Bond Devonshire Energy 7.95% ( US251799AA02 ) in USD

Devonshire Energy

117.588 % ▲

United States

US251799AA02 ( in USD )

7.95% per year ( payment 2 times a year)

14/04/2032

Prospectus brochure of the bond Devon Energy US251799AA02 en USD 7.95%, maturity 14/04/2032

251799AA0

BBB ( Lower medium grade - Investment-grade )

Baa2 ( Lower medium grade - Investment-grade )

15/04/2026 ( In 10 days )

Devon Energy Corporation is an independent energy company engaged in the exploration, development, and production of oil and natural gas, primarily in the United States.

The Bond issued by Devonshire Energy ( United States ) , in USD, with the ISIN code US251799AA02, pays a coupon of 7.95% per year.
The coupons are paid 2 times per year and the Bond maturity is 14/04/2032

The Bond issued by Devonshire Energy ( United States ) , in USD, with the ISIN code US251799AA02, was rated Baa2 ( Lower medium grade - Investment-grade ) by Moody's credit rating agency.

The Bond issued by Devonshire Energy ( United States ) , in USD, with the ISIN code US251799AA02, was rated BBB ( Lower medium grade - Investment-grade ) by Standard & Poor's ( S&P ) credit rating agency.

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-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: [email protected]
Originator-Key-Asymmetric:
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<SEC-DOCUMENT>0000950134-02-002382.txt : 20020322
<SEC-HEADER>0000950134-02-002382.hdr.sgml : 20020322
ACCESSION NUMBER:
0000950134-02-002382
CONFORMED SUBMISSION TYPE:
424B2
PUBLIC DOCUMENT COUNT:
1
FILED AS OF DATE:
20020321
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME:
DEVON ENERGY CORP/DE
CENTRAL INDEX KEY:
0001090012
STANDARD INDUSTRIAL CLASSIFICATION:
CRUDE PETROLEUM & NATURAL GAS [1311]
IRS NUMBER:
731567067
STATE OF INCORPORATION:
DE
FISCAL YEAR END:
1231
FILING VALUES:
FORM TYPE:
424B2
SEC ACT:
1933 Act
SEC FILE NUMBER:
333-83156
FILM NUMBER:
02580427
BUSINESS ADDRESS:
STREET 1:
20 N BROADWAY
STREET 2:
STE 1500
CITY:
OKLAHOMA CITY
STATE:
OK
ZIP:
73102
BUSINESS PHONE:
4052353611
MAIL ADDRESS:
STREET 1:
20 N BROADWAY
STREET 2:
STE 1500
CITY:
OKLAHOMA CITY
STATE:
OK
ZIP:
73102
FORMER COMPANY:
FORMER CONFORMED NAME:
DEVON DELAWARE CORP
DATE OF NAME CHANGE:
19990707
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME:
DEVON FINANCING CORP ULC
CENTRAL INDEX KEY:
0001167889
IRS NUMBER:
000000000
STATE OF INCORPORATION:
A5
FISCAL YEAR END:
1231
FILING VALUES:
FORM TYPE:
424B2
SEC ACT:
1933 Act
SEC FILE NUMBER:
333-83156-01
FILM NUMBER:
02580428
BUSINESS ADDRESS:
STREET 1:
20 NORTH BROADWAY
CITY:
OKLAHOMA CITY
STATE:
OK
ZIP:
73102-8260
BUSINESS PHONE:
4055524506
MAIL ADDRESS:
STREET 1:
20 NORTH BROADWAY
CITY:
OKLAHOMA CITY
STATE:
OK
ZIP:
73102-8260
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME:
DEVON FINANCING TRUST II
CENTRAL INDEX KEY:
0001128384
IRS NUMBER:
736324936
FILING VALUES:
FORM TYPE:
424B2
SEC ACT:
1933 Act
SEC FILE NUMBER:
333-83156-02
FILM NUMBER:
02580429
BUSINESS ADDRESS:
STREET 1:
20 NORTH BROADWAY
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STREET 2:
SUITE 1500
CITY:
OKLAHOMA CITY
STATE:
OK
ZIP:
73102-1260
BUSINESS PHONE:
4052353611
MAIL ADDRESS:
STREET 1:
C/O DEVON ENERGY CORP
STREET 2:
20 N. BROADWAY #1500
CITY:
OKLAHOMA CITY
STATE:
OK
ZIP:
73102
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B2
<SEQUENCE>1
<FILENAME>d95047b2e424b2.txt
<DESCRIPTION>PROSPECTUS - FILE NO. 333-83156
<TEXT>
<PAGE>
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-83156
333-83156-01
Prospectus Supplement 333-83156-02
March 20, 2002
(To Prospectus dated March 5, 2002)
$1,000,000,000
[DEVON LOGO]
7.95% SENIOR DEBENTURES DUE 2032
Our 7.95% Senior Debentures due 2032, will mature on April 15, 2032. We
will pay interest on the debentures semiannually in arrears on April 15 and
October 15 of each year, beginning October 15, 2002. We may redeem some or all
of the debentures at any time and from time to time before their maturity date
at our option at a make-whole redemption price, together with accrued and unpaid
interest, if any, to the redemption date.
The debentures will be our general unsecured obligations and will rank
equally in right of payment with all our existing and future unsecured and
unsubordinated debt.
We do not intend to list the debentures on any securities exchange.
---------------------
<Table>
<Caption>
PROCEEDS, BEFORE
PUBLIC OFFERING UNDERWRITING EXPENSES, TO
PRICE DISCOUNT DEVON
--------------- ------------ ----------------
<S> <C> <C> <C>
Per Debenture................................... 99.481% 0.875% 98.606%
Total......................................... $$994,810,000 $$8,750,000 $986,060,000
</Table>
The public offering price set forth above does not include accrued
interest, if any. Interest on the debentures will accrue from March 25, 2002.
INVESTING IN THE DEBENTURES INVOLVES RISKS. YOU SHOULD CAREFULLY READ THE
ENTIRE ACCOMPANYING PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT, INCLUDING THE
SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE 4 OF THE ACCOMPANYING
PROSPECTUS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these debentures or determined if this
prospectus supplement and the accompanying prospectus are truthful or complete.
Any representation to the contrary is a criminal offense.
The debentures will be delivered to investors on or about March 25, 2002 in
