DEVON ENERGY CORP, S-3/A, 1999-09-17

DEVON ENERGY CORP
S-3/A, 1999-09-17
CRUDE PETROLEUM & NATURAL GAS

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<PAGE>

As Filed with the Securities and Exchange Commission on September 17, 1999
Registration No. 333-86065
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---------------

Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

---------------

DEVON ENERGY CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 73-1567067
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

20 North Broadway, Suite 1500
Oklahoma City, Oklahoma 73102-8260
(405) 235-3611
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
J. Larry Nichols
President and Chief Executive Officer
Devon Delaware Corporation
20 North Broadway, Suite 1500
Oklahoma City, Oklahoma 73102-8260
(405) 235-3611
(Name, Address, Including Zip Code, and Telephone Number,Including Area Code,
of Agent For Service)

COPIES TO:

Jerry A. Warren Thomas P. Mason
McAfee & Taft A Professional Andrews & Kurth L.L.P.
Corporation 600 Travis, Suite 4200
Two Leadership Square, 10th Floor Houston, Texas 77002
211 North Robinson

Oklahoma City, Oklahoma 73102-7103

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.

If the only securities being registered on the Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act of 1933, check the following box. [_]

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------

Title of Each Class Proposed Maximum Proposed Maximum
of Securities to be Amount to be Offering Price Aggregate Amount of
Registered Registered Per Share(2) Offering Price(2) Registration Fee(2)(3)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10,000,000
Devon Common Stock(1) Shares $38.46875 $384,687,500 $106,943
- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes the stock purchase rights associated with the Devon Common Stock.
(2) Estimated pursuant to Rule 457(c) solely for the purposes of computing the
registration fee based upon the average of the high and low prices of the
Devon Common Stock, as reported on the American Stock Exchange Composite
Transactions on August 26, 1999.
(3) The filing fee of $106,943.00 has been previously paid on August 26, 1999.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)

Issued September 17, 1999

8,700,000 Shares

Devon Energy Corporation Logo

COMMON STOCK

-----------

Devon Energy Corporation is offering 8,700,000 shares of its common stock.

-----------

Our common stock is listed on the American Stock Exchange under the symbol
"DVN." On September 16, 1999, the reported last sale price of the common stock
on the American Stock Exchange was $41 11/16 per share.

-----------

Investing in our common stock involves risks. See "Risk Factors" beginning on
page 14.

-----------

PRICE $ A SHARE

-----------

<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions Devon
-------- ------------- -----------
<S> <C> <C> <C>
Per Share.................................... $ $ $
Total........................................ $ $ $
</TABLE>

The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.

Devon Energy Corporation has granted the underwriters the right to purchase up
to an additional 1,300,000 shares of common stock to cover over-allotments.
Morgan Stanley & Co. Incorporated expects to deliver the shares of common stock
to purchasers on . , 1999.

-----------

MORGAN STANLEY DEAN WITTER
J.P. MORGAN & CO.
PAINEWEBBER INCORPORATED

BEAR, STEARNS & CO. INC.
SCHRODER & CO. INC.

. , 1999
<PAGE>

(This page intentionally left blank)

2
<PAGE>

You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. 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

<TABLE>
<CAPTION>
Page
----
<S> <C>
About This Prospectus.................................................... 3
Prospectus Summary....................................................... 4
Risk Factors............................................................. 14
Risks Relating to the Oil and Gas Industry............................. 14
Risks Relating to an Investment in Devon............................... 15
Risks Relating to the Recent Merger with PennzEnergy................... 15
Use of Proceeds.......................................................... 18
Capitalization........................................................... 19
Market Price Data........................................................ 20
Unaudited Pro Forma Financial Information................................ 21
Notes to Unaudited Pro Forma Financial Information....................... 25
Properties of Devon...................................................... 30
Directors and Executive Officers of Devon................................ 33
Certain United States Federal Tax Considerations to Non-United States
Holders................................................................. 35
Underwriters............................................................. 38
Legal Matters............................................................ 40
Experts.................................................................. 40
Where You Can Find More Information...................................... 40
Cautionary Statement Concerning Forward-Looking Statements............... 42
Commonly Used Oil and Gas Terms.......................................... 43
</TABLE>

ABOUT THIS PROSPECTUS

This prospectus provides you with a general description of our common stock
which we are offering. You should read this prospectus together with the
additional information described under the heading "Where You Can Find More
Information" on page 40.

In this prospectus, the terms "Devon", "we", "us" and "our" generally mean
Devon Energy Corporation, a Delaware corporation, and its consolidated
subsidiaries. Some references to Devon in this prospectus are made as of a time
or period before the PennzEnergy merger. Those references to Devon mean, unless
the context otherwise requires, our predecessor company before the PennzEnergy
merger. The predecessor company became a wholly-owned subsidiary of Devon in
the PennzEnergy merger.

Unless otherwise indicated, all dollar amounts in this prospectus are
expressed in U.S. dollars.

3
<PAGE>

PROSPECTUS SUMMARY

This summary highlights selected information from this prospectus. It may not
contain all of the information that is important to you. You should read the
summary together with the more detailed information about Devon and the common
stock being sold in this offering in the rest of this prospectus and the
documents to which we have referred you. See "Where You Can Find More
Information" on page 40.

Devon

Devon is an independent oil and gas company engaged in the acquisition,
exploration, exploitation and development of prospective and proved oil and gas
properties, and the production and sale of crude oil, condensate, natural gas
and natural gas liquids. On August 17, 1999, we completed our merger with
PennzEnergy Company. We believe that Devon now ranks solidly in the top ten of
all U.S.-based independent oil and gas producers in terms of market
capitalization, total proved reserves and annual production.

The following references to our oil and gas reserves and properties are on a
pro forma basis as if the merger was completed on December 31, 1998. As of
December 31, 1998, we had proved oil and gas reserves of approximately 660
million barrels of oil equivalent. Approximately 52% of these reserves were
natural gas and 48% were oil and natural gas liquids. Approximately 64% of the
proved reserves, or 422 million equivalent barrels, were located in the United
States. These reserves were concentrated in four primary operating areas: the
Permian Basin, the Rocky Mountain Region, the Gulf Coast/East Texas Region and
the Offshore Gulf of Mexico. Approximately 22% of the combined reserves, or 144
million equivalent barrels, were located in the Western Canadian Sedimentary
Basin. The balance of proved reserves, approximately 94 million equivalent
barrels, was located outside North America, primarily in Azerbaijan. In
addition to the proved oil and gas properties, we had a substantial inventory
of exploration acreage totaling approximately 15 million acres as of the end of
1998.

We have significant expertise with regard to various oilfield technologies,
including coal bed methane extraction, enhanced oil recovery, deep onshore
natural gas drilling, shallow water offshore drilling and other exploration,
production and processing technologies. We also have significant international
operations and experience in Canada and outside North America. We believe our
property base and expertise give us the ability to acquire, explore for,
develop and exploit oil and natural gas reserves domestically both onshore and
offshore, as well as internationally.

The "Risk Factors" section of this prospectus, beginning on page 14,
discusses potential risks associated with an investment in Devon. You should
consider these potential risks before you decide to invest in the common stock
offered by this prospectus. The prospectus incorporates by reference detailed
information about the merger contained in the merger proxy statement. To
request a copy of the merger proxy statement, see "Where You Can Find More
Information" on page 40 of this prospectus.

Our principal executive offices are located at 20 North Broadway, Suite
1500, Oklahoma City, Oklahoma 73102-8260. Our telephone number at that location
is (405) 235-3611.

Strategy

Our primary objectives are to build reserves, production, cash flow and
earnings per share by acquiring oil and gas properties, exploring for new oil
and gas reserves and seeking optimal production from existing oil and gas
properties. Our management seeks to achieve these objectives by:

4
<PAGE>

. concentrating our properties in core areas to achieve economies of scale,

. acquiring and developing high profit margin properties,

. continually disposing of marginal and non-strategic properties,

. balancing reserves and production between oil and gas, and

. keeping debt levels reasonable.

Through our predecessors, we began operations in 1971 as a privately held
company. During 1988, we expanded our capital base by issuing common stock to
the public for the first time. This transaction began a substantial expansion
program that has continued through the years. We have used a two-pronged
strategy of acquiring producing properties and engaging in drilling activities
to achieve this expansion. Approximately two-thirds of our total capital spent
during this period was for property acquisitions and one-third was for
drilling. Total proved reserves increased from 8.1 million barrels of oil
equivalent at the end of 1987 to 660 million pro forma barrels of oil
equivalent at the end of 1998.

Our objective is to increase value per share, in addition to increasing total
assets. Reserves have grown from 1.31 barrels of oil equivalent per diluted
share at the end of 1987 to 8.83 pro forma barrels of oil equivalent per
diluted share at the end of 1998. At the same time, our net debt, or long-term
debt less working capital, has remained relatively low. At the end of 1998, our
pro forma net debt was $2.10 per barrel of oil equivalent. This number excludes
$742.4 million of debentures which are exchangeable for shares of Chevron
Corporation common stock owned by Devon.

Our merger with Northstar

On December 10, 1998, we completed a merger with Canadian-based Northstar
Energy Corporation. The merger was accounted for under the "pooling of
interests" method of accounting and Northstar became our subsidiary.
Northstar's properties are located primarily in the Western Canada Sedimentary
Basin in Alberta. Through the merger, we expanded our reserves by approximately
115 million barrels of oil equivalent, or by 62% at the time, and nearly
tripled our undeveloped leasehold inventory. In addition, we retained the
experienced Northstar management team to continue to direct our Canadian
operations.

Our merger with Northstar placed us in a unique position to take advantage of
growth opportunities both in the United States and in Canada. With 64% of our
pro forma proved reserves in the United States and 22% in Canada, we have
considerable exposure to growing North American natural gas markets, while
retaining substantial oil reserves, particularly in the Permian Basin of the
United States. In addition, we own a large inventory of acreage and have the
financial flexibility to pursue the opportunities for drilling on this acreage.

As part of the Northstar merger consideration, we issued, through Northstar,
16.1 million exchangeable shares. These shares are exchangeable at any time, on
a one-for-one basis, for shares of our common stock. The exchangeable shares
are essentially equivalent to our common stock, but, because they were issued
by Northstar, they qualify as a domestic Canadian investment for Canadian
institutional stockholders. The exchangeable shares trade on The Toronto Stock
Exchange under the symbol "NSX." Our common stock trades on the American Stock
Exchange under the symbol "DVN."

5
<PAGE>

The Offering

<TABLE>
<S> <C>
Common stock offered................ 8,700,000 shares (1)

Common stock to be outstanding after
the offering....................... 79,172,068 shares (1)(2)

Over-allotment option............... 1,300,000 shares

Use of proceeds..................... The proceeds will be used to reduce long-
term debt.
</TABLE>
- --------

(1) Assuming the underwriters do not exercise the over-allotment option granted
by us to purchase up to 1,300,000 additional shares in this offering.

(2) Based on the number of shares actually outstanding as of September 16,
1999. This number includes 4,815,224 shares issuable upon the exchange of
all of our outstanding Northstar exchangeable shares. This number excludes
(a) 4,901,503 shares issuable upon the conversion of all our outstanding
trust convertible preferred securities, (b) shares subject to outstanding
options or reserved for issuance under our employee benefit plans, and (c)
the exercise of the over-allotment option by the underwriters.

6
<PAGE>

Summary Unaudited Pro Forma Financial and Other Information

The following unaudited pro forma financial information has been prepared to
assist in your analysis of the financial effects of this offering of additional
Devon common stock and the PennzEnergy merger. This pro forma information is
based on the historical financial statements of Devon and PennzEnergy.

The information was prepared based on the following:

. The assumed net proceeds from this offering of 8.7 million common shares
are $349.2 million. This is based on an assumed offering price of
$41.6875 per share (the closing price as of September 16, 1999), less
$13.5 million for the underwriting discount and other estimated offering
costs and expenses.

. Devon utilizes the full cost method of accounting for its oil and gas
activities.

. The PennzEnergy merger was accounted for as a purchase of PennzEnergy by
Devon.

. Targeted annual general and administrative expense and lease operating
expense savings from the merger of $50 to $60 million have not been
reflected as an adjustment to the historical data. These cost savings
are expected to result from the consolidation of the corporate
headquarters of Devon and PennzEnergy and the elimination of duplicate
staff and expenses.

. As of June 30, 1999, the merger did not cause a pro forma reduction of
the carrying value of oil and gas properties under the full cost
accounting "ceiling test." The June 30, 1999 ceiling test was calculated
based on a posted West Texas Intermediate oil price of $16.50 per barrel
and a Texas Gulf Coast index gas price of $2.14 per Mcf. However, the
pro forma ceiling "cushion" as of June 30, 1999, in Devon's non-Canadian
cost centers was less than $20 million. Therefore, future reductions in
oil and gas prices or changes to the preliminary allocation of the
purchase price of PennzEnergy's oil and gas properties could cause a
reduction of the carrying value to be recorded as of September 30, 1999,
or in subsequent periods.

No pro forma adjustments have been made with respect to the following unusual
items. These items are reflected in the historical results of Devon or
PennzEnergy, as applicable, and should be considered when making period-to-
period comparisons:

. In 1998, PennzEnergy realized pretax gains on the sale and exchange of
Chevron Corporation common stock of $230.1 million. The summary
unaudited pro forma operations data does not include the $207.0 million
after-tax extraordinary loss resulting from the early extinguishment of
related debentures exchangeable for such common stock.

. In 1998, PennzEnergy incurred $24.3 million of nonrecurring general and
administrative expenses in connection with the spin-off of Pennzoil-
Quaker State Company on December 30, 1998.

. In 1998, Devon incurred $13.1 million of nonrecurring expenses related
to the merger with Northstar.

. In 1998, Devon reduced the carrying value of its oil and gas properties
by $126.9 million ($88.0 million after-tax) due to the full cost ceiling
limitation.

. In the second quarter of 1999, PennzEnergy recognized a gain of $46.7
million ($29.8 million after-tax) from the sale of land, timber and
mineral rights in Pennsylvania and New York.

The unaudited pro forma information is presented for illustrative purposes
only. If this offering of additional Devon common stock and the PennzEnergy
merger had occurred in the past, Devon's financial position or operating
results might have been different from those presented in the unaudited pro
forma information. You should not rely on the unaudited pro forma information
as an indication of the financial position or operating results that Devon
would have achieved if this offering and the merger had occurred on June 30,
1999, or January 1, 1998. You also should not rely on the unaudited pro forma
information as an indication of the future results that Devon will achieve
after this offering and the merger.

7
<PAGE>

<TABLE>
<CAPTION>
As of June 30, 1999
----------------------------------
Devon Pro Forma With
the PennzEnergy
Merger
----------------------
Without
Devon the With the
Historical Offering Offering
---------- ---------- ----------
(In Thousands, Except Per Share
Data)
<S> <C> <C> <C>
Balance Sheet Data:
Investment in common stock of Chevron
Corporation (see note 4 on page 27)..... $ -- $ 674,224 $ 674,224
Total assets............................. 1,305,163 4,733,482 4,733,482
Debentures exchangeable into shares of
Chevron Corporation common stock (see
note 4 on page 27)...................... -- 775,519 775,519
Other long-term debt..................... 448,013 1,390,242 1,041,005
Convertible preferred securities of
subsidiary trust........................ 149,500 149,500 149,500
Stockholders' equity..................... 555,240 1,431,539 1,780,776
Book value per share..................... 11.37 20.36 22.54

<CAPTION>
Year Ended December 31, 1998
----------------------------------
Devon Pro Forma With
the PennzEnergy
Merger
----------------------
Without
Devon the With the
Historical Offering Offering
---------- ---------- ----------
(In Thousands, Except Per Share
Data)
<S> <C> <C> <C>
Operations Data:
Operating Results
Oil sales............................... $ 143,624 $ 302,918 $ 302,918
Gas sales............................... 209,344 553,938 553,938
NGL sales............................... 16,692 63,703 63,703
Other revenue........................... 17,848 295,803 295,803
---------- ---------- ----------
Total revenue......................... 387,508 1,216,362 1,216,362
---------- ---------- ----------
Lease operating expenses................ 113,484 294,739 294,739
Production taxes........................ 13,916 28,148 28,148
Depreciation, depletion and
amortization........................... 123,844 510,064 510,064
General and administrative expenses..... 23,544 139,378 139,378
Northstar combination expenses.......... 13,149 13,149 13,149
Interest expense........................ 22,632 176,659 141,515
Deferred effect of changes in foreign
currency exchange rate on subsidiary's
long-term debt......................... 16,104 16,104 16,104
Distributions on preferred securities of
subsidiary trust....................... 9,717 9,717 9,717
Reduction of carrying value of oil and
gas properties......................... 126,900 126,900 126,900
---------- ---------- ----------
Total costs and expenses.............. 463,300 1,314,858 1,279,714
---------- ---------- ----------
Loss before income taxes................ (75,792) (98,496) (63,352)
Income tax expense (benefit):
Current............................... 7,687 10,324 10,324
Deferred.............................. (23,194) (28,198) (14,843)
---------- ---------- ----------
Total income tax expense............. (15,507) (17,874) (4,519)
---------- ---------- ----------
Net loss................................ (60,285) (80,622) (58,833)
Preferred stock dividends............... -- 5,625 5,625
---------- ---------- ----------
Net loss applicable to common
shareholders........................... $ (60,285) $ (86,247) $ (64,458)
========== ========== ==========
Net loss per share--basic and diluted... (1.25) (1.24) (0.82)
Cash dividends per share................ 0.15 0.17 0.17
Weighted average common shares
outstanding............................ 48,376 69,729 78,429
Cash Flow Data
Net cash provided by operating
activities............................. $ 191,571 $ 388,992 $ 424,136
Net cash used in investing activities... (271,960) (222,959) (222,959)
Net cash provided (used) by financing
activities............................. 57,618 (143,300) (145,040)
Modified EBITDA......................... 223,405 740,948 740,948
Cash margin............................. 183,369 544,248 579,392
</TABLE>

