EX-99.2
3
d34951dex992.htm
EX-99.2
EX-99.2
Exhibit 99.2
DEVON ENERGY CORPORATION
Unaudited Pro Forma Consolidated Financial Information
Introduction
On October 1, 2020,
Devon Energy Corporation (the "Company" or "Devon") completed the previously announced Barnett Shale divest transaction, pursuant to which Devon sold its Barnett Shale assets to BKV Barnett, LLC (the "Purchaser"). Under
the terms of the agreement, Devon has received proceeds, net of purchase price adjustments, of $490 million, including a $170 million deposit previously received in April 2020. Additionally, the agreement provides for contingent earnout
payments to Devon of up to $260 million based upon future commodity prices, with upside participation beginning at a $2.75 Henry Hub natural gas price or a $50 WTI oil price. The contingent payment period commences on January 1, 2021 and
has a term of four years.
With this disposition, Devon is effectively exiting its last natural gas focused asset and the transaction
results in a material reduction to the Company's total assets, revenues and proved reserves. Therefore, this disposition represents a strategic shift in Devon's business, and the Company's Barnett Shale financial information has been
classified as discontinued operations since entering into the divestiture agreement with the Purchaser.
The unaudited pro forma
consolidated financial information has been prepared in conformity with Article 11 of
Regulation S-X. In
addition, this unaudited pro forma consolidated financial information is based on currently
available information and assumptions the Company believes are reasonable. This unaudited pro forma consolidated financial information is presented for informational purposes only and does not purport to represent what the Company's financial
position would have been had the disposition of Devon's Barnett Shale assets occurred on the date indicated.
DEVON ENERGY CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 2020
(In
millions)
As Reported
Pro Forma
Adjustments
Pro Forma
Current assets:
Cash and cash equivalents
$
1,474
$
315
$
1,789
Cash restricted for discontinued operations
195
-
195
Accounts receivable
515
-
515
Current assets associated with discontinued operations
748
(744
)
4
Other current assets
446
-
446
Total current assets
3,378
(429
)
2,949
Oil and gas property and equipment, net
4,673
-
4,673
Other property and equipment, net
1,013
-
1,013
Total property and equipment, net
5,686
-
5,686
Goodwill
753
-
753
Right-of-use
assets
231
-
231
Other long-term assets
227
-
227
Long-term assets associated with discontinued operations
82
41
123
Total assets
$
10,357
$
(388
)
$
9,969
Current liabilities:
Accounts payable
$
309
$
-
$
309
Revenues and royalties payable
473
-
473
Current liabilities associated with discontinued operations
441
(375
)
66
Other current liabilities
229
-
229
Total current liabilities
1,452
(375
)
1,077
Long-term debt
4,296
-
4,296
Lease liabilities
245
-
245
Asset retirement obligations
391
-
391
Other long-term liabilities
458
-
458
Long-term liabilities associated with discontinued operations
162
-
162
Deferred income taxes
-
-
-
Stockholders' equity:
Common stock, $0.10 par value. Authorized 1.0 billion shares; issued 383 million
shares
38
-
38
Additional
paid-in
capital
2,720
-
2,720
Retained earnings
586
(13
)
573
Accumulated other comprehensive loss
(117
)
-
(117
)
Total stockholders' equity attributable to Devon
3,227
(13
)
3,214
Noncontrolling interests
126
-
126
Total equity
3,353
(13
)
3,340
Total liabilities and equity
$
10,357
$
(388
)
$
9,969
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS:
1. Basis of Presentation
Because the
Company's Barnett Shale financial information has been presented as discontinued operations, the accompanying pro forma financial information only consists of a balance sheet prepared as of June 30, 2020. The historical consolidated
balance sheet as of June 30, 2020 is derived from and should be read in conjunction with the Company's unaudited financial statements in its June
30, 2020
Quarterly Report on Form
10-Q
, which was filed on August 5, 2020.
The Company's historical consolidated balance sheet has been adjusted in the unaudited pro forma consolidated financial information to
present events that are (i) directly attributable to the sale of its Barnett Shale assets, (ii) factually supportable and (iii) are expected to have a continuing impact on the Company's consolidated results following the Barnett
Shale disposition.
The pro forma financial information does not purport to be indicative of the financial position of the Company as of
June 30, 2020, nor is it indicative of future results.
2. Pro Forma Adjustments
The pro forma adjustments reflect the following:
•
Devon's receipt of $320 million of cash proceeds from the Purchaser at closing, less $5 million of
transaction related expenses. This amount excludes the $170 million cash deposit received in April 2020.
•
The recognition of a $41 million long-term asset, which represents the estimated fair value of the
contingent earnout payments.
•
The derecognition of $744 million of assets acquired and $375 million of liabilities assumed by the
Purchaser.
•
The recognition of a $13 million decrease to retained earnings and total equity.

