Devon Energy Announces First-Quarter 2013 Results

Devon Energy Corporation (NYSE:DVN) today reported a net loss of $1.3
billion or $3.34 per common share ($3.34 per diluted share) for the
quarter ended March 31, 2013. The quarterly loss was attributable to a
$1.9 billion non-cash asset impairment charge primarily related to lower
oil and natural gas liquids pricing. Adjusting for this non-cash charge
and other items securities analysts typically exclude from their
published estimates, the company earned $270 million or $0.66 per
diluted share in the first quarter of 2013.

Strong Oil Growth Driven by U.S. Operations

Devon continued to deliver strong oil production growth in the first
quarter of 2013. Companywide oil production averaged 162,000 barrels per
day, a 14 percent increase compared to the first quarter of 2012 and an
8 percent increase over the fourth quarter of 2012. Driven by the
Permian Basin, the most significant growth came from the company′s U.S.
operations, where oil production increased 23 percent year over year.

Total production of oil, natural gas and natural gas liquids increased
to an average of 687,000 oil-equivalent barrels (Boe) per day in the
first quarter. This exceeded the top end of the company′s guidance by
2,000 barrels per day. First-quarter production benefited from
better-than-expected results across several core development assets,
including Jackfish and Cana-Woodford.

'Our continued focus on oil production growth is successfully
transitioning Devon′s production mix to a higher oil weighting, as
evidenced by our first-quarter results. Oil and liquids production, our
highest margin products, now account for 41 percent of our total
production,? said John Richels, president and chief executive officer.
'Driven by our success in the Permian, we are on track to grow our U.S.
oil production by almost 40 percent in 2013.?

First-Quarter Operating Highlights

• 
  Permian Basin oil production increased 24 percent over the first
  quarter of 2012. Oil accounted for 60 percent of the company′s 68,000
  Boe per day produced in the Permian Basin during the quarter.
  
• 
  In the Bone Spring oil play, the company added 20 new wells to
  production in the first quarter of 2013. Initial 30-day production
  from these wells averaged 590 Boe per day.
  
• 
  Net production from Devon′s Jackfish 1 and Jackfish 2 oil sands
  projects averaged a record 54,000 barrels of oil per day in the first
  quarter of 2013. Compared to the first quarter of 2012, this
  represents an 18 percent increase in production.
  
• 
  Construction of Devon′s third Jackfish oil sands project is now
  approximately 60 percent complete, with startup expected by year-end
  2014.
  
• 
  In the Mississippian trend located in Oklahoma, the company brought 24
  operated wells online in the first quarter. Overall results in this
  emerging oil play continue to support target economics. Several recent
  wells with seven- to 30-day initial production rates have averaged
  from 600 to more than 1,000 barrels of oil per day. These wells also
  have significant volumes of liquids-rich gas.
  
• 
  The company′s oil exploration program in the Rocky Mountains delivered
  encouraging results in the first quarter. This activity was
  highlighted by results in the Powder River Basin where Devon commenced
  production on five wells targeting the Parkman, Turner and Frontier
  formations. Initial 30-day production from the five wells averaged 540
  Boe per day, including 500 barrels of oil per day.
  
• 
  In the Granite Wash, the company initiated production on two operated
  Hogshooter wells in the first quarter. The average 30-day production
  rate from these two wells was 1,250 Boe per day, including 1,100
  barrels per day of oil and liquids.
  
• 
  First-quarter production from the company′s Cana-Woodford Shale
  averaged a record 340 million cubic feet of natural gas equivalent per
  day. Liquids production now accounts for 41 percent of total
  Cana-Woodford production and was 78 percent higher than the prior-year
  quarter.
  
• 
  Net production in the Barnett Shale averaged 1.4 billion cubic feet of
  natural gas equivalent per day during the first quarter. Liquids
  production increased 5 percent year over year to 55,000 barrels per
  day.
  

Operating Costs Beat Expectations

In aggregate, the company′s pre-tax cash costs of $898 million, or
$14.54 per Boe, were lower than forecasted in the first quarter. Pre-tax
cash costs per unit of production were 5 percent higher than the first
quarter of 2012 but 4 percent lower than the fourth quarter of 2012.
Devon′s cost management efforts and efficient operations offset the
impact of high activity levels in oil-focused basins. In general, oil
projects are higher margin, but more expensive to develop and have
higher operating costs than gas wells.

Midstream Profit Rises; Hedging Position Strengthened

Devon′s marketing and midstream operating profit reached $125 million in
the first quarter of 2013. This result exceeded the company′s guidance
and represents a 12 percent increase compared with the first quarter of
2012. The increase in operating profit was attributable to higher
natural gas prices and strong cost management.