book-entry form only through the facilities of The Depository Trust Company.
---------------------
Joint Book-Running Managers
BANC OF AMERICA SECURITIES LLC UBS WARBURG
---------------------
ABN AMRO INCORPORATED
BMO NESBITT BURNS
CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANC ALEX. BROWN
JPMORGAN
RBC CAPITAL MARKETS
SALOMON SMITH BARNEY
WACHOVIA SECURITIES
---------------------
<Table>
<S> <C> <C>
BNY CAPITAL MARKETS, INC. CREDIT LYONNAIS SECURITIES TOKYO-MITSUBISHI INTERNATIONAL PLC
</Table>
<PAGE>
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No person is authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
prospectus supplement or the accompanying prospectus and, if given or made, such
information or representations must not be relied upon as having been
authorized. This prospectus supplement and the accompanying prospectus do not
constitute an offer to sell or the solicitation of an offer to buy any
securities other than the securities described in this prospectus supplement or
an offer to sell or the solicitation of an offer to buy those securities in any
circumstances in which such offer or solicitation is unlawful. Neither the
delivery of this prospectus supplement or the accompanying prospectus, nor any
sale made hereunder and thereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of Devon since the date
hereof or that the information contained or incorporated by reference herein or
therein is correct as of any time subsequent to the date of such information.
For purposes of this prospectus supplement and the accompanying prospectus,
unless the context otherwise indicates, references to "us," "we," "our," "ours,"
and "Devon" refer to Devon Energy Corporation and its subsidiaries.
TABLE OF CONTENTS
<Table>
<S> <C>
Prospectus Supplement
Devon Energy Corporation.................................... S-3
Use of Proceeds............................................. S-4
Capitalization.............................................. S-5
Selected Financial Data..................................... S-6
Ratio of Earnings to Fixed Charges.......................... S-9
Description of the Debentures............................... S-10
Underwriting................................................ S-13
Legal Matters............................................... S-14
Where You Can Find More Information......................... S-14
Prospectus
About this Prospectus....................................... i
Summary..................................................... 1
Risk Factors................................................ 4
Use of Proceeds............................................. 8
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends........................................... 9
Description of Capital Stock................................ 9
Description of Undesignated Preferred Stock................. 11
Description of Debt Securities.............................. 12
Description of Trust Preferred Securities................... 30
Description of Trust Preferred Securities Guarantees........ 37
Description of Stock Purchase Contracts and Units........... 39
Book-Entry Securities....................................... 39
Plan of Distribution........................................ 41
Legal Matters............................................... 42
Experts..................................................... 42
Where You Can Find More Information......................... 43
Cautionary Statement Concerning Forward-Looking
Statements................................................ 44
</Table>
S-2
<PAGE>
DEVON ENERGY CORPORATION
GENERAL
We are an independent energy company engaged primarily in oil and gas
exploration, development and production, the acquisition of producing
properties, transportation of oil and gas and processing of natural gas.
We currently own oil and gas properties concentrated in five operating
divisions: the Permian/ Mid-Continent, Rocky Mountain and Gulf divisions,
including onshore properties in the continental United States and offshore
properties primarily in the Gulf of Mexico; Canada, including properties in the
Western Canadian Sedimentary Basin in Alberta and British Columbia; and the
International Division, which includes properties in Argentina, Azerbaijan,
China, Indonesia and West Africa. In addition, Devon created a sixth operating
division to incorporate its U.S. midstream activities with its marketing
activities.
At December 31, 2001, Devon's estimated proved reserves were 1,620 million
equivalent barrels of oil, or MMBoe, of which 56% were natural gas reserves and
44% were oil and natural gas liquids, or NGLs reserves. The present value of
pre-tax future net revenues discounted at 10% per year assuming essentially
constant prices of such reserves was $7.2 billion. After taxes, the present
value was $5.3 billion. Devon is one of the top five public independent oil and
gas companies based in the United States, as measured by oil and gas reserves.
STRATEGY
Our primary objectives are to build reserves, production, cash flow and
earnings per share by (a) acquiring oil and gas properties, (b) exploring for
new oil and gas reserves and (c) optimizing production and value from existing
oil and gas properties. Devon's management seeks to achieve these objectives by
