Devon Energy Earns $859 Million in Second Quarter 2006; Per Share Earnings Increase 39 Percent to $1.92

OKLAHOMA CITY, Aug. 2 /PRNewswire-FirstCall/ -- Devon Energy Corporation today reported net earnings for the quarter ended June 30, 2006, of $859 million, or $1.94 per common share ($1.92 per diluted common share). These results compare with second-quarter 2005 net earnings of $653 million, or $1.40 per common share ($1.38 per diluted common share). Earnings per share increased 39 percent compared with the second quarter of 2005.

For the six months ended June 30, 2006, Devon's net earnings were $1.6 billion, or $3.52 per common share ($3.47 per diluted common share). Net earnings for the six months ended June 30, 2005, were $1.2 billion, or $2.57 per common share ($2.53 per diluted common share).

Second-quarter 2006 reported net earnings of $859 million benefited from certain items securities analysts typically exclude from their published estimates. Excluding these items, Devon earned $701 million, or $1.57 per diluted share. The excluded items are described in detail in this news release.

"The strength of Devon's property base and drilling programs is reflected in our production growth. Second-quarter oil and gas production was up two percent over the first quarter and we expect production growth to accelerate in the second half of the year," commented J. Larry Nichols, chairman and chief executive officer.

Acquisition of Chief Properties Enhances Devon's Lead in Barnett Shale

Devon completed its acquisition of Chief Holdings LLC on June 29, 2006, increasing its position in the Barnett Shale in north Texas. With net production of approximately 650 million cubic feet of gas equivalent per day, Devon produces almost half of the total Barnett Shale production. Following the acquisition, Devon has more than 2,500 producing wells and 733,000 net acres in the Barnett Shale.

"Acquisition of the Chief acreage gives us 2,000 additional drilling locations in the Barnett Shale," said Stephen J. Hadden, senior vice president, exploration and production. "We plan to have 30 rigs drilling in the Barnett Shale by year-end and to drive Devon's share of Barnett production to one billion cubic feet of gas equivalent per day by 2009."

Second-Quarter Highlights Include Gulf of Mexico and International Operations

Devon drilled 546 wells in the second quarter of 2006 with a 97 percent overall success rate. Following are second-quarter operating highlights:

* Devon and its partners completed the production test of the deepwater Jack well in the Gulf of Mexico's lower Tertiary trend in June. The test results are currently being evaluated and will be announced later this year. This test is an important step in Devon's evaluation of its extensive inventory of discoveries and prospects in the lower Tertiary trend. * In May, the company restored production from the deepwater Red Hawk field in the Gulf of Mexico that was suspended by the 2005 hurricanes. Red Hawk produces about 10,000 oil equivalent barrels (Boe) per day net to Devon. In July, Devon restored another 6,000 Boe per day in the Eugene Island and West Cameron areas of the shallow water shelf. About 90 percent of the production interrupted by the hurricanes has now been restored. * Construction and fabrication for the 50 million barrel Polvo oil development project in Brazil continues on schedule. The drilling deck was lifted into place and initial dry-dock work on the floating production, storage and offloading vessel was completed in June. Devon expects first oil production from Polvo in mid-2007. * The inaugural shipment of crude oil from the Baku-Tbilisi-Ceyhan pipeline marked an important milestone for the 5.5 billion barrel ACG field in Azerbaijan in June. Devon's average daily oil production from ACG is expected to increase by approximately 30,000 barrels per day within the next six months. Pre-Tax Earnings Climb on Higher Revenues

Sales of oil, gas and natural gas liquids increased seven percent to $2.2 billion in the second quarter of 2006. The increase in revenues more than exceeded combined expense increases, leading to higher earnings before income taxes.

Substantially higher realized prices for oil and natural gas liquids led to the increase in sales revenues. Devon's second-quarter 2006 average realized oil price increased 71 percent to $63.69 per barrel compared with $37.28 per barrel in the second quarter of 2005. The higher realized oil price is attributable to a global increase in crude oil prices and to the expiration of Devon's oil price hedges at December 31, 2005. None of Devon's oil production is hedged in 2006. The average realized price for natural gas liquids increased 30 percent to $33.83 per barrel in the second quarter of 2006 compared with $25.99 per barrel in the same quarter in 2005.

