SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
OR
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1997
Commission File No. 1-10067
DEVON ENERGY CORPORATION
 (Exact Name of Registrant as Specified in its Charter)

          Oklahoma                                73-1474008
   (State or Other Jurisdiction of             (I.R.S. Employer
   Incorporation or Organization)           Identification Number)
  20 North Broadway, Suite 1500
     Oklahoma City, Oklahoma                          73102
(Address of Principal Executive Offices)            (Zip Code)	

Registrant's telephone number, including area code: (405) 235-3611
Not applicable
Former name, former address and former fiscal year, if changed
from last report.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No .
The number of shares outstanding of Registrant's common stock, par value $.10, as of October 14, 1997, was 32,318,895.
1 of 31 total pages

(Exhibit Index is found at page 28)

DEVON ENERGY CORPORATION
Index to Form 10-Q Quarterly Report
to the Securities and Exchange Commission
Page No.
Part I. Financial Information
Item 1. Consolidated Financial Statements

Consolidated  Balance  Sheets, September  30, 1997
(Unaudited), and December 31, 1996                           4

Consolidated Statements of Operations (Unaudited),
For the Three Months and the Nine Months Ended
September 30, 1997 and 1996                                  5

Consolidated Statements of Cash Flows (Unaudited),
For the  Nine Months Ended September  30, 1997 and
1996                                                         6

Notes to Consolidated Financial Statements.                  7	

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 22
2

DEVON ENERGY CORPORATION
Part I. Financial Information
Item 1. Consolidated Financial Statements September 30, 1997 and 1996
(Forming a part of Form 10-Q Quarterly Report to the Securities and Exchange Commission)
3

                 DEVON ENERGY CORPORATION AND SUBSIDIARIES
                        Consolidated Balance Sheets

                                                           September 30, December 31,
                                                                1997         1996
                                                            (Unaudited)
Assets
Current assets:
            Cash and cash equivalents                    $   37,947,666   9,401,350
            Accounts receivable                              42,234,131  29,580,306
            Inventories                                       2,166,662   2,103,486
            Prepaid expenses                                  1,257,203     688,752
            Deferred income taxes                             1,600,000   1,600,000

              Total current assets                           85,205,662  43,373,894

Property and equipment, at cost, based on the
  full cost method of accounting for oil and
  gas properties                                          1,062,816,198 974,805,756
            Less: Accumulated depreciation, depletion
              and amortization                              341,619,932 281,959,410

                                                            721,196,266 692,846,346
Other assets                                                 14,262,410  10,030,560

              Total assets                               $  820,664,338 746,250,800

Liabilities and Stockholders' Equity
Current liabilities:
            Accounts payable:
              Trade                                          12,433,487   4,861,428
              Revenues and royalties due to others           10,731,609  10,569,960
            Income taxes payable                                      -   4,705,447
            Accrued expenses                                  2,505,694   3,503,420

              Total current liabilities                      25,670,790  23,640,255

Revenues and royalties due to others                          1,044,654   1,053,270
Other liabilities                                            13,279,281  10,325,999
Long-term debt                                                        -   8,000,000
Deferred revenue                                                 18,163     205,859
Deferred income taxes                                       104,544,000  81,121,000

Company-obligated mandatorily redeemable
            convertible preferred securities of
            Devon Financing Trust holding solely
            6.5% convertible junior subordinated
            debentures of Devon Energy Corporation          149,500,000 149,500,000

Stockholders' equity:
            Preferred stock of $1.00 par value.
              Authorized 3,000,000 shares; none issued                -           -
            Common stock of $.10 par value.
              Authorized 120,000,000 shares; issued
              32,293,695 in 1997 and 32,141,295 in 1996       3,229,370   3,214,130
            Additional paid-in capital                      391,190,915 388,090,930
            Retained earnings                               132,632,144  81,099,357
            Cumulative currency translation adjustment         (444,979)          -

              Total stockholders' equity                    526,607,450 472,404,417

              Total liabilities and stockholders' equity $  820,664,338 746,250,800

See accompanying notes to consolidated financial statements.	

4

                    DEVON ENERGY CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Operations
                                   (Unaudited)

                                                 Three Months                     Nine Months
                                              Ended September 30,             Ended September 30,
                                                 1997      1996                1997         1996

   Revenues
              Oil sales                      $31,267,250 20,342,307         100,857,256  55,994,559
              Gas sales                       34,044,149 15,289,596         107,458,126  44,123,924
              Natural gas liquids sales        5,206,135  3,375,507          16,534,020   9,366,377
              Other                            2,342,969    466,270           5,562,529   1,335,493

Total revenues                                72,860,503 39,473,680         230,411,931 110,820,353

   Costs and expenses
              Lease operating expenses        15,814,690  7,622,554          46,155,611  22,795,807
              Production taxes                 4,109,654  2,587,664          13,165,045   7,075,577
              Depreciation, depletion and
                 amortization                 20,246,574 11,046,617          60,388,870  31,634,780
              General and administrative
                 expenses                      2,992,104  2,139,647           9,228,599   6,664,597
              Interest expense                    90,146    230,775             249,184   5,172,855
              Distributions on preferred securities
                 of subsidiary trust           2,429,375  2,323,750           7,288,126   2,323,750

                    Total costs and expenses  45,682,543 25,951,007         136,475,435  75,667,366

   Earnings before income taxes               27,177,960 13,522,673          93,936,496  35,152,987

   Income tax expense
              Current                          5,546,000  1,758,000          14,091,000   4,570,000
              Deferred                         5,326,000  4,057,000          23,484,000  10,546,000

                 Total income tax expense     10,872,000  5,815,000          37,575,000  15,116,000

   Net earnings                              $16,305,960  7,707,673          56,361,496  20,036,987

   Net earnings per average common share
              outstanding (Note 2):
                 Assuming no dilution              $0.51       0.35                1.75        0.91
                 Assuming full dilution            $0.47       0.35                1.62        0.91

   Weighted average common shares outstanding 32,235,002 22,130,896          32,181,077  22,121,757

   See accompanying notes to consolidated financial statements.	

5

                 DEVON ENERGY CORPORATION AND SUBSIDIARIES
                   Consolidated Statements of Cash Flows
                                (Unaudited)

                                                                              Nine Months
                                                                           Ended September 30,
                                                                            1997        1996
Cash flows from operating activities
            Net earnings                                               $ 56,361,496   20,036,987
            Adjustments to reconcile net earnings to net
              cash provided by operating activities:
                Depreciation, depletion and amortization                 60,388,870   31,634,780
                (Gain) loss on sale of assets                              (155,040)      26,191
                Deferred income taxes                                    23,484,000   10,546,000
                Changes in assets and liabilities:
                     (Increase) decrease in:
                       Accounts receivable                              (12,138,238)  (4,304,455)
                       Inventories                                          (73,883)    (195,490)
                       Prepaid expenses                                    (568,739)    (622,671)
                       Other assets                                        (767,123)     609,654
                     Increase (decrease) in:
                       Accounts payable                                   8,444,761   (4,730,276)
                       Income taxes payable                              (4,705,447)   1,865,773
                       Accrued expenses                                  (1,173,599)     421,752
                       Revenues and royalties due to others                  (8,616)     235,051
                       Deferred revenue                                    (187,696)     240,942
                       Long-term other liabilities                           49,298      376,242

                       Net cash provided by operating activities        128,950,044   56,140,480

Cash flows from investing activities
            Proceeds from sale of property and equipment                  1,436,610    1,824,009
            Capital expenditures                                        (91,418,731) (65,765,581)
            Increase in other assets                                     (2,700,941)           -

                     Net cash used in investing activities              (92,683,062) (63,941,572)

Cash flows from financing activities
            Proceeds from borrowings on revolving line of credit          1,847,750   21,000,000
            Principal payments on revolving line of credit               (9,843,750)(159,000,000)
            Issuance of common stock                                      3,115,223      159,125
            Issuance of preferred securities of subsidiary
              trust, net of issuance costs                                        -  144,888,879
            Dividends paid on common stock                               (4,828,709)  (1,991,271)
            Increase in long-term other liabilities                       2,020,566      945,099

                     Net cash provided (used) by financing activities    (7,688,920)   6,001,832

Effect of exchange rate changes on cash                                     (31,746)           -

Net increase (decrease) in cash and cash equivalents                     28,546,316   (1,799,260)

Cash and cash equivalents at beginning of period                          9,401,350    8,897,891

Cash and cash equivalents at end of period                             $ 37,947,666    7,098,631

See accompanying notes to consolidated financial statements.	

