DEVON ENERGY CORP /OK/, DEF 14A, 1999-04-09

DEVON ENERGY CORP /OK/
DEF 14A, 1999-04-09
CRUDE PETROLEUM & NATURAL GAS

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DEVON ENERGY CORPORATION

20 North Broadway, Suite 1500
Oklahoma City, OK 73102-8260

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To the Stockholders:

The Annual Meeting of Stockholders of Devon
Energy Corporation, an Oklahoma Corporation ("Devon" or the
"Company") will be held in the 20th Century Ballroom
on the Second Floor of the Westin Hotel, One North
Broadway, Oklahoma City, Oklahoma on May 19, 1999, at
11:00 a.m., local time, for the following purposes:

1. To elect four directors for terms expiring in the year 2002; and

2. To transact such other business as may properly come before the meeting
or any adjournment thereof.

Stockholders of record at the close of business
on March 31, 1999 are entitled to notice of and to
vote at the meeting. A complete list of the
stockholders entitled to vote at the meeting will be
available for examination by any stockholder for any
purpose germane to the meeting, during ordinary
business hours, for a period of ten (10) days prior
to the meeting at the headquarters of the Company in
Oklahoma City. The accompanying proxy statement
contains information regarding the matters to be
considered at the meeting. For reasons outlined in
the attached proxy statement, the Board of Directors
recommends a vote "FOR" the election of directors
nominated by the Board of Directors.

IMPORTANT

YOUR PROXY IS IMPORTANT TO ASSURE A QUORUM AT
THE MEETING. WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING, PLEASE BE SURE THAT THE ENCLOSED PROXY IS
PROPERLY COMPLETED, DATED, SIGNED AND RETURNED
WITHOUT DELAY. PLEASE USE THE ENCLOSED RETURN
ENVELOPE. IT REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS

Marian J. Moon
Corporate Secretary

Oklahoma City, Oklahoma
April 9, 1999

DEVON ENERGY CORPORATION

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 1999

This proxy statement is furnished in connection
with the solicitation of proxies by the Board of
Directors of Devon to be used at the annual meeting
of stockholders and any adjournment thereof (the
"Meeting"). The Meeting will be held on the 19th day
of May 1999. This proxy statement is first being
sent to the stockholders on or about April 9, 1999.

THE COMPANY

Devon is an independent energy company engaged
primarily in oil and gas exploration, development and
production and in the acquisition of producing
properties. Devon currently owns oil and gas
properties concentrated in six operating areas in the
United States and Canada. At December 31, 1998,
Devon's estimated proved reserves were 299.4 million
barrels of oil equivalent ("MMBoe"), of which 67%
were natural gas reserves and 33% were oil reserves.
Devon is one of the top 15 public independent oil and
gas companies in both the United States and Canada,
as measured by oil and gas reserves. Unless
otherwise indicated, all dollar amounts in this Proxy
Statement are expressed in U.S. dollars.

Strategy

Devon's 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 optimizing
production from existing oil and gas properties.
Devon's management seeks to achieve these objectives
by (a) keeping debt levels low, (b) concentrating its
properties in core areas to achieve economies of
scale, (c) acquiring and developing high profit
margin properties, (d) continually disposing of
marginal and non-strategic properties and (e)
balancing reserves and production between oil and
gas.

During 1988, Devon expanded its capital base
with its first issuance of common stock to the
public. This transaction began a substantial
expansion program that has continued through the
subsequent years. Devon has used a two-pronged
strategy of acquiring producing properties and
engaging in drilling activities to achieve this
expansion. Approximately two-thirds of total capital
spent during this period was for property
acquisitions and one-third was for drilling. Total
proved reserves increased from 8.1 MMBoe at year-end
1987 to 299.4 MMBoe at year-end 1998.

Devon's objective, however, is to increase value
per share, not simply to increase total assets.
Reserves have grown from 1.31 barrels of oil
equivalent ("Boe") per diluted share at yearend 1987
to 5.61 Boe per diluted share at year-end 1998. At
the same time, net debt (long-term debt less working
capital) has remained relatively low. At year-end
1998, Devon's net debt was $1.25 per Boe.

On December 10, 1998, Devon completed a merger
with Canadianbased Northstar Energy Corporation
("Northstar"). Northstar's properties are located
primarily in the Western Canada
Sedimentary Basin in the province of Alberta. The
combination of Northstar with Devon (the "Northstar
Combination") expanded Devon's reserves by
approximately 115.0 MMBoe, or 62%, and nearly tripled
the Company's undeveloped leasehold inventory. In
addition, Devon retained the experienced Northstar
management team to continue to direct the Company's
Canadian operations.
The total consideration to Northstar was 16.1 million
common equivalent shares and the assumption of $307
million of Northstar
debt. At year-end 1998, Devon's unused borrowing
capacity under committed facilities was in excess of
$200 million.

The Northstar Combination places Devon in a
unique position to take advantage of growth
opportunities both in the U.S. and in Canada. The
Company's properties are now relatively balanced,
with 52% of its proved reserves in the U.S. and 48%
in Canada. This provides Devon with considerable
exposure to growing North American natural gas
markets, while retaining substantial oil reserves,
particularly in the Permian Basin of the U.S. In
addition, the Company owns a large inventory of
acreage and has the financial flexibility to pursue
the opportunities for drilling on this acreage.

Since September 29, 1988, Devon's common stock
(the "Common Stock") has been traded on the American
Stock Exchange (the "AMEX") under the symbol "DVN."
In addition, following the Northstar Combination, a
new class of exchangeable shares (the "Exchangeable
Shares") began trading on The Toronto Stock Exchange
under the symbol NSX. These shares are essentially
equivalent to Devon Common Stock. However, because
they are issued by Devon's wholly-owned subsidiary,
Northstar, they qualify as a domestic Canadian
investment for Canadian institutional stockholders.
They are exchangeable at any time, on a one-for-one
basis, for common shares of Devon. The shares of
Common Stock and the Exchangeable Shares are together
referred to herein as the "Voting Shares." All
holders of Common Stock and Exchangeable Shares are
referred to herein as "stockholders" of the Company.

The Company's mailing address is 20 North
Broadway, Suite 1500, Oklahoma City, OK 73102-8260.
Its telephone number is 405/235-3611.

All references in this proxy statement to Devon
or the Company include its predecessors and subsidiary corporations.

GENERAL INFORMATION

Purpose of the Meeting.

At the Meeting the stockholders will elect four directors
for terms expiring in the year 2002. The stockholders
will also consider and vote upon such other business
as may properly come before the Meeting or any
adjournment thereof.

Voting at the Meeting.

The Board of Directors has established March 31, 1999, as
the record date (the "Record Date") to determine
stockholders entitled to notice of and to vote at the
Meeting.

Voting by Holders of Common Stock. At the close
of business on the Record Date, there were 42,773,096
shares of Common Stock outstanding, each of which are
entitled to one vote at the Meeting. The enclosed
proxy is a means by which a stockholder may authorize
the voting of his or her shares of Common Stock at
the Meeting. Each proxy that is properly signed,
dated and returned to the Company in time for the
Meeting, and not revoked, will be voted in accordance
with instructions contained therein. If no contrary
instructions are given, proxies will be voted "FOR"
the four director nominees nominated by the Board of
Directors. A proxy may be revoked at any time prior
to its exercise by delivering a written notice of
revocation or a later dated proxy to the Corporate
Secretary of the Company. In addition, a stockholder
present at the Meeting may revoke his
proxy and vote in person. The Company has furnished
this Proxy Statement, the accompanying Notice of
Meeting, the proxy card and certain related materials
to the holders of Common Stock.

Voting by Holders of Exchangeable Shares. As of
the close of business on the Record Date, there were
also 5,719,163 Exchangeable Shares outstanding. Each
Exchangeable Share is entitled to one vote at the
Meeting through a Voting and Exchange Trust Agreement
dated December 10, 1998 (the "Voting Agreement").
Under the Voting Agreement, CIBC Mellon Trust Company
(the "Trustee") is entitled to exercise certain
voting rights on behalf of holders of the
Exchangeable Shares. The Trustee holds one share of
Special Voting Stock of the Company (the "Special
Voting Share"). The Special Voting Share is entitled
to a number of votes equal to the number of
Exchangeable Shares outstanding from time to time
that are held by persons other than the Company.
Pursuant to the Voting Agreement, each holder of
Exchangeable Shares (other than the Company) is
entitled to give the Trustee voting instructions for
a number of votes equal to the number of such
holder's Exchangeable Shares. A voting direction
card is a means by which a holder of Exchangeable
Shares may authorize the voting of his or her voting
rights at the Meeting. The Trustee will exercise
each vote only as directed by the relevant holders on
the voting direction card.
In the absence of instructions from a holder as to
voting, the Trustee will not exercise such votes. A
holder may also instruct the Trustee to give him or
her a proxy entitling him or her to vote personally
the relevant number of votes or to grant to the
Company's management a proxy to vote such votes. The
voting direction may be revoked at any time prior to
its exercise by delivering a written notice of
revocation or a later dated voting direction card to
the Trustee. In addition, a holder of Exchangeable
Shares present at the Meeting may revoke his voting
direction card and vote in person. The Trustee has
furnished (or caused the Company to furnish) this
Proxy Statement, the accompanying Notice of Meeting,
the voting direction card and certain related
materials to the holders of Exchangeable Shares.

