DEVON ENERGY CORP/DE Fair Value Disclosure
The following table provides carrying value and fair value measurement information for certain of Devon’s financial assets and liabilities. The carrying values of cash, restricted cash, accounts receivable, other current receivables, accounts payable, other current payables, accrued expenses and lease liabilities included in the accompanying consolidated balance sheets approximated fair value at December 31, 2025 and December 31, 2024, as applicable. Therefore, such financial assets and liabilities are not presented in the following table.
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Fair Value Measurements Using: |
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Carrying |
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Total Fair |
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Level 1 |
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Level 2 |
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Level 3 |
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Amount |
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Value |
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Inputs |
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Inputs |
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Inputs |
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December 31, 2025 assets (liabilities): |
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Cash equivalents |
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$ |
764 |
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$ |
764 |
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$ |
764 |
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$ |
— |
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$ |
— |
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Commodity derivatives |
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$ |
194 |
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$ |
194 |
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$ |
— |
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$ |
194 |
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$ |
— |
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Commodity derivatives |
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$ |
(1 |
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$ |
(1 |
) |
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$ |
— |
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$ |
(1 |
) |
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$ |
— |
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Debt |
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$ |
(8,389 |
) |
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$ |
(8,290 |
) |
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$ |
— |
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$ |
(8,290 |
) |
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$ |
— |
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December 31, 2024 assets (liabilities): |
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Cash equivalents |
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$ |
319 |
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$ |
319 |
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$ |
319 |
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$ |
— |
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$ |
— |
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Commodity derivatives |
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$ |
56 |
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$ |
56 |
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$ |
— |
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$ |
56 |
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$ |
— |
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Commodity derivatives |
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$ |
(33 |
) |
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$ |
(33 |
) |
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$ |
— |
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$ |
(33 |
) |
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$ |
— |
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Debt |
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$ |
(8,883 |
) |
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$ |
(8,520 |
) |
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$ |
— |
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$ |
(8,520 |
) |
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$ |
— |
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Contingent earnout payments |
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$ |
20 |
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$ |
20 |
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$ |
— |
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$ |
— |
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$ |
20 |
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The following methods and assumptions were used to estimate the fair values in the table above.
Level 1 Fair Value Measurements
Cash equivalents – Amounts consist primarily of money market investments and the fair value approximates the carrying value.
Level 2 Fair Value Measurements
Commodity derivatives – The fair value of commodity derivatives is estimated using internal discounted cash flow calculations based upon forward curves and data obtained from independent third parties for contracts with similar terms or data obtained from counterparties to the agreements.
Debt – Devon’s debt instruments do not consistently trade actively in an established market. The fair values of its debt are estimated based on rates available for debt with similar terms and maturity when active trading is not available. Our variable rate debt is non-public and consists of our Term Loan. The fair value of our variable rate debt approximates the carrying value as the underlying SOFR resets every month based on the prevailing market rate.
Level 3 Fair Value Measurements
Contingent Earnout Payments – Devon had the right to receive contingent consideration related to the Barnett asset divestiture based on future oil and gas prices. 2024 was the last performance period related to this contingent consideration. These values were derived using a Monte Carlo valuation model and qualify as a level 3 fair value measurement. For additional information, see Note 2.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 15, 2023 | |
| 2021 | Feb 16, 2022 | |
| 2017 | Feb 21, 2018 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.