e424b3
The
information in this preliminary prospectus supplement is not
complete and may be changed. This preliminary prospectus
supplement is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-156025
SUBJECT TO COMPLETION, DATED
JULY 5, 2011
PRELIMINARY
PROSPECTUS SUPPLEMENT dated July 5, 2011
(To Prospectus dated July 5, 2011)
$
Devon Energy
Corporation
$ % Senior
Notes due 2016
$ % Senior
Notes due 2021
$ % Senior
Notes due 2041
We are offering $ aggregate
principal amount of
our % senior notes
due ,
2016, $ aggregate principal amount
of our % senior notes
due ,
2021 and $ aggregate principal
amount of our % senior notes
due ,
2041. We will pay interest on the notes semi-annually in arrears
on
and
of each year,
beginning ,
2011. We may redeem any series of notes in whole or in part at
any time at the redemption prices set forth under
Description of the Notes Optional
Redemption. The notes 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 notes on any securities exchange.
Investing in the notes involves risks. You should carefully
read the entire accompanying prospectus and this prospectus
supplement, including the section entitled Risk
Factors beginning on
page S-1
of this prospectus supplement and in our Annual Report on
Form 10-K
for the year ended December 31, 2010.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these notes
or determined if this prospectus supplement and the accompanying
prospectus are truthful or complete. Any representation to the
contrary is a criminal offense.
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Per 2016
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Per 2021
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Per 2041
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Note
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Total
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Note
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Total
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Note
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Total
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Price to public(1)
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%
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$
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%
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$
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%
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$
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Underwriting discount
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%
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$
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%
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$
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%
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$
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Proceeds, before expenses, to us(1)
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%
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$
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%
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$
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%
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$
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(1) |
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Plus accrued interest, if any, from July , 2011. |
We expect that the notes will be delivered to investors on or
about ,
2011 in book-entry form only through the facilities of The
Depository Trust Company and its participants, including
Clearstream Banking, société anonyme, and
Euroclear Bank S.A./N.V.
Joint
Book-Running Managers
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Goldman,
Sachs & Co. |
Morgan Stanley |
UBS Investment Bank |
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 or in any free writing prospectus filed with the
Securities and Exchange Commission and, if given or made, such
information or representations must not be relied upon as having
been authorized. We take no responsibility for, and can provide
no assurance as to the reliability of, any other information
that others may give you.
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.
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TABLE OF CONTENTS
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Prospectus Supplement
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S-1
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S-1
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S-2
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S-2
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S-6
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S-8
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S-11
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1
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2
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2
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3
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4
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13
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15
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16
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16
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16
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DEVON
ENERGY CORPORATION
Devon is an independent energy company engaged primarily in
exploration, development and production of natural gas and oil.
Our operations are concentrated in various North American
onshore areas in the United States and Canada. We also have
offshore operations located in Angola that are currently in the
process of being divested. To complement our upstream oil and
gas operations in North America, we have a large marketing and
midstream operation. With these operations, we market gas, crude
oil and natural gas liquids (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 to process natural
gas.
We recently confirmed our estimated 2011 combined oil, gas and
NGL production of 236 to 240 MMBoe and announced that we
increased our estimate for our 2011 oil and gas development and
exploration capital expenditures to be between $5.5 billion
and $5.9 billion. Please see Risk Factors below
and Forward-Looking Estimates under Item 7 of
our Annual Report on Form 10-K for the year ended
December 31, 2010 for a further discussion of these
calculations and limitations of these estimates.
Our principal and administrative offices are located at 20 North
Broadway, Oklahoma City, Oklahoma
73102-8260.
Our telephone number at that location is
(405) 235-3611.
RISK
FACTORS
An investment in the notes is subject to risk. Before you decide
to invest in the notes, you should carefully consider the
specific factors discussed below, together with all the other
information contained in this prospectus supplement, the
accompanying prospectus as well as the documents incorporated by
reference herein or therein. For further discussion of the
risks, uncertainties and assumptions relating to our business,
please see the discussion under the captions Risk
Factors and Information Regarding Forward-Looking
Statements included in our Annual Report on
Form 10-K
for the year ended December 31, 2010, as updated by annual,
quarterly and other reports and documents that we file with the
SEC, which are incorporated by reference in this prospectus
supplement and the accompanying prospectus.
The
notes do not restrict our ability to incur additional debt or
prohibit us from taking other actions that could negatively
impact holders of the notes.
We are not restricted under the terms of the notes or the
indenture governing the notes from incurring additional debt and
other obligations, including debt and other obligations that
rank equal in right of payment with the notes. Although the
indenture limits our ability to issue secured debt without also
securing the notes and to consolidate with or merge into, or
convey or otherwise transfer or lease our properties and assets
substantially as an entirety to, any person, these limitations
are subject to a number of exceptions. See Description of
Debt Securities Covenants in the accompanying
prospectus.
Our
ability to service our debt, including the notes, will be
dependent upon the earnings of our subsidiaries and the
distribution of those earnings to us. The notes are effectively
subordinated to any existing and future debt of our
subsidiaries.
The notes are obligations exclusively of Devon Energy
Corporation. Our operations are conducted almost entirely
through our subsidiaries. Accordingly, our cash flow and our
consequent ability to service our debt, including the notes, are
dependent upon the earnings of our subsidiaries and the
distribution of those earnings to us, whether by dividends,
loans or otherwise. The payment of dividends and the making of
loans and advances to us and our right to receive assets of any
of our subsidiaries upon their liquidation or reorganization,
and the consequent right of the holders of the notes to
participate in those assets, will be effectively subordinated to
the claims of that subsidiarys creditors, including trade
creditors, except to the extent that we are recognized as a
creditor of such subsidiary, in which case our claims would
still be subordinate to any liens on the assets of such
subsidiary and any indebtedness of such subsidiary senior to
ours. As of March 31, 2011, we had total consolidated
indebtedness with a carrying value of approximately
$6.8 billion, none of which was secured. This total
includes indebtedness of our subsidiaries of approximately
$3.4 billion, excluding intercompany debt and trade
payables.
S-1
At certain times we may redeem all or a portion of the
notes at our option at a redemption price equal to 100% of the
principal amount of such notes, plus accrued and unpaid interest
to, but not including, the redemption date, which may adversely
affect your return.
As described under Description of the Notes
Optional Redemption, at certain times we have the right to
redeem the notes of any series in whole or in part, at our
option at a redemption price equal to 100% of the principal
amount of such notes, plus accrued and unpaid interest to, but
not including, the redemption date. We may choose to exercise
this redemption right when prevailing interest rates are
relatively low. As a result, you generally will not be able to
reinvest the redemption proceeds in a comparable security at an
effective interest rate as high as that of the notes.
An
active trading market for the notes may not
develop.
The notes of each series are a new issue of securities with no
established trading market, and we do not intend to list them on
any securities exchange or automated quotation system. As a
result, an active trading market for the notes may not develop,
or if one does develop, it may not be sustained. If an active
trading market fails to develop or cannot be sustained, you may
not be able to resell your notes at their fair market value or
at all.
USE OF
PROCEEDS
The net proceeds of this offering, after discounts and expenses,
are estimated to be approximately
$ . We intend to use substantially
all of the net proceeds to repay our $1.75 billion
aggregate principal amount of 6.875% senior notes due 2011
upon maturity in September 2011 and to use the remainder for
general corporate purposes. Prior to the repayment of the
6.875% senior notes due 2011, the net proceeds may be
invested temporarily in short-term marketable securities or
applied to repay commercial paper as it comes due. If we apply
the proceeds to repay commercial paper, we intend to issue
additional commercial paper prior to the maturity of the
6.875% senior notes due 2011. As of March 31, 2011,
our average borrowing rate on our $1,197 million of
commercial paper borrowings was 0.30 percent.
DESCRIPTION
OF THE NOTES
The following description of the particular terms of the
$ % senior notes
due ,
2016 (the 2016 notes), the
$ % senior notes
due ,
2021 (the 2021 notes) and the
$ % senior notes
due ,
2041 (the 2041 notes and, collectively with the 2016
notes and the 2021 notes, the notes) (which each
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 notes under an indenture between us and UMB
Bank, National Association, as trustee, to be dated as of
July , 2011, as supplemented by a supplemental
indenture to be dated as of July , 2011. In
this prospectus supplement, we refer to that indenture as so
supplemented as the indenture. The terms of the
notes 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 notes 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 notes. 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
The 2016 notes will:
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accrue interest at the rate of %
per year;
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S-2
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be initially limited to $
aggregate principal amount;
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be issued in denominations of $2,000 and integral multiples of
$1,000; and
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mature
on ,
2016.
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The 2021 notes will:
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accrue interest at the rate of %
per year;
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be initially limited to $
aggregate principal amount;
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be issued in denominations of $2,000 and integral multiples of
$1,000; and
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mature
on ,
2021.
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The 2041 notes will:
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accrue interest at the rate of %
per year;
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be initially limited to $
aggregate principal amount;
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be issued in denominations of $2,000 and integral multiples of
$1,000; and
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mature
on ,
2041.
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Interest on the notes will:
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accrue from the date of issuance or the most recent interest
payment date;
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be payable in cash semiannually in arrears on
each
and
commencing
on ,
2011;
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be payable to the holders of record
on
and
immediately preceding the related interest payment
dates; and
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be computed on the basis of a
360-day year
consisting of twelve
30-day
months.
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There is no limit on the aggregate principal amount of notes
that we may issue. Also, we reserve the right, from time to
time, in compliance with the terms of the indenture and without
the consent of any holders of any of the notes, to reopen any
series of notes by issuing additional 2016 notes, 2021 notes or
2041 notes, as the case may be. Any such additional 2016 notes,
2021 notes or 2041 notes would have terms identical to the
outstanding 2016 notes, 2021 notes or 2041 notes, as the case
may be (except the date of issuance, the date interest begins to
accrue and, in certain circumstances, the first interest payment
date), so that such additional 2016 notes, 2021 notes or 2041
notes shall be consolidated with, form a single series with, and
increase the aggregate principal amount of, the 2016 notes, 2021
notes or 2041 notes, as the case may be; provided that if the
additional 2016 notes, 2021 notes or 2041 notes are not fungible
with the outstanding 2016 notes, 2021 notes and 2041 notes,
respectively, for United States federal income tax purposes, the
additional notes will have a separate CUSIP number.