6

DEVON ENERGY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements and notes thereto have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. The accompanying consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in Devon's 1996 annual report on Form 10-K.
In the opinion of Devon's management, all adjustments (all of which are normal and recurring) have been made which are necessary to fairly state the consolidated financial position of Devon and its subsidiaries as of September 30 1997, and the results of their operations and their cash flows for the three month and nine month periods ended September 30, 1997 and 1996.
Foreign Currency Translation
Prior to December 31, 1996, Devon had no operations outside the United States. On December 31, 1996, Devon acquired certain Canadian oil and gas properties as part of a transaction in which Devon acquired all of Kerr-McGee Corporation's North American onshore oil and gas exploration and production properties and business in exchange for 9,954,000 shares of Devon common stock. The acquired Canadian properties are owned by a Canadian subsidiary which is wholly- owned by Devon.
For purposes of foreign currency translation, the Canadian dollar is the functional currency for Devon's Canadian operations. Translation adjustments resulting from translating the Canadian subsidiary's foreign currency financial statements into U.S. dollar equivalents are reported separately and accumulated in a separate component of stockholders' equity.
2. Earnings Per Share
The periods ended September 30, 1997, include a dilutive effect on earnings per share from Devon's 6.5% Trust Convertible Preferred Securities issued in July, 1996, and from employee stock options. The following table reconciles the net earnings and common shares outstanding used in the calculations of net earnings per share assuming no dilution, and assuming full dilution, for the three month and nine month periods ended September 30, 1997. (There was no dilutive effect on earnings per share in the comparable 1996 periods.)
2. Earnings Per Share (Continued)

                                                                                                    Net
                                                                                        Common   Earnings
                                                                            Net         Shares      Per
                                                                          Earnings    Outstanding  Share

Three Months Ended Sepetember 30, 1997:

               Net earnings per share, assuming no dilution             $16,305,960   32,235,020   0.51

               Dilutive effect of:
                Potential common shares issuable upon the conversion
                of Trust Convertible Preferred securities (the
                increase in net earnings is net of income tax expense
                of $963,000)                                              1,506,489    4,901,507

                Potential common shares issuable upon the exercise
                of employee stock options (calculated using the
                treasury stock method)                                            -      526,725

               Net earnings per share, assuming full dilution           $17,812,449   37,663,252   0.47

Nine Months Ended September 30, 1997:

               Net earnings per share, assuming no dilution              56,361,496   32,181,077   1.75

               Dilutive effect of:
                Potential common shares issuable upon the conversion
                of Trust Convertible Preferred securities (the
                increase in net earnings is net of income tax expense
                of $2,889,000)                                            4,519,466    4,901,507

                Potential common shares issuable upon the exercise
                of employee stock options (calculated using the
                treasury stock method)                                            -      550,986

               Net earnings per share, assuming full dilution            $60,880,962  37,633,570   1.62	

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The following discussion addresses material changes in results of operations for the three month and nine month periods ended September 30, 1997, compared to the three month and nine month periods ended September 30, 1996, and in financial condition since December 31, 1996. It is presumed that readers have read or have access to Devon's 1996 annual report on Form 10-K.
Overview
On December 31, 1996, Devon acquired all of Kerr- McGee Corporation's North American onshore oil and gas exploration and production business and properties (the "KMG- NAOS Properties") in exchange for 9,954,000 shares of Devon common stock. This transaction added approximately 62 million barrels of oil equivalent ("Boe") to Devon's year-end 1996 proved reserves, as well as 370,000 net undeveloped acres of leasehold. The addition of the KMG-NAOS Properties in the first quarter of 1997 was the primary reason for the changes in Devon's operational results between the 1997 and 1996 third quarter and year-to-date periods.
Production for the third quarter of 1997 totaled 5.1 million Boe of oil, gas and natural gas liquids ("NGL"). This was an increase of 92% over the third quarter of 1996. Revenues for the third quarter of 1997 were $72.9 million, an increase of 85% over the prior year's third quarter. Net earnings for the 1997 quarter were $16.3 million, or $0.51 per share. The 1997 net earnings were 112% above the prior year's quarterly results. The 1997 per share amount was 46% above the comparable 1996 amount, with approximately 10 million more <F1> shares outstanding in the 1997 period. The cash margin 1 for the third quarter of 1997 also increased significantly to $41.9 million, an increase of 84% over the 1996 third quarter's cash margin of $22.8 million.
Year-to-date production for the first nine months of 1997 totaled 15.1 million Boe. This was 91% greater than the total for the first nine months of 1996. Revenues for the
<F1>
1 "Cash margin" equals Devon's total revenues less cash expenses. Cash expenses are all expenses other than the non-cash expenses of depreciation, depletion and amortization and deferred income tax expense. Cash margin is an indicator which is commonly used in the oil and gas industry. This margin measures the net cash which is generated by a company's operations during a given period, without regard to the period such cash is actually physically received or spent by the company. This margin ignores the non-operations effects on a company's activities as an operator of oil and gas wells. Such activities produce net increases or decreases in temporary cash funds held by the operator which have no effect on net earnings of the company. Cash margin should be used as a supplement to, and not as a substitute for, net earnings and net cash provided by operating activities determined in accordance with generally accepted accounting principles in analyzing Devon's results of operations and liquidity.
first nine months of 1997 were $230.4 million, an increase of 108% over the comparable 1996 period's revenues. Net earnings for the first nine months of 1997 were $56.4 million, or $1.75 per share. The 1997 earnings were 181% above the 1996 nine- month total. The 1997 per share amount was 92% above the comparable 1996 amount, with approximately 10 million more shares outstanding in the 1997 period. The cash margin for the first nine months of 1997 was $140.2 million, an increase of 125% over the cash margin of $62.2 million for the comparable 1996 period.
Results of Operations
Total revenues increased by $33.4 million, or 85%, in the third quarter of 1997 compared to the third quarter of 1996, and by $119.6 million, or 108%, in the first nine months of 1997 compared to the same period in 1996. These increases were primarily caused by substantial gains in oil, gas and NGL revenues. Combined oil, gas and NGL revenues increased by 81% in the third quarter of 1997, and 105% in the year-to-date period of 1997. The relative contributions of production and price changes are shown below. (Note: Unless otherwise stated, all references in this report to dollar amounts regarding Devon's Canadian operations are expressed in U.S. dollars.)

