CEO Letter

BUILDING MOMENTUM FOR THE FUTURE

I’m proud of what the Devon team accomplished in 2021 and our environmental, social and governance (ESG) momentum. After merging two legacy companies in January 2021, Devon became the #1 performing stock on the S&P 500 by successfully executing our disciplined business model and creating value for our shareholders. Importantly, this was accomplished with integrity, including investing in and safeguarding our employees, being environmental stewards and supporting our communities.

While celebrating the 50th year since Devon’s founding, we also explored what it will take to be a sustainable oil and natural gas producer for the next half century. It has become clear to us that the world needs an “all of the above” approach to energy production in order to meet growing global energy demand and to meet global climate change goals. The world also needs affordable, reliable and sustainable supplies of energy, including oil and gas, to meet this growing demand. Affordability, reliability and sustainability are equally important, and will have to be balanced with decarbonization efforts until alternative energy sources can be delivered consistently on a global scale. As the crisis in Ukraine and pandemic show, energy supply disruptions can cause severe impacts on the economic stability of our families, communities, nation and counterparts around the world.

Our core business of delivering responsibly produced oil and natural gas is not only sustainable, but essential to maintain our nation’s energy security and to improve the quality of human lives around the world. We are committed to producing low-cost, clean, safe and reliable energy to contribute to energy security and create shareholder value. Our employees, shareholders, contractors and other stakeholders hold us accountable for financial success, as well as for meeting expectations and targets for ESG performance and communicating our progress transparently.

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Our balanced approach to delivering sustainable energy the world needs

Key beliefs:

  • Addressing climate change requires the world to decarbonize while at the same time ensure access to secure, affordable and reliable energy.
  • Access to secure, equitable, affordable and reliable energy improves the quality of human lives around the world.
  • The world needs an “all of the above” approach to energy production to meet the demands of a growing global population and lower carbon goals.
  • Oil and natural gas can and must be part of any lower carbon future.
  • As the world continues to change, Devon will adapt and evolve in a way that enables us to continue to be an industry leader.
  • We are proud of the work we do and the way we do it.

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Focusing on environmental targets

Devon takes the same disciplined, thoughtful approach to ESG performance that we take to operational, financial and strategic performance. To continuously improve, we set targets, apply technologies and best practices to meet them, measure progress and take intelligent risks based on what we learn. We also set annual corporate goals for environment, health and safety (EHS) and community engagement, enabling our employees to share in our success.

2021年6月,我们将积极的环境目标ets to lower the carbon intensity of our operations and proactively address climate-related risks and opportunities. Our team quickly integrated data sets from both legacy companies and aligned to meet our targets. Through ongoing emissions reduction efforts, our company-wide greenhouse gas (GHG) emissions for Scope 1 and Scope 2 location-based emissions fell by 19% and methane emissions fell by 13% compared to 2020. Our flaring intensity is headed in the right direction, especially in the Delaware Basin and Williston Basin, falling 36% in 2021 to 0.9%. Devon is evaluating advanced technologies to help us keep detecting, measuring, mitigating and ultimately verifying our emissions performance as we advance toward our target of net zero GHG emissions for Scopes 1 and 2 by 2050.

We have a target to use 90% non-fresh water in our most active Delaware Basin operating areas, where our use of recycled water increased 65% to 61 million barrels in 2021 compared to 2020. Since 2015, Devon has reused over 200 million barrels of water from our water treatment facilities.

Supporting our employees and communities

To fulfill our social responsibility to keep our workforce safe, we focus on our safety culture and take steps to find and retain contractors who meet our high EHS standards and comply with our requirements. Thanks to a team effort, our 2021 serious incidents and fatalities (SIF) rate of 0.07 per 200,000 hours worked was 36% lower than our 2020 rate and surpassed our goal for the year.

By taking ownership of our performance, Devon employees made our 2021 successes possible. We value our employees and will invest in their success to build the talented workforce our company needs in the future. The Devon leadership team is committed to balancing what our employees need as individuals with the best interests of our company, and to fostering a truly diverse, equitable and inclusive workplace where each employee feels a sense of belonging.