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.
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 notes as described under Description of Debt
Securities Defeasance in the accompanying
prospectus.
The notes 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.
S-3
Payment
and Transfer
The notes 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 notes, and
its participants, including Clearstream Banking,
société anonyme, and Euroclear Bank S.A./N.V.
See Book-Entry Securities in the accompanying
prospectus. Beneficial interests in notes in global form will be
shown on, and transfers of interest in notes in global form will
be made only through, records maintained by the depositary and
its participants. Notes 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 1010 Grand
Blvd. Kansas City, MO 64106). Payment of principal of, premium,
if any, and interest on notes 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 notes are no longer represented by
global securities, all payments on such notes will be made at
the corporate trust office of the trustee; however, any payment
of interest on such notes 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 notes, 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 note selected for
redemption or any other note for a period of 15 days before
any mailing of notice of notes to be redeemed.
Optional
Redemption
We may redeem:
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the 2016 notes prior to one month before their maturity date,
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the 2021 notes prior to three months before their maturity
date, or
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the 2041 notes prior to six months before their maturity date
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at any time, in whole or in part, at our option at a redemption
price equal to the greater of:
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100% of the principal amount of the notes then outstanding to be
redeemed; or
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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
basis points in the case of the 2016
notes, basis
points in the case of the 2021 notes
and
basis points in the case of the 2041 notes, plus the Adjusted
Treasury Rate, as determined by the Independent Investment
Banker, on the third business day prior to the redemption date;
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plus, in each case, accrued and unpaid interest, if any, to the
redemption date.
On or after the date that is one month prior to the maturity for
the 2016 notes, three months prior to the maturity for the 2021
notes, or six months prior to the maturity for the 2041 notes,
respectively, we may redeem the 2016 notes, the 2021 notes or
the 2041 notes, at any time, in whole or in part, at our option
at a redemption price equal to 100% of the principal amount of
such notes, plus accrued and unpaid interest to, but not
including, the redemption date.
Adjusted Treasury Rate means, with respect to
any redemption date, the rate per annum equal to the semiannual
equivalent yield to maturity of the Optional
Redemption Comparable Treasury Issue, calculated using a
price for the Optional Redemption Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the
Optional Redemption Comparable Treasury Price for such
redemption date.
Independent Investment Banker means an
independent investment banking institution of national standing
appointed by Devon.
S-4
Optional Redemption Reference Treasury
Dealer means each of Goldman, Sachs & Co.,
Morgan Stanley & Co. LLC, UBS Securities LLC and their
respective successors; provided that if any of the foregoing
ceases to be, and has no affiliate that is, a primary
U.S. governmental securities dealer, Devon will substitute
for it another primary U.S. governmental securities dealer.
Optional Redemption Comparable Treasury
Issue means the U.S. Treasury security selected
by the Independent Investment Banker as having a maturity
comparable to the remaining term of the notes to be redeemed
that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to
the remaining term of the notes or, if, in the reasonable
judgment of the Independent Investment Banker, there is no such
security, then the Optional Redemption Comparable Treasury
Issue will mean the U.S. Treasury security or securities
selected by the Independent Investment Banker as having an
actual or interpolated maturity or maturities comparable to the
remaining term of the notes.
Optional Redemption Comparable Treasury
Price means the average of the Optional
Redemption Reference Treasury Dealer Quotations for the
applicable redemption date.
Optional Redemption Reference Treasury Dealer
Quotations means, with respect to each Optional
Redemption Reference Treasury Dealer and any redemption
date for the notes, the average, as determined by the
Independent Investment Banker, of the bid and asked prices for
the Optional Redemption Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount)
quoted in writing to the Independent Investment Banker and the
trustee at 5:00 p.m., New York City time, on the third
business day preceding such redemption date.
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 notes 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 notes or portions thereof called for redemption.
In the case of any partial redemption, selection of the notes
for redemption will be made by the trustee by such method of
random selection as the trustee shall deem fair and appropriate.
Notes will only be redeemed in multiples of $2,000 or any
integral multiple of $1,000. If any note is to be redeemed in
part only, the notice of redemption will state the portion of
the principal amount to be redeemed. A new note in principal
amount equal to the unredeemed portion of the original note will
be issued upon the cancellation of the original note.
No
Sinking Fund
We are not required to make mandatory redemption or sinking fund
payments with respect to the notes.
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 notes. 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 notes 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 notes, 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 notes, outstanding under the indenture
to which these provisions are applicable may accelerate the
maturity of the debt
S-5
securities under the indenture. As of the issue date of the
notes and after giving effect to the use of proceeds therefrom,
no other debt securities will be outstanding under the indenture.
Events of
Default
In addition to the Events of Default described in
the accompanying prospectus under the heading Description
of Debt Securities Events of Default, it shall
constitute an Event of Default under the indenture
in respect of each series of the notes if we 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:
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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 notes of such
series; or
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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 notes of
such series.
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Concerning
the Trustee
UMB Bank, National Association, is the trustee under the
indenture and has been appointed by us as security registrar and
paying agent with regard to the notes.
MATERIAL
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS FOR
NON-U.S.
HOLDERS
The following is a general discussion of certain material
U.S. federal income tax consequences of the purchase,
ownership and disposition of the notes. This discussion applies
only to a
Non-U.S. Holder
(as defined below) that acquires the notes pursuant to this
offering at the initial offering price. If we decide to reopen
any series of notes by issuing additional notes on a date later
than thirteen days from the date of the initial offering, such
reopening will be treated as a separate offering for
U.S. federal income tax purposes and any
Non-U.S. Holder
acquiring notes pursuant to such reopening will not be treated
as acquiring notes pursuant to this offering. Accordingly, any
such new note may not be fungible with the notes being issued
pursuant to this offering for US federal income tax purposes.
This discussion is limited to investors that hold the notes as
capital assets for U.S. federal income tax purposes.
Furthermore, this discussion does not address all aspects of
U.S. federal income taxation that may be applicable to
investors in light of their particular circumstances, or to
investors subject to special treatment under U.S. federal
income tax law. Furthermore, this discussion does not address
any U.S. federal estate or gift tax consequences or any
state, local or foreign tax consequences. This discussion is
based upon the Internal Revenue Code of 1986, as amended (the
Code), the Treasury Department regulations (the
Treasury Regulations) promulgated thereunder and
judicial decisions and administrative interpretations thereof,
all as of the date hereof and all of which are subject to
change, possibly with retroactive effect. Prospective investors
are urged to consult their tax advisors regarding the
U.S. federal, state, local and foreign income and other tax
consequences of the purchase, ownership and disposition of the
notes.
For purposes of this summary, the term
Non-U.S. Holder
means a beneficial owner of a note that is not, for
U.S. federal income tax purposes (i) an individual
that is a citizen or resident of the United States, (ii) a
corporation, or other entity treated as a corporation for
U.S. federal income tax purposes, that is created or
organized under the laws of the United States, any of the States
or the District of Columbia, (iii) an estate the income of
which is subject to U.S. federal income taxation regardless
of its source, or (iv) a trust (A) if a court within
the United States is able to exercise primary supervision over
its administration and one or more U.S. persons have the
authority to control all substantial decisions of such trust, or
(B) that has made a valid election under applicable
Treasury Regulations to be treated as a U.S. person for
U.S. federal income tax purposes.
If a partnership (including any entity or arrangement treated as
a partnership for U.S. federal income tax purposes) owns
notes, the tax treatment of a partner in the partnership will
depend upon the status of the partner and
S-6
the activities of the partnership. Partners in a partnership
that owns the notes should consult their tax advisors as to the
particular U.S. federal income tax consequences applicable
to them.
Non-U.S.
Holders
Interest
Subject to the discussion below concerning backup withholding, a
Non-U.S. Holder
generally will not be subject to U.S. federal income or
withholding tax on payments of interest on the notes provided
that the
Non-U.S. Holder:
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does not actually or constructively own 10% or more of the total
combined voting power of all classes of our voting stock;
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is not a controlled foreign corporation related to
us directly or constructively through stock ownership; and
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satisfies certain certification requirements.
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Such certification requirements will be met if: (i) the
Non-U.S. Holder
certifies on the appropriate Internal Revenue Service
(IRS) form, under penalties of perjury, that it is
not a U.S. person or (ii) a securities clearing
organization or certain other financial institutions holding the
note on behalf of the
Non-U.S. Holder
certifies on the appropriate IRS form, under penalties of
perjury, that such certification has been received by it and
furnishes us or our paying agent with a copy thereof. In
addition, we or our paying agent must not have actual knowledge
or reason to know that the beneficial owner of the note is a
U.S. person.
If a
Non-U.S. Holder
cannot satisfy the requirements described above, payments of
interest made to such
Non-U.S. Holder
will generally be subject to a 30% withholding tax or a lower
rate as may be specified by an applicable tax treaty, unless the
interest is effectively connected with the conduct by such
Non-U.S. Holder of a U.S. trade or business as described
below. A
Non-U.S. Holder
who claims the benefit of an applicable tax treaty generally
will be required to satisfy applicable certification and other
requirements.
Non-U.S. Holders
should consult their tax advisors regarding their entitlement to
benefits under the relevant tax treaty.
Generally, if interest on the notes is effectively connected
with the conduct of a U.S. trade or business by the
Non-U.S. Holder
and, if required by an applicable tax treaty, attributable to a
permanent establishment in the United States, the
Non-U.S. Holder
will not be subject to the 30% withholding if the
Non-U.S. Holder
files the appropriate IRS form with the payor. Instead, such
interest will be subject to U.S. federal income tax on a
net-income basis at the applicable graduated U.S. federal
income tax rates. In addition, a
Non-U.S. Holder
that is a foreign corporation receiving effectively connected
interest may be subject to an additional branch profits
tax which is generally imposed on a foreign corporation on
the repatriation from the U.S. of effectively connected
earnings and profits, subject to certain adjustments. This tax
is imposed at a 30% or lower rate as may be specified by an
applicable tax treaty.
