The sharp drop in operating cash flow in Q4 2023 was primarily driven by a combination of factors. **Lower commodity prices** resulted in lower total revenues from oil, gas, and NGL sales (declining from **$3,139 million** in Q4 2022 to **$2,737 million** in Q4 2023).  **[0001193125-24-047938_d746925dex992.htm:0]**  This reduction in revenue, combined with **increased production expenses** (rising from **$715 million** in Q4 2022 to **$759 million** in Q4 2023) and changes in the timing of cash flows—such as a **lower deferred income tax expense** (dropping from **$265 million** to **$164 million**) and a positive shift in assets and liabilities—collectively contributed to the sharp decline in net cash from operating activities.  **[0001193125-24-047938_d746925dex992.htm:2]** **[0001193125-24-047938_d746925dex992.htm:0]** 

Why did Operating Cash Flow drop so sharply in Q4 2023?

The dramatic swing in financing activities in Q3 2024 was driven by several factors. Devon issued **$3,219 million** in long-term debt to fund the Grayson Mill acquisition, repaid **$472 million** of senior notes as part of its debt reduction program, conducted **$295 million** in share repurchases as part of its ongoing **$5 billion** buyback program, and paid **$272 million** in dividends during the quarter.  **[0001193125-24-251247_d824691dex991.htm:1]** **[0001193125-24-251247_d824691dex992.htm:2]** 

What drove the dramatic swing in financing activities in Q3 2024?

The significant decline in cash balances by Q3 2024 was due to a combination of large cash outflows. These included the cash outlay for the **Grayson Mill Acquisition**, retiring **$472 million** of debt, repurchasing **$295 million** of common stock, paying **$272 million** in fixed dividends, and investing **$877 million** in capital expenditures, which together outweighed the operating cash flow of **$1.7 billion** during the quarter, leading to a decrease from **$1,169 million** at Q2 to **$676 million** at Q3.  **[0001193125-24-251247_d824691dex991.htm:1]** **[0001193125-24-251247_d824691dex992.htm:2]** 

What caused the significant decline in cash balances by Q3 2024?

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The jump to **1,169 million** in Q2 2024 was driven by several factors: **strong operating cash flow of 1.5 billion USD**, significant outlays including **948 million USD in capital expenditures**, **share repurchases** costing **256 million USD**, and **223 million USD in dividend payments**. After accounting for these components, the overall net change resulted in an increase of **20 million USD** in cash, cash equivalents, and restricted cash.  **[0000950170-24-092424_dvn-20240630.htm:28]** **[0001193125-24-194945_d816697dex991.htm:1]** **[DVN_3397160_6]** 

What drove the jump in cash levels to 1,169 million in Q2 2024?

**Total assets surged to **30,263 million** in Q3 2024 primarily because Devon Energy completed the **Grayson Mill Acquisition** on September 27, 2024, with a total deal value of approximately **$5.0 billion**—including **$3.5 billion in cash** and **37.3 million shares of common stock**.  **[0000950170-24-121981_dvn-20240930.htm:24]**  This acquisition significantly increased the company’s **oil and gas property and equipment, net** (which jumped from **$17,825 million** in Q4 2023 to **$23,155 million** in Q3 2024).  **[0001193125-24-251247_d824691dex992.htm:1]** **[0000950170-24-121981_dvn-20240930.htm:5]**  In addition, to finance the deal, Devon issued **$2.25 billion in senior notes** and secured a **$1 billion term loan**, further bolstering its asset base.  **[0001193125-24-251247_d824691dex991.htm:1]** 

Why did total assets surge to 30,263 million in Q3 2024?

The sharp increase in long-term debt to **$8,884 million** in Q3 2024 was driven by financing activities associated with the acquisition of Grayson Mill Energy. Devon Energy issued **$2.25 billion** in senior notes and secured a **$1 billion** term loan to fund the cash portion of the acquisition, leading to the notable debt increase.  **[0001193125-24-251247_d824691dex991.htm:1]** **[0000950170-24-121981_dvn-20240930.htm:5]** **[0000950170-24-121981_dvn-20240930.htm:24]** 

What led to the sharp increase in long-term debt to 8,884 million in Q3 2024?

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The drastic drop in Q4 2023 total revenues was mainly driven by a **decline in commodity sales**, with oil, gas, and NGL sales falling from **$3,139 million** in Q4 2022 to **$2,737 million** in Q4 2023 due to lower commodity prices. Additionally, **marketing and midstream revenues** decreased from **$1,213 million** to **$1,084 million**, which further contributed to the overall reduction, despite a partial offset from a gain on oil, gas, and NGL derivatives.  **[0001193125-24-047938_d746925dex992.htm:0]** 

What led to the drastic drop in total revenues in Q4 2023?

