Devon Energy Earns $2.7 Billion in Second-Quarter 2011; North American Onshore Production Sets Record

Devon Energy Corporation (NYSE:DVN) today reported net earnings of $2.7
billion for the quarter ended June 30, 2011, or $6.50 per common share
($6.48 per diluted share). This is a 288 percent increase compared with
second-quarter 2010 net earnings of $706 million, or $1.59 per common
share ($1.58 per diluted share).

For the six months ended June 30, 2011, Devon reported net earnings of
$3.2 billion, or $7.44 per common share ($7.41 per diluted share). This
compares with net earnings for the six months ended June 30, 2010, of
$1.9 billion, or $4.26 per common share ($4.24 per diluted share).

Second-quarter 2011 financial results were impacted by certain items
securities analysts typically exclude from their published estimates.
The most significant of the adjusting items was a $2.5 billion gain on
the sale of assets in Brazil. Excluding adjusting items, Devon earned
$726 million or $1.71 per diluted common share in the second quarter.
The adjusting items are discussed in more detail later in this news
release.

Record Production and Higher Prices Drive Oil and Gas Sales

Sales of oil, natural gas, and natural gas liquids from continuing
operations were $2.2 billion in the second quarter of 2011, a 23 percent
increase over the second quarter of 2010. Both higher production and
higher oil and natural gas liquids pricing contributed to the increase.

Devon′s North American onshore production averaged the highest daily
rate in the company′s history at 660,000 oil-equivalent barrels (Boe)
per day in the second quarter of 2011. This represents a production
increase of more than six percent over the second-quarter 2010, driven
by a 12 percent increase in oil and natural gas liquids production.

Devon′s marketing and midstream operating profit totaled $148 million in
the second-quarter 2011, a 19 percent increase over the second quarter
of 2010. The improvement resulted from higher natural gas liquids
production and prices as well as increased gas throughput.

Strategic Repositioning Completed; Share Repurchase Plan Remains on
Schedule

In May, the company closed the $3.2 billion sale of its Brazilian
operations. Devon has now substantially completed its International and
Gulf of Mexico divestiture plan. In aggregate, sales proceeds from the
combined divestitures exceeded $10 billion with after-tax proceeds
expected to approximate $8 billion.

'The execution of Devon′s strategic repositioning was excellent,? said
John Richels, president and chief executive officer. 'Devon has emerged
with a pristine balance sheet, a deep inventory of oil and liquids-rich
growth opportunities and a highly competitive cost structure. As
demonstrated by our second-quarter results, the repositioned Devon is
delivering profitable growth per share.?

In May 2010, Devon commenced a program to repurchase $3.5 billion of its
common stock. As of June 30, 2011, the company had repurchased 33.5
million shares at a total cost of $2.5 billion. Devon expects to
complete the stock repurchase program by the end of 2011.

Production Growth Leads Operating Highlights

• 
  In the Permian Basin, Devon increased production 17 percent over the
  second quarter of 2010, to 49,000 oil-equivalent barrels per day. Oil
  and natural gas liquids accounted for 75 percent of the quarter′s
  production.
  
• 
  The company completed nine operated Bone Spring wells within the
  Permian Basin in the second quarter. Initial daily production from the
  nine wells averaged more than 700 Boe per day per well. Devon has an
  average working interest of 77 percent in these wells.
  
• 
  In Canada, Devon commenced steam injection and achieved first
  production from its Jackfish 2 oil sands project in the second
  quarter. Production from the 100 percent-owned project is expected to
  ramp-up to 35,000 barrels per day before royalties over the next 18
  months.
  
• 
  Production from the company′s Cana-Woodford Shale play averaged a
  record 189 million cubic feet of natural gas equivalent per day in the
  second quarter, including nearly 9,000 barrels per day of liquids.
  This represents an 80 percent increase in total production compared to
  the year-ago quarter.
  