Dispositions
of the Notes
Subject to the discussion below concerning backup withholding, a
Non-U.S. Holder
generally will not be subject to U.S. federal withholding
tax with respect to gain recognized on the sale, exchange,
redemption, retirement or other disposition of the notes. A
Non-U.S. Holder
also generally will not be subject to U.S. federal income
tax with respect to such gain unless (i) the gain is
effectively connected with the conduct of a trade or business
within the United States by the
Non-U.S. Holder
and, if required by an applicable tax treaty, is attributable to
a permanent establishment maintained by the
Non-U.S. Holder
within the United States, or (ii) in the case of a
Non-U.S. Holder
that is a nonresident alien individual, such holder is present
in the United States for 183 or more days in the taxable year of
disposition and certain other conditions are satisfied. In the
case described above in (i), gain or loss recognized on the
disposition of such notes will generally be subject to
U.S. federal income taxation in the same manner as if such
gain or loss were recognized by a U.S. person, and, in the
case of a
Non-U.S. Holder
that is a foreign corporation, may also be subject to an
additional branch profits tax at a rate of 30% (or a lower
applicable treaty rate). In the case described above in (ii),
the
Non-U.S. Holder
generally will be subject to 30% tax (or lower applicable treaty
rate) on any capital gain recognized on the disposition of the
notes, which may be offset by certain U.S. source capital
losses. Proceeds from the disposition of a note that are
attributable to accrued but
S-7
unpaid interest generally will be subject to, or exempt from,
tax to the same extent as described above with respect to
interest paid on a note.
Backup
Withholding and Information Reporting
A
Non-U.S. Holder
generally will be required to comply with certain certification
procedures in order to establish that such holder is not a
U.S. person in order to avoid backup withholding with
respect to payments of principal and interest on or the proceeds
of a disposition of the notes. In addition, we must report
annually to the IRS and to each
Non-U.S. Holder
the amount of any interest paid to such
Non-U.S. Holder
and the amount of tax, if any, withheld with respect to such
interest. Copies of the information returns reporting such
interest payments and the amount of any tax withheld may also be
made available to the tax authorities in the country in which a
Non-U.S. Holder
resides under the provisions of an applicable income tax treaty.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or credit against a
Non-U.S. Holders
U.S. federal income tax liability provided the required
information is timely provided to the IRS.
Non-U.S. Holders
should consult their tax advisors as to their qualification for
any exemption for backup withholding and the procedure for
obtaining such an exemption.
UNDERWRITING
We are selling the notes to the underwriters named in the table
below pursuant to an underwriting agreement dated as of 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 notes set forth
opposite that underwriters name in the table below:
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Principal Amount
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Principal Amount
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Principal Amount
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Underwriter
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of 2016 Notes
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of 2021 Notes
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of 2041 Notes
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Goldman, Sachs & Co.
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$
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$
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$
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Morgan Stanley & Co. LLC
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$
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$
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$
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UBS Securities LLC
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$
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$
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$
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Total
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$
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$
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$
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Under the terms and conditions of the underwriting agreement,
the underwriters must buy all of the notes 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 notes to the public when and if
the underwriters buy the notes from us. The offering of the
notes by the underwriters is subject to receipt and acceptance
and subject to the underwriters right to reject any order
in whole or in part.
The notes of each series are a new issue of securities with no
established trading market. We do not intend to apply for
listing of the notes on any national securities exchange. We
have been advised by the underwriters that the underwriters
intend to make a market in the notes 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
notes cannot be assured.
The notes sold by the underwriters to the public will initially
be offered at the public offering price set forth on the cover
of this prospectus supplement. Any notes sold by the
underwriters to securities dealers may be sold at a discount
from the initial public offering price of up
to % of the principal amount of the
2016 notes, up to % of the
principal amount of the 2021 notes and up
to % of the principal amount of the
2041 notes. Any such securities dealers may resell any notes
purchased from the underwriters to certain other brokers or
dealers at a discount from the initial public offering price of
up to % of the principal amount of
the 2016 notes, % of the principal
amount of the 2021 notes and up
to % of the principal amount of the
2041 notes. If all of the notes are not sold at the initial
offering price, the underwriters may change the offering price
and other selling terms.
S-8
In order to facilitate the offering of the notes, the
underwriters may engage in transactions that stabilize, maintain
or otherwise affect the price of the notes. Specifically, the
underwriters may over-allot in connection with the offering,
creating a short position in the notes for their own accounts.
In addition, to cover short positions or to stabilize the price
of the notes, the underwriters may bid for, and purchase, the
notes in the open market. Finally, the underwriters may reclaim
selling concessions allowed to a particular underwriter or
dealer for distributing the notes in the offering if the
underwriter or dealer repurchases previously distributed notes
in transactions to cover short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the notes above independent
market levels. The underwriters are not required to engage in
these activities and may end any of these activities at any
time. These transactions may be effected in the
over-the-counter
market or otherwise.
The underwriters may also impose a penalty bid. This occurs when
a particular underwriter repays to the underwriters a portion of
the underwriting discount received by it because the
representatives have repurchased shares sold by or for the
account of such underwriter in stabilizing or short covering
transactions.
We estimate that our expenses in connection with the sale of the
notes, other than the underwriting discounts, will be
$ .
We have agreed to indemnify the several underwriters against
certain liabilities, including liabilities under the Securities
Act of 1933, as amended.
Other
Relationships
The underwriters and their respective affiliates are full
service financial institutions engaged in various activities,
which may include securities trading, commercial and investment
banking, financial advisory, investment management, investment
research, principal investment, hedging, financing and brokerage
activities. Certain of the underwriters and their respective
affiliates have, from time to time, performed, and may in the
future perform, various financial advisory and investment
banking services for the issuer, for which they may receive
customary fees and expenses. In particular, affiliates of
certain of the underwriters are parties to and lenders under our
credit facility. Our credit facility was negotiated on an
arms length basis and contains customary terms pursuant to
which the lenders receive customary fees. Additionally,
affiliates of certain of the underwriters are or may become
holders of the 6.875% senior notes due 2011 or participate
in our commercial paper program and, as a result, may receive a
portion of the proceeds from this offering when such commercial
paper is repaid or such senior notes are redeemed.
In the ordinary course of their various business activities, the
underwriters and their respective affiliates have made or held,
and may in the future make or hold, a broad array of investments
including serving as counterparties to certain derivative and
hedging arrangements, and may have actively traded, and, in the
future may actively trade, debt and equity securities (or
related derivative securities), and financial instruments
(including bank loans) for their own account and for the
accounts of their customers and may have in the past and at any
time in the future hold long and short positions in such
securities and instruments. Such investment and securities
activities may have involved, and in the future may involve,
securities and instruments of our company.
Selling
Restrictions
European
Economic Area
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a Relevant
Member State), each Underwriter has represented and agreed that
with effect from and including the date on which the Prospectus
Directive is implemented in that Relevant Member State (the
Relevant Implementation Date) it has not made and will not make
an offer of notes which are the subject of the offering
contemplated by this prospectus supplement to the public in that
Relevant Member State other than:
a) to any legal entity which is a qualified investor as
defined in the Prospectus Directive;
b) to fewer than 100 or, if the Relevant Member State has
implemented the relevant provision of the 2010 PD Amending
Directive, 150, natural or legal persons (other than qualified
investors as defined in the
S-9
Prospectus Directive), as permitted under the Prospectus
Directive, subject to obtaining the prior consent of the
relevant Dealer or Dealers nominated by the issuer for any such
offer; or
c) in any other circumstances falling within
Article 3(2) of the Prospectus Directive,
provided that no such offer of notes shall require the issuer or
any Underwriter to publish a prospectus pursuant to
Article 3 of the Prospectus Directive or supplement a
prospectus pursuant to Article 16 of the Prospectus
Directive.
For the purposes of this provision, the expression an
offer of notes to the public in relation to any
notes in any Relevant Member State means the communication in
any form and by any means of sufficient information on the terms
of the offer and the notes to be offered so as to enable an
investor to decide to purchase or subscribe the notes, as the
same may be varied in that Member State by any measure
implementing the Prospectus Directive in that Member State, the
expression Prospectus Directive means Directive
2003/71/EC (and amendments thereto, including the 2010 PD
Amending Directive, to the extent implemented in the Relevant
Member State), and includes any relevant implementing measure in
the Relevant Member State and the expression 2010 PD
Amending Directive means Directive 2010/73/EU.
United
Kingdom
Each Underwriter has represented and agreed that:
a) it has only communicated or caused to be communicated
and will only communicate or cause to be communicated an
invitation or inducement to engage in investment activity
(within the meaning of Section 21 of the Financial Services
and Markets Act 2000 (FSMA)) received by it in
connection with the issue or sale of the notes in circumstances
in which Section 21(1) of the FSMA does not apply to the
issuer; and
b) it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in
relation to the notes in, from or otherwise involving the United
Kingdom.
Hong
Kong
The notes may not be offered or sold by means of any document
other than (i) in circumstances which do not constitute an
offer to the public within the meaning of the Companies
Ordinance (Cap.32, Laws of Hong Kong), or (ii) to
professional investors within the meaning of the
Securities and Futures Ordinance (Cap.571, Laws of Hong Kong)
and any rules made thereunder, or (iii) in other
circumstances which do not result in the document being a
prospectus within the meaning of the Companies
Ordinance (Cap.32, Laws of Hong Kong), and no advertisement,
invitation or document relating to the notes may be issued or
may be in the possession of any person for the purpose of issue
(in each case whether in Hong Kong or elsewhere), which is
directed at, or the contents of which are likely to be accessed
or read by, the public in Hong Kong (except if permitted to do
so under the laws of Hong Kong) other than with respect to notes
which are or are intended to be disposed of only to persons
outside Hong Kong or only to professional investors
within the meaning of the Securities and Futures Ordinance (Cap.
571, Laws of Hong Kong) and any rules made thereunder.
Singapore
This prospectus supplement has not been registered as a
prospectus with the Monetary Authority of Singapore.