(a) concentrating its properties in core areas to achieve economies of scale,
(b) acquiring and developing high profit margin properties, (c) continually
disposing of marginal and non-strategic properties, (d) balancing reserves
between oil and gas, (e) maintaining a high degree of financial flexibility, and
(f) enhancing the value of Devon's production through midstream activities.
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DEVELOPMENT OF BUSINESS
In August and September 2001, Devon announced two major acquisitions that
eventually would almost double its total proved reserves to over two billion
equivalent barrels of oil, or Boe. On August 13, 2001, Devon announced an
agreement to merge with Mitchell Energy & Development Corp. ("Mitchell"). The
terms of this merger called for Devon to issue approximately 30 million shares
of Devon common stock and to pay $1.6 billion in cash to the Mitchell
stockholders. Although the merger agreement was signed in August 2001, the
transaction did not close until January 24, 2002. Therefore, this merger did not
affect Devon's 2001 reported results.
Following the Mitchell merger announcement, Devon announced on September 4,
2001, that it had entered into an agreement to acquire Anderson Exploration Ltd.
("Anderson") for approximately $3.5 billion in cash. This acquisition closed on
October 15, 2001, and therefore Anderson's results of operations are included in
Devon's results of operations for the last two and one-half months of the year.
To fund the cash portions of these two acquisitions, as well as to pay
related transaction costs and retire certain long-term debt assumed from
Mitchell and Anderson, Devon entered into long-term debt obligations in October
2001 that totaled $6 billion. As part of this $6 billion total, Devon Financing
Corporation, U.L.C., a wholly owned Canadian financing subsidiary of Devon,
issued $3 billion of unsecured notes and debentures, which are fully and
unconditionally guaranteed by Devon, consisting of $1.75 billion aggregate
principal amount of 6.875% Notes due September 30, 2011 and $1.25 billion
aggregate principal amount of 7.875% Debentures due September 30, 2031.
The remaining $3 billion of the $6 billion of long-term debt is in the form
of a credit facility that bears interest at floating rates. At December 31,
2001, $1 billion of this facility was borrowed. Following
S-3
<PAGE>
the consummation of the Mitchell transaction, the $3 billion facility was fully
borrowed. Principal payments due on this debt are $0.2 billion in October 2004,
$1.2 billion in 2005 and $1.6 billion in 2006. The 2005 and 2006 payments are
divided into equal payments due in April and October of those years. The
interest rate on this debt at December 31, 2001 was 2.9%.
USE OF PROCEEDS
We intend to use the approximately $985.8 million of net proceeds from this
offering (after the payment of offering expenses) to:
- repay borrowings of $800 million outstanding under our $3 billion
credit facility; and
- reduce our outstanding commercial paper borrowings.
Indebtedness under our $3 billion credit facility, which bears interest at
a floating rate based on LIBOR plus a variable margin, was incurred in
connection with the acquisition of Anderson and Mitchell and matures in
installments beginning in October 2004. As of March 18, 2002, the interest rate
under our $3 billion credit facility was 2.86%. As of March 18, 2002, our
outstanding commercial paper borrowings had an interest rate of 2.58% and
matured within 45 days.
S-4
<PAGE>
CAPITALIZATION
The following table sets forth Devon's capitalization as of December 31,
2001: (1) on an historical basis; (2) on a pro forma basis giving effect to the
acquisition of Mitchell and; (3) on a pro forma as adjusted basis giving effect
to the acquisition of Mitchell and this offering and the application of the net
proceeds of this offering.
<Table>
<Caption>
AS OF DECEMBER 31, 2001
------------------------------------
PRO PRO FORMA
HISTORICAL FORMA AS ADJUSTED
---------- --------- -----------
(in millions, except for ratios)
<S> <C> <C> <C>
Cash and cash equivalents................................... $ 193 $ 208 $ 269
====== ======= =======
Current maturities of long-term debt........................ -- 63 63
------ ------- -------
Long-term debt:
Historical long-term debt................................. 6,589 8,531 7,606
Securities offered hereby................................. -- -- 1,000
------ ------- -------
Total long term debt, less current maturities.......... 6,589 8,531 8,606
------ ------- -------
Total debt............................................. 6,589 8,594 8,669
------ ------- -------
Stockholders' equity:
Preferred stock........................................... 1 1 1
Common stock.............................................. 13 16 16
Additional paid-in capital................................ 3,610 5,140 5,140
Accumulated deficit....................................... (147) (245) (245)
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Accumulated other comprehensive loss...................... (28) (28) (28)
Treasury stock............................................ (190) (190) (190)
------ ------- -------
Total stockholders' equity............................. 3,259 4,694 4,694
------ ------- -------
Total capitalization................................. $9,848 $13,288 $13,363
