DEVON ENERGY CORP/DE recently released its 10-Q report for the quarter ended June 30, 2026. Devon Energy Corporation is an independent U.S. energy producer focused on the exploration, development and production of oil, natural gas and natural gas liquids. Its operating areas include the Delaware Basin, Eagle Ford, Anadarko Basin, Williston Basin and Powder River Basin, and the company was founded in 1971 and is headquartered in Houston.
Item 2 of the filing shows how the May 7, 2026 all-stock merger with Coterra reshaped Devon’s second-quarter results. Devon said the merger created a large-cap shale operator with a Permian-anchored asset base and that it expects $1.0 billion of sustainable annual pre-tax synergies by year-end 2027, with about $600 million expected in 2027. In the second quarter, production reached 1,359 MBoe/d, including 503 MBbls/d of oil, compared with 833 MBoe/d in the first quarter. The company said Coterra legacy assets contributed about 488 MBoe/d in the quarter, and it expects third-quarter combined output of 1,660 to 1,690 MBoe/d.
Operating cash flow in the second quarter was $3.7 billion. Devon ended the period with $4.0 billion of liquidity, including $1.0 billion of cash, and retired $500 million of debt. It also launched an $8.0 billion share repurchase program and has repurchased about 4.4 million shares for roughly $202 million, or $45.48 per share, since inception after the merger closed. Dividends paid in the quarter totaled $366 million. Devon also acquired about 16,300 net acres for approximately $2.6 billion in a federal lease sale.
Quarterly earnings attributable to Devon were $1.9 billion, or $2.03 per diluted share, versus $120 million in the first quarter. The company said the quarter-over-quarter increase in earnings was driven by a $1.2 billion benefit from higher volumes and a $918 million benefit from realized prices. Oil production rose to 503 MBbls/d from 387 MBbls/d, gas production increased to 3,252 MMcf/d from 1,373 MMcf/d, and NGL production climbed to 314 MBbls/d from 218 MBbls/d.
Realized oil prices with hedges were $88.09 per barrel in the second quarter, up from $67.94 in the first quarter, while realized gas prices with hedges fell to $1.05 per Mcf from $1.68. Devon said unhedged gas prices were pressured by lower Henry Hub pricing and wider regional differentials in the Permian, including negative spot pricing at Waha. Oil hedge cash settlements were a $321 million outflow in the second quarter, compared with a $60 million outflow in the first quarter, while gas hedge settlements were a $205 million inflow, versus $3 million in the first quarter.
Production expenses increased to $1.393 billion from $894 million. Lease operating expense was $626 million, gathering, processing and transportation costs were $391 million, production taxes were $357 million and property taxes were $19 million. On a per-Boe basis, LOE fell to $5.06 from $6.48, while gathering, processing and transportation rose to $3.16 from $2.54. Production taxes represented 7.0% of oil, gas and NGL sales, up slightly from 6.9%.
DD&A rose to $1.416 billion from $904 million, with oil and gas DD&A at $1.383 billion and other property and equipment DD&A at $33 million. G&A increased to $175 million from $125 million, though G&A per Boe fell to $1.41 from $1.67. Devon also recorded $246 million of restructuring and transaction costs tied to the merger, compared with $19 million in the first quarter. Commodity hedge valuation changes added $530 million to earnings, reversing a $644 million loss in the prior quarter. Devon also recognized an approximately $201 million gain on its Fervo investment in other, net.
For the first six months of 2026, Devon reported net earnings of $2.0 billion, up from $1.4 billion in the first six months of 2025. Oil production averaged 445 MBbls/d, compared with 388 MBbls/d a year earlier, while gas production averaged 1,447 MMcf/d versus 1,434 MMcf/d. The six-month figures show Permian oil output at 278 MBbls/d, up from 222 MBbls/d, and Permian gas output at 1,054 MMcf/d, up from 784 MMcf/d. Following these announcements, the company's shares moved -3.52%, and are now trading at a price of $42.4994. Check out the company's full 10-Q submission here.