Accordingly, this prospectus supplement and any other document
or material in connection with the offer or sale, or invitation
for subscription or purchase, of the notes may not be circulated
or distributed, nor may the notes be offered or sold, or be made
the subject of an invitation for subscription or purchase,
whether directly or indirectly, to persons in Singapore other
than (i) to an institutional investor under
Section 274 of the Securities and Futures Act,
Chapter 289 of Singapore (the SFA),
(ii) to a relevant person, or any person pursuant to
Section 275(1A), and in accordance with the conditions,
specified in Section 275 of the SFA or (iii) otherwise
pursuant to, and in accordance with the conditions of, any other
applicable provision of the SFA.
Where the notes are subscribed or purchased under
Section 275 by a relevant person which is: (a) a
corporation (which is not an accredited investor) the sole
business of which is to hold investments and the entire share
capital of which is owned by one or more individuals, each of
whom is an accredited investor; or (b) a trust (where the
trustee
S-10
is not an accredited investor) whose sole purpose is to hold
investments and each beneficiary is an accredited investor,
shares, debentures and units of shares and debentures of that
corporation or the beneficiaries rights and interest in
that trust shall not be transferable for 6 months after
that corporation or that trust has acquired the notes under
Section 275 except: (1) to an institutional investor
under Section 274 of the SFA or to a relevant person, or
any person pursuant to Section 275(1A), and in accordance
with the conditions, specified in Section 275 of the SFA;
(2) where no consideration is given for the transfer; or
(3) by operation of law.
Japan
The securities have not been and will not be registered under
the Financial Instruments and Exchange Law of Japan (the
Financial Instruments and Exchange Law) and each Underwriter has
agreed that it will not offer or sell any securities, directly
or indirectly, in Japan or to, or for the benefit of, any
resident of Japan (which term as used herein means any person
resident in Japan, including any corporation or other entity
organized under the laws of Japan), or to others for re-offering
or resale, directly or indirectly, in Japan or to a resident of
Japan, except pursuant to an exemption from the registration
requirements of, and otherwise in compliance with, the Financial
Instruments and Exchange Law and any other applicable laws,
regulations and ministerial guidelines of Japan.
LEGAL
MATTERS
The validity of the notes will be passed upon for us by Skadden,
Arps, Slate, Meagher & Flom LLP of New York, New York.
Davis Polk & Wardwell LLP of New York, New York will
pass on certain legal matters on behalf of the underwriters.
S-11
PROSPECTUS
Devon Energy
Corporation
COMMON STOCK, PREFERRED STOCK
AND
DEBT SECURITIES
By this prospectus, Devon Energy Corporation may offer, from
time to time, its common stock, preferred stock and debt
securities. We will provide more specific information regarding
these securities in supplements to this prospectus. You should
read this prospectus and any supplement carefully before
investing.
Our common stock, par value $0.10 per share, is listed on the
New York Stock Exchange and its trading symbol is
DVN.
Investing in securities involves risks. You should carefully
read the risk factors included in the applicable prospectus
supplement and in our periodic reports and other information
filed with the Securities and Exchange Commission before
investing in our securities.
We may sell these securities to or through underwriters, to
other purchasers
and/or
through agents. The supplements to this prospectus will specify
the names of and arrangements with any underwriters or agents.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities, or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this Prospectus is July 5, 2011.
No person is authorized to give any information or to make any
representations other than those contain or incorporated by
reference in this prospectus and, if given or made, such
information or representations must not be relied upon as having
been authorized. We take no responsibility for, and can provide
no assurance as to the reliability of, any other information
that others may give you. You should not assume that the
information provided by this prospectus is accurate as of any
date other than the date on the front of this prospectus.
TABLE OF
CONTENTS
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Page
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1
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1
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1
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2
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2
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3
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4
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13
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15
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16
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16
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16
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i
ABOUT
THIS PROSPECTUS
This prospectus may not be used to sell securities unless it is
accompanied by a prospectus supplement.
This prospectus is part of a registration statement we filed
with the SEC utilizing a shelf registration process. Under this
shelf registration process, we may sell the securities described
in this prospectus in one or more offerings.
This prospectus provides you with a general description of the
securities we may offer. Each time we sell offered securities,
we will provide a prospectus supplement that will contain
specific information about the terms of that offering. The
prospectus supplement may include additional risk factors or
other special considerations applicable to those securities. The
prospectus supplement may also add, update or change information
contained in this prospectus. If there is any inconsistency
between the information in this prospectus and any prospectus
supplement, you should rely on the information in the prospectus
supplement. You should read both this prospectus and any
prospectus supplement together with additional information
described under Where You Can Find More Information.
Unless the context otherwise indicates, the terms
Devon, we, us and
our in this prospectus mean Devon Energy
Corporation, a Delaware corporation, and its consolidated
subsidiaries.
DEVON
ENERGY CORPORATION
Devon is an independent energy company engaged primarily in
exploration, development and production of natural gas and oil.
Our operations are concentrated in various North American
onshore areas in the United States and Canada. We also have
offshore operations located in Angola that are currently in the
process of being divested. To complement our upstream oil and
gas operations in North America, we have a large marketing and
midstream operation. With these operations, we market gas, crude
oil and natural gas liquids (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 to process natural
gas.
Our principal and administrative offices are located at 20 North
Broadway, Oklahoma City, Oklahoma
73102-8260.
Our telephone number at that location is
(405) 235-3611.
USE OF
PROCEEDS
Unless otherwise indicated in an accompanying prospectus
supplement, we expect to use the net proceeds from the sale of
the securities offered by this prospectus for general corporate
purposes, which may include, among other things:
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the repayment of outstanding indebtedness;
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working capital;
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capital expenditures; and
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acquisitions.
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The precise amount and timing of the application of such
proceeds will depend upon our funding requirements and the
availability and cost of other funds.
1
RATIOS OF
EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
The ratios of earnings to fixed charges and earnings to combined
fixed charges and preferred stock dividends for each of the
periods set forth below have been completed on a consolidated
basis and should be read in conjunction with Devons
consolidated financial statements, including the accompanying
notes thereto, incorporated by reference in this prospectus.
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Three
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Months
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Ended
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Year Ended December 31,
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March 31,
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2006
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2007
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2008
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2009
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2010
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2011
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(Dollars in millions)
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Ratio of earnings to fixed charges
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7.11
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6.97
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N/A
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N/A
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8.71
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6.43
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Ratio of earnings to combined fixed charges and preferred stock
dividends
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6.91
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6.78
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N/A
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N/A
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8.71
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6.43
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Insufficiency of earnings to cover fixed charges
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N/A
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N/A
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$
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4,208
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$
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4,574
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N/A
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N/A
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Insufficiency of earnings to cover combined fixed charges and
preferred stock dividends
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N/A
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N/A
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$
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4,217
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$
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4,574
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N/A
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N/A
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N/A Not applicable.
Our ratios of earnings to fixed charges and earnings to combined
fixed charges and preferred stock dividends were computed based
on:
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earnings, which consist of earnings from
continuing operations before income taxes, plus fixed charges;
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fixed charges, which consist of interest
expense and one-third of rental expense estimated to be
attributable to interest; and
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preferred stock dividends, which consist of
the amount of pre-tax earnings required to pay dividends on the
outstanding preferred stock.
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DESCRIPTION
OF CAPITAL STOCK
General
Devons authorized capital stock consists of:
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1.0 billion shares of common stock, par value $0.10 per
share, and
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4.5 million shares of preferred stock, par value $1.00 per
share.
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As of April 25, 2011, there were 423.0 million shares
of common stock outstanding and no shares of preferred stock
outstanding.
Common
Stock
Holders of common stock will be entitled to receive dividends
out of legally available funds when and if declared by our board
of directors. Subject to the rights of the holders of any
outstanding shares of preferred stock, holders of shares of
common stock will be entitled to cast one vote for each share
held of record on all matters submitted to a vote of
stockholders. They will not be entitled to cumulative voting
rights for the election of directors. Except pursuant to our
rights agreement, the shares of common stock have no preemptive,
conversion or other rights to subscribe for or purchase any of
our securities. Upon our liquidation or dissolution, the holders
of shares of common stock are entitled to share ratably in any
of our assets that remain after payment or provision for payment
to creditors and holders of preferred stock.
2
Preferred
Stock
The preferred stock may be issued in one or more series. Our
board may establish attributes of any series, including the
designation and number of shares in the series, dividend rates
(cumulative or noncumulative), voting rights, redemptions,
conversion or preference rights, and any other rights and
qualifications, preferences and limitations or restrictions on
shares of a series. The issuance of preferred stock may have the
effect of delaying, deferring or preventing a change in control
of Devon without any vote or action by the stockholders and may
adversely affect the voting and other rights of the holders of
shares of common stock. The specific terms of a particular
series of preferred stock will be described in a certificate of
designation relating to that series.
Series A Junior Participating Preferred
Stock. We have designated 2.9 million shares
of preferred stock as series A junior participating
preferred stock.
DESCRIPTION
OF UNDESIGNATED PREFERRED STOCK
This summary of the undesignated preferred stock discusses terms
and conditions that we expect may apply to any series of the
preferred stock that may be offered under this prospectus. The
applicable prospectus supplement will describe the particular
terms of each series of preferred stock actually offered. If
indicated in the prospectus supplement, the terms of any series
may differ from the terms described below.
We expect the prospectus supplement for any preferred stock that
we actually offer pursuant to this prospectus to include some or
all of the following terms:
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the designation of the series of preferred stock;
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the number of shares of preferred stock offered, the liquidation
preference per share and the offering price of the preferred
stock;
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the dividend rate or rates of the shares, the method or methods
of calculating the dividend rate or rates, the dates on which
dividends, if declared, will be payable, and whether or not the
dividends are to be cumulative and, if cumulative, the date or
dates from which dividends shall be cumulative;
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The amounts payable on shares of the preferred stock in the
event of our voluntary or involuntary liquidation, dissolution
or winding up;
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the redemption rights and price or prices, if any, for the
shares of preferred stock;
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the terms, and the amount, of any sinking fund or analogous fund
providing for the purchase or redemption of the shares of
preferred stock;
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any restrictions on our ability to make payments on any of our
capital stock if dividend or other payments are not made on the
preferred stock;
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any voting rights granted to the holders of the shares of
preferred stock in addition to those required by Delaware law or
our certificate of incorporation;
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whether the shares of preferred stock will be convertible into
shares of our common stock or any other class of our capital
stock, and, if convertible, the conversion price or prices, and
any adjustment or other terms and conditions upon which the
conversion shall be made;
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any other rights, preferences, restrictions, limitations or
conditions relative to the shares of preferred stock permitted
by Delaware law or our certificate of incorporation;
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any listing of the preferred stock on any securities
exchange; and
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the federal income tax considerations applicable to the
preferred stock.
