SECURITIES AND EXCHANGE COMMISSION

                      Washington, D.C.  20549


                             FORM 10-Q

  (Mark One)
    X     Quarterly Report Pursuant to Section 13 or 15(d)
               of the Securities Exchange Act of 1934

                                 OR

         Transition Report Pursuant to Section 13 or 15(d)
               of the Securities Exchange Act of 1934

                  For Quarter Ended June 30, 1997
                    Commission File No. 1-10067


                      DEVON ENERGY CORPORATION
       (Exact Name of Registrant as Specified in its Charter)



            Oklahoma                                73-1474008
     (State or Other Jurisdiction of             (I.R.S. Employer
     Incorporation or Organization)           Identification Number)
    20 North Broadway, Suite 1500
       Oklahoma City, Oklahoma                         73102 
  (Address of Principal Executive Offices)           (Zip Code)

    Registrant's telephone number, including area code:   (405) 235-3611


                           Not applicable
                                                  
   Former name, former address and former fiscal year, if changed
   from last report.

       Indicate  by check  mark whether  the  registrant (1)  has
  filed all reports required  to be filed by Section  13 or 15(d)
  of the Securities Exchange  Act of 1934 during the preceding 12
  months (or  for such  shorter period  that  the registrant  was
  required  to file  such reports), and  (2) has  been subject to
  such filing requirements for the past 90 days.  Yes X  No    .

       The number of  shares outstanding  of Registrant's  common
  stock, par value $.10, as of July 15, 1997, was 32,217,495.


                        1 of 58 total pages
                (Exhibit Index is found at page 28)
<PAGE>


                      DEVON ENERGY CORPORATION



                Index to Form 10-Q Quarterly Report
             to the Securities and Exchange Commission



                                                                        Page No.

     Part I.   Financial Information


          Item 1.    Consolidated Financial Statements

               Consolidated Balance Sheets, June 30, 1997 (Unaudited),
               and December 31, 1996                                         4

               Consolidated Statements of Operations (Unaudited),
               For the Three Months and the Six Months Ended
               June 30, 1997 and 1996                                        5

               Consolidated Statements of Cash Flows (Unaudited),
               For the Six Months Ended June 30, 1997 and 1996               6

               Notes to Consolidated Financial Statements.                   7

          Item 2.    Management's Discussion and Analysis of Financial
                     Condition and Results of Operations.                    9

     Part II.   Other Information

          Item 4.    Submission of Matters  to a Vote of Security Holders   21

          Item 6.    Exhibits and Reports on Form 8-K                       22






                                 2 
<PAGE>




                      DEVON ENERGY CORPORATION










                   Part I.  Financial Information
             Item 1.  Consolidated Financial Statements
                       June 30, 1997 and 1996










           (Forming a part of Form 10-Q Quarterly Report
             to the Securities and Exchange Commission)






                                 3 
<PAGE>
<TABLE>
                    DEVON ENERGY CORPORATION AND SUBSIDIARIES
                           Consolidated Balance Sheets
<CAPTION>
                                                                              December 31,
                                                              June 30, 1997       1996     
                                                               (Unaudited)
            Assets
            Current assets:
               <S>                                          <C>                 <C>
               Cash and cash equivalents                    $   42,844,904      9,401,350
               Accounts receivable                              39,272,324     29,580,306
               Inventories                                       2,079,219      2,103,486
               Prepaid expenses                                  1,916,454        688,752
               Deferred income taxes                             1,600,000      1,600,000

                 Total current assets                           87,712,901     43,373,894

            Property and equipment, at cost, based on the
              full cost method of accounting for oil and
              gas properties                                 1,023,727,223    974,805,756
               Less: Accumulated depreciation, depletion
                 and amortization                              321,535,816    281,959,410

                                                               702,191,407    692,846,346
            Other assets                                        11,160,793     10,030,560

                 Total assets                               $  801,065,101    746,250,800

            Liabilities and Stockholders' Equity
            Current liabilities:
               Accounts payable:
                 Trade                                          11,187,574      4,861,428
                 Revenues and royalties due to others           13,434,903     10,569,960
               Income taxes payable                              2,725,114      4,705,447
               Accrued expenses                                  2,161,587      3,503,420

                 Total current liabilities                      29,509,178     23,640,255

            Revenues and royalties due to others                 1,043,660      1,053,270
            Other liabilities                                   12,158,592     10,325,999
            Long-term debt                                               -      8,000,000
            Deferred revenue                                         1,091        205,859
            Deferred income taxes                               99,216,000     81,121,000

            Company-obligated mandatorily redeemable
               convertible preferred securities of
               Devon Financing Trust holding solely
               6.5% convertible junior subordinated
               debentures of Devon Energy Corporation          149,500,000    149,500,000

            Stockholders' equity:
               Preferred stock of $1.00 par value.
                 Authorized 3,000,000 shares; none issued                               -
               Common stock of $.10 par value.
                 Authorized 120,000,000 shares; issued
                 32,178,595 in 1997 and 32,141,295 in 1996       3,217,860      3,214,130
               Additional paid-in capital                      388,930,620    388,090,930
               Retained earnings                               117,938,898     81,099,357
               Cumulative currency translation adjustment         (450,798)             -

                 Total stockholders' equity                    509,636,580    472,404,417

                 Total liabilities and stockholders' equity $  801,065,101    746,250,800

            See accompanying notes to consolidated financial statements.
</TABLE>

                                                        4
<PAGE>
<TABLE>
                                   DEVON ENERGY CORPORATION AND SUBSIDIARIES
                                     Consolidated Statements of Operations
                                                  (Unaudited)


