trustee, relating to the 5.000%
Senior Notes due 2045 (incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K filed
June 16, 2015; File No. 001-32318).

Supplemental Indenture No. 5, dated as of December 15, 2015, to Indenture dated as of July 12,
2011, between Registrant and UMB Bank, National Association, as Trustee, relating to the
5.850% Senior Notes due 2025 (incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K
filed December 15, 2015; File No. 001-32318).

Indenture, dated as of March 1, 2002, between Registrant and The Bank of New York Mellon
Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 of Registrant’s
Form 8-K filed April 9, 2002; File No. 000-30176).

Supplemental Indenture No. 1, dated as of March 25, 2002, to Indenture dated as of March 1,
2002, between Registrant and The Bank of New York Mellon Trust Company, N.A., as Trustee,
relating to the 7.95% Senior Debentures due 2032 (incorporated by reference to Exhibit 4.2 to
Registrant’s Form 8-K filed April 9, 2002; File No. 000-30176).

Supplemental Indenture No. 3, dated as of January 9, 2009, to Indenture dated as of March 1,
2002, between Registrant and The Bank of New York Mellon Trust Company, N.A., as Trustee,
relating to the 6.30% Senior Notes due 2019 (incorporated by reference to Exhibit 4.1 to
Registrant’s Form 8-K filed January 9, 2009; File No. 000-32318).

Indenture dated as of October 3, 2001, by and among Devon Financing Corporation, L.L.C. as
Issuer, Registrant as Guarantor, and The Bank of New York Mellon Trust Company, N.A.,
originally The Chase Manhattan Bank, as Trustee, relating to the 7.875% Debentures due 2031
(incorporated by reference to Exhibit 4.7 to Registrant’s Registration Statement on Form S-4 as
filed October 31, 2001; File No. 333-68694).

Indenture dated as of July 8, 1998 among Devon OEI Operating, L.L.C. (as successor by merger to
Ocean Energy, Inc.), its Subsidiary Guarantors, and Wells Fargo Bank Minnesota, N.A., as
Trustee, relating to the 8.25% Senior Notes due 2018 (incorporated by reference to Exhibit 10.24
to the Form 10-Q for the period ended June 30, 1998 of Ocean Energy, Inc.; File No. 001-14252).

123

Exhibit No.

4.14

4.15

4.16

4.17

4.18

4.19

4.20

4.21

Description

First Supplemental Indenture, dated March 30, 1999 to Indenture dated as of July 8, 1998 among
Devon OEI Operating, L.L.C. (as successor by merger to Ocean Energy, Inc.), its Subsidiary
Guarantors, and Wells Fargo Bank Minnesota, N.A., as Trustee, relating to the 8.25% Senior
Notes due 2018 (incorporated by reference to Exhibit 4.5 to Ocean Energy, Inc.’s Form 10-Q for
the period ended March 31, 1999; File No. 001-08094).

Second Supplemental Indenture, dated as of May 9, 2001 to Indenture dated as of July 8, 1998
among Devon OEI Operating, L.L.C. (as successor by merger to Ocean Energy, Inc.), its
Subsidiary Guarantors, and Wells Fargo Bank Minnesota, N.A., as Trustee, relating to the 8.25%
Senior Notes due 2018 (incorporated by reference to Exhibit 99.2 to Ocean Energy, Inc.’s
Form 8-K filed May 14, 2001; File No. 033-06444).

Third Supplemental Indenture, dated January 23, 2006 to Indenture dated as of July 8, 1998
among Devon OEI Operating, L.L.C., as Issuer, Devon Energy Production Company, L.P., as
Successor Guarantor, and Wells Fargo Bank Minnesota, N.A., as Trustee, relating to the 8.25%
Senior Notes due 2018 (incorporated by reference to Exhibit 4.23 of Registrant’s Form 10-K for
the year ended December 31, 2005; File No. 001-32318).

Senior Indenture dated September 1, 1997, among Devon OEI Operating, L.L.C. (as successor by
merger to Ocean Energy, Inc.) and The Bank of New York Mellon Trust Company, N.A., as
Trustee, and Specimen of 7.50% Senior Notes (incorporated by reference to Exhibit 4.4 to Ocean
Energy Inc.’s Form 10-K for the year ended December 31, 1997; File No. 001-08094).