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Subject to our certificate of incorporation and to any
limitations imposed by any then outstanding preferred stock, we
may issue additional series of preferred stock, at any time or
from time to time, with such powers, preferences, rights and
qualifications, limitations or restrictions as our board of
directors determines, and without further action of the
stockholders, including holders of our then outstanding
preferred stock, if any.
3
DESCRIPTION
OF DEBT SECURITIES
The following description of the debt securities sets forth
certain general terms and provisions of the debt securities to
which this prospectus and any prospectus supplement may relate.
The particular terms of any series of debt securities and the
extent to which the general provisions may apply to a particular
series of debt securities will be described in a prospectus
supplement relating to that series. References in this section
to Devon mean Devon Energy Corporation and not its
subsidiaries.
Any debt securities offered by this prospectus will be issued
under one or more indentures between Devon and a trustee. We
have summarized selected provisions of the indentures below.
Devon senior debt securities are to be issued under an indenture
between Devon and UMB Bank, National Association, as trustee
(the Devon senior indenture), the form of which is
incorporated by reference as an exhibit to the registration
statement of which this prospectus forms a part. Devon
subordinated debt securities are to be issued under an indenture
(the Devon subordinated indenture), the form of
which is filed as an exhibit to the registration statement of
which this prospectus forms a part. The Devon senior indenture
and the Devon subordinated indenture are sometimes referred to
herein, collectively, as the indentures and each,
individually, as an indenture. You should read the
indentures for provisions that may be important to you.
Because we have included only a summary of the indenture terms,
you must read the indentures in full to understand every detail
of the terms of the debt securities.
The indentures will not limit the amount of debt securities we
may issue under them, and will provide that additional debt
securities of any series may be issued up to the aggregate
principal amount that we authorize from time to time.
Unless otherwise indicated in the applicable prospectus
supplement, we will issue the debt securities in denominations
of $2,000 and in integral multiples of $1,000 in excess thereof.
Principal and any premium and interest in respect of the debt
securities will be payable, and the debt securities will be
transferable, at the corporate trust office of the trustee,
unless we specify otherwise in the applicable prospectus
supplement. At our option, however, we may pay interest by
mailing checks to the registered holders of the debt securities
at their registered addresses.
We will describe any special U.S. federal income tax and
other considerations relating to debt securities in the
applicable prospectus supplement.
General
The prospectus supplement relating to the particular series of
debt securities being offered will specify the amounts, prices
and terms of those debt securities. These terms may include:
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the designation, aggregate principal amount and authorized
denominations of the debt securities;
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the date or dates on which the debt securities will mature;
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the percentage of the principal amount at which the debt
securities will be issued;
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the date on which the principal of the debt securities will be
payable;
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whether the debt securities will be issued as registered
securities, bearer securities or a combination of the two;
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whether the debt securities will be issued in the form of one or
more global securities and whether such global securities will
be issued in a temporary global form or permanent global form;
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the currency or currencies or currency unit or units of two or
more currencies in which debt securities are denominated, for
which they may be purchased, and in which principal and any
premium and interest is payable;
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whether the currency or currencies or currency unit or units for
which debt securities may be purchased or in which principal and
any premium interest may be paid is at our election or at the
election of a purchaser, the manner in which an election may be
made and its terms;
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the annual rate or rates, which may be fixed or variable, or the
method of determining the rate or rates at which the debt
securities will bear any interest, whether by remarketing,
auction, formula or otherwise;
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the date or dates from which any interest will accrue and the
date or dates on which such interest will be payable;
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a description of any provisions providing for redemption,
exchange or conversion of the debt securities at our option, at
holders option or otherwise, and the terms and provisions
of such a redemption, exchange or conversion;
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information with respect to book-entry procedures relating to
global debt securities;
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any sinking fund terms;
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whether and under what circumstances we will pay
additional amounts, as defined in the indenture, on
the debt securities to any holder; the term
interest, as used in this prospectus, includes any
additional amounts;
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any events of default or covenants of Devon with respect to the
debt securities of a certain series that are different from
those described in this prospectus;
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whether and under what circumstances any covenants in the
indenture shall be subject to covenant defeasance;
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any deletions from, or modifications or additions to, the
provisions of the indenture relating to satisfaction and
discharge in respect of the debt securities;
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any index or other method used to determine the amount of
payments of principal of and any premium and interest on the
debt securities; and
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any other specific terms of the debt securities.
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We are not obligated to issue all debt securities of any one
series at the same time. The debt securities of any one series
may not bear interest at the same rate or mature on the same
date.
If we sell any of the debt securities for foreign currencies or
foreign currency units or if the principal of, or any premium or
interest on, any series of debt securities is payable in foreign
currencies or foreign currency units, we will describe the
restrictions, elections, tax consequences, specific terms and
other information with respect to those debt securities in the
applicable prospectus supplement.
Except as may be described in the applicable prospectus
supplement, the indenture will not limit our ability to incur
indebtedness or afford holders of debt securities protection in
the event of a decline in our credit quality or if we are
involved in a takeover, recapitalization or highly leveraged or
similar transaction. The prospectus supplement relating to the
particular series of debt securities, to the extent not
otherwise described in this prospectus, will include any
information with respect to any deletions from, modifications of
or additions to the covenants or events of default described
below and contained in the indenture, including any addition of
a covenant or other provision providing event risk or similar
protection.
Unless otherwise indicated in the applicable prospectus
supplement, Devons obligation to pay the principal of, and
any premium and interest on, its senior debt securities will be
unsecured and will rank equally with all of Devons other
unsecured unsubordinated indebtedness.
Interest
Rates and Discounts
The debt securities will earn interest at a fixed or floating
rate or rates for the period or periods of time specified in the
applicable prospectus supplement. Unless otherwise specified in
the applicable prospectus supplement, the debt securities will
bear interest on the basis of a
360-day year
consisting of twelve
30-day
months.
5
We may sell debt securities at a substantial discount below
their stated principal amount, bearing no interest or interest
at a rate that at the time of issuance is below market rates. We
will describe the federal income tax consequences and special
considerations that apply to those debt securities in the
applicable prospectus supplement.
Exchange,
Registration and Transfer
Unless otherwise specified, debt securities of any series will
be exchangeable for other debt securities of the same series and
of like aggregate principal amount and tenor in different
authorized denominations.
You may present debt securities for registration of transfer,
together with a duly executed form of transfer, at the office of
the security registrar or at the office of any transfer agent
designated by us for that purpose with respect to any series of
debt securities and referred to in the applicable prospectus
supplement. This may be done without service charge but upon
payment of any taxes and other governmental charges as described
in the indenture. The security registrar or the transfer agent
will effect the transfer or exchange upon being satisfied with
the documents of title and identity of the person making the
request. We may at any time designate additional transfer agents
with respect to any series of debt securities.
In the event of any redemption, we will not be required to:
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execute, register the transfer of or exchange debt securities of
any series during a period beginning at the opening of business
15 days before any selection of debt securities of that
series to be redeemed and ending at the close of business on the
day of mailing of the relevant notice of redemption; or
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execute, register the transfer of or exchange any debt security,
or portion thereof, called for redemption, except the unredeemed
portion of any debt security being redeemed in part.
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Payment
and Paying Agents
Unless we specify otherwise in the applicable prospectus
supplement, we will pay the principal of, and any premium and
interest on, debt securities at the office of the paying agent
or paying agents that we designate at various times. However, at
our option, we may make interest payments by check mailed to the
address, as it appears in the security register, of the person
entitled to the payments. Unless we specify otherwise in the
applicable prospectus supplement, the Corporate
Trust Office of the trustee in New York, New York, will be
designated as our sole paying agent for payments with respect to
debt securities that are issuable solely as registered
securities.
All monies we pay to a paying agent for the payment of principal
of, and any premium and interest on, any debt security or coupon
that remains unclaimed at the end of two years after becoming
due and payable will be repaid to us. After that time, the
holder of the debt security or coupon will look only to us for
payments out of those repaid amounts.
Global
Securities
The debt securities of a series may be issued in whole or in
part in the form of one or more global certificates that we will
deposit with a depository identified in the applicable
prospectus supplement, or a custodian for such depository.
Global securities may be issued in either registered or bearer
form and in either temporary or permanent form. Unless and until
it is exchanged in whole or in part for the individual debt
securities it represents, a global security may not be
transferred except as a whole:
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by the applicable depositary to a nominee of the depositary;
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by any nominee to the depositary itself or another
nominee; or
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by the depositary or any nominee to a successor depositary or
any nominee of the successor.
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We will describe the specific terms of the depositary
arrangement with respect to a series of debt securities in the
applicable prospectus supplement. We anticipate that the
following provisions will generally apply to depositary
arrangements.
6
When we issue a global security in registered form, the
depositary for the global security or its nominee will credit,
on its book-entry registration and transfer system, the
respective principal amounts of the individual debt securities
represented by that global security to the accounts of
participants that have accounts with the depositary. Those
accounts will be designated by the dealers, underwriters or
agents with respect to the underlying debt securities or by us
if those debt securities are offered and sold directly by us.
Ownership of beneficial interests in a global security will be
limited to participants or persons that may hold interests
through participants. For interests of participants, ownership
of beneficial interests in the global security will be shown on
records maintained by the applicable depositary or its nominee.
For interests of persons other than participants, that ownership
information will be shown on the records of participants.
Transfer of that ownership will be effected only through those
records.
The laws of some states require that certain purchasers of
securities take physical delivery of securities in definitive
form. These limits and laws may impair your ability to transfer
beneficial interests in a global security.