<CAPTION>
                                                 Three Months             Six Months
                                                 Ended June 30,          Ended June 30,
                                                 1997      1996         1997       1996

            Revenues
              <S>                            <C>         <C>          <C>        <C>
              Oil sales                      $32,060,026 19,507,458   69,590,006 35,652,252
              Gas sales                       30,175,836 14,212,694   73,413,977 28,834,328
              Natural gas liquids sales        5,523,964  3,023,069   11,327,885  5,990,870
              Other                            1,891,956    555,392    3,219,560    869,223

                    Total revenues            69,651,782 37,298,613  157,551,428 71,346,673

            Costs and expenses
              Lease operating expenses        14,528,284  7,755,074   30,340,921 15,173,253
              Production taxes                 3,745,547  2,345,996    9,055,391  4,487,913
              Depreciation, depletion and
                 amortization                 20,597,744 10,461,179   40,142,296 20,588,163
              General and administrative 
                 expenses                      3,606,610  2,389,052    6,236,495  4,524,950
              Interest expense                    28,231  2,460,924      159,038  4,942,080
              Distributions on preferred
                 securities of subsidiary
                 trust                         2,429,376          -    4,858,751          -

                    Total costs and expenses  44,935,792 25,412,225   90,792,892 49,716,359

            Earnings before income taxes      24,715,990 11,886,388   66,758,536 21,630,314

            Income tax expense
              Current                          3,500,000  1,545,000    8,545,000  2,812,000
              Deferred                         6,386,000  3,566,000   18,158,000  6,489,000

                 Total income tax expense      9,886,000  5,111,000   26,703,000  9,301,000

            Net earnings                     $14,829,990  6,775,388   40,055,536 12,329,314

            Net earnings per average common
              share outstanding (Note 2):
                 Assuming no dilution              $0.46       0.31         1.25       0.56

                 Assuming full dilution             0.44       0.31         1.15       0.56

            Weighted average common shares
              outstanding                     32,165,904  22,121,786  32,153,667 22,117,138




            See accompanying notes to consolidated financial statements.
</TABLE>


                                                   5
 <PAGE>

                                   DEVON ENERGY CORPORATION AND SUBSIDIARIES
                                     Consolidated Statements of Cash Flows
                                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                      Six Months
                                                                                    Ended June 30,
                                                                                  1997           1996

            Cash flows from operating activities
               <S>                                                           <C>              <C>
               Net earnings                                                  $ 40,055,536     12,329,314
               Adjustments to reconcile net earnings to net
                 cash provided by operating activities:
                   Depreciation, depletion and amortization                    40,142,296     20,588,163
                   (Gain) loss on sale of assets                                  (26,681)       (39,011)
                   Deferred income taxes                                       18,158,000      6,489,000
                   Changes in assets and liabilities:
                     (Increase) decrease in:
                        Accounts receivable                                    (9,798,563)    (2,417,642)
                        Inventories                                                17,285         20,679
                        Prepaid expenses                                       (1,228,235)      (780,122)
                        Other assets                                              (42,005)       212,027
                     Increase (decrease) in:
                        Accounts payable                                        9,900,406     (1,850,332)
                        Income taxes payable                                   (1,962,110)       459,433
                        Accrued expenses                                       (1,517,493)      (362,923)
                        Revenues and royalties due to others                       (9,610)       230,256
                        Long-term other liabilities                               268,798        232,507
                        Deferred revenue                                         (204,768)       (32,759)

                        Net cash provided by operating activities              93,752,856     35,078,590

            Cash flows from investing activities
               Proceeds from sale of property and equipment                     1,307,310      1,435,378
               Capital expenditures                                           (51,895,414)   (42,643,295)

                        Net cash used in investing activities                 (50,588,104)   (41,207,917)

            Cash flows from financing activities
               Proceeds from borrowings on revolving lines of credit            1,847,750     16,000,000
               Principal payments on revolving line of credit                  (9,843,750)    (4,000,000)
               Issuance of common stock                                           843,418        159,125
               Dividends paid on common stock                                  (3,215,995)    (1,327,343)
               Increase in long-term other liabilities                            680,377        532,770

                        Net cash provided (used) by financing activities       (9,688,200)    11,364,552

            Effect of exchange rate changes on cash                               (32,998)             -

            Net increase in cash and cash equivalents                          33,443,554      5,235,225

            Cash and cash equivalents at beginning of period                    9,401,350      8,897,891

            Cash and cash equivalents at end of period                       $ 42,844,904     14,133,116


            See accompanying notes to consolidated financial statements.

</TABLE>
                                                      6
<PAGE>


                      DEVON ENERGY CORPORATION AND SUBSIDIARIES
                      Notes to Consolidated Financial Statements

          1.   Summary of Significant Accounting Policies

          Basis of Presentation

                The  accompanying  consolidated  financial  statements  and
          notes  thereto  have been  prepared  pursuant  to the  rules  and
          regulations   of  the   Securities   and   Exchange   Commission.
          Accordingly,  certain footnote  disclosures normally  included in
          financial  statements  prepared  in  accordance   with  generally
          accepted   accounting  principles   have  been   omitted.     The
          accompanying consolidated financial  statements and notes thereto
          should  be read  in conjunction  with the  consolidated financial
          statements and  notes thereto  included  in Devon's  1996  annual
          report on Form 10-K.