Devon focuses on building strong, safe communities and an educated workforce where we live and work. In 2021, we expanded our established STEM (science, technology, engineering and math) education programs, and with valuable input from our Diversity, Equity and Inclusion (DEI) Team, made our first Inclusion and Equity Grants in Oklahoma City. The grant program was so successful that we more than doubled our total investment and added organizations in the New Mexico Delaware Basin in 2022. We continue to look for meaningful ways to have a positive impact on children, families and communities.

Challenging ourselves to do better

在德文郡,我们不断学习和不抵抗课题ess. Engaging constructively with a wide range of stakeholders exposes us to ideas and solutions that help us improve. Our company is now one of the largest U.S. energy producers, and this brings new opportunities to listen, learn and share the Devon perspective. With our seat at the table, Devon is joining our industry in underscoring the need for clear and consistent energy policy and sensible regulations that allow us to deliver the affordable, accessible energy we’ll need for many decades. We’re committed to conducting our core business in the right way for the benefit of our stakeholders.

Devon has the full support of our board of directors to be innovative and take bold, progressive action. The board approved our ESG improvement targets, and its Governance, Environmental and Public Policy (GEPP) Committee maintains an ongoing dialogue with our subject matter experts about our performance against the targets. The board takes an active interest in how we’re developing our workforce for the future, in fact, all of our female directors are championing Devon’s women leaders through mentorship. We’re grateful for the board’s counsel and their confidence in our capabilities.

In our pursuit of ESG excellence, Devon is heading in the right direction. We’re making progress and preparing for a long future as a climate-conscious, low-cost, low-carbon energy producer. We know there’s more to do to safely and responsibly deliver energy needed for both the basic necessities of modern life and to raise the standard of living for millions of people worldwide. Devon employees embrace the possibilities.

Thank you for your interest in what Devon is doing to improve our environmental, social and governance performance. We take stakeholder feedback to heart and would appreciate your thoughts on this report to help us meet your information needs.

Sincerely,

Richard E. “Rick” Muncrief
President and CEO

Core to our culture:

Integrity

Integrity is a key ingredient in Devon’s success. It is vital that stakeholders trust us to deliver results the right way.

Devon's Values

Message from Our Board

MEETING TARGETS AND STAKEHOLDER EXPECTATIONS

At Devon, we strongly believe that the company’s business performance builds from our environmental, social and governance (ESG) efforts. That’s why ESG topics are at the heart of our board’s deliberations. We are keenly focused on Devon’s efforts on environmental, safety, community and diversity, equity and inclusion initiatives. We review and measure the execution of our ESG initiatives and evaluate future actions. We are proud of our efforts and contend that the hard, creative work of our employees in these areas was a critical component in driving the company’s stock price performance to the top spot on the S&P 500 for 2021.

Acknowledging that ESG views and priorities continually evolve, we welcome increasing stakeholder scrutiny in these areas. With ambitious goals in place, Devon is engaging with a broad spectrum of stakeholders, including many who have differing perspectives on how to reach climate change objectives. The board believes the resulting healthy dialogue deepens Devon’s understanding and strengthens the company for the future.

The board and our Governance, Environmental and Public Policy (GEPP) Committee, in particular, view our ESG initiatives as critical opportunities for our company and our industry to remain essential contributors to the world’s energy needs. We believe that addressing ESG initiatives, particularly emissions reductions and workforce trends, is an imperative. We’ve endorsed and regularly monitor the company’s decarbonization targets, committing capital investments, technology deployments, on-going operational measures and enhanced internal resources to them. Devon’s pursuit of aggressive environmental targets is wholly compatible with delivering the strong business results that our shareholders expect.

德文郡的员工致力于做正确的things with integrity. Diverse views and backgrounds lie at the heart of this company: without them, employees and contractors can’t challenge assumptions or share the bold ideas required in this swiftly changing industry. In our board and committee deliberations, we continually challenge how the company can foster a deeper commitment to a diverse, equitable and inclusive workplace.

We believe that Devon — well into the future — will produce oil and natural gas in a safe, environmentally responsible, financially prudent and sustainable manner. The GEPP Committee invites you to share your feedback on how we can continue to improve our ESG efforts. Thank you for taking the time to learn about Devon’s focus in these areas, as we continue to deliver energy for the world’s needs.

Sincerely,

Dave Hager
Executive Chair


Barbara M. Baumann
Chair of Governance, Environmental and Public Policy Committee