8
<PAGE>

<TABLE>
<CAPTION>
Year Ended December 31, 1998
----------------------------
Devon Pro Forma
With the
PennzEnergy
Merger
-----------------
Without
Devon the With the
Historical Offering Offering
---------- -------- --------
<S> <C> <C> <C>
Production, Price and Other Data
Production:
Oil (MBbls).................................... 11,903 26,128 26,128
Gas (MMcf)..................................... 133,065 303,693 303,693
NGL (MBbls).................................... 1,939 7,128 7,128
MBoe .......................................... 36,020 83,872 83,872
Average prices:
Oil (per Bbl).................................. $ 12.07 $ 11.59 $ 11.59
Gas (per Mcf).................................. 1.57 1.82 1.82
NGL (per Bbl).................................. 8.61 8.94 8.94
Per Boe........................................ 10.26 10.98 10.98
Costs per Boe:
Operating costs................................ 3.54 3.85 3.85
Depreciation, depletion and amortization of oil
and gas properties............................ 3.32 6.02 6.02
General and administrative expenses............ 0.65 1.66 1.66
</TABLE>

<TABLE>
<CAPTION>
As of December 31, 1998
--------------------------------
Devon Pro Forma With
the PennzEnergy
Merger
---------------------
Without
Devon the With the
Historical Offering Offering
---------- ---------- ----------
<S> <C> <C> <C>
Property Data
Proved reserves:
Oil (MBbls)................................ 83,457 272,688 272,688
Gas (MMcf)................................. 1,198,894 2,050,528 2,050,528
NGL (MBbls)................................ 16,079 45,654 45,654
Total (MBoe)............................... 299,351 660,096 660,096
SEC 10% present value (thousands).......... $1,009,039 $2,087,666 $2,087,666
Standardized measure of discounted future
net cash flows (thousands)................ 931,588 1,816,542 1,816,542
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
Six Months Ended June 30, 1999
--------------------------------
Devon Pro Forma
With the
PennzEnergy Merger
--------------------
Without
Devon the With the
Historical Offering Offering
---------- --------- ---------
(In Thousands, Except Per
Share Data)
<S> <C> <C> <C>
Operations Data:
Operating Results
Oil sales.................................. $ 64,784 $ 149,898 $ 149,898
Gas sales.................................. 112,938 263,822 263,822
NGL sales.................................. 9,764 28,496 28,496
Other revenue.............................. 4,092 65,654 65,654
--------- --------- ---------
Total revenue............................ 191,578 507,870 507,870
--------- --------- ---------
Lease operating expenses................... 54,520 130,996 130,996
Production taxes........................... 6,415 13,179 13,179
Depreciation, depletion and amortization... 69,321 247,368 247,368
General and administrative expenses........ 13,175 57,895 57,895
Interest expense........................... 13,779 74,232 56,660
Deferred effect of changes in foreign
currency exchange rate on subsidiary's
long-term debt............................ (8,746) (8,746) (8,746)
Distributions on preferred securities of
subsidiary trust.......................... 4,859 4,859 4,859
--------- --------- ---------
Total costs and expenses................. 153,323 519,783 502,211
--------- --------- ---------
Earnings (loss) before income taxes........ 38,255 (11,913) 5,659
Income tax expense (benefit):
Current................................... 4,302 4,268 4,268
Deferred.................................. 11,764 (8,057) (1,380)
--------- --------- ---------
Total income tax expense (benefit)....... 16,066 (3,789) 2,888
--------- --------- ---------
Net earnings (loss)........................ 22,189 (8,124) 2,771
Preferred stock dividends.................. -- 4,868 4,868
--------- --------- ---------
Net earnings (loss) applicable to common
shareholders.............................. $ 22,189 $ (12,992) $ (2,097)
========= ========= =========
Net earnings (loss) per share--basic and
diluted................................... 0.46 (0.19) (0.03)
Cash dividends per share................... 0.10 0.10 0.10
Weighted average common shares
outstanding............................... 48,575 70,021 78,721
Cash Flow Data
Net cash provided by operating activities.. $ 85,911 $ 107,508 $ 125,080
Net cash used in investing activities...... (134,419) (172,599) (172,599)
Net cash provided by financing activities.. 43,281 53,188 52,318
Modified EBITDA............................ 117,468 305,800 305,800
Cash margin................................ 94,528 223,441 240,013
</TABLE>

10
<PAGE>

<TABLE>
<CAPTION>
Six Months Ended June 30,
1999
----------------------------
Devon Pro Forma
With the
PennzEnergy
Merger
-----------------
Without
Devon the With the
Historical Offering Offering
---------- -------- --------
<S> <C> <C> <C>
Production, Price and Other Data
Production:
Oil (MBbls).................................... 5,071 11,962 11,962
Gas (MMcf)..................................... 71,402 153,452 153,452
NGL (MBbls).................................... 991 3,271 3,271
MBoe .......................................... 17,962 40,808 40,808
Average prices:
Oil (per Bbl).................................. $12.78 $ 12.53 $ 12.53
Gas (per Mcf).................................. 1.58 1.72 1.72
NGL (per Bbl).................................. 9.85 8.71 8.71
Per Boe........................................ 10.44 10.84 10.84
Costs per Boe:
Operating costs................................ 3.39 3.53 3.53
Depreciation, depletion and amortization of oil
and gas properties............................ 3.75 6.00 6.00
General and administrative expenses............ 0.73 1.42 1.42
</TABLE>

11
<PAGE>

Summary Historical Selected Financial and Production Data

The following selected financial information (not covered by the independent
auditors' reports) for the fiscal years has been derived from Devon's audited
consolidated financial statements. The following information for the interim
periods has been derived from Devon's unaudited financial statements.

<TABLE>
<CAPTION>
Six Months
Year Ended December 31, Ended June 30,
--------------------------------- ---------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
(In Thousands, Except Per Share Data)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets.......... $1,183,290 $1,248,986 $1,226,356 $1,295,766 $1,305,163
Long-term debt........ 83,000 305,337 405,271 302,315 448,013
Convertible preferred
securities of
subsidiary trust..... 149,500 149,500 149,500 149,500 149,500
Stockholders' equity.. 678,772 596,546 522,963 617,847 555,240
Statement of Operations
Data:
Oil sales............. 136,023 207,725 143,624 75,573 64,784
Gas sales............. 101,443 219,459 209,344 106,555 112,938
NGL sales............. 19,299 24,920 16,692 9,687 9,764
Other revenue......... 34,570 47,555 17,848 13,397 4,092
---------- ---------- ---------- ---------- ----------
Total revenues.... 291,335 499,659 387,508 205,212 191,578
---------- ---------- ---------- ---------- ----------
Lease operating
expenses............. 58,734 100,897 113,484 57,679 54,520
Production taxes...... 10,880 19,227 13,916 7,266 6,415
Depreciation,
depletion and
amortization......... 70,307 169,108 123,844 61,158 69,321
General and
administrative
expenses............. 15,111 24,381 23,554 11,784 13,175
Northstar Combination
expenses............. -- -- 13,149 -- --
Interest expense...... 12,662 18,788 22,632 10,837 13,779
Deferred effect of
changes in foreign
currency exchange
rate on subsidiary's
long-term debt....... 199 5,860 16,104 6,921 (8,746)
Distributions on
preferred securities
of subsidiary trust.. 4,753 9,717 9,717 4,859 4,859
Reduction of carrying
value of oil and gas
properties........... -- 625,514 126,900 -- --
---------- ---------- ---------- ---------- ----------
Total costs and
expenses............. 172,646 973,492 463,300 160,504 153,323
---------- ---------- ---------- ---------- ----------
Earnings (loss) before
income taxes.......... 118,689 (473,833) (75,792) 44,708 38,255
Income tax expense
(benefit):
Current.............. 7,834 26,857 7,687 5,331 4,302
Deferred............. 43,252 (200,699) (23,194) 12,979 11,764
---------- ---------- ---------- ---------- ----------
Total.............. 51,086 (173,842) (15,507) 18,310 16,066
---------- ---------- ---------- ---------- ----------
Net earnings (loss).. $ 67,603 $ (299,991) $ (60,285) $ 26,398 $ 22,189
========== ========== ========== ========== ==========
Net earnings (loss)
per share:
Basic.............. $ 2.06 $ (6.38) $ (1.25) $ 0.55 $ 0.46
Diluted............ 1.99 (6.38) (1.25) 0.55 0.46
Cash dividends per
common share........ 0.15 0.14 0.15 0.07 0.10
Weighted average
common shares
outstanding--basic.. 32,812 47,040 48,376 48,338 48,575
</TABLE>

12
<PAGE>

<TABLE>
<CAPTION>
Six Months
Year Ended December 31, Ended June 30,
---------------------------------- -------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- -------- ---------
(In Thousands, Except Per Share and Per Unit Data)
<S> <C> <C> <C> <C> <C>
Cash Flow Data:
Net cash provided by
operating
activities........... $ 144,248 $ 253,056 $ 191,571 $102,832 $ 85,911
Net cash used by
investing
activities........... (243,451) (147,583) (271,960) (74,988) (134,419)
Net cash provided
(used) by financing
activities........... 96,420 (77,141) 57,618 (47,111) 43,281
Modified EBITDA....... 206,610 355,154 223,405 128,483 117,468
Cash margin........... 181,361 299,792 183,369 107,456 94,528
Production, Price and
Other Data:
Production:
Oil (MBbls)......... 6,780 11,783 11,903 6,105 5,071
Gas (MMcf).......... 62,186 121,810 133,065 66,662 71,402
NGL (MBbls)......... 1,255 1,891 1,939 1,043 991
MBoe................ 18,399 33,976 36,020 18,258 17,962
Average prices:
Oil (Per Bbl)....... $ 20.06 $ 17.63 $ 12.07 $ 12.38 $ 12.78
Gas (Per Mcf)....... 1.63 1.80 1.57 1.60 1.58
NGL (Per Bbl)....... 15.38 13.18 8.61 9.29 9.85
Per Boe............. 13.96 13.31 10.26 10.51 10.44
Costs per Boe:
Operating costs..... 3.78 3.54 3.54 3.56 3.39
Depreciation,
depletion and
amortization of oil
and gas
properties......... 3.69 4.86 3.32 3.24 3.75
General and
administrative
expenses........... 0.82 0.72 0.65 0.65 0.73

<CAPTION>
As of December 31,
----------------------------------
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Property Data:
Proved reserves:
Oil (MBbls)......... 80,155 97,041 83,457
Gas (MMcf).......... 898,319 1,150,604 1,198,894
NGL (MBbls)......... 14,190 17,178 16,079
Total (MBoe)........ 244,065 305,986 299,351
SEC 10% present
value (thousands).. $1,999,748 $1,340,644 $1,009,039
Standardized measure
of discounted
future net cash
flows (thousands).. 1,454,974 1,100,676 931,588
</TABLE>

13
<PAGE>

RISK FACTORS

You should carefully consider the following factors, in addition to the other
information contained or incorporated by reference in this prospectus, before
deciding to invest in our common stock.

Risks Relating to the Oil and Gas Industry

Our results depend on oil and gas prices, which are volatile and beyond our
control

Our revenues, results of operations and financial condition depend largely on
the prices we receive for our oil and gas production. Extended periods of low
prices could adversely affect the ultimate return on past investments. Our
ability or willingness to continue or complete our current and planned drilling
programs and acquisitions may also be affected.

Our calculations of proved reserves are only estimates

Many uncertainties exist when estimating quantities of oil and gas reserves.
The estimates of future net cash flows from our proved reserves and their
present value are based on assumptions about future production levels, prices
and costs that may prove to be inaccurate. Our estimated reserves may be
subject to upward or downward revision based upon our production, results of
future exploration and development, prevailing oil and gas prices, operating
and development costs and other factors.

Our exploration, development and acquisition activities might not result in
significant additional reserves

The rate of production from oil and gas properties generally declines as
reserves are depleted. Our proved reserves will decline materially as oil and
gas are produced unless we acquire additional properties with proved reserves,
conduct successful exploration and development activities or our reserve
estimates increase. Our future oil and gas production depends on our success in
acquiring or finding additional reserves.

Potential hazards could damage or destroy our oil and gas wells or production
facilities or damage or injure property, persons and the environment

The exploration for and production of oil and gas can be hazardous, involving
natural disasters, blowouts, cratering, fires and losses of well control. These
hazards can damage or destroy oil and gas wells and production facilities,
injure or kill people and cause damage to property and the environment. We
maintain insurance against many potential losses and liabilities in accordance
with customary industry practices, however our insurance does not protect us
against all operational risks.

Government regulations, including environmental regulations, may adversely
affect our results

Our exploration and production operations are regulated at the federal, state
and local levels in the United States as well as by governments in other
countries. We make large expenditures to comply with the requirements of these
regulations. Future changes in the regulation of the oil and gas industry could
significantly increase these costs.

We are subject to various federal, state, local and foreign regulations
relating to the protection of the environment. We may be liable for the cost to
clean-up pollution resulting from our operations and for the cost of pollution
damages. We also may be required to suspend or cease operations in affected
areas. Additional future regulations for the protection of the environment
could adversely affect our operations and results.

14
<PAGE>

Risks Relating to an Investment in Devon

Devon has charter and other provisions that may make it difficult to cause a
change of control

Some provisions of Devon's certificate of incorporation and by-laws and of
the Delaware General Corporation Law, as well as Devon's stockholder rights
plan, may make it difficult for stockholders to cause a change in control of
Devon and replace incumbent management. These provisions include:

. a classified board, the members of which serve staggered three-year
terms and may be removed by stockholders only for cause;

. a prohibition on stockholders calling special meetings and acting by
written consent; and

. rights issued under its rights plan, which would "flip in" if a hostile
bidder acquired 15% of Devon's common stock.

The interest of Devon's largest stockholder may conflict with the interests of
Devon's other stockholders

Kerr-McGee Corporation currently owns 9,954,000 shares, or 14.1%, of our
outstanding Devon common stock. After completion of this offering, assuming the
underwriters do not exercise the over-allotment option, Kerr-McGee would own
approximately 12.6% of our common stock. On August 2, 1999, Kerr-McGee
completed an offering of exchangeable notes which are due on August 2, 2004.
These notes are exchangeable into the Devon common shares owned by Kerr-McGee
or, at Kerr-McGee's option, the cash equivalent of the value of such Devon
common shares.

As a substantial stockholder, Kerr-McGee may have the power to influence the
outcome of matters submitted to a vote of the Devon stockholders. Kerr-McGee's
interests may not reflect the interests of other stockholders. Devon and Kerr-
McGee have not implemented any specific procedures to deal with conflicts that
may arise in the future between Kerr-McGee's interests and those of other Devon
stockholders. In the event a conflict arises, we will implement procedures we
deem appropriate to deal with the specific situation.

Risks Relating to the Recent Merger with PennzEnergy

We may not successfully integrate the operations of Devon and PennzEnergy or
achieve the benefits we are seeking

The success of the merger will partially depend upon the integration of the
management and operations of Devon and PennzEnergy. Our management team does
not have experience with the combined businesses of Devon and PennzEnergy.
Devon may not be able to integrate the operations of PennzEnergy without losing
key employees, customers or suppliers; loss of revenues; increases in operating
or other costs; or other difficulties. In addition, we may not be able to
realize the operating efficiencies and other benefits sought from the merger.

Significant charges and expenses will be incurred as a result of the merger

We expect to incur approximately $71.5 million of costs related to the
merger. These costs, which will be included as part of the cost of the oil and
gas properties acquired, will include investment banking expenses, severance,
legal and accounting fees, financial printing expenses and other related
charges. In addition, we expect to incur an estimated $20 to $30 million in
costs to combine the two companies. We may incur additional unanticipated
expenses in connection with the merger.

We also may incur a noncash after-tax charge to earnings related to a full
cost ceiling limitation. Under the full cost method of accounting followed by
Devon, the net book value of oil and gas properties, less related deferred
income taxes, may not exceed a calculated "ceiling." The ceiling is the
estimated after-tax future net revenues from proved oil and gas properties,
discounted at 10% per year. The ceiling limitation is applied

15
<PAGE>

separately by country. In calculating future net revenues, prices and costs in
effect at the time of the calculation are held constant indefinitely, except
for changes that are fixed and determinable by existing contracts. The net book
value, less deferred tax liabilities, is compared to the ceiling on a quarterly
basis. Any excess of the net book value, less deferred taxes, is written off as
an expense. An expense recorded in one period may not be reversed in a
subsequent period even though higher oil and gas prices may have increased the
ceiling applicable to the subsequent period.