The recent rise in natural gas pricing has provided Devon the
opportunity to increase its natural gas hedging position. For the
remaining three quarters of 2013, the company has protected 1.7 billion
cubic feet per day, representing approximately 75 percent of its
expected natural gas production. Of this total, 1.0 billion cubic feet
per day is swapped at a weighted average price of $4.09 per thousand
cubic feet. The remaining 0.7 billion cubic feet per day utilize
costless collars with a weighted average ceiling of $4.19 per thousand
cubic feet and a floor of $3.55 per thousand cubic feet. In 2014, Devon
now has 900 million cubic feet per day of production locked in at a
weighted average floor price of $4.34.

The company also increased its oil hedging position for 2013. For the
balance of the year, Devon has entered into contracts to hedge 135,000
barrels per day of oil production. Of this total, 70,000 barrels per day
are swapped at a weighted average price of $100 per barrel. The
remaining 65,000 barrels per day utilize costless collars with a
weighted average ceiling of $112 per barrel and a floor of $90.

The recent improvement in Canadian heavy oil differentials has provided
Devon the opportunity to add attractive regional basis swaps. For the
remainder of 2013, the company has 35,000 barrels per day of Canadian
heavy oil secured at a $22 per-barrel differential to the West Texas
Intermediate oil index.

Balance Sheet and Liquidity Remain Strong

Devon generated cash flow before balance sheet changes of $1.2 billion
in the first quarter of 2013. At March 31, 2013, the company′s cash and
short-term investments totaled $6.5 billion, and its net debt to
adjusted capitalization was 22 percent.

Impairment Charge Methodology

On a quarterly basis, the carrying value of Devon′s oil and natural gas
assets are subject to a 'ceiling test.? Under the full-cost method of
accounting, the net book value of the company′s oil and gas properties,
less related deferred income taxes, may not exceed a calculated ceiling.
The ceiling is the estimated future net cash flow from proved oil and
gas properties, discounted at 10 percent per year. Any excess is written
off as a non-cash expense and may not be reversed in future periods,
even though higher oil and gas prices may subsequently increase the
ceiling. Future net cash flows are calculated assuming continuation of
prices and costs in effect at the time of the calculation, except for
changes that are fixed and determinable by existing contracts. Trailing
12-month average prices at the end of each quarter are used in the
future net cash flow calculation. Impairment charges have no impact on
cash flow or cash balances and are not reflective of the fair value of
oil and natural gas assets.

Non-GAAP Reconciliations

Pursuant to regulatory disclosure requirements, Devon is required to
reconcile non-GAAP financial measures to the related GAAP information
(GAAP refers to generally accepted accounting principles). Adjusted
earnings, cash flow before balance sheet changes, net debt, and adjusted
capitalization are non-GAAP financial measures referenced within this
release. Reconciliations of these non-GAAP measures are provided
beginning on page 11.

Conference Call to be Webcast Today

Devon will discuss its first-quarter 2013 financial and operating
results in a conference call webcast today. The webcast will begin at 10
a.m. Central Time (11 a.m. Eastern Time) and may be accessed from
Devon′s home page at www.devonenergy.com.

This press release includes 'forward-looking statements' as defined
by the Securities and Exchange Commission (SEC). 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; the extent to
which we are successful in acquiring and discovering additional
reserves; unforeseen changes in the rate of production from our oil and
gas properties; uncertainties in future exploration and drilling
results; uncertainties inherent in estimating the cost of drilling and
completing wells; drilling risks; competition for leases, materials,
people and capital; midstream capacity constraints and potential
interruptions in production; risk related to our hedging activities;
environmental risks; political or regulatory changes; and our limited
control over third parties who operate our oil and gas properties.
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 SEC 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,
available from us at Devon Energy Corporation, Attn. Investor Relations,
333 West Sheridan Avenue, Oklahoma City, OK 73102-5015. 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.

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.

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

NON-GAAP FINANCIAL MEASURES

The United States Securities and Exchange Commission has adopted
disclosure requirements for public companies such as Devon concerning
Non-GAAP financial measures. (GAAP refers to generally accepted
accounting principles). The company must reconcile the Non-GAAP
financial measure to related GAAP information. 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. The following tables summarize the effects of these
items on first-quarter 2013 earnings.

Cash flow before balance sheet changes is a Non-GAAP financial measure.
Devon believes cash flow before balance sheet changes is relevant
because it is a measure of cash available to fund the company′s capital
expenditures, dividends and to service its debt. Cash flow before
balance sheet changes is also used by certain securities analysts as a
measure of Devon′s financial results.

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

NON-GAAP FINANCIAL MEASURES

Devon believes that using net debt for the calculation of 'net debt to
adjusted capitalization? provides a better measure than using debt.
Devon defines net debt as debt less cash, cash equivalents and
short-term investments. Devon believes that netting these sources of
cash against debt provides a clearer picture of the future demands on
cash to repay debt.

Devon Energy Corporation

Investor Contacts

Scott Coody,
405-552-4735

or

Shea Snyder, 405-552-4782

or

Media
Contact

Chip Minty, 405-228-8647