General Procedures. The office of the Company's
Corporate Secretary appoints an inspector of election
to tabulate all votes and to certify the results of
all matters voted upon at the Meeting. The Common
Stock and the Special Voting Share vote together as a
single class. The holders of a majority of the
Voting Shares entitled to vote, present in person or
by proxy, constitute a quorum. Election of each
director at the Meeting will be by a plurality of
votes cast at the meeting. Votes may be cast in
favor of the election of each director or withheld.
The Company believes that brokers that are member
firms of the New York Stock Exchange ("NYSE") and who
hold Common Stock in street name for customers, but
have not received instructions from a beneficial
owner, have the authority under the rules of the NYSE
to vote those shares with respect to the election of
directors. In Canada, registrants and their nominees
may not exercise voting rights without instructions
from a beneficial owner. Therefore, no votes with
respect to the Exchangeable Shares will be cast
without specific instructions to the Trustee.

Except as provided by law or the Company's
Certificate of Incorporation or Bylaws, the
affirmative vote of the holders of a majority of the
Voting Shares, present in person or by proxy,
entitled to vote at the Meeting is required to take
action with respect to any other matter that may
properly be brought before the Meeting. Shares
cannot be voted at the Meeting unless the holder of
record is present in person or by proxy.

Neither the corporate law of the state of Oklahoma,
the
state in which Devon is incorporated, nor the
Company's Certificate of Incorporation or Bylaws have
any provisions regarding the treatment of abstentions
and broker non-votes. It is the Company's policy (i)
to count abstentions and broker nonvotes for purposes
of determining the presence of a quorum at the
Meeting; (ii) to treat abstentions as votes not cast
but as shares represented at the Meeting for
determining results on actions requiring a majority
vote; (iii) to not consider broker non-votes for
determining actions requiring a majority vote; and
(iv) to consider neither abstentions nor broker non-
votes in determining results of plurality votes.
The cost of solicitation of proxies will be borne by
the Company. Proxies may be solicited by mail or
personally by directors, officers or regular
employees of the Company, none of whom will receive
additional compensation therefor. The Company has
also retained Morrow & Co., Inc. to assist in
solicitation of proxies for a fee of $3,500, plus
reimbursement of certain expenses. Those holding
shares of Common Stock of record for the benefit of
others ("Nominee Holders") are being asked to
distribute proxy soliciting materials to, and request
voting instructions from, the beneficial owners of
such shares. The Company will reimburse Nominee
Holders for their reasonable outof-pocket expenses.

Management's Ownership of Voting Shares.
Devon's officers and directors own or represent a
total of 11,071,362 Voting Shares, or 23% of the
total 48,480,459 Voting Shares entitled to be voted
at the meeting, and intend to vote all of such shares
in favor of the election of the four nominees for
director named herein.
YOUR PROXY VOTE IS IMPORTANT. YOU ARE ASKED TO
COMPLETE, SIGN AND RETURN THE ACCOMPANYING PROXY CARD
OR VOTING DIRECTION CARD REGARDLESS OF WHETHER YOU
PLAN TO ATTEND THE MEETING.

PRINCIPAL SECURITY OWNERSHIP

The table below sets forth as of March 31, 1999,
the names and addresses of each person known by
management to own beneficially more than 5% of the
Company's outstanding Voting Shares, the number of
Voting Shares beneficially owned by each such
stockholder and the percentage of outstanding Voting
Shares owned. The table also sets forth the number
and percentage of outstanding Voting Shares
beneficially owned by the Company's Chief Executive
Officer ("CEO"), each of the Company's directors, the
four most highly compensated executive officers other
than the CEO and by all officers and directors of the
Company as a group.

Name and Address of Number of Percent of
Beneficial Owner Shares (1) Class

Kerr-McGee Corporation 9,954,000 (2) 20.5%
123 Robert S. Kerr Avenue
Oklahoma City, Oklahoma 73102

Merrill Lynch & Co., Inc. 4,721,652 (3) 9.4%
World Financial Center, North Tower
New York, New York 10381

J. Larry Nichols* 775,971 (4) 1.6%
Michael E. Gellert* 317,720 (5) 0.7%
John A. Hagg* 213,490 (6) 0.4%
Darryl G. Smette 153,400 (7) 0.3%
H. Allen Turner 151,485 (8) 0.3%
J. Michael Lacey 107,965 (9) 0.2%
John W. Nichols* 104,504 (10) 0.2%
David M. Gavrin* 79,251 (11) 0.2%
Duke R. Ligon 60,300 (12) 0.1%
Michael M. Kanovsky* 43,484 (13) 0.1%
H. R. Sanders, Jr.* 35,979 (14) 0.1%
Lawrence H. Towell* 6,100 (15) <0.1%
Luke R. Corbett* 6,000 (16) <0.1%
Thomas F. Ferguson* 6,000 (16) <0.1%
Tom J. McDaniel* 6,000 (16) <0.1%

All directors and officers of Devon
Energy as a group (21 persons) 2,464,016 (17) 4.9%
_____________________________________
* Director. The business address of each director is
20 North Broadway, Suite 1500, Oklahoma City, Oklahoma 73102-8260.

(1) Shares Beneficially Owned includes shares of
Common Stock, Exchangeable Shares and shares of
Common Stock issuable within 60 days of March 31,
1999.

(2) Kerr-McGee Corporation ("Kerr-McGee") has
reported beneficial ownership of these shares on
Schedule 13D filed on January 6, 1997. Kerr-
McGee acquired these shares on December 31, 1996,
in connection with a transaction whereby Devon
acquired the North American onshore oil and gas
exploration and production properties and businesses
of KerrMcGee in exchange for 9,954,000 shares of
Common Stock. KerrMcGee reports shared voting and
investment power with respect to these shares. Devon and
Kerr-McGee have entered into two agreements that define and limit the
two companies' rights and obligations. In addition,
Devon's Board of Directors amended Devon's share
rights plan so that Devon's existing stockholder
rights plan will remain in force for third parties
and/or certain further transactions with KerrMcGee.

(3) Merrill Lynch Growth Fund and Merrill Lynch & Co.,
Inc. ("ML&Co.") on behalf of Merrill Lynch Asset
Management Group ("AMG") have reported shared
ownership of these shares on Schedule 13G filed on
February 4, 1999. ML&Co. is a parent holding
company. AMG is an operating division of ML&Co.
consisting of ML&Co.'s indirectly owned asset
management subsidiaries, the following of which hold
certain of these shares: Merrill Lynch Asset
Management, L.P., Mercury Asset Management, Ltd.,
Mercury Asset Management Japan, Ltd. and Mercury Fund
Managers, Ltd. Merrill Lynch Growth Fund and ML&Co.
disclaim beneficial ownership of such shares. The
number of shares reported includes 1,639,300 shares
that ML&Co. has the right to acquire upon the
conversion of Devon's trust convertible preferred
securities issued in July 1996.

(4) Includes 42,965 shares owned of record by Mr. Nichols
as Trustee of a family trust, 78,624 shares owned by
Mr. Nichols' wife, 12,570 shares owned by Mr. Nichols
as trustee of his children's trusts as to which he
exercises sole voting and investment power, 6,200
shares owned by Mr. Nichols' son, 6,000 shares owned
by Mr. Nichols' daughter and 296,000 shares which are
deemed beneficially owned pursuant to stock options
held by Mr. Nichols.

(5) Includes 309,149 shares owned by Windcrest Partners,
a limited partnership, in which Mr. Gellert shares
investment and voting power and 6,000 shares which are
deemed beneficially owned pursuant to stock options held
by Mr. Gellert.

(6) Includes Exchangeable Shares that are convertible
into 91,290 shares of Common Stock and 122,200 shares
that are deemed beneficially owned pursuant to stock
options held by Mr. Hagg.

(7) Includes 148,300 shares that are deemed beneficially
owned pursuant to stock options held by Mr. Smette.

(8) Includes 148,000 shares that are deemed beneficially
owned pursuant to stock options held by Mr. Turner.