First Supplemental Indenture, dated as of March 30, 1999 to Senior Indenture dated as of
September 1, 1997, among Devon OEI Operating, L.L.C. (as successor by merger to Ocean
Energy, Inc.) and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to the
7.50% Senior Notes Due 2027 (incorporated by reference to Exhibit 4.10 to Ocean Energy’s
Form 10-Q for the period ended March 31, 1999; File No. 001-08094).

Second Supplemental Indenture, dated as of May 9, 2001 to Senior Indenture dated as of
September 1, 1997, among Devon OEI Operating, L.L.C. (as successor by merger to Ocean
Energy, Inc.), its Subsidiary Guarantors, and The Bank of New York Mellon Trust Company,
N.A., as Trustee, relating to the 7.50% Senior Notes Due 2027 (incorporated by reference to
Exhibit 99.4 to Ocean Energy, Inc.’s Form 8-K filed May 14, 2001; File No. 033-06444).

Third Supplemental Indenture, dated December 31, 2005 to Senior Indenture dated as of September
1, 1997, among Devon OEI Operating, L.L.C., as Issuer, Devon Energy Production Company, L.P.,
as Successor Guarantor, and The Bank of New York Mellon Trust Company, N.A., as Trustee,
relating to the 7.50% Senior Notes Due 2027 (incorporated by reference to Exhibit 4.27 of
Registrant’s Form 10-K for the year ended December 31, 2005; File No. 001-32318).

Registrant has not filed instruments defining the rights of holders of long-term indebtedness of
Registrant’s majority owned subsidiary, EnLink Midstream Partners, LP, as none of which
exceeds ten percent of the total assets of Registrant and its subsidiaries on a consolidated basis.
Registrant hereby agrees to furnish a copy of any such agreements to the Commission upon
request.

10.1

Credit Agreement dated October 24, 2012, among Registrant, as U.S. Borrower, Devon NEC
Corporation and Devon Canada Corporation, as Canadian Borrowers, each lender from time to
time party thereto, each L/C Issuer from time to time party thereto, and Bank of America, N.A., as
Administrative Agent, Canadian Swing Line Lender and U.S. Swing Line Lender (incorporated by
reference to Exhibit 10.1 of Registrant’s Form 8-K filed October 29, 2012; File No. 001-32318).

124

Exhibit No.

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

Description

Extension Agreement dated September 3, 2013 to the Credit Agreement dated October 24, 2012,
among Registrant, as U.S. Borrower, Devon NEC Corporation and Devon Canada Corporation, as
Canadian Borrowers, Devon Financing Company, L.L.C., the consenting lenders, and Bank of
America, N.A., as Administrative Agent, Canadian Swing Line Lender and U.S. Swing Line
Lender, with respect to Borrower’s extension of the Maturity Date from October 24, 2017 to
October 24, 2018 (incorporated by reference to Exhibit 10.1 to Registrant’s Form 10-Q filed
November 6, 2013; File No. 001-32318).

First Amendment to Credit Agreement dated February 3, 2014, to the Credit Agreement dated
October 24, 2012, among Registrant, as U.S. Borrower, Devon NEC Corporation and Devon
Canada Corporation, as Canadian Borrowers, each lender from time to time party thereto, each L/
C Issuer from time to time party thereto, and Bank of America, N.A., as Administrative Agent,
Canadian Swing Line Lender and U.S. Swing Line Lender (incorporated by reference to Exhibit
10.1 of Registrant’s Form 8-K filed February 7, 2014; File No. 001-32318).

Extension Agreement dated as of October 17, 2014, to the Credit Agreement dated October 24,
2012, among Registrant, as U.S. Borrower, Devon NEC Corporation and Devon Canada
Corporation, as Canadian Borrowers, Devon Financing Company, L.L.C., the consenting lenders,
and Bank of America, N.A., as Administrative Agent, Canadian Swing Line Lender and U.S.
Swing Line Lender with respect to the extension of the maturity date from October 24, 2018 to
October 24, 2019 (incorporated by reference to Exhibit 10.1 to Registrant’s Form 10-Q filed
November 5, 2014; File No. 001-32318).