                                                      Total
                               Three Months Ended                 Nine Months Ended
                                   September 30,                     September 30,
                             1997       1996   Change         1997         1996   Change
Production
  Oil (Bbls)              1,725,020    957,268   +80%      5,218,472    2,788,446  +87%
  Gas (Mcf)              17,730,418  8,661,984  +105%     52,062,741   26,476,320  +97%
  NGL (Bbls)                414,446    253,811   +63%      1,214,944      704,346  +72%
  Oil, Gas and
<F1>
    NGL (Boe)1            5,094,536  2,654,743   +92%     15,110,540    7,905,512  +91%

Revenues
  Oil                   $31,267,250 20,342,307   +54%    100,857,256   55,994,559  +80%
  Gas                    34,044,149 15,289,596  +123%    107,458,126   44,123,924 +144%
  NGL                     5,206,135  3,375,507   +54%     16,534,020    9,366,377  +77%

  Combined              $70,517,534 39,007,410   +81%    224,849,402  109,484,860 +105%

Average Prices
  Oil (Per Bbl)              $18.13      21.25   -15%          19.33        20.08   -4%
  Gas (Per Mcf)               $1.92       1.77    +8%           2.06         1.67  +23%
  NGL (Per Bbl)              $12.56      13.30    -6%          13.61        13.30   +2%
  Oil, Gas and NGL
<F1>
    (Per Boe)1               $13.84      14.69    -6%          14.88        13.85   +7%	

                                                    Domestic
                                Three Months Ended               Nine Months Ended
                                   September 30,                    September 30,
                            1997         1996   Change        1997        1996    Change
Production
  Oil (Bbls)              1,503,734     957,268   +57%     4,520,756    2,788,446   +62%
  Gas (Mcf)              15,662,465   8,661,984   +81%    45,761,290   26,476,320   +73%
  NGL (Bbls)                372,322     253,811   +47%     1,091,316      704,346   +55%
  Oil, Gas and
<F1>
    NGL (Boe)1            4,486,467   2,654,743   +69%    13,238,954    7,905,512   +67%

Revenues
  Oil                   $27,297,108  20,342,307   +34%    87,513,250   55,994,559   +56%
  Gas                    31,524,367  15,289,596  +106%    98,843,718   44,123,924  +124%
  NGL                     4,617,201   3,375,507   +37%    14,598,360    9,366,377   +56%

  Combined              $63,438,676  39,007,410   +63%   200,955,328  109,484,860   +84%

Average Prices
  Oil (Per Bbl)              $18.15       21.25   -15%         19.36        20.08    -4%
  Gas (Per Mcf)               $2.01        1.77   +14%          2.16         1.67   +29%
  NGL (Per Bbl)              $12.40       13.30    -7%         13.38        13.30    +1%
  Oil, Gas and NGL
<F1>
    (Per Boe)1               $14.14       14.69    -4%         15.18        13.85   +10%	

                                                                   Canada
                                             Three Months Ended             Nine Months Ended
                                                 September 30,                 September 30,
                                           1997       1996   Change       1997      1996  Change

            Production
                Oil (Bbls)                221,286       -      NA       697,716       -     NA
                Gas (Mcf)               2,067,953       -      NA     6,301,451       -     NA
                NGL (Bbls)                 42,124       -      NA       123,628       -     NA
                Oil, Gas and
<F1>
                  NGL (Boe)1              608,069       -      NA     1,871,586       -     NA

            Revenues
                Oil                    $3,970,142       -      NA    13,344,006       -     NA
                Gas                     2,519,782       -      NA     8,614,408       -     NA
                NGL                       588,934       -      NA     1,935,660       -     NA

                Combined               $7,078,858       -      NA    23,894,074       -     NA

            Average Prices
                Oil (Per Bbl)              $17.94       -      NA         19.13       -     NA
                Gas (Per Mcf)               $1.22       -      NA          1.37       -     NA
                NGL (Per Bbl)              $13.98       -      NA         15.66       -     NA
                Oil, Gas and NGL
<F1>
                  (Per Boe)1               $11.64       -      NA         12.77       -     NA

<F1>
1           Gas  is converted to barrels  of oil equivalent  ("Boe") at the
            rate of six  Mcf per barrel of oil, based  upon the approximate
            relative energy content of  natural gas and oil, which  rate is
            not necessarily indicative  of the relationship of oil, gas and
            NGL  prices.   The  respective  prices  of these  products  are
            affected  by market and  other factors in  addition to relative
            energy content.	

Oil Revenues. Oil revenues increased by $10.9 million, or 54%, in the third quarter of 1997 compared to the same period of 1996. Production gains of 768,000 barrels, or 80%, added $16.3 million of oil revenues in the 1997 period. This increase was partially offset by a $5.4 million reduction in oil revenues caused by a $3.12 per barrel decrease in the third quarter of 1997 s average oil price.
The KMG-NAOS Properties were responsible for the increased oil production. These properties produced 780,000 barrels of oil in the third quarter of 1997. Approximately 559,000 of these barrels were produced in the U.S. and another 221,000 barrels were produced in Canada. Devon s other domestic properties produced 945,000 barrels in the third quarter of 1997. This was a decrease of 12,000 barrels, or 1%, compared to the 957,000 barrels produced in the third quarter of 1996.
Oil revenues increased by $44.9 million, or 80%, in the first nine months of 1997 compared to the same period in 1996. Production gains of 2,430,000 barrels, or 87%, added $48.8 million of oil revenues in the 1997 period. This increase was partially offset by a $3.9 million reduction in oil revenues caused by a $0.75 per barrel decrease in the year-to-date period of 1997.
The KMG-NAOS Properties were the primary contributors to the increased oil production in the 1997 year- to-date period. These properties produced 2,282,000 barrels of oil in the first nine months of 1997. Approximately 1,584,000 of these barrels were produced in the U.S., while 698,000 barrels were produced in Canada. Devon s other domestic properties produced 2,937,000 barrels in the first nine months of 1997. This was an increase of 149,000 barrels, or 5%, over the 2,788,000 barrels produced in the first nine months of 1996.
Gas Revenues. Gas revenues increased by $18.8 million, or 123%, in the third quarter of 1997 compared to the third quarter of 1996. An increase in gas production of 9.1 Bcf, or 105%, added $16.0 million to the 1997 quarter s gas sales. Also, an increase in the average gas price of $0.15 per Mcf, or 8%, added the remaining $2.8 million of increased gas revenues.
The KMG-NAOS Properties were the primary contributors to the increased production volumes in the 1997 quarter. These properties produced 7.8 Bcf in the third quarter of 1997. The KMG-NAOS Properties produced 5.7 Bcf in the U.S. and 2.1 Bcf in Canada. Devon s coal seam gas properties produced 4.2 Bcf in the third quarter of 1997 and the third quarter of 1996. Devon's other domestic properties produced 5.8 Bcf in the 1997 period compared to 4.5 Bcf in the third quarter of 1996.
The coal seam gas properties averaged $1.88 per Mcf in the third quarter of 1997 compared to $1.71 per Mcf in the third quarter of 1996. Devon s domestic conventional gas properties averaged $2.06 per Mcf in the 1997 quarter compared to $1.82 per Mcf in the 1996 quarter. Devon s Canadian gas production averaged $1.22 per Mcf in the 1997 quarter.
Gas revenues increased by $63.3 million, or 144%, in the first nine months of 1997 compared to the same period of 1996. An increase in gas production of 25.6 Bcf, or 97%, added $42.6 million of gas sales in the 1997 period. An increase in the average price of $0.39 per Mcf, or 23%, added the remaining $20.7 million of increased gas sales.
The KMG-NAOS Properties were responsible for the majority of the increased gas production. These properties produced 22.7 Bcf in the first nine months of 1997. Approximately 16.4 Bcf of this production was in the U.S., while the remaining 6.3 Bcf was produced in Canada. Devon s coal seam gas properties produced 12.8 Bcf in the first nine months of 1997 compared to 13.2 Bcf in the comparable 1996 period. Devon s other domestic properties produced 16.7 Bcf in the first nine months of 1997 compared to 13.3 Bcf in the first nine months of 1996.
The coal seam gas properties averaged $2.00 per Mcf in the first nine months of 1997 compared to $1.47 per Mcf in the comparable 1996 period. Devon s domestic conventional gas properties averaged $2.22 per Mcf in the 1997 period compared to $1.86 per Mcf in the 1996 period. Devon s Canadian gas production averaged $1.37 per Mcf in the first nine months of 1997.
NGL Revenues. NGL revenues increased by $1.8 million, or 54%, in the third quarter of 1997 compared to the third quarter of 1996. An increase in production of 161,000 barrels, or 63%, added $2.1 million to the 1997 quarter s revenues. This was partially offset by a $0.3 million reduction in revenues caused by a $0.74 per barrel decrease in the 1997 quarter s average price.
The KMG-NAOS Properties accounted for 121,000 barrels of the total increase in production. The KMG-NAOS Properties produced 79,000 barrels in the U.S. and 42,000 barrels in Canada.
NGL revenues increased by $7.2 million, or 77%, in the first nine months of 1997 compared to the same period of 1996. An increase in production of 511,000 barrels, or 72%, added $6.8 million to the 1997 period s revenues. An increase in the average price of $0.31 per barrel in 1997 added the remaining $0.4 million of increased NGL revenues.
The KMG-NAOS Properties produced 366,000 barrels in the first nine months of 1997. These properties produced 242,000 barrels in the U.S. and 124,000 barrels in Canada.
Other Revenues. Other revenues increased by $1.9 million, or 402%, in the third quarter of 1997. The addition of the KMG-NAOS Properties added $0.8 million of revenues in the 1997 quarter from processing third party natural gas. The investment of excess cash on hand in the 1997 quarter added $0.6 million of interest income.
Other revenues increased by $4.2 million, or 317%, in the first nine months of 1997. Processing of third party natural gas related to the KMG-NAOS Properties accounted for $2.4 million of the increase. Another $1.2 million of the increase in other revenues was attributable to interest income earned in the first nine months of 1997.
Production and Operating Expenses. Components of production and operating expenses in the second quarter and first half of 1997 increased or decreased compared to 1996 as shown in the tables below.