On a pro forma basis as of June 30, 1999, the merger would not have caused a
charge to earnings due to the ceiling limitation. This pro forma calculation
was based on a posted West Texas Intermediate oil price of $16.50 per barrel
and a Texas Gulf Coast index gas price of $2.14 per Mcf. However, the pro forma
ceiling "cushion" as of June 30, 1999, in our non-Canadian cost centers was
less than $20 million. Therefore, future reductions in oil and gas prices or
changes to the preliminary allocation of the purchase price of PennzEnergy's
oil and gas properties could cause a charge to earnings as of September 30,
1999, or in subsequent periods.

Devon may incur a tax liability for a prior PennzEnergy transaction as a result
of the merger

If PennzEnergy's distribution to its stockholders of the stock of Pennzoil-
Quaker State Company in December 1998 were to be considered part of a plan or
series of related transactions that includes the merger, Devon would recognize
gain under Section 355(e) of the Internal Revenue Code. We believe the
distribution and the merger should not be considered part of such a plan or
series of related transactions because, among other things, neither Devon nor
PennzEnergy contemplated a business combination with the other and until April
1999 the parties had no discussions regarding a business combination. However,
any transaction within a four-year period beginning two years before the
distribution is presumed to be part of such a plan. We cannot assure you that
we will be able to overcome this presumption. We currently estimate our
potential tax liability upon such a transaction at $16 million in additional
tax for 1998 and the elimination of approximately $183 million in net operating
loss carryovers through 1998.

Devon stockholders are exposed to risks of offshore operations

As a result of the merger some of our production and reserves are now located
offshore in the Gulf of Mexico. Operations in this area are subject to tropical
weather disturbances. Some of these disturbances can be severe enough to cause
substantial damage to facilities and possibly interrupt production. In
accordance with customary industry practices, Devon will maintain insurance
against some, but not all, of these risks. Losses could occur for uninsurable
or uninsured risks or in amounts in excess of existing insurance coverage. We
cannot assure you that Devon will be able to maintain adequate insurance in the
future at rates it considers reasonable or that any particular types of
coverage will be available. An event that is not fully covered by insurance
could have a material adverse effect on Devon's financial position and results
of operations.

16
<PAGE>

We are subject to uncertainties of foreign operations

As a result of the merger, we now have international operations in Australia,
Azerbaijan, Brazil, Canada, Egypt, Qatar and Venezuela. Local political,
economic and other uncertainties may adversely affect these operations. These
uncertainties include:

. the risk of war, general strikes, civil unrest, expropriation, forced
renegotiation or modification of existing contracts, and import, export
and transportation regulations and tariffs;

. taxation policies, including royalty and tax increases and retroactive
tax claims;

. exchange controls, currency fluctuations, devaluation or other activities
that limit or disrupt markets and restrict payments or the movement of
funds, and other uncertainties arising out of foreign government
sovereignty over international operations;

. laws and policies of the United States affecting foreign trade, taxation
and investment;

. the possibility of being subject to the exclusive jurisdiction of foreign
courts in connection with legal disputes and the possible inability to
subject foreign persons to the jurisdiction of courts in the United
States; and

. difficulties in enforcing our rights against a governmental agency
because of the doctrine of sovereign immunity.

The merger has increased our debt level, which may result in a lower debt
rating and require a substantial portion of operating cash flow to pay interest
and principal

The merger has resulted in higher levels of debt and interest expense than we
had on a stand-alone basis prior to the merger. Our total indebtedness after
the merger may have a negative impact on our ability to realize the expected
benefits of the merger, including a possible downgrade in our credit rating.
Standard & Poor's has announced that, because of our higher leverage, it may
assign a debt rating that is lower than our current senior debt rating of
"BBB+." The increased debt level will also require us to use a substantial
portion of our operating cash flow to pay interest and principal on our debt
instead of for other corporate purposes.

17
<PAGE>

USE OF PROCEEDS

We estimate that the net proceeds to us after deducting the underwriting
discount and other estimated offering expenses payable by us from the sale of
the 8.7 million shares of common stock in this offering will be approximately
$349.2 million ($401.5 million if the underwriters' over-allotment is exercised
in full), at an assumed public offering price of $41.6875 per share. We intend
to use the net proceeds from this offering, plus an additional $0.8 million of
borrowings from credit facilities, to retire $350 million of long-term debt
that bears interest at approximately 10% per year. The additional credit
available as a result of the reduction in debt will be used primarily for
capital expenditures and acquisitions as they occur.

Pending these uses, the net proceeds will be used to reduce outstanding debt
under our revolving credit facilities or invested in short-term investment-
grade instruments, certificates of deposit or direct or guaranteed obligations
of the U.S. government.

18
<PAGE>

CAPITALIZATION

The following table compares our actual capitalization as of June 30, 1999,
to our capitalization after we sell the 8.7 million shares we are offering. The
table includes our pro forma capitalization after the PennzEnergy merger, both
with and without the offering. In preparing the following table, we have
assumed that we will receive net proceeds of $349.2 million from the sale of
8.7 million Devon common shares at $41.6875 per share (the closing price as of
September 16, 1999), less $13.5 million for the underwriting discount and other
estimated offering costs and expenses. We have assumed that the $349.2 million
of net proceeds plus an additional $0.8 million of borrowings under our credit
facilities, would be used to retire $350 million of existing notes payable that
bear interest at approximately 10% per year. The additional credit available as
a result of the reduction in debt will be used primarily for capital
expenditures and acquisitions as they occur.

The capitalization as adjusted for the offering assumes that the
underwriter's over-allotment option is not exercised. You should read the
following table in conjunction with the historical consolidated financial
statements of Devon which are filed with the SEC and incorporated by reference
in this document and the unaudited pro forma financial information included in
this document.
<TABLE>
<CAPTION>
As of June 30, 1999
----------------------------------
Devon Pro Forma With
the PennzEnergy
Merger
----------------------
Without
Devon the With the
Historical Offering Offering
---------- ---------- ----------
(In Thousands)
<S> <C> <C> <C>
Long-term debt:
Borrowings under credit facilities with
banks................................... $ 223,013 $ 319,077 $ 319,840
Notes:
6.76% due July 19, 2005................ 75,000 75,000 75,000
6.79% due March 2, 2009................ 150,000 150,000 150,000
Debentures:
9.625% due November 15, 1999, principal
amount of $200 million................ -- 200,000 --
10.625% due June 1, 2001, principal
amount of $150 million................ -- 150,000 --
10.25% due November 1, 2005, principal
amount of $250 million................ -- 275,825 275,825
10.125% due November 15, 2009,
principal amount of $200 million...... -- 220,340 220,340
Debentures exchangeable into shares of
Chevron Corporation common stock (see
note 4 on page 27)
4.90% due August 15, 2008, principal
amount of $443.8 million.............. -- 452,683 452,683
4.95% due August 15, 2008, principal
amount of $316.5 million.............. -- 322,836 322,836
---------- ---------- ----------
Total long-term debt................... 448,013 2,165,761 1,816,524
---------- ---------- ----------
Devon-obligated mandatorily redeemable
trust convertible preferred securities.... 149,500 149,500 149,500
Stockholders' equity:
Preferred stock, $1.00 par value......... -- 1,500 1,500
Common stock, $0.10 par value............ 4,882 7,030 7,900
Additional paid-in capital............... 807,270 1,679,921 2,028,288
Accumulated deficit...................... (225,582) (225,582) (225,582)
Accumulated other comprehensive loss..... (31,330) (31,330) (31,330)
---------- ---------- ----------
Total stockholders' equity............. 555,240 1,431,539 1,780,776
---------- ---------- ----------
Total capitalization................. $1,305,163 $3,746,800 $3,746,800
========== ========== ==========
Shares authorized:
Preferred stock.......................... 3,000 4,500 4,500
Common stock............................. 400,000 400,000 400,000
Shares outstanding:
Preferred stock.......................... -- 1,500 1,500
Common stock............................. 48,820 70,296 78,996
Common shares reserved for issuance of
options under Devon's stock option plans.. 1,800 4,800 4,800
Employee stock options outstanding......... 2,974 5,059 5,059
</TABLE>

The above pro forma capitalization with the PennzEnergy merger includes six
debentures issued by PennzEnergy which were assumed by Devon. Of these six
debentures, four will be outstanding after the proceeds from this offering are
used to retire two debentures totaling $350 million. The aggregate pro forma
amount recorded for the four remaining debentures is $61.4 million higher than
their aggregate principal amount. The excess amount is the amount by which the
debentures' estimated fair value at June 30, 1999 exceeded the principal
amounts. Because the PennzEnergy merger was accounted for using the purchase
method of accounting for business combinations, Devon recorded these debentures
at their fair values at the date the merger was closed. The difference will be
amortized over the debentures' lives as adjustments to interest expense.

19
<PAGE>

MARKET PRICE DATA

Devon common stock is listed on the AMEX under the symbol "DVN." We began
paying regular quarterly cash dividends on our common stock on June 30, 1993,
in the amount of $0.03 per share. Effective December 31, 1996, we increased our
quarterly dividend payment to $0.05 per share. We anticipate that we will
continue to pay regular quarterly dividends in the foreseeable future.
Dividends are also paid on our exchangeable shares at the same rate and on the
same dates as dividends paid on our common stock.

The following table sets forth the quarterly high and low sales prices for
the Devon common stock as reported by the AMEX for the fiscal periods
indicated.

<TABLE>
<CAPTION>
High Low Volume
---- ---- --------------
(In Thousands)
<S> <C> <C> <C>
1996:
Quarter Ended March 31, 1996....... $25 3/4 $19 7/8 2,825
Quarter Ended June 30, 1996........ $26 1/8 $22 2,474
Quarter Ended September 30, 1996... $27 1/2 $22 3/4 4,715
Quarter Ended December 31, 1996.... $35 1/2 $25 1/4 6,011
1997:
Quarter Ended March 31, 1997....... $38 7/8 $29 1/2 4,458
Quarter Ended June 30, 1997........ $38 1/2 $27 3/8 5,619
Quarter Ended September 30, 1997... $45 1/4 $36 1/8 3,851
Quarter Ended December 31, 1997.... $49 1/8 $35 4,460
1998:
Quarter Ended March 31, 1998....... $41 1/8 $32 7/8 5,542
Quarter Ended June 30, 1998........ $40 1/2 $32 5/8 6,144
Quarter Ended September 30, 1998... $36 5/8 $26 1/8 10,170
Quarter Ended December 31, 1998.... $36 $27 3/4 9,017
1999:
Quarter Ended March 31, 1999....... $31 3/4 $20 1/8 14,271
Quarter Ended June 30, 1999........ $37 7/16 $25 15/16 14,221
Quarter Ended September 30, 1999
(through September 16, 1999)...... $44 15/16 $33 25,704
</TABLE>

On September 16, 1999, the last full trading day prior to the date of this
prospectus, the last reported sales price on the American Stock Exchange of
shares of Devon common stock was $41 11/16.

20
<PAGE>

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma financial information has been prepared to
assist in the analysis of the financial effects of this offering of additional
Devon common stock and the PennzEnergy merger. This pro forma information is
based on the historical financial statements of Devon and PennzEnergy.

The information was prepared based on the following:

. Devon utilizes the full cost method of accounting for its oil and gas
activities.

. The merger was accounted for as a purchase of PennzEnergy by Devon.

. The unaudited pro forma balance sheet has been prepared as if the public
offering and the merger occurred on June 30, 1999. The unaudited pro
forma statements of operations have been prepared as if the public
offering and the merger occurred on January 1, 1998.

. Targeted annual general and administrative expense and lease operating
expense savings from the merger of $50 to $60 million have not been
reflected as an adjustment to the historical data. These cost savings are
expected to result from the consolidation of the corporate headquarters
of Devon and PennzEnergy and the elimination of duplicate staff and
expenses.

. As of June 30, 1999, the merger did not cause a pro forma reduction of
the carrying value of oil and gas properties under the full cost
accounting "ceiling test." The June 30, 1999, ceiling test was calculated
based on a posted West Texas Intermediate oil price of $16.50 per barrel
and a Texas Gulf Coast index gas price of $2.14 per Mcf. However, the pro
forma ceiling "cushion" as of June 30, 1999, in Devon's non-Canadian cost
centers was less than $20 million. Therefore, future reductions in oil
and gas prices or changes to the preliminary allocation of the purchase
price of PennzEnergy's oil and gas properties could cause a reduction of
the carrying value to be recorded as of September 30, 1999, or in
subsequent periods.

. In 1998, PennzEnergy realized pretax gains on the sale and exchange of
Chevron Corporation common stock of $230.1 million. The unaudited pro
forma statement of operations does not include the $207.0 million after-
tax extraordinary loss resulting from the early extinguishment of related
debentures exchangeable for such common stock.

. In 1998, PennzEnergy incurred $24.3 million of nonrecurring general and
administrative expenses in connection with the spin-off of Pennzoil-
Quaker State Company on December 30, 1998.

. In 1998, Devon incurred $13.1 million of nonrecurring expenses related to
the merger with Northstar.

. In 1998, Devon reduced the carrying value of its oil and gas properties
by $126.9 million ($88.0 million after-tax) due to the full cost ceiling
limitation.

. In the second quarter of 1999, PennzEnergy recognized a gain of $46.7
million ($29.8 million after-tax) from the sale of land, timber and
mineral rights in Pennsylvania and New York.

The unaudited pro forma financial statements and related notes are presented
for illustrative purposes only. If this offering of additional Devon common
stock and the PennzEnergy merger had occurred in the past, Devon's financial
position or operating results might have been different from those presented in
the unaudited pro forma information. The unaudited pro forma information should
not be relied upon as an indication of the financial position or operating
results that Devon would have achieved if this offering and the merger had
occurred as of June 30, 1999 or January 1, 1998. You also should not rely on
the unaudited pro forma information as an indication of the future results that
Devon will achieve after this offering and the merger.

21
<PAGE>

Unaudited Pro Forma Balance Sheet

June 30, 1999
(In Thousands)

<TABLE>
<CAPTION>
Devon Pro Forma With
the PennzEnergy
Merger
PennzEnergy ----------------------
Historical Pro Forma Without With the
Devon Reclassified Adjustments the Offering
Historical (Note 6) (Note 2) Offering (Note 3)
---------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Assets:
Current assets........ $ 104,760 $ 128,912 $(10,300)(a) $ 233,672 $ 233,672
10,300 (c)
Oil and gas
properties, net...... 1,162,164 1,616,916 385,545 (a) 3,718,114 3,718,114
553,489 (c)
Other properties,
net.................. 23,465 -- 5,000 (a) 28,465 28,465
Investment in common
stock of Chevron
Corporation (Note
4)................... -- 674,224 -- 674,224 674,224
Other assets.......... 14,774 34,054 30,179 (a) 79,007 79,007
---------- ---------- -------- ---------- ----------
Total assets........ $1,305,163 $2,454,106 $974,213 $4,733,482 $4,733,482
========== ========== ======== ========== ==========
Liabilities:
Current liabilities... $ 73,677 $ 145,167 $ (5,374)(a) $ 213,470 $ 213,470
Debentures
exchangeable into
shares of Chevron
Corporation common
stock (Note 4)....... -- 740,361 35,158 (a) 775,519 775,519
Other long-term debt.. 448,013 822,652 48,032 (a) 1,390,242 1,041,005
71,545 (a)
Other long-term
liabilities.......... 34,584 133,280 (2,590)(a) 165,274 165,274
Deferred income
taxes................ 44,149 187,257 (187,257)(a) 607,938 607,938
563,789 (c)
Company-obligated
mandatorily
redeemable
convertible preferred
securities of
subsidiary trust
holding solely 6.5%
convertible junior
subordinated
debentures of Devon
Energy Corporation... 149,500 -- 149,500 149,500
Stockholders' equity:
Preferred stock....... -- 1,500 1,500 1,500
Common stock.......... 4,882 43,507 2,148 (a) 7,030 7,900
(43,507)(b)
Additional paid-in
capital.............. 807,270 354,504 710,151 (a) 1,679,921 2,028,288
14,000 (a)
148,500 (a)
(354,504)(b)
Accumulated deficit... (225,582) (23,743) 23,743 (b) (225,582) (225,582)
Accumulated other
comprehensive
earnings (loss)...... (31,330) 275,743 (275,743)(b) (31,330) (31,330)
Treasury stock........ -- (226,122) 226,122 (b) -- --
---------- ---------- -------- ---------- ----------
Total stockholders'
equity............. 555,240 425,389 450,910 1,431,539 1,780,776
---------- ---------- -------- ---------- ----------
Total liabilities
and stockholders'
equity............. $1,305,163 $2,454,106 $974,213 $4,733,482 $4,733,482
========== ========== ======== ========== ==========
</TABLE>

