UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event report): February 7, 2007
DEVON ENERGY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
 	 	 	 	 	
DELAWARE	 	001-32318	 	73-1567067	
(State or Other Jurisdiction of
Incorporation or Organization)	 	(Commission File Number)	 	(IRS Employer
Identification Number)	
 	 	 	
20 NORTH BROADWAY, OKLAHOMA CITY, OK
(Address of Principal Executive Offices)	 	73102
(Zip Code)	
Registrant’s telephone number, including area code: ( 405) 235-3611
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

   

 

Item 2.02 Results of Operations and Financial Condition
     Devon Energy Corporation hereby furnishes the information set forth in its news release dated February 7, 2007 announcing fourth quarter and year-end results, a copy of which is attached as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits
      (c) Exhibits

99.1	 	Devon Energy Corporation news release dated February 7, 2007.	
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 hereto duly authorized.
 	 	 	 	 	
 	DEVON ENERGY CORPORATION
 	 	
 	By:  	/s/ Danny J. Heatly  	 	
 	 	Danny J. Heatly 	 	
 	 	Vice President — Accounting 	 	
 	
Date: February 7, 2007
 2 

EXHIBIT 99.1
 	 	 	 	 	
	 	20 North Broadway
Oklahoma City, Oklahoma 73102-8260	 	Telephone: (405) 235-3611
Fax: (405) 552-4667	
NEWS RELEASE

 	 	 	
Investor contact:	 	Zack Hager	
 	 	(405) 552-4526	
 	 	 	
Media contact:	 	Brian Engel	
 	 	(405) 228-7750	
DEVON ENERGY’S EARNINGS CLIMB TO $6.34 PER SHARE IN 2006; PROVED RESERVES REACH RECORD 2.4
BILLION BARRELS
OKLAHOMA CITY — February 7, 2007 — Devon Energy Corporation (NYSE:DVN) today reported net earnings of $2.8 billion for the year ended December 31, 2006. Earnings per share were $6.42 per common share ($6.34 per diluted common share). In 2005 the company earned $2.9 billion, or $6.38 per common share ($6.26 per diluted common share).
     For the quarter ended December 31, 2006, Devon reported net earnings of $582 million, or $1.31 per common share ($1.29 per diluted common share). This compares to reported earnings of $970 million or $2.18 per common share ($2.14 per diluted common share) in the fourth quarter of 2005.
     In aggregate, items securities analysts typically exclude from their published estimates reduced reported fourth-quarter 2006 net earnings by $28 million, or seven cents per diluted share. These items include non-cash charges, unrealized gains and other items discussed in detail later in this news release.
     “From almost every perspective, 2006 was an outstanding year for Devon,” commented J. Larry Nichols, chairman and chief executive officer. “We invested over $5 billion in exploration and development projects adding more than 400 million barrels of proved reserves. These investments fortified our North American onshore production base and moved our major development projects toward completion in 2007. In addition, our successful production test in the Gulf of Mexico’s Lower Tertiary Trend validated our long-term growth strategy and set the stage to extend Devon’s growth trajectory well into the next decade.”
Oil and Gas Reserves Climb to Record Levels
Capital and Reserve Summary
(detailed tables on pages 12 and 13 and non-GAAP reconciliation on page 17)
 	 	 	 	 	 	 	 	 	
 	 	Year Ended December 31,	
 	 	2006	 	2005	
 	
Drill-bit Capital (in millions)	 	$	5,236	 	 	$	3,952	 	

Reserve Data (MMBoe)	 	 	 	 	 	 	 	 	
 	
Discoveries and extensions	 	 	433	 	 	 	400	 	
Revisions other than price	 	 	(6	)	 	 	37	 	
 	
Drill-bit and performance reserve additions	 	 	427	 	 	 	437	 	
 	
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     Devon’s estimated proved reserves at December 31, 2006, were a record 2,376 million oil-equivalent barrels (Boe). This is a 13 percent increase over year-end 2005 estimated proved reserves. Reserve additions from all sources before price revisions were 533 million Boe, more than double the company’s annual oil and gas production of 214 million Boe. During 2006, Devon’s reserve life index (proved reserves divided by annual production) increased from 9.4 years to 11.1 years.
     Devon added 427 million Boe through successful drilling (discoveries, extensions and performance revisions) in 2006. The company also acquired 106 million Boe in 2006, primarily through the purchase of Chief’s Barnett Shale natural gas properties. Revisions, largely related to changes in year-end oil and gas prices, reduced 2006 proved reserves by 50 million Boe.
     Proved developed reserves were 1,674 million Boe at December 31, 2006, or 70 percent of proved reserves. Year-end reserves comprised 708 million barrels of crude oil, 8.4 trillion cubic feet of natural gas and 275 million barrels of natural gas liquids.
Active Year Yields Many Exploration and Development Achievements
     Devon drilled more than 2,400 wells in 2006, with a success rate of 98 percent. Following are highlights from the year’s operations activity.

•	 	Devon dramatically increased its presence in the Barnett Shale in north Texas in 2006 by completing the $2.2 billion acquisition of Chief. The acquired properties include estimated proved reserves of approximately 600 billion cubic feet of natural gas equivalent and leasehold totaling 169,000 net acres with some 2,000 additional drilling locations.	
 		
•	 	The company’s United States onshore properties, including the Barnett Shale and the Groesbeck and Carthage areas in east Texas, showed strong production growth in 2006. Total fourth-quarter production for the U.S. onshore increased seven percent in 2006 compared with 2005.	
 		
•	 	Devon and its co-owners conducted a successful production test of the deepwater Jack No. 2 well in the Gulf of Mexico’s Lower Tertiary Trend. During the test, the Jack No. 2 flowed at a sustained rate of 6,000 barrels of oil per day from approximately 40 percent of the total net pay measured in the well. The successful production test was an important milestone in moving the Jack project toward sanctioning and development. Devon has a 25 percent working interest in the Jack prospect.	
 		
•	 	Also in the Lower Tertiary Trend, the company increased its working interest in the Cascade project from 25 percent to 50 percent. Devon and equal-partner Petrobras plan to develop Cascade using a floating production, storage and offloading vessel. The partners anticipate first production from Cascade in late 2009.	
 		
•	 	Elsewhere in the Lower Tertiary Trend, Devon and its co-owners announced an oil discovery on the Kaskida prospect. Kaskida is Devon’s fourth discovery in the Lower Tertiary Trend and its first in the Keathley Canyon deepwater lease area. Devon has identified 12 additional exploratory prospects on its acreage in Keathley Canyon. The company believes that Kaskida, in which it has a 20 percent working interest, is the largest of its four Lower Tertiary discoveries to date.	
 		
•	 	In the fourth quarter of 2006, the company announced a Miocene-aged oil discovery on the Mission Deep prospect in the Gulf of Mexico. The well, in 7,300 feet of water, was drilled to 25,000 feet and encountered more than 250 feet of net oil pay. The company has 15 additional prospects in its deepwater Miocene inventory. Devon has a 50 percent working interest in Mission Deep, which is operated by Anadarko.	
 2 

 

•	 	At the 100 percent-owned Jackfish thermal heavy oil project in Canada, facilities construction and drilling continued in 2006. Devon expects to commence steam injection at Jackfish in the second quarter of 2007, with full production of 35,000 barrels per day anticipated by the end of 2008.	
 		