                In the opinion of Devon's management, all adjustments  (all
          of  which  are normal  and recurring)  have  been made  which are
          necessary to fairly state the consolidated financial position  of
          Devon and its  subsidiaries as of June 30, 1997,  and the results
          of their operations and their cash flows for  the three month and
          six month periods ended June 30, 1997 and 1996.

          Foreign Currency Translation

               Prior to December 31, 1996,  Devon had no operations outside
          the  United States.  On December 31, 1996, Devon acquired certain
          Canadian oil and gas properties as part of a transaction in which
          Devon  acquired  all of  Kerr-McGee Corporation's  North American
          onshore  oil and  gas exploration  and production  properties and
          business in exchange for 9,954,000 shares of  Devon common stock.
          The  acquired  Canadian  properties  are  owned  by  a   Canadian
          subsidiary which is wholly-owned by Devon.

               For purposes  of foreign currency translation,  the Canadian
          dollar   is   the  functional   currency  for   Devon's  Canadian
          operations.   Translation adjustments  resulting from translating
          the Canadian subsidiary's  foreign currency financial  statements
          into  U.S.   dollar  equivalents  are  reported   separately  and
          accumulated in a separate component of stockholders' equity.

          2.   Earnings Per Share

               The periods ended  June 30, 1997, include  a dilutive effect
          on  earnings  per  share  from  Devon's  6.5%  Trust  Convertible
          Preferred Securities  issued in  July,  1996, and  from  employee
          stock  options.  The following  table reconciles the net earnings
          and common  shares outstanding  used in  the calculations  of net
          earnings per  share  assuming  no  dilution,  and  assuming  full
          dilution,  for the three month  and six month  periods ended June
          30, 1997.  (There was no dilutive effect on earnings per share in
          the comparable 1996 periods.)

          2.   Earnings Per Share (Continued)
<TABLE>
<CAPTION>
                                                                                                          Net
                                                                                             Common     Earnings
                                                                                Net          Shares       Per
                                                                              Earnings     Outstanding   Share

            Three Months Ended June 30, 1997:

                  <S>                              <S>                      <C>            <C>          <C>
                  Net earnings per share, assuming no dilution              $14,829,990    32,165,904   $0.46

                  Dilutive effect of:
                   Potential common shares issuable upon the conversion
                   of Trust Convertible Preferred securities (the 
                   increase in net earnings is net of income tax expense
                   of $963,000)                                               1,506,489     4,901,507

                   Potential common shares issuable upon the exercise
                   of employee stock options (calculated using the
                   treasury stock method)                                             -       402,184

                  Net earnings per share, assuming full dilution            $16,336,479    37,469,595   $0.44


            Six Months Ended June 30, 1997:

                  Net earnings per share, assuming no dilution              $40,055,536    32,153,667   $1.25

                  Dilutive effect of:
                   Potential common shares issuable upon the conversion
                   of Trust Convertible Preferred securities (the 
                   increase in net earnings is net of income tax expense
                   of $1,926,000)                                             3,012,977     4,901,507

                   Potential common shares issuable upon the exercise
                   of employee stock options (calculated using the
                   treasury stock method)                                             -       405,837

                  Net earnings per share, assuming full dilution            $43,068,513    37,461,011   $1.15

</TABLE>


          Item 2.   Management's  Discussion  and   Analysis  of  Financial
                    Condition and Results of Operations.

               The  following  discussion  addresses  material  changes  in
          results of operations for  the three month and six  month periods
          ended June 30,  1997, compared to  the three month and  six month
          periods ended  June 30,  1996, and  in financial condition  since
          December 31, 1996.  It is presumed that readers have read or have
          access to Devon's 1996 annual report on Form 10-K.

          Overview

               On  December  31, 1996,  Devon  acquired  all  of Kerr-McGee
          Corporation's North American onshore  oil and gas exploration and
          production business and properties (the "KMG-NAOS Properties") in
          exchange for  9,954,000  shares  of Devon  common  stock.    This
          transaction  added  approximately  62   million  barrels  of  oil
          equivalent ("Boe")  to Devon's year-end 1996  proved reserves, as
          well as 370,000 net undeveloped acres of leasehold.  The addition
          of the KMG-NAOS  Properties in the first quarter of  1997 was the
          primary  reason for  the changes  in Devon's  operational results
          between  the  1997  and  1996  second  quarter  and  year-to-date
          periods.

               Production  for  the  second  quarter  of  1997 totaled  5.1
          million Boe  of oil, gas and  natural gas liquids ("NGL").   This
          was an increase of 91% over the second quarter of 1996.  Revenues
          for the second quarter of 1997 were $69.7 million, an increase of
          87% over the prior  year's second quarter.  Net  earnings for the
          1997 quarter were  $14.8 million, or $0.46  per share.   The 1997
          net earnings were 119% above the  prior year's quarterly results.
          The  1997  per share  amount was  48%  above the  comparable 1996
          amount, with approximately 10  million more shares outstanding in
<F1>
          the 1997  period.   The cash margin1  for the  second quarter  of
          1997 also  increased significantly to $41.8  million, an increase
          of  101%  over the  1996 second  quarter's  cash margin  of $20.8
          million.

