Analysis of Debt
Total Debt (Carrying Amount)
Devon Energy Corp., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The analysis of the debt data over the five-year period reveals several notable trends and patterns. Overall, the composition and magnitude of debt and finance lease liabilities have exhibited fluctuations that warrant attention from a financial perspective.
- Short-term debt
- Short-term debt data is partially reported, with values available only for 2018 and 2022. In 2018, short-term debt stood at $162 million, while in 2022 it increased to $251 million. This indicates a rise in short-term borrowing in the latest year compared to the earliest year recorded, suggesting a potentially greater reliance on short-term liabilities in recent periods.
- Current finance lease liabilities
- Current finance lease liabilities commenced being reported from 2019 onwards and remained relatively stable at $7 to $8 million annually. The consistency in this category implies stable lease-related obligations without significant growth or reduction during the period.
- Long-term debt
- Long-term debt presents a varying trajectory. Initially, it decreased significantly from $5,785 million in 2018 to $4,294 million in 2019 and remained almost unchanged in 2020 at $4,298 million. However, it increased substantially in 2021 to $6,482 million before slightly declining to $6,189 million in 2022. This pattern suggests a strategic restructuring or refinancing of long-term obligations, with a marked elevation in debt levels starting in 2021.
- Long-term finance lease liabilities
- The long-term finance lease liabilities have shown a gradual but consistent increase, from $240 million in 2019 to $249 million by 2022. This trend indicates a modest growth in lease-related long-term financing over the observed periods.
- Total debt and finance lease liabilities
- Total debt and finance lease liabilities demonstrate a pattern consistent with individual components. Starting at $5,947 million in 2018, the total dropped considerably to $4,541 million in 2019 and remained nearly flat in 2020 at $4,550 million. However, a sharp rise occurred in 2021, reaching $6,737 million, followed by a slight decrease to $6,697 million in 2022. This overall trend reflects the interplay among short-term debt, long-term debt, and lease liabilities, with a notable increase in total liabilities since 2020.
In summary, the data suggest a strategic increase in long-term indebtedness starting in 2021, accompanied by stable finance lease obligations and an uptick in short-term debt as of 2022. The total debt and finance lease liabilities show a recovery and growth trend after an earlier decline between 2018 and 2020, which could reflect changes in the company’s financing strategy or operational requirements.
Total Debt (Fair Value)
| Dec 31, 2022 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Debt | 6,231) |
| Finance lease liabilities | 257) |
| Total debt and finance lease liabilities (fair value) | 6,488) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.97 |
Based on: 10-K (reporting date: 2022-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt and finance lease liabilities: 5.75%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 8.25% | 242) | 20) | |
| 5.25% | 472) | 25) | |
| 5.85% | 485) | 28) | |
| 7.50% | 73) | 5) | |
| 5.25% | 390) | 20) | |
| 5.88% | 325) | 19) | |
| 4.50% | 585) | 26) | |
| 7.88% | 675) | 53) | |
| 7.95% | 366) | 29) | |
| 5.60% | 1,250) | 70) | |
| 4.75% | 750) | 36) | |
| 5.00% | 750) | 38) | |
| 4.20% | 257) | 11) | |
| Total | 6,620) | 381) | |
| 5.75% | |||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × 381 ÷ 6,620 = 5.75%