•	 	Construction and fabrication for the 50 million barrel Polvo oil development project in Brazil continued on schedule throughout 2006. Devon expects first production from Polvo in mid-2007. Devon operates Polvo with a 60 percent working interest.	
African Operations Designated for Divestiture
     In the fourth quarter of 2006, Devon announced its intention to divest its assets and terminate operations in Egypt. In accordance with accounting standards, Devon reclassified the assets, liabilities and results of its operations in Egypt as discontinued operations for all accounting periods presented. Therefore, Devon’s annual and quarterly results from continuing operations for all periods presented in this release exclude results attributable to Egypt. Although revenues and expenses for prior periods were reclassified, there was no impact upon previously reported net earnings. Included with the financial information that follows is a table of revenues, expenses and production categories and the amounts reclassified as discontinued operations for each period presented.
     Early in the first quarter of 2007, the company announced that it plans to divest its assets and terminate operations in West Africa. Therefore, commencing with reporting for the first quarter of 2007, Devon will also reclassify the assets, liabilities and results of its operations in West Africa as discontinued operations.
Oil, Gas and Liquids Sales Remain Steady
     Sales of oil, gas and natural gas liquids increased less than one percent to $8.9 billion in the year ended December 31, 2006, compared with the year ended December 31, 2005. The positive effects of higher realized oil and natural gas liquids prices were largely offset by lower realized natural gas prices and a decline in oil and gas production.
     Combined oil, gas and natural gas liquids production averaged 587 thousand Boe per day in 2006. This was four percent less than Devon’s 2005 average daily production of 613 thousand Boe per day. This decrease in 2006 production was driven by property divestitures completed during 2005, partially offset by growth in production from retained properties during 2006.
     Devon’s combined production of oil, gas and natural gas liquids production increased throughout 2006. Fourth-quarter production climbed seven percent from 574 thousand Boe per day in 2005 to 613 thousand Boe per day in 2006.
     Marketing and midstream operating profit totaled $448 million in 2006, some $2 million less than Devon’s marketing and midstream operating profit for 2005. Marketing and midstream revenues decreased by $100 million while related expenses decreased by $98 million.
 3 

 

Cash Flow Before Balance Sheet Changes Reaches Record Levels
     Cash flow before balance sheet changes in 2006 climbed seven percent to a record $6.1 billion. With cash flow, cash on hand and short-term borrowings under the company’s commercial paper facility, Devon funded more than $8.0 billion of capital expenditures, including the $2.2 billion property acquisition of Chief, and repurchased $253 million of common stock. The company ended the year with cash and short-term investments of approximately $1.3 billion.
     At December 31, 2006, net debt to adjusted capitalization was 24 percent. 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 of the company’s financial results. These items and their effects upon reported earnings for the full year and fourth quarter of 2006 were as follows:

•	 	A change in fair value of derivative financial instruments decreased full-year earnings by $178 million pre-tax ($114 million after tax) and decreased fourth-quarter earnings by $97 million pre-tax ($62 million after tax).	
 		
•	 	An unrealized gain on natural gas derivative instruments increased full-year earnings by $37 million pre-tax ($24 million after tax) and increased fourth-quarter earnings by $32 million pre-tax ($21 million after tax).	
 		
•	 	A reduction in Canadian statutory income tax rates increased full-year after-tax earnings by $243 million.	
 		
•	 	A new income-based tax in the state of Texas decreased full-year after-tax earnings by $39 million.	
 		
•	 	A reduction in the carrying value of oil and gas properties reduced full-year earnings by $152 million pre-tax ($129 million after tax).	
 		
•	 	The decision to exit Egypt generated financial benefits that increased full-year and fourth-quarter earnings by $5 million pre-tax ($13 million after tax).	
     The following tables summarize the full-year and fourth-quarter effects of these items on 2006 earnings and income taxes. Included in the tables are the tax effects resulting from an income tax accrual adjustment that did not affect net earnings.
Summary of Items Typically Excluded by Securities Analysts — Full Year 2006
(in millions)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Pretax	 	 	 	 	 	 	 	 	 	 	 	 	 	After-tax	 	Cash Flow Before	
 	 	Earnings	 	Income Tax Effect	 	Earnings	 	Balance Sheet	
 	 	Effect	 	Current	 	Deferred	 	Total	 	Effect	 	Changes Effect	
 	
Change in fair value of financial instruments	 	$	(178	)	 	 	—	 	 	 	(64	)	 	 	(64	)	 	 	(114	)	 	 	—	 	
Unrealized gain on natural gas derivative instruments	 	 	37	 	 	 	—	 	 	 	13	 	 	 	13	 	 	 	24	 	 	 	—	 	
Change in Canadian income tax rate	 	 	—	 	 	 	—	 	 	 	(243	)	 	 	(243	)	 	 	243	 	 	 	—	 	
Texas income-based tax	 	 	—	 	 	 	—	 	 	 	39	 	 	 	39	 	 	 	(39	)	 	 	—	 	
Reduction in the carrying value of properties	 	 	(152	)	 	 	—	 	 	 	(23	)	 	 	(23	)	 	 	(129	)	 	 	—	 	
Financial benefits generated by decision to exit Egypt	 	 	5	 	 	 	—	 	 	 	(8	)	 	 	(8	)	 	 	13	 	 	 	—	 	
Income tax accrual adjustment	 	 	—	 	 	 	(35	)	 	 	35	 	 	 	—	 	 	 	—	 	 	 	35	 	
 	
Totals	 	$	(288	)	 	 	(35	)	 	 	(251	)	 	 	(286	)	 	 	(2	)	 	 	35	 	
 	
 4 

 

     In aggregate, these items decreased full-year 2006 net earnings by $2 million, or one cent per common share (no effect per diluted share). In addition, a reclassification of deferred tax benefits increased cash flow before balance sheet changes by $35 million.
Summary of Items Typically Excluded by Securities Analysts — Fourth Quarter 2006
(in millions)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Pretax	 	 	 	 	 	 	 	 	 	 	 	 	 	After-tax	 	Cash Flow Before	
 	 	Earnings	 	Income Tax Effect	 	Earnings	 	Balance Sheet	
 	 	Effect	 	Current	 	Deferred	 	Total	 	Effect	 	Changes Effect	
 	
Change in fair value of financial instruments	 	$	(97	)	 	 	—	 	 	 	(35	)	 	 	(35	)	 	 	(62	)	 	 	—	 	
Unrealized gain on natural gas derivatives	 	 	32	 	 	 	—	 	 	 	11	 	 	 	11	 	 	 	21	 	 	 	—	 	
Financial benefits generated by decision to exit Egypt	 	 	5	 	 	 	—	 	 	 	(8	)	 	 	(8	)	 	 	13	 	 	 	—	 	
 	
Totals	 	$	(60	)	 	 	—	 	 	 	(32	)	 	 	(32	)	 	 	(28	)	 	 	—	 	
 	
     In aggregate, these items decreased fourth-quarter 2006 net earnings by $28 million, or six cents per common share (seven cents per diluted share).
Conference Call to be Webcast Today
     Devon will discuss its 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 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 and production. Devon is one of the world’s leading independent oil and gas producers and is included in the S&P 500 Index. For more information about Devon, please visit our website at www.devonenergy.com.
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DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
PRODUCTION DATA (net of royalties)
All periods exclude properties discontinued in 2006
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Year Ended	 	Quarter Ended	
 	 	December 31,	 	December 31,	
 	 	2006	 	2005	 	2006	 	2005	
 	
Total Period Production	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Natural Gas (Bcf)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	487.5	 	 	 	462.7	 	 	 	129.5	 	 	 	119.1	 	
U.S. Offshore	 	 	78.6	 	 	 	92.5	 	 	 	21.4	 	 	 	15.0	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	566.1	 	 	 	555.2	 	 	 	150.9	 	 	 	134.1	 	
Canada	 	 	240.4	 	 	 	261.0	 	 	 	57.8	 	 	 	61.3	 	
International	 	 	8.1	 	 	 	10.8	 	 	 	1.8	 	 	 	3.2	 	
 	
Total Natural Gas	 	 	814.6	 	 	 	827.0	 	 	 	210.5	 	 	 	198.6	 	
 	
Oil (MMBbls)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	11.1	 	 	 	12.1	 	 	 	2.7	 	 	 	2.9	 	
U.S. Offshore	 	 	8.5	 	 	 	13.4	 	 	 	2.0	 	 	 	2.3	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	19.6	 	 	 	25.5	 	 	 	4.7	 	 	 	5.2	 	
Canada	 	 	12.8	 	 	 	13.1	 	 	 	3.4	 	 	 	3.3	 	
International	 	 	22.6	 	 	 	23.4	 	 	 	7.2	 	 	 	5.4	 	
 	
