NON-GAAP FINANCIAL MEASURES

Drill-bit capital is defined as costs incurred less asset retirement costs and proved acquisition costs. Drill-bit capital is a Non-GAAP measure. Devon believes drill-bit capital is relevant because it provides additional insight into costs associated with current year exploration and development activities. Certain securities analysts also use this methodology to measure Devon’s performance. It should be noted that the actual costs of reserves added through Devon’s drilling program will differ, sometimes significantly, from the direct comparison of capital spent and reserves added in any given period due to the timing of capital expenditures and reserve bookings.
 
RECONCILIATION TO GAAP INFORMATION
(in millions)            
  Total
Year Ended December 31,
2012 2011
Costs Incurred (GAAP) $ 8,005 $ 6,943  
Less:
Asset retirement costs 415

(4

)
Proved acquisition costs   73   48  
Drill-bit capital (Non-GAAP) $ 7,517

$

6,899
 
 
United States
Year Ended December 31,
2012 2011
Costs Incurred (GAAP) $ 5,896 $ 5,287  
Less:
Asset retirement costs 146

(6

)
Proved acquisition costs   2   34  
Drill-bit capital (Non-GAAP) $ 5,748

$

5,259
 
 
Canada
Year Ended December 31,
2012 2011
Costs Incurred (GAAP) $ 2,109 $ 1,656  
Less:
Asset retirement costs 269

2
Proved acquisition costs   71   14  
Drill-bit capital (Non-GAAP) $ 1,769

$

1,640
 

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