                                                                       Total
                                          Three Months Ended                           Nine Months Ended
                                              September  30,                             September 30,
                                      1997            1996     Change             1997           1996     Change

Expenses
  Recurring operations and
    maintenance expenses          $14,513,305      7,173,359    +102%          43,088,111    20,553,364    +110%
  Well workover expenses            1,301,385        449,195    +190%           3,067,500     2,242,443     +37%
  Production taxes                  4,109,654      2,587,664     +59%          13,165,045     7,075,577     +86%

     Total production and
       operating expenses         $19,924,344     10,210,218     +95%          59,320,656    29,871,384     +99%

Expenses Per Boe
  Recurring operations and
    maintenance expenses                $2.85           2.70      +6%                2.85          2.60     +10%
  Well workover expenses                 0.25           0.17     +47%                0.21          0.28     -25%
  Production taxes                       0.81           0.98     -17%                0.87          0.90      -3%

     Total production and
       operating expenses               $3.91           3.85      +2%                3.93          3.78      +4%	

                                                                      Domestic
                                           Three Months Ended                          Nine Months Ended
                                              September  30,                             September 30,
                                     1997            1996      Change             1997          1996      Change

Expenses
  Recurring operations and
    maintenance expenses          $12,782,991      7,173,359     +78%          38,447,151    20,553,364     +87%
  Well workover expenses              849,830        449,195     +89%           2,410,520     2,242,443      +7%
  Production taxes                  4,043,208      2,587,664     +56%          12,961,285     7,075,577     +83%

     Total production and
       operating expenses         $17,676,029     10,210,218     +73%          53,818,956    29,871,384     +80%

Expenses Per Boe
  Recurring operations and
    maintenance expenses                $2.85           2.70      +6%                2.91          2.60     +12%
  Well workover expenses                 0.19           0.17     +12%                0.18          0.28     -36%
  Production taxes                       0.90           0.98      -8%                0.98          0.90      +9%

     Total production and
       operating expenses               $3.94           3.85      +2%                4.07          3.78      +8%	

                                                                        Canada
                                             Three  Months Ended                     Nine Months Ended
                                                 September  30,                         September 30,
                                       1997           1996       Change          1997          1996   Change

Expenses
  Recurring operations and
    maintenance expenses            $1,730,314              -       NA        4,640,960           -     NA
  Well workover expenses               451,555              -       NA          656,980           -     NA
  Production taxes                      66,446              -       NA          203,760           -     NA

     Total production and
       operating expenses           $2,248,315              -       NA        5,501,700           -     NA

Expenses Per Boe
  Recurring operations and
    maintenance expenses                 $2.85              -       NA              2.48          -     NA
  Well workover expenses                  0.74              -       NA              0.35          -     NA
  Production taxes                        0.11              -       NA              0.11          -     NA

     Total production and
       operating expenses                $3.70              -       NA              2.94          -     NA	