(9) Includes 102,800 shares that are deemed beneficially
owned pursuant to stock options held by Mr. Lacey.

(10) Includes 98,304 shares held by a family investment
partnership and 6,000 shares that are deemed beneficially
owned pursuant to stock options held by Mr. Nichols.

(11) Includes 2,141 shares owned by Mr. Gavrin as co-
trustee of the Mark Sandler 1987 Trust, 9,249 shares owned by
Mr. Gavrin's wife and 6,000 shares that are deemed
beneficially owned pursuant to stock options held by
Mr. Gavrin.

(12) Includes 60,000 shares that are deemed beneficially
owned pursuant to stock options held by Mr. Ligon.

(13) Includes Exchangeable Shares that are convertible
into 35,729 shares of Common Stock and 7,755 shares that
are deemed beneficially owned pursuant to stock
options held by Mr. Kanovsky.

(14) Includes 33,000 shares that are deemed beneficially
owned pursuant to stock options held by Mr. Sanders.

(15) Includes 6,000 shares that are deemed beneficially
owned pursuant to stock options held by Mr. Towell.

(16) Consists of 6,000 shares that are deemed beneficially
owned pursuant to stock options.

(17) Includes Exchangeable Shares that are convertible
into 132,252 shares of Common Stock and 1,345,039 shares
that are deemed beneficially owned pursuant to stock
options held by officers and directors.

ELECTION OF DIRECTORS

Pursuant to provisions of the Company's Certificate
of Incorporation and Bylaws, the Board of Directors has
fixed the number of directors at eleven. The Company's
Certificate of Incorporation and Bylaws provide for
three classes of directors, serving staggered three-
year terms, with each class to be as nearly equal in
number as possible. The Board of Directors has
nominated Luke R. Corbett, Michael E. Gellert, Michael
M. Kanovsky and H. R. Sanders, Jr. for re-election as
directors for terms expiring at the annual meeting in
the year 2002, and in each case until their successors
are elected and qualified. Proxies cannot be voted for
a greater number of persons than the number of
nominees named. The four nominees are presently
directors of the Company whose terms expire at the
Meeting. Other directors who are remaining on the
Board will continue in office in accordance with their
previous elections until the expiration of their terms
at the 2000 or 2001 annual meeting, as the case may
be.

The Board of Directors recommends a vote "FOR"
each of the nominees for election to the Board of
Directors.

It is the intention of the persons named in the proxy
to vote proxies "FOR" the election of the four nominees.
In the event that any of the nominees should fail to
stand for election, the persons named in the proxy
intend to vote for substitute nominees designated by
the Board of Directors, unless the Board of Directors
reduces the number of directors to be elected.

INFORMATION ABOUT NOMINEES AND DIRECTORS

Nominees for Re-election as Directors for Terms
Expiring in 2002

Luke R. Corbett, age 51, was appointed to the Board of
Directors in December 1996. Mr. Corbett is Kerr-McGee
Corporation's Chairman of the Board of Directors and
Chief Executive Officer, positions he has held since
February 1, 1997. He joined Kerr-McGee in 1985 as Vice
President of Geophysics, was named Senior Vice
President of Exploration for the Exploration and
Production Division in 1987, Senior Vice President in
1991 and President and Chief Operating Officer in
1995. Prior to joining Kerr-McGee, Mr. Corbett was
employed by Amoco Production Company as a
geophysicist. He later joined Aminoil, Inc. where he
held the position of Vice President of Domestic
Exploration. Mr. Corbett is also a Director of OGE
Energy Corp. He is a member of the American
Association of Petroleum Geologists and the Society of
Exploration Geophysicists and is on the board of the
American Petroleum Institute. He is a member of the
Domestic Petroleum Council and a trustee for the
American Geological Institute Foundation. Mr. Corbett
obtained his bachelor's degree in mathematics from the
University of Georgia.

Michael E. Gellert, age 67, has been a Director
of Devon since 1971 and is a member of the
Compensation and Stock Option Committee. Mr. Gellert
is a General Partner of Windcrest Partners, a private
investment partnership in New York, New York, having
held that position since April 1967. From January 1958
until his retirement in October 1989 Mr. Gellert
served in executive capacities with Drexel Burnham
Lambert and its predecessors in New York, New York.
In addition to serving as a Director of Devon, Mr.
Gellert also serves on the boards of Humana, Inc.,
owners of managed health care facilities; Premier
Parks, Inc., amusements parks operator; Seacor Smit,
Inc., owners and operators of marine equipment and
Smith Barney World Funds. Mr. Gellert is also a member
of the Putnam Trust Company Advisory Board to the Bank
of New York.

Michael M. Kanovsky, age 50, co-founded Canadian
Northstar Corporation, Northstar's former controlling
shareholder, with Mr. Hagg in 1977. He became a
Director of Northstar in 1982. He
remained in the position of President of Canadian
Northstar Corporation until 1993. He is currently the
President of Sky Energy Corporation, a privately held
energy corporation. Mr. Kanovsky is currently on the
boards of directors of Cabre Exploration Ltd. and
Bonavista Petroleum Corporation, two Calgarybased
public oil and gas companies, ARC Resources, Ltd.,
which acquires and develops oil and natural gas
properties for the publicly-traded ARC Energy Trust,
and the AGF North American Insurance Group.
Mr. Kanovsky is a Director of the following
public companies: Celestar Exploration Ltd., and Kappa
Energy Company, Inc. Mr. Kanovsky also served as
Chairman of Taro Industries Ltd., a public oilfield
manufacturing company and Vice Chairman of Precision
Drilling Inc., Canada's largest drilling
contractor. He sits on the Board of Governors of the
University of Western Ontario's Richard Ivey School of
Business. Mr. Kanovsky obtained his bachelor's degree
in mechanical engineering from Queens University in
Kingston, Ontario and his master's degree from the
University of Western Ontario.

H. R. Sanders, Jr., age 66, has been a Director
since 1981 and is a member of the Audit Committee. He
served as Devon's Executive Vice President from 1981
until his retirement in 1997. Prior to joining Devon,
Mr. Sanders was associated with RepublicBank Dallas,
N.A. serving from 1970 to 1981 as its Senior Vice
President with direct responsibility for independent
oil and gas producer and mining loans. Mr. Sanders is
a member of the Independent Petroleum Association of
America, Texas Independent Producers and Royalty
Owners Association, Oklahoma Independent Petroleum
Association and a past director of Triton Energy
Corporation.

Directors Whose Terms Expire in the Year 2000

Thomas F. Ferguson, age 62, has been a Director
of Devon since 1982, and is the Chairman of the Audit
Committee. He is Managing Director of Englewood, N.V.,
a wholly-owned subsidiary of Kuwaiti-based Al-Futtooh
Investments WLL. Mr. Ferguson represents them on the
board of directors of various companies including
Baltic Transit Bank in Latvia and Tunis International
Bank in Tunisia. Mr. Ferguson is a Canadian qualified
Certified General Accountant and was formerly employed
by the Economist Intelligence Unit of London as a
financial consultant.

John A. Hagg, age 51, co-founded Canadian
Northstar Corporation, Northstar's former controlling
shareholder, in 1977. In 1982, Mr. Hagg became a
director, and in 1985, was appointed Chairman and
President of Northstar Energy Corporation. He is
currently the Chairman of the Board of Northstar. Mr.
Hagg is a past director of the Canadian Association of
Petroleum Producers, the Independent Petroleum
Association of Canada, the Petroleum Communication
Foundation, Canadian Oilmen's Executive Association,
the Calgary Chamber of Commerce, and past Chairman of
Junior Achievement of Southern Alberta. He is
currently a member of the Management Advisory Council
at the University of Calgary. In addition, Mr. Hagg is
a Director of Berry Petroleum Company, a New York
Stock Exchange listed company based in California. He
obtained his bachelor's degree from the University of
Alberta and his master's degree from Stanford
University.

J. Larry Nichols, age 56, co-founded Devon with
his father, John W. Nichols. He has been a Director
since 1971, President since 1976 and Chief Executive
Officer since 1980. Mr. Nichols is active in industry
and business groups, serving as Vice President of the
Independent Petroleum Association of America,
President of the Domestic Petroleum Council, Vice
Chairman of the Natural Gas Supply Association and
President of the Oklahoma Nature Conservancy. In
addition, Mr. Nichols is a Director of the Independent
Petroleum Association of New Mexico, the Oklahoma
Independent Petroleum Association and the National
Petroleum Council. He also serves as a Director of
Smedvig asa, a Norwegian shipping manufacturing
company and CMI Corporation which designs and
manufactures automated road construction equipment.
Both of these companies are traded on the New York
Stock Exchange. He also serves on the Board of
Governors of the American Stock Exchange. Mr. Nichols
holds a geology degree from Princeton University and a
law degree from the University of Michigan. He served
as a law clerk to Mr. Chief Justice Earl Warren and
Mr. Justice Tom Clark of the U.S. Supreme Court.

