DVN

Devon Energy Corporation

General

Devon Energy Corporation, including its subsidiaries (“Devon”), is an independent energy company engaged primarily in exploration, development and production of natural gas and oil. Our oil and gas operations are concentrated in various North American onshore areas in the United States and Canada. We also have offshore operations that are situated principally in the Gulf of Mexico and regions located offshore Azerbaijan, Brazil and China.

To complement our upstream oil and gas operations, we have marketing and midstream operations primarily in North America. With these operations, we market gas, crude oil and NGLs. We also construct and operate pipelines, storage and treating facilities and natural gas processing plants. These midstream facilities are used to transport oil, gas, and NGLs and process natural gas.

We began operations in 1971 as a privately held company. We have been publicly held since 1988, and our common stock is listed on the New York Stock Exchange. Our principal and administrative offices are located at 20 North Broadway, Oklahoma City, OK 73102-8260 (telephone 405/235-3611).

Strategy

As an enterprise, we aspire to be the premier independent natural gas and oil company in North America. To achieve this, we continuously strive to optimize value for our shareholders by growing reserves, production, earnings and cash flows, all on a per share basis. We do this by:


• exercising capital discipline;

• investing in oil and gas properties with high operating margins;

• balancing our reserves and production mix between natural gas and liquids;

• maintaining a low overall cost structure;

• improving performance through our marketing and midstream operations; and

• preserving financial flexibility.

Over the past decade, we captured an abundance of resources by carrying out this strategy. We pioneered horizontal drilling in the Barnett Shale and extended this technique to other natural gas shale plays in the United States and Canada. We became proficient with steam-assisted gravity drainage with our Jackfish oil sands development in Alberta, Canada. We achieved key oil discoveries with our drilling in the deepwater Gulf of Mexico and offshore Brazil. We have more than tripled our proved oil and gas reserves since 2000, and have also assembled an extensive inventory of exploration assets representing additional unproved resources.

Building off our past successes, in November 2009, we announced plans to strategically reposition Devon as a high-growth, North American onshore exploration and production company. As part of this strategic repositioning, we plan to bring forward the value of our offshore assets located in the Gulf of Mexico and countries outside North America by divesting them.

This repositioning is driven by our desire to unlock and accelerate the realization of the value underlying the deep inventory of opportunities we have. We have assembled a valuable portfolio of offshore assets, and we have a considerable inventory of premier North American onshore assets. However, our North American onshore assets have consistently provided us our highest risk-adjusted investment returns. By selling our offshore assets, we can more aggressively pursue the untapped value of these North American onshore opportunities. Besides reducing debt, the offshore divestiture proceeds are expected to provide significant funds to redeploy into our prolific North American onshore opportunities. With these added funds, we plan to accelerate the growth and realization of the value of our North American onshore assets.

Development of Business

Since our first issuance of common stock to the public in 1988, we have executed strategies that have always been focused on growth and value creation for our shareholders. We increased our total proved reserves from 8 MMBoe at year-end 1987 to 2,733 MMBoe at year-end 2009. During this same time period, we increased annual production from 1 MMBoe in 1987 to 233 MMBoe in 2009. Our expansion over this time period is attributable to a focused mergers and acquisitions program spanning a number of years, as well as active and successful exploration and development programs in more recent years. Additionally, our growth has provided meaningful value creation for our shareholders. The growth statistics from 1987 to 2009 translate into annual per share growth rates of 11% for production and 8% for reserves.

As a result of this growth, we have become one of the largest independent oil and gas companies in North America. During 2009, we continued to build off our past successes with a number of key accomplishments, including those discussed below.


• Drilling Success — We drilled 1,135 gross wells with a 99% success rate. As a result of our success with the drill-bit, we replaced approximately 213% of our 2009 production. We added 496 MMBoe of proved reserves during the year with extensions, discoveries and performance revisions. These reserve additions were more than double the 233 MMBoe we produced during 2009. Besides increasing our proved reserves, our drilling success was also the main driver of our 5% production growth in 2009.

• Barnett Shale — We drilled 336 wells in the Barnett Shale field in north Texas in 2009, bringing our total producing wells in the field to almost 4,200 at year end. We exited 2009 with net Barnett Shale production at just over one Bcf of natural gas equivalent per day. We are currently running 16 operated drilling rigs in the Barnett and expect to drill 370 wells in the field in 2010.

• Cana-Woodford Shale — We drilled 47 successful wells in the Cana-Woodford Shale in western Oklahoma in 2009. We also increased our net production from this important new shale-gas resource by nearly 500% to an average of 39 MMcf of natural gas equivalent per day. We have increased our lease position in the Cana-Woodford Shale to 118,000 net acres and expect to drill approximately 85 wells in the field in 2010.

• Haynesville Shale — We drilled eight Haynesville Shale wells in the greater Carthage area of east Texas in 2009. These wells have significantly de-risked our 110,000 net Haynesville Shale acres in the Carthage area.

• Jackfish — In Canada, our 100-percent owned Jackfish oil sands project in Alberta was operational throughout 2009. As measured by production per well and steam-to-oil ratio, Jackfish is one of Canada’s most commercially successful steam-assisted gravity drainage projects. In late 2009, Jackfish’s gross production reached 33.7 MBbls of oil per day. The addition of four more producing wells is expected to push production to the facility’s capacity of 35 MBbls per day in early 2010.

Construction continued throughout 2009 on a second phase of the Jackfish project. Jackfish 2 is also sized to produce 35 MBbls of oil per day and will commence operations in 2011. We expect to file a regulatory application for a third phase of the project in the third quarter of 2010.

• Brazil — Offshore Brazil, we participated in two significant deepwater discoveries in 2009. The Devon-operated Itaipu exploratory discovery followed a successful appraisal of the 2008 Wahoo discovery. Both Itaipu and Wahoo are pre-salt prospects located in the Campos Basin.

Employees

As of December 31, 2009, we had approximately 5,400 employees. We consider labor relations with our employees to be satisfactory. We have not had any work stoppages or strikes pertaining to our employees.