Recurring operations and maintenance expenses increased by $7.3 million, or 102%, in the third quarter of 1997. The addition of the KMG-NAOS Properties accounted for $5.5 million of the increased expenses. Expenses on wells drilled since September 30, 1996, comprised the majority of the remaining $1.8 million increase.
Production taxes increased by $1.5 million, or 59%, in the third quarter of 1997. This increase was attributable to the 81% increase in combined oil, gas and NGL revenues in the 1997 period.
Recurring expenses per Boe were up by $0.15, or 6%, in the third quarter of 1997 compared to the same quarter of 1996. This increase was caused by the reduction in the coal seam gas properties share of total production. The recurring operating costs per Boe for the coal seam gas properties are extremely low ($0.40 per Boe in the third quarter of 1997 and $0.30 per Boe in the third quarter of 1996). However, as production from these properties declined and production from Devon s conventional properties increased in the 1997 quarter, the coal seam gas properties percentage of overall production dropped from 26% in the 1996 quarter to only 14% in the 1997 quarter. The result is that more of Devon s production in the 1997 period was attributable to its conventional gas properties, which have a higher operating cost per Boe than the low-cost coal seam gas properties. The recurring operating costs per Boe for Devon s conventional properties actually dropped to $3.24 per Boe in the third quarter of 1997 from $3.56 per Boe in the third quarter of 1996. Even though the coal seam costs per Boe rose only $0.10 and the conventional properties costs per Boe dropped by $0.32 in the 1997 quarter, the overall cost per Boe increased because of the shift in the production percentage toward the conventional properties.
Recurring operations and maintenance expenses increased by $22.5 million, or 110%, in the first nine months of 1997. The KMG-NAOS Properties accounted for $17.3 million of the increased expenses. Most of the remaining $5.2 million of increased expenses was due to wells which were drilled subsequent to September 30, 1996.
Production taxes increased by $6.1 million, or 86%, in the first nine months of 1997. This increase was attributable to the 105% increase in combined oil, gas and NGL revenues in the 1997 period.
Recurring expenses per Boe were up by $0.25, or 10%, in the first nine months of 1997. As explained above in the discussion of the quarterly increase, the increase in the percentage of production attributable to the conventional properties is the cause of the increase in the costs per Boe. Expenses of Devon s coal seam gas properties were $0.37 per Boe in the first nine months of 1997 compared to $0.32 per Boe in the first nine months of 1996. Expenses of Devon s conventional properties were $3.26 per Boe in the 1997 period compared to $3.48 per Boe in the 1996 period. Even though the per unit expenses increased only $0.05 per Boe for the coal seam properties and decreased by $0.22 per Boe for the conventional properties, Devon s overall cost per Boe increased. This was caused by the drop in the percentage of Devon s overall production attributable to the extremely low- cost coal seam properties. Such properties accounted for 28% of combined production in the first nine months of 1996, but only accounted for 14% of the 1997 period s production.
Depreciation, Depletion and Amortization Expense ( DD&A ). Oil and gas property related DD&A increased $8.9 million, or 85%, from $10.6 million in the third quarter of 1996 to $19.5 million in the third quarter of 1997. The increase in combined oil, gas and NGL production of 2.4 million Boe, or 92%, added $9.7 million of DD&A. This was partially offset by a $0.8 million decrease in DD&A caused by a reduction in the 1997 quarter's DD&A rate. The DD&A rate dropped to $3.83 per Boe in the 1997 quarter compared to $3.98 per Boe in the 1996 quarter due to 1997 upward reserve revisions.
Oil and gas property related DD&A increased $28.0 million, or 92%, from $30.3 million in the first nine months of 1996 to $58.3 million in the first nine months of 1997. The increase in combined oil, gas and NGL production of 7.2 million Boe, or 91%, accounted for $27.6 million of the increased DD&A. The remaining $0.4 million of the increased expense was caused by an increase in the DD&A rate from $3.83 per Boe in the year-to-date 1996 period to $3.86 per Boe in the 1997 year-to-date period.
General and Administrative Expenses ( G&A ). G&A increased $0.9 million, or 40%, in the third quarter of 1997. Employee salaries and related overhead costs, including insurance and pension expense, increased $1.2 million in the 1997 quarter. This increase was primarily related to the additional permanent and temporary personnel added at Devon s Oklahoma City and Calgary offices as a result of the acquisition of the KMG-NAOS Properties. The expansion in personnel also caused office-related costs such as rent, dues, travel, supplies, telephone, etc., to increase by $0.5 million in the third quarter.
The higher salary, overhead and office costs were partially offset by an increase in Devon s overhead reimbursements. As the operator of a property, Devon receives these reimbursements from the property s working interest owners. Devon records the reimbursements as reductions to G&A. Due to the addition of the KMG-NAOS Properties, many of which Devon operates, Devon s overhead reimbursements increased by $0.8 million in the third quarter of 1997.
The amount of G&A capitalized pursuant to the full cost method of accounting for oil and gas properties increased from $0.7 million in the third quarter of 1996 to $0.9 million in the third quarter of 1997.
G&A increased $2.6 million, or 38%, in the first nine months of 1997. Employee salaries and related overhead costs increased by $3.9 million due to the expansion in personnel from the acquisition of the KMG-NAOS Properties. This expansion also caused office-related costs to increase by $1.4 million in the first nine months of 1997. The higher salary, overhead and office costs were partially offset by a $2.7 million increase in Devon s overhead reimbursements.
Capitalized G&A increased from $2.0 million in the first nine months of 1996 to $2.7 million in the same period of 1997.
Interest Expense. Interest expense decreased $0.1 million, or 61%, in the third quarter of 1997 due to a substantial reduction in the average debt outstanding. The average debt balance outstanding dropped from $5.7 million in the third quarter of 1996 to zero in the third quarter of 1997. Devon issued $149.5 million of 6.5% Trust Convertible Preferred Securities ( TCP Securities ) in July, 1996. The proceeds from this issuance, along with cash flow from operations, were used to substantially retire Devon s long- term bank debt. (The TCP Securities are discussed further below.)
Interest expense decreased $4.9 million, or 95%, in the first nine months of 1997. This reduction was caused by a drop in the average debt balance outstanding from $102.3 million in the first nine months of 1996 to only $1.0 million in the first nine months of 1997. As explained above, the issuance of the TCP Securities in July, 1996, was the primary reason for the reduction in Devon s long-term bank debt.
Distributions on Preferred Securities of Subsidiary Trust. As mentioned in the above discussions of interest expense, Devon, through an affiliate, issued $149.5 million of 6.5% TCP Securities in July, 1996. Distributions on the TCP Securities accrue at the rate of 1.625% per quarter. Distributions on the TCP Securities were $2.4 million in the third quarter of 1997 and $2.3 million in the third quarter of 1996. The 1996 amount was slightly lower because the initial distribution in 1996 did not cover the entire third quarter.
Income Taxes. During interim periods, income tax expense is based on the estimated effective tax rate for the entire fiscal year. The estimated effective tax rate in the third quarter and first nine months of 1997 was 40%, compared to 43% estimated in the third quarter and first nine months of 1996. However, the eventual actual tax rate for the year 1996 was reduced to 41%, which was only slightly higher than the current estimated rate for 1997.
Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes ( Statement 109 ), requires that the tax benefit of available tax carryforwards be recorded as an asset to the extent that management assesses the utilization of such carryforwards to be more likely than not . When the future utilization of some portion of the carryforwards is determined not to be more likely than not , Statement 109 requires that a valuation allowance be provided to reduce the recorded tax benefits from such assets.
Included as deferred tax assets at September 30, 1997, were approximately $11 million of various tax carryforwards. Of this amount, $5 million were for net operating loss carryforwards that expire between 1998 and 2008. The remaining $6 million of carryforward benefits relate to depletion and minimum tax credit carryforwards which do not have expiration dates.
To assess the likelihood of realizing tax benefits from the future utilization of these carryforwards, management considered four primary factors: (1) estimates of future yearly taxable income which Devon is expected to generate; (2) the level of future taxable income necessary to utilize the carryforwards; (3) the expiration dates, if any, of such carryforwards, and (4) certain limitations on the annual utilization of the carryforwards as set forth by federal tax regulations.
Based upon current estimates of future production, average prices and pre-tax expenses, management believes that taxable income during the carryforward periods will be sufficient to utilize all of the carryforwards currently available. Devon expects the tax benefits from its net operating loss carryforwards to be utilized between 1997 and 1999. This is well before the 2006 expiration date for the majority of such benefits.
Management s assessment of the future utilization of Devon s deferred tax assets is based upon current estimates of taxable income to be generated in 1997 and beyond. Significant changes in such estimates from variables such as future oil and gas prices or capital expenditures could alter the timing of the eventual utilization of such assets. There can be no assurance that Devon will generate any specific level of continuing taxable earnings.
Capital Expenditures, Capital Resources and Liquidity
The following discussion of capital expenditures, capital resources and liquidity should be read in conjunction with the consolidated statements of cash flows included in Part 1, Item 1 elsewhere herein.
Capital Expenditures. Cash used for capital expenditures increased 39% from $65.8 million in the first nine months of 1996 to $91.4 million in the first nine months of 1997. Approximately $87.7 million was spent in the 1997 period on acquisition, exploration and development costs, compared to $65.1 million in the 1996 period.
Capital Resources and Liquidity. Net cash provided by operating activities ( operating cash flow ) continued to be the primary source of capital and liquidity in the first nine months of 1997. Operating cash flow in the 1997 year-to-date period was $129.0 million compared to $56.1 million in the comparable 1996 period.
Because of the amount of operating cash flow generated in the first nine months of 1997, Devon s credit lines were not used as a significant source of capital. Long- term debt at the end of 1996 was $8 million. During the first quarter of 1997, operating cash flow was utilized to eliminate this debt balance.
Devon s domestic long-term credit facilities were amended in March, 1997. At Devon s request, the borrowing base of the facilities was lowered from $260 million to $208 million. This will lower Devon s future cost of borrowings. If future capital needs arise, Devon believes that its lenders would increase its domestic credit lines to approximately $500 million. The amendments to the credit agreements also lowered the annual facilities fee from 0.25% of the borrowing base to 0.20%, and extended the final maturity date for $200 million of the facilities to August 31, 2003. The maturity date for the remaining $8 million of credit facilities is August 31, 2000. Also, the amendments reduced Devon s minimum tangible net worth required by the lenders.
Impact of Recently Issued Accounting Standards Not Yet Adopted. In February, 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings Per Share. SFAS No. 128 is effective for financial statements issued for periods ending after December 15, 1997, and restatement of prior-period earnings per share date is required. The new standard will not apply to Devon s financial statements until the fourth quarter of 1997. SFAS No. 128 revises the current calculation methods and presentation of primary and fully diluted earnings per share. Devon has reviewed the requirements of SFAS No. 128, and has concluded that they will not affect Devon s historical primary earnings per share data. However, SFAS No. 128 will lower Devon s historical fully diluted earnings per share amounts by $0.01 per share in each of the following periods: the year 1994, the year 1995, the second quarter of 1996 and the third quarter of 1996.
Revisions to 1997 Estimates
The 1996 annual report on Form 10-K, and a Form 8-K filed on February 11, 1997, contained forward-looking information for the year 1997. This information was revised to the extent necessary in the Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. Where necessary, that information has been further revised in the following discussion. The revised forward-looking statements provided in this discussion are based on management's examination of historical operating trends, the December 31, 1996 reserve reports of independent petroleum consultants LaRoche Petroleum Consultants, Ltd. and AMH Group Ltd., data in Devon's files, other data available from third parties, and actual results for the first half of 1997. Devon cautions that its future oil, gas and NGL production, revenues and expenses 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, environmental risks, drilling risks, regulatory changes, the uncertainty inherent in estimating future oil and gas production or reserves, and other risks as outlined below. The scope of Devon's operations increased significantly with the KMG-NAOS transaction. This increases the margin of error inherent in estimating Devon's 1997 production volumes, prices and expenses. Also, the financial results for Devon's new Canadian operations, obtained in the KMG-NAOS transaction, are subject to currency exchange rate risks.
Assumptions and Risks for Price and Production Estimates. Prices for oil, natural gas and NGLs are determined primarily by prevailing market conditions. Market conditions for these products are influenced by regional and world-wide economic growth, weather and other substantially variable factors. These factors are beyond Devon's control and are difficult to predict. Over 90% of Devon's revenues are attributable to sales of these three commodities. Consequently, the company's financial results and resources are highly influenced by this price volatility.
Estimates for Devon's future production of oil, natural gas and NGLs are based on the assumption that market demand and prices for oil and gas will continue at levels that allow for profitable production of these products. Although Devon's management believes these assumptions to be reasonable, there can be no assurance of such stability.
Certain of Devon's individual oil and gas properties are sufficiently significant as to have a material impact on the company's overall financial results. With respect to oil production, these properties include the West Red Lake Field and the Grayburg-Jackson Unit, both in southeast New Mexico. The company's interest in coal seam natural gas in the Northeast Blanco Unit and the 32-9 Unit can have a substantive effect on overall gas production.
The production, transportation and marketing of oil, natural gas and NGLs are complex processes which are subject to disruption due to transportation and processing availability, mechanical failure, human error, meteorological events and numerous other factors. The following forward- looking statements were prepared assuming demand, curtailment, producibility and general market conditions for Devon's oil, natural gas and NGLs for the last quarter of 1997 will be substantially similar to those of the first three quarters, unless otherwise noted.
Discussed below are those areas where revisions have been made to the 1997 estimates originally included in the aforementioned Form 10-K and Form 8-K, and first revised in the June 30, 1997 Form 10-Q.
Relative Prices of Oil Production. In the revisions to forward-looking information which were included in the June 30, 1997, Form 10-Q, Devon revised its expected 1997 oil price upward to between $0.15 above West Texas Intermediate posted prices ("WTI") and $0.30 above WTI. Since the time of that revision, three factors have caused Devon to raise its expected oil prices again. First, the price differential between higher-priced sweet crude and lower- priced sour crude has narrowed substantially. Therefore, Devon's expected price for its sour crude has increased as it relates to WTI. Second, Devon's proportionate mix of sweet and sour crude production has shifted towards a larger percentage of the higher-priced sweet crude. And third, since the June, 1997, price revision, Devon has been successful at replacing expiring crude contracts with new contracts that have pricing terms equal to or better than the terms of the expiring contracts. These factors contributed to Devon's average oil price for the first nine months of 1997 being $0.41 above WTI. As a result of these events, Devon has again revised upward its estimate for the year's average oil price in 1997. Devon now expects its average oil price for 1997 to be between $0.30 above WTI and $0.50 above WTI.
Relative Prices of Gas Production. In the original forward-looking information included in the aforementioned Form 8-K and Form 10-K, Devon estimated that its average price for coal seam gas production would include an expected $0.55 per Mcf from the San Juan Basin Transaction. (See Note 3 to the consolidated financial statements included in the 1996 Form 10-K for a complete description of the San Juan Basin Transaction.) Recent upward revisions to Devon's expected future San Juan Basin prices, and the effect of such revisions on certain provisions of the agreement covering the San Juan Basin Transaction, have caused Devon to lower the expected price benefit from such transaction. Devon believes that the San Juan Basin transaction will add between $0.40 per Mcf and $0.50 per Mcf to Devon's 1997 coal seam gas average price.
Income Taxes. In the June 30, 1997, Form 10-Q, Devon revised upward its estimate of the current portion of its 1997 income tax expense to between $11 million and $15 million. The upward revision was necessitated by an upward revision to expected pre-tax earnings for the year. Since that June revision, Devon has again revised upward its estimate of 1997's pre-tax earnings. Accordingly, Devon now expects its current portion of 1997 income taxes to be between $16 million and $22 million. The original estimate of Devon's total income tax rate of between 38% and 42% has not been revised.