====== ======= =======
Total debt to total capitalization ratios(1)................ 60.5% 59.5% 59.7%
</Table>
- ---------------
(1) The total debt to total capitalization ratios shown above are calculated in
the manner set forth in Devon's revolving credit facilities and its $3
billion credit facility. These facilities provide for adjustments to total
long-term debt and total stockholders' equity from those amounts shown above
for purposes of calculating the total debt to total capitalization ratio.
S-5
<PAGE>
SELECTED FINANCIAL DATA
The following selected historical financial information has been derived
from the audited financial statements of Devon for the years 1997 through 2001.
The unaudited pro forma financial information as of and for the year ended
December 31, 2001 has been prepared by us and gives effect to the Mitchell and
Anderson acquisitions as if they had occurred at the beginning of the period
presented. The summary unaudited pro forma financial information does not
purport to be indicative of the combined financial position or results of
operations of future periods or indicative of results that would have occurred
had the transactions discussed above occurred on the date indicated. This
information is only a summary. You should read it along with Devon's historical
financial statements and related notes and the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in Devon's annual report on Form 10-K for the year ended December 31,
2001 and other information on file with the Securities and Exchange Commission
and incorporated by reference into the accompanying prospectus. See "Where You
Can Find More Information" in the accompanying prospectus.
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
PRO FORMA
1997 1998 1999 2000 2001 2001
------ ------ ------ ------ ------ ---------
(in millions, except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Oil sales............................... $ 555 $ 310 $ 561 $1,079 $ 958 $1,232
Gas sales............................... 375 347 628 1,485 1,890 3,145
NGL sales............................... 36 25 68 154 132 308
Gas service............................. -- -- -- -- -- 1,169
Other revenue........................... 48 24 21 66 95 92
------ ------ ------ ------ ------ ------
Total revenues.......................... 1,014 706 1,278 2,784 3,075 5,946
------ ------ ------ ------ ------ ------
Lease operating expenses................ 266 229 299 441 531 769
Transportation costs.................... 20 23 34 53 83 155
Production taxes........................ 31 23 45 103 117 149
Gas service costs and expenses.......... -- -- -- -- -- 1,038
Depreciation, depletion and amortization
of property and equipment............. 286 243 406 693 876 1,393
Amortization of goodwill................ -- -- 16 41 34 34
General and administrative expenses..... 53 45 81 93 111 202
Expenses related to mergers............. -- 13 17 60 1 1
Interest expense........................ 41 43 109 155 220 508
Effects of changes in foreign currency
exchange rates........................ 6 16 (13) 3 13 21
Distributions on preferred securities of
subsidiary trust...................... 10 10 7 -- -- --
Change in fair value of financial
instruments........................... -- -- -- -- 2 16
Reduction of carrying value of oil and
gas properties........................ 641 423 476 -- 1,003 1,155
------ ------ ------ ------ ------ ------
Total costs and expenses................ 1,354 1,068 1,477 1,642 2,991 5,441
------ ------ ------ ------ ------ ------
Earnings (loss) before income taxes,
minority interest, extraordinary item
and cumulative effect of change in
accounting principle.................. (340) (362) (199) 1,142 84 505
</Table>
S-6
<PAGE>
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
PRO FORMA
1997 1998 1999 2000 2001 2001
------ ------ ------ ------ ------ ---------
(in millions, except per share data and ratios)
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<S> <C> <C> <C> <C> <C> <C>
Income tax expense (benefit):
Current................................. $ 36 $ (4) $ 23 $ 131 $ 71 $ 108
Deferred................................ (163) (122) (72) 281 (41) 68
------ ------ ------ ------ ------ ------
Total................................... (127) (126) (49) 412 30 176
------ ------ ------ ------ ------ ------
Earnings (loss) before minority
interest, extraordinary item and
cumulative effect of change in
accounting principle.................. (213) (236) (150) 730 54 329
Minority interest in Monterey Resources,
Inc. ................................. (5) -- -- -- -- --
------ ------ ------ ------ ------ ------
Earnings (loss) before extraordinary
item and cumulative effect of change
in accounting principle............... (218) (236) (150) 730 54 329
Extraordinary loss...................... -- -- (4) -- -- --
------ ------ ------ ------ ------ ------
Earnings (loss) before cumulative effect
of change in accounting principle..... (218) (236) (154) 730 54 329
Cumulative effect of change in
accounting principle.................. -- -- -- -- 49 49
------ ------ ------ ------ ------ ------
Net earnings (loss)..................... $ (218) $ (236) $ (154) $ 730 $ 103 $ 378
====== ====== ====== ====== ====== ======
Net earnings (loss) applicable to common
shareholders.......................... $ (230) $ (236) $ (158) $ 720 $ 93 $ 368
