Approximately 60% of the 2024 capital budget is allocated to the Delaware Basin, reflecting a strategy to concentrate investment in the highest-returning oil play. This is expected to improve capital efficiency and generate growth in free cash flow.

The 2024 capital expenditure budget is expected to be approximately $3.3 billion to $3.6 billion, which is approximately 10% lower than the 2023 capital expenditures. This is due to a reduced activity level in some core areas and identified cost reductions.

The company acquired additional producing properties and leasehold interests in the Williston Basin and Eagle Ford in 2022, which were complementary to existing acreage, offered operational synergies and added high-quality inventory to our portfolio.

The company continues to prioritize value creation through moderated capital investment and production growth, with a focus on opportunistic share repurchases, funding fixed and variable dividends, and repaying debt.

The elevated level of cost inflation has eroded and could continue to erode the cost efficiencies gained over previous years and pressure margins in 2024. Management expects to mitigate the impact of cost inflation through efficiencies gained from the scale of our operations as well as by leveraging our long-standing relationships with our suppliers.

The company is prioritizing value creation through moderated capital investment and production growth, particularly considering the volatility in commodity prices, supply chain constraints, and economic uncertainty. This reflects a focus on capital efficiency over volume.

The company's financial condition, results of operations, and the value of its properties are highly dependent on the general supply and demand for oil, gas, and NGLs, which impact the prices it ultimately realizes on sales of these commodities. Volatility is likely to continue in the future due to numerous factors beyond the company's control.

The company is subject to extensive federal, state, tribal, and local laws and regulations, including with respect to environmental matters, worker health and safety, and the gathering and transportation of oil, gas, and NGLs. Changes in public policy could significantly impact profitability, financial condition and liquidity.

Continuing and increasing political and social attention to the issue of climate change has resulted in legislative, regulatory and other initiatives, including international agreements, to reduce GHG emissions. These actions may result in the restriction or cancellation of oil and natural gas activities, greater costs of compliance or consumption.

The company competes with major integrated and independent oil and gas companies for the acquisition of oil and gas leases and properties. Rising costs and scarcity caused by competitive pressure will generally increase during periods of higher commodity prices and can be further exacerbated by higher inflation rates and supply chain disruptions.

The company is refining its capital allocation by further concentrating investment in the Delaware Basin. By shifting more capital to the core of this world-class basin and high-grading activity across the rest of our diversified portfolio, the company anticipates delivering meaningful improvements to capital efficiency.

Certain of the properties and investments in which the company has an interest are operated by other companies and may involve third-party working interest owners. The company has limited influence and control over the operation or future development of such properties and investments, including compliance with environmental, health and safety regulations.

LOE expenses and LOE per BOE increased primarily due to acquisitions in the Eagle Ford and Williston Basin that both closed in the third quarter of 2022, along with inflation and higher volumes resulting from increased activity in the Delaware Basin and Anadarko Basin.

DD&A and our oil and gas per BOE rate both increased in 2023 primarily due to acquisitions in the Eagle Ford and Williston Basin which both closed in the third quarter of 2022. Increased activity in the Delaware Basin and Anadarko Basin also led to an increase in DD&A.

Management expects to mitigate the impact of cost inflation through efficiencies gained from the scale of our operations as well as by leveraging our long-standing relationships with our suppliers.

The company relies heavily on information systems and other digital technologies to conduct its business, and anticipates expanding the use of and reliance on these systems and technologies, including through artificial intelligence, process automation and data analytics.

Concurrent with the growing dependence on technology is a greater sensitivity to cyberattack related activities, which have increasingly targeted our industry. Perpetrators of cyberattacks often attempt to gain unauthorized access to digital systems for purposes of misappropriating confidential and proprietary information.

In February 2024, Devon committed to invest approximately $90 million in a geothermal technology company and expects to fund the commitment throughout 2024.

Through 2023, the company completed approximately 77% of its authorized $3.0 billion share repurchase program, with approximately 45 million of its common shares repurchased for approximately $2.3 billion, or $51.05 per share, since inception of the plan.

In February 2024, Devon raised its fixed dividend by 10%, to $0.22 per share, and announced a cash dividend in the amount of $0.44 per share payable in the first quarter of 2024.

The 2024 capital expenditure budget is expected to be approximately $3.3 billion to $3.6 billion, which is approximately 10% lower than the 2023 capital expenditures. This is due to a reduced activity level in some core areas and identified cost reductions.

To support our commitment to improve our environmental footprint, we spent approximately $115 million in 2023 on capital projects that will directly or indirectly result in emissions reduction, and we anticipate similar spending in 2024.

Our organizational efforts assure that our environmental objectives and targets are considered in capital allocation decisions, corporate and business unit planning and team strategies to integrate sustainability into our business activities.

Public statements with respect to emissions reduction goals, environmental targets or, more broadly, ESG-related goals, are becoming increasingly subject to heightened scrutiny from public and governmental authorities with respect to the risk of potential "greenwashing.

Commodity prices weakened primarily due to economic uncertainty surrounding inflation and increased interest rates as well as certain geopolitical events. WTI oil prices averaged $77.62 per Bbl in 2023 versus $94.39 per Bbl in 2022.

The market price for crude oil is currently expected to be lower in 2024 due to concerns of a global economic slowdown driven by high interest rates and high inflation that could weaken economic activity and oil demand. Additionally, oil prices could remain volatile as uncertainty still exists from the impact of sanctioned Russian oil in the global market.

Public statements with respect to emissions reduction goals, environmental targets or, more broadly, ESG-related goals, are becoming increasingly subject to heightened scrutiny from public and governmental authorities with respect to the risk of potential "greenwashing.