DEVON ENERGY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Part II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of
Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K are as follows:
Exhibit
No.
2.1 Agreement and Plan of Merger among Registrant, Devon Energy Corporation (Nevada), Kerr-McGee Corporation, Kerr-McGee North American Onshore Corporation and Kerr-McGee Canada Onshore Ltd., dated October 17, 1996 (incorporated by reference to Addendum A to Registrant's definitive proxy statement for a special meeting of shareholders, filed on November 6, 1996).
3.1 Registrant's Certificate of Incorporation, as amended (incorporated by reference to Exhibit B to Registrant's definitive Proxy Statement for its 1995 Annual Meeting of Shareholders filed on April 21, 1995).
3.2 Registrant's Certificate of Amendment of Certificate of Incorporation (incorporated by reference to Exhibit 2 to Registrant's Current Report on Form 8-K dated December 31, 1996).
3.3 Registrant's Bylaws (incorporated by reference to Exhibit 3.2 to Registrant's Registration Statement on Form 8-B filed on June 7, 1995).
4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Registrant's Registration Statement on Form 8-B filed on June 7, 1995).
4.2 Rights Agreement between Registrant and The First National Bank of Boston (incorporated by reference to Exhibit 4.2 to Registrant's Registration Statement on Form 8-B filed on June 7, 1995).
4.3 First Amendment to Rights Agreement between Registrant and The First National Bank of Boston dated October 16, 1996 (incorporated by reference to Exhibit H-1 to Addendum A to Registrant's definitive proxy statement for a special meeting of shareholders, filed on November 6, 1996).
4.4 Second Amendment to Rights Agreement between Registrant and the First National Bank of Boston, dated December 31, 1996 (incorporated by reference to Exhibit 4.2 to Registrant's Current Report on Form 8-K dated December 31, 1996).
4.5 Certificate of Designations of Series A Junior Participating Preferred Stock of Registrant (incorporated by reference to Exhibit 3.3 to Registrant's Registration Statement on Form 8-B filed on June 7, 1995).
4.6 Certificate of Trust of Devon Financing Trust
[incorporated by reference to Exhibit 4.5 to Amendment No. 1 to Registrant's Registration Statement on Form S-3 (No. 333-00815)].
4.7 Amended and Restated Declaration of Trust of Devon Financing Trust dated as of July 3, 1996, by J. Larry Nichols, H. Allen Turner, William T. Vaughn, The Bank of New York (Delaware) and The Bank of New York as Trustees and the Registrant as Sponsor [incorporated by reference to Exhibit 4.6 to Amendment No. 1 to Registrant's Registration Statement on Form S-3 (No. 333-00815)].
4.8 Indenture dated as of July 3, 1996, between the Registrant and The Bank of New York
[incorporated by reference to Exhibit 4.7 to Amendment No. 1 to Registrant's Registration Statement on Form S-3 (No. 333-00815)].
4.9 First Supplemental Indenture dated as of July 3, 1996, between the Registrant and The Bank of New York [incorporated by reference to Exhibit 4.8 to Amendment No. 1 to Registrant's Registration Statement on Form S-3 (No. 333- 00815)].
4.10 Form of 6 1/2% Preferred Convertible Securities (included as Exhibit A-1 to Exhibit 4.5 above).
4.11 Form of 6 1/2% Convertible Junior Subordinated Debentures (included in Exhibit 4.7 above).
4.12 Preferred Securities Guarantee Agreement dated July 3, 1996, between Registrant, as Guarantor, and The Bank of New York, as Preferred Guarantee Trustee [incorporated by reference to Exhibit 4.11 to Amendment No. 1 to Registrant's Registration Statement on Form S-3 (No. 333- 00815)].
4.13 Stock Rights and Restrictions Agreement dated as of December 31, 1996, between Registrant and Kerr-McGee Corporation (incorporated by reference to Exhibit 4.3 to Registrant's Current Report on Form 8-K dated December 31, 1996).
4.14 Registration Rights Agreement, dated December 31, 1996, by and between Registrant and Kerr- McGee Corporation (incorporated by reference to Exhibit 4.4 to Registrant's Current Report on Form 8-K dated December 31, 1996).
10.1 Credit Agreement dated August 30, 1996, among Devon Energy Corporation (Nevada), as Borrower, the Registrant and Devon Energy Operating Corporation, as Guarantors, NationsBank of Texas, N.A., as Agent, and NationsBank of Texas, N.A., Bank One, Texas, N.A., Bank of Montreal, and First Union National Bank of North Carolina, as Lenders (incorporated by reference to Exhibit 10.1 to Registrant s Quarterly Report on Form 10-Q for the quarter ended September 30, 1996).
10.2 First Amendment, dated March 15, 1997, to Credit Agreement among Devon Energy Corporation (Nevada), as Borrower, the Registrant, as Guarantor, NationsBank of Texas, N.A., as Agent, and NationsBank of Texas, N.A., Bank One, Texas, N.A., Bank of Montreal and First Union National Bank of North Carolina, as Lenders (incorporated by reference to Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997).
10.3 Devon Energy Corporation 1988 Stock Option Plan
[incorporated by reference to Exhibit 10.4 to Registrant's Registration Statement on Form S-4 (No. 33-23564)].*
10.4 Devon Energy Corporation 1993 Stock Option Plan (incorporated by reference to Exhibit A to Registrant's Proxy Statement for the 1993 Annual Meeting of Shareholders filed on May 6, 1993).*
10.5 Devon Energy Corporation 1997 Stock Option Plan (incorporated by reference to Exhibit A to Registrant's Proxy Statement for the 1997 Annual Meeting of Shareholders filed on April 3, 1997).*
10.6 Severance Agreement among Devon Energy Corporation (Nevada), Registrant and Mr. J. Larry Nichols, dated December 3, 1992 (incorporated by reference to Exhibit 10.10 to Registrant's Amendment No. 1 to Annual Report on Form 10-K for the year ended December 31, 1992).*
10.7 Severance Agreement among Devon Energy Corporation (Nevada), Registrant and Mr. J. Michael Lacey, dated December 3, 1992 (incorporated by reference to Exhibit 10.12 to Registrant's Amendment No. 1 to Annual Report on Form 10-K for the year ended December 31, 1992).*
10.8 Severance Agreement among Devon Energy Corporation (Nevada), Registrant and Mr. H. Allen Turner, dated December 3, 1992 (incorporated by reference to Exhibit 10.13 to Registrant's Amendment No. 1 to Annual Report on Form 10-K for the year ended December 31, 1992).*
10.9 Severance Agreement among Devon Energy Corporation (Nevada), Registrant and Mr. Darryl G. Smette, dated December 3, 1992 (incorporated by reference to Exhibit 10.14 to Registrant's Amendment No. 1 to Annual Report on Form 10-K for the year ended December 31, 1992).*
10.10 Severance Agreement among Devon Energy Corporation (Nevada), Registrant and Mr. William T. Vaughn, dated December 3, 1992 (incorporated by reference to Exhibit 10.15 to Registrant's Amendment No. 1 to Annual Report on Form 10-K for the year ended December 31, 1992).*
10.11 Severance Agreement among Devon Energy Corporation (Nevada), Registrant and Duke
R. Ligon dated March 26, 1997 (incorporated by reference to Exhibit 10.11 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997).*
10.12 Employment Agreement between Registrant and Duke R. Ligon dated February 7, 1997 (incorporated by reference to Exhibit