As long as the depositary for a global security, or its nominee,
is the registered owner of that global security, the depositary
or nominee will be considered the sole owner or holder of the
debt securities represented by the global security for all
purposes under the applicable indenture. Except as provided
below, owners of beneficial interests in a global security:
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will not be entitled to have any of the underlying debt
securities registered in their names;
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will not receive or be entitled to receive physical delivery of
any of the underlying debt securities in definitive
form; and
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will not be considered the owners or holders under the indenture
relating to those debt securities.
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We will make payments of principal of, and any premium and
interest on, individual debt securities represented by a global
security registered in the name of a depositary or its nominee
to the depositary or its nominee as the registered owner of the
global security representing such debt securities. Neither we,
the trustee, any paying agent nor the registrar for the debt
securities will be responsible for any aspect of the records
relating to or payments made by the depositary or any
participants on account of beneficial interests of the global
security.
We expect that the depositary or its nominee, upon receipt of
any payment of principal, premium or interest relating to a
permanent global security representing any series of debt
securities, immediately will credit participants accounts
with the payments. Those payments will be credited in amounts
proportional to the respective beneficial interests of the
participants in the principal amount of the global security as
shown on the records of the depositary or its nominee. We also
expect that payments by participants to owners of beneficial
interests in the global security held through those participants
will be governed by standing instructions and customary
practices. This is now the case with securities held for the
accounts of customers in bearer form or registered in
street name. Those payments will be the sole
responsibility of those participants.
If the depositary for a series of debt securities is at any time
unwilling, unable or ineligible to continue as depositary and we
do not appoint a successor depositary within 90 days, we
will issue individual debt securities of that series in exchange
for the global security or securities representing that series.
In addition, we may at any time in our sole discretion determine
not to have any debt securities of a series represented by one
or more global securities. In that event, we will issue
individual debt securities of that series in exchange for the
global security or securities. Further, if we specify, an owner
of a beneficial interest in a global security may, on terms
acceptable to us, the trustee and the applicable depositary,
receive individual debt securities of that series in exchange
for those beneficial interests. The foregoing is subject to any
limitations described in the applicable prospectus supplement.
In that instance, the owner of the beneficial interest will be
entitled to physical delivery of individual debt securities
equal in principal amount to the beneficial interest and to have
the debt securities registered in its name. Those individual
debt securities will be issued in denominations, unless we
specify otherwise, of $2,000 and in integral multiples of $1,000
in excess thereof.
For a description of the depositary arrangements for global
securities held by The Depository Trust Company, also known
as DTC, see Book-Entry Securities.
7
Events of
Default
Unless otherwise specified in the applicable prospectus
supplement, any one of the following events will constitute an
event of default under the indentures with respect
to the debt securities of any series issued under the indentures:
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if we fail to pay any interest on any debt security of that
series when due, and the failure continues for 30 days;
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if we fail to pay principal of or any premium on the debt
securities of that series when due and payable, either at
maturity or otherwise;
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if we fail to perform or we breach any of our other covenants or
warranties in the applicable indentures or in the debt
securities of that series, other than a covenant or warranty
included in the applicable indenture solely for the benefit of a
series of securities other than the debt securities of that
series, and that breach or failure continues for 60 days
(subject to extension under certain circumstances for another
120 days) after written notice as provided in the
applicable indenture;
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certain events of bankruptcy, insolvency or reorganization
involving us or certain of our subsidiaries; and
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any other event of default provided with respect to the debt
securities of that series.
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If we fail to pay the principal of, or premium or interest on,
the debt securities of any series or we fail to perform or
breach any of the other covenants or warranties applicable to
the debt securities of that series but not applicable to all
outstanding debt securities, and such event of default is
continuing, either the trustee or the holders of not less than
25% in aggregate principal amount of the outstanding debt
securities of that series may declare the principal amount of,
and any premium and interest on, the debt securities of that
series to be due and payable immediately. If an event of default
occurs due to default in the performance of any other of the
covenants and warranties applicable to all outstanding debt
securities or pertaining to certain events of bankruptcy,
insolvency or reorganization, and the event of default is
continuing, either the trustee or the holders of not less than
25% in principal amount of all debt securities then outstanding
(considered as one class), may declare the principal amount of,
and any premium and interest on, all debt securities to be due
and payable immediately. There is no automatic acceleration,
even in the event of our bankruptcy, insolvency or
reorganization. At any time after a declaration of acceleration
has been made, but before a judgment or decree for payment of
money has been obtained by the trustee, we may cause such
declaration of acceleration to be rescinded and annulled with
respect to the debt securities of any series if we deposit with
the trustee an amount sufficient to pay all overdue interest on
the debt securities of that series, the principal of and
premium, if any, on the debt securities of that series that have
become due and payable otherwise than by such declaration of
acceleration and all amounts due to the trustee and if all other
events of default with respect to the debt securities of that
series have been cured or waived.
Within 90 days after the occurrence of any event of default
under the indentures with respect to the debt securities of any
series issued under that indenture, the trustee must transmit
notice of the event of default to the holders of the debt
securities of that series unless the event of default has been
cured or waived. The trustee may withhold the notice, however,
except in the case of a payment default, if and so long as the
board of directors, the executive committee or a trust committee
of directors or responsible officers of the trustee has in good
faith determined that the withholding of the notice is in the
interest of the holders of debt securities of that series.
If an event of default occurs and is continuing with respect to
the debt securities of any series, the trustee may in its
discretion proceed to protect and enforce its rights and the
rights of the holders of debt securities of that series by all
appropriate judicial proceedings.
Subject to the duty of the trustee during any default to act
with the required standard of care, the trustee is under no
obligation to exercise any of its rights or powers under the
indenture at the request or direction of any of the holders of
debt securities issued under that indenture, unless the holders
offer the trustee reasonable indemnity. Subject to indemnifying
the trustee, and subject to applicable law and certain other
provisions of the indenture, the holders of a majority in
aggregate principal amount of the outstanding debt securities of
a series issued under that indenture may direct the time, method
and place of conducting any proceeding for any remedy available
to the trustee, or exercising any trust or power conferred on
the trustee, with respect to the debt securities of that series.
8
Defeasance
Unless the applicable prospectus supplement provides otherwise,
any debt securities, or portion of the principal amount of the
debt securities, will be deemed to have been paid for purposes
of the applicable indentures, and, at our election, our entire
indebtedness with respect to the debt securities, or portion
thereof, will be deemed to have been satisfied and discharged,
if we have irrevocably deposited with the trustee or any paying
agent other than us, in trust, money, certain eligible
obligations, as defined in the applicable indentures, or a
combination of the two, sufficient to pay principal of and any
premium and interest due and to become due on the debt
securities or portions thereof.
The applicable prospectus supplement will describe, if
applicable, our ability to be released from any of our covenant
obligations under the indentures.
Modification
and Waiver
The trustee and Devon may, without the consent of holders,
modify or waive provisions of each indenture for certain
purposes, including, among other things, curing ambiguities and
maintaining the qualification of the applicable indenture under
the Trust Indenture Act. The trustee and Devon may modify
or waive certain provisions of each indenture with the consent
of the holders of not less than a majority in aggregate
principal amount of the debt securities of each series issued
under that indenture affected by the modification or waiver.
However, the provisions of any indenture may not be waived or
modified without the consent of the holders of each debt
security affected thereby if the modification or waiver would:
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change the stated maturity of the principal of, or any
installment of principal of or interest on, any debt security
issued under that indenture;
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reduce the principal amount of, or interest on, any debt
security issued under the indenture, or change the method of
calculating the interest on, or reduce any premium payable upon
the redemption of, any such debt security;
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change the coin or currency (or other property) in which any
debt security issued under that indenture or any premium or any
interest on that debt security or any additional amounts with
respect to that debt security is payable;
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impair the right to institute suit for the enforcement of any
payment on or after the stated maturity of any debt securities
issued under that indenture or, in the case of redemption, on or
after the redemption date;
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reduce the percentage and principal amount of the outstanding
debt securities, the consent of the holders of which is required
under that indenture in order to take certain actions; or
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modify any of the provisions of Sections 12.02, 6.07 (6.06
in the case of the Devon subordinated indenture) and 8.13 of
each indenture relating to modifying the indenture, waiving
certain covenants and waiving past defaults, respectively.
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The holders of at least a majority in aggregate principal amount
of outstanding debt securities of any series issued under an
indenture may, on behalf of the holders of all debt securities
of that series, waive our compliance with certain restrictive
provisions of that indenture. The holders of not less than a
majority in aggregate principal amount of debt securities of any
series issued under either of the indentures may, on behalf of
all holders of debt securities of that series, waive any past
default and its consequences under that indenture with respect
to the debt securities of that series, except:
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a payment default with respect to debt securities of that
series; or
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a default of a covenant or provision of that indenture that
cannot be modified or amended without the consent of the holder
of the debt securities of that series.
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9
Consolidation,
Merger and Sale of Assets
We may not consolidate with or merge into, or convey, transfer
or lease our properties and assets substantially as an entirety
to, any person (as defined in the applicable indenture) unless:
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the entity formed by the consolidation or into which we are
merged, or the person which acquires by conveyance or transfer,
or which leases, substantially all of our properties and assets:
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is organized and validly existing under the laws of the United
States, any domestic jurisdiction or the District of
Columbia; and
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expressly assumes our obligations on the debt securities and
under the applicable indenture;
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immediately after the transaction becomes effective, no event of
default, and no event that would become an event of default,
will have occurred and be continuing; and
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we have delivered to the trustee an officers certificate
and opinion of counsel as provided in the applicable indenture.
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Covenants
Unless otherwise specified in the prospectus supplement, the
following covenants will apply to the senior debt securities
issued by Devon. Various capitalized terms used within this
Covenants subsection are defined at the end of this
subsection.
Liens
Neither Devon nor any of its Restricted Subsidiaries may incur,
issue, assume or guarantee any Debt that is secured by a
Mortgage on any Principal Property or on any shares of stock or
Indebtedness of any Restricted Subsidiary of Devon, without
first effectively providing that the securities (together with,
if Devon so determines, any other indebtedness of Devon or its
Restricted Subsidiaries that is not subordinate in right of
payment to the prior right of payment in full of the securities)
will be secured equally and ratably with, or prior to, the
incurred, issued, assumed or guaranteed secured Debt, for so
long as this secured Debt remains so secured.