====== ====== ====== ====== ====== ======
Net earnings (loss) per share before
extraordinary loss and cumulative
effect of change in accounting
principle:
Basic................................. $(3.35) $(3.32) $(1.64) $ 5.66 $ 0.34 $ 2.03
Diluted............................... (3.35) (3.32) (1.64) 5.50 0.34 2.00
Net earnings (loss) per share before
cumulative effect of change in
accounting principle:
Basic................................. (3.35) (3.32) (1.68) 5.66 0.34 2.03
Diluted............................... (3.35) (3.32) (1.68) 5.50 0.34 2.00
Net earnings (loss) per share:
Basic................................. (3.35) (3.32) (1.68) 5.66 0.73 2.35
Diluted............................... (3.35) (3.32) (1.68) 5.50 0.72 2.30
Cash dividends per common share(1)...... 0.09 0.10 0.14 0.17 0.20
Weighted average common shares
outstanding:
Basic................................. 69 71 94 127 128 157
Diluted............................... 75 77 99 132 130 164
</Table>
S-7
<PAGE>
<Table>
<Caption>
DECEMBER 31,
-------------------------------------------------------
PRO FORMA
1997 1998 1999 2000 2001 2001
------ ------ ------ ------ ------- ---------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets........................... $1,965 $1,931 $6,096 $6,860 $13,184 $17,784
Debentures exchangeable into shares of
ChevronTexaco Corporation common
stock............................... -- -- 760 760 649 649
Other long-term debt................... 427 736 1,656 1,289 5,940 7,882
Convertible preferred securities of
subsidiary trust.................... 149 149 -- -- -- --
Stockholders' equity................... 1,007 750 2,521 3,277 3,259 4,694
</Table>
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
PRO FORMA
1997 1998 1999 2000 2001 2001
------ ------ ------ ------- ------- ---------
(in millions, except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOW DATA:
Net cash provided by operating
activities..................... $ 530 $ 334 $ 532 $ 1,619 $ 1,886 $ 3,080
Net cash used in investing
activities..................... (546) (607) (768) (1,173) (5,285) (8,573)
Net cash provided by (used in)
financing activities........... 35 256 377 (390) 3,370 5,188
Modified EBITDA(2,4)............. 644 373 802 2,034 2,232 3,632
Cash margin(3,4)................. 557 324 663 1,748 1,941 3,016
PRODUCTION, PRICE AND OTHER DATA:
Production:
Oil (MMBbls)..................... 32 26 32 43 44 58
Gas (Bcf)........................ 186 198 304 426 498 810
NGL (MMBbls)..................... 3 3 5 7 8 17
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MMBoe(5)......................... 66 62 88 121 135 210
Average prices:
Oil (Per Bbl).................... $17.05 $12.10 $17.67 $ 25.35 $ 21.57 $ 21.42
Gas (Per Mcf).................... 2.01 1.75 2.06 3.49 3.80 3.88
NGL (Per Bbl).................... 12.61 8.09 13.30 20.87 16.98 17.65
Per Boe(5)....................... 14.54 11.05 14.35 22.47 22.05 22.31
Costs per Boe(5):
Operating costs.................. 4.78 4.45 4.31 4.94 5.41 5.11
Depreciation, depletion and
amortization of oil and gas
properties..................... 4.17 3.74 4.46 5.48 6.20 6.08
General and administrative
expenses....................... 0.80 0.74 0.92 0.77 0.82 0.96
</Table>
- -------------------------------------------
(1) Cash dividends per share are presented based on the combined amount of
dividends paid by Devon, Santa Fe Snyder Corporation and Northstar Energy
Corporation in each year. The dividends per share are also based on the
number of shares outstanding in each year assuming the Santa Fe Snyder
merger and the Northstar combination had been consummated as of the
beginning of the earliest year presented. Santa Fe Snyder did not pay any
dividends in any of the years presented. Northstar did not pay any dividends
in 1997 or in 1998 prior to the closing of the Northstar combination.
Because of
S-8
<PAGE>
these facts, the cash dividends per share presented for 1997 through 2000 are
not representative of the actual amounts paid by Devon on an historical basis.
For the years 1997 through 2000, Devon's historical cash dividends per share
were $0.20 in each year.
(2) Modified EBITDA represents earnings before interest (including effects of
changes in foreign currency exchange rates, change in fair value of
financial instruments, and distributions on preferred securities of
subsidiary trust), taxes, depreciation, depletion and amortization and
reduction of carrying value of oil and gas properties.
(3) "Cash margin" equals total revenues less cash expenses. Cash expenses are
all expenses other than the non-cash expenses of depreciation, depletion and
amortization, effects of changes in foreign currency exchange rates, change
in fair value of financial instruments, reduction of carrying value of oil
and gas properties and deferred income tax expense (benefit). Cash 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-operational
effect on a company's "net cash provided by operating activities" as
measured by accounting principles generally accepted in the United States of
America, from 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.
(4) Modified EBITDA is presented because it is commonly accepted in the oil and
gas industry as a financial indicator of a company's ability to service or
incur debt. Cash margin is presented because it is commonly accepted in the