22
<PAGE>

Unaudited Pro Forma Statement of Operations

Year Ended December 31, 1998

(In Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
Devon Pro Forma With
the PennzEnergy
Merger
PennzEnergy ----------------------
Historical Pro Forma Without With the
Devon Reclassified Adjustments the Offering
Historical (Note 6) (Note 2) Offering (Note 3)
---------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenues:
Oil sales............. $143,624 $159,294 $ 302,918 $ 302,918
Gas sales............. 209,344 344,594 553,938 553,938
NGL sales............. 16,692 47,011 63,703 63,703
Other................. 17,848 286,468 (8,513)(g) 295,803 295,803
-------- -------- -------- ---------- ----------
Total revenues...... 387,508 837,367 (8,513) 1,216,362 1,216,362
-------- -------- -------- ---------- ----------
Costs and expenses:
Lease operating
expenses............. 113,484 181,255 294,739 294,739
Production taxes...... 13,916 14,232 28,148 28,148
Depreciation,
depletion and
amortization......... 123,844 208,009 178,211 (d) 510,064 510,064
General and
administrative
expenses............. 23,554 126,124 (10,300)(g) 139,378 139,378
Northstar combination
expenses............. 13,149 -- 13,149 13,149
Interest expense...... 22,632 156,272 4,114 (e) 176,659 141,515
(6,359)(f)
Exploration expenses.. -- 139,970 (139,970)(g) -- --
Deferred effect of
changes in foreign
currency exchange
rate on subsidiary's
long-term debt....... 16,104 -- 16,104 16,104
Distributions on
preferred securities
of subsidiary
trust................ 9,717 -- 9,717 9,717
Reduction of carrying
value of oil and gas
properties........... 126,900 74,739 (74,739)(g) 126,900 126,900
-------- -------- -------- ---------- ----------
Total costs and
expenses........... 463,300 900,601 (49,043) 1,314,858 1,279,714
-------- -------- -------- ---------- ----------
Earnings (loss) before
income tax expense
(benefit).............. (75,792) (63,234) 40,530 (98,496) (63,352)
Income tax expense
(benefit):
Current............... 7,687 2,637 -- 10,324 10,324
Deferred.............. (23,194) (20,405) 15,401 (h) (28,198) (14,843)
-------- -------- -------- ---------- ----------
Total income tax
expense
(benefit).......... (15,507) (17,768) 15,401 ( 17,874) (4,519)
-------- -------- -------- ---------- ----------
Net earnings (loss)..... (60,285) (45,466) 26,029 (80,622) (58,833)
Preferred stock
dividends.............. -- 5,625 -- 5,625 5,625
-------- -------- -------- ---------- ----------
Net earnings (loss)
applicable to common
shareholders........... $(60,285) $(51,091) $ 26,029 $ (86,247) $ (64,458)
======== ======== ======== ========== ==========
Net loss per average
common share
outstanding--basic and
diluted................ $ (1.25) $ (1.07) $ (1.24) $ (0.82)
======== ======== ========== ==========
Weighted average common
shares outstanding--
basic (Note 5)......... 48,376 47,716 69,729 78,429
======== ======== ========== ==========
</TABLE>

23
<PAGE>

Unaudited Pro Forma Statement of Operations

Six Months Ended June 30, 1999

(In Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
Devon Pro Forma
With the
PennzEnergy
Merger
PennzEnergy ------------------
Historical Pro Forma Without With the
Devon Reclassified Adjustments the Offering
Historical (Note 6) (Note 2) Offering (Note 3)
---------- ------------ ----------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues:
Oil sales............. $64,784 $ 85,114 $149,898 $149,898
Gas sales............. 112,938 150,884 263,822 263,822
NGL sales............. 9,764 18,732 28,496 28,496
Other................. 4,092 67,119 (5,557)(g) 65,654 65,654
------- -------- -------- -------- --------
Total revenues...... 191,578 321,849 (5,557) 507,870 507,870
------- -------- -------- -------- --------
Costs and expenses:
Lease operating
expenses............. 54,520 76,476 130,996 130,996
Production taxes...... 6,415 6,764 13,179 13,179
Depreciation,
depletion and
amortization......... 69,321 131,450 46,597 (d) 247,368 247,368
General and
administrative
expenses............. 13,175 49,870 (5,150)(g) 57,895 57,895
Interest expense...... 13,779 61,811 2,057 (e) 74,232 56,660
(3,415)(f)
Exploration expenses.. -- 17,537 (17,537)(g) -- --
Deferred effect of
changes in foreign
currency exchange
rate on subsidiary's
long-term debt....... (8,746) -- (8,746) (8,746)
Distributions on
preferred securities
of subsidiary trust.. 4,859 -- 4,859 4,859
------- -------- -------- -------- --------
Total costs and
expenses........... 153,323 343,908 22,552 519,783 502,211
------- -------- -------- -------- --------
Earnings (loss) before
income tax expense
(benefit).............. 38,255 (22,059) (28,109) (11,913) 5,659
Income tax expense
(benefit):
Current............... 4,302 (34) -- 4,268 4,268
Deferred.............. 11,764 (9,140) (10,681)(k) (8,057) (1,380)
------- -------- -------- -------- --------
Total income tax
expense
(benefit).......... 16,066 (9,174) 10,681 (3,789) 2,888
------- -------- -------- -------- --------
Net earnings (loss)..... 22,189 (12,885) (17,428) (8,124) 2,771
Preferred stock
dividends.............. -- 4,868 -- 4,868 4,868
------- -------- -------- -------- --------
Net earnings (loss)
applicable to common
shareholders........... $22,189 $(17,753) $(17,428) $(12,992) $ (2,097)
======= ======== ======== ======== ========
Net earnings (loss) per
average common share
outstanding--basic and
diluted................ $ 0.46 $ (0.37) $ (0.19) $ (0.03)
======= ======== ======== ========
Weighted average common
shares outstanding--
basic (Note 5)......... 48,575 47,923 70,021 78,721
======= ======== ======== ========
</TABLE>

24
<PAGE>

NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION

December 31, 1998 and June 30, 1999

1. Method of Accounting for the Merger

Devon accounted for the merger using the purchase method of accounting for
business combinations. Accordingly, PennzEnergy's assets acquired and
liabilities assumed by Devon were revalued and recorded at their estimated
"fair values." In the merger, Devon issued 0.4475 shares of Devon common stock
for each outstanding share of PennzEnergy common stock. This resulted in Devon
issuing approximately 21.4 million shares of its common stock to PennzEnergy
stockholders.

The purchase price of PennzEnergy's net assets acquired was based on the
value of the Devon common stock issued to the PennzEnergy stockholders. The
value of the Devon common stock issued was based on the average trading price
of Devon's common stock for a period of three days before and after the public
announcement of the merger. This average trading price equaled $33.40 per
share.

2. Pro Forma Adjustments Related to the Merger

The unaudited pro forma balance sheet includes the following adjustments:

(a) This entry adjusts the historical book values of PennzEnergy's assets
and liabilities to their estimated fair values as of June 30, 1999. The
calculation of the total purchase price and the preliminary allocation to
assets and liabilities are shown below.

<TABLE>
<CAPTION>
(In Thousands,
Except Share
Price)
--------------
<S> <C>
Calculation and preliminary allocation of purchase price:
Shares of Devon common stock issued to PennzEnergy
stockholders............................................. 21,476
Average Devon stock price................................. $ 33.40
----------
Fair value of common stock issued......................... 717,298
Plus preferred stock assumed by Devon..................... 150,000
Plus estimated merger costs to be incurred................ 71,545
Plus fair value of PennzEnergy employee stock options
assumed by Devon......................................... 14,000
Less estimated stock registration and issuance costs to be
incurred................................................. (4,999)
----------
Total purchase price........................................ 947,844
Plus fair value of liabilities assumed by Devon:
Current liabilities....................................... 139,793
Debentures exchangeable into Chevron Corporation common
stock.................................................... 775,519
Other long-term debt...................................... 870,684
Other long-term liabilities............................... 130,690
----------
2,864,530
----------
Less fair value of non oil and gas assets acquired by Devon:
Current assets............................................ 118,612
Non oil and gas properties................................ 5,000
Investment in common stock of Chevron Corporation......... 674,224
Other assets.............................................. 64,233
----------
862,069
----------
Fair value allocated to oil and gas properties, including
$111 million of undeveloped leasehold...................... $2,002,461
==========
</TABLE>

The total purchase price includes the value of the Devon common stock issued,
net of $5.0 million of estimated registration and issuance costs. The purchase
price also includes:

25
<PAGE>

NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION--(Continued)

December 31, 1998 and June 30, 1999

. $150 million of Devon preferred stock issued in exchange for the same
amount of PennzEnergy preferred stock. The unaudited pro forma balance
sheet includes $1.5 million of PennzEnergy's historical aggregate par
value of the preferred stock, plus $148.5 million of additional paid-in
capital.

. $71.5 million of estimated merger costs. These costs include advisory
fees, severance and other merger-related costs. These costs are added to
long-term debt in the unaudited pro forma balance sheet.

. $14 million of Devon employee stock options issued in exchange for
existing vested PennzEnergy employee stock options. The value of these
options is added to additional paid-in capital in the unaudited pro forma
balance sheet.

(b) This adjustment includes a $43.5 million reduction to par value, a
$354.5 million reduction of additional paid-in capital, a $23.7 million
reduction of accumulated deficit, a $275.7 million reduction of accumulated
other comprehensive earnings and a $226.1 million reduction of treasury
stock. These adjustments eliminate PennzEnergy's historical book values of
those accounts.

(c) This adjustment increases the value of PennzEnergy's oil and gas
properties acquired by $553.5 million, and increases current assets by
$10.3 million, both for related deferred income taxes. This adjustment
equals the deferred income tax effect of the difference between the fair
values assigned to PennzEnergy's assets and liabilities and their bases for
income tax purposes. Due to the tax-free nature of the merger, Devon's tax
basis in those assets and liabilities is the same as PennzEnergy's tax
basis.

The unaudited pro forma statements of operations include the following
adjustments:

(d) This adjustment reflects the pro forma depreciation, depletion and
amortization expense using the full cost method of accounting based on the
preliminary allocation of the purchase price.

(e) This adjustment increases interest expense due to the $71.5 million
of merger costs assumed to be funded with borrowings from credit
facilities.

(f) This adjustment reduces interest expense for the year 1998 and the
first quarter of 1999 by $6.4 million and $1.7 million, respectively. These
amounts represent the amortization of the pro forma premium recorded in
long-term debt as of January 1, 1998 as part of pro forma adjustment (a) to
record PennzEnergy's assets and liabilities at their estimated fair values.

(g) This adjustment eliminates historical amounts recorded by PennzEnergy
under the successful efforts accounting method for gains on property sales,
general and administrative expenses, exploration expenses and asset
impairments to conform to the full cost method of accounting followed by
Devon. Under the full cost method, proceeds from the sale of oil and gas
properties are generally recorded as an adjustment of the carrying value of
the properties, with no gain or loss recognized. Also, general and
administrative expenses incurred for property acquisition, exploration and
development activities are capitalized under the full cost method. In
addition, exploration expenses, which include items such as dry hole costs
and lease expirations or impairment expenses, are capitalized under the
full cost method. The $74.7 million reduction of oil and gas properties
recorded by PennzEnergy in the year 1998 was calculated under the
successful efforts method and therefore has been eliminated in the pro
forma statement of operations for 1998.

(h) This adjustment records the net tax effect of all pro forma
adjustments at an effective income tax rate of 38%.

26
<PAGE>

NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION--(Continued)

December 31, 1998 and June 30, 1999

3. Pro Forma Effects of this Offering of Additional Shares of Devon Common
Stock

The accompanying pro forma financial statements include a column titled
"Devon Pro Forma With the PennzEnergy Merger--With the Offering." The amounts
included in this column on the pro forma balance sheet include the effects of
issuing 8.7 million additional shares of Devon common stock and applying the
estimated net proceeds of $349.2 million against long-term debt. The pro forma
balance sheet assumes that the offering occurred on June 30, 1999.

The amounts included in this column on the pro forma statements of operations
include the effects of lower interest expense and the related change in income
tax expense due to the assumed reduction of long-term debt with the proceeds
from this offering. The pro forma statements of operations assume that the
offering occurred on January 1, 1998.

4. Investment in Chevron Common Stock and Related Exchangeable Debentures

As of June 30, 1999 and December 31, 1998, PennzEnergy beneficially owned
approximately 7.1 million shares of Chevron Corporation common stock. These
shares have been deposited with an exchange agent for possible exchange for
$761.2 million principal amount of exchangeable debentures of PennzEnergy. Each
$1,000 principal amount of the exchangeable debentures is exchangeable into
9.3283 shares of Chevron common stock, an exchange rate equivalent to $107 7/32
per share of Chevron common stock.

The exchangeable debentures consist of $443.8 million of 4.90% debentures and
$316.5 million of 4.95% debentures. The exchangeable debentures were issued on
August 3, 1998 and mature August 15, 2008. The exchangeable debentures are
callable beginning on August 15, 2000. The exchangeable debentures are
exchangeable at the option of the holders at any time prior to maturity for
shares of Chevron common stock. In lieu of delivering Chevron common stock,
PennzEnergy may, at its option, pay to any holder an amount in cash equal to
the market value of the Chevron common stock to satisfy the exchange request.

5. Common Shares Outstanding

Net earnings (loss) per average share outstanding have been calculated based
upon the pro forma weighted average number of shares outstanding as follows:

<TABLE>
<CAPTION>
Six Months
Year Ended Ended
December 31, June 30,
1998 1999
------------ -----------
(In Thousands)
<S> <C> <C>
Devon's weighted average common shares
outstanding.................................... 48,376 48,575
Devon shares issued in exchange for all
outstanding shares of PennzEnergy ............. 21,353 21,446
------ ------
Pro forma weighted average Devon shares
outstanding with the PennzEnergy merger........ 69,729 70,021
Additional Devon common shares to be issued in
this offering.................................. 8,700 8,700
------ ------
Pro forma weighted average Devon common shares
with the PennzEnergy merger and the shares to
be issued in this offering..................... 78,429 78,721
====== ======
</TABLE>

27
<PAGE>

NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION--(Continued)

December 31, 1998 and June 30, 1999

Pro forma common shares outstanding at June 30, 1999, are as follows:

<TABLE>
<CAPTION>
(In Thousands)
--------------
<S> <C>
Devon's common shares outstanding........................ 48,820
Devon shares issued in exchange for all outstanding
shares of PennzEnergy .................................. 21,476
------
Pro forma Devon common shares outstanding with the
PennzEnergy merger...................................... 70,296
Additional Devon common shares to be issued in this
offering................................................ 8,700
------
Pro forma Devon common shares outstanding with the
PennzEnergy merger and the shares to be issued in this
offering................................................ 78,996
======
</TABLE>

6. PennzEnergy Historical and Reclassified Balances

Devon and PennzEnergy record certain revenues and expenses differently in
their respective consolidated financial statements. To make the unaudited pro
forma financial information consistent, we have reclassified certain of
PennzEnergy's balances to conform to Devon's financial presentation. The
following tables present PennzEnergy's balances as presented in its historical
financial statements and the reclassified balances which are included in the
accompanying unaudited pro forma statements of operations.

Securities and Exchange Commission rules regarding pro forma presentation
require that the pro forma statements of operations disclose income or loss
from continuing operations. As shown in the tables below, PennzEnergy's
historical results for the year 1998 included a loss from discontinued
operations and extraordinary items that are not included in the reclassified
balances presented in the accompanying unaudited pro forma statement of
operations for 1998.

28
<PAGE>

NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION--(Continued)

December 31, 1998 and June 30, 1999

In addition to the reclassifications shown below for the unaudited pro forma
statements of operations, a reclassification has been made to PennzEnergy's
historical balance sheet for the accompanying unaudited pro forma balance sheet
as of June 30, 1999. PennzEnergy had $38.4 million classified as minority
interest in its June 30, 1999 historical consolidated balance sheet. To conform
to Devon's presentation, this amount is included as other long-term liabilities
in the accompanying unaudited pro forma balance sheet.

