Devon Energy Corp Q2 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Neil Mehta - Goldman Sachs & Co. LLC - Analyst : Yes, thanks so much, team. Appreciate all the color here today. I would just love your perspective on the non-oil realizations. I think what's clear is you're executing very well on oil. The netbacks are good on oil. NGLs and local gas prices have continued to be a headwind for a lot of producers, including you guys. And so as you think about the back half of this year and into next year, and then even some of the marketing agreements that you announced here today, what are you doing to try to capture better on the non-oil side of the equation? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 3:00PM, DVN.N - Q2 2025 Devon Energy Corp Earnings Call

Question: Neil Mehta - Goldman Sachs & Co. LLC - Analyst : Yes, that's great color, guys. And then slide 10, always helpful to see how you guys are scorecarding across the buckets of business optimization. Just unpack this for us a little bit. How is that 40% that you've achieved in the first four months compared relative to your expectations? And what's the next key milestone you guys are really focused on here?

Question: Scott Gruber - Citigroup Global Markets, Inc. - Analyst : Yes, good morning. It's nice to see the four-year oil volumes ticking higher here. Does the improvement in output drive you to shift higher? How do you think about the maintenance level of production in '26 to use the new run rate from this year?

Question: Scott Gruber - Citigroup Global Markets, Inc. - Analyst : I guess with the production enhancement efforts, would that not take higher? Why keep it at the mid-380s, or is that just kind of baking in some conservatism?

Question: John Freeman - Raymond James Financial, Inc. - Analyst : Thank you. This morning, Landbridge announced a produced water-pour space agreement with you all starting in 2Q '27. It looks like you all are getting out ahead of what could potentially be an issue in the Permian. I'm just hoping you all could maybe elaborate on that deal and how much runway you see it providing you all. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 3:00PM, DVN.N - Q2 2025 Devon Energy Corp Earnings Call

Question: John Freeman - Raymond James Financial, Inc. - Analyst : I appreciate the color. And then just following up on the new gas marketing agreement with CPV, you've got a competitor that's also participating, and they disclosed the right to also purchase power from that facility for their own operations. Do you all have a similar agreement in place?

Question: Paul Cheng - Scotia Capital (USA), Inc. - Analyst : Thank you. Good morning. Maybe if we can we look at Bakken? Maybe the data is wrong, but it does look like the well productivities has maybe come down a bit and also from the third-party data. So can you give us some idea that -- are we seeing that is just a dip or that the deterioration is something that need to work on? And also whether you have a sufficient scale now after the Grayson acquisition that you think you have? And the second question is that on Eagle Ford, that after the dissolve of the joint venture, can you give us some idea that now you reset -- I suppose that you reset the base? And how is the cadence on your activity and also your production outlook for that over the next several quarters? Thank you.

Question: Scott Hanold - RBC Capital Markets LLC - Analyst : Yes, thanks. Hey, Jeff, you kind of mentioned the windfall you all are going to get from the OBBBA. I think you said $1 billion over the next few years. What is the plan on allocating that cash? What are you targeting to do with that? Could that be for incremental shareholder returns? Would you rather focus on maybe paying off the term loan faster? But just give me your thoughts on how to allocate that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 3:00PM, DVN.N - Q2 2025 Devon Energy Corp Earnings Call

Question: Scott Hanold - RBC Capital Markets LLC - Analyst : Okay, I appreciate that. My follow up is on the Anadarko. And Paul highlighted, obviously, there's some moving parts on both Bakken and Eagle Ford production. But I think Anadarko stepped up pretty strongly this quarter as well. Can you tell us where you all are with the JV there and how to think about that production? And obviously, it's got a little bit more of a gas mix. So it would be interesting to hear your thoughts on investing in that area and your views on the gas macro.

Question: Doug Leggate - Wolfe Research LLC - Analyst : Thank you. Good morning. Clay, can you hear me okay?

Question: Doug Leggate - Wolfe Research LLC - Analyst : Okay, great. I just wanted to check that there were no connection issues this time around. Thanks for your patience. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 3:00PM, DVN.N - Q2 2025 Devon Energy Corp Earnings Call

Question: Doug Leggate - Wolfe Research LLC - Analyst : Good stuff. You have no idea how many times I said that last time around. But anyway, I did actually want to ask a question last call, and I didn't get to for some reason. And it was about the BP separation. And I want to address one specific issue. When BP talks about this, they said that they chose their acreage because they had problems with the Wilcox, the instability of the Wilcox sand in the eastern part of the play, which caused sidetracks, all sorts of operating problems, and so on. And they wanted to avoid that going forward. I wonder if you could address that as it relates to your experience of operating in that part of the Eagle Ford. And I've got a follow-up for Jeff, if that's okay.