Conversely, the realized price of natural gas decreased by four percent in the second quarter of 2006 to $5.83 per thousand cubic feet. This compares with a realized price of $6.09 per thousand cubic feet in the second quarter of 2005.

Devon's combined oil, gas and natural gas liquids production averaged 578 thousand Boe per day in the second quarter of 2006. This compares with second quarter 2005 average production of 641 thousand Boe per day. The decrease in 2006 production was primarily attributable to property divestitures and the continued impact of hurricanes experienced in the second half of 2005. Devon has now restored about 90 percent of the production suspended by the 2005 hurricanes. Second-quarter 2006 daily production was approximately two percent greater than first-quarter 2006 daily production.

Marketing and midstream operating profit increased 17 percent in the second quarter of 2006 to $109 million. Marketing and midstream revenues increased two percent to $397 million. Related expenses decreased three percent to $288 million.

Lease operating expenses increased seven percent to $362 million in the second quarter of 2006. Higher ad valorem taxes, rising oil field service and supply costs and the continued strengthening of the Canadian Dollar all contributed to the increase.

Production taxes increased 15 percent to $86 million in the second quarter of 2006. Higher production taxes resulted primarily from higher oil and gas revenues.

Depreciation, depletion and amortization (DD&A) of oil and gas properties increased 12 percent to $556 million in the second quarter of 2006 compared with the same quarter in 2005. Unit DD&A increased 25 percent to $10.56 per Boe compared with the second quarter of 2005.

Second-quarter general and administrative (G&A) expenses increased 16 percent to $90 million compared with the second quarter of 2005. Beginning in 2006, accounting rules require that stock option costs be expensed, contributing to the increase in G&A expenses.

Interest expense for the second quarter of 2006 decreased 31 percent to $102 million. Interest expense of $146 million in the second quarter of 2005 included $30 million attributable to the company's early redemption of zero coupon convertible debentures.

Lower Canadian Rate Decreases Income Tax Expense

Income tax expense was $185 million in the second quarter of 2006, or 18 percent of pre-tax earnings. Current income tax expense decreased 28 percent compared with the second quarter of 2005. A reduction in Canadian statutory income tax rates resulted in a $243 million reduction in deferred taxes. This was offset in part by a $39 million deferred tax increase attributable to a new income-based tax in the state of Texas.

Cash Flow Before Balance Sheet Changes Increases 19 Percent

Cash flow before balance sheet changes increased 19 percent to $1.5 billion in the second quarter of 2006. This was sufficient to fully fund Devon's second-quarter 2006 drilling budget of $1.1 billion and other capital expenditures. The $2.2 billion Chief acquisition was funded with cash on hand and debt.

At June 30, 2006, cash and short-term investments were $1.4 billion. Net debt at June 30, 2006, was 26 percent of adjusted capitalization, compared with 23 percent of adjusted capitalization at June 30, 2005. Reconciliations of cash flow before balance sheet changes, net debt and adjusted capitalization, which are non-GAAP measures, are provided in this release.

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 for the company's financial results. These items and their effects upon second- quarter 2006 reported earnings were as follows:

* A change in fair value of derivative financial instruments decreased earnings by $47 million pre-tax ($30 million after tax). * A reduction in the carrying value of oil and gas properties reduced earnings by $16 million before and after income taxes. * A reduction in Canadian statutory income tax rates increased after-tax earnings by $243 million. * A new income-based tax in the state of Texas decreased after-tax earnings by $39 million.

The following table summarizes the effects of these items on second- quarter 2006 earnings and income taxes.

Summary of Items Typically Excluded by Securities Analysts (in millions) Cash Flow Before Balance Pretax After-tax Sheet Earnings Income Tax Effect Earnings Changes Effect Current Deferred Total Effect Effect Change in fair value of financial instruments $(47) --- (17) (17) (30) --- Reduction in the carrying value of properties (16) --- --- --- (16) --- Change in Canadian income tax rate --- --- (243) (243) 243 --- Texas income-based tax --- --- 39 39 (39) --- Totals $(63) --- (221) (221) 158 ---

In aggregate, these items increased second-quarter 2006 net earnings by $158 million, or 35 cents per common share (35 cents per diluted share).