Total Oil	 	 	55.0	 	 	 	62.0	 	 	 	15.3	 	 	 	13.9	 	
 	
Natural Gas Liquids (MMBbls)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	18.1	 	 	 	17.3	 	 	 	4.7	 	 	 	4.3	 	
U.S. Offshore	 	 	0.5	 	 	 	0.8	 	 	 	0.1	 	 	 	0.0	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	18.6	 	 	 	18.1	 	 	 	4.8	 	 	 	4.3	 	
Canada	 	 	4.7	 	 	 	5.3	 	 	 	1.1	 	 	 	1.4	 	
International	 	 	—	 	 	 	0.3	 	 	 	—	 	 	 	0.1	 	
 	
Total Natural Gas Liquids	 	 	23.3	 	 	 	23.7	 	 	 	5.9	 	 	 	5.8	 	
 	
Oil Equivalent (MMBoe)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	110.5	 	 	 	106.6	 	 	 	29.1	 	 	 	27.1	 	
U.S. Offshore	 	 	22.0	 	 	 	29.6	 	 	 	5.6	 	 	 	4.8	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	132.5	 	 	 	136.2	 	 	 	34.7	 	 	 	31.9	 	
Canada	 	 	57.6	 	 	 	61.9	 	 	 	14.2	 	 	 	14.9	 	
International	 	 	23.9	 	 	 	25.5	 	 	 	7.5	 	 	 	6.0	 	
 	
Total Oil Equivalent	 	 	214.0	 	 	 	223.6	 	 	 	56.4	 	 	 	52.8	 	

Average Daily Production	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Natural Gas (MMcf)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	1,335.6	 	 	 	1,267.6	 	 	 	1,407.5	 	 	 	1,295.0	 	
U.S. Offshore	 	 	215.4	 	 	 	253.5	 	 	 	232.8	 	 	 	163.1	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	1,551.0	 	 	 	1,521.1	 	 	 	1,640.3	 	 	 	1,458.1	 	
Canada	 	 	658.7	 	 	 	715.1	 	 	 	627.9	 	 	 	665.9	 	
International	 	 	22.1	 	 	 	29.5	 	 	 	19.5	 	 	 	34.2	 	
 	
Total Natural Gas	 	 	2,231.8	 	 	 	2,265.7	 	 	 	2,287.7	 	 	 	2,158.2	 	
 	
Oil (MBbls)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	30.5	 	 	 	33.2	 	 	 	29.9	 	 	 	31.6	 	
U.S. Offshore	 	 	23.1	 	 	 	36.6	 	 	 	21.2	 	 	 	25.0	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	53.6	 	 	 	69.8	 	 	 	51.1	 	 	 	56.6	 	
Canada	 	 	35.2	 	 	 	36.0	 	 	 	37.1	 	 	 	35.8	 	
International	 	 	61.8	 	 	 	64.3	 	 	 	78.2	 	 	 	58.2	 	
 	
Total Oil	 	 	150.6	 	 	 	170.1	 	 	 	166.4	 	 	 	150.6	 	
 	
Natural Gas Liquids (MBbls)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	49.6	 	 	 	47.5	 	 	 	51.4	 	 	 	46.9	 	
U.S. Offshore	 	 	1.4	 	 	 	2.2	 	 	 	1.2	 	 	 	0.4	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	51.0	 	 	 	49.7	 	 	 	52.6	 	 	 	47.3	 	
Canada	 	 	12.9	 	 	 	14.5	 	 	 	12.2	 	 	 	15.3	 	
International	 	 	—	 	 	 	0.9	 	 	 	—	 	 	 	0.8	 	
 	
Total Natural Gas Liquids	 	 	63.9	 	 	 	65.1	 	 	 	64.8	 	 	 	63.4	 	
 	
Oil Equivalent (MBoe)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	302.7	 	 	 	292.0	 	 	 	315.9	 	 	 	294.3	 	
U.S. Offshore	 	 	60.4	 	 	 	81.0	 	 	 	61.2	 	 	 	52.5	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	363.1	 	 	 	373.0	 	 	 	377.1	 	 	 	346.8	 	
Canada	 	 	157.9	 	 	 	169.7	 	 	 	153.9	 	 	 	162.1	 	
International	 	 	65.5	 	 	 	70.0	 	 	 	81.5	 	 	 	64.7	 	
 	
Total Oil Equivalent	 	 	586.5	 	 	 	612.7	 	 	 	612.5	 	 	 	573.6	 	
 	
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DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
FULL-YEAR PRODUCTION DATA — RETAINED PROPERTIES
Both periods exclude properties divested in 2005 and discontinued in 2006
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Year Ended	 	 	
 	 	December 31,	 	YOY	
 	 	2006	 	2005	 	% Change	
 	 	 	
Total Period Production	 	 	 	 	 	 	 	 	 	 	 	 	
Natural Gas (Bcf)	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	487.5	 	 	 	455.2	 	 	 	7	%	
U.S. Offshore	 	 	78.6	 	 	 	80.3	 	 	 	-2	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	566.1	 	 	 	535.5	 	 	 	6	%	
Canada	 	 	240.4	 	 	 	246.6	 	 	 	-3	%	
International	 	 	8.1	 	 	 	10.8	 	 	 	-25	%	
 	 	 	
Total Natural Gas	 	 	814.6	 	 	 	792.9	 	 	 	3	%	
 	 	 	
Oil (MMBbls)	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	11.1	 	 	 	11.6	 	 	 	-4	%	
U.S. Offshore	 	 	8.5	 	 	 	10.7	 	 	 	-21	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	19.6	 	 	 	22.3	 	 	 	-12	%	
Canada	 	 	12.8	 	 	 	12.4	 	 	 	3	%	
International	 	 	22.6	 	 	 	23.4	 	 	 	-3	%	
 	 	 	
Total Oil	 	 	55.0	 	 	 	58.1	 	 	 	-5	%	
 	 	 	
Natural Gas Liquids (MMBbls)	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	18.1	 	 	 	17.1	 	 	 	6	%	
U.S. Offshore	 	 	0.5	 	 	 	0.6	 	 	 	-17	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	18.6	 	 	 	17.7	 	 	 	5	%	
Canada	 	 	4.7	 	 	 	5.1	 	 	 	-8	%	
International	 	 	—	 	 	 	0.3	 	 	 	-100	%	
 	 	 	
Total Natural Gas Liquids	 	 	23.3	 	 	 	23.1	 	 	 	1	%	
 	 	 	
Oil Equivalent (MMBoe)	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	110.5	 	 	 	104.5	 	 	 	6	%	
U.S. Offshore	 	 	22.0	 	 	 	24.8	 	 	 	-11	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	132.5	 	 	 	129.3	 	 	 	2	%	
Canada	 	 	57.6	 	 	 	58.6	 	 	 	-2	%	
International	 	 	23.9	 	 	 	25.5	 	 	 	-6	%	
 	 	 	
Total Oil Equivalent	 	 	214.0	 	 	 	213.4	 	 	 	0	%	

Average Daily Production	 	 	 	 	 	 	 	 	 	 	 	 	
Natural Gas (MMcf)	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	1,335.6	 	 	 	1,247.1	 	 	 	7	%	
U.S. Offshore	 	 	215.4	 	 	 	220.1	 	 	 	-2	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	1,551.0	 	 	 	1,467.2	 	 	 	6	%	
Canada	 	 	658.7	 	 	 	675.5	 	 	 	-2	%	
International	 	 	22.1	 	 	 	29.5	 	 	 	-25	%	
 	 	 	
Total Natural Gas	 	 	2,231.8	 	 	 	2,172.2	 	 	 	3	%	
 	 	 	
Oil (MBbls)	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	30.5	 	 	 	31.8	 	 	 	-4	%	
U.S. Offshore	 	 	23.1	 	 	 	29.4	 	 	 	-21	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	53.6	 	 	 	61.2	 	 	 	-12	%	
Canada	 	 	35.2	 	 	 	33.9	 	 	 	4	%	
International	 	 	61.8	 	 	 	64.3	 	 	 	-4	%	
 	 	 	
