Devon Energy Earns $393 Million in First-Quarter 2012; Oil Production Increases 26 Percent

Devon Energy Corporation (NYSE:DVN) today reported net earnings of $393
million for the quarter ended March 31, 2012, or $0.97 per common share
($0.97 per diluted share). This compares with first-quarter 2011 net
earnings of $416 million, or $0.97 per common share ($0.97 per diluted
share).

Devon′s first-quarter 2012 financial results were impacted by certain
items securities analysts typically exclude from their published
estimates. Adjusting for these items, the company earned $427 million or
$1.05 per diluted share in the first quarter of 2012. The adjusting
items are discussed in more detail later in this news release.

Devon′s first-quarter 2012 earnings were significantly affected by
unusually wide Canadian oil price differentials. Following the end of
the quarter, Canadian oil differentials have begun to normalize.

Strong Oil Growth Drives Record Production

Total production of oil, natural gas and natural gas liquids averaged
694,000 oil-equivalent barrels (Boe) per day in the first quarter of
2012. This is the highest daily production rate in history from the
company′s North American onshore properties and represents a 10 percent
increase compared to the year-ago quarter. Record production from the
company′s cornerstone development properties, including the Permian
Basin, Jackfish, Cana-Woodford and Barnett Shale, drove the strong first
quarter performance.

Devon′s first quarter liquids production increased for the sixth
consecutive quarter to 256,000 Boe per day. This growth was led by a 26
percent year-over-year increase in oil production.

Sales of oil, natural gas and natural gas liquids, before the impact of
hedges, increased 3 percent to $1.9 billion in the first quarter of
2012. Cash settlements related to oil and natural gas hedges increased
revenues by $158 million or $2.50 per Boe in the first-quarter 2012.

Marketing and midstream operating profit was $112 million in the first
quarter of 2012. This was a 7 percent decrease compared with the
first-quarter 2011. The decrease was attributable to lower natural gas
and natural gas liquids prices.

Permian Basin Activity and Production Growth Lead Operating Highlights

• 
  Devon continued to aggressively ramp-up activity in the Permian Basin
  in the first quarter. Since year-end the company has added five
  operated rigs and now has 21 rigs running in the basin.
  
• 
  Permian Basin oil production increased 32 percent over the
  first-quarter 2011. Liquids production accounted for 76 percent of the
  56,000 Boe per day produced in the Permian Basin during the first
  quarter.
  
• 
  Additionally, Devon recently enhanced its leasehold position in the
  Permian Basin by assembling a 500,000 net acre position in the Cline
  Shale light-oil play. The company is currently drilling its first
  horizontal well in the Cline and expects to drill 15 wells in 2012.
  
• 
  Also in the Permian, Devon completed 16 operated Bone Spring wells in
  the first quarter. Initial daily production averaged 580 Boe per day
  per well.
  
• 
  Net production from Devon′s Jackfish 1 and Jackfish 2 oil sands
  projects in Canada averaged a record 46,000 barrels per day in the
  first quarter, representing a 55 percent increase over the year-ago
  quarter. The company′s Jackfish 2 production is now at 21,000 barrels
  per day and will continue to ramp-up throughout 2012.
  
• 
  Construction of Devon′s third Jackfish oil sands project is now
  approximately 30 percent complete. Jackfish 3 is expected to produce
  35,000 barrels per day before royalties for more than 20 years. Plant
  startup is targeted for late 2014.
  
• 
  The company′s Cana-Woodford Shale production averaged a record 271
  million cubic feet of natural gas equivalent per day in the first
  quarter of 2012. Liquids production averaged 13,000 barrels per day,
  an 80 percent year-over-year increase.
  
• 
  Net liquids production from the Barnett Shale increased more than 20
  percent compared to the year-ago quarter to 52,500 barrels per day,
  accounting for 23 percent of total Barnett production. In aggregate,
  net production reached a record 1.37 billion cubic feet of natural gas
  equivalent per day in the first quarter.
  
• 
  Devon brought seven operated Granite Wash wells online in the first
  quarter. Initial production from these wells averaged 1,650 Boe per
  day. The company has an average working interest of 73 percent in
  these wells.
  
• 
  In the first quarter, the company continued to capture acreage in new
  oil-focused opportunities. Devon has now contracted for or leased
  250,000 net acres in an undisclosed position. The company is targeting
  500,000 net acres in this play.
  

Cost Containment Efforts Partially Offset Rising Costs

First-quarter 2012 expenses increased compared to the year-ago quarter
due to rising oilfield service and supply costs. Compared to the first
quarter of 2011, the company′s total pre-tax cash costs increased 5
percent to $13.80 per Boe. The company′s successful cost management
efforts and efficient operations partially offset the full impact of
industry inflation and a shift towards oil projects. In general, oil
projects are more expensive to develop and have higher operating costs
than gas production.

Lease operating expenses (LOE) were $514 million in the first quarter.
On a unit of production basis, LOE increased 9 percent compared with the
first-quarter 2011 and was 2 percent higher than the fourth-quarter
2011. The increase in LOE reflects rising industry costs coupled with
increased activity levels in oil-focused basins.

Taxes other than income decreased 6 percent to $102 million in the first
quarter of 2012. The year-over-year decrease was driven by lower ad
valorem and production taxes.

Interest expense for the first quarter totaled $87 million, a $6 million
increase over the first quarter of 2011. Higher average debt balances
drove the increase.

First-quarter general and administrative expenses were $168 million, or
$2.67 per Boe. This compares with $2.29 per Boe in the first quarter of
2011. Higher personnel costs were the largest contributor to the
increase. Devon has increased the size of its workforce to support its
expanding exploration and development activity.

Compared with the first-quarter 2011, depreciation, depletion and
amortization expense (DD&A) increased 21 percent to $10.78 per Boe.
Inflation in industry costs and increased investment in oil-focused
projects drove DD&A expense higher.

Balance Sheet and Liquidity Remain Strong

In the first quarter of 2012, Devon generated cash flow before balance
sheet changes of $1.4 billion. On a per share basis, this represents a 3
percent increase in cash flow compared to the first-quarter 2011. At
March 31, 2012, the company′s cash and short-term investments totaled
$7.1 billion, and its net debt to adjusted capitalization was 15 percent.

Devon Adds Oil and Gas Hedges in 2012 and 2013

The strong oil price environment has provided Devon the opportunity to
add attractive oil hedges for 2013. The company has entered into various
swap and collar contracts to hedge 72,000 barrels per day of oil
production. Of this total, 31,000 barrels per day are swapped at a
weighted average price of $104 per barrel. The remaining 41,000 barrels
per day utilize costless collars with a weighted average ceiling of $117
per barrel and a floor of $91 per barrel. For the remainder of 2012, the
company has 109,000 barrels per day of oil production hedged, or roughly
70 percent of forecasted oil production, at a weighted average floor
price of $95 per barrel.

The company has also recently bolstered its natural gas hedging
position. For the remaining three quarters of 2012, Devon has
approximately 1 billion cubic feet per day protected at a weighted
average floor price of $4.42 per thousand cubic feet. This represents
about 40 percent of Devon′s 2012 forecasted gas production.

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). 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 on page 11.

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. The following tables
summarize the first-quarter 2012 effects of these items on earnings and
cash flow.

Conference Call to be Webcast Today

Devon will discuss its first-quarter 2012 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). The webcast may be accessed
from Devon′s internet home page at

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, 2011, available from us at Devon Energy Corporation,
Attn. Investor Relations, 333 West Sheridan, 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

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

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. 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 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.