oil and gas industry as a financial indicator of a company's ability to fund
capital expenditures or service debt. Modified EBITDA and cash margin are
also presented because investors routinely request such information.
Management interprets the trends of modified EBITDA and cash margin in a
similar manner as trends in net earnings.
Modified EBITDA and cash margin should be used as supplements to, and not as
substitutes for, net earnings and net cash provided by operating activities
determined in accordance with accounting principles generally accepted in
the United States of America as measures of Devon's profitability or
liquidity. There may be operational or financial demands and requirements
that reduce management's discretion over the use of modified EBITDA and cash
margin. Modified EBITDA and cash margin may not be comparable to similarly
titled measures used by other companies.
(5) Gas volumes are converted to Boe or MMBoe at the rate of six million cubic
feet, or Mcf, of gas 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 and gas prices. The respective prices
of oil, gas and NGLs are affected by market and other factors in addition to
relative energy content.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods set forth
below has been computed on a consolidated basis and should be read in
conjunction with Devon's consolidated financial statements, including the
accompanying notes thereto, incorporated by reference into the accompanying
prospectus.
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges........................ N/A N/A N/A 8.11 1.37
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</Table>
In 1997, 1998 and 1999, earnings were insufficient to cover fixed charges
by $340 million, $362 million and $199 million, respectively.
Our ratios of earnings to fixed charges were computed based on:
- "earnings," which consist of earnings before income taxes, plus fixed
charges; and
- "fixed charges," which consist of interest expense, including
distributions on preferred securities of subsidiary trusts, amortization
of costs relating to indebtedness and the preferred securities of
subsidiary trusts, and one-third of rental expense estimated to be
attributable to interest.
S-9
<PAGE>
DESCRIPTION OF THE DEBENTURES
The following description of the particular terms of the debentures (which
represent a new series of, and are referred to in the accompanying prospectus
as, the "debt securities") supplements and, to the extent inconsistent
therewith, replaces the description of the general terms and provisions of the
debt securities set forth in the accompanying prospectus.
We will issue the debentures under an indenture between us and The Bank of
New York, as trustee, to be dated as of March 1, 2002, as supplemented by a
supplemental indenture to be dated as of March 25, 2002. In this prospectus
supplement, we refer to that indenture as so supplemented as the "indenture".
The terms of the debentures include those set forth in the indenture and those
made a part of the indenture by reference to the Trust Indenture Act of 1939, as
amended.
The following description is a summary of the material provisions of the
debentures and the indenture. It does not restate the indenture in its entirety.
We urge you to read the indenture because it, and not this description, defines
your rights as a holder of debentures. Copies of the indenture are available
upon request from us or the trustee. References to "us," "we," "ours," or
"Devon" in this section of the prospectus supplement are to Devon Energy
Corporation and not its subsidiaries.
GENERAL
We will issue the debentures initially in an aggregate principal amount of
$1,000,000,000. The debentures will be issued in denominations of $1,000 and
integral multiples of $1,000. The debentures will mature on April 15, 2032. We
may issue additional debentures of this series from time to time, without the
consent of the existing holders of the debentures, in compliance with the terms
of the indenture.
Interest on the debentures will:
- accrue at the rate of 7.95% per year;
- accrue from the date of issuance or the most recent interest payment
date;
- be payable in cash semiannually in arrears on each April 15 and
October 15 commencing on October 15, 2002;
- be payable to the holders of record on April 1 and October 1
immediately preceding the related interest payment dates; and
- be computed on the basis of a 360-day year consisting of twelve
30-day months.
If any interest payment date, maturity date or redemption date falls on a
day that is not a business day, the payment will be made on the next business
day with the same force and effect as if made on the relevant interest payment
date, maturity date or redemption date. Unless we default on a payment, no
interest will accrue for the period from and after the applicable interest
payment date, maturity date or redemption date.
The debentures will be our general unsecured obligations and will rank
equally in right of payment with all our other existing and future unsecured and
unsubordinated debt.
Subject to the exceptions, and subject to compliance with the applicable
requirements, set forth in the indenture, we may discharge our obligations under
the indenture with respect to the debentures as described under "Description of
Debt Securities -- Defeasance" in the accompanying prospectus.
PAYMENT AND TRANSFER