Devon Energy Corporation 2015 Long-Term Incentive Plan (incorporated by reference to Exhibit
99.1 to Registrant’s Form S-8 filed June 3, 2015; File No. 333-204666).*

Devon Energy Corporation 2009 Long-Term Incentive Plan (as amended and restated effective
June 6, 2012) (incorporated by reference to Exhibit 99.1 to Registrant’s Form S-8 filed June 18,
2012; File No. 333-182198).*

Devon Energy Corporation 2013 Amendment (effective as of March 6, 2013) to the Devon Energy
Corporation 2009 Long-Term Incentive Plan (as amended and restated effective June 6, 2012)
(incorporated by reference to Exhibit 10.1 to Registrant’s Form 10-Q filed May 1, 2013; File
No. 001-32318).*

Devon Energy Corporation 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit
4.8 to Registrant’s Form S-8 filed August 17, 2005; File No. 333-127630).*

First Amendment to Devon Energy Corporation 2005 Long-Term Incentive Plan (incorporated by
reference to Appendix A to Registrant’s Proxy Statement for the 2006 Annual Meeting of
Stockholders filed on April 28, 2006; File No. 001-32318).*

Devon Energy Corporation Incentive Compensation Plan (incorporated by reference to Exhibit
10.1 to Registrant’s Form 8-K, filed June 8, 2012; File No. 001-32318)*

Devon Energy Corporation Non-Qualified Deferred Compensation Plan Amended and Restated
Effective as of April 15, 2014 (incorporated by reference to Exhibit 10.1 to Registrant’s
Form 10-Q filed August 6, 2014; File No. 001-32318).*

Devon Energy Corporation Amendment 2014-2, executed May 9, 2014, to the Devon Energy
Corporation Non-Qualified Deferred Compensation Plan as amended effective April 15, 2014
(incorporated by reference to Exhibit 10.11 to Registrant’s Form 10-K, filed February 20, 2015;
File No. 001-32318).*

Devon Energy Corporation Benefit Restoration Plan (amended and restated effective January 1,
2012) (incorporated by reference to Exhibit 10.15 to Registrant’s Form 10-K, filed February 24,
2012; File No. 001-32318).*

125

Exhibit No.

10.14

10.15

10.16

10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24

10.25

10.26

10.27

Description

Devon Energy Corporation Amendment 2014-1, executed March 7, 2014, to the Devon Energy
Corporation Benefit Restoration Plan (amended and restated effective January 1, 2012) (incorporated
by reference to Exhibit 10.6 to Registrant’s Form 10-Q filed May 9, 2014; File No. 001-32318).*

Devon Energy Corporation Amendment 2015-1, executed April 15, 2015, to the Devon Energy
Corporation Benefit Restoration Plan (amended and restated effective January 1, 2012) (incorporated
by reference to Exhibit 10.1 to Registrant’s Form 10-Q filed May 6, 2015; File No. 001-32318).*

Devon Energy Corporation Defined Contribution Restoration Plan (amended and restated effective
January 1, 2012) (incorporated by reference to Exhibit 10.16 to Registrant’s Form 10-K, filed
February 24, 2012; File No. 001-32318).*

Devon Energy Corporation Amendment 2014-1, executed March 7, 2014, to the Devon Energy
Corporation Defined Contribution Restoration Plan (amended and restated effective January 1,
2012) (incorporated by reference to Exhibit 10.7 to Registrant’s Form 10-Q filed May 9, 2014;
File No. 001-32318).*

Devon Energy Corporation Supplemental Contribution Plan (amended and restated effective
January 1, 2012) (incorporated by reference to Exhibit 10.17 to Registrant’s Form 10-K, filed
February 24, 2012; File No. 001-32318).*

Devon Energy Corporation Amendment 2014-1, executed March 7, 2014, to the Devon Energy
Corporation Supplemental Contribution Plan (amended and restated effective January 1, 2012)
(incorporated by reference to Exhibit 10.8 to Registrant’s Form 10-Q filed May 9, 2014; File
No. 001-32318).*

Devon Energy Corporation Supplemental Executive Retirement Plan (amended and restated
effective January 1, 2012) (incorporated by reference to Exhibit 10.18 to Registrant’s Form 10-K,
filed February 24, 2012; File No. 001-32318).*

Devon Energy Corporation Supplemental Retirement Income Plan (amended and restated effective
January 1, 2012) (incorporated by reference to Exhibit 10.19 to Registrant’s Form 10-K, filed
February 24, 2012; File No. 001-32318).*