Conference Call to be Webcast Today

Devon will discuss its second-quarter 2006 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 http://www.devonenergy.com/ .

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, inflation or lack of availability of goods and services, environmental risks, drilling risks and 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.

Devon Energy Corporation is an Oklahoma City-based independent energy company engaged in oil and gas exploration, production and property acquisitions. Devon is the largest 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 http://www.devonenergy.com/ .

DEVON ENERGY CORPORATION UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION PRODUCTION DATA Quarter Ended Six Months Ended (net of royalties) June 30, June 30, 2006 2005 2006 2005 Total Period Production Natural Gas (Bcf) U.S. Onshore 117.3 113.9 230.8 229.6 U.S. Offshore 18.6 25.7 35.0 54.8 Total U.S. 135.9 139.6 265.8 284.4 Canada 62.7 66.9 121.8 133.0 International 2.2 2.4 4.5 5.2 Total Natural Gas 200.8 208.9 392.1 422.6 Oil (MMBbls) U.S. Onshore 2.8 3.0 5.6 6.3 U.S. Offshore 2.3 3.9 4.5 8.4 Total U.S. 5.1 6.9 10.1 14.7 Canada 3.1 3.4 6.3 6.7 International 5.3 7.1 10.5 13.9 Total Oil 13.5 17.4 26.9 35.3 Natural Gas Liquids (MMBbls) U.S. Onshore 4.4 4.4 8.9 8.8 U.S. Offshore 0.1 0.2 0.2 0.5 Total U.S. 4.5 4.6 9.1 9.3 Canada 1.2 1.3 2.4 2.6 International --- 0.1 --- 0.1 Total Natural Gas Liquids 5.7 6.0 11.5 12.0 Oil Equivalent (MMBoe) U.S. Onshore 26.8 26.4 53.0 53.4 U.S. Offshore 5.4 8.4 10.5 18.0 Total U.S. 32.2 34.8 63.5 71.4 Canada 14.7 15.9 29.0 31.4 International 5.7 7.6 11.2 14.9 Total Oil Equivalent 52.6 58.3 103.7 117.7 Average Daily Production Natural Gas (MMcf) U.S. Onshore 1,288.7 1,251.0 1,275.0 1,268.4 U.S. Offshore 204.0 282.6 193.5 303.0 Total U.S. 1,492.7 1,533.6 1,468.5 1,571.4 Canada 689.0 734.6 672.8 735.0 International 24.7 26.9 24.8 28.5 Total Natural Gas 2,206.4 2,295.1 2,166.1 2,334.9 Oil (MBbls) U.S. Onshore 30.8 33.1 31.0 35.0 U.S. Offshore 24.7 42.8 24.5 46.1 Total U.S. 55.5 75.9 55.5 81.1 Canada 33.6 38.0 34.7 37.1 International 58.7 77.8 58.2 76.7 Total Oil 147.8 191.7 148.4 194.9 Natural Gas Liquids (MBbls) U.S. Onshore 48.5 48.5 49.1 48.8 U.S. Offshore 1.0 2.6 1.3 2.6 Total U.S. 49.5 51.1 50.4 51.4 Canada 13.2 14.4 13.4 14.1 International --- 0.9 --- 0.9 Total Natural Gas Liquids 62.7 66.4 63.8 66.4 Oil Equivalent (MBoe) U.S. Onshore 294.1 290.1 292.7 295.2 U.S. Offshore 59.8 92.5 58.0 99.2 Total U.S. 353.9 382.6 350.7 394.4 Canada 161.6 174.8 160.2 173.7 International 62.8 83.2 62.3 82.3 Total Oil Equivalent 578.3 640.6 573.2 650.4 DEVON ENERGY CORPORATION UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION PRODUCTION DATA - RETAINED PROPERTIES YOY Sequential All periods exclude properties % % divested in 2005 Q2 2006 Q2 2005 Q1 2006 Change Change Total Period Production Natural Gas (Bcf) U.S. Onshore 117.3 113.2 113.5 4% 3% U.S. Offshore 18.6 23.5 16.5 -21% 13% Total U.S. 135.9 136.7 130.0 -1% 5% Canada 62.7 61.3 59.1 2% 6% International 2.2 2.4 2.2 -8% 0% Total Natural Gas 200.8 200.4 191.3 0% 5% Oil (MMBbls) U.S. Onshore 2.8 2.9 2.8 -6% 0% U.S. Offshore 2.3 3.0 2.2 -24% 5% Total U.S. 5.1 5.9 5.0 -15% 2% Canada 3.1 3.2 3.2 -4% -3% International 5.3 7.1 5.2 -25% 2% Total Oil 13.5 16.2 13.4 -17% 1% Natural Gas Liquids (MMBbls) U.S. Onshore 4.4 4.4 4.5 1% -2% U.S. Offshore 0.1 0.2 0.1 -52% 0% Total U.S. 4.5 4.6 4.6 -1% -2% Canada 1.2 1.2 1.2 -4% 0% International --- 0.1 --- -100% 0% Total Natural Gas Liquids 5.7 5.9 5.8 -3% -2% Oil Equivalent (MMBoe) U.S. Onshore 26.8 26.2 26.2 2% 2% U.S. Offshore 5.4 7.1 5.1 -23% 6% Total U.S. 32.2 33.3 31.3 -3% 3% Canada 14.7 14.6 14.3 0% 3% International 5.7 7.6 5.5 -25% 4% Total Oil Equivalent 52.6 55.5 51.1 -5% 3% Average Daily Production Natural Gas (MMcf) U.S. Onshore 1,288.7 1,243.4 1,261.2 4% 2% U.S. Offshore 204.0 258.8 182.9 -21% 12% Total U.S. 1,492.7 1,502.2 1,444.1 -1% 3% Canada 689.0 672.9 656.3 2% 5% International 24.7 26.9 24.9 -8% -1% Total Natural Gas 2,206.4 2,202.0 2,125.3 0% 4% Oil (MBbls) U.S. Onshore 30.8 32.8 31.2 -6% -1% U.S. Offshore 24.7 32.6 24.3 -24% 2% Total U.S. 55.5 65.4 55.5 -15% 0% Canada 33.6 35.0 35.7 -4% -6% International 58.7 77.8 57.7 -25% 2% Total Oil 147.8 178.2 148.9 -17% -1% Natural Gas Liquids (MBbls) U.S. Onshore 48.5 48.1 49.8 1% -3% U.S. Offshore 1.0 2.1 1.4 -52% -29% Total U.S. 49.5 50.2 51.2 -1% -3% Canada 13.2 13.8 13.6 -4% -3% International --- 0.9 --- -100% 0% Total Natural Gas Liquids 62.7 64.9 64.8 -3% -3% Oil Equivalent (MBoe) U.S. Onshore 294.1 288.2 291.2 2% 1% U.S. Offshore 59.8 77.8 56.3 -23% 6% Total U.S. 353.9 366.0 347.5 -3% 2% Canada 161.6 160.9 158.6 0% 2% International 62.8 83.2 61.9 -25% 1% Total Oil Equivalent 578.3 610.1 568.0 -5% 2% DEVON ENERGY CORPORATION UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION Quarter Ended Six Months Ended REALIZED PRICE DATA June 30, June 30, (average realized prices) 2006 2005 2006 2005 Realized Prices Natural Gas ($/Mcf) U.S. Onshore $ 5.67 $ 5.96 $ 6.27 $ 5.56 U.S. Offshore $ 7.39 $ 7.10 $ 7.80 $ 6.81 Total U.S. $ 5.91 $ 6.17 $ 6.47 $ 5.80 Canada $ 5.70 $ 5.98 $ 6.51 $ 5.83 International $ 4.65 $ 4.08 $ 4.43 $ 3.95 Total Natural Gas $ 5.83 $ 6.09 $ 6.46 $ 5.79 Oil ($/Bbl) U.S. Onshore $64.87 $48.40 $61.22 $45.82 U.S. Offshore $67.51 $33.81 $63.87 $33.29 Total U.S. $66.05 $40.18 $62.39 $38.70 Canada $54.52 $24.05 $46.14 $23.98 International $66.72 $40.91 $62.22 $38.59 Total Oil $63.69 $37.28 $58.53 $35.86 Natural Gas Liquids ($/Bbl) U.S. Onshore $30.53 $23.42 $28.55 $22.69 U.S. Offshore $47.05 $29.48 $41.06 $27.83 Total U.S. $30.88 $23.73 $28.86 $22.95 Canada $44.87 $34.28 $43.70 $33.16 International $ --- $21.16 $ --- $24.56 Total Natural Gas Liquids $33.83 $25.99 $31.98 $25.15 Oil Equivalent ($/Boe) U.S. Onshore $36.69 $35.15 $38.61 $33.08 U.S. Offshore $53.98 $38.16 $53.90 $37.01 Total U.S. $39.61 $35.88 $41.14 $34.07 Canada $39.31 $33.20 $40.99 $32.50 International $64.17 $39.82 $59.86 $37.58 Total Oil Equivalent $42.19 $35.66 $43.14 $34.09 Quarter Ended Six Months Ended BENCHMARK PRICES June 30, June 30, (average prices) 2006 2005 2006 2005 Benchmark Prices Natural Gas ($/Mcf) - Henry Hub $ 6.80 $ 6.74 $ 7.91 $ 6.51 Oil ($/Bbl) - West Texas Intermediate (Cushing) $70.64 $53.23 $67.03 $51.57 PRICE DIFFERENTIALS, Quarter Ended Six Months Ended EXCLUDING EFFECTS OF HEDGES June 30, June 30, (average floating price differentials from benchmark prices) 2006 2005 2006 2005 Price Differentials Natural Gas ($/Mcf) U.S. Onshore $ (1.13) $ (0.76) $ (1.64) $ (0.94) U.S. Offshore $ 0.59 $ 0.39 $ (0.11) $ 0.31 Total U.S. $ (0.89) $ (0.55) $ (1.44) $ (0.69) Canada $ (1.10) $ (0.58) $ (1.40) $ (0.51) International $ (2.15) $ (1.27) $ (3.48) $ (1.40) Total Natural Gas $ (0.97) $ (0.56) $ (1.45) $ (0.64) Oil ($/Bbl) U.S. Onshore $ (5.77) $ (4.83) $ (5.81) $ (4.83) U.S. Offshore $ (3.13) $ (4.41) $ (3.16) $ (4.74) Total U.S. $ (4.59) $ (4.59) $ (4.64) $ (4.78) Canada $ (16.12) $(15.77) $(20.89) $(14.43) International $ (3.92) $ (5.63) $ (4.81) $ (6.74) Total Oil $ (6.95) $ (7.23) $ (8.50) $ (7.38) DEVON ENERGY CORPORATION UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION Quarter Ended Six Months Ended CONSOLIDATED STATEMENTS OF OPERATIONS June 30, June 30, (in millions, except per share data) 2006 2005 2006 2005 Revenues Oil sales $ 857 $ 650 $1,572 $1,265 Gas sales 1,170 1,272 2,534 2,447 Natural gas liquids sales 193 157 369 302 Marketing & midstream revenues 397 389 859 805 Total revenues 2,617 2,468 5,334 4,819 Expenses and Other Income, net Lease operating expenses 362 338 711 686 Production taxes 86 75 169 153 Marketing & midstream operating costs and expenses 288 296 627 627 Depreciation, depletion and amortization of oil and gas properties 556 494 1,063 1,035 Depreciation and amortization of non-oil and gas properties 43 41 85 79 Accretion of asset retirement obligation 13 11 24 23 General & administrative expenses 90 78 180 136 Interest expense 102 146 203 264 Effects of changes in foreign currency exchange rates --- 11 (1) 11 Change in fair value of derivative financial instruments 47 (18) 59 34 Reduction of carrying value of oil and gas properties 16 --- 101 --- Other income, net (30) (14) (58) (152) Total expenses and other income, net 1,573 1,458 3,163 2,896 Earnings before income tax expense 1,044 1,010 2,171 1,923 Income Tax Expense (Benefit) Current 198 277 502 629 Deferred (13) 80 110 78 Total income tax expense 185 357 612 707 Net earnings 859 653 1,559 1,216 Preferred stock dividends 3 3 5 5 Net earnings applicable to common stockholders $ 856 $ 650 $1,554 $1,211 Net earnings per weighted average common shares outstanding Basic $ 1.94 $ 1.40 $ 3.52 $ 2.57 Diluted $ 1.92 $ 1.38 $ 3.47 $ 2.53 Basic weighted average shares outstanding 440 464 441 472 Diluted weighted average shares outstanding 446 471 447 479 DEVON ENERGY CORPORATION UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION CONSOLIDATED BALANCE SHEETS (in millions) June 30, December 31, 2006 2005 Assets (Audited) Current assets Cash and cash equivalents $ 1,030 $ 1,606 Short-term investments 332 680 Accounts receivable 1,404 1,601 Deferred income taxes 90 158 Other current assets 189 161 Total current assets 3,045 4,206 Property and equipment, at cost, based on the full cost method of accounting for oil and gas properties ($3,890 and $2,747 excluded from amortization in 2006 and 2005, respectively) 39,773 34,246 Less accumulated depreciation, depletion and amortization 16,454 15,114 Net property and equipment 23,319 19,132 Investment in Chevron Corporation common stock, at fair value 880 805 Goodwill 5,823 5,705 Other assets 451 425 Total Assets $33,518 $30,273 Liabilities and Stockholders' Equity Current liabilities Accounts payable: Trade $ 1,137 $ 947 Revenues and royalties due to others 492 666 Income taxes payable 147 293 Short-term debt 2,098 662 Accrued interest payable 127 127 Fair value of derivative financial instruments 17 18 Current portion of asset retirement obligation 73 50 Accrued expenses and other current liabilities 107 171 Total current liabilities 4,198 2,934 Debentures exchangeable into shares of Chevron Corporation common stock 718 709 Other long-term debt 5,238 5,248 Fair value of derivative financial instruments 183 125 Asset retirement obligation, long- term 766 618 Other liabilities 370 372 Deferred income taxes 5,552 5,405 Stockholders' equity Preferred stock 1 1 Common stock 44 44 Additional paid-in capital 6,762 6,928 Retained earnings 7,932 6,477 Accumulated other comprehensive income 1,772 1,414 Treasury stock (18) (2) Stockholders' Equity 