The debentures will be issued in the form of one or more permanent global
securities as described in the accompanying prospectus under "Description of
Debt Securities-Global Securities" and registered in the name of a nominee of
The Depository Trust Company, as depositary for the debentures. See "Book-Entry
Securities" in the accompanying prospectus. Beneficial interests in debentures
in global form will be shown on, and transfers of interest in debentures in
global form will be made only through, records
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maintained by the depositary and its participants. Debentures in definitive
form, if any, may be registered, exchanged or transferred at the office or
agency maintained by us for such purpose (which initially will be the corporate
trust office of the trustee located at 101 Barclay Street, New York, New York
10286). Payment of principal, of premium, if any, and interest on debentures in
global form registered in the name of or held by the depositary or its nominee
will be made in immediately available funds to the depositary or its nominee, as
the case may be, as the registered holder of such global security. If any of the
debentures are no longer represented by global securities, all payments on such
debentures will be made at the corporate trust office of the trustee; however,
any payment of interest on such debentures may be made, at our option, by check
mailed directly to registered holders at their registered addresses.
No service charge will be made for any registration of transfer or exchange
of debentures, but we may require payment of a sum sufficient to cover any
transfer tax or other similar governmental charge payable in connection
therewith. We are not required to transfer or exchange any debenture selected
for redemption or any other note for a period of 15 days before any mailing of
notice of debentures to be redeemed.
OPTIONAL REDEMPTION
The debentures will be redeemable by us, in whole or in part, at any time
at a redemption price equal to the greater of:
- 100% of the principal amount of the debentures then outstanding to be
redeemed; or
- the sum of the present values of the remaining scheduled payments of
principal and interest thereon (exclusive of interest accrued to the
date of redemption) from the redemption date to the maturity date
computed by discounting such payments to the redemption date on a
semiannual basis, assuming a 360-day year consisting of twelve 30-day
months, at a rate equal to the sum of 30 basis points plus the
adjusted Treasury rate, as that term is generally used in the
industry, on the third business day prior to the redemption date;
plus, in each case, accrued and unpaid interest, if any, to the redemption
date.
The redemption price will be calculated by Banc of America Securities LLC
or UBS Warburg LLC, as selected by us. If Banc of America Securities LLC or UBS
Warburg LLC is unwilling or unable to make the calculation, we will appoint an
independent investment banking institution of national standing to make the
calculation.
We will mail notice of redemption at least 30 days but not more than 60
days before the applicable redemption date to each holder of the debentures to
be redeemed.
Upon the payment of the redemption price, plus accrued and unpaid interest,
if any, to the date of redemption, interest will cease to accrue on and after
the applicable redemption date on the debentures or portions thereof called for
redemption.
In the case of any partial redemption, selection of the debentures for
redemption will be made by the trustee by such method of random selection as the
trustee shall deem fair and appropriate. Debentures will only be redeemed in
multiples of $1,000 in principal amount. If any debenture is to be redeemed in
part only, the notice of redemption will state the portion of the principal
amount to be redeemed. A new debenture in principal amount equal to the
unredeemed portion of the original debenture will be issued upon the
cancellation of the original debenture.
NO SINKING FUND
We are not required to make mandatory redemption or sinking fund payments
with respect to the debentures.
S-11
<PAGE>
COVENANTS
The covenant limiting our ability to incur liens described in the
accompanying prospectus under the heading "Description of Debt
Securities -- Covenants" and the restrictions on consolidation, merger or sale
of assets described in the accompanying prospectus under the heading
"Description of Debt Securities -- Consolidation, Merger and Sale of Assets"
will apply to the debentures. The indenture does not otherwise limit the amount
of indebtedness or other obligations that we may incur and does not give you the
right to require us to repurchase your debentures upon a change of control.
In addition, the indenture provides that the covenant limiting our ability
to incur liens, the restrictions on consolidation, merger or sale of assets and
certain other non-monetary covenants included in the indenture may be waived or
modified by holders representing at least a majority of all debt securities,
including the debentures, outstanding at any one time under the indenture, and
that, following an "Event of Default" arising from a breach of any of these
provisions, the trustee or holders of not less than 25% in principal amount of