               Year-to-date production  from the  first six  months of 1997
          totaled  10.0 million Boe.   This was 91%  greater than the total
          for the first half of 1996.  Revenues for  the first half of 1997
                              

<F1>
          1  "Cash margin" equals Devon's total revenues  less cash expenses.
              Cash  expenses are all expenses other than  the non-cash  expenses
              of depreciation,  depletion  and  amortization  and deferred 
              income  tax expense.   Cash margin  is an  indicator which  is
              commonly  used in the  oil and  gas industry.   This margin
              measures  the net  cash which  is generated  by a  company's
              operations  during a  given period, without regard to the
              period such cash is actually  physically received or spent by
              the  company.  This margin  ignores the  non-operations effects
              on  a company's  activities as an  operator of oil  and gas
              wells.   Such  activities produce  net  increases  or decreases
              in temporary  cash funds  held  by the operator which  have no
              effect on  net earnings  of the  company.   Cash margin  should
              be  used as  a supplement  to,  and  not as  a  substitute  for,
              net  earnings  and  net cash  provided  by  operating activities 
              determined  in  accordance  with  generally  accepted  accounting
              principles  in analyzing Devon's results of operations and
              liquidity.
                 

          were $157.6 million, an increase of 121% over the comparable 1996
          period's revenues.  Net earnings for the first six months of 1997
          were  $40.1 million, or $1.25 per share.   The 1997 earnings were
          225% above the  1996 six-month total.  The 1997  per share amount
          was 123% above the comparable 1996 amount, with  approximately 10
          million more shares  outstanding in  the 1997 period.   The  cash
          margin  for the first half of 1997 was $98.4 million, an increase
          of  150% over  the first  half  of 1996's  cash  margin of  $39.4
          million.

          Results of Operations

               Total revenues  increased by $32.4  million, or  87%, in the
          second  quarter of 1997 compared  to the second  quarter of 1996,
          and by $86.2 million, or 121%, in the first half of 1997 compared
          to  the  same period  in 1996.    These increases  were primarily
          caused  by  substantial gains  in  oil,  gas  and  NGL  revenues.
          Combined oil, gas and NGL revenues increased by 84% in the second
          quarter of  1997,  and 119%  in  the first  half  of 1997.    The
          relative contributions of production and price changes are  shown
          below.   (Note: Unless otherwise  stated, all references  in this
          report  to dollar  amounts regarding Devon's  Canadian operations
          are expressed in U.S. dollars.)
<TABLE>
<CAPTION>
                                                                                Total
                                                    Three Months Ended                      Six Months Ended
                                                          June 30,                               June 30,  
                                             1997           1996        Change      1997           1996      Change
                 Production
                   <S>                     <C>             <C>           <C>      <C>           <C>           <C>
                   Oil (Bbls)              1,738,187       956,663       +82%     3,493,452     1,831,178     +91%
                   Gas (Mcf)              17,314,448     8,830,714       +96%    34,332,323    17,814,336     +93%
                   NGL (Bbls)                432,393       222,942       +94%       800,498       450,535     +78%
                   Oil, Gas and
<F1>
                     NGL (Boe)1            5,056,321     2,651,391       +91%    10,016,004     5,250,769     +91%

                 Revenues
                   Oil                   $32,060,026    19,507,458       +64%    69,590,006    35,652,252     +95%
                   Gas                    30,175,836    14,212,694      +112%    73,413,977    28,834,328    +155%
                   NGL                     5,523,964     3,023,069       +83%    11,327,885     5,990,870     +89%

                   Combined              $67,759,826    36,743,221       +84%   154,331,868    70,477,450    +119%

                 Average Prices
                   Oil (Per Bbl)              $18.44         20.39       -10%         19.92         19.47      +2%
                   Gas (Per Mcf)               $1.74          1.61        +8%          2.14          1.62     +32%
                   NGL (Per Bbl)              $12.78         13.56        -6%         14.15         13.30      +6%
                   Oil, Gas and NGL
<F1>
                     (Per Boe)1               $13.40         13.86        -3%         15.41         13.42     +15%

</TABLE>
<TABLE>
<CAPTION>
                                                                                          
                                                                              Domestic
                                                    Three Months Ended                     Six Months Ended
                                                          June 30,                               June 30,
                                              1997          1996        Change      1997          1996       Change

                 Production
                   <S>                     <C>             <C>           <C>      <C>          <C>            <C>
                   Oil (Bbls)              1,503,440       956,663       +57%     3,017,022    1,831,178      +65%
                   Gas (Mcf)              15,198,083     8,830,714       +72%    30,098,825   17,814,336      +69%
                   NGL (Bbls)                385,379       222,942       +73%       718,994      450,535      +60%
                   Oil, Gas and
<F1>
                     NGL (Boe)1            4,421,833     2,651,391       +67%     8,752,487    5,250,769      +67%

                 Revenues
                   Oil                   $27,761,317    19,507,458      +42%     60,216,142   35,652,252      +69%
                   Gas                    27,708,475    14,212,694      +95%     67,319,351   28,834,328     +133%
                   NGL                     4,790,391     3,023,069      +58%      9,981,159    5,990,870      +67%

                   Combined              $60,260,183    36,743,221      +64%    137,516,652   70,477,450      +95%

                 Average Prices
                   Oil (Per Bbl)              $18.47         20.39       -9%          19.96        19.47       +3%
                   Gas (Per Mcf)               $1.82          1.61      +13%           2.24         1.62      +38%
                   NGL (Per Bbl)              $12.43         13.56       -8%          13.88        13.30       +4%
                   Oil, Gas and NGL
<F1>
                     (Per Boe)1               $13.63         13.86      -2%           15.71        13.42      +17%

</TABLE>
<TABLE>
<CAPTION>
                                                                                          
                                                                        Canada
                                                 Three Months Ended               Six Months Ended
                                                       June 30,                        June 30,
                                              1997       1996      Change     1997       1996   Change