          10.12 to Registrant's Quarterly Regport  on
          Form 10-Q  for the quarter  ended June  30,
          1997).*

10.13     Supplemental  Retirement  Income  Agreement
          among  Devon Energy  Corporation  (Nevada),
          Registrant and John W. Nichols  dated March
          26,  1997  (incorporated  by  reference  to
          Exhibit  10.13  to  Registrant's  Quarterly
          Report on  Form 10-Q for  the quarter ended
          June 30, 1997).*

10.14     Sale  and  Purchase Agreement  relating  to	

Registrant's San Juan Basin gas properties (incorporated by reference to Exhibit 10.15 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995).
10.15 Second Restatement of and Amendment to Sale and Purchase Agreement relating to Registrant's San Juan Basin gas properties

     (incorporated by  reference to Exhibit 10.16  to
     Registrant's Quarterly  Report on  Form 10-Q for
     the quarter ended September 30, 1995).

10.16     Purchase  and Sale  Agreement between Union
     Oil  Company  of  California  and  Devon  Energy
     Corporation (Nevada) (incorporated  by reference
     to  Exhibit 2 to  Registrant's Current Report on
     Form 8-K dated December 18, 1995).

10.17     Registration  Rights Agreement  dated  July
     3, 1996,  by  and  among the  Registrant,  Devon	

Financing Trust and Morgan Stanley & Co. Incorporated [incorporated by reference to Exhibit 10.1 to Amendment No. 1 to Registrant's Registration Statement on Form S-3 (No. 333- 00815)].
11 Computation of earnings per share
* Compensatory plans or arrangements.
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the three months ended September 30, 1997.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
DEVON ENERGY CORPORATION

Date:      October 20, 1997        /s/William T. Vaughn
                                   William T. Vaughn
                                   Vice President -  Finance	

INDEX TO EXHIBITS
Page
2.1 Agreement and Plan of Merger among Registrant, # Devon Energy Corporation (Nevada), Kerr-McGee Corporation, Kerr-McGee North American Onshore Corporation and Kerr-McGee Canada Onshore Ltd., dated October 17, 1996
3.1 Registrant's Certificate of Incorporation, as # amended
3.2 Registrant's Certificate of Amendment of #

     Certificate of Incorporation

3.3  Registrant's Bylaws                                  #

4.1  Form of Common Stock Certificate                     #

4.2  Rights Agreement between Registrant  and The First   #
     National Bank of Boston

4.3  First  Amendment  to   Rights  Agreement   between   #
     Registrant and  The First National Bank  of Boston
     dated October 16, 1996

4.4  Second  Amendment  to  Rights   Agreement  between   #
     Registrant and the First National  Bank of Boston,
     dated December 31, 1996

4.5  Certificate  of  Designations of  Series  A Junior   #
     Participating Preferred Stock of Registrant

4.6  Certificate of Trust of Devon Financing Trust        #

4.7  Amended  and  Restated  Declaration  of  Trust  of   #
     Devon  Financing Trust  dated as of  July 3, 1996,
     by J. Larry  Nichols, H. Allen Turner,  William T.
     Vaughn,  The Bank  of New York  (Delaware) and The
     Bank  of New  York as Trustees  and the Registrant
     as Sponsor