EX - 99 . 2 3 d34951dex992 . htm EX - 99 . 2 EX - 99 . 2 Exhibit 99 . 2 DEVON ENERGY CORPORATION Unaudited Pro Forma Consolidated Financial Information Introduction On October 1 , 2020 , Devon Energy Corporation ( the " Company " or " Devon " ) completed the previously announced Barnett Shale divest transaction , pursuant to which Devon sold its Barnett Shale assets to BKV Barnett , LLC ( the " Purchaser " ) . Under the terms of the agreement , Devon has received proceeds , net of purchase price adjustments , of $ 490 million , including a $ 170 million deposit previously received in April 2020 . Additionally , the agreement provides for contingent earnout payments to Devon of up to $ 260 million based upon future commodity prices , with upside participation beginning at a $ 2.75 Henry Hub natural gas price or a $ 50 WTI oil price . The contingent payment period commences on January 1 , 2021 and has a term of four years . With this disposition , Devon is effectively exiting its last natural gas focused asset and the transaction results in a material reduction to the Company 's total assets , revenues and proved reserves . Therefore , this disposition represents a strategic shift in Devon 's business , and the Company 's Barnett Shale financial information has been classified as discontinued operations since entering into the divestiture agreement with the Purchaser . The unaudited pro forma consolidated financial information has been prepared in conformity with Article 11 of Regulation S-X. In addition , this unaudited pro forma consolidated financial information is based on currently available information and assumptions the Company believes are reasonable . This unaudited pro forma consolidated financial information is presented for informational purposes only and does not purport to represent what the Company ' s financial position would have been had the disposition of Devon 's Barnett Shale assets occurred on the date indicated . DEVON ENERGY CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET June 30 , 2020 ( In millions ) As Reported Pro Forma Adjustments Pro Forma Current assets : Cash and cash equivalents $ 1,474 $ 315 $ 1,789 Cash restricted for discontinued operations 195 - 195 Accounts receivable 515 - 515 Current assets associated with discontinued operations 748 ( 744 ) 4 Other current assets 446 - 446 Total current assets 3,378 ( 429 ) 2,949 Oil and gas property and equipment , net 4,673 - 4,673 Other property and equipment , net 1,013 - 1,013 Total property and equipment , net 5,686 - 5,686 Goodwill 753 - 753 Right - of - use assets 231 - 231 Other long - term assets 227 - 227 Long - term assets associated with discontinued operations 82 41 123 Total assets $ 10,357 $ ( 388 ) $ 9,969 Current liabilities : Accounts payable $ 309 $ - $ 309 Revenues and royalties payable 473 - 473 Current liabilities associated with discontinued operations 441 ( 375 ) 66 Other current liabilities 229 - 229 Total current liabilities 1,452 ( 375 ) 1,077 Long - term debt 4,296 - 4,296 Lease liabilities 245 - 245 Asset retirement obligations 391 - 391 Other long - term liabilities 458 - 458 Long - term liabilities associated with discontinued operations 162 - 162 Deferred income taxes - - - Stockholders ' equity : Common stock , $ 0.10 par value . Authorized 1 . 0 billion shares ; issued 383 million shares 38 - 38 Additional paid - in capital 2,720 - 2,720 Retained earnings 586 ( 13 ) 573 Accumulated other comprehensive loss ( 117 ) - ( 117 ) Total stockholders ' equity attributable to Devon 3,227 ( 13 ) 3,214 Non controlling interests 126 - 126 Total equity 3,353 ( 13 ) 3,340 Total liabilities and equity $ 10,357 $ ( 388 ) $ 9,969 NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS : 1 . Basis of Presentation Because the Company 's Barnett Shale financial information has been presented as discontinued operations , the accompanying pro forma financial information only consists of a balance sheet prepared as of June 30 , 2020 . The historical consolidated balance sheet as of June 30 , 2020 is derived from and should be read in conjunction with the Company 's unaudited financial statements in its June 30 , 2020 Quarterly Report on Form 10 - Q , which was filed on August 5 , 2020 . The Company ' s historical consolidated balance sheet has been adjusted in the unaudited pro forma consolidated financial information to present events that are ( i ) directly attributable to the sale of its Barnett Shale assets , ( ii ) factually supportable and ( iii ) are expected to have a continuing impact on the Company 's consolidated results following the Barnett Shale disposition . The pro forma financial information does not purport to be indicative of the financial position of the Company as of June 30 , 2020 , nor is it indicative of future results . 2 . Pro Forma Adjustments The pro forma adjustments reflect the following : • Devon 's receipt of $ 320 million of cash proceeds from the Purchaser at closing , less $ 5 million of transaction related expenses . This amount excludes the $ 170 million cash deposit received in April 2020 . • The recognition of a $ 41 million long - term asset , which represents the estimated fair value of the contingent earnout payments . • The derecognition of $ 744 million of assets acquired and $ 375 million of liabilities assumed by the Purchaser . • The recognition of a $ 13 million decrease to retained earnings and total equity .