Total Oil	 	 	150.6	 	 	 	159.4	 	 	 	-6	%	
 	 	 	
Natural Gas Liquids (MBbls)	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	49.6	 	 	 	46.6	 	 	 	6	%	
U.S. Offshore	 	 	1.4	 	 	 	1.7	 	 	 	-18	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	51.0	 	 	 	48.3	 	 	 	6	%	
Canada	 	 	12.9	 	 	 	14.0	 	 	 	-8	%	
International	 	 	—	 	 	 	0.9	 	 	 	-100	%	
 	 	 	
Total Natural Gas Liquids	 	 	63.9	 	 	 	63.2	 	 	 	1	%	
 	 	 	
Oil Equivalent (MBoe)	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	 	302.7	 	 	 	286.3	 	 	 	6	%	
U.S. Offshore	 	 	60.4	 	 	 	67.6	 	 	 	-11	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total U.S.	 	 	363.1	 	 	 	353.9	 	 	 	3	%	
Canada	 	 	157.9	 	 	 	160.7	 	 	 	-2	%	
International	 	 	65.5	 	 	 	70.0	 	 	 	-6	%	
 	 	 	
Total Oil Equivalent	 	 	586.5	 	 	 	584.6	 	 	 	0	%	
 	 	 	
 7 

 

DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
REALIZED PRICE DATA
(average realized prices)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Year Ended	 	Quarter Ended	
 	 	December 31,	 	December 31,	
 	 	2006	 	2005	 	2006	 	2005	
 	
Realized Prices	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Natural Gas ($/Mcf)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	$	5.90	 	 	$	6.90	 	 	$	5.59	 	 	$	9.41	 	
U.S. Offshore	 	$	7.24	 	 	$	7.95	 	 	$	6.72	 	 	$	11.15	 	
Total U.S.	 	$	6.09	 	 	$	7.08	 	 	$	5.75	 	 	$	9.61	 	
Canada	 	$	6.05	 	 	$	6.95	 	 	$	5.78	 	 	$	9.36	 	
International	 	$	3.95	 	 	$	3.75	 	 	$	3.11	 	 	$	2.74	 	
 	
Total Natural Gas	 	$	6.06	 	 	$	6.99	 	 	$	5.74	 	 	$	9.42	 	
 	
Oil ($/Bbl)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	$	60.70	 	 	$	51.23	 	 	$	54.50	 	 	$	55.58	 	
U.S. Offshore	 	$	64.24	 	 	$	32.96	 	 	$	57.35	 	 	$	31.08	 	
Total U.S.	 	$	62.23	 	 	$	41.64	 	 	$	55.68	 	 	$	44.75	 	
Canada	 	$	46.94	 	 	$	26.88	 	 	$	41.08	 	 	$	26.09	 	
International	 	$	61.36	 	 	$	40.26	 	 	$	56.58	 	 	$	41.25	 	
 	
Total Oil	 	$	58.30	 	 	$	38.00	 	 	$	52.85	 	 	$	38.96	 	
 	
Natural Gas Liquids ($/Bbl)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	$	29.26	 	 	$	26.50	 	 	$	27.57	 	 	$	31.16	 	
U.S. Offshore	 	$	35.43	 	 	$	30.61	 	 	$	28.38	 	 	$	47.72	 	
Total U.S.	 	$	29.42	 	 	$	26.68	 	 	$	27.59	 	 	$	31.29	 	
Canada	 	$	42.67	 	 	$	37.19	 	 	$	37.78	 	 	$	41.13	 	
International	 	$	—	 	 	$	22.81	 	 	$	—	 	 	$	21.07	 	
 	
Total Natural Gas Liquids	 	$	32.10	 	 	$	28.96	 	 	$	29.51	 	 	$	33.53	 	
 	
Oil Equivalent ($/Boe)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	$	36.94	 	 	$	40.10	 	 	$	34.57	 	 	$	52.34	 	
U.S. Offshore	 	$	51.23	 	 	$	40.58	 	 	$	45.96	 	 	$	49.73	 	
Total U.S.	 	$	39.31	 	 	$	40.21	 	 	$	36.42	 	 	$	51.94	 	
Canada	 	$	39.21	 	 	$	38.17	 	 	$	36.45	 	 	$	48.10	 	
International	 	$	59.24	 	 	$	38.80	 	 	$	55.07	 	 	$	38.81	 	
 	
Total Oil Equivalent	 	$	41.51	 	 	$	39.48	 	 	$	38.91	 	 	$	49.38	 	
 	
BENCHMARK PRICES
(average prices)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Year Ended	 	Quarter Ended	
 	 	December 31,	 	December 31,	
 	 	2006	 	2005	 	2006	 	2005	
 	
Benchmark Prices	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Natural Gas ($/Mcf) — Henry Hub	 	$	7.24	 	 	$	8.64	 	 	$	6.56	 	 	$	13.00	 	
Oil ($/Bbl) — West Texas Intermediate (Cushing)	 	$	66.22	 	 	$	56.57	 	 	$	60.19	 	 	$	60.00	 	
 	
PRICE DIFFERENTIALS, EXCLUDING EFFECTS OF HEDGES
(average floating price differentials from benchmark prices)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Year Ended	 	Quarter Ended	
 	 	December 31,	 	December 31,	
 	 	2006	 	2005	 	2006	 	2005	
 	
Price Differentials	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Natural Gas ($/Mcf)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	$	(1.41	)	 	$	(1.71	)	 	$	(1.21	)	 	$	(3.54	)	
U.S. Offshore	 	$	0.00	 	 	$	(0.42	)	 	$	0.16	 	 	$	(0.50	)	
Total U.S.	 	$	(1.22	)	 	$	(1.50	)	 	$	(1.02	)	 	$	(3.20	)	
Canada	 	$	(1.02	)	 	$	(1.46	)	 	$	(0.61	)	 	$	(3.26	)	
International	 	$	(1.15	)	 	$	(3.90	)	 	$	(1.90	)	 	$	(9.94	)	
 	
Total Natural Gas	 	$	(1.16	)	 	$	(1.50	)	 	$	(0.91	)	 	$	(3.29	)	
 	
Oil ($/Bbl)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Onshore	 	$	(5.52	)	 	$	(4.85	)	 	$	(5.69	)	 	$	(4.42	)	
U.S. Offshore	 	$	(1.96	)	 	$	(5.45	)	 	$	(2.84	)	 	$	(4.85	)	
Total U.S.	 	$	(3.99	)	 	$	(5.16	)	 	$	(4.51	)	 	$	(4.61	)	
Canada	 	$	(19.28	)	 	$	(15.48	)	 	$	(19.11	)	 	$	(19.64	)	
International	 	$	(4.86	)	 	$	(7.27	)	 	$	(3.61	)	 	$	(7.87	)	
 	
Total Oil	 	$	(7.92	)	 	$	(8.14	)	 	$	(7.34	)	 	$	(9.44	)	
 	
 8 

 

DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Year Ended	 	Quarter Ended	
 	 	December 31,	 	December 31,	
 	 	2006	 	2005	 	2006	 	2005	
 	
Revenues	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Oil sales	 	$	3,205	 	 	$	2,359	 	 	$	809	 	 	$	540	 	
Gas sales	 	 	4,932	 	 	 	5,784	 	 	 	1,207	 	 	 	1,871	 	
Natural gas liquids sales	 	 	749	 	 	 	687	 	 	 	177	 	 	 	195	 	
Marketing & midstream revenues	 	 	1,692	 	 	 	1,792	 	 	 	416	 	 	 	582	 	
 	