Lawrence H. Towell, age 55, was appointed to the
Board of Directors in December 1996. Mr. Towell is
the Vice President of Acquisitions in Kerr-McGee's
Strategic Planning/Business Development Division, a
position he has held since 1984. Prior to his current
position, he served Kerr-McGee in various positions
since 1975, including Vice President of Engineering
and Vice President of Natural Gas Sales. Prior to his
employment with Kerr-McGee, Mr. Towell was manager of
HK Properties for Howell-Kerr Enterprises in Oklahoma
City. Prior to his employment at Howell-Kerr, he
worked for Shell Oil Co. for eight years serving in
various engineering capacities in various domestic
locations. Mr. Towell received his bachelor's degree
in mechanical engineering from Yale University. He is
a member of the Society of Petroleum Engineers, the
Independent Petroleum Association of America and the
Yale University Science and Engineering Association.

Directors Whose Terms Expire in 2001

David M. Gavrin, age 64, a Director of Devon since
1979, serves as the Chairman of the Compensation and Stock
Option Committee. In addition to managing his personal
investments, he serves as a director of United
American Energy Corp., an independent power producer
and Metbank Holding Corporation, a bank holding
company. Mr. Gavrin was associated with Drexel
Burnham Lambert Incorporated for 14 years as First
Vice President and was a General Partner of Windcrest
Partners, an investment partnership, for 10 years.

Tom J. McDaniel, age 60, was appointed to the Board of
Directors in December 1996 and is a member of the
Audit Committee. Mr. McDaniel has been Kerr-McGee
Corporation's ViceChairman of the Board of Directors
since February 1, 1997. He joined Kerr-McGee as
Associate General Counsel in 1984, became Senior Vice
President in 1986 and served as Senior Vice President
and Corporate Secretary from 1989 to 1997. Prior to
joining KerrMcGee, Mr. McDaniel was engaged in the
private practice of law for 18 years.
In 1981 the Oklahoma Supreme Court
appointed him Administrative Director of State
Courts. In addition to serving on the Kerr-McGee
board, Mr. McDaniel serves on the board of directors
of UMB Oklahoma Bank and the National Association of
Manufacturers. A member of the Oklahoma and
American Bar Associations, Mr. McDaniel holds an
undergraduate degree in business from Northwestern
Oklahoma State University and a law degree from the
University of Oklahoma.

John W. Nichols, age 84, is a co-founder of Devon
and has been Chairman of the Board of Directors since 1971.
He is a founding partner of Blackwood & Nichols Co.,
which developed the conventional reserves in the
Northeast Blanco Unit of the San Juan Basin. Mr.
Nichols is a non-practicing Certified Public
Accountant. Mr. Nichols is the father of J. Larry
Nichols.

INFORMATION ABOUT EXECUTIVE OFFICERS

The positions held by the executive officers of
the Company are as follows:

Donald A. Garner, age 41, joined Northstar in
January 1998 as Executive Vice President and Chief
Operating Officer. In January 1999 he was named
President and Chief Operating Officer of Northstar.
Prior to joining Northstar, Mr. Garner was with
Imperial Oil Limited where he has held a variety of
management positions, most recently having
accountability for all exploration, development, marketing, financial and
strategic planning aspects of Imperial's oil sands
business unit. At Imperial Oil Limited, Mr. Garner
was also Director of Syncrude Canada Limited and
President of Oslo Alberta and was a member of
Imperial Resources' Executive Leadership Board. He
is a past director of the Alberta Chamber of
Resources. Mr. Garner received his bachelor's degree
in mechanical engineering from the University of
Saskatchewan.

J. Michael Lacey, age 53, joined Devon as Vice
President Operations and Exploration in 1989. Prior
to his employment with Devon, Mr. Lacey served as
General Manager in Tenneco Oil Company's Mid-
Continent and Rocky Mountain Divisions. He holds
both undergraduate and graduate degrees in Petroleum
Engineering from the Colorado School of Mines, is a
Registered Professional Engineer and a member of the
Society of Petroleum Engineers and the American
Association of Petroleum Geologists.

Duke R. Ligon, age 57, joined Devon in 1997, as its
Vice President - General Counsel. In addition to his 12
years of energy law practice, most recently as a
partner of a large New York City law firm, he was an
investment banker at Bankers Trust Company of New
York for 10 years. Mr. Ligon also served for three
years in various positions with the Federal Energy
Administration, the U.S. Department of the Interior,
the U.S. Treasury Department and the Department of
Energy in Washington D. C. Mr. Ligon's primary
responsibilities at Devon include assisting in the
Company's acquisition efforts and representing the
Company in various legal matters and litigation. Mr.
Ligon holds an undergraduate degree in chemistry from
Westminster College and a law degree from the
University of Texas School of Law.

John Richels, age 48, is Chief Executive Officer
of Northstar. From April 1996 to December 1998 he
served Northstar as Executive Vice President and
Chief Financial Officer. Mr. Richels also served on
the Northstar board of directors from April 1993 to
April 1996. Prior to joining Northstar, Mr. Richels
was Managing Partner, Chief Operating Partner and a
member of the executive committee of the Canadian
based national law firm, Bennett Jones. From 1986 to
1988, Mr. Richels also served, on a secondment from
Bennett Jones, as General Counsel of the XV Olympic
Winter Games Organizing Committee in Calgary,
Alberta. Mr. Richels holds a bachelor's degree in
economics from York University and a law degree from
the University of Windsor.

Darryl G. Smette, age 51, Vice President - Marketing
and Administrative Planning since 1989, joined Devon in
1986 as Manager of Gas Marketing. Mr. Smette's
educational background includes an undergraduate
degree from Minot State College and a master's degree
from Wichita State University. His marketing
background includes 15 years with Energy Reserves
Group, Inc./BHP Petroleum (Americas), Inc., his last
position being Director of Marketing. He is also an
oil and gas industry instructor approved by the
University of Texas' Department of Continuing
Education. Mr. Smette is a member of the Oklahoma
Independent Producers Association, Natural Gas
Association of Oklahoma, and the American Gas
Association.

H. Allen Turner, age 46, has been responsible for
Devon's corporate finance and capital formation activities as
Vice President of Corporate Development since 1982.
In 1981 he served as Executive Vice President of Palo
Pinto/Harken Drilling Programs. For the six prior
years he was associated with Merrill Lynch Pierce
Fenner & Smith with various responsibilities
including Regional Tax Investments Manager. He is a
member of the Petroleum Investor Relations Association, and serves
on the Independent Petroleum Association of America
Capital Markets Committee. Mr. Turner received his
bachelor's degree from Duke University.

William T. Vaughn, age 52, is Devon's Vice President -
Finance in charge of commercial banking functions,
accounting, tax and information services. Mr. Vaughn
was elected in 1987 to his present position. Prior
to that he was Controller of Devon from 1983 to 1987.
Mr. Vaughn's prior experience includes serving as
Controller with Marion Corporation for two years and
employment with Arthur Young & Co. for seven years
with various duties, including audit manager. He is
a Certified Public Accountant and a member of the
American Institute of Certified Public Accountants
and the Oklahoma Society of Certified Public
Accountants. He is a graduate of the University of
Arkansas with a Bachelor of Science degree.

Danny J. Heatly, age 43, has been Devon's
Controller since 1989. Prior to joining Devon, Mr.
Heatly was associated with Peat Marwick Main & Co.
(now KPMG LLP) in Oklahoma City for ten years with
various duties, including senior audit manager. He
is a Certified Public Accountant and a member of the
American Institute of Certified Public Accountants
and the Oklahoma Society of Certified Public
Accountants. He graduated with a Bachelor of
Accountancy degree from the University of Oklahoma.

Gary L. McGee, age 49, was elected Treasurer of
Devon in 1983, having first served as Devon's
Controller. Mr. McGee is a member of the Petroleum
Association of Wyoming and Mid-Continent Oil & Gas
Association of Oklahoma. He served as Vice President
of Finance with KSA Industries, Inc., a private
holding company with various interests including oil
and gas production. Mr. McGee also held various
accounting positions with Adams Resources and Energy
Company and Mesa Petroleum Company. He received his
accounting degree from the University of Oklahoma.