16,493 14,862 Total Liabilities & Stockholders' Equity $33,518 $30,273 Common Shares Outstanding 441 443 DEVON ENERGY CORPORATION UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Six Months Ended June 30, 2006 2005 Cash Flows From Operating Activities Net earnings $ 1,559 $ 1,216 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation, depletion and amortization 1,148 1,114 Deferred income tax expense 110 78 Net gain on sales of non-oil and gas property and equipment (5) (150) Reduction of carrying value of oil and gas properties 101 --- Other non-cash charges to net earnings 112 95 3,025 2,353 Changes in assets and liabilities: (Increase) decrease in: Accounts receivable 269 9 Other current assets (17) (6) Long-term other assets (6) 35 Increase (decrease) in: Accounts payable (168) 112 Income taxes payable (156) (75) Debt, including current maturities --- (67) Accrued interest and expenses (108) 46 Long-term other liabilities (21) (22) Net cash provided by operating activities $ 2,818 $ 2,385 Cash Flows From Investing Activities Proceeds from sales of property and equipment $ 26 $ 2,161 Capital expenditures (4,715) (1,976) Purchases of short-term investments (1,698) (2,765) Sales of short-term investments 2,046 3,183 Net cash (used in) provided by investing activities $(4,341) $ 603 Cash Flows From Financing Activities Proceeds from borrowings of debt, net of issuance costs $ 1,452 $ --- Principal payments on debt, including current maturities (208) (354) Proceeds from exercise of stock options 27 81 Repurchase of common stock (253) (1,562) Excess tax benefits related to share-based compensation 7 --- Dividends paid on common stock (99) (70) Dividends paid on preferred stock (5) (5) Net cash provided by (used in) financing activities $ 921 $(1,910) Effect of exchange rate changes on cash $ 26 $ (3) Net (decrease) increase in cash and cash equivalents (576) 1,075 Cash and cash equivalents at beginning of period 1,606 1,152 Cash and cash equivalents at end of period $ 1,030 $ 2,227 DEVON ENERGY CORPORATION UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION Quarter Ended Six Months Ended DRILLING ACTIVITY June 30, June 30, 2006 2005 2006 2005 Exploration Wells Drilled U.S. 18 9 39 21 Canada 30 35 96 152 International 5 7 8 7 Total 53 51 143 180 Exploration Wells Success Rate U.S. 89% 89% 90% 76% Canada 100% 100% 99% 93% International 20% 43% 13% 43% Total 89% 90% 92% 89% Development Wells Drilled U.S. 372 317 655 597 Canada 109 115 382 382 International 12 10 22 19 Total 493 442 1,059 998 Development Wells Success Rate U.S. 98% 98% 98% 98% Canada 100% 99% 99% 99% International 92% 100% 95% 100% Total 98% 98% 99% 99% Total Wells Drilled U.S. 390 326 694 618 Canada 139 150 478 534 International 17 17 30 26 Total 546 493 1,202 1,178 Total Wells Success Rate U.S. 97% 98% 98% 98% Canada 100% 99% 99% 97% International 71% 76% 73% 85% Total 97% 98% 98% 97% COMPANY OPERATED RIGS June 30, 2006 2005 Number of Company Operated Rigs Running U.S. 60 50 Canada 11 9 International --- 2 Total 71 61 Quarter Ended Six Months Ended CAPITAL EXPENDITURES DATA June 30, 2006 June 30, 2006 (in millions) Capital Expenditures U.S. Onshore $ 588 $1,089 U.S. Offshore 183 330 Total U.S. 771 1,419 Canada 253 835 International 73 200 Chief acquisition 2,223 2,223 Marketing & midstream 75 152 Capitalized general & administrative costs 61 118 Capitalized interest costs 20 36 Other 44 71 Total $3,520 $5,054 DEVON ENERGY CORPORATION UNAUDITED 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.