<TABLE>
<CAPTION>
Year Ended December 31, 1998 Six Months Ended June 30, 1999
------------------------------------------ ------------------------------------------
PennzEnergy PennzEnergy
PennzEnergy Historical PennzEnergy Historical
Historical Reclassifications Reclassified Historical Reclassifications Reclassified
----------- ----------------- ------------ ----------- ----------------- ------------
(Unaudited)
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Net sales.............. $ 550,899 $(550,899) $ -- $254,730 $(254,730) $ --
Oil sales.............. -- 159,294 159,294 -- 85,114 85,114
Gas sales.............. -- 344,594 344,594 -- 150,884 150,884
NGL sales.............. -- 47,011 47,011 -- 18,732 18,732
Investment and other
income................ 286,468 -- 286,468 67,119 -- 67,119
--------- --------- -------- -------- --------- --------
Total revenues....... 837,367 -- 837,367 321,849 -- 321,849
--------- --------- -------- -------- --------- --------
Costs and expenses:
Lease operating
expenses.............. 217,194 (35,939) 181,255 90,782 (14,306) 76,476
Production taxes....... -- 14,232 14,232 -- 6,764 6,764
General and
administrative
expenses.............. 52,228 73,896 126,124 19,676 30,194 49,870
Depreciation,
depletion and
amortization.......... 208,009 -- 208,009 131,450 -- 131,450
Impairment of long-
lived assets.......... 74,739 -- 74,739 -- -- --
Exploration expenses... 161,615 (21,645) 139,970 25,921 (8,384) 17,537
Taxes, other than
income................ 30,544 (30,544) -- 14,268 (14,268) --
Interest charges,
net................... 156,272 -- 156,272 61,811 -- 61,811
--------- --------- -------- -------- --------- --------
Total costs and
expenses............ 900,601 -- 900,601 343,908 -- 343,908
--------- --------- -------- -------- --------- --------
Loss from continuing
operations before
income tax............. (63,234) -- (63,234) (22,059) -- (22,059)
Income tax benefit...... (17,768) -- (17,768) (9,174) -- (9,174)
--------- --------- -------- -------- --------- --------
Loss from continuing
operations............. $ (45,466) $ -- $(45,466) $(12,885) $ -- $(12,885)
========= ======== ========= ========
Loss from discontinued
operations............. (3,246) --
--------- --------
Loss before
extraordinary items.... (48,712) (12,885)
Extraordinary items..... (206,963) --
--------- --------
Net loss................ (255,675) (12,885)
Preferred stock
dividends.............. 5,625 4,868
--------- --------
Net loss available to
common shareholders.... $(261,300) $(17,753)
========= ========
</TABLE>

29
<PAGE>

PROPERTIES OF DEVON

The following table shows the total proved reserves of Devon on a pro forma
basis as of December 31, 1998:

<TABLE>
<CAPTION>
Proved Reserves as of December 31, 1998
-------------------------------------------------------------
10%
Devon PennzEnergy Devon Pro 10% Present Present
Primary Operating Areas Historical Historical Forma MBoe% Value Value %
- ----------------------- ---------- ----------- --------- ----- -------------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
North America--MBoe
Western Canadian
Sedimentary Basin..... 143,908 -- 143,908 22% $ 462,921 22%
Permian Basin.......... 53,375 61,351 114,726 17% 292,951 14%
Rocky Mountain
Region................ 78,973 23,677 102,650 16% 355,902 17%
Gulf Coast/East Texas
Region................ 1,800 86,927 88,727 13% 390,560 19%
Offshore Gulf of
Mexico................ -- 78,674 78,674 12% 339,995 16%
Other U.S.............. 21,295 16,477 37,772 6% 107,583 5%
--------- ------- --------- --- ---------- ---
Total--North America.... 299,351 267,106 566,457 86% 1,949,912 93%
--------- ------- --------- --- ---------- ---

International--MBoe
Azerbaijan............. -- 76,082 76,082 11% 135,867 7%
Other International.... -- 17,557 17,557 3% 1,887 0%
--------- ------- --------- --- ---------- ---
Total International..... -- 93,639 93,639 14% 137,754 7%
--------- ------- --------- --- ---------- ---
Total North America and
International.......... 299,351 360,745 660,096 100% $2,087,666 100%
========= ======= ========= === ========== ===
Oil--MBbls
U.S.................... 44,451 95,969 140,420 21%
Western Canadian
Sedimentary Basin..... 39,006 -- 39,006 6%
Azerbaijan............. -- 76,082 76,082 11%
Other International.... -- 17,180 17,180 3%
--------- ------- --------- ---
Total................ 83,457 189,231 272,688 41%
========= ======= ========= ===
Gas--MMcf
U.S.................... 596,987 849,368 1,446,355 37%
Western Canadian
Sedimentary Basin..... 601,907 -- 601,907 15%
Other International.... -- 2,266 2,266 0%
--------- ------- --------- ---
Total................ 1,198,894 851,634 2,050,528 52%
========= ======= ========= ===
NGLs--MBbls
U.S.................... 11,494 29,575 41,069 6%
Western Canadian
Sedimentary Basin..... 4,585 -- 4,585 1%
--------- ------- --------- ---
Total................ 16,079 29,575 45,654 7%
========= ======= ========= ===
Total--MBoe............. 299,351 360,745 660,096 100%
========= ======= ========= ===
</TABLE>

Primary Operating Areas--North America

Our North American property base is concentrated in five primary operating
areas: the Western Canadian Sedimentary Basin, which encompasses portions of
British Columbia, Alberta, Saskatchewan and Manitoba; the Permian Basin of
southeastern New Mexico and west Texas; the Rocky Mountain Region, which spans
from northeast Wyoming to northwest New Mexico; the offshore Gulf of Mexico;
and the Gulf Coast/East Texas Region in portions of Texas and Louisiana.

Western Canadian Sedimentary Basin

Our single largest reserve position is in the Western Canadian Sedimentary
Basin with proved reserves of 143.9 million barrels of oil equivalent, or 22%
of the total company on a pro forma basis as of December 31, 1998. This basin
is a large geologic feature encompassing portions of British Columbia, Alberta,
Saskatchewan and Manitoba. This basin feature forms a wedge-shaped depression
that tapers from a maximum thickness of 17,000 feet on the western and southern
margins to a zero edge along the northeast. Devon's properties in this

30
<PAGE>

basin range from shallow oil and natural gas production in Northern Alberta to
deep, long-lived gas reservoirs in the Foothills area near the Alberta/British
Columbia border. In addition, approximately 2.2 million net acres of
undeveloped leasehold in the Western Canadian Sedimentary Basin should continue
to provide Devon with numerous exploration and development opportunities.

Permian Basin

This region encompasses approximately 66,000 square miles in southeastern New
Mexico and west Texas and contains more than 500 major oil and gas fields.
Since 1987, we have made several significant acquisitions of properties in the
Permian Basin that have established prospective acreage in areas in which
leasehold positions could not otherwise be obtained. The Permian Basin
represents one of our largest reserve positions with total reserves of 114.7
million barrels of oil equivalent, or 17% of our total reserves on a pro forma
basis as of December 31, 1998. In addition, several hundred thousand acres of
undeveloped leasehold should continue to provide us with numerous exploration
and development opportunities in the Permian Basin.

Rocky Mountain Region

The Rocky Mountain Region includes oil and gas producing basins that are
grouped together because of their geographic location rather than their
geological characteristics. The region generally encompasses all or portions of
the states of Colorado, Montana, New Mexico, North Dakota, Utah and Wyoming.
Our properties are primarily located in the San Juan Basin in northwest New
Mexico, the Raton Basin in northeast New Mexico and southeast Colorado, and the
Big Horn and Powder River basins in northeast Wyoming. The Rocky Mountain
Region represents one of our largest reserve areas with 102.7 million barrels
of oil equivalent, or 16% of the total company on a pro forma basis as of
December 31, 1998. We will also have over one million acres of net undeveloped
leasehold in the Rocky Mountain Region.

Our single largest natural gas reserve position in the Rocky Mountain Region
relates to its interests in two federal units in the San Juan Basin. The San
Juan Basin is a densely drilled area covering 3,700 square miles. It has been
historically considered the second largest gas producing basin in the United
States. Prior to 1990, the basin's gas production primarily came from
conventional sandstone formations at a depth of about 5,500 feet. However, in
the early 1980's, development of the shallower Fruitland coal formation began.
Coal seam gas production has increased total production so significantly that
the San Juan Basin could be considered the largest gas producing basin in the
United States.

Our coal seam expertise will also play an important role in both the Powder
River and Raton basins. These basins, which are less developed than the San
Juan Basin, have become two of the more active domestic onshore exploration
areas in the United States. During the next five years, we plan to drill
several thousand coalbed methane wells in the Powder River and Raton basins
which could, in the aggregate, add proved natural gas reserves in excess of two
trillion cubic feet. Peak production for the Powder River Basin is anticipated
for 2003, while peak production in the Raton Basin is estimated for 2004 to
2006. Additionally, we anticipate initial operation of a 126-mile gas gathering
system servicing the Powder River Basin in the fourth quarter of 1999. When it
is fully developed in 2001, this system will have an estimated capacity of 450
million cubic feet of gas per day and will have access to multiple interstate
pipelines.

Gulf Coast/East Texas Region

Our interest in the Gulf Coast/East Texas Region consists of over 465,000 net
acres in portions of the states of Texas and Louisiana and includes both oil
and gas producing zones. On a pro forma basis as of December 31, 1998, our Gulf
Coast/East Texas reserves were 88.7 million barrels of oil equivalent, or 13%
of our total reserves. In south Texas, where exploration by the oil and gas
industry is accelerating, 3-D seismic data covers our major acreage positions
underlain by Charco Lobo, the Middle Wilcox and the Frio-Vicksburg formations.

31
<PAGE>

Offshore Gulf of Mexico

We are one of the ten largest producers on the shelf in the Offshore Gulf of
Mexico with operations on 75 blocks. On a pro forma basis as of December 31,
1998, proved reserves in the Gulf totaled 78.7 million barrels of oil
equivalent, or 12% of our total reserves. We operate more than 40 fields and 80
platforms on the central and western shelf. We also hold interests in another
98 exploratory blocks, 39 of which are deepwater. Of the 39 deepwater blocks,
two blocks are in production and two blocks are undergoing development. We
conduct both shallow and deepwater exploration and development drilling in the
Gulf of Mexico.

Primary Operating Areas--International

Our property base outside North America includes approximately 94 million
barrels of oil equivalent reserves, or 14% of our total reserves on a pro forma
basis as of December 31, 1998. We also have 10.5 million net undeveloped acres
outside of North America. While our international operations are focused
primarily in Azerbaijan, we also have interests in Venezuela, Brazil, Egypt,
Qatar and Australia.

Azerbaijan

Most of our proved reserves that lie outside North America are in Azerbaijan.
On a pro forma basis as of December 31, 1998, proved reserves in Azerbaijan
totaled 76.1 million barrels of oil equivalent, or 11% of our total reserves.
Our properties in Azerbaijan are located in the Caspian Basin, which is
considered home to some of the world's last known major undeveloped hydrocarbon
reserves. We hold a 4.8% carried interest in the Azeri-Chirag-Gunashli joint
development area, which is estimated to contain five billion barrels of crude
oil. Peak production for Azerbaijan is estimated sometime between 2005 and
2008.

Developed and Undeveloped Acreage

The following table sets forth our developed and undeveloped oil and gas
lease and mineral acreage on a pro forma basis as of December 31, 1998. Gross
acres are the total number of acres in which we own a working interest. Net
refers to gross acres multiplied by our fractional working interests.

<TABLE>
<CAPTION>
Developed Undeveloped
----------- -------------
Gross Net Gross Net
----- ----- ------ ------
(In Thousands of Acres)
<S> <C> <C> <C> <C>
United States--Onshore......................... 2,815 1,583 3,049 1,789
United States--Offshore........................ 328 204 532 384
Canada......................................... 1,120 584 2,995 2,175
Australia...................................... -- -- 679 271
Azerbaijan..................................... 10 -- 202 39
Egypt.......................................... -- -- 9,111 8,842
Qatar.......................................... -- -- 519 389
Venezuela...................................... 23 12 1,434 1,004
----- ----- ------ ------
Total........................................ 4,296 2,383 18,521 14,893
===== ===== ====== ======
</TABLE>

32
<PAGE>

DIRECTORS AND EXECUTIVE OFFICERS OF DEVON

Directors

Our certificate of incorporation classifies the Devon board into three
classes with staggered terms of three years each. The number of directors will
be fixed from time to time by resolution of the Devon board. The Devon board is
currently set at fourteen members consisting of the following:

<TABLE>
<CAPTION>
Previous Board Expiration of
Name Age Membership First Term
---- --- -------------- -------------
<S> <C> <C> <C>
Thomas F. Ferguson(1).................... 63 Devon 2001
David M. Gavrin(2)....................... 64 Devon 2001
Michael E. Gellert(3).................... 68 Devon 2002
John A. Hagg............................. 51 Devon 2000
Henry R. Hamman.......................... 61 PennzEnergy 2000
William J. Johnson(4).................... 64 -- 2002
Michael M. Kanovsky...................... 50 Devon 2002
Robert A. Mosbacher, Jr.................. 48 PennzEnergy 2002
J. Larry Nichols......................... 57 Devon 2000
James L. Pate(5)......................... 63 PennzEnergy 2002
H.R. Sanders, Jr......................... 67 Devon 2002
Terry L. Savage.......................... 54 PennzEnergy 2001
Brent Scowcroft.......................... 74 PennzEnergy 2001
Robert B. Weaver......................... 60 PennzEnergy 2000
</TABLE>
- --------
(1) Chairman of the Audit Committee. The Audit Committee also consists of one
additional former Devon board member and one former PennzEnergy board
member.
(2) Chairman of the Compensation and Stock Option Committee. The Compensation
and Stock Option Committee also consists of one additional former Devon
board member and two former PennzEnergy board members.
(3) Chairman of the Nominating Committee. The Nominating Committee also
consists of one additional former Devon board member and two former
PennzEnergy board members.
(4) Designated by PennzEnergy and mutually approved by PennzEnergy's chairman
of the board and Devon's president prior to the merger. Mr. Johnson is a
private consultant for the oil and gas industry and is President and a
director of JonLoc Inc., an oil and gas company of which he and his family
are the sole shareholders. He also serves as a director of Tesoro Petroleum
and J. Ray McDermott, S.A. From 1991 to 1994, Mr. Johnson was President,
Chief Operating Officer and a director of Apache Corporation.
(5) Chairman of the Board and Chairman of the Executive Committee. The
Executive Committee consists of Mr. Pate and Mr. Nichols.

Our certificate of incorporation provides, that until our annual stockholder
meeting in 2000, (1) the initial directors of Devon designated by pre-merger
Devon and their designated successors will nominate successors to, and fill any
vacancies in, that group of directors and (2) the initial directors of Devon
designated by PennzEnergy and their designated successors will nominate
successors to, and fill any vacancies in, that group of directors. One member
of the PennzEnergy group of directors must be a person mutually agreed to by
Devon's chairman and president. Our certificate provides that at and after the
annual stockholder meeting in 2000, a majority of the whole board, will
nominate successors and fill vacancies.

33
<PAGE>

Executive Officers

Our board will elect executive officers annually to serve in their respective
capacities until their successors are duly elected and qualified or until their
earlier resignation or removal. The following currently serve as executive
officers of Devon:

<TABLE>
<CAPTION>
Pre-merger
Company
Name Age Office Affiliation
---- --- ------------------------------------- -----------
<S> <C> <C> <C>
J. Larry Nichols... 57 President and Chief Executive Officer Devon
J. Michael Lacey... 53 Vice President--Operations and
Exploration Devon
Duke R. Ligon...... 58 Vice President--General Counsel Devon
Darryl G. Smette... 52 Vice President--Marketing and
Administrative Planning Devon
H. Allen Turner.... 46 Vice President--Corporate
Development Devon
William T. Vaughn.. 52 Vice President--Finance Devon
Danny J. Heatly.... 43 Controller Devon
Gary L. McGee...... 50 Treasurer Devon
Marian J. Moon..... 49 Secretary Devon
</TABLE>

34
<PAGE>

CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
TO NON-UNITED STATES HOLDERS

General

This is a summary of certain U.S. federal tax considerations of the ownership
and disposition of our common stock by a non-U.S. holder as we define that term
below. We assume in this summary that our common stock will be held as a
capital asset (generally, property held for investment). We do not discuss all
aspects of U.S. federal taxation that may be important to particular non-U.S.
holders in light of their individual investment circumstances, such as special
tax rules that would apply if, for example, a non-U.S. holder is a dealer in
securities, financial institution, bank, insurance company, tax-exempt
organization, partnership or owner of more than 5% of our common stock.

For purposes of this summary, a "non-U.S. holder" means a holder of our
common stock who, for U.S. federal income tax purposes, is not a U.S. person.
The term "U.S. person" means any one of the following:

. a citizen or resident of the U.S.;

. a corporation, partnership, or other entity created or organized in the
U.S. or under the laws of the U.S. or of any political subdivision of the
U.S.;

. an estate, the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source; or

. a trust, if (A) a court within the U.S. is able to exercise primary
supervision over the administration of the trust and one or more U.S.
persons have the authority to control all substantial decisions of the
trust or (B) the trust has a valid election in effect under applicable
U.S. Treasury Regulations to be treated as a U.S. person.

This summary is based upon the Internal Revenue Code of 1986, as amended,
U.S. Treasury Regulations, judicial precedent, administrative rulings and
pronouncements, and other applicable authorities, all as in effect on the date
of this prospectus. These authorities are subject to differing interpretations
or change, possibly with retroactive effect. We have not sought, and will not
seek, any ruling from the U.S. Internal Revenue Service, which we refer to in
this summary as the IRS, with respect to the tax considerations discussed
below. There can be no assurance that the IRS will not take a position contrary
to the tax considerations discussed below or that any position taken by the IRS
would not be sustained.

We strongly urge you to consult your tax advisor about the U.S. federal tax
consequences of holding and disposing of our common stock, as well as any tax
consequences that may arise under the laws of any foreign, state, local, or
other taxing jurisdiction.