The change to negative net earnings in Q4 2023 appears to have been the result of several offsetting factors. Although Q4 showed improvements like a favorable shift in derivative valuation—from a loss of **$(183) million** in Q3 to a gain of **$316 million** in Q4—and similar or better production expenses and asset disposition gains, the overall result was overwhelmed by other costs. In particular, the **income tax expense** increased from **$152 million** in Q3 to **$269 million** in Q4, among possibly other operating factors, which contributed to the negative figure of **(1,051 million USD)** reported in Q4 2023.  **[0000950170-24-021781_dvn-20231231.htm:61]** **[0001193125-24-047938_d746925dex992.htm:0]** **[0001193125-24-047938_d746925dex992.htm:7]** 

Why did net earnings turn negative in Q4 2023?

The available documents do not provide specific reasons for the negative Marketing and midstream revenues in Q4 2023. They only note that fluctuations in these revenues are generally influenced by factors such as changes in production volumes, commodity prices, and midstream service demand.  **[0001193125-24-047938_d746925dex992.htm:0]** 

What caused Marketing and midstream revenues to turn negative in Q4 2023?

The documents indicate that the spike in **Other, net** for Q4 2023 was driven by several nonoperating items. Specifically, the category typically includes items such as **asset retirement obligation accretion**, severance costs, non-income tax refunds, and other miscellaneous items. For example, in 2023, the documents note a contribution of **$29 million** from asset retirement obligation accretion and an additional **$9 million** from other miscellaneous items.  **[0000950170-24-021781_dvn-20231231.htm:83]**  However, the breakdown for Q4 2023 was not detailed further, so while these items likely played a significant role, the exact factors remain partially unspecified.  **[0000950170-24-021781_dvn-20231231.htm:83]** 

What factors contributed to the spike in Other, net in Q4 2023?

The documents indicate that there was **no significant jump** in Depreciation, depletion, and amortization in Q4 2023. In fact, one narrative explains that the DD&A expense in Q4 2023 was **$650 million**, which is quite consistent with prior quarters (for example, Q3 at **$651 million**, Q2 at **$638 million**, and Q1 at **$615 million**) as well as Q4 of 2022 at **$625 million**. Therefore, if it appears that there is a big change, it may be a misinterpretation of the numbers provided, as the overall values remain relatively stable due to consistent production levels and asset base depreciation.  **[0001193125-24-047938_d746925dex992.htm:2]** **[0001193125-24-047938_d746925dex992.htm:0]** 

Why did Depreciation, depletion and amortization jump significantly in Q4 2023?

0cb2d1a962348f039b0f6cbc8576fb94d3b39f62e5b049f0aa9508c64547944e

49dd47a895c26cc3572c99c684450f4db57eb48a20e09c0222eb437ffd28d5d3

c0b5ffca52fe04c2724478f9a7c2e0846511f31be0a63b42dedfa92ee4f151a3

Oil, gas and NGL sales (USD, millions)

Oil, gas and NGL derivatives (USD, millions)

Marketing and midstream revenues (USD, millions)

Total revenues (USD, millions)

Production expenses (USD, millions)

Exploration expenses (USD, millions)

Marketing and midstream expenses (USD, millions)

Depreciation, depletion and amortization (USD, millions)

Asset dispositions (USD, millions)

General and administrative expenses (USD, millions)

Financing costs, net (USD, millions)

Other, net (USD, millions)

Total expenses (USD, millions)

Earnings before income taxes (USD, millions)

Income tax expense (USD, millions)

Net earnings (USD, millions)

Net earnings attributable to noncontrolling interests (USD, millions)

Net earnings attributable to Devon (USD, millions)

b6910f18c9265a9bd385b0a7c14a5cfb9fa7db03197096b648a4e5965113e178

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

SG&A [USD, Millions]

R&D [USD, Millions]

D&A [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

EPS - Basic [USD, Per Share]

EPS - Diluted [USD, Per Share]

f3d55cc0a4740c6d85a4d976efc2a6ec971eb001cd1230445c4b57074fe6bb42

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from / Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

2cb76f2ec5f8f3ca106aade68d2b6596ad188b74e0dfbb08c18da5f6d1d6c4cc

95b59882f70e173a6143e9921c1f90ea2830e279ad4c3350d807eb7f3701b598

9edca6fa450b83ee0d8297f94a02bdaa975115f97f88d2c7681e74128d239fac

U.S.

- Oil Revenue

- Gas Revenue

- NGL Revenue

Canada

EnLink

Total Revenue

4bf1b36b929d795bade1a8516385de019daa8d1083966daac9e987e883e523ee

Marketing and Midstream

Oil, Gas and NGL Sales

Oil, Gas and NGL Derivatives

U.S. Segment

Canada Segment

EnLink Segment

- Gains on Asset Sales

Eliminations

6ce0f15a93ea7287046427accf056601c0485d6c71b026743f89ec4fc3521de2

DEVON ENERGY CORP/DE (DVN)

Financials