Total revenues	 	 	10,578	 	 	 	10,622	 	 	 	2,609	 	 	 	3,188	 	
 	
Expenses and other income, net	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Lease operating expenses	 	 	1,488	 	 	 	1,324	 	 	 	412	 	 	 	334	 	
Production taxes	 	 	341	 	 	 	335	 	 	 	80	 	 	 	101	 	
Marketing & midstream operating costs and expenses	 	 	1,244	 	 	 	1,342	 	 	 	314	 	 	 	421	 	
Depreciation, depletion and amortization of oil and gas properties	 	 	2,266	 	 	 	1,981	 	 	 	634	 	 	 	492	 	
Depreciation and amortization of non-oil and gas properties	 	 	176	 	 	 	160	 	 	 	47	 	 	 	41	 	
Accretion of asset retirement obligation	 	 	49	 	 	 	43	 	 	 	13	 	 	 	9	 	
General & administrative expenses	 	 	397	 	 	 	291	 	 	 	113	 	 	 	85	 	
Interest expense	 	 	421	 	 	 	533	 	 	 	106	 	 	 	105	 	
Effects of changes in foreign currency exchange rates	 	 	—	 	 	 	(2	)	 	 	1	 	 	 	2	 	
Change in fair value of derivative financial instruments	 	 	178	 	 	 	94	 	 	 	97	 	 	 	(74	)	
Reduction of carrying value of oil and gas properties	 	 	121	 	 	 	212	 	 	 	—	 	 	 	212	 	
Other income, net	 	 	(115	)	 	 	(196	)	 	 	(30	)	 	 	(17	)	
 	
Total expenses and other income, net	 	 	6,566	 	 	 	6,117	 	 	 	1,787	 	 	 	1,711	 	
 	
Earnings from continuing operations before income tax expense	 	 	4,012	 	 	 	4,505	 	 	 	822	 	 	 	1,477	 	
 	
Income tax expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Current	 	 	819	 	 	 	1,218	 	 	 	104	 	 	 	397	 	
Deferred	 	 	370	 	 	 	388	 	 	 	159	 	 	 	117	 	
 	
Total income tax expense	 	 	1,189	 	 	 	1,606	 	 	 	263	 	 	 	514	 	
 	
Earnings from continuing operations	 	 	2,823	 	 	 	2,899	 	 	 	559	 	 	 	963	 	
 	
Discontinued operations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Results of discontinued operations before income taxes	 	 	22	 	 	 	46	 	 	 	19	 	 	 	12	 	
Income tax (benefit) expense	 	 	(1	)	 	 	15	 	 	 	(4	)	 	 	5	 	
 	
Net results of discontinued operations	 	 	23	 	 	 	31	 	 	 	23	 	 	 	7	 	
 	
Net earnings	 	 	2,846	 	 	 	2,930	 	 	 	582	 	 	 	970	 	
Preferred stock dividends	 	 	10	 	 	 	10	 	 	 	3	 	 	 	3	 	
 	
Net earnings applicable to common stockholders	 	$	2,836	 	 	$	2,920	 	 	$	579	 	 	$	967	 	
 	
Net earnings per weighted average common shares outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	6.42	 	 	$	6.38	 	 	$	1.31	 	 	$	2.18	 	
Diluted	 	$	6.34	 	 	$	6.26	 	 	$	1.29	 	 	$	2.14	 	
Basic weighted average shares outstanding	 	 	442	 	 	 	458	 	 	 	443	 	 	 	443	 	
Diluted weighted average shares outstanding	 	 	448	 	 	 	470	 	 	 	448	 	 	 	451	 	
 9 

 

DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(in millions)
 	 	 	 	 	 	 	 	 	
 	 	December 31,	 	December 31,	
 	 	2006	 	2005	
 	
Assets	 	 	 	 	 	 	 	 	
 	
Current assets	 	 	 	 	 	 	 	 	
 	
Cash and cash equivalents	 	$	739	 	 	$	1,593	 	
Short-term investments	 	 	574	 	 	 	680	 	
Accounts receivable	 	 	1,393	 	 	 	1,565	 	
Deferred income taxes	 	 	102	 	 	 	158	 	
Current assets held for sale	 	 	81	 	 	 	66	 	
Other current assets	 	 	323	 	 	 	144	 	
 	
Total current assets	 	 	3,212	 	 	 	4,206	 	
 	
Property and equipment, at cost, based on the full cost method of accounting for oil and gas properties ($3,674 and $2,704 excluded from amortization in 2006 and 2005, respectively)	 	 	41,889	 	 	 	33,824	 	
Less accumulated depreciation, depletion and amortization	 	 	17,294	 	 	 	14,913	 	
 	
Net property and equipment	 	 	24,595	 	 	 	18,911	 	
 	
Investment in Chevron Corporation common stock, at fair value	 	 	1,043	 	 	 	805	 	
Goodwill	 	 	5,706	 	 	 	5,705	 	
Assets of held for sale	 	 	185	 	 	 	217	 	
Other assets	 	 	322	 	 	 	429	 	
 	
Total Assets	 	$	35,063	 	 	$	30,273	 	
 	
Liabilities and Stockholders’ Equity	 	 	 	 	 	 	 	 	
 	
Current liabilities	 	 	 	 	 	 	 	 	
 	
Accounts payable:	 	 	 	 	 	 	 	 	
Trade	 	$	1,190	 	 	$	928	 	
Revenues and royalties due to others	 	 	529	 	 	 	666	 	
Income taxes payable	 	 	197	 	 	 	293	 	
Current portion of long-term debt	 	 	2,205	 	 	 	662	 	
Accrued interest payable	 	 	114	 	 	 	127	 	
Fair value of derivative financial instruments	 	 	6	 	 	 	18	 	
Current portion of asset retirement obligation	 	 	61	 	 	 	50	 	
Current liabilities associated with assets held for sale	 	 	5	 	 	 	19	 	
Accrued expenses and other current liabilities	 	 	338	 	 	 	171	 	
 	
Total current liabilities	 	 	4,645	 	 	 	2,934	 	
 	
Debentures exchangeable into shares of Chevron Corporation common stock	 	 	727	 	 	 	709	 	
Other long-term debt	 	 	4,841	 	 	 	5,248	 	
Fair value of derivative financial instruments	 	 	302	 	 	 	125	 	
Asset retirement obligation, long-term	 	 	833	 	 	 	610	 	
Liabilities associated with assets held for sale	 	 	25	 	 	 	40	 	
Other liabilities	 	 	598	 	 	 	371	 	
Deferred income taxes	 	 	5,650	 	 	 	5,374	 	
 	
Stockholders’ equity	 	 	 	 	 	 	 	 	
 	
Preferred stock	 	 	1	 	 	 	1	 	
Common stock	 	 	44	 	 	 	44	 	
Additional paid-in capital	 	 	6,840	 	 	 	6,928	 	
Retained earnings	 	 	9,114	 	 	 	6,477	 	
Accumulated other comprehensive income	 	 	1,444	 	 	 	1,414	 	
Treasury stock	 	 	(1	)	 	 	(2	)	
 	
Stockholders’ Equity	 	 	17,442	 	 	 	14,862	 	
 	
Total Liabilities & Stockholders’ Equity	 	$	35,063	 	 	$	30,273	 	
 	
Common Shares Outstanding	 	 	444	 	 	 	443	 	
 	
 10 

 

DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
 	 	 	 	 	 	 	 	 	
 	 	Year Ended December 31,	
 	 	2006	 	2005	
 	
Cash Flows From Operating Activities	 	 	 	 	 	 	 	 	
 	
Net earnings	 	$	2,846	 	 	$	2,930	 	
Less income from discontinued operations, net of tax	 	 	(23	)	 	 	(31	)	
Adjustments to reconcile net earnings to net cash provided by operating activities	 	 	 	 	 	 	 	 	
Depreciation, depletion and amortization	 	 	2,442	 	 	 	2,141	 	
Deferred income tax expense	 	 	370	 	 	 	388	 	
Net gain on sales of non-oil and gas property and equipment	 	 	(5	)	 	 	(150	)	
Reduction of carrying value of oil and gas properties	 	 	121	 	 	 	212	 	
Other non-cash charges	 	 	270	 	 	 	128	 	
 	