4.8  Indenture  dated as  of July 3,  1996, between the   #
     Registrant and The Bank of New York

4.9  First Supplemental  Indenture dated as  of July 3,   #
     1996, between the  Registrant and The Bank  of New
     York

4.10 Form of  6 1/2%  Preferred Convertible  Securities   #
     (included as Exhibit A-1 to Exhibit 4.5 above)

4.11 Form  of  6 1/2%  Convertible  Junior Subordinated   #
     Debentures (included in Exhibit 4.7 above)

4.12 Preferred  Securities  Guarantee  Agreement  dated   #
     July 3,  1996, between  Registrant, as  Guarantor,
     and The Bank  of New York, as  Preferred Guarantee
     Trustee

4.13 Stock  Rights and Restrictions  Agreement dated as   #
     of  December  31,  1996,  between  Registrant  and
     Kerr-McGee Corporation

4.14 Registration Rights Agreement, dated  December 31,   #
     1996,  by and  between  Registrant and  Kerr-McGee
     Corporation

10.1 Credit  Agreement  dated August  30,  1996,  among   #
     Devon  Energy  Corporation (Nevada),  as Borrower,
     the   Registrant   and   Devon  Energy   Operating
     Corporation, as Guarantors, NationsBank  of Texas,
     N.A., as  Agent, and NationsBank  of Texas,  N.A.,
     Bank  One,  Texas,  N.A., Bank  of  Montreal,  and
     First  Union National  Bank of North  Carolina, as
     Lenders

10.2 First  Amendment, dated March  15, 1997, to Credit   #
     Agreement   among    Devon   Energy    Corporation
     (Nevada),   as   Borrower,   the  Registrant,   as
     Guarantor, NationsBank  of Texas, N.A.,  as Agent,
     and NationsBank of  Texas, N.A., Bank  One, Texas,
     N.A., Bank of  Montreal, and First Union  National
     Bank of North Carolina, as Lenders

10.3 Devon Energy Corporation 1988 Stock Option Plan      #

10.4 Devon Energy Corporation 1993 Stock Option Plan      #

10.5 Devon Energy Corporation 1997 Stock Option Plan      #

10.6 Severance    Agreement    among    Devon    Energy   #
     Corporation (Nevada), Registrant and  Mr. J. Larry
     Nichols, dated December 3, 1992	

10.7 Severance Agreement among Devon Energy # Corporation (Nevada), Registrant and Mr. J.
Michael Lacey, dated December 3, 1992
10.8 Severance Agreement among Devon Energy # Corporation (Nevada), Registrant and Mr. H. Allen Turner, dated December 3, 1992
10.9 Severance Agreement among Devon Energy # Corporation (Nevada), Registrant and Mr. Darryl G. Smette, dated December 3, 1992
10.10 Severance Agreement among Devon Energy # Corporation (Nevada), Registrant and Mr.

                    William T. Vaughn, dated December 3, 1992

          10.11     Severance   Agreement  among   Devon   Energy   #
                    Corporation (Nevada), Registrant and  Duke R.
                    Ligon dated March 26, 1997

          10.12     Employment Agreement  between Registrant  and   #
                    Duke R. Ligon dated February 7, 1997

          10.13     Supplement Retirement Income  Agreement among   #
                    Devon     Energy     Corporation    (Nevada),
                    Registrant and  John W.  Nichols dated  March
                    26, 1997

          10.14     Sale  and  Purchase  Agreement   relating  to   #
                    Registrant's San Juan Basin gas properties

          10.15     Second Restatement  of and Amendment  to Sale   #
                    and    Purchase   Agreement    relating    to
                    Registrant's San Juan Basin gas properties

          10.16     Purchase  and  Sale  Agreement between  Union   #
                    Oil Company  of California  and Devon  Energy
                    Corporation (Nevada)

          10.17     Registration  Rights Agreement  dated July 3,   #
                    1996,  by  and among  the  Registrant,  Devon
                    Financing  Trust  and  Morgan  Stanley &  Co.
                    Incorporated

          11   Computation of earnings per share                    31

______________________________________	

# Incorporated by reference.

                         DEVON ENERGY CORPORATION                Exhibit 11
                     Computation of Earnings Per Share

                                                             Three Monthes Ended        Nine Months Ended
                                                                 September 30,            September 30,
                                                             1997          1996        1997          1996

PRIMARY EARNINGS PER SHARE

Computation for Statement of Operations
Net earnings per statement of operations                 $16,305,960    7,707,673   56,361,496   20,036,987

Weighted average common shares outstanding                32,235,002   22,130,896   32,181,077   22,121,757

Primary earnings per share                                     $0.51         0.35         1.75         0.91

Additional Primary Computation (A)
Net earnings per statement of operations                 $16,305,960    7,707,673   56,361,496   20,036,987

Adjustment to weighted average common shares outstanding:
      Weighted average as shown above in primary
            computation                                   32,235,002   22,130,896   32,181,077   22,121,757
      Add dilutive effect of outstanding stock options (as
            determined using the treasury stock method)      474,919      151,815      400,737      147,047

      Weighted average common shares outstanding,
            as adjusted                                   32,709,921   22,282,711   32,581,814   22,268,804

Net earnings per common share, as adjusted                     $0.50         0.35         1.73         0.90

FULLY DILUTED EARNINGS PER SHARE (A)

Net earnings per statement of operations                 $16,305,960    7,707,673   56,361,496   20,036,987

Increase in net earnings from assumed conversion
      of Trust Convertible Preferred Securities
      (net of tax effect)                                  1,506,489    1,464,549    4,519,466    1,464,549

Net earnings, as adjusted                                $17,812,449    9,172,222   60,880,962   21,501,536

Weighted average common shares outstanding as shown
      in primary computation above                        32,235,002   22,130,896   32,181,077   22,121,757

Add fully dilutive effect of outstanding stock options
      (as determined using the treasury stock method)        526,725      169,736      550,986      175,815

Add weighted average of additional shares issued
      from assumed conversion of Trust Convertible
      Preferred Securities                                 4,901,507      4,586,476  4,901,507    1,539,985

Weighted average common shares outstanding, as adjusted   37,663,234     26,887,108 37,633,570   23,837,557

Fully diluted earnings per common share                        $0.47           0.34       1.62         0.90

(A)   The additional primary computations for all periods, and the fully
      diluted computations for the 1996 periods, are submitted in
      accordance with Regulation S-K item 601(b)(11) although not required
      by footnote 2 to paragraph 14 of APB Opinion No. 15 because they
      result in dilution of less than 3%.	

ARTICLE 5	

		
PERIOD TYPE	9 MOS	
FISCAL YEAR END	DEC 31 1997	
PERIOD END	SEP 30 1997	
CASH	37947666	
SECURITIES	0	
RECEIVABLES	42234131	
ALLOWANCES	0	
INVENTORY	2166662	
CURRENT ASSETS	85205662	
PP&E	1062816198	
DEPRECIATION	341619932	
TOTAL ASSETS	820664338	
CURRENT LIABILITIES	25670790	
BONDS	0	
PREFERRED MANDATORY	3229370	
PREFERRED	0	
COMMON	0	
OTHER SE	523378080	
TOTAL LIABILITY AND EQUITY	820664338	
SALES	224849402	
TOTAL REVENUES	230411931	
CGS	0	
TOTAL COSTS	0	
OTHER EXPENSES	59320656	
LOSS PROVISION	0	
INTEREST EXPENSE	249184	
INCOME PRETAX	93936496	
INCOME TAX	37575000	
INCOME CONTINUING	56361496	
DISCONTINUED	0	
EXTRAORDINARY	0	
CHANGES	0	
NET INCOME	56361496	
EPS PRIMARY	1.75	
EPS DILUTED	1.62