• 
  Devon′s Barnett Shale production increased 13 percent over the
  second-quarter 2010 to a record 1.3 billion cubic feet of natural gas
  equivalent per day, including 46,000 barrels per day of liquids
  production.
  
• 
  Devon brought eight operated Granite Wash wells online in the second
  quarter. Initial production from these wells averaged 2,010 barrels of
  oil-equivalent per day, including 200 barrels of oil and 730 barrels
  of natural gas liquids per day. The company has an average working
  interest of 71 percent in these wells.
  
• 
  The company has assembled 1.1 million net acres targeting new oil and
  liquids-rich gas opportunities across multiple basins in the U.S.
  Devon plans to drill more than 30 wells this year targeting the
  Tuscaloosa Marine Shale, Niobrara Shale, Mississippian Lime, Ohio
  Utica Shale and the A1 Carbonate and Utica Shale in Michigan.
  

Cost Containment Efforts Offset Rising Industry Costs

Lease operating expenses (LOE) were $453 million in the second quarter
of 2011, or $7.55 per Boe. This represents a one cent per Boe decrease
from the second-quarter 2010. Effective cost management and higher
production offset the effects of the strengthening Canadian dollar and
rising service and supply costs.

Taxes other than income increased $28 million to $120 million in the
second quarter of 2011. The year-over-year increase was driven by higher
production taxes, resulting from the significant increase in oil and
natural gas liquids revenues.

Second-quarter 2011 general and administrative expenses (G&A) totaled
$135 million, or $2.26 per Boe. Compared to the second quarter of 2010,
G&A per Boe increased approximately two percent. Efficiencies gained
through the company′s strategic repositioning helped mitigate the
effects of the strengthening Canadian dollar and an increase in overall
activity levels.

Depreciation, depletion and amortization expense (DD&A) of oil and gas
properties increased to $485 million in the second quarter of 2011.
Compared to the year-ago quarter, unit DD&A increased 11 percent to
$8.08 per Boe.

Interest expense decreased 24 percent in the second quarter to $85
million. Second-quarter 2010 interest expense included a $19 million
charge related to the early redemption of senior notes.

Second-quarter income tax expense from continuing operations totaled
$1.2 billion, or 87 percent of pre-tax earnings. This unusually high tax
rate resulted from a $744 million charge related to U.S. income taxes on
foreign earnings assumed to be repatriated under current U.S. tax law.
After adjusting for this and other items generally excluded by
securities analysts, Devon′s second quarter tax rate totaled 32 percent
of pre-tax earnings from continuing operations.

Cash Flow and Divestiture Proceeds Total $4.8 Billion

Cash flow before balance sheet changes totaled $1.6 billion in the
second quarter of 2011, a 115 percent increase over the year-ago
quarter. In addition, Devon received $3.2 billion of pre-tax proceeds
from the sale of its assets in Brazil.

As of June 30, 2011, the company′s cash and short-term investments
reached $6.7 billion and its net debt to adjusted capitalization ratio
declined to five percent. Reconciliations of cash flow before balance
sheet changes, net debt and adjusted capitalization, which are non-GAAP
measures, are provided in this release.

Devon Adds To Natural Gas Hedges

Devon continued to bolster its natural gas hedge positions for 2011 and
2012. For the second half of 2011, the company now has approximately 980
million cubic feet per day protected utilizing swap and collar contracts
with a weighted average floor price of $5.28 per Mcf. For 2012, Devon
now has hedges covering 815 million cubic feet per day hedged at a
weighted average floor price of $4.89 per Mcf. The company′s natural gas
hedges for both 2011 and 2012 are based on the Henry Hub benchmark index.

Divestitures Impact Reported Financial and Operational Results

In accordance with accounting standards, Devon has classified the
assets, liabilities, and results of its international segment as
discontinued operations for all accounting periods presented in this
release. Included with this release is a table of revenues, expenses,
production categories, and the amounts classified as discontinued
operations for each period presented.