 	 	 	6,021	 	 	 	5,618	 	
 	 	 	 	 	 	 	 	 	
Changes in assets and liabilities:	 	 	 	 	 	 	 	 	
(Increase) decrease in:	 	 	 	 	 	 	 	 	
Accounts receivable	 	 	212	 	 	 	(279	)	
Other current assets	 	 	(37	)	 	 	(17	)	
Long-term other assets	 	 	(66	)	 	 	48	 	
Increase (decrease) in:	 	 	 	 	 	 	 	 	
Accounts payable	 	 	(183	)	 	 	255	 	
Income taxes payable	 	 	(231	)	 	 	69	 	
Debt, including current maturities	 	 	—	 	 	 	(67	)	
Accrued interest and expenses	 	 	78	 	 	 	(34	)	
Long-term other liabilities	 	 	142	 	 	 	(79	)	
 	
Cash provided by operating activities — continuing operations	 	 	5,936	 	 	 	5,514	 	
Cash provided by operating activities — discontinued operations	 	 	57	 	 	 	98	 	
 	
Net cash provided by operating activities	 	$	5,993	 	 	$	5,612	 	

Cash Flows From Investing Activities	 	 	 	 	 	 	 	 	
 	
Proceeds from sales of property and equipment	 	$	40	 	 	$	2,151	 	
Capital expenditures	 	 	(7,551	)	 	 	(4,026	)	
Purchases of short-term investments	 	 	(2,395	)	 	 	(4,020	)	
Sales of short-term investments	 	 	2,501	 	 	 	4,307	 	
 	
Cash used in investing activities — continuing operations	 	 	(7,405	)	 	 	(1,588	)	
Cash used in investing activities — discontinued operations	 	 	(44	)	 	 	(64	)	
 	
Net cash used in investing activities	 	$	(7,449	)	 	$	(1,652	)	

Cash Flows From Financing Activities	 	 	 	 	 	 	 	 	
 	
Proceeds from borrowings of debt, net of issuance costs	 	$	1,808	 	 	$	—	 	
Principal payments on debt, including current maturities	 	 	(862	)	 	 	(1,258	)	
Proceeds from exercise of stock options	 	 	73	 	 	 	124	 	
Repurchase of common stock	 	 	(253	)	 	 	(2,263	)	
Excess tax benefits related to share-based compensation	 	 	36	 	 	 	—	 	
Dividends paid on common stock	 	 	(199	)	 	 	(136	)	
Dividends paid on preferred stock	 	 	(10	)	 	 	(10	)	
 	
Net cash provided by (used in) financing activities	 	$	593	 	 	$	(3,543	)	

Effect of exchange rate changes on cash	 	$	13	 	 	$	37	 	
Net (decrease) increase in cash and cash equivalents	 	 	(850	)	 	 	454	 	
Cash and cash equivalents at beginning of year (including discontinued operations)	 	 	1,606	 	 	 	1,152	 	
 	
Cash and cash equivalents at end of year (including discontinued operations)	 	$	756	 	 	$	1,606	 	
 	
 11 

 

DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
RESERVE RECONCILIATION
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Total	 	Total U.S.	
 	 	Oil	 	Gas	 	NGLs	 	Total	 	Oil	 	Gas	 	NGLs	 	Total	
 	 	(MMBbls)	 	(Bcf)	 	(MMBbls)	 	(MMBoe)	 	(MMBbls)	 	(Bcf)	 	(MMBbls)	 	(MMBoe)	
 	
As of December 31, 2005:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Proved developed	 	 	355	 	 	 	6,111	 	 	 	216	 	 	 	1,589	 	 	 	150	 	 	 	4,343	 	 	 	175	 	 	 	1,049	 	
Proved undeveloped	 	 	285	 	 	 	1,185	 	 	 	30	 	 	 	513	 	 	 	23	 	 	 	821	 	 	 	22	 	 	 	183	 	
 	
Total proved	 	 	640	 	 	 	7,296	 	 	 	246	 	 	 	2,102	 	 	 	173	 	 	 	5,164	 	 	 	197	 	 	 	1,232	 	
 	
Production	 	 	(55	)	 	 	(815	)	 	 	(23	)	 	 	(214	)	 	 	(19	)	 	 	(566	)	 	 	(19	)	 	 	(132	)	
Discoveries and extensions	 	 	139	 	 	 	1,491	 	 	 	45	 	 	 	433	 	 	 	16	 	 	 	1,298	 	 	 	43	 	 	 	274	 	
Divestitures	 	 	—	 	 	 	(5	)	 	 	—	 	 	 	(1	)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Acquisitions	 	 	—	 	 	 	584	 	 	 	9	 	 	 	106	 	 	 	—	 	 	 	580	 	 	 	9	 	 	 	105	 	
Revisions due to prices	 	 	(21	)	 	 	(89	)	 	 	(7	)	 	 	(44	)	 	 	—	 	 	 	(110	)	 	 	(3	)	 	 	(22	)	
Revisions other than price	 	 	5	 	 	 	(106	)	 	 	5	 	 	 	(6	)	 	 	—	 	 	 	(11	)	 	 	6	 	 	 	5	 	
As of December 31, 2006:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Proved developed	 	 	358	 	 	 	6,518	 	 	 	229	 	 	 	1,674	 	 	 	147	 	 	 	4,916	 	 	 	196	 	 	 	1,163	 	
Proved undeveloped	 	 	350	 	 	 	1,838	 	 	 	46	 	 	 	702	 	 	 	23	 	 	 	1,439	 	 	 	37	 	 	 	299	 	
 	
Total proved	 	 	708	 	 	 	8,356	 	 	 	275	 	 	 	2,376	 	 	 	170	 	 	 	6,355	 	 	 	233	 	 	 	1,462	 	

 	 	U.S. Onshore	 	U.S. Offshore	
 	 	Oil	 	Gas	 	NGLs	 	Total	 	Oil	 	Gas	 	NGLs	 	Total	
 	 	(MMBbls)	 	(Bcf)	 	(MMBbls)	 	(MMBoe)	 	(MMBbls)	 	(Bcf)	 	(MMBbls)	 	(MMBoe)	
 	
As of December 31, 2005:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Proved developed	 	 	121	 	 	 	4,110	 	 	 	173	 	 	 	979	 	 	 	29	 	 	 	233	 	 	 	2	 	 	 	70	 	
Proved undeveloped	 	 	8	 	 	 	651	 	 	 	20	 	 	 	137	 	 	 	15	 	 	 	170	 	 	 	2	 	 	 	46	 	
 	
Total proved	 	 	129	 	 	 	4,761	 	 	 	193	 	 	 	1,116	 	 	 	44	 	 	 	403	 	 	 	4	 	 	 	116	 	
 	
Production	 	 	(11	)	 	 	(487	)	 	 	(18	)	 	 	(110	)	 	 	(8	)	 	 	(79	)	 	 	(1	)	 	 	(22	)	
Discoveries and extensions	 	 	11	 	 	 	1,270	 	 	 	43	 	 	 	265	 	 	 	5	 	 	 	28	 	 	 	—	 	 	 	9	 	
Divestitures	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Acquisitions	 	 	—	 	 	 	580	 	 	 	9	 	 	 	105	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Revisions due to prices	 	 	—	 	 	 	(107	)	 	 	(3	)	 	 	(21	)	 	 	—	 	 	 	(3	)	 	 	—	 	 	 	(1	)	
Revisions other than price	 	 	(2	)	 	 	(38	)	 	 	6	 	 	 	(2	)	 	 	2	 	 	 	27	 	 	 	—	 	 	 	7	 	
As of December 31, 2006:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Proved developed	 	 	116	 	 	 	4,672	 	 	 	194	 	 	 	1,089	 	 	 	31	 	 	 	244	 	 	 	2	 	 	 	74	 	
Proved undeveloped	 	 	11	 	 	 	1,307	 	 	 	36	 	 	 	264	 	 	 	12	 	 	 	132	 	 	 	1	 	 	 	35	 	
 	