               Production
                   <S>                       <C>           <C>              <C>           <C>     <C>
                   Oil (Bbls)                234,747       -          NA    476,430       -       NA
                   Gas (Mcf)               2,116,365       -          NA  4,233,498       -       NA
                   NGL (Bbls)                 47,014       -          NA     81,504       -       NA
                   Oil, Gas and
<F1>
                     NGL (Boe)1              634,488       -          NA  1,263,517       -       NA

               Revenues
                   Oil                    $4,298,709       -          NA  9,373,864       -       NA
                   Gas                     2,467,361       -          NA  6,094,626       -       NA
                   NGL                       733,573       -          NA  1,346,726       -       NA

                   Combined               $7,499,643       -          NA 16,815,216       -       NA

               Average Prices
                   Oil (Per Bbl               $18.31       -          NA      19.68       -       NA
                   Gas (Per Mcf)               $1.17       -          NA       1.44       -       NA
                   NGL (Per Bbl)              $15.60       -          NA      16.52       -       NA
                   Oil, Gas and NGL
<F1>
                     (Per Boe)1               $11.82       -          NA      13.31       -       NA
                                    
<F1>
1  Gas  is converted to barrels  of oil equivalent ("Boe")  at the rate of six
   Mcf  per barrel of oil, based upon  the approximate relative energy content
   of natural gas  and oil, which  rate is not  necessarily indicative of  the
   relationship of  oil, gas and NGL  prices.  The respective  prices of these
   products are  affected by market and other  factors in addition to relative
   energy content.

</TABLE>
                  Oil Revenues.  Oil revenues  increased by $12.6  million, or
          64%, in the second quarter of 1997 compared to the same period of
          1996.  Production gains  of 782,000 barrels, or 82%,  added $15.9
          million of oil revenues  in the 1997  period.  This increase  was
          partially offset  by a  $3.3  million reduction  in oil  revenues
          caused by a $1.95 per barrel decrease in the average oil price.

               The KMG-NAOS  Properties were  responsible for  the majority
          of  the  increased oil  production.    These properties  produced
          755,000   barrels  of  oil   in  the  second   quarter  of  1997.
          Approximately 520,000 of  these barrels were produced in the U.S.
          and  another 235,000  barrels were produced  in Canada.   Devon's
          other domestic properties produced  983,000 barrels in the second
          quarter of 1997.  This  is an increase of 26,000 barrels,  or 3%,
          over the 957,000 barrels produced in the second quarter of 1996.

               Oil  revenues increased  by $33.9  million,  or 95%,  in the
          first   half  of  1997  compared  to  the  first  half  of  1996.
          Production  gains  of  1,662,000  barrels, or  91%,  added  $32.4
          million of oil revenues in  the 1997 period.  An increase  in the
          average price of  $0.45 per  barrel, or 2%,  added the  remaining
          $1.5 million of increased oil revenues.

               The  KMG-NAOS Properties  were the  primary  contributors to
          the   increased  oil  production.     These  properties  produced
          1,502,000  barrels  of  oil in  the  first  six  months of  1997.
          Approximately  1,026,000 of  these barrels  were produced  in the
          U.S., while  476,000 barrels  were produced  in Canada.   Devon's
          other domestic properties produced 1,991,000 barrels in the first
          half of 1997.   This is  an increase of  160,000 barrels, or  9%,
          over the 1,831,000 barrels produced in the first half of 1996.

               Gas  Revenues.  Gas  revenues increased by $16.0 million, or
          112%,  in the  second  quarter of  1997  compared to  the  second
          quarter of  1996.  An increase  in gas production of  8.5 Bcf, or
          96%, added $13.7 million  to the 1997 quarter's gas sales.  Also,
          an increase  in the average  gas price of  $0.13 per Mcf,  or 8%,
          added the remaining $2.3 million of increased gas revenues.

               The  KMG-NAOS Properties  were the  primary contributors  to
          the  increased production  volumes in  the 1997  quarter.   These
          properties produced 7.1  Bcf in the second quarter of  1997.  The
          KMG-NAOS Properties produced 5.0  Bcf in the U.S. and 2.1  Bcf in
          Canada.  Devon's coal seam gas properties produced 4.5 Bcf in the
          second quarter of 1997 compared to 4.3 Bcf in the second  quarter
          of 1996.  Devon's  other domestic properties produced 5.7  Bcf in
          the 1997  period compared  to 4.5  Bcf in  the second quarter  of
          1996.  Of this 1.2 Bcf increase, 0.5 Bcf resulted from the second
          quarter receipt  of out-of-period gas revenues  from certain non-
          operated properties in southern Oklahoma.   The operator of these
          properties had incorrectly disbursed prior periods' revenues from
          these wells.   Production from  Permian Basin wells  completed in
          the second  half of 1996 contributed  0.5 Bcf of the  1997 second
          quarter increase, and the Worland properties in Wyoming increased
          by 0.2 Bcf in the 1997 quarter.

               The coal seam gas properties  averaged $1.74 per Mcf  in the
          second quarter of 1997 compared to $1.33 in the second quarter of
          1996.    Devon's  domestic conventional  gas  properties averaged
          $1.86 per  Mcf in the 1997  quarter compared to $1.88  per Mcf in
          the 1996 quarter.  Devon's Canadian gas production averaged $1.17
          per Mcf in the 1997 quarter.