Marian J. Moon, age 48, was elected Corporate
Secretary of Devon in 1994. Ms. Moon has served
Devon in various capacities since 1984, including her
current position as Manager of Corporate Finance.
She has also served as Assistant Secretary with
responsibilities including compliance with Securities
and Exchange Commission and stock exchange
regulations. Prior to joining Devon, Ms. Moon was
employed for eleven years by Amarex, Inc., an
Oklahoma City based oil and natural gas production
and exploration firm, where she served most recently
as Treasurer. Ms. Moon is a member of the American
Society of Corporate Secretaries. She is a graduate
of Valparaiso University.

MEETINGS AND COMMITTEES OF THE BOARD

During 1998, the Board of Directors of the
Company held four regular meetings and two special
meetings. All directors attended (a) at least five
of the six meetings of the Board of Directors and (b)
all of the meetings held by committees of the Board
on which they served. The Board of Directors has
standing audit, compensation and stock option, and
dividend committees. It does not have a standing nominating committee.

Mr. Ferguson was the sole member of the
Company's Audit Committee until March 11, 1998, at
which time Mr. McDaniel and Mr. Sanders were
appointed by the Board to join such Committee. Mr.
Ferguson continues to serve as Chairman. The Audit
Committee meets with the Company's independent public
accountants and reviews the consolidated financial statements of the
Company on a regular basis. The functions of the
Audit Committee consist of recommending independent
accountants to the Board of Directors; approving the
nature and scope of services performed by the inde
pendent accountants and reviewing the range of fees
for such services; conferring with the independent
accountants and reviewing the results of their audit;
reviewing the Company's accounting and financial
controls and providing assistance to the Board of
Directors with respect to the corporate and reporting
practices of the Company. The Board of Directors, as
recommended by the Audit Committee, has selected KPMG
LLP to serve as the Company's independent public
accountants for the fiscal year ending December 31,
1999. The Audit Committee met two times during 1998.

The Compensation and Stock Option Committee,
which consists of Messrs. Gavrin (Chairman) and
Gellert, determines the nature and amount of
compensation of all executive officers of the Company
who are also directors and the amount and terms of
stock options granted to all employees. In addition,
this committee provides guidance to and makes
recommendations to management regarding employee
benefit programs. The Compensation and Stock Option
Committee held two meetings in 1998.

The Dividend Committee declares dividends on
Common Stock. However, such Committee may not declare
dividends more or less than the amount last declared
by the full Board of Directors. In 1998 the Dividend
Committee, which consisted of Mr. Larry Nichols
(Chairman) and Mr. Corbett, held four meetings.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth information
regarding annual and long-term compensation during
1996, 1997 and 1998 for the Chief Executive Officer
("CEO") and the four most highly compensated
executive officers, other than the CEO, who were
serving as executive officers of the Company on
December 31, 1998.
<TABLE>
<CAPTION>

Long-Term
Annual Compensation Compensation
(1)

Principal Awards of All Other
Name Position Year Salary Bonus Options Compensation
(# of
Shares)
<S> <S> <C> <C> <C> <C> <C>
J. Larry Nichols President 1998 $450,000 $450,000 80,000 (2) $ 9,600 (3)
& CEO 1997 $400,000 $500,600 - (2) $ 4,800 (3)
1996 $325,000 $500,600 40,000 $ 3,000 (3)

J. Michael Lacey Vice 1998 $260,000 $125,600 40,000 (2) $ 9,600 (3)
President 1997 $220,000 $125,600 - (2) $ 4,800 (3)
1996 $210,000 $ 90,600 20,000 $ 3,000 (3)

Duke R. Ligon Vice 1998 $220,000 $125,600 40,000 (2) $ 9,600 (3)
President 1997 $175,000 $125,550 30,000 $67,540

Darryl G. Smette Vice 1998 $220,000 $125,600 40,000 (2) $27,761 (5)
President 1997 $176,000 $125,600 - (2) $ 4,800 (3)
1996 $168,000 $ 90,600 20,000 $ 3,000 (3)

H. Allen Turner Vice 1998 $220,000 $125,600 40,000 (2) $79,884 (6)
President 1997 $176,000 $125,600 - (2) $ 4,800 (3)
1996 $168,000 $ 90,600 20,000 $ 3,000 (3)
<FN>
(1) No awards of restricted stock or payments under
long-term incentive plans were made by the Company to
any of the named executives in any period covered by
the table.

(2) Annual option grants for 1997, which normally would
have been made in December 1997 were not made until
January 1998. Annual Option grants for 1998 were made
at the normal time in December 1998. See "Option
Grants in 1998" below.

(3) These amounts represent Company matching
contributions to the Devon Energy Incentive Savings Plan.

(4) Mr. Ligon joined the Company on February 7, 1997.
The amount shown includes $62,740 of expenses reimbursed
to Mr. Ligon by the Company to relocate from New York
to Oklahoma City and $4,800 of Company matching
contributions to the Devon Energy Incentive Savings
Plan.

(5) Includes $9,600 of Company matching contributions
to the Devon Energy Incentive Savings Plan and a one-time
payment of $18,161 for unused vacation time.

(6) Includes $9,600 of Company matching contributions
to the Devon Energy Incentive Savings Plan and a one-time
payment of $70,284 for unused vacation time.
</TABLE>

Option Grants in 1998

The following tables set forth information
concerning options to purchase Common Stock granted in 1998 to
the five individuals named in the Summary Compensation Table.
The material terms of such options appear in the following tables and the
footnotes thereto.
<TABLE>
<CAPTION>
Individual Grants in January 1998 Based on 1997 Performance

Percent of Total Exercise
Options Options Granted in Price Per Expiration Grant Date
Granted 1988 (1) Share (2) Date Percent Value (3)

<S> <C> <C> <C> <C> <C>
J. Larry Nichols 40,000 (4) 1.7% $ 36.75 01/20/2008 $556,800

J. Michael Lacey 20,000 (5) 0.8% $ 36.75 01/20/2008 $278,400

Duke R. Ligon 20,000 (5) 0.8% $ 36.75 01/20/2008 $278,400

Darryl G. Smette 20,000 (5) 0.8% $ 36.75 01/20/2008 $278,400

H. Allen Turner 20,000 (5) 0.8% $ 36.75 01/20/2008 $278,400

</TABLE>
<TABLE>
<CAPTION>
Individual Grants in December 1998 based on 1998 Performance

Percent of Total Exercise
Options Options Granted in Price Per Expiration Grant Date
Granted 1998 (1) Share (2) Date Percent Value (6)

<S> <C> <C> <C> <C> <C>
J. Larry Nichols 40,000 (7) 1.7% $29.125 12/10/2008 $416,800

J. Michael Lacey 20,000 (8) 0.8% $29.125 12/10/2008 $208,400

Duke R. Ligon 20,000 (8) 0.8% $29.125 12/10/2008 $208,400

Darryl G. Smette 20,000 (8) 0.8% $29.125 12/10/2008 $208,400

H. Allen Turner 20,000 (8) 0.8% $29.125 12/10/2008 $208,400

<FN>
(1) Annual option grants for officers and employees for
1997, which normally would have been made in December
1997, were not made until January 1998. In addition,
Devon assumed the Northstar stock options in 1998.
Had neither of these nonrecurring events occurred in
1998, the percent of total options granted to Mr.
Nichols in the table above would have been 5.0%,
rather than the 1.7% shown. The percent of total
options granted to the other four officers would have
been 2.5%, rather than the 0.8% shown.

(2) Exercise price is the fair market value on the date
of grant, which is the closing price of Common Stock
on the date of grant as reported by the American
Stock Exchange.

(3) The grant date present value is an estimation of the
possible future value of the option grant based upon
the Black-Scholes Option Pricing Model. The
following assumptions were used in the model:
volatility (a measure of the historic variability of
a stock price) - 33.6%; risk-free interest rate (the
interest paid by zero-coupon U.S. government issues
with a remaining term equal to the expected life of
the options) - 5.4% per annum; annual dividend yield
- 0.5%; and expected life of the options - five years
from grant date. The option value estimated using
this model does not necessarily represent the value
to be realized by the named officers.

(4) These options were granted on January 21, 1998, in
connection with 1997 performance. Options with
respect to 34,600 shares were immediately vested and
exercisable, 2,700 vest and become exercisable on
January 21, 2001, and the remaining 2,700 vest and
become exercisable on January 21, 2002.

(5) These options were granted on January 21, 1998, in
connection with 1997 performance. Options with respect
to 14,600 shares were immediately vested and
exercisable. However, 80% of the unexercised portion of
such options are subject to forfeiture upon the
officer's voluntary termination or termination for cause
prior to January 21, 1999. This percentage decreases
20% in each subsequent year. After January 21, 2002,
none of the 14,600 options are subject to forfeiture. Of
the remaining options, 2,700 vest and become exercisable
on January 21, 2001 and 2,700 vest and become
exercisable on January 21, 2002.