Total proved	 	 	127	 	 	 	5,979	 	 	 	230	 	 	 	1,353	 	 	 	43	 	 	 	376	 	 	 	3	 	 	 	109	 	

 	 	Canada	 	International	
 	 	Oil	 	Gas	 	NGLs	 	Total	 	Oil	 	Gas	 	NGLs	 	Total	
 	 	(MMBbls)	 	(Bcf)	 	(MMBbls)	 	(MMBoe)	 	(MMBbls)	 	(Bcf)	 	(MMBbls)	 	(MMBoe)	
 	
As of December 31, 2005:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Proved developed	 	 	103	 	 	 	1,708	 	 	 	41	 	 	 	429	 	 	 	102	 	 	 	60	 	 	 	—	 	 	 	111	 	
Proved undeveloped	 	 	150	 	 	 	298	 	 	 	8	 	 	 	207	 	 	 	112	 	 	 	66	 	 	 	—	 	 	 	123	 	
 	
Total proved	 	 	253	 	 	 	2,006	 	 	 	49	 	 	 	636	 	 	 	214	 	 	 	126	 	 	 	—	 	 	 	234	 	
 	
Production	 	 	(13	)	 	 	(241	)	 	 	(4	)	 	 	(58	)	 	 	(23	)	 	 	(8	)	 	 	—	 	 	 	(24	)	
Discoveries and extensions	 	 	109	 	 	 	193	 	 	 	2	 	 	 	145	 	 	 	14	 	 	 	—	 	 	 	—	 	 	 	14	 	
Divestitures	 	 	—	 	 	 	(5	)	 	 	—	 	 	 	(1	)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Acquisitions	 	 	—	 	 	 	4	 	 	 	—	 	 	 	1	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Revisions due to prices	 	 	(19	)	 	 	23	 	 	 	(4	)	 	 	(20	)	 	 	(2	)	 	 	(2	)	 	 	—	 	 	 	(2	)	
Revisions other than price	 	 	(1	)	 	 	(84	)	 	 	(1	)	 	 	(16	)	 	 	6	 	 	 	(11	)	 	 	—	 	 	 	5	 	
As of December 31, 2006:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Proved developed	 	 	112	 	 	 	1,560	 	 	 	33	 	 	 	405	 	 	 	99	 	 	 	42	 	 	 	—	 	 	 	106	 	
Proved undeveloped	 	 	217	 	 	 	336	 	 	 	9	 	 	 	282	 	 	 	110	 	 	 	63	 	 	 	—	 	 	 	121	 	
 	
Total proved	 	 	329	 	 	 	1,896	 	 	 	42	 	 	 	687	 	 	 	209	 	 	 	105	 	 	 	—	 	 	 	227	 	
 	
 12 

 

DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
COSTS INCURRED
(in millions)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Total	 	Total U.S.	
 	 	Year Ended December 31,	 	Year Ended December 31,	
 	 	2006	 	2005	 	2006	 	2005	
 	
Property Acquisition Costs:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Total proved	 	$	1,113	 	 	$	54	 	 	$	1,066	 	 	$	5	 	
 	
Total unproved	 	$	1,485	 	 	$	347	 	 	$	1,366	 	 	$	106	 	
 	
Exploration and Development Costs	 	$	5,124	 	 	$	3,677	 	 	$	3,105	 	 	$	2,019	 	
 	
Costs Incurred	 	$	7,722	 	 	$	4,078	 	 	$	5,537	 	 	$	2,130	 	

 	 	U.S. Onshore	 	U.S. Offshore	
 	 	Year Ended December 31,	 	Year Ended December 31,	
 	 	2006	 	2005	 	2006	 	2005	
 	
Property Acquisition Costs:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Total proved	 	$	1,066	 	 	$	3	 	 	$	—	 	 	$	2	 	
 	
Total unproved	 	$	1,311	 	 	$	86	 	 	$	55	 	 	$	20	 	
 	
Exploration and Development Costs	 	$	2,479	 	 	$	1,554	 	 	$	626	 	 	$	465	 	
 	
Costs Incurred	 	$	4,856	 	 	$	1,643	 	 	$	681	 	 	$	487	 	

 	 	Canada	 	International	
 	 	Year Ended December 31,	 	Year Ended December 31,	
 	 	2006	 	2005	 	2006	 	2005	
 	
Property Acquisition Costs:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Total proved	 	$	23	 	 	$	49	 	 	$	24	 	 	$	—	 	
 	
Total unproved	 	$	70	 	 	$	239	 	 	$	49	 	 	$	2	 	
 	
Exploration and Development Costs	 	$	1,461	 	 	$	1,381	 	 	$	558	 	 	$	277	 	
 	
Costs Incurred	 	$	1,554	 	 	$	1,669	 	 	$	631	 	 	$	279	 	
 	
Devon capitalizes certain general and administrative expenses which are related to property acquisition, exploration and development activities. Such capitalized expenses, which are included in the costs shown in the preceding tables, were $269 million and $188 million in the years 2006 and 2005, respectively. In addition, Devon capitalizes certain interest expenses which are related to property development activities. Such capitalized expenses, which are also included in the costs shown in the preceding tables, were $70 million in each of the years 2006 and 2005.
CAPITAL EXPENDITURES DATA
     (in millions)
 	 	 	 	 	 	 	 	 	
 	 	Year Ended	 	Quarter Ended	
 	 	December 31, 2006	 	December 31, 2006	
 	
Capital Expenditures	 	 	 	 	 	 	 	 	
 	
Drill-bit capital (1)	 	$	5,236	 	 	$	1,433	 	
Chief acquisition	 	 	2,210	 	 	 	2	 	
Other acquisitions of proved properties	 	 	88	 	 	 	33	 	
Marketing & midstream	 	 	376	 	 	 	129	 	
Other	 	 	183	 	 	 	60	 	
 	
Total	 	$	8,093	 	 	$	1,657	 	

(1)	 	Drill-bit capital, a Non-GAAP measure, is defined on page 17.	
 13 

 

DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
DRILLING ACTIVITY
 	 	 	 	 	 	 	 	 	
 	 	Year Ended	
 	 	December 31,	
 	 	2006	 	2005	
 	
Total Wells Drilled	 	 	 	 	 	 	 	 	
 	
U.S.	 	 	1,550	 	 	 	1,298	 	
Canada	 	 	877	 	 	 	1,020	 	
International	 	 	41	 	 	 	44	 	
 	
Total	 	 	2,468	 	 	 	2,362	 	
 	
Total Wells Success Rate	 	 	 	 	 	 	 	 	
 	
U.S.	 	 	98	%	 	 	98	%	
Canada	 	 	99	%	 	 	98	%	
International	 	 	88	%	 	 	82	%	
 	
Total	 	 	98	%	 	 	97	%	
 	
COMPANY OPERATED RIGS
 	 	 	 	 	 	 	 	 	
 	 	December 31,	
 	 	2006	 	2005	
 	
Number of Company Operated Rigs Running	 	 	 	 	 	 	 	 	
 	
U.S.	 	 	58	 	 	 	53	 	
Canada	 	 	11	 	 	 	16	 	
International	 	 	2	 	 	 	3	 	
 	
Total	 	 	71	 	 	 	72	 	
 	
 14 

 

DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
DETAIL OF RECLASSIFICATION FOR DISCONTINUED
OPERATIONS IN EGYPT
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Year Ended	 	Quarter Ended	
 	 	December 31,	 	December 31,	
 	 	2006	 	2005	 	2006	 	2005	
 	
Production from Discontinued Operations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Oil (MMBbls)	 	 	1.9	 	 	 	2.4	 	 	 	0.6	 	 	 	0.5	 	
Natural Gas (Bcf)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Natural Gas Liquids (MMBbls)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	
Total Oil Equivalent (MMBoe)	 	 	1.9	 	 	 	2.4	 	 	 	0.6	 	 	 	0.5	 	
 	