Devon Energy Corporation Amendment 2014-1, executed March 7, 2014, to the Devon Energy
Corporation Supplemental Retirement Income Plan (amended and restated effective January 1,
2012) (incorporated by reference to Exhibit 10.9 to Registrant’s Form 10-Q filed May 9, 2014;
File No. 001-32318).*

Devon Energy Corporation Incentive Savings Plan, as amended and restated effective January 1,
2014, executed September 22, 2014 (incorporated by reference to Exhibit 10.21 to Registrant’s
Form 10-K, filed February 20, 2015; File No. 001-32318).*

Devon Energy Corporation Amendment 2015-1, executed April 15, 2015, to the Devon Energy
Corporation Incentive Savings Plan (amended and restated effective January 1, 2014) (incorporated
by reference to Exhibit 10.2 to Registrant’s Form 10-Q filed May 6, 2015; File No. 001-32318).*

Amended and Restated Form of Employment Agreement between Registrant and certain executive
officers (incorporated by reference to Exhibit 10.19 to Registrant’s Form 10-K filed February 27,
2009; File No. 001-32318).*

Form of Amendment No. 1 to the Amended and Restated Employment Agreement between
Registrant and certain executive officers (incorporated by reference to Exhibit 10.1 to Registrant’s
Form 8-K filed April 25, 2011; File No. 001-32318).*

Form of Employment Agreement between Registrant and certain executive officers (Amended and
Restated Form of Employment Agreement dated December 15, 2008 (Exhibit 10.22 above), as
amended by Amendment No. 1 thereto dated April 19, 2011 (Exhibit 10.23 above)) (incorporated by
reference to Exhibit 10.22 to Registrant’s Form 10-K filed February 28, 2014; File No. 001-32318).*

126

Exhibit No.

10.28

10.29

10.30

10.31

10.32

10.33

10.34

10.35

10.36

10.37

Description

Form of Notice of Grant of Performance Restricted Stock Award and Award Agreement under the
2009 Long-Term Incentive Plan (as amended and restated June 6, 2012) between Registrant and
certain employees and executive officers for performance based restricted stock awarded
(incorporated by reference to Exhibit 10.16 to Registrant’s Form 10-K filed February 21, 2013;
File No. 001-32318).*

Form of Notice of Grant of Performance Restricted Stock Award and Award Agreement under the
2009 Long-Term Incentive Plan (as amended and restated June 6, 2012) between Registrant and
certain employees and executive officers for performance based restricted stock awarded
(incorporated by reference to Exhibit 10.25 to Registrant’s Form 10-K filed February 28, 2014;
File No. 001-32318).*

Form of Notice of Grant of Performance Restricted Stock Award and Award Agreement under the
2009 Long-Term Incentive Plan (as amended and restated June 6, 2012) between Registrant and
certain employees and executive officers for performance based restricted stock awarded
(incorporated by reference to Exhibit 10.29 to Registrant’s Form 10-K filed February 20, 2015;
File No. 001-32318).*

Form of Notice of Grant of Performance Restricted Stock Award and Award Agreement under the
2015 Long-Term Incentive Plan between Registrant and David A. Hager for performance based
restricted stock awarded (incorporated by reference to Exhibit 10.1 to Registrant’s Form 10-Q
filed November 4, 2015; File No. 001-32318).*

Form of Notice of Grant of Performance Share Unit Award and Award Agreement under the 2009
Long-Term Incentive Plan (as amended and restated June 6, 2012) between Registrant and certain
employees and executive officers for performance based restricted share units awarded
(incorporated by reference to Exhibit 10.17 to Registrant’s Form 10-K filed February 21, 2013;
File No. 001-32318).*

Form of Notice of Grant of Performance Share Unit Award and Award Agreement under the 2009
Long-Term Incentive Plan (as amended and restated June 6, 2012) between Registrant and certain
employees and executive officers for performance based restricted share units awarded
(incorporated by reference to Exhibit 10.28 to Registrant’s Form 10-K filed February 28, 2014;
File No. 001-32318).*

Form of Notice of Grant of Performance Share Unit Award and Award Agreement under the 2009
Long-Term Incentive Plan (as amended and restated June 6, 2012) between Registrant and certain
employees and executive officers for performance based restricted share units awarded
(incorporated by reference to Exhibit 10.32 to Registrant’s Form 10-K filed February 20, 2015;
File No. 001-32318).*