Items Excluded from Published Earnings Estimates

Devon's reported net earnings include items of income and expense that
are typically excluded by securities analysts in their published
estimates of the company's financial results. These items and their
effects upon reported earnings for the second-quarter 2011 were as
follows:

Items affecting continuing operations:

• 
  U.S. income taxes on foreign earnings assumed to be repatriated to the
  U.S. decreased second-quarter earnings by $744 million.
  
• 
  A change in the fair value of oil, gas and NGL derivative instruments
  increased second-quarter earnings by $357 million pre-tax ($233
  million after tax).
  
• 
  A change in fair value of interest-rate and other financial
  instruments decreased second-quarter earnings by $30 million pre-tax
  ($20 million after tax).
  
• 
  Restructuring costs decreased second-quarter earnings by $6 million
  pre-tax ($3 million after tax).
  

Items affecting discontinued operations:

• 
  Divestitures of assets in Brazil resulted in a second-quarter gain of
  $2.5 billion pre-tax ($2.5 billion after tax).
  
• 
  Restructuring costs increased second-quarter earnings by $8 million
  pre-tax ($5 million after tax).
  

The following tables summarize the effects of these items on
second-quarter 2011 earnings, income taxes and cash flow.

In aggregate, these items increased second-quarter 2011 net earnings by
$2.0 billion, or $4.78 per common share ($4.77 cents per diluted share).
These items and their associated tax effects decreased second-quarter
2011 cash flow before balance sheet changes by $5 million.

Conference Call to be Webcast Today

Devon will discuss its second-quarter 2011 financial and operating
results in a conference call that will be webcast today at 10 a.m.
Central Time (11 a.m. Eastern Time). The webcast may be accessed from
Devon′s internet home page at www.devonenergy.com.

Devon Energy Corporation is an Oklahoma City-based independent energy
company engaged in oil and gas exploration and production. Devon is a
leading U.S.-based independent oil and gas producer and is included in
the S&P 500 Index. For more information about Devon, please visit our
website at www.devonenergy.com.

This press release includes 'forward-looking statements' as defined
by the Securities and Exchange Commission. Such statements are those
concerning strategic plans, expectations and objectives for future
operations. All statements, other than statements of historical facts,
included in this press release that address activities, events or
developments that the company expects, believes or anticipates will or
may occur in the future are forward-looking statements. Such statements
are subject to a number of assumptions, risks and uncertainties, many of
which are beyond the control of the company. Statements regarding future
drilling and production are subject to all of the risks and
uncertainties normally incident to the exploration for and development
and production of oil and gas. These risks include, but are not limited
to the volatility of oil, natural gas and NGL prices; uncertainties
inherent in estimating oil, natural gas and NGL reserves; drilling
risks; environmental risks; and political or regulatory changes.
Investors are cautioned that any such statements are not guarantees of
future performance and that actual results or developments may differ
materially from those projected in the forward-looking statements. The
forward-looking statements in this press release are made as of the date
of this press release, even if subsequently made available by Devon on
its website or otherwise. Devon does not undertake any obligation to
update the forward-looking statements as a result of new information,
future events or otherwise.

The United States Securities and Exchange Commission permits oil and
gas companies, in their filings with the SEC, to disclose only proved,
probable and possible reserves that meet the SEC's definitions for such
terms, and price and cost sensitivities for such reserves, and prohibits
disclosure of resources that do not constitute such reserves.  This
release may contain certain terms, such as resource potential
and  exploration target size.  These estimates are by their nature more
speculative than estimates of proved, probable and possible reserves and
accordingly are subject to substantially greater risk of being actually
realized.The SEC guidelines strictly prohibit us from including
these estimates in filings with the SEC. U.S. investors are urged to
consider closely the disclosure in our Form 10-K for the fiscal year
ended December 31, 2010, available from us at Devon Energy Corporation,
Attn. Investor Relations, 20 North Broadway, Oklahoma City, OK 73102.
You can also obtain this form from the SEC by calling 1-800-SEC-0330 or
from the SEC′s website at www.sec.gov.