STATEMENT OF DISCONTINUED OPERATIONS DATA
(US$ in millions)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Year Ended	 	Quarter Ended	
 	 	December 31,	 	December 31,	
 	 	2006	 	2005	 	2006	 	2005	
 	
Revenues	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Oil sales	 	$	118	 	 	$	119	 	 	$	32	 	 	$	30	 	
 	
Expenses and other income, net	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Lease operating expenses	 	 	23	 	 	 	21	 	 	 	7	 	 	 	6	 	
Depreciation, depletion and amortization of oil and gas properties	 	 	41	 	 	 	50	 	 	 	6	 	 	 	12	 	
Depreciation and amortization of non-oil and gas properties	 	 	1	 	 	 	1	 	 	 	—	 	 	 	—	 	
Accretion of asset retirement obligation	 	 	—	 	 	 	1	 	 	 	—	 	 	 	—	 	
Reduction of carrying value of oil and gas properties	 	 	31	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	
Total expenses and other income, net	 	 	96	 	 	 	73	 	 	 	13	 	 	 	18	 	
 	
Earnings before income tax expense	 	 	22	 	 	 	46	 	 	 	19	 	 	 	12	 	
 	
Income tax (benefit) expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Current	 	 	15	 	 	 	20	 	 	 	(4	)	 	 	9	 	
Deferred	 	 	(16	)	 	 	(5	)	 	 	—	 	 	 	(4	)	
 	
Total income tax (benefit) expense	 	 	(1	)	 	 	15	 	 	 	(4	)	 	 	5	 	
 	
Earnings from discontinued operations	 	$	23	 	 	$	31	 	 	$	23	 	 	$	7	 	
 	
RESERVE DATA FOR EGYPT
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Oil	 	Gas	 	NGLs	 	Total	
 	 	(MMBbls)	 	(Bcf)	 	(MMBbls)	 	(MMboe)	
 	
As of December 31, 2005:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Proved developed	 	 	10	 	 	 	—	 	 	 	—	 	 	 	10	 	
Proved undeveloped	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	
Total proved	 	 	10	 	 	 	—	 	 	 	—	 	 	 	10	 	
 	
As of December 31, 2006:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
Proved developed	 	 	8	 	 	 	—	 	 	 	—	 	 	 	8	 	
Proved undeveloped	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	
Total proved	 	 	8	 	 	 	—	 	 	 	—	 	 	 	8	 	
 	
 15 

 

DEVON ENERGY CORPORATION
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
(in millions)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Year Ended	 	Quarter Ended	
 	 	December 31,	 	December 31,	
 	 	2006	 	2005	 	2006	 	2005	
 	
Net Cash Provided By Operating Activities (GAAP)	 	$	5,993	 	 	$	5,612	 	 	$	1,111	 	 	$	1,960	 	
Changes in assets and liabilities — continuing operations	 	 	84	 	 	 	103	 	 	 	423	 	 	 	(202	)	
Changes in assets and liabilities — discontinued operations	 	 	14	 	 	 	(20	)	 	 	(5	)	 	 	(19	)	
 	
Cash flow before balance sheet changes (Non-GAAP)	 	$	6,091	 	 	$	5,695	 	 	$	1,529	 	 	$	1,739	 	
 	
     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 $727 million of debentures exchangeable into 14.2 million shares of Chevron common stock owned outright by Devon. As of December 31, 2006, the market value of the shares ($1.0 billion) 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)
 	 	 	 	 	 	 	 	 	
 	 	December 31,	
 	 	2006	 	2005	
 	
Total debt (GAAP)	 	$	7,773	 	 	 	6,619	 	
Adjustments:	 	 	 	 	 	 	 	 	
Cash and short-term investments	 	 	(1,313	)	 	 	(2,273	)	
Market value of Chevron Corporation common stock	 	 	(1,043	)	 	 	(805	)	
 	
Net Debt (Non-GAAP)	 	$	5,417	 	 	 	3,541	 	

Total Capitalization	 	 	 	 	 	 	 	 	
 	
Total debt	 	$	7,773	 	 	 	6,619	 	
Stockholders’ equity	 	 	17,442	 	 	 	14,862	 	
 	
Total Capitalization (GAAP)	 	$	25,215	 	 	 	21,481	 	

Adjusted Capitalization	 	 	 	 	 	 	 	 	
Net debt	 	$	5,417	 	 	 	3,541	 	
Stockholders’ equity	 	 	17,442	 	 	 	14,862	 	
 	
Adjusted Capitalization (Non-GAAP)	 	$	22,859	 	 	 	18,403	 	
 	
 16 

 

DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
     Drill-bit capital is defined as costs incurred less proved acquisition costs, unproved acquisition costs resulting from business combinations and other significant similar transactions, and the net difference of accrued future asset retirement costs less actual cash retirement expenditures. Drill-bit capital is a non-GAAP measure. Devon believes drill-bit capital is relevant because it provides additional insight into costs associated with current year drilling, facilities and unproved acreage acquisitions unrelated to business combinations and other significant similar transactions. It should be noted that the actual costs of reserves added through Devon’s drilling program will differ, sometimes significantly, from the direct comparison of capital spent and reserves added in any given period due to the timing of capital expenditures and reserve bookings. This methodology is also utilized by certain securities analysts as a measure of Devon’s performance.
RECONCILIATION TO GAAP INFORMATION
(in millions)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Total	 	Total U.S.	
 	 	Year Ended December 31,	 	Year Ended December 31,	
 	 	2006	 	2005	 	2006	 	2005	
 	
Costs Incurred (GAAP)	 	$	7,722	 	 	$	4,078	 	 	$	5,537	 	 	$	2,130	 	
 	
Less:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Proved acquisition costs	 	 	1,113	 	 	 	54	 	 	 	1,066	 	 	 	5	 	
Unproved portion of Chief acquisition	 	 	1,185	 	 	 	—	 	 	 	1,185	 	 	 	—	 	
Accrued asset retirement costs	 	 	250	 	 	 	113	 	 	 	78	 	 	 	70	 	
Plus: Actual retirement expenditures	 	 	62	 	 	 	41	 	 	 	41	 	 	 	22	 	
 	
Drill-bit capital (Non-GAAP)	 	$	5,236	 	 	$	3,952	 	 	$	3,249	 	 	$	2,077	 	

 	 	U.S. Onshore	 	U.S. Offshore	
 	 	Year Ended December 31,	 	Year Ended December 31,	
 	 	2006	 	2005	 	2006	 	2005	
 	
Costs Incurred (GAAP)	 	$	4,856	 	 	$	1,643	 	 	$	681	 	 	$	487	 	
 	
Less:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Proved acquisition costs	 	 	1,066	 	 	 	3	 	 	 	—	 	 	 	2	 	
Unproved portion of Chief acquisition	 	 	1,185	 	 	 	—	 	 	 	—	 	 	 	—	 	
Accrued asset retirement costs	 	 	36	 	 	 	23	 	 	 	42	 	 	 	47	 	
Plus: Actual retirement expenditures	 	 	6	 	 	 	5	 	 	 	35	 	 	 	17	 	
 	
Drill-bit capital (Non-GAAP)	 	$	2,575	 	 	$	1,622	 	 	$	674	 	 	$	455	 	

 	 	Canada	 	International	
 	 	Year Ended December 31,	 	Year Ended December 31,	
 	 	2006	 	2005	 	2006	 	2005	
 	
Costs Incurred (GAAP)	 	$	1,554	 	 	$	1,669	 	 	$	631	 	 	$	279	 	
 	
Less:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Proved acquisition costs	 	 	23	 	 	 	49	 	 	 	24	 	 	 	—	 	
Unproved portion of Chief acquisition	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Accrued asset retirement costs	 	 	107	 	 	 	37	 	 	 	65	 	 	 	6	 	
Plus: Actual retirement expenditures	 	 	18	 	 	 	16	 	 	 	3	 	 	 	3	 	
 	
Drill-bit capital (Non-GAAP)	 	$	1,442	 	 	$	1,599	 	 	$	545	 	 	$	276	 	
 	
 17