RECONCILIATION TO GAAP INFORMATION Quarter Ended Six Months Ended (in millions) June 30, June 30, 2006 2005 2006 2005 Net Cash Provided By Operating Activities (GAAP) $1,296 $ 997 $2,818 $2,385 Changes in assets and liabilities, net of effects of acquisitions of businesses 237 291 207 (32) Cash flow before balance sheet changes (Non-GAAP) $1,533 $1,288 $3,025 $2,353

Devon believes that using net debt, defined as debt less cash, short-term investments, and the market value of Chevron common stock, for the calculation of "net debt to adjusted capitalization" provides a better measure than using debt. Devon believes that because cash and short-term investments can be used to repay indebtedness, netting cash and short-term investments against debt provides a clearer picture of the future demands on cash to repay debt. Included in Devon's indebtedness are $718 million of debentures exchangeable into 14.2 million shares of Chevron common stock owned outright by Devon. As of June 30, 2006, the market value of the shares ($880 million) exceeded the related debt obligation. Devon believes deducting the market value of the stock provides a clearer picture of future demands on cash to repay debt. This methodology is also utilized by various lenders, rating agencies and securities analysts as a measure of Devon's indebtedness.

RECONCILIATION TO GAAP INFORMATION (in millions) June 30, 2006 2005 Total debt (GAAP) $ 8,054 7,523 Adjustments: Cash and short-term investments 1,362 (2,776) Market value of Chevron Corporation common stock 880 (793) Net Debt (Non-GAAP) $ 5,812 3,954 Total Capitalization Total debt $ 8,054 7,523 Stockholders' equity 16,493 13,299 Total Capitalization (GAAP) $24,547 20,822 Adjusted Capitalization Net debt $ 5,812 3,954 Stockholders' equity 16,493 13,299 Adjusted Capitalization (Non-GAAP) $22,305 17,253