Form of Incentive Stock Option Award Agreement under the 2009 Long-Term Incentive Plan
between Registrant and certain employees and executive officers for incentive stock options
granted (incorporated by reference to Exhibit 10.15 to Registrant’s Form 10-K filed February 25,
2011; File No. 001-32318).*

Form of Employee Nonqualified Stock Option Award Agreement under the 2009 Long-Term
Incentive Plan between Registrant and certain employees and executive officers for nonqualified
stock options granted (incorporated by reference to Exhibit 10.16 to Registrant’s Form 10-K filed
February 25, 2011; File No. 001-32318).*

Form of Non-Management Director Nonqualified Stock Option Award Agreement under the
Devon Energy Corporation 2009 Long-Term Incentive Plan between Registrant and all Non-
Management Directors for nonqualified stock options granted (incorporated by reference to
Exhibit 10.20 to Registrant’s Form 10-K filed on February 25, 2010; File No. 001-32318).*

127

Exhibit No.

10.38

10.39

10.40

10.41

10.42

10.43

10.44

23.1

23.2

23.3

31.1

31.2

32.1

32.2

99.1

99.2

Description

Form of Restricted Stock Award Agreement under the 2009 Long-Term Incentive Plan (as
amended and restated June 6, 2012) between Registrant and Thomas L. Mitchell for restricted
stock awarded (incorporated by reference to Exhibit 10.18 to Registrant’s Form 10-K filed
February 25, 2011; File No. 001-32318).*

Form of Notice of Grant of Restricted Stock Award Agreement under the 2009 Long-Term
Incentive Plan between Registrant and all non-management directors for restricted stock awards
(incorporated by reference to Exhibit 10.33 to Registrant’s Form 10-K filed February 28, 2014;
File No. 001-32318).*

Form of Notice of Grant of Restricted Stock Award and Award Agreement under the 2015 Long-
Term Incentive Plan between Registrant and all non-management directors for restricted stock
awards (incorporated by reference to Exhibit 10.1 to Registrant’s Form 10-Q filed August 5, 2014;
File No. 001-32318).*

Form of Letter Agreement amending the restricted stock award agreements and nonqualified stock
option agreements under the 2009 Long-Term Incentive Plan and the 2005 Long-Term Incentive
Plan between Registrant and J. Larry Nichols, John Richels and Darryl G. Smette (incorporated by
reference to Exhibit 10.22 to Registrant’s Form 10-K filed February 25, 2011; File No. 001-
32318).*

Form of Amendment to Incentive Stock Option Award Agreements between Registrant and post-
retirement eligible executives relating to incentive stock options under the 2009 Long-Term
Incentive Plan (incorporated by reference to Exhibit 10.24 to Registrant’s Form 10-K filed
February 21, 2013; File No. 001-32318).*

Amendment to Performance Share Unit Award Agreement dated effective September 16, 2015,
between Registrant and John Richels to Performance Share Unit Award Agreement dated
February 10, 2015.*

Amendment to Performance Restricted Stock Award Agreement dated effective September 16,
2015, between Registrant and John Richels to Performance Restricted Stock Award Agreement
dated February 10, 2015.*

Statement of computations of ratios of earnings to fixed charges.

Registrant’s Significant Subsidiaries.

Consent of KPMG LLP.

Consent of LaRoche Petroleum Consultants, Ltd.

Consent of Deloitte.

Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.

Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.

Certification of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.

Certification of principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.

Report of LaRoche Petroleum Consultants, Ltd.

Report of Deloitte.

* Compensatory plans or arrangements

128

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant

has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

DEVON ENERGY CORPORATION

By: /s/ DAVID A. HAGER
David A. Hager
President and Chief Executive Officer

February 17, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by

the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ DAVID A. HAGER
David A. Hager

/s/ THOMAS L. MITCHELL
Thomas L. Mitchell

/s/ JEREMY D. HUMPHERS
Jeremy D. Humphers

/s/ J. LARRY NICHOLS
J. Larry Nichols

/s/ JOHN RICHELS
John Richels

/s/ BARBARA M. BAUMANN
Barbara M. Baumann

/s/ JOHN E. BETHANCOURT
John E. Bethancourt

/s/ ROBERT H. HENRY
Robert H. Henry

/s/ MICHAEL M. KANOVSKY
Michael M. Kanovsky

/s/ ROBERT A. MOSBACHER, JR.
Robert A. Mosbacher, Jr.