(6) The grant date present value is an estimation of the
possible future value of the option grant based upon
one of the methods prescribed by the Securities and Exchange
Commission, the Black-Scholes Option Pricing Model. This
model uses the past performance of a stock to predict the
future value of a stock option. The following assumptions were
used in the model: volatility - 33.3%; risk-free interest rate -
4.6% per annum; annual dividend yield - 0.7%; and
expected life of the options - five years from
grant date. The option value estimated using this
model does not necessarily represent the value to
be realized by the named officers.

(7) These options were granted on December 11, 1998,
in connection with 1998 performance. All of such
options were immediately vested and exercisable.

(8) These options were granted on December 11, 1998,
in connection with 1998 performance. All of such
options were immediately vested and exercisable.
However, 80% of the unexercised portion of such
options are subject to forfeiture upon the
officer's voluntary termination or termination
for cause prior to December 11, 1999. This
percentage decreases 20% in each subsequent year.
After December 11, 2002, none of the options are
subject to forfeiture.
</TABLE>

Aggregate Option Exercises in 1998 and Year-End Option Values

The following table sets forth information for the five individuals
named in the Summary Compensation Table concerning the exercise of options
to purchase Common Stock in 1998 and unexercised options to purchase Common
Stock held at December 31, 1998.
<TABLE>
<CAPTION>
Number of Unexercised Options Value of Unexercised In-the-Money
at 12/31/98 Options at 12/31/98 (1)

Number of Shares
Acquired Upon Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable

<S> <C> <C> <C> <C> <C>
J. Larry Nichols -- $ -- 296,000 6,000 $ 2,048,875 $ --
J. Michael Lacey -- $ -- 102,800 6,000 $ 402,575 $ --
Duke R. Ligon -- $ -- 50,000 20,000 $ 31,350 $ --
Darryl G. Smette -- $ -- 148,300 6,000 $ 1,055,069 $ --
H. Allen Turner -- $ -- 148,000 6,000 $ 1,037,625 $ --
<FN>
(1) The value is based on the aggregate amount of the excess of $30.6875 (the
closing price as reported by the American Stock Exchange for December 31, 1998)
over the relevant exercise price for outstanding options that were
exercisable and in-the-money at year-end.
</TABLE>

Compensation Pursuant to Plans

Long-term Incentive Plans. Devon has outstanding stock options issued to
certain of its directors, executive officers and employees under four
separate stock option plans. Three of such plans were adopted by
Devon stockholders in 1988, 1993 and 1997 (the "1988
Plan," the "1993 Plan" and the "1997 Plan,"
respectively). The Company has also outstanding stock
options which it assumed from Northstar in connection
with the Northstar Combination (the "Northstar
Plan"). Options granted under the 1988 Plan, the 1993
Plan and the Northstar Plan remain exercisable by the
employees owning such options, but no new options
will be granted under any of such plans. At December
31, 1998, 12 participants held options granted under
the 1988 Plan, 23 participants held options granted
under the 1993 Plan and 134 participants held options
granted under the Northstar Plan.

Effective May 21, 1997, Devon stockholders
adopted the 1997 Plan and reserved two million shares
of Common Stock for issuance thereunder to directors,
officers and employees. On December 9, 1998, Devon
stockholders voted to increase the number of shares
available under the 1997 plan to three million. The
exercise price of options granted under the 1997 Plan
may not be less than the estimated fair market value
of the stock on the date of grant (plus 10% if the
grantee owns or controls more than 10% of the total
voting stock of Devon prior to the grant). Options
granted are exercisable during a period established
for each grant, which period may not exceed 10 years
from the date of grant. Under the 1997 Plan, the
grantee must pay the exercise price in cash or in
Common Stock, or a combination thereof, at the time
the option is exercised. The 1997 Plan expires on
March 25, 2007. As of December 31, 1998, 150
participants held options granted under the 1997
Plan.

The Company has no other plans that provide
compensation intended to serve as incentive for performance to
occur over a period longer than one fiscal year.

Retirement Plan. Devon maintains a defined
benefit retirement plan (the "Basic Plan") which
provides benefits based upon past and future
employment service with Devon. Each eligible employee
who retires is entitled to receive annual retirement
income, computed as a percentage of "final average
compensation" (which consists of the average of the
highest three consecutive years' salaries, wages, and
bonuses out of the last ten years), and credited
years of service up to 25 years. Contributions by
employees are neither required nor permitted under
the Basic Plan. Benefits are computed based on
straight-life annuity amounts and are reduced by
Social Security payments. All of the executive
officers participate in the Basic Plan.

The following table sets forth the credited
years of service under Devon's Basic Plan for each of
the five individuals named in the Summary
Compensation Table.

Credited
Years of Service
Name of Individual (Through December 31, 1998)

J. Larry Nichols 29 years
J. Michael Lacey 10 years
Duke R. Ligon 2 years
H. Allen Turner 17 years
Darryl G. Smette 12 years

Supplemental Retirement Plan. Devon also has a
nonqualified deferred compensation plan (the
"Supplemental Plan"), the purpose of which is to
provide supplemental retirement income
to certain selected key management and highly
compensated employees because their annual
compensation is greater than the maximum annual
compensation that can be considered in computing
their benefits under the Basic Plan. An employee
must be selected by the Compensation and Stock Option
Committee in order to be eligible for participation
in the Supplemental Plan. All of the five
individuals named in the Summary Compensation Table
have been selected to participate in the Supplemental
Plan. Each eligible participant's supplemental
retirement income will equal 65% of his final average
compensation, multiplied by a fraction, the numerator
of which is his credited years of service (not to
exceed 20) and the denominator of which is 20 (or
less, if so determined by the Committee), less any
offset amounts. Offset amounts are (i) retirement
benefits payable to the participant under the Basic
Plan, (ii) benefits due to the participant under
Social Security, and (iii) any benefits which are
paid to the participant under the Company's long-term
disability plan. The Supplemental Plan is currently
unfunded.

In general, benefits will be paid when the
participant retires from the Company. However in the event that
the participant's employment with the Company is
terminated (i) within two years of the acquisition by
the Company of reserves or assets which results in
the reserves or assets of the Company increasing by
at least 20%, or (ii) within two years of a change of
control of the Company, then the participant shall be
100% vested in his benefit and shall be entitled to
receive the actuarial equivalent of such benefit
earned as of the date of termination of employment.
"Change of control" is defined in the Supplemental
Plan as being an event which results in an entity or
group acquiring either (i) 30% or more of the
Company's outstanding voting securities, or (ii) less
than 30% of the outstanding voting securities, but
which a majority of the Board of Directors has
determined has caused a change of control. If the
participant is terminated within two years following
a change of control or the acquisition of reserves or
assets that results in the reserves or assets
increasing by at least 20%, the participant's benefit
will be paid in a single lump sum payment. Otherwise,
the participant's benefit will be paid for the life
of the participant. The participant may elect to
provide a 50% survivor benefit for his or her
beneficiary.

The following table illustrates estimated annual
benefits payable upon retirement under the Basic Plan
and the Supplemental Plan to participants in
specified compensation and years of service
classifications, assuming a normal retirement in 1998
at age 65.
<TABLE>
<CAPTION>
Final Average Years of Service
Compensation 15 20 25 or more

Severance Agreements

Pursuant to severance agreements, each of the
five individuals named in the Summary Compensation
Table is entitled to certain compensation ("Severance
Payment") in the event that his employment with the
Company is terminated (a) within one year of the
acquisition by the Company of reserves or assets
which result in the reserves or assets of the Company
increasing by at least 20% or (b) within two years of
a change in control of the Company. "Change of
control" is defined in the agreements as being an
event which results in an entity or group acquiring
either (i) 30% or more of the Company's outstanding
voting securities, or (ii) less than 30% of the
outstanding voting securities, but which a majority
of the Board of Directors determines has caused a
change of control. In either case the Severance
Payment would be approximately equal to two times the
individual's annual compensation.

Employment Agreement

The Company has an Employment Agreement with
Duke R. Ligon dated February 7, 1997, which has an
initial term of two years and, unless sooner
terminated, shall automatically renew for an
additional two-year term. The Employment Agreement
provides that Mr. Ligon will be paid a base salary at
the minimum annual rate of $200,000 and will be
eligible to participate in other incentive
compensation and benefit arrangements provided to
other employees of the Company. The Employment
Agreement also provides that Mr. Ligon will be
eligible to participate in the Company's stock option
plans and shall be granted a nonqualified stock
option to purchase at least 30,000 shares of the
Company's Common Stock at a price not less than fair
market value on the date of grant. Mr. Ligon was
granted an option to purchase 30,000 shares on
February 10, 1997, at an exercise price of $32.81.
One-third of these options vest on each of the first,
second and third anniversaries of the grant date.