Dividends

Dividends paid to a non-U.S. holder will generally be subject to withholding
of U.S. federal income tax at a rate of 30% of the gross amount paid. If,
however, the dividend is effectively connected with the conduct of a trade or
business in the U.S. by the non-U.S. holder, the dividend will be subject to
U.S. federal income tax imposed on net income on the same basis that applies to
U.S. persons generally, and, for corporate holders under certain circumstances,
the branch profits tax.

Non-U.S. holders should consult any applicable income tax treaties that may
provide for a reduction of, or exemption from, withholding taxes. Under
recently finalized U.S. Treasury Regulations, which in general will apply to
dividends that we pay after December 31, 2000, to obtain a reduced rate of
withholding under an income tax treaty, a non-U.S. holder generally will be
required to provide certification as to that non-U.S. holder's entitlement to
treaty benefits. These U.S. Treasury Regulations also provide special rules to
determine whether, for purposes of applying an income tax treaty, dividends
that we pay to a non-U.S. holder that is an entity should be treated as paid to
holders of interests in that entity.

35
<PAGE>

Gain on Disposition

A non-U.S. holder will generally not be subject to U.S. federal income tax,
including by way of withholding, on gain recognized on a sale or other
disposition of our common stock unless any one of the following is true:

. the gain is effectively connected with the conduct of a trade or business
in the U.S. by the non-U.S. holder;

. the non-U.S. holder is a nonresident alien individual present in the U.S.
for 183 or more days in the taxable year of the disposition and certain
other requirements are met;

. the non-U.S. holder is subject to tax pursuant to provisions of the U.S.
federal income tax law applicable to certain U.S. expatriates; or

. we are or have been during certain periods a "U.S. real property holding
corporation" for U.S. federal income tax purposes.

If we are or have been a U.S. real property holding corporation, a non-U.S.
holder will generally not be subject to U.S. federal income tax on gain
recognized on a sale or other disposition of our common stock provided that:

. the non-U.S. holder does not hold, and has not held during certain
periods, directly or indirectly, more than 5% of our outstanding common
stock; and

. our common stock is and continues to be traded on an established
securities market for U.S. federal income tax purposes.

We believe that our common stock will be traded on an established securities
market for this purpose in any quarter during which it is listed on the
American Stock Exchange.

If we are or have been during certain periods a U.S. real property holding
corporation and the above exception does not apply, a non-U.S. holder will be
subject to U.S. federal income tax with respect to gain realized on any sale or
other disposition of our common stock as well as to a withholding tax,
generally at a rate of 10% of the proceeds. Any amount withheld pursuant to a
withholding tax will be creditable against a non-U.S. holder's U.S. federal
income tax liability.

Gain that is effectively connected with the conduct of a trade or business in
the U.S. by the non-U.S. holder will be subject to the U.S. federal income tax
imposed on net income on the same basis that applies to U.S. persons generally,
and, for corporate holders under certain circumstances, the branch profits tax,
but will generally not be subject to withholding. Non-U.S. holders should
consult any applicable income tax treaties that may provide for different
rules.

United States Federal Estate Taxes

Our common stock that is owned or treated as owned by an individual who is
not a citizen or resident of the U.S., as specifically defined for U.S. federal
estate tax purposes, on the date of that person's death will be included in his
or her estate for U.S. federal estate tax purposes, unless an applicable estate
tax treaty provides otherwise.

Information Reporting and Backup Withholding

We must report annually to the IRS and to each non-U.S. holder the amount of
dividends that we paid to a holder, and the amount of tax that we withheld on
those dividends. This information may also be made available to the tax
authorities of a country in which the non-U.S. holder resides. Backup
withholding tax will generally not apply to dividends that we pay on our common
stock to a non-U.S. holder at an address outside the U.S.

36
<PAGE>

Payments of the proceeds of a sale or other taxable disposition of our common
stock by a U.S. office of a broker are subject to both backup withholding at a
rate of 31% and information reporting, unless the holder certifies as to its
non-U.S. holder status under penalties of perjury or otherwise establishes an
exemption. Information reporting requirements, but not backup withholding tax,
will also apply to payments of the proceeds of a sale or other taxable
disposition of our common stock by a foreign office of a U.S. broker or a
foreign broker with certain types of relationships to the U.S., unless the
broker has documentary evidence in its records that the holder is a non-U.S.
holder and certain other conditions are met or the holder otherwise establishes
an exemption.

The U.S. Treasury Department has promulgated final regulations regarding the
withholding and information reporting rules discussed above. In general, those
regulations do not significantly alter the substantive withholding and
information reporting requirements, but unify current certification procedures
and forms and clarify reliance standards. The final U.S. Treasury Regulations
are generally effective for payments made after December 31, 2000, subject to
transition rules.

Backup withholding is not an additional tax. Any amounts that we withhold
under the backup withholding rules will be refunded or credited against the
non-U.S. holder's U.S. federal income tax liability if certain required
information is furnished to the IRS.

37
<PAGE>

UNDERWRITERS

Under the terms and subject to the conditions contained in an underwriting
agreement dated the date of this prospectus, the underwriters named below, for
whom Morgan Stanley & Co. Incorporated, J.P. Morgan Securities Inc.,
PaineWebber Incorporated, Bear, Stearns & Co. Inc. and Schroder & Co. Inc. are
acting as representatives, have severally agreed to purchase, and we have
agreed to sell to them, severally, the number of shares indicated below:

<TABLE>
<CAPTION>
Number of
Name Shares
---- -----------
<S> <C>
Morgan Stanley & Co. Incorporated.................................
J.P. Morgan Securities Inc........................................
PaineWebber Incorporated..........................................
Bear, Stearns & Co. Inc...........................................
Schroder & Co. Inc................................................
-----------
Total............................................................. 8,700,000
===========
</TABLE>

The underwriters are offering the shares of common stock subject to their
acceptance of the shares from Devon and subject to prior sale. The underwriting
agreement provides that the obligations of the several underwriters to pay for
and accept delivery of the shares of common stock offered by this prospectus
are subject to the approval of certain legal matters by their counsel and to
stock offered by this prospectus if any such shares are taken. However, the
underwriters are not required to take or pay for the shares covered by the
underwriters over-allotment option described below.

The underwriters initially propose to offer part of the shares of common
stock directly to the public at the public offering price listed on the cover
page of this prospectus and part to certain dealers at a price that represents
a concession not in excess of $ . a share under the public offering price.
Any underwriter may allow, and such dealers may reallow, a concession not in
excess of $ . a share to other underwriters or to certain dealers. After the
initial offering of the shares of common stock, the offering price and other
selling terms may from time to time be varied by the representatives.

We have granted to the underwriters an option, exercisable for 30 days from
the date of this prospectus, to purchase up to an aggregate of 1,300,000
additional shares of common stock at the public offering price listed on the
cover page of this prospectus, less underwriting discounts and commissions. The
underwriters may exercise this option solely for the purpose of covering over-
allotments, if any, made in connection with the offering of the shares of
common stock offered by this prospectus. To the extent the option is exercised,
each underwriter will become obligated, subject to certain conditions, to
purchase about the same percentage of the additional shares of common stock as
the number listed next to the underwriter's name in the preceding table bears
to the total number of shares of common stock, listed next to the names of all
underwriters in the preceding table. If the underwriters' option is exercised
in full, the total price to the public would be $ . , the total underwriters'
discounts and commissions would be $ . and total proceeds to Devon would be
$ . .

The common stock has been approved for listing, subject to official notice of
issuance, on the American Stock Exchange under the symbol "DVN."

Each of Devon and the directors and executive officers of Devon have agreed
that, without the prior written consent of Morgan Stanley & Co. Incorporated on
behalf of the underwriters, it will not during the period ending . days
after the date of this prospectus:

. offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose of
directly or indirectly, any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock; or

38
<PAGE>

. enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the
common stock;

whether any transaction described above is to be settled by delivery of common
stock or such other securities in cash or otherwise.

The restrictions described in this paragraph do not apply to:

. the sale of shares to the underwriters;

. the issuance by Devon of shares of common stock upon the exercise of an
option or a warrant or the conversion of a security outstanding on the
date of this prospectus of which the underwriters have been advised in
writing; or

. transactions by any person other than Devon relating to shares of common
stock or other securities acquired in open market transactions after the
completion of the offering of the shares.

In order to facilitate the offering of the common stock, the underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price
of the common stock. Specifically, the underwriters may over-allot in
connection with the offering, creating a short position in the common stock for
their own account. In addition, to cover over-allotments or to stabilize the
price of the common stock, the underwriters may bid for, and purchase, shares
of common stock in the open market. Finally, the underwriting syndicate may
reclaim selling concessions allowed to an underwriter or a dealer for
distributing the common stock in the offering, if the syndicate repurchases
previously distributed common stock in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the common stock above
independent market levels. The underwriters are not required to engage in these
activities, and may end any of these activities at any time.

From time to time, Morgan Stanley & Co. Incorporated and PaineWebber
Incorporated have provided, and continue to provide, investment banking
services to Devon, including acting as financial advisor to Devon in connection
with the merger with PennzEnergy.

Devon and the underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act.

39
<PAGE>

LEGAL MATTERS

Certain legal matters in connection with the shares of common stock being
offered by this prospectus will be passed upon for us by McAfee & Taft A
Professional Corporation. Certain legal matters in connection with this
offering will be passed upon for the underwriters by Andrews & Kurth L.L.P.

EXPERTS

The consolidated financial statements of Devon as of and for each of the
years ended December 31, 1998, 1997 and 1996 have been incorporated by
reference herein in reliance upon the reports of KPMG LLP, independent
certified public accountants, and Deloitte & Touche LLP and
PricewaterhouseCoopers LLP, chartered accountants, incorporated by reference in
this document, and upon the authority of said firms as experts in accounting
and auditing.

The audited consolidated financial statements of PennzEnergy and its
subsidiaries incorporated by reference in this registration
statement/prospectus have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report.

Certain information with respect to our oil and gas reserves derived from the
reports of LaRoche Petroleum Consultants, Ltd., AMH Group Ltd., Paddock
Lindstrom & Associates Ltd. and John P. Hunter & Associates, Ltd., independent
consulting petroleum engineers, has been included and 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.

Certain information with respect to PennzEnergy's oil and gas reserves
derived from the report of Ryder Scott Company, L.P., independent consulting
petroleum engineers, has been included and incorporated by reference herein
upon the authority of said firm as experts with respect to matters covered by
such report and in giving such report.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or
other information we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. 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 web site 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 common stock 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.

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

40
<PAGE>

reference the documents set forth below that we or PennzEnergy have previously
filed with the SEC. These documents contain important information about our
companies and their finances.

Devon SEC Filings

<TABLE>
<CAPTION>
(File No. 001-30176) Period
- -------------------- -----------------------------------
<S> <C>
Current Report on Form 8-K Filed on August 18, 1999
Current Report on Form 8-K Filed on August 31, 1999
<CAPTION>
(File No. 001-10067)
- --------------------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1998
Quarterly Report on Form 10-Q Quarter ended March 31, 1999
Current Report on Form 8-K/A Filed on February 2, 1999
Current Report on Form 8-K Filed on February 8, 1999
Current Report on Form 8-K Filed on February 22, 1999
Proxy Statement on Schedule 14A Filed on April 9, 1999
Current Report on Form 8-K Filed on April 28, 1999
Current Report on Form 8-K Filed on May 21, 1999
Current Report on Form 8-K Filed on June 1, 1999
Proxy Statement on Schedule 14A Filed on July 16, 1999
Current Report on Form 8-K Filed on July 22, 1999
Quarterly Report on Form 10-Q Quarter ended June 30, 1999
Current Report on Form 8-K Filed on August 13, 1999

PennzEnergy SEC Filings

<CAPTION>
(File No. 001-05591)
- --------------------
<S> <C>
Part II, Item 8. "Financial Statements and Fiscal year ended December 31, 1998
Supplementary Data" of the Annual Report
on Form 10-K
Part I, Item 1. "Financial Statements" of Quarter ended March 31, 1999
the Quarterly Report on Form 10-Q.
Proxy Statement on Schedule 14A Filed on March 25, 1999
Part I, Item 1. "Financial Statements" of Quarter ended June 30, 1999
the Quarterly Report on Form 10-Q
Current Report on Form 8-K Filed on August 17, 1999
</TABLE>

We are also incorporating by reference additional documents that we file with
the SEC between the date of this prospectus and the termination of the
offering.

Documents incorporated by reference are available from us without charge,
excluding all exhibits unless we have specifically incorporated by reference an
exhibit in this prospectus. You may obtain documents incorporated by reference
in this prospectus by requesting them in writing, by e-mail or by telephone
from us at the following address:

Devon Energy Corporation
20 North Broadway, Suite 1500
Oklahoma City, Oklahoma 73102-8260
Attention: Corporate Secretary
Tel: (405) 235-3611
[email protected]

You can also get more information by visiting our web site at
"http://www.devonenergy.com". Web site materials are not part of this
prospectus.

41
<PAGE>

CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS

We have made forward-looking statements in this document and in the documents
referred to in this document which are subject to risks and uncertainties,
including those discussed under the caption "Risk Factors." These statements
are based on the beliefs and assumptions of our management and on the
information currently available to them.

Statements and calculations concerning oil and gas reserves and their present
value also may be deemed to be forward-looking statements in that they reflect
the determination, based on estimates and assumptions, that oil and gas
reserves may be profitably exploited in the future. When used or referred to in
this document, these forward-looking statements may be preceded by, followed
by, or otherwise include the words "believes," "expects," "anticipates,"
"intends," "plans," "estimates," "projects" or similar expressions, or
statements that certain events or conditions "will" or "may" occur.

Except for our ongoing obligations to disclose material information as
required by the federal securities laws, we do not have any intention or
obligation to update forward-looking statements after we distribute this
document.

42
<PAGE>

COMMONLY USED OIL AND GAS TERMS

"Bbl" means barrel.

"Bbl/d" means Bbl per day.

"Bcf" means billion cubic feet.

"Boe" means equivalent barrels of oil, calculated by converting gas to
equivalent Bbls. The U.S. convention for this conversion is six Mcf equals one
Boe.

"Boe/d" means Boe per day.

"Cash margin" means total revenues less cash expenses. Cash expenses are all
expenses other than the non-cash expenses of depreciation, depletion and
amortization, deferred effect of changes in foreign currency exchange rate on
subsidiary's long-term debt, reduction of carrying value of oil and gas
properties and deferred income tax expense.

"MBbls" means thousand barrels.

"MBoe" means thousand Boe.

"Mcf" means thousand cubic feet.

"Mcfe" means thousand equivalent cubic feet of gas, calculated by converting
oil and NGLs to equivalent Mcf. The U.S. convention for this conversion is one-
sixth Bbl equals one Mcfe.

"MMBbls" means million barrels.

"MMBoe" means million Boe.

"MMBtu" means million British thermal units, a measure of heating value.

"MMcf" means million cubic feet.

"MMcf/d" means MMcf per day.

"Modified EBITDA" means earnings before interest (including deferred effect
of changes in foreign currency exchange rate on subsidiary's long-term debt,
and distributions on preferred securities of subsidiary trust), taxes,
depreciation, depletion and amortization and reduction of carrying value of oil
and gas properties.

"NGL" means natural gas liquids.

"Oil" includes crude oil and condensate.

"SEC 10% present value" is the pre-tax present value of future net cash flows
from proved reserves, discounted at 10% per year. Oil, gas and NGL prices used
to calculate future revenues are based on year-end prices held constant, except
where fixed and determinable price changes are provided by contractual
arrangements. Future development and production costs are also based on year-
end costs and assume the continuation of existing economic conditions.

"Standardized measure of discounted future net cash flows" is the SEC 10%
present value defined above, less applicable income taxes.

"Tcf" means trillion cubic feet.

43
<PAGE>

Devon Energy Corporation Logo
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following is a statement of estimated expenses incurred in connection
with the shares of common stock being registered hereby. Devon will pay for the
fees and expenses of the offering of the shares of common stock offered hereby.

<TABLE>
<S> <C>
SEC Registration Fee.................................................. $106,943
Legal Fees and Expenses............................................... 175,000
Printing and Engraving Expenses....................................... 150,000
Accounting Fees and Expenses.......................................... 50,000
Transfer Agent and Registrar Fees and Expenses........................ 5,000
Blue Sky Fees and Expenses (including legal fees)..................... 10,000
Miscellaneous......................................................... 253,057
--------
Total............................................................... $750,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Except to the extent indicated below, there is no charter provision, by-law,
contract, arrangement or statute under which any director or officer of
Registrant is insured or indemnified in any manner against any liability which
he or she may incur in his or her capacity as such.

Article VIII of the Restated Certificate of Incorporation of Registrant
contains a provision, permitted by Section 102(b)(7) of the Delaware General
Corporation Law (the "DGCL"), limiting the personal monetary liability of
directors for breach of fiduciary duty as a director. The DGCL and the Restated
Certificate of Incorporation of the Registrant provide that such provision does
not eliminate or limit liability,

(1) for any breach of the director's duty of loyalty to Registrant or its
stockholders,

(2) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,

(3) for unlawful payments of dividends or unlawful stock repurchases or
redemptions, as provided in Section 174 of the DGCL, or

(4) for any transaction from which the director derived an improper
benefit.