/s/ DUANE C. RADTKE
Duane C. Radtke

/s/ MARY P. RICCIARDELLO
Mary P. Ricciardello

President and Chief Executive Officer
(Principal executive officer)

February 17, 2016

Executive Vice President
and Chief Financial Officer
(Principal financial officer)

Senior Vice President
and Chief Accounting Officer
(Principal accounting officer)

February 17, 2016

Executive Chairman of the Board

February 17, 2016

Vice Chairman of the Board

February 17, 2016

Director

129

February 17, 2016

Directors

J. Larry Nichols
Executive Chairman

John Richels
Vice Chairman

Barbara M. Baumann (1) (3)

John E. Bethancourt (2) (3) (4)

Robert H. Henry (1) (3)

Michael M. Kanovsky (1) (4)
Chairman of Reserves Committee

Robert A. Mosbacher Jr. (2) (3)
Lead Director
Chairman of Governance Committee

Duane C. Radtke (2) (4)
Chairman of Compensation Committee

Mary P. Ricciardello (1) (3)
Chairman of Audit Committee

(1) Audit Committee
(2) Compensation Committee
(3) Governance Committee
(4) Reserves Committee

Senior Executives

David A. Hager
President and Chief Executive Officer

Tony Vaughn
Chief Operating Officer

Other Executives

Sue Alberti
Senior Vice President, Marketing, Supply Chain
and Evaluation & Planning

Tana K. Cashion
Senior Vice President, Human Resources

Rob Dutton
Senior Vice President, Canadian Operations
and President of Devon Canada

Richard A. Gideon
Senior Vice President, U.S. Operations

David G. Harris
Senior Vice President, Business Development

Jeremy D. Humphers
Senior Vice President and Chief Accounting
Officer

Kevin D. Lafferty
Senior Vice President, U.S. Operations

Bill A. Penhall
Senior Vice President, Exploration and New
Ventures

Jeffrey L. Ritenour
Senior Vice President, Corporate Finance
and Treasurer

Michael J. Stover
Senior Vice President, Strategic Services

Howard J. Thill
Senior Vice President, Communications
and Investor Relations

Shareholder Assistance
For information about transfer or exchange of
shares, dividends, address changes, account
consolidation, multiple mailings, lost certificates
and Form 1099, contact:

Computershare Trust Company, N.A.
PO Box 43078
Providence, RI 02940-3078
Toll free: (877) 860-5820
Website: www.computershare.com/investor

Royalty Owner Assistance
Telephone: (405) 228-4800
E-mail: DevonDirect@dvn.com

Annual Meeting
Our annual shareholders’ meeting will be held at
8 a.m. Central Time on Wednesday, June 8, 2016,
at the Devon Energy Center Auditorium, 333 W.
Sheridan Avenue, Oklahoma City, OK.

Independent Auditors
KPMG LLP
Oklahoma City, OK

Stock Trading Data
Devon Energy Corporation’s common stock is
traded on the New York Stock Exchange (symbol:
DVN). There are approximately 8,500 shareholders
of record.

Additional Information
This report, Devon’s Corporate Social Responsibility
Report and other information about the company
are available at www.devonenergy.com.

Forward-Looking Statements
See Information Regarding Forward-Looking
Statements on page four of this report.

Thomas L. Mitchell
Executive Vice President and Chief Financial
Officer

R. Alan Marcum
Executive Vice President, Administration

Frank W. Rudolph
Executive Vice President, Human Resources

Darryl G. Smette
Executive Vice President, Marketing, Facilities,
Pipeline and Supply Chain

Lyndon C. Taylor
Executive Vice President and General Counsel

Other Information

Investor Relations Contacts
E-mail: investor.relations@dvn.com

Howard J. Thill, Senior Vice President,
Communications and Investor Relations
Telephone: (405) 552-3693

Scott Coody, Director Investor Relations
Telephone: (405) 552-4735

Chris Carr, Supervisor Investor Relations
Telephone: (405) 228-2496

Media Contact
John Porretto, Director Corporate Communications
Telephone: (405) 228-7506

Devon Energy Corporation
333 West Sheridan Avenue
Oklahoma City, OK 73102
(405) 235-3611
devonenergy.com