all debt securities, including the debentures, outstanding under the indenture
to which these provisions are applicable may accelerate the maturity of the debt
securities under the indenture. As of the issue date of the debentures, no other
debt securities will be outstanding under the indenture.
EVENTS OF DEFAULT
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In addition to the "Events of Default" described in the accompanying
prospectus under the heading "Description of Debt Securities -- Events of
Default," the following constitutes an "Event of Default" under the indenture in
respect of the debentures:
default in the payment of any principal of our Funded Debt (as defined in
the accompanying prospectus) outstanding in an aggregate principal amount
in excess of $50 million at the stated final maturity thereof or the
occurrence of any other default the effect of which is to cause the stated
final maturity of this Funded Debt to be accelerated, and if:
- the default in payment is not cured within 60 days after written
notice of the default from the trustee or holders of at least 25%
in principal amount of the outstanding debentures; or
- the acceleration is not rescinded or annulled or the default that
caused the acceleration is not cured within 60 days after written
notice of the default from the trustee or holders of at least 25%
in principal amount of the outstanding debentures.
CONCERNING THE TRUSTEE
The Bank of New York is the trustee under the indenture and has been
appointed by us as security registrar and paying agent with regard to the
debentures.
S-12
<PAGE>
UNDERWRITING
We are selling the debentures to the underwriters named in the table below
pursuant to an underwriting agreement dated the date of this prospectus
supplement. We have agreed to sell to each of the underwriters, and each of the
underwriters have severally agreed to purchase, the principal amount of
debentures set forth opposite that underwriter's name in the table below:
<Table>
<Caption>
PRINCIPAL AMOUNT OF
UNDERWRITER DEBENTURES
----------- -------------------
<S> <C>
Banc of America Securities LLC.............................. $ 327,500,000
UBS Warburg LLC............................................. 327,500,000
ABN AMRO Incorporated....................................... 37,500,000
BMO Nesbitt Burns Corp...................................... 37,500,000
Credit Suisse First Boston Corporation...................... 37,500,000
Deutsche Banc Alex. Brown Inc............................... 37,500,000
J.P. Morgan Securities Inc.................................. 37,500,000
RBC Dominion Securities Corporation......................... 37,500,000
Salomon Smith Barney Inc.................................... 37,500,000
First Union Securities, Inc................................. 37,500,000
BNY Capital Markets, Inc.................................... 15,000,000
Credit Lyonnais Securities (USA) Inc........................ 15,000,000
Tokyo-Mitsubishi International plc.......................... 15,000,000
--------------
Total............................................. $1,000,000,000
==============
</Table>
Under the terms and conditions of the underwriting agreement, the
underwriters must buy all of the debentures if they buy any of them. The
underwriting agreement provides that the obligations of the underwriters
pursuant thereto are subject to certain conditions. In the event of a default by
an underwriter, the underwriting agreement provides that, in certain
circumstances, the purchase commitments of the non-defaulting underwriters may
be increased or the underwriting agreement may be terminated. The underwriters
will sell the debentures to the public when and if the underwriters buy the
debentures from us.
The debentures are a new issue of securities with no established trading
market. We do not intend to apply for listing of the debentures on any national
securities exchange. We have been advised by the underwriters that the
underwriters intend to make a market in the debentures but are not obligated to
do so and may stop their market-making at any time without providing any notice.
Liquidity of the trading market for the debentures cannot be assured.
The debentures sold by the underwriters to the public will initially be
offered at the initial public offering price set forth on the cover of this
prospectus supplement. Any debentures sold by the underwriters to securities
dealers may be sold at a discount from the initial public offering price of up
to 0.50% of the principal amount of debentures. Any such securities dealers may
resell any debentures purchased from the underwriters to certain other brokers
or dealers at a discount from the initial public offering price of up to 0.25%
of the principal amount of debentures. If all of the debentures are not sold at
the initial offering price, the underwriters may change the offering price and
other selling terms.
In order to facilitate the offering of the debentures, the underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the debentures. Specifically, the underwriters may over-allot in connection with
the offering, creating a short position in the debentures for their own
accounts. In addition, to cover short positions or to stabilize the price of the
debentures, the underwriters may bid for, and purchase, the debentures in the
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