Section 145 of the DGCL permits indemnification against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred in connection with actions, suits or proceedings in which a
director, officer, employee or agent is a party by reason of the fact that he
or she is or was such a director, officer, employee or agent, if he or she
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the corporation and with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. However, in connection with actions by or in the right of
the corporation, such indemnification is not permitted if such person has been
adjudged liable to the corporation unless the court determines that, under all
of the circumstances, such person is nonetheless fairly and reasonably entitled
to indemnity for such expenses as the court deems proper. Article X of the
Registrant's Restated Certificate of Incorporation provides for such
indemnification.

Section 145 also permits a corporation to purchase and maintain insurance on
behalf of its directors and officers against any liability which may be
asserted against, or incurred by, such persons in their capacities as

II-1
<PAGE>

directors or officers of the corporation whether or not Registrant would have
the power to indemnify such persons against such liabilities under the
provisions of such sections. Registrant intends to purchase such insurance.

Section 145 further provides that the statutory provision is not exclusive of
any other right to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
independent directors, or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.

Article XIII of the by-laws of Registrant contains provisions regarding
indemnification which parallel those described above.

The merger agreement provides that for seven years after the effective time,
Registrant will indemnify and hold harmless each person who was a director or
officer of Devon or PennzEnergy prior to the effective time from their acts or
omissions in those capacities occurring prior to the effective time to the
fullest extent permitted by applicable law.

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
Exhibit No. Document
----------- --------
<C> <S>
1.1 Form of Underwriting Agreement.*
2.1 Amended and Restated Agreement and Plan of Merger among
Registrant, Devon Energy Corporation (Oklahoma) (formerly Devon
Energy Corporation, an Oklahoma corporation), Devon Oklahoma
Corporation and PennzEnergy Company dated as of May 19, 1999
(incorporated by reference to Exhibit 2 to Registrant's Form S-4,
File No. 333-82903).
4.1 Registrant's Restated Certificate of Incorporation (incorporated
by reference to Exhibit 3 to Registrant's Form 8-K filed on August
18, 1999).
4.2 Registrant's By-laws (incorporated by reference to Exhibit 3.3 to
Registrant's Registration Statement on Form S-4, File No. 333-
82903).
4.3 Form of Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to Registrant's Form 8-K, filed on August 18, 1999).
4.4 Rights Agreement between Registrant and BankBoston, N.A.
(incorporated by reference to Exhibit 4.2 to Registrant's Form 8-K
filed on August 18, 1999).
4.5 Certificate of Designations of Series A Junior Participating
Preferred Stock of Registrant (incorporated by reference to
Exhibit 4.3 to Registrant's Form 8-K filed on August 18, 1999).
4.6 Certificate of Designations of the 6.49% Cumulative Preferred
Stock, Series A of Registrant (incorporated by reference to
Exhibit 4.4 to Registrant's Form 8-K filed on August 18, 1999).
4.7 Amending Support Agreement, dated August 17, 1999, between the
Registrant and Northstar Energy Corporation (incorporated by
reference to Exhibit 4.5 to Registrant's Form 8-K filed on August
18, 1999).
4.8 Description of Capital Stock of Devon Energy Corporation
(incorporated by reference to Exhibit 4.9 to Registrant's Form 8-K
filed on August 18, 1999).
5.1 Opinion of McAfee & Taft A Professional Corporation.*
23.1 Consent of KPMG LLP.*
23.2 Consent of Deloitte & Touche LLP.*
23.3 Consent of PricewaterhouseCoopers LLP.*
23.4 Consent of Arthur Andersen LLP.*
23.5 Consent of LaRoche Petroleum Consultants, Ltd.
23.6 Consent of AMH Group Ltd.
23.7 Consent of Paddock Lindstrom & Associates Ltd.
23.8 Consent of John P. Hunter & Associates, Ltd.
23.9 Consent of Ryder Scott Company, L.P.
23.10 Consent of McAfee & Taft A Professional Corporation (contained in
opinion in Exhibit 5.1).*
24.1 Power of Attorney.
</TABLE>
- --------

* Filed with this amendment.

II-2
<PAGE>

ITEM 17. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes

(1) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in this Registration
Statement shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof;

(2) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the undersigned registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective;

(3) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offer of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by any such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether or not such indemnification is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, the registrant has
duly caused this amended Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Oklahoma City, State
of Oklahoma, on the 15th day of September, 1999.

DEVON ENERGY CORPORATION

/s/ *
By: _________________________________
J. Larry Nichols
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed by the following persons in the
capacities indicated on September 15, 1999.

<TABLE>
<S> <C> <C>
</TABLE>
Signature Title

/s/ Chairman of the Board
* and Director
- -----------------------------------
James L. Pate

/s/ President,
* Chief Executive
- ----------------------------------- Officer and Director
J. Larry Nichols

/s/ Vice President Finance
*
- -----------------------------------
William T. Vaughn

/s/ Controller
*
- -----------------------------------
Danny J. Heatly

/s/ Director
*
- -----------------------------------
Thomas F. Ferguson

/s/ Director
*
- -----------------------------------
David M. Gavrin

/s/ Director
*
- -----------------------------------
Michael E. Gellert

/s/ Director
*
- -----------------------------------
John A. Hagg

/s/ Director
*
- -----------------------------------
Henry R. Hamman

/s/ Director
*
- -----------------------------------
William J. Johnson

/s/ Director
*
- -----------------------------------
Michael M. Kanovsky

/s/ Director
*
- -----------------------------------
Robert Mosbacher, Jr.

II-4
<PAGE>

<TABLE>
<S> <C> <C>
</TABLE>
Signature Title

/s/ Director
*
- ----------------------------------
H.R. Sanders, Jr.

/s/ Director
*
- ----------------------------------
Terry L. Savage

/s/ Director
*
- ----------------------------------
Brent Scowcrowft

/s/ Director
*
- ----------------------------------
Robert B. Weaver

*By /s/ H. Allen Turner
- ----------------------------------
H. Allen Turner Attorney in Fact

II-5
<PAGE>

EXHIBIT INDEX

<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.*
2.1 Amended and Restated Agreement and Plan of Merger among Registrant,
Devon Energy Corporation (Oklahoma) (formerly Devon Energy Corporation,
an Oklahoma corporation), Devon Oklahoma Corporation and PennzEnergy
Company dated as of May 19, 1999 (incorporated by reference to Exhibit 2
to Registrant's Form S-4, File No. 333-82903).
4.1 Registrant's Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3 to Registrant's Form 8-K filed on August 18,
1999).
4.2 Registrant's By-laws (incorporated by reference to Exhibit 3.3 to
Registrant's Registration Statement on Form S-4, File No. 333-82903).
4.3 Form of Common Stock Certificate (incorporated by reference to Exhibit
4.1 to Registrant's Form 8-K, filed on August 18, 1999).
4.4 Rights Agreement between Registrant and BankBoston, N.A. (incorporated
by reference to Exhibit 4.2 to Registrant's Form 8-K filed on August 18,
1999).
4.5 Certificate of Designations of Series A Junior Participating Preferred
Stock of Registrant (incorporated by reference to Exhibit 4.3 to
Registrant's Form 8-K filed on August 18, 1999).
4.6 Certificate of Designations of the 6.49% Cumulative Preferred Stock,
Series A of Registrant (incorporated by reference to Exhibit 4.4 to
Registrant's Form 8-K filed on August 18, 1999).
4.7 Amending Support Agreement, dated August 17, 1999, between the
Registrant and Northstar Energy Corporation (incorporated by reference
to Exhibit 4.5 to Registrant's Form 8-K filed on August 18, 1999).
4.8 Description of Capital Stock of Devon Energy Corporation (incorporated
by reference to Exhibit 4.9 to Registrant's Form 8-K filed on August 18,
1999).
5.1 Opinion of McAfee & Taft A Professional Corporation.*
23.1 Consent of KPMG LLP.*
23.2 Consent of Deloitte & Touche LLP.*
23.3 Consent of PricewaterhouseCoopers LLP.*
23.4 Consent of Arthur Andersen LLP.*
23.5 Consent of LaRoche Petroleum Consultants, Ltd.
23.6 Consent of AMH Group Ltd.
23.7 Consent of Paddock Lindstrom & Associates Ltd.
23.8 Consent of John P. Hunter & Associates, Ltd.
23.9 Consent of Ryder Scott Company, L.P.
23.10 Consent of McAfee & Taft A Professional Corporation (contained in
opinion in Exhibit 5.1).*
24.1 Power of Attorney.
</TABLE>
- --------

* Filed with this amendment.

<PAGE>

Exhibit 1.1

8,700,000 SHARES

DEVON ENERGY CORPORATION

COMMON STOCK, PAR VALUE $0.10

UNDERWRITING AGREEMENT

September ___, 1999
<PAGE>

September ___, 1999

Morgan Stanley & Co. Incorporated
J.P. Morgan Securities, Inc.
PaineWebber Incorporated
Bear, Stearns & Co. Inc.
Schroder & Co. Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036

Dear Sirs and Mesdames:

Devon Energy Corporation, a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters (as defined below)
8,700,000 shares of its Common Stock, par value $0.10 (the "FIRM SHARES").

It is understood that, subject to the conditions hereinafter stated,
8,700,000 Firm Shares (the "FIRM SHARES") will be sold to the several
Underwriters named in Schedule I hereto (the "UNDERWRITERS") in connection with
the offering and sale of such Firm Shares. Morgan Stanley & Co. Incorporated,
J.P. Morgan Securities, Inc., PaineWebber Incorporated, Bear, Stearns & Co. Inc.
and Schroder & Co. Inc. shall act as representatives (the "REPRESENTATIVES") of
the several Underwriters.

The Company also proposes to issue and sell to the several
Underwriters not more than an additional 1,300,000 shares of its Common Stock,
par value $0.10 (the "ADDITIONAL SHARES"), if and to the extent that the
Representatives shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares of common stock granted to the
Underwriters in Section 2 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "SHARES." The shares of Common
Stock, par value $0.10, of the Company to be outstanding after giving effect to
the sales contemplated hereby are hereinafter referred to as the "COMMON STOCK."

The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement relating to the Shares. The registration
statement as amended at the time it becomes effective, including the information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), is hereinafter referred to as the "REGISTRATION
STATEMENT;" the prospectus included in the Registration Statement in the form
first used to confirm sales of Shares is hereinafter referred to as the
"PROSPECTUS." If the Company has filed an abbreviated registration statement to
register additional shares of Common Stock pursuant to
<PAGE>

Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"),
then any reference herein to the term "Registration Statement" shall be deemed
to include such Rule 462 Registration Statement (including, in the case of all
references to the Registration Statement and the Prospectus, documents
incorporated by reference).

1. Representations and Warranties. The Company represents and
warrants to and agrees with each of the Underwriters that:

(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.

(b) (i) Each document, if any, filed or to be filed pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and
incorporated by reference in the Prospectus, complied or will comply when
so filed in all material respects with the Exchange Act and the applicable
rules and regulations of the Commission thereunder, (ii) the Registration
Statement, when it became effective, did not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (iii)
the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (iv) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set
forth in this paragraph do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to
any Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use therein.

(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.

(d) Each subsidiary of the Company has been duly incorporated, is
validly existing and in good standing under the laws of the jurisdiction in
which it is chartered or organized, has the corporate power and authority
to own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or

-2-
<PAGE>

leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole; all of the issued shares of capital stock of each subsidiary of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned, directly or indirectly, by the Company,
free and clear of all liens, encumbrances, equities or claims.

(e) This Agreement has been duly authorized, executed and delivered by
the Company.

(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.

(g) The shares of Common Stock outstanding prior to the issuance of
the Shares have been duly authorized and are validly issued, fully paid and
non-assessable.

(h) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares will
not be subject to any preemptive or similar rights.

(i) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene
any provision of applicable law or the certificate of incorporation or by-
laws of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except
such as has been obtained under the Securities Act and such as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares.

(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).

(k) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration Statement or
the Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement

-3-
<PAGE>

or the Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required.

(l) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.

(m) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.

(n) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants,
including, without limitation, the regulations of the United States Mineral
Management Service ("ENVIRONMENTAL LAWS"), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole.

(o) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.

(p) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company or to require the Company to
include such securities with the Shares registered pursuant to the
Registration Statement, other than pursuant to the Registration Rights
Agreement between the Company and Kerr-McGee Corporation.

(q) There are no defects in title to, or encumbrances upon the
leasehold interests in, the oil and gas producing properties of the Company
and its subsidiaries or the assets or facilities used by the Company and
its subsidiaries in the production and marketing of oil and gas which,
individually or in the aggregate, have a material adverse effect on the
Company

-4-
<PAGE>

and its subsidiaries, taken as a whole, except any such defects and
encumbrances that are customary in the oil and gas industry and are in the
ordinary course of business of the Company.

(r) The Company has reviewed its operations and that of its
subsidiaries to evaluate the extent to which the business or operations of
the Company or any of its subsidiaries will be affected by the Year 2000
Problem (that is, any significant risk that computer hardware or software
applications used by the Company and its subsidiaries will not, in the case
of dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000); as a result of such review, (i) the Company has
no reason to believe, and does not believe, that (A) there are any issues
related to the Company's preparedness to address the Year 2000 Problem that
are of a character required to be described or referred to in the
Registration Statement or Prospectus which have not been accurately
described in the Registration Statement or Prospectus and (B) the Year 2000
Problem will have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business or operations of the Company and
its subsidiaries, taken as a whole, or result in any material loss or
interference with the business or operations of the Company and its
subsidiaries, taken as a whole; and (ii) the Company reasonably believes,
after due inquiry, that the suppliers, vendors, customers or other material
third parties used or served by the Company and such subsidiaries are
addressing or will address the Year 2000 Problem in a timely manner, except
to the extent that a failure to address the Year 2000 Problem by any
supplier, vendor, customer or material third party would not have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, business or operations of the Company and its subsidiaries, taken
as a whole.

2. Agreements to Sell and Purchase. The Company hereby agrees to
sell to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedules I and II
hereto opposite its names at U.S.$_____ a share ("PURCHASE PRICE").

On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the U.S. Underwriters the Additional Shares, and the U.S. Underwriters shall
have a one-time right to purchase, severally and not jointly, up to 1,500,000
Additional Shares at the Purchase Price. If the U.S. Representatives, on
behalf of the U.S. Underwriters, elect to exercise such option, the U.S.
Representatives shall so notify the Company in writing not later than 30 days
after the date of this Agreement, which notice shall specify the number of
Additional Shares to be purchased by the U.S. Underwriters and the date on which
such shares are to be purchased. Such date may be the same as the Closing Date
(as defined below) but not earlier than the Closing Date nor later than ten
business days after the date of such notice. Additional Shares may be purchased
as provided in Section 4 hereof solely for the purpose of covering over-
allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each U.S. Underwriter agrees, severally
and not jointly, to

-5-
<PAGE>

purchase the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as the U.S. Representatives may determine) that
bears the same proportion to the total number of Additional Shares to be
purchased as the number of U.S. Firm Shares set forth in Schedule I hereto
opposite the name of such U.S. Underwriter bears to the total number of U.S.
Firm Shares.

The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending [____] days after the date of the Prospectus, (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Shares to be sold hereunder or (B) the issuance by the Company of
shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof of which the
Underwriters have been advised in writing or which is disclosed in the
Prospectus.

3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is further
advised by you that the Shares are to be offered to the public initially at U.S.
$_____ a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected by
you at a price that represents a concession not in excess of U.S. $____ a share
under the Public Offering Price, and that any Underwriter may allow, and such
dealers may reallow, a concession, not in excess of U.S. $____ a share, to any
Underwriter or to certain other dealers.

4. Payment and Delivery. Payment for the Firm Shares shall be made
to the Company in Federal or other funds immediately available in New York City
against delivery of such Firm Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on September ___, 1999, or at
such other time on the same or such other date, not later than September ___,
1999, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the "CLOSING DATE."

Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 2 or at such other time on the same or on such other
date, in any event not later than October __, 1999, as shall be designated in
writing by the U.S. Representatives. The time and date of such payment are
hereinafter referred to as the "OPTION CLOSING DATE."

-6-
<PAGE>

Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.

5. Conditions to the Underwriters' Obligations. The obligations of
the Company to sell the Shares to the Underwriters and the several obligations
of the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than 5:00 p.m. (New York City time) on the date hereof.

The several obligations of the Underwriters are subject to the
following further conditions:

(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:

(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and

(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.

(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in Section 5(a)(i) above and to the
effect that the representations and warranties of the Company contained in
this Agreement are true and correct as of the Closing Date and that the
Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before
the Closing Date.

The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.