If the Company terminates Mr. Ligon's employment
other than for cause or by reason of his death or
disability, or if Mr. Ligon terminates for good
reason within 24 months following a change of
control, the Company shall pay Mr. Ligon a cash lump
sum payment equal to his earned but unpaid base
salary plus his base salary otherwise payable to him
for the remainder of his employment term. "Change of
control" is defined in the agreement as being an
event which results in an entity or group acquiring
either (i) 30% or more of the Company's outstanding
voting securities, or (ii) less than 30% of the
outstanding voting securities, but which a majority
of the Board of Directors determines has caused a
change of control. Any amounts paid to Mr. Ligon
under his employment agreement would offset any
Severance Payment due him under his severance
agreement.

Director Compensation

Non-management directors of Devon receive an
annual retainer of $20,000, payable quarterly, plus
$1,000 for each Board meeting attended. Also,
directors serving as chairmen of the standing
committees of the Board of Directors receive an
additional $2,000 per year. Committee members who
attend the meetings of their standing committee
receive $1,000 per meeting.

Non-management directors are eligible to receive
stock options in addition to their cash remuneration.
Such directors are eligible to receive stock option grants of up to
3,000 shares immediately after each annual meeting of
stockholders at an exercise price equal to the fair
market value of the Common Stock on that date. Any
unexercised options will expire ten years after the
date of grant. The Compensation and Stock Option
Committee, which awards options to non-management
directors, may elect to grant awards that are less
than the 3,000 shares maximum. However, the
Compensation and Stock Option Committee has no other
discretion regarding the award of stock options to
non-management directors. 1997 was the first year in
which directors were eligible to receive stock
options. The following table sets forth information
concerning options granted to nonmanagement directors
in 1998:
<TABLE>
<CAPTION>
Individual Grants in 1998

Percent of
Total Options Exercise
Options Granted in Price Per Expiration Grant Date
Name Granted (1) 1998 (2) Share Date Present Value (3)

<S> <C> <C> <C> <C> <C>
Luke R. Corbett 3,000 0.1% $37.25 (4) 5/19/2008 $42,420
Thomas F. Ferguson 3,000 0.1% $37.25 (4) 5/19/2008 $42,420
David M. Gavrin 3,000 0.1% $37.25 (4) 5/19/2008 $42,420
Michael E. Gellert 3,000 0.1% $37.25 (4) 5/19/2008 $42,420
Michael M. Kanovsky - - - - -
Tom J. McDaniel 3,000 0.1% $37.25 (4) 5/19/2008 $42,420
John W. Nichols 3,000 0.1% $37.25 (4) 5/19/2008 $42,420
H.R. Sanders,Jr. 3,000 0.1% $37.25 (4) 5/19/2008 $42,420
Lawrence H.Towell 3,000 0.1% $37.25 (4) 5/19/2008 $42,420
<FN>
(1) These options were granted on May 20, 1998. They
became immediately vested and exercisable on the
date of grant.

(2) Annual option grants for officers and employees
for 1997, which normally would have been made in
December 1997, were not made until January 1998.
In addition, Devon assumed the Northstar stock
options in 1998. Had neither of these non
recurring events occurred in 1998, the percent of
total options granted to each director named in
the table above would have been 0.4%, rather than
the 0.1% shown.

(3) The grant date present value is an estimation
of the possible future value of the option grant based upon
the Black-Scholes Option Pricing Model. The following
assumptions were used in the model: volatility -
32.9%; risk-free interest rate - 5.7% per
annum; annual dividend yield - 0.5%; and expected
life of the options - five years from grant date. The
option value estimated using this model does not
necessarily represent the value to be realized by
the named directors.

(4) Exercise price is the fair market value on the
date of grant that is the closing price of Common
Stock on the date of grant as reported by the
American Stock Exchange.
</TABLE>

Compensation and Stock Option Committee Report on Executive Compensation

The Compensation and Stock Option Committee of
the Board of Directors (the "Committee") establishes
the general compensation policies of the Company.
The Committee meets in November or December of each
year to establish specific compensation levels
for the CEO and to review the executive officers'
compensation in general. (The compensation for
executive officers other than the CEO is determined
by the CEO.)

The Committee's goal in setting executive
compensation is to motivate, reward and retain
management talent who support the Company's goals of
increasing absolute and per share value for
stockholders. This goal is carried out through
awards of base salary, annual cash bonuses and stock
options.

The Committee generally believes that the total
cash compensation of its CEO and other executive
officers should be similar to the total cash
compensation of similarly situated executives of peer
group public companies within the oil and gas
industry. Further, a significant portion of the
complete compensation package should be tied to the
Company's success in achieving long-term growth in
per share earnings, cash flow, reserves and stock
price.

Base Salary. A competitive base salary is
considered vital to support the continuity of
management and is consistent with the long-term
nature of the oil and gas business. The Committee
believes that the base salaries of the executive
officers should be similar to the base salaries of
executive officers of similar companies within the
oil and gas industry. Therefore, no performance
criteria are applied to the base salary portion of
the total compensation. Performance of the Company
versus its peers is, however, given significant
weight in the cash bonus and stock option portions of
compensation.

The CEO's base salary for 1998 was based upon
information available to the Committee at its
December 1997 meeting. At that meeting the Committee
established a peer group of 11 companies to which
Devon should be compared. This peer group included
companies that are similar to Devon in total
revenues, balance sheet ratios, oil and gas reserves
and overall oil and gas operations. (The industry
group index in the Performance Graph included in this
proxy statement includes, but is not limited to, the
companies used for this compensation analysis. In
its analysis, the Committee specifically focused on
those companies that are most similar to Devon in
size, financial structure and operations, believing
that the most direct comparisons would not
necessarily include all of the more than 200
companies included in the industry group index used
for the performance graph.)

A review of the base salaries for the highest-
paid executive at each of these peer companies
revealed that the 1997 base salary of Devon's CEO was
at the low end of the range of all base salaries in
the group, and only 80% of the average base salary
for the group. As a result of this finding, the
Committee increased the CEO's base salary for 1998 by
12.5% to improve his base salary in relationship to the peer group.

The Committee advised the CEO that similar
criteria should be used to evaluate the base salaries
of the other executive officers of the Company.

Cash Bonuses. The Committee believes that the
officers' cash bonuses should be tied to Devon's success in
meeting its corporate goals and budgets and in
achieving growth in comparison to those of the
Company's industry peers and to the individual
officers' contribution to such success. Cash bonuses
for calendar year 1998 were set at the December 1998
Committee meeting. In setting the cash bonus for the
CEO for the calendar year 1998, the Committee
reviewed the performance of the peer group of 10 oil
and gas companies. (Three companies on the prior
year's list had changed sufficiently as to be no
longer comparable to Devon, and were thus removed
from the list. Two other companies similar to Devon
were added.)

The Committee reviewed Devon's growth over the last
three years, compared with the peer group average on a
number of different measures, notably, change in
earnings per share, cash flow per share, reserves per
share and stock price. Devon's growth in cash flow
per share and stock price exceeded that of the peer
group average for the years reviewed. The growth in
earnings per share and reserves per share was
somewhat less than the peer group average. The
Committee also noted that Devon's stock price over
the last year had decreased by 13% while the average
stock price for the peer group had decreased by 29%.
The Committee also noted the CEO's efforts in closing
the Northstar Combination. As a result of this
analysis, the Committee awarded the CEO a cash bonus
of $450,000. This award resulted in his total cash
compensation for 1998 being 85% of the average total
1997 cash compensation for the highest-paid
executives of the companies in the peer group.

The Committee advised the CEO that similar
criteria should be used in establishing cash bonuses
for the other executive officers.

Stock Options. The Committee desires to reward
key management and professional employees for long-
term strategic management practices and enhancement
of stockholder value by awarding stock options.
Stock options are granted at an option price equal to
the fair market value of the Common Stock on the
grant date. The grant of these options and the
optionees' holdings of unexercised options and/or
ownership of exercised option shares is designed to
closely align the interests of the executive officers
with those of the stockholders. The ultimate value
of the stock options will depend on the continued
success of the Company, thereby creating a continuing
incentive for executive officers to perform long
after the initial grant.

Due to time limitations, the grant of stock
options was not considered at the December 1997
meeting of the Committee. Rather, the Committee met
by telephone in January 1998 to consider stock option
grants in connection with 1997 Company performance.
Stock options were awarded to the CEO and other
executive officers on January 21, 1998 at this meeting.
The Committee considered stock option grants again in December 1998
based on 1998 Company performance. Stock options
were awarded to the CEO and other executive officers
on December 11, 1998 at this meeting.