               Gas revenues  increased by  $44.6 million,  or 155%,  in the
          first  half of  1997 compared  to the  same period  of 1996.   An
          increase  in  gas production  of 16.5  Bcf,  or 93%,  added $26.7
          million  of gas  sales in the  1997 period.   An  increase in the
          average price of $0.52 per Mcf, or 32%, added the remaining $17.9
          million of increased gas sales.

               The KMG-NAOS  Properties were  responsible for the  majority
          of the increased gas production.  These  properties produced 14.9
          Bcf in  the first half of  1997.  Approximately 10.7  Bcf of this
          production  was  in the  U.S., while  the  remaining 4.2  Bcf was
          produced in  Canada.  Devon's  coal seam gas  properties produced
          8.6  Bcf in  the first  six months  of 1997  compared to  9.0 Bcf
          produced  in  the first  half of  1996.   Devon's  other domestic
          properties produced 10.9 Bcf  in the first half of  1997 compared
          to 8.8  Bcf in  the  comparable 1996  period.   Of  this 2.1  Bcf
          increase,  the out-of-period  volumes discussed  above added  0.5
          Bcf, production from Permian Basin wells completed  in the second
          half of 1996 contributed 1.1 Bcf and the Worland properties added
          0.5 Bcf.

               The coal seam gas properties  averaged $2.06 per Mcf  in the
          first half of 1997 compared to $1.36 per Mcf in the first half of
          1996.   Devon's  domestic  conventional  gas properties  averaged
          $2.31 per Mcf in the 1997 period compared to $1.88 per Mcf in the
          1996 period.  Devon's Canadian  gas production averaged $1.44 per
          Mcf in the first half of 1997.

               NGL Revenues.   NGL revenues increased  by $2.5  million, or
          83%, in the second quarter of 1997 compared to the second quarter
          of 1996.   An increase in production of 209,000  barrels, or 94%,
          added  $2.8 million  to the  1997 quarter's  revenues.   This was
          partially offset by  a $0.3 million reduction in  revenues caused
          by a $0.78 per barrel decrease in the average price.

               The  KMG-NAOS Properties  accounted for  150,000 barrels  of
          the total  209,000 barrels increase in production.   The KMG-NAOS
          Properties  produced  103,000  barrels  in the  U.S.  and  47,000
          barrels in Canada.

               NGL revenues  increased  by  $5.3 million,  or  89%, in  the
          first  half of  1997 compared  to the  same period  of 1996.   An
          increase in  production of  350,000 barrels,  or 78%, added  $4.6
          million  to the  1997  period's revenues.    An increase  in  the
          average  price  of  $0.85  per barrel  added  the  remaining $0.7
          million of increased NGL revenues.

               The  KMG-NAOS  Properties produced  244,000  barrels  in the
          first half of 1997.  These properties produced 162,000 barrels in
          the U.S. and 82,000 barrels in Canada.

               Other Revenues.   Other revenues increased by $1.3  million,
          or 241%, in the second quarter of 1997.  The addition of the KMG-
          NAOS Properties  added $1.0  million of revenues  from processing
          third party natural  gas.  The investment of excess  cash on hand
          in the 1997 quarter added $0.4 million of interest income.

               Other revenues increased by  $2.4 million, or  270%, in  the
          first  half of  1997.   Processing  of  third party  natural  gas
          related to the KMG-NAOS Properties accounted for  $1.6 million of
          the  increase.   Another $0.6  million of  the increase  in other
          revenues was  attributable to interest income earned in the first
          six months of 1997.

               Production  and   Operating   Expenses.      Components   of
          production and operating expenses in the second quarter and first
          half of 1997 increased or decreased compared to 1996  as shown in
          the tables below.

<TABLE>
<CAPTION>
                                                                                        Total
                                                              Three Months Ended                         Six Months Ended
                                                                    June 30,                                  June 30,
                                                       1997            1996      Change            1997         1996      Change

                        Expenses
                           Recurring operations and
                             <S>                   <C>              <C>          <C>            <C>          <C>           <C>
                             maintenance expenses  $13,713,587      6,833,763    +101%          28,574,806   13,380,005    +114%
                           Well workover expenses      814,697        921,311     -12%           1,766,115    1,793,248      -2%
                           Production taxes          3,745,547      2,345,996     +60%           9,055,391    4,487,913    +102%

                              Total production and
                                operating expenses $18,273,831     10,101,070     +81%          39,396,312   19,661,166    +100%

                        Expenses Per Boe
                           Recurring operations and
                             maintenance expenses        $2.71           2.58      +5%                2.85         2.55     +12%
                           Well workover expenses         0.16           0.35     -54%                0.18         0.34     -47%
                           Production taxes               0.74           0.88     -16%                0.90         0.85      +6%

                              Total production and
                                operating expenses       $3.61           3.81      -5%                3.93         3.74      +5%
</TABLE>
<TABLE>
<CAPTION>
                                                                                       Domestic
                                                                Three Months Ended                       Six Months Ended
                                                                      June 30,                                June 30,
                                                       1997             1996     Change            1997         1996       Change

                        Expenses
                           Recurring operations and
                             <S>                   <C>              <C>           <C>           <C>          <C>            <C>
                             maintenance expenses  $12,453,033      6,833,763     +82%          25,664,160   13,380,005     +92%
                           Well workover expenses      642,130        921,311     -30%           1,560,690    1,793,248     -13%
                           Production taxes          3,743,006      2,345,996     +60%           8,918,077    4,487,913     +99%

                              Total production and
                                operating expenses $16,838,169     10,101,070     +67%          36,142,927   19,661,166     +84%