-7-
<PAGE>

(c) The Underwriters shall have received on the Closing Date an
opinion of McAfee & Taft A Professional Corporation ("McAfee & Taft"),
outside counsel for the Company, dated the Closing Date, to the effect
that:

(i) the Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the jurisdiction
of its incorporation, has the corporate power and authority to own or
lease its property and to conduct its business as described in the
Prospectus;

(ii) each corporate subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus;

(iii) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;

(iv) the shares of Common Stock outstanding prior to the
issuance of the Shares have been duly authorized and are validly
issued, fully paid and non-assessable;

(v) all of the issued shares of capital stock of each subsidiary
of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned directly by the Company,
free and clear of all liens, encumbrances, equities or claims;

(vi) the Shares have been duly authorized and, when paid for,
issued, and delivered in accordance with the terms of this Agreement,
will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or
similar rights;

(vii) this Agreement has been duly authorized, executed and
delivered by the Company;

(viii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate
of incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
listed as an exhibit to the Registration Statement and is material to
the Company and its subsidiaries, taken as a whole, or any judgment,
order or decree known to such counsel to be applicable to the Company
or any subsidiary of any United States or state governmental body,
agency or court having jurisdiction over the Company or any of its
U.S. subsidiaries, and no consent, approval, authorization or order
of, or qualification with, any United States or state

-8-
<PAGE>

governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, except such as has
been obtained under the Securities Act and such as may be required by
the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares by the U.S. Underwriters;

(ix) the statements (A) in the Prospectus under the captions
"United States Federal Tax Considerations To Non-United States
Holders," (B) in the Registration Statement in Item 15, (C) in the
Company's Annual Report on Form 10-K for the year ended December 31,
1998 under the captions "Business-Government Regulation-United States
Regulation," and "Properties--Title to Properties," and (D) in Exhibit
4.9, "Description of Capital Stock of Devon Energy Corporation," to
the Company's Current Report on Form 8-K filed with the Commission on
August 17, 1999 (the "Form 8-K"), in each case insofar as such
statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present the information called
for with respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein;

(x) after due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened in the United States to
which the Company or any of its subsidiaries is a party or to which
any of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration
Statement or the Prospectus and are not so described; or of any
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as
required;

(xi) the Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as
such term is defined in the Investment Company Act of 1940, as
amended;

(xii) such counsel (A) is of the opinion that each document filed
pursuant to the Exchange Act and incorporated by reference in the
Registration Statement and the Prospectus (except for financial
statements and schedules and other financial and statistical data and
oil and gas reserve data as to which such counsel need not express any
opinion) complied when so filed as to form in all material respects
with the Exchange Act and the applicable rules and regulations of the
Commission thereunder, and (B) is of the opinion that the Registration
Statement and Prospectus (except for financial statements and
schedules, other financial and statistical data and oil and gas
reserve data included therein as to which such counsel need not
express any opinion) comply as to form in all material respects with
the Securities Act and the applicable rules and regulations of the
Commission thereunder, (C) has no reason

-9-
<PAGE>

to believe that (except for financial statements and schedules, other
financial and statistical data and oil and gas reserve data as to
which such counsel need not express any belief) the Registration
Statement and the prospectus included therein at the time the
Registration Statement became effective contained any untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading and (D) has no reason to believe that (except for financial
statements and schedules, other financial and statistical data and oil
and gas reserve data as to which such counsel need not express any
belief) the Prospectus contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.

(d) The Underwriters shall have received on the Closing Date an
opinion of Andrews & Kurth L.L.P., counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in Sections 5(c)(vi),
5(c)(vii), 5(c)(ix) (but only as to the statements in the Prospectus under
"Underwriters" and the statements in Exhibit 4.9 to the Form 8-K) and
clauses (B), (C) and (D) of 5(c)(xii) above.

With respect to Section 5(c)(xii) above, McAfee & Taft may state that
their opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any amendments
or supplements thereto and documents incorporated therein by reference and
review and discussion of the contents thereof, but is without independent
check or verification except as specified; and such counself may also state
that they have relied on the opinion of Burnet, Duckworth & Palms as to
matters of Canadian law. With respect to clauses (B), (C) and (D) of
Section 5(c)(xii) above, Andrews & Kurth L.L.P. may state that their
opinion and belief are based upon their participation in the preparation of
the Registration Statement and Prospectus and any amendments or supplements
thereto (other than the documents incorporated by reference) and review and
discussion of the contents thereof (including documents incorporated by
reference), but are without independent check or verification except as
specified.

The opinion of McAfee & Taft described in Section 5(c) above shall be rendered
to the Underwriters at the request of the Company and shall so state therein.

(e) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from KPMG LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the historical and pro forma
financial statements of the Company and certain financial information
related to the Company contained or incorporated by reference in the
Registration Statement and the Prospectus; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.

-10-
<PAGE>

(f) The Underwriters shall have received a letter, on each of the date
hereof and the Closing Date, as the case may be, in form and substance
satisfactory to the Underwriters, from each of Deloitte & Touche LLP and
PricewaterhouseCoopers LLP, independent public accountants, stating their
independence with respect to the Company.

(g) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from Arthur Andersen & Co., independent public accountants, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the historical financial
statements of PennzEnergy and certain financial information related to
PennzEnergy contained or incorporated by reference in the Registration
Statement and the Prospectus; provided that the letter delivered on the
Closing Date shall use a "cut-off date" not earlier than the date hereof.

(h) The Company shall have requested and caused LaRoche Petroleum
Consultants, Ltd., AMH Group Ltd., Paddock Lindstrom & Associates Ltd.,
John P. Hunter & Associates, Ltd. and Ryder Scott Company, L.P. to have
furnished to the Underwriters, at the date hereof and at the Closing Date,
letters, dated respectively as of the date hereof and as of the Closing
Date, in form and substance satisfactory to the Underwriters, with respect
to reserve information of the Company contained in the Registration
Statement and the Prospectus.

(i) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and executive officers and directors of the
Company relating to sales and certain other dispositions of shares of
Common Stock or certain other securities, delivered to you on or before the
date hereof, shall be in full force and effect on the Closing Date.

(j) The several obligations of the U.S. Underwriters to purchase
Additional Shares hereunder are subject to the delivery to the U.S.
Representatives on the Option Closing Date of such documents as they may
reasonably request with respect to the good standing of the Company, the
due authorization and issuance of the Additional Shares and other matters
related to the issuance of the Additional Shares.

6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:

(a) To furnish to you, without charge, signed copies of the
Registration Statement (including exhibits thereto and documents
incorporated by reference) and for delivery to each other Underwriter a
conformed copy of the Registration Statement (without exhibits thereto but
including documents incorporated by reference) and to furnish to you in New
York City, without charge, prior to 10:00 a.m. New York City time on the
business day next succeeding the date of this Agreement and during the
period mentioned in Section 6(c) below, as many copies of the Prospectus,
and any documents incorporated therein by reference, and any

-11-
<PAGE>

supplements and amendments thereto or to the Registration Statement as you
may reasonably request. The terms "supplement" and "amendment" or "amend"
as used in this Agreement shall include all documents subsequently filed by
the Company with the Commission pursuant to the Securities Exchange Act of
1934, as amended, that are deemed to be incorporated by reference in the
Prospectus.

(b) Before filing any amendment or supplement to the Registration
Statement or the Prospectus, to furnish to you a copy of each such proposed
amendment or supplement and not to file any such proposed amendment or
supplement to which you reasonably object, and to file with the Commission
within the applicable period specified in Rule 424(b) under the Securities
Act any prospectus required to be filed pursuant to such Rule.

(c) If, during such period after the first date of the public offering
of the Shares as in the opinion of counsel for the Underwriters the
Prospectus is required by law to be delivered in connection with sales by
an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.

(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.

(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the twelve-
month period ending September 30, 2000 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.

(f) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
registration and delivery of the Shares under the Securities Act and all
other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove

-12-
<PAGE>

specified, (ii) all costs and expenses related to the transfer and delivery
of the Shares to the Underwriters, including any transfer or other taxes
payable thereon, (iii) the cost of printing or producing any Blue Sky or
Legal Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws
as provided in Section 6(d) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky or
Legal Investment memorandum, (iv) all filing fees and the reasonable fees
and disbursements of counsel to the Underwriters incurred in connection
with the review and qualification of the offering of the Shares by the
National Association of Securities Dealers, Inc., (v) all costs and
expenses incident to listing the Shares on the American Stock Exchange,
(vi) the cost of printing certificates representing the Shares, (vii) the
costs and charges of any transfer agent, registrar or depositary, (viii)
the costs and expenses of the Company relating to investor presentations on
any "road show" undertaken in connection with the marketing of the offering
of the Shares, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, (ix)
all expenses in connection with any offer and sale of the Shares outside of
the United States, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with offers and
sales outside of the United States and (x) all other costs and expenses
incident to the performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 7 entitled
"Indemnity and Contribution," and the last paragraph of Section 9 below,
the Underwriters will pay all of their costs and expenses, including fees
and disbursements of their counsel, stock transfer taxes payable on resale
of any of the Shares by them and any advertising expenses connected with
any offers they may make.

7. Indemnity and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
or on behalf of any Underwriter through you expressly for use therein.

-13-
<PAGE>

(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Company to such Underwriter, but only with reference to information
relating to such Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendments or supplements
thereto.

(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to Section 7(a) or 7(b), such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party,
upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to
the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the indemnifying party shall
not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all such indemnified parties
and that all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by Morgan Stanley & Co.
Incorporated, in the case of parties indemnified pursuant to Section 7(a),
and by the Company, in the case of parties indemnified pursuant to Section
7(b). The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss
or liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel as contemplated by the second and third sentences
of this paragraph, the indemnifying party agrees that it shall be liable
for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by
such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with
such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in

-14-
<PAGE>

respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter
of such proceeding.

(d) To the extent the indemnification provided for in Section 7(a) or
7(b) is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Shares or (ii) if
the allocation provided by clause 7(d)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause 7(d)(i) above but also the
relative fault of the Company on the one hand and of the Underwriters on
the other hand in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the
Shares (before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover of the Prospectus, bear to
the aggregate Public Offering Price of the Shares. The relative fault of
the Company on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the respective
number of Shares they have purchased hereunder, and not joint.

(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 7(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which
the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages
that such Underwriter has otherwise been required to

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<PAGE>

pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 7 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.

(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter or by or on behalf of the Company, its officers
or directors or any person controlling the Company and (iii) acceptance of
and payment for any of the Shares.

8. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any calamity or crisis that, in your judgment, materially and
adversely affects the financial markets and (b) in the case of any of the events
specified in clauses 8(a)(i) through 8(a)(iv), such event, singly or together
with any other such event, makes it, in your judgment, impracticable to market
the Shares on the terms and in the manner contemplated in the Prospectus.

9. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.

If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally, in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I or Schedule
II bears to the aggregate number of Firm Shares set forth opposite the names of
all such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 9 by
an amount in excess of one-ninth of such number of Shares without the written
consent

-16-
<PAGE>

of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters
shall fail or refuse to purchase Firm Shares and the aggregate number of Firm
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Firm Shares to be purchased, and arrangements satisfactory
to you and the Company for the purchase of such Firm Shares are not made within
36 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter or the Company. In any such case
either you or the Company shall have the right to postpone the Closing Date, but
in no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. If, on the Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional Shares or (ii)
purchase not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.

If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.

10. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

11. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.

12. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.

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<PAGE>

Very truly yours,

DEVON ENERGY CORPORATION

By:
-----------------------------
Name:
Title:

Accepted as of the date hereof

MORGAN STANLEY & CO. INCORPORATED
J.P. MORGAN SECURITIES INC.
PAINEWEBBER INCORPORATED
BEAR, STEARNS & CO. INC.
SCHRODER & CO. INC.
Acting severally on behalf of themselves
and the several U.S. Underwriters
named in Schedule I hereto.

By: Morgan Stanley & Co. Incorporated

By:
------------------------------
Name:
Title:

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<PAGE>

SCHEDULE I

UNDERWRITERS

UNDERWRITER NUMBER OF
FIRM SHARES
TO BE PURCHASED

Morgan Stanley & Co. Incorporated

J.P. Morgan Securities, Inc.

PaineWebber Incorporated

Bear, Stearns & Co. Inc.

Schroder & Co. Inc.

-----------
Total Firm Shares.......................
===========

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<PAGE>

EXHIBIT A

[FORM OF LOCK-UP LETTER]

September ___, 1999

Morgan Stanley & Co. Incorporated
J.P. Morgan Securities Inc.
PaineWebber Incorporated
Bear, Stearns & Co. Inc.
Schroder & Co. Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036

Dear Sirs and Mesdames:

The undersigned understands that Morgan Stanley & Co. Incorporated ("MORGAN
STANLEY") and Morgan Stanley & Co. International Limited ("MSIL") propose to
enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") with Devon
Energy Corporation, a Delaware corporation (the "COMPANY") providing for the
public offering (the "PUBLIC OFFERING") by the several Underwriters, including
Morgan Stanley and MSIL (the "UNDERWRITERS") of 8,700,000 shares (the "SHARES")
of the Common Stock, par value $0.10 of the Company (the "COMMON STOCK").

To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending [90] days after the date of the final prospectus relating
to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the sale of any Shares
to the Underwriters pursuant to the Underwriting Agreement or (b) transactions
relating to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering. In addition, the
undersigned agrees that, without the prior written consent of

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<PAGE>

Morgan Stanley on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 90 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.

Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.

Very truly yours,

--------------------
(Name)

--------------------
(Address)

-21-

<PAGE>
Exhibit 5.1

Law Offices
McAfee & Taft
A Professional Corporation
10th Floor, Two Leadership
Square
211 North Robinson
Oklahoma City, Oklahoma
73102-7103
(405) 235-9621
Fax (405) 235-0439
http://www.mcafeetaft.com

September 16, 1999

Devon Energy Corporation
20 North Broadway, Suite 1500
Oklahoma City, Oklahoma 73102-8260

Ladies and Gentlemen:

We have acted as counsel to Devon Energy Corporation (the "Company"), an
Oklahoma corporation, in connection with the public offering by the Company of
up to 10,000,000 shares of the Company's common stock, par value $0.10 per share
(the "Shares"). This opinion letter is furnished to you in connection with a
registration statement on Form S-3 (the "Registration Statement") filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
for the registration of the Shares.

We have examined, and have relied as to matters of fact upon, the
Registration Statement (File No. 333-86065), and originals, or duplicates or
certified or conformed copies, of the Company's Certificate of Incorporation and
such records, agreements, instruments and other documents and such certificates
of public officials and of officers and representatives of the Company, and have
made such other and further investigations as we have deemed relevant and
necessary in connection with the opinions expressed herein.

In such examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as duplicates or certified or conformed copies, and the
authenticity of the originals of such latter documents.

Based upon and subject to the foregoing, we are of the opinion that when
(i) the Registration Statement becomes effective, (ii) certificates representing
the Shares in the form of the specimen certificates examined by us have been
manually signed by an authorized officer of the transfer agent and registrar for
the common stock and registered by such transfer agent and registrar and (iii)
the Shares are issued pursuant to and in accordance with the Underwriting
Agreement in substantially the form of Exhibit 1.1 to the registration
Statement, the issuance and sale of the Shares will have been duly authorized,
and the Shares will be validly issued, fully paid and nonassessable.
<PAGE>

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the reference to this firm appearing
in the Registration Statement under the caption "Legal Matters."

Very truly yours,

McAfee & Taft A Professional Corporation

<PAGE>

Exhibit 23.1

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Devon Energy Corporation

We consent to incorporation by reference herein of our report dated January
26, 1999, relating to the consolidated balance sheets of Devon Energy
Corporation and subsidiaries as of December 31, 1998, 1997 and 1996 and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the years then ended, which report appears in the December 31, 1998
annual report on Form 10-K of Devon Energy Corporation. We also consent to the
reference to our firm under the heading "Experts" in the prospectus.

KPMG LLP

Oklahoma City, Oklahoma

September 14, 1999

<PAGE>

Exhibit 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this registration statement
on Form S-3 of Devon Energy Corporation of our report dated January 20, 1999 to
the shareholders of Northstar Energy Corporation, relating to the consolidated
balance sheets of Northstar Energy Corporation and subsidiaries as at December
31, 1998 and 1997 and the related consolidated statements of operations and
comprehensive income (loss), stockholders' equity, and cash flows for each of
the years then ended, which report appears in the December 31, 1998 annual
report on Form 10-K of Devon Energy Corporation.

We also consent to the reference to our firm under the heading "Experts" in
the prospectus.

/s/ DELOITTE & TOUCHE LLP
Chartered Accountants

Calgary, Alberta
Canada

September 14, 1999

<PAGE>

Exhibit 23.3

INDEPENDENT AUDITORS' CONSENT

We consent to incorporation by reference in this registration statement on
Form S-3 of Devon Energy Corporation of our report dated February 5, 1997,
relating to the consolidated balance sheet of Northstar Energy Corporation and
subsidiaries as of December 31, 1996 and the related consolidated statements of
operations, stockholders' equity, and cash flows for the year then ended, which
report appears in the December 31, 1998 annual report on Form 10-K of Devon
Energy Corporation. We also consent to the reference to our firm in this
prospectus as experts in accounting and auditing.

PRICEWATERHOUSECOOPERS LLP

Calgary, Alberta, Canada

September 14, 1999

<PAGE>

Exhibit 23.4

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 19, 1999
included in the PennzEnergy Company Form 10-K for the year ended December 31,
1998 and to all references to our Firm included in this registration statement.

ARTHUR ANDERSEN LLP

Houston, Texas

September 14, 1999