Devon Energy Earns $1.0 Billion in Third-Quarter 2011; Liquids Production Increases 17 Percent

Devon Energy Corporation (NYSE:DVN) today reported net earnings of $1.0
billion for the quarter ended September 30, 2011, or $2.51 per common
share ($2.50 per diluted share). This compares with third-quarter 2010
net earnings of $2.1 billion, or $4.81 per common share ($4.79 per
diluted share). The company′s third-quarter 2010 earnings were enhanced
by a one-time gain of $1.5 billion resulting from the divestiture of
assets in Azerbaijan.

Earnings Increased to $1.54 per Share Excluding Items Not Estimated
by Analysts

Devon′s third-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 an unrealized
gain on oil, gas and natural gas liquids derivatives of $642 million
before-tax ($415 million after-tax). Excluding these adjusting items,
the company earned $638 million or $1.54 per diluted share in the third
quarter. The adjusting items are discussed in more detail later in this
news release.

Strong Liquids Production Growth and Higher Prices Drive Sales

Devon continued to deliver strong oil and natural gas liquids production
growth in the third quarter of 2011. In aggregate, liquids production
averaged 226,000 barrels per day. This represents a 17 percent increase
in liquids production compared to the third quarter of 2010.

Total production of oil, natural gas and natural gas liquids averaged
661,000 oil-equivalent barrels (Boe) per day in the third quarter of
2011, an eight percent increase over the year-ago quarter.

Higher overall production and improved oil and natural gas liquids
prices drove sales of oil, natural gas and natural gas liquids to $2.1
billion in the third quarter of 2011. This represents a 25 percent
increase over the year-ago quarter.

Devon′s marketing and midstream operating profit rose 11 percent over
the third quarter of 2010, to $138 million. The increase was
attributable to higher natural gas liquids prices and production.

Oil and Natural Gas Liquids Production Growth Leads Operating
Highlights

• 
  In the Permian Basin, Devon increased oil and natural gas liquids
  production 17 percent compared to the third quarter of 2010. Liquids
  production accounted for 75 percent of the 50,000 oil-equivalent
  barrels per day produced in the Permian Basin during the third quarter.
  
• 
  At the Bone Spring play in the Permian Basin, the company added 11 new
  wells to production in the third quarter of 2011. Initial daily
  production from the 11 wells averaged 540 Boe per day per well.
  
• 
  In Canada, average net production from Devon′s 100 percent-owned
  Jackfish 1 and Jackfish 2 projects reached a record 36,000 barrels per
  day during the third quarter. Devon′s net production from its Jackfish
  2 oil sands project continued to ramp-up ahead of schedule.
  
• 
  Also in Canada, Devon completed 19 exploration wells targeting oil and
  liquids-rich opportunities across its more than 4 million net acres in
  the Western Canadian Sedimentary Basin. The company tied in 10 of
  these wells to production in the third quarter. This activity was
  highlighted by results in the Ferrier area where the company commenced
  production on three Cardium wells with initial production averaging
  770 Boe per day per well.
  
• 
  Third-quarter production from the Cana-Woodford Shale increased 71
  percent compared to the year-ago quarter. Net production averaged a
  record 200 million cubic feet of natural gas equivalent per day in the
  quarter, including 8,100 barrels per day of liquids. The company′s
  Cana-Woodford gas processing facility remains on schedule to be fully
  operational in the fourth quarter.
  
• 
  The company′s Barnett Shale production totaled 1.3 billion cubic feet
  of natural gas equivalent per day in the third quarter, an eight
  percent increase over the third-quarter 2010. Liquids production in
  the Barnett Shale averaged 46,000 barrels per day, a 15 percent
  year-over-year increase.
  
• 
  Devon brought 10 operated Granite Wash wells online in the third
  quarter. Initial production from these wells averaged 1,250 barrels of
  oil-equivalent per day, including 180 barrels of oil and 405 barrels
  of natural gas liquids per day. The company has an average working
  interest of 86 percent in these wells.
  

Balance Sheet and Liquidity Remain Strong; Share Repurchase Plan on
Schedule

Devon generated $1.9 billion of cash flow before balance sheet changes
in the third quarter of 2011, a six percent increase over the year-ago
quarter. The company comfortably funded its total capital program during
the third quarter and returned nearly $800 million to its shareholders
in the form of stock buybacks and dividend payments.

In May 2010, Devon commenced a program to repurchase $3.5 billion of its
common stock. During the third-quarter 2011 the company repurchased $697
million of common stock. As of September 30, 2011, the company had
repurchased $3.2 billion of stock and expects to complete the stock
repurchase program during the fourth quarter of 2011.

Devon exited the third quarter of 2011 with cash and short-term
investments of $6.8 billion and a net debt to adjusted capitalization
ratio of 10 percent. Reconciliations of cash flow before balance sheet
changes, net debt and adjusted capitalization, which are non-GAAP
measures, are provided in this release.

Expenses in Line with Forecasts

The company′s lease operating expenses (LOE) totaled $475 million in the
third quarter. On a unit of production basis, LOE increased six percent
compared to the third quarter of 2010. The increase in LOE reflects
higher industry costs and the impact of a stronger Canadian dollar.

Taxes other than income were $108 million in the third quarter of 2011.
The year-over-year increase of 14 percent was driven by higher
production taxes resulting from the significant increase in oil and
natural gas liquids revenues.

Third-quarter 2011 general and administrative expenses (G&A) totaled
$138 million, or $2.27 per Boe. G&A per Boe declined three percent
compared to the third quarter of 2010.

Total depreciation, depletion and amortization expenses (DD&A) were $566
million in the third quarter of 2011. Compared to the year-ago quarter,
unit DD&A increased 14 percent, to $9.32 per Boe.

Interest expense for the third quarter was $104 million, a $21 million
increase over the third quarter of 2010. Higher average debt balances
drove the increase.

Third-quarter income tax expense from continuing operations totaled $498
million, or 32 percent of pre-tax earnings. After adjusting for items
generally excluded by securities analysts, Devon′s third quarter tax
rate was 35 percent of pre-tax earnings from continuing operations.

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 by category, and the amounts classified as discontinued
operations for each period presented.

Items Typically Excluded from Analyst′s 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 third-quarter 2011 are described
below:

Items affecting continuing operations:

• 
  A change in the fair value of oil, gas and NGL derivative instruments
  increased third-quarter earnings by $642 million pre-tax ($415 million
  after tax).
  
• 
  Income tax accrual adjustments increased third-quarter earnings by $42
  million.
  
• 
  The reversal of previously accrued restructuring costs increased
  third-quarter earnings by $3 million pre-tax ($2 million after tax).
  
• 
  A change in fair value of interest-rate and other financial
  instruments decreased third-quarter earnings by $92 million pre-tax
  ($59 million after tax).
  

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

In aggregate, these items increased third-quarter 2011 net earnings by
$400 million, or $0.97 per common share ($0.96 cents per diluted share).
These items and their associated tax effects increased third-quarter
2011 cash flow before balance sheet changes by $130 million.

Conference Call to be Webcast Today

Devon will discuss its third-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.