                        Expenses Per Boe
                           Recurring operations and
                             maintenance expenses        $2.82           2.58      +9%                2.93         2.55     +15%
                           Well workover expenses         0.14           0.35     -60%                0.18         0.34     -47%
                           Production taxes               0.85           0.88      -3%                1.02         0.85     +20%

                              Total production and
                                operating expenses       $3.81           3.81      --                 4.13         3.74     +10%
</TABLE>
<TABLE>
<CAPTION>

                                                                                       Canada
                                                            Three Months Ended                         Six Months Ended
                                                                   June 30,                                 June 30,
                                                       1997                1996    Change          1997            1996     Change

                        Expenses
                           Recurring operations and
                             <S>                    <C>                     <C>     <C>          <C>                  <C>     <C>
                             maintenance expenses   $1,260,554              -       NA           2,910,646            -       NA
                           Well workover expenses      172,567              -       NA             205,425            -       NA
                           Production taxes              2,541              -       NA             137,314            -       NA

                              Total production and
                                operating expenses  $1,435,662              -       NA           3,253,385            -       NA

                        Expenses Per Boe
                           Recurring operations and
                             maintenance expenses        $1.99              -       NA                2.30            -       NA
                           Well workover expenses         0.27              -       NA                0.16            -       NA
                           Production taxes                 -               -       NA                0.11            -       NA

                              Total production and
                                operating expenses       $2.26              -       NA                2.57            -       NA
</TABLE>

               Recurring operations and maintenance  expenses increased  by
          $6.9 million,  or 101%,  in  the second  quarter  of 1997.    The
          addition of the KMG-NAOS Properties accounted for $4.8 million of
          the increased expenses.  Expenses on wells drilled since June 30,
          1996,  comprised  the  majority  of the  remaining  $2.1  million
          increase.

               Production taxes increased  by $1.4 million, or 60%, in  the
          second  quarter of 1997.   This increase was  attributable to the
          84% increase in  combined oil, gas and  NGL revenues in the  1997
          period.

               Recurring expenses per Boe were up  by $0.13, or 5%, in  the
          second  quarter of  1997 compared  to the  same quarter  of 1996.
          This increase  was caused by the  reduction in the coal  seam gas
          properties' share  of total production.   The recurring operating
          costs  per Boe for these  coal seam gas  properties are extremely
          low ($0.35  per Boe in the  second quarter of 1997  and $0.27 per
          Boe in the  second quarter of 1996).  However, as production from
          these   properties   declined   and   production   from   Devon's
          conventional properties  increased in the 1997  quarter, the coal
          seam  gas properties'  percentage of  overall production  dropped
          from 27%  in the 1996  quarter to only  15% in the  1997 quarter.
          The result  is that more of Devon's production in the 1997 period
          was attributable to its conventional gas properties, which have a
          higher operating cost  per Boe  than the low-cost  coal seam  gas
          properties.   The recurring  operating costs per  Boe for Devon's
          conventional properties actually dropped to $3.12 per Boe in  the
          second quarter of 1997  from $3.44 per Boe in  the second quarter
          of 1996.  Even though the coal seam costs per Boe rose only $0.08
          and the conventional properties'  costs per Boe dropped  by $0.32
          in the 1997 quarter,  the overall cost per Boe  increased because
          of the shift in the production percentage toward the conventional
          properties.

               Recurring operations  and maintenance  expenses increased by
          $15.2 million, or 114%, in the first half of 1997.   The KMG-NAOS
          Properties accounted for $11.8 million of the increased expenses.
          Most  of the remaining $3.4 million of increased expenses was due
          to wells which were drilled subsequent to June 30, 1996.

               Production taxes increased  by $4.6 million, or 102%, in the
          first six months of 1997.  This  increase was attributable to the
          119%  increase in combined oil, gas  and NGL revenues in the 1997
          period.

               Recurring expenses per Boe were up by  $0.30, or 12%, in the
          first half  of 1997.  As explained above in the discussion of the
          quarterly increase, the increase  in the percentage of production
          attributable  to the conventional properties is  the cause of the
          increase in the costs per Boe.  Expenses of Devon's coal seam gas
          properties were $0.36  per Boe in the first half of 1997 compared
          to $0.32 per Boe  in the first half of 1996.  Expenses of Devon's
          conventional  properties were $3.27  per Boe  in the  1997 period
          compared to  $3.44 per Boe in  the 1996 period.   Even though the
          per unit expenses increased only $0.04 per Boe for the coal  seam
          properties and  decreased by $0.17  per Boe for  the conventional
          properties, Devon's  overall cost  per Boe  increased.   This was
          caused  by  the  drop  in  the   percentage  of  Devon's  overall
          production  attributable  to  the  extremely low-cost  coal  seam
          properties.    Such  properties  accounted for  29%  of  combined
          production  in the first half of 1996,  but they were only 14% of
          the 1997 period's production.

               Depreciation,  Depletion and  Amortization Expense ("DD&A").
          Oil and gas property related DD&A increased $9.9 million, or 98%,
          from $10.0 million in the second quarter of 1996 to $19.9 million
          in the second quarter of 1997.  The increase in combined oil, gas
          and NGL production of 2.4 million Boe, or 91%, accounted for $9.1
          million of the increased DD&A.  The remaining $0.8 million of the
          increased expense was caused by an increase in the DD&A rate from
          $3.78 per Boe  in the 1996 quarter  to $3.94 per Boe  in the 1997
          quarter.