The award of options is based generally upon the
same criteria as that used for the award of cash
bonuses; that is, more options are awarded if the Company performs well
in relationship to its peers, and less or none are
awarded if the Company does not perform well. In
addition, the Committee wants to encourage executives
to maintain ownership of Company stock and/or
unexercised options. Although there are no specific
ownership criteria used in awarding options, long-
term ownership is viewed favorably. The Committee
noted that Devon's officers as a group still retained
63% of all options (both vested and unvested) that
had been granted to them through year-end 1997 and
over 81% through year-end 1998.

The Committee generally seeks to award no more than
1% of the outstanding shares in any one year, and further
desires to keep the total number of shares under
option and available for option to less than 10% of
the total shares outstanding. As of December 31,
1998, there were 3,455,692 shares under option and
1,873,550 shares available for option, which were
6.5% and 3.5%, respectively, of total shares on a
fully diluted basis.

Policy on Deductibility of Compensation.
Section 162(m) of the Internal Revenue Code limits
the tax deduction to $1 million for compensation paid
to any one executive officer, unless certain
requirements are met. The Committee presently
intends that all compensation paid to executive
officers will meet the requirements for deductibility
under Section 162(m). However, the Committee may
award compensation, which is not deductible under
Section 162(m), if it believes that such awards would
be in the best interest of the Company or its
stockholders.

Submission of Compensation Plans to
Stockholders. On November 6, 1998 the Company
submitted a proposal to the Devon stockholders to
increase the number of shares available for grant
under the 1997 Plan from two million to three million
shares. This amendment was approved by the
stockholders at a special meeting held on December 9,
1998. This amendment was submitted in connection
with the Northstar Combination. After the
combination of the two companies, Devon has more than
doubled its employees. The stock option plan
amendment permits Devon to have sufficient stock
options available for future grants to employees and
directors. The Committee has no present intention of
submitting any other compensation plans to the
stockholders for approval that would result in the
issuance of more than 5% of the Company's outstanding
Common Stock.

We believe that the Company has an appropriate
compensation structure that properly rewards and
motivates its executive officers to build stockholder
value.

As to Compensation of As to Compensation of Executive Officers
the CEO other than the CEO

David M. Gavrin, Chairman J. Larry Nichols
Michael E. Gellert

Compensation Committee Interlocks

The Compensation Committee is composed of two
independent, non-employee directors, Mr. Gavrin and
Mr. Gellert. These directors have no interlocking
relationships as defined by the Securities and
Exchange Commission.

Performance Graph

The following performance graph compares the
Company's cumulative total stockholder return on its Common
Stock for the five-year period from December 31,
1993 to December 31, 1998, with the cumulative total
return of the Standard & Poor's 500 stock index and
the Stock Index by Standard Industrial
Classification Code ("SIC Code") for Crude Petroleum
and Natural Gas. The SIC Code for Crude Petroleum
and Natural Gas is 1311. The identities of the 200+
companies included in the index will be provided
upon request.

CUMULATIVE TOTAL RETURN*
THE COMPANY, S&P 500, AND SIC CODE INDEX
FOR CRUDE PETROLEUM AND NATURAL GAS

------------------Fiscal Year Ending---------
Company/Index/Market 12/31/1993 12/30/1994 12/29/1995 12/31/1996

Devon Energy Corp. 100.00 89.02 125.05 171.35
Crude Petroleum & Natural Gas 100.00 104.80 115.26 153.26
S&P Composite 100.00 101.32 139.40 171.41

--Fiscal Year Ending--
Company/Index/Market 12/31/1997 12/31/1998

Devon Energy Corp. 190.89 153.08
Crude Petroleum & Natural Gas 155.34 124.43
S&P Composite 228.59 293.92

Assumes $100 invested on December 31, 1992, in Devon
Energy Corporation Common Stock, S&P 500 Index and
SIC Code Index for Crude Petroleum and Natural Gas.

* Total return assumes reinvestment of dividends.

CERTAIN TRANSACTIONS

In 1986, H. R. Sanders, Jr., a director of Devon
and Executive Vice President of the Company until his
retirement in May 1997, executed a non-interest
bearing note in favor of Devon in the principal
amount of $125,000, to evidence his borrowings from
Devon. This note, which was executed as part of Mr.
Sanders' employment agreement with Devon, was made on
terms favorable to him to induce him to move to
Oklahoma City. Mr. Sanders repaid the note in full
in 1998.

In 1996, upon becoming Chief Financial Officer
of Northstar, John Richels executed a non-interest-
bearing note in favor of Northstar in the principal
amount of CN$250,000 (approximately US$165,000).
This loan was made to assist Mr. Richels in making
the transition from private legal practice to
industry. The loan is due and payable upon the
earlier of Mr. Richels' voluntary resignation of
employment from Northstar and December 31, 2000. The
largest balance on this note during 1998 was
CN$212,000.

SUBMISSION OF STOCKHOLDER PROPOSALS

Any stockholder desiring to present a proposal
for inclusion in the Company's Proxy Statement for
the 2000 Annual Meeting of Stockholders of the
Company must present the proposal to the Secretary of
the Company not later than December 10, 1999. Only
those proposals that comply with the requirements of
Rule 14a-8 promulgated under the Securities Exchange
Act of 1934 will be included in the Company's proxy
statement for the 2000 Annual Meeting. Written
notice of stockholder proposals submitted outside the
process of Rule 14a-8 for consideration at the 2000
Annual Meeting of Stockholders (but not included in
the Company's Proxy Statement) must be received by
the Corporate Secretary of the Company on or before
January 24, 2000 in order to be considered timely,
subject to any provisions of the Company's Bylaws.
The chairman of the meeting may determine that any
proposal for which the Company did not receive timely
notice shall not be considered at the meeting. If in
the discretion of the chairman any such proposal is
to be considered at the meeting, the persons
designated in the Company's Proxy Statement shall be
granted discretionary authority with respect to the
untimely stockholder proposal.

OTHER MATTERS

The Board of Directors of the Company knows of no
other matter to come before the Meeting other than that set
forth herein and in the accompanying Notice of Annual
Meeting of Stockholders. However, if any other
matters should properly come before the Meeting, it
is the intention of the persons named in the
accompanying proxy to vote such proxies, as they deem
advisable in accordance with their best judgment.

Your cooperation in giving this matter your immediate
attention and in returning your proxy promptly will
be appreciated.

BY ORDER OF THE BOARD OF DIRECTORS

Marian J. Moon
Corporate Secretary

April 9, 1999

<PAGE>

DEVON ENERGY CORPORATION

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder of Devon Energy Corporation, an
Oklahoma corporation, hereby nominates and appoints John W.
Nichols and J. Larry Nichols or either one of them, with full
power of substitution, as true and lawful agents and proxies to
represent the undersigned and vote all shares of stock of Devon
Energy Corporation owned by the undersigned in all matters coming
before the Annual Meeting of Stockholders (or any adjournment
thereof) of Devon Energy Corporation to be held in the 20th
Century Ballroom, 2nd Floor of the Westin Hotel on Wednesday, May
19, 1999, at 11:00 a.m., local time. The Board of Directors
recommends a vote "FOR" the matters set forth on the reverse
side.

PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.

CONTINUED AND TO BE SIGNED ON REVERSE SIDE

/X/
Please mark
votes as in this
example.

WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
SPECIFIED BELOW BY THE STOCKHOLDER. TO THE EXTENT CONTRARY
SPECIFICATIONS ARE NOT GIVEN, THIS PROXY WILL BE VOTED "FOR" THE
NOMINEES LISTED IN ITEM 1.

1. ELECTION OF DIRECTORS
2. OTHER MATTERS:
Nominees: Luke R. Corbett,
Michael E. Gellert, Michael M. In their discretion, to
Kanovsky and H. R. Sanders, vote with respect to any other
Jr. matters that may come before
the meeting or any adjournment
thereof, including matters
FOR / / WITHHELD / / incident to its conduct.
(all nominees) (as to all
nominees) I RESERVE THE RIGHT TO REVOKE
THE PROXY AT ANY TIME BEFORE
THE EXERCISE THEREOF.

Please sign exactly as your
name appears at left,
WITHHELD / / indicating your official
(as to nominees listed below) position or representative
capacity, if applicable. If
___________________________ shares are held jointly, each
You may withhold your vote for owner should sign.
a particular nominee by
marking this box and naming Signature:
th nominee for which your ______________________________
vote is being withheld. Date _________

Signature:
______________________________
Date_________