Question: Doug Leggate - Wolfe Research LLC - Analyst : Clay, that saving includes the additional strength?

Question: Doug Leggate - Wolfe Research LLC - Analyst : That's great. Thanks for the clarity. So my follow-up, Jeff, I guess there's a couple of pieces to this, and it starts with cash tax. You've given the next three years. My question is, I know there's no precision here, but this idea that you navigate IDCs on a kind of, I guess as long as the current administration is in place, for an extended period of time, what does it look like beyond the next three years? And I guess my part B would be, clearly this is kind of a windfall. I think I heard you say that you're prepared to put cash on the balance sheet and reduce net debt. Am I overthinking that?

Question: Arun Jayaram - JPMorgan Securities LLC - Analyst : Yes, good morning, gentlemen. One follow up, Jeff, on the commercial opportunities or the $200 million that you've realized in that bucket. What is the timing of when you'll get those savings? Is that early in the year, but maybe just helpful because it is a pretty meaningful needle mover? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 3:00PM, DVN.N - Q2 2025 Devon Energy Corp Earnings Call

Question: Arun Jayaram - JPMorgan Securities LLC - Analyst : Got it, got it. I just want to make sure because on the slide it says it's not captured in your 2025 outlook, but you'll get that later this year.

Question: Arun Jayaram - JPMorgan Securities LLC - Analyst : Got it, got it. I got one follow up. Clay, as you have contemplated a higher degree of co-development between the Wolf Camp B and Wolf Camp A zones in the Delaware Basin, I think the mix is going to 30% this year versus 10% last year. I was wondering if you could comment on how you're seeing the interplay between the Wolf Camp B and Wolf Camp A zones. And just talk about -- are you seeing any impacts to productivity in that Wolf Camp Bay Zone?

Question: Betty Jiang - Barclays Capital, Inc. - Analyst : Good morning. It's great to see the operational momentum translating into free cash flow generation. Maybe a follow up to you, Jeff. We talked a lot about the balance of capital allocation. Maybe asked differently, you are grinding that or paying down that $2.5 billion in net debt reduction faster than previously expected with all these efficiency gains, lower CapEx, and tax savings. What do you think is the optimal debt level for this business going forward? We see you potentially reaching that $2.5 billion target by end of '26, maybe early '27. Is that -- after that, we could see a potential increase in cash return? Thanks.

Question: Betty Jiang - Barclays Capital, Inc. - Analyst : That's very clear. Thanks. My follow up is on unlocking the next layer of resources. Given the lower cost structure, whether that's coming from midstream or upstream, do you see other resource opportunities that's getting unlocked now that was previously uneconomical under the prior higher cost structure? If so, where could be some of these opportunities?

Question: Phillip Jungwirth - BMO Capital Markets Corp. - Analyst : Thanks. Good morning. You mentioned being open to additional investments in the midstream space and was just hoping you could expand on this and maybe what part of the value chain that could be. And what would the target level of investment be, assuming you're planning to fund this with Devon's balance sheet?

Question: Phillip Jungwirth - BMO Capital Markets Corp. - Analyst : Okay, great. And then you had strong Delaware production in the quarter. And just following up on the co-development question, now that we're halfway through the year, can you talk about just generally how performance has been versus expectations? Any key learnings so far, and then how optimized do you think you are at the moment as far as overall completion intensity per DSU?

Question: David Deckelbaum - TD Securities (USA) LLC - Analyst : Thanks, everyone, for squeezing me on. Clay, I wanted to just get back to the initiatives, particularly on commercial opportunities. So far, it looks like the savings achieved have been in the Delaware. Do you anticipate focusing on other areas of the portfolio that might enhance some of the economics, specifically in areas like Anadarko? Or is there more work to be done more in the Delaware from a midstream renegotiation perspective?

Question: David Deckelbaum - TD Securities (USA) LLC - Analyst : And I guess, are most of the quantified opportunities have been captured, are they more a function of better realizations or are you getting materially better rates here?