This limitation on the incurrence, issuance, assumption or
guarantee of any Debt secured by a Mortgage will not apply to,
and there will be excluded from any secured Debt in any
computation under this covenant, Debt secured by:
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Mortgages existing at the date of the indenture;
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Mortgages on property of, or on any shares of stock or
Indebtedness of, any entity existing at the time the entity is
merged into or consolidated with Devon or becomes a Restricted
Subsidiary of Devon;
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Mortgages in favor of Devon or any of its Restricted
Subsidiaries;
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Mortgages securing only Debt owed by one of our Restricted
Subsidiaries to us
and/or to
one or more of our other Restricted Subsidiaries;
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Mortgages on property, shares of stock or Indebtedness:
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existing at the time of acquisition thereof, including
acquisitions through merger, consolidation or other
reorganization;
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to secure the payment of all or any part of the purchase price
thereof or construction thereon; or
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to secure any Debt incurred prior to, at the time of, or within
one year after the later of the acquisition, the completion of
construction or the commencement of full operation of the
property or within one year after the acquisition of the shares
or Indebtedness for the purpose of financing all or any part of
the purchase price thereof or construction thereon;
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provided that, if a commitment for the financing is obtained
prior to or within this one-year period, the applicable Mortgage
will be deemed to be included in this clause whether or not the
Mortgage is created within this one-year period;
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Mortgages in favor of the United States, any state thereof,
Canada, or any province thereof, or any department, agency or
instrumentality or political subdivision of any of the
foregoing, or in favor of any other country or any political
subdivision thereof;
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Mortgages on minerals or geothermal resources in place, or on
related leasehold or other property interests, that are incurred
to finance development, production or acquisition costs,
including, but not limited to, Mortgages securing advance sale
obligations;
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Mortgages on equipment used or usable for drilling, servicing or
operating oil, gas, coal or other mineral properties or
geothermal properties;
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Mortgages required by any contract or statute in order to permit
Devon or any of its subsidiaries to perform any contract or
subcontract made with or at the request of the United States,
any state thereof, Canada, any province thereof, or in favor of
any other country or any political subdivision thereof, or any
department, agency or instrumentality of any of the foregoing;
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any Mortgage resulting from the deposit of moneys or evidence of
indebtedness in trust for the purpose of defeasing Debt of Devon
or any of its Restricted Subsidiaries or secured Debt of Devon
or any of its Restricted Subsidiaries the net proceeds of which
are used, substantially concurrent with the funding thereof, and
taking into consideration, among other things, required notices
to be given to the holders of the outstanding securities in
connection with the refunding, refinancing or repurchase
thereof, and the required corresponding durations thereof, to
refund, refinance or repurchase all of the outstanding
securities, including the amount of all accrued interest thereon
and reasonable fees and expenses and premiums, if any, incurred
by Devon or any of its Restricted Subsidiaries in connection
therewith;
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any Ordinary Course Mortgages arising, and only so
long as continuing, in the ordinary course of our
business; and
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any extension, renewal or replacement, or successive extensions,
renewals or replacements, of any Mortgage referred to in the
foregoing clauses of this covenant, so long as the extension,
renewal or replacement Mortgage is limited to all or a part of
the same property, including any improvements on the property,
shares of stock or Indebtedness that secured the Mortgage so
extended, renewed or replaced.
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Notwithstanding anything mentioned above, Devon and any one or
more of its Restricted Subsidiaries may incur, issue, assume or
guarantee Debt secured by Mortgages that would otherwise be
subject to the above restrictions if the aggregate amount of the
Debt secured by the Mortgages, together with the outstanding
principal amount of all other secured Debt of Devon and its
Restricted Subsidiaries that would otherwise be subject to the
above restrictions, does not exceed 15% of Consolidated Net
Tangible Assets.
The following transactions shall not be deemed to create Debt
secured by a Mortgage:
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the sale or other transfer of oil, gas, coal or other minerals
in place for a period of time until, or in an amount such that,
the transferee will realize therefrom a specified amount of
money, however determined, or a specified amount of oil, gas,
coal or other minerals, or the sale or other transfer of any
other interest in property of the character commonly referred to
as an oil, gas, coal or other mineral payment or a production
payment, and including, in any case, overriding royalty
interests, net profit interests, reversionary interests and
carried interests and other similar burdens on
production; and
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the sale or other transfer by Devon or any of its Restricted
Subsidiaries of properties to a partnership, joint venture or
other entity whereby Devon or the Restricted Subsidiary would
retain partial ownership of the properties.
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Definitions
Consolidated Net Tangible Assets means,
calculated as of the date of the financial statements for the
most recently ended fiscal quarter or fiscal year, as
applicable, prior to the date of determination, the aggregate
amount of assets of Devon, less applicable reserves and other
properly deductible items but including investments in
non-consolidated entities, after deducting therefrom:
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all current liabilities, excluding any portion thereof
constituting Funded Debt by reason of being renewable or
extendible at the option of the obligor beyond 12 months
from the date of determination; and
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all goodwill, trade names, trademarks, patents, unamortized debt
discount and expenses and other like intangibles, all as set
forth on a consolidated balance sheet of Devon and computed in
accordance with accounting principles generally accepted in the
United States.
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Debt means indebtedness for money borrowed.
Funded Debt means all Debt of Devon or any of
its subsidiaries for money borrowed which is not by its terms
subordinated in right of payment to the prior payment in full of
the securities or to Devons full and unconditional
guarantee in respect thereof, as applicable, having a maturity
of more than 12 months from the date as of which the amount
thereof is to be determined or having a maturity of fewer than
12 months but by its terms being:
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renewable or extendible beyond 12 months from such date at
the option of the obligor; or
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issued in connection with a commitment by a bank or other
financial institution to lend so that the indebtedness is
treated as though it had a maturity in excess of 12 months
pursuant to accounting principles generally accepted in the
United States.
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Indebtedness means Debt and the deferred
purchase price of property or assets purchased.
Mortgage means and includes any mortgage,
pledge, lien, security interest, conditional sale or other title
retention agreement or other similar encumbrance.
Offshore means the lands beneath the
navigable waters of the U.S. or Canada, or the continental
shelf of the U.S. or Canada.
Ordinary Course Mortgages means:
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Mortgages for taxes, assessments or governmental charges or
levies on the property of Devon or any Restricted Subsidiary if
the same shall not at the time be delinquent or thereafter can
be paid without penalty, or are being contested in good faith
and by appropriate proceedings and for which adequate reserves
in accordance with generally accepted accounting principles
shall have been set aside on Devons books;
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Mortgages imposed by law, such as carriers,
warehousemens, landlords and mechanics liens
and other similar liens arising in the ordinary course of
business which secure obligations not more than 60 days
past due or which are being contested in good faith by
appropriate proceedings and for which adequate reserves in
accordance with generally accepted accounting principles shall
have been set aside on Devons books;
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Mortgages arising out of pledges or deposits under workers
compensation laws, unemployment insurance, old age pensions, or
other social security or retirement benefits, or similar
legislation;
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Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature
generally existing with respect to properties of a similar
character and which do not in any material way affect the
marketability of the same or interfere with the use thereof in
the business of Devon or any Restricted Subsidiary, as the case
may be;
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Mortgages arising under operating agreements or similar
agreements in respect of obligations which are not yet due or
which are being contested in good faith by appropriate
proceedings;
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Mortgages reserved in oil, gas
and/or
mineral leases for bonus or rental payments and for compliance
with the terms of such leases;
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Mortgages pursuant to partnership agreements, oil, gas
and/or
mineral leases, farm-out-agreements, division orders, contracts
for the sale, purchase, exchange, or processing of oil, gas
and/or other
hydrocarbons, unitization and pooling declarations and
agreements, operating agreements, development agreements, area
of mutual interest agreements, forward sale agreements, oil and
gas delivery obligations, and other agreements which are
customary in the oil, gas and other mineral exploration,
development and production business and in the business of
processing of gas and gas condensate production of the
extraction of products therefrom;
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Mortgages on personal property (excluding the capital stock or
indebtedness of any Restricted Subsidiary) securing indebtedness
maturing not more than one year from the date of its
creation; and
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Mortgages relating to a judgment or other court-ordered award or
settlement as to which Devon has not exhausted its appellate
rights.
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Principal Property means any oil, gas or
mineral producing property, or any refining, processing,
smelting or manufacturing facility located in the U.S., Canada
or Offshore, other than:
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property employed in transportation, distribution or marketing;
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information and electronic data processing equipment; or
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any property that, in the opinion of the Board of Directors of
Devon, is not materially important to the total business
conducted by Devon and its subsidiaries as an entirety.
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Restricted Subsidiary means Devon Financing
Company, L.L.C. and any other subsidiary of Devon:
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a substantial portion of the property of which is located, or a
substantial portion of the business of which is carried on,
within the U.S., Canada or Offshore;
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that owns or leases under a capital lease any Principal
Property; and
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that has Stockholders Equity exceeding 5% of Consolidated
Net Tangible Assets.
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Stockholders Equity means, with respect
to any corporation, partnership, joint venture, association,
joint stock company, limited liability company, unlimited
liability company, trust, unincorporated organization or
government, or any agency or political subdivision thereof,
stockholders equity, as computed in accordance with
accounting principles generally accepted in the United States.
The
Trustee
We may appoint a separate trustee for any series of debt
securities. In the description of a series of debt securities,
the term trustee refers to the trustee appointed
with respect to such series of debt securities. The trustee may
be a depository for funds and perform other services for, and
may transact other banking business with, Devon and its
subsidiaries in the normal course of business.
BOOK-ENTRY
SECURITIES
Unless otherwise specified in the applicable prospectus
supplement, we will issue securities, other than our common
stock, to investors in the form of one or more book-entry
certificates registered in the name of a depository or a nominee
of a depository. Unless otherwise specified in the applicable
prospectus supplement, the depository will be DTC. We have been
informed by DTC that its nominee will be Cede & Co.
Accordingly, Cede is expected to be the initial registered
holder of all securities that are issued in book-entry form.
