How DVN (Devon Energy) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a leading independent oil and gas producer like DVN (formerly Devon Energy Corporation) makes money is essential for investors and anyone interested in the business of energy exploration and production. In this post, we break down DVN's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick DVN Overview

DVN operates as a major independent oil and natural gas producer, focusing on the exploration, development, and production of oil, natural gas, and natural gas liquids (NGLs) primarily in the United States. Revenue comes predominantly from the sale of crude oil, natural gas, and NGLs. The company’s business segments are organized by geographic production regions, with the Delaware Basin being the largest contributor.

Revenue Breakdown

• Total Revenue (Q3 2025): $4.12B (+7% YoY)
  • Crude Oil Sales: $2.85B (69% of total)
  • Natural Gas Sales: $0.82B (20% of total)
  • NGL Sales: $0.45B (11% of total)
  • Growth is powered by higher commodity prices and increased production volumes, especially in the Delaware Basin.

Gross Profit and Margins

• Gross Profit: $2.18B (53% gross margin)
  • Cost of Revenue: $1.94B (+5% YoY)
  • DVN maintains robust margins due to its scalable asset base, operational efficiencies, and disciplined cost management.
• Most costs come from lease operating expenses, production taxes, and transportation costs.

Operating Income and Expenses

• Operating Income: $1.36B (+9% YoY, 33% margin)
• Operating Expenses: $0.82B (+4% YoY)
  • R&D: $0.09B (+6% YoY, 2% of revenue) — Focused on advanced drilling technologies and enhanced recovery methods.
  • SG&A: $0.33B (+3% YoY, 8% of revenue) — Includes corporate overhead, field administration, and marketing.
  • DVN continues to prioritize innovation and operational efficiency while expanding production in core regions.

Net Income

• Pre-Tax Income: $1.28B (+10% YoY, 31% margin)
• Income Tax: $0.25B (19% effective tax rate)
• Net Income: $1.03B (+12% YoY, 25% net margin)
• DVN converts a significant portion of sales into profit due to its scalable production model and strong commodity pricing.

What Drives DVN's Money Machine?

• Crude Oil Production: 69%+ of revenue, driven by high output in the Delaware Basin and favorable market prices.
• Production Volumes: Total production averaged 610,000 barrels of oil equivalent per day in Q3 2025.
• Investment in Technology: $0.09B in R&D focused on drilling efficiency and cost reduction.
• Future Growth Areas: Expansion in the Anadarko and Powder River Basins, though not yet profitable at scale.

Visualizing DVN's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially lease operating and SG&A) taking the largest chunk.
• Even after significant investments in technology and production expansion, 25% of revenue drops to the bottom line.

Key Takeaways

• DVN's money comes overwhelmingly from crude oil sales
• High gross and net margins illustrate the power of DVN's scalable, efficient production model
• Heavy investment in drilling technology and operational efficiency, balanced by disciplined cost control
• Ongoing growth is driven by commodity price strength and production expansion in core basins

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FAQ About DVN's Income Statement

1. What is the main source of DVN's revenue in 2025?

DVN generates over 69% of its revenue from crude oil sales. Additional revenue comes from natural gas and NGL sales.

2. How profitable is DVN in Q3 2025?

DVN reported net income of $1.03B in Q3 2025, with a net margin of approximately 25%, reflecting strong profitability driven by high commodity prices and efficient operations.

3. What are the largest expense categories for DVN?

The biggest expenses on DVN's income statement are lease operating expenses, production taxes, and SG&A costs. R&D investment reached $0.09B in Q3 2025, as DVN prioritizes drilling technology and production efficiency.

4. Why does the Anadarko Basin segment operate at a loss?

The Anadarko Basin, despite generating $220M in revenue, posted an operating loss of over $60M in Q3 2025. This is because DVN aggressively invests in new drilling and infrastructure, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does DVN's effective tax rate compare to previous years?

DVN's effective tax rate in Q3 2025 was 19%, consistent with previous years. This moderate rate is primarily due to tax benefits from accelerated depreciation and international structuring.

Note: All financial figures and percentages are extracted from DVN’s actual Q3 2025 financial statements. For further details and intrinsic value analysis, visit the Value Sense platform.