No person that acquires a beneficial interest in securities
issued in book-entry form will be entitled to receive a
certificate representing those securities, except as set forth
in this prospectus or in the applicable prospectus supplement.
Unless and until definitive securities are issued under the
limited circumstances described below, all references to actions
by holders or beneficial owners of securities issued in
book-entry form will refer to actions taken by DTC upon
instructions from its participants, and all references to
payments and notices to holders or beneficial owners will refer
to payments and notices to DTC or Cede, as the registered holder
of such securities.
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DTC has informed us that it is:
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a limited-purpose trust company organized under New York banking
laws;
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a banking organization within the meaning of the New
York banking laws;
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a member of the Federal Reserve System;
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a clearing corporation within the meaning of the New
York Uniform Commercial Code; and
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a clearing agency registered under the Securities
Exchange Act.
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DTC has also informed us that it was created to:
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hold securities for participants; and
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facilitate the computerized settlement of securities
transactions among participants through computerized electronic
book-entry changes in participants accounts, thereby
eliminating the need for the physical movement of securities
certificates.
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Participants have accounts with DTC and include securities
brokers and dealers, banks, trust companies and clearing
corporations. Indirect access to the DTC system also is
available to indirect participants such as banks, brokers,
dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or
indirectly.
Persons that are not participants or indirect participants but
desire to buy, sell or otherwise transfer ownership of or
interests in securities may do so only through participants and
indirect participants. Under the book-entry system, beneficial
owners may experience some delay in receiving payments, as
payments will be forwarded by our agent to Cede, a nominee for
DTC. These payments will be forwarded to DTCs
participants, which thereafter will forward them to indirect
participants or beneficial owners. Beneficial owners will not be
recognized by the applicable registrar, transfer agent, trustee
or depositary as registered holders of the securities entitled
to the benefits of the certificate, the indenture or any deposit
agreement. Beneficial owners that are not participants will be
permitted to exercise their rights as an owner only indirectly
through participants and, if applicable, indirect participants.
Under the current rules and regulations affecting DTC, DTC will
be required to make book-entry transfers of securities among
participants and to receive and transmit payments to
participants. Participants and indirect participants with whom
beneficial owners of securities have accounts are also required
by these rules to make book-entry transfers and receive and
transmit such payments on behalf of their respective account
holders.
Because DTC can act only on behalf of participants, who in turn
act only on behalf of other participants or indirect
participants, and on behalf of certain banks, trust companies
and other persons approved by it, the ability of a beneficial
owner of securities issued in book-entry form to pledge those
securities to persons or entities that do not participate in the
DTC system may be limited due to the unavailability of physical
certificates for the securities.
DTC has advised us that it will take any action permitted to be
taken by a registered holder of any securities under the
certificate, the indenture or any deposit agreement only at the
direction of one or more participants to whose accounts with DTC
the securities are credited.
According to DTC, it has provided information with respect to
DTC to its participants and other members of the financial
community for informational purposes only and is not intended to
serve as a representation, warranty or contract modification of
any kind.
Unless otherwise specified in the applicable prospectus
supplement, a book-entry security will be exchangeable for
definitive securities registered in the names of persons other
than DTC or its nominee only if:
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DTC notifies us that it is unwilling or unable to continue as
depository for the book-entry security or DTC ceases to be a
clearing agency registered under the Securities Exchange Act at
a time when DTC is required to be so registered; or
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we execute and deliver to the applicable registrar, transfer
agent, trustee
and/or
depositary an order complying with the requirements of the
certificate, the indenture or any deposit agreement that the
book-entry security will be so exchangeable.
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Any book-entry security that is exchangeable in accordance with
the preceding sentence will be exchangeable for securities
registered in such names as DTC directs.
If one of the events described in the immediately preceding
paragraph occurs, DTC is generally required to notify all
participants of the availability through DTC of definitive
securities. Upon surrender by DTC of the book-entry security
representing the securities and delivery of instructions for
re-registration, the registrar, transfer agent, trustee or
depositary, as the case may be, will reissue the securities as
definitive securities. After reissuance of the securities, such
persons will recognize the beneficial owners of such definitive
securities as registered holders of securities.
Except as described above:
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a book-entry security may not be transferred except as a whole
book-entry security by or among DTC, a nominee of DTC
and/or a
successor depository appointed by us; and
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DTC may not sell, assign or otherwise transfer any beneficial
interest in a book-entry security unless the beneficial interest
is in an amount equal to an authorized denomination for the
securities evidenced by the book-entry security.
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None of Devon, the trustees, any registrar and transfer agent or
any depository, or any agent of any of them, will have any
responsibility or liability for any aspect of DTCs or any
participants records relating to, or for payments made on
account of, beneficial interests in a book-entry security.
PLAN OF
DISTRIBUTION
We may sell the securities through agents, underwriters or
dealers, or directly to one or more purchasers without using
underwriters or agents.
We may designate agents who agree to use their reasonable
efforts to solicit purchases for the period of their appointment
or to sell securities on a continuing basis.
If we use underwriters for a sale of securities, the
underwriters will acquire the securities for their own accounts.
The underwriters may resell the securities in one or more
transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the
time of sale. The obligations of the underwriters to purchase
the securities will be subject to the conditions set forth in
the applicable underwriting agreement. The underwriters will be
obligated to purchase all the securities offered if any of those
securities are purchased. Any initial public offering price and
any discounts or concessions allowed or re-allowed or paid to
dealers will be described in the applicable prospectus
supplement and may be changed from time to time.
Underwriters, dealers and agents that participate in the
distribution of the securities may be underwriters as defined in
the Securities Act and any discounts or commissions they receive
from us and any profit on their resale of the securities may be
treated as underwriting discounts and commissions under the
Securities Act. The applicable prospectus supplement will
identify any underwriters, dealers or agents and will describe
their compensation. We may have agreements with the
underwriters, dealers and agents to indemnify them against
certain civil liabilities, including liabilities under the
Securities Act. Underwriters, dealers and agents may engage in
transactions with or perform services for us or our subsidiaries
in the ordinary course of their businesses.
Unless otherwise specified in the applicable prospectus
supplement, each class or series of securities will be a new
issue with no established trading market, other than the common
stock, which is listed on the New York Stock Exchange. We may
elect to list any other class or series of securities on any
exchange, but we are not obligated to do so. It is possible that
one or more underwriters may make a market in a class or series
of securities, but the underwriters will not be obligated to do
so and may discontinue any market making at any time without
notice. We cannot give any assurance as to the liquidity of the
trading market for any of the securities.
15
LEGAL
MATTERS
Certain legal matters in connection with the securities will be
passed upon for us by Skadden, Arps, Slate, Meagher &
Flom LLP and for any underwriter by legal counsel named in the
prospectus supplement.
EXPERTS
The consolidated financial statements of Devon and its
subsidiaries as of December 31, 2010 and 2009 and for each
of the years in the three-year period ended December 31,
2010, and managements assessment of the effectiveness of
internal control over financial reporting as of
December 31, 2010, have been incorporated by reference
herein in reliance upon the report of KPMG LLP, independent
registered public accounting firm, incorporated by reference
herein, and upon the authority of said firm as experts in
accounting and auditing.
Certain information with respect to Devons oil and gas
reserves derived from the reports of LaRoche Petroleum
Consultants, Ltd. and AJM Petroleum Consultants, independent
consulting petroleum engineers, has been incorporated by
reference herein upon the authority of said firms as experts
with respect to matters covered by such reports and in giving
such reports.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements or
other information we file at the SECs Public Reference
Room at 100 F Street, N.E., Washington, D.C.
20549. Please call the SEC at
1-800-SEC-0330
for further information on the public reference rooms. Our SEC
filings are also available to the public from commercial
document retrieval services and at the website maintained by the
SEC at
http://www.sec.gov.
We filed with the SEC a registration statement on
Form S-3
with respect to the securities offered by this prospectus. This
prospectus is a part of that registration statement. As allowed
by SEC rules, this prospectus does not contain all the
information you can find in the registration statement or the
exhibits to the registration statement. Instead, the SEC allows
us to incorporate by reference information into this
prospectus, which means that we can disclose important
information to you by referring you to another document filed
separately with the SEC. The information incorporated by
reference is deemed to be part of this prospectus, except for
any information superseded by information in, or incorporated by
reference in, this prospectus.
This prospectus incorporates by reference the documents set
forth below that we have previously filed with the SEC. These
documents contain important information about Devon.
(a) Our Annual Report on
Form 10-K
for the year ended December 31, 2010.
(b) Our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2011.
(c) Our Definitive Proxy Statement filed April 27,
2011.
(d) Our Current Reports on
Form 8-K
filed February 16, 2011 (filed under Item 8.01 of
Form 8-K),
February 17, 2011, April 25, 2011 and June 9,
2011.
(e) The description of our Common Stock set forth in
Exhibit 4.9 to our Current Report on
Form 8-K,
filed August 18, 1999, including any amendment or report
filed for the purposes of updating such description.
We are also incorporating by reference additional documents that
we file with the SEC pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this prospectus
but before the completion of the offering. Current Reports on
Form 8-K
containing only disclosure furnished under Items 2.02 and
7.01 of
Form 8-K
are not incorporated herein by reference.
We will provide documents incorporated by reference in this
prospectus without charge, excluding all exhibits unless we have
specifically incorporated by reference an exhibit in this
prospectus. You may obtain documents
16
incorporated by reference in this prospectus (at no cost) by
requesting them in writing, by
e-mail or by
telephone from us at the following address:
Devon Energy Corporation, 20 North Broadway, Oklahoma City,
Oklahoma
73102-8260
Attention: Corporate Secretary, Telephone:
(405) 235-3611,
CorporateSecretary@dvn.com.
You can also get more information by visiting our website at
http://www.devonenergy.com.
Website materials are not part of this prospectus.
17
$
Devon Energy
Corporation
$ % Senior
Notes due 2016
$ % Senior
Notes due 2021
$ % Senior
Notes due 2041
PROSPECTUS SUPPLEMENT
Joint Book-Running Managers
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Goldman,
Sachs & Co. |
Morgan Stanley |
UBS Investment Bank |
July , 2011