               Oil and gas  property related DD&A increased $19.1  million,
          or  97%, from $19.7  million in the  first half of  1996 to $38.8
          million in the first half of 1997.  The increase in combined oil,
          gas and NGL production of 4.8 million Boe, or 91%, accounted  for
          $17.9  million of the increased DD&A.  The remaining $1.2 million
          of the increased expense  was caused by an  increase in the  DD&A
          rate from $3.76  per Boe in the first  half of 1996 to  $3.87 per
          Boe in the first half of 1997.

               General and Administrative Expenses ("G&A").   G&A increased
          $1.2 million, or  51%, in the second  quarter of 1997.   Employee
          salaries  and related  overhead  costs,  including insurance  and
          pension  expense, increased  $1.5  million in  the 1997  quarter.
          This  increase  was primarily  related  to  the approximately  70
          permanent and  15 temporary  personnel added at  Devon's Oklahoma
          City and  Calgary offices as a  result of the  acquisition of the
          KMG-NAOS  Properties.   The  expansion in  personnel also  caused
          office-related  costs  such  as  rent,  dues,  travel,  supplies,
          telephone,  etc.,  to  increase by  $0.5  million  in  the second
          quarter of 1997.

               The higher salary, overhead and office  costs were partially
          offset by an increase in Devon's overhead reimbursements.  As the
          operator of a property,  Devon receives these reimbursements from
          the  property's  working  interest  owners.   Devon  records  the
          reimbursements as reductions to G&A.  Due to the addition of  the
          KMG-NAOS  Properties,  many  of  which  Devon  operates,  Devon's
          overhead reimbursements  increased by $0.9 million  in the second
          quarter of 1997.

               The  amount of  G&A  capitalized pursuant  to the  full cost
          method  of accounting for  oil and gas  properties increased from
          $0.7 million in the second quarter of 1996 to $0.9 million in the
          second quarter of 1997.

               G&A  increased $1.7  million, or 38%,  in the  first half of
          1997.   Employee  salaries and  related overhead  costs increased
          $2.7  million  due  to  the   expansion  in  personnel  from  the
          acquisition  of the  KMG-NAOS  Properties.   This expansion  also
          caused office-related  costs to increase  by $0.9 million  in the
          first half of 1997.  The higher salary, overhead and office costs
          were  partially  offset by  a  $1.9 million  increase  in Devon's
          overhead reimbursements.

               Capitalized G&A  increased from  $1.3 million  in the  first
          half of 1996 to $1.8 million in the first half of 1997.

               Interest Expense.  Interest  expense decreased $2.4 million,
          or  99%,  in the  second quarter  of  1997 due  to  a substantial
          reduction  in the  average debt  outstanding.   The  average debt
          balance  outstanding dropped  from $152.4  million in  the second
          quarter of  1996 to zero  in the second  quarter of 1997.   Devon
          issued   $149.5  million  of  6.5%  Trust  Convertible  Preferred
          Securities ("TCP  Securities") in July, 1996.   The proceeds from
          this issuance, along with cash flow from operations, were used to
          substantially  retire  Devon's long-term  bank  debt.   (The  TCP
          Securities are discussed further below.)

               Interest  expense decreased  $4.8 million,  or  97%, in  the
          first half of 1997.   This reduction was caused by  a drop in the
          average debt balance outstanding from $151.1 million in the first
          half of 1996 to only  $1.5 million in the first half of 1997.  As
          explained above,  the issuance  of  the TCP  Securities in  July,
          1996, was the primary  reason for the reduction in  Devon's long-
          term bank debt.

               Distributions on  Preferred Securities of Subsidiary  Trust.
          As mentioned in the above discussions of interest expense, Devon,
          through  an   affiliate,  issued  $149.5  million   of  6.5%  TCP
          Securities in  July, 1996.   Distributions on the  TCP Securities
          accrue  at the rate of 1.625% per  quarter.  Distributions on the
          TCP  Securities were $2.4 million  in the second  quarter of 1997
          and  $4.9 million  in the  first  half of  1997.   There were  no
          distributions in  either of the  comparable 1996 periods,  as the
          TCP Securities were not issued until the third quarter of 1996.

               Income Taxes.   During interim  periods, income tax  expense
          is  based  on the  estimated effective  tax  rate for  the entire
          fiscal  year.   The estimated  effective tax  rate in  the second
          quarter and first half of 1997 was 40%, compared to 43% estimated
          in  the second  quarter and  first half  of  1996.   However, the
          eventual actual tax rate  for the year 1996  was reduced to  41%,
          which was  only slightly higher  than the current  estimated rate
          for 1997.

               Statement  of   Financial  Accounting   Standards  No.  109,
          "Accounting for  Income Taxes"  ("Statement 109"),  requires that
          the  tax benefit of available tax carryforwards be recorded as an
          asset to the extent  that management assesses the utilization  of
          such carryforwards to be "more likely than not".  When the future
          utilization of  some portion  of the carryforwards  is determined
          not to be "more likely  than not", Statement 109 requires that  a
          valuation  allowance  be  provided  to reduce  the  recorded  tax
          benefits from such assets.

               Included  as  deferred  tax assets  at  June 30,  1997, were
          approximately $11 million of various tax carryforwards.  Of  this
          amount,  $5 million  were  for net  operating loss  carryforwards
          which expire between 1998 and 2008.  The remaining $6 million  of
          carryforward benefits related to depletion and minimum tax credit
          carryforwards which do not have expiration dates.  

               To assess the likelihood of  realizing tax benefits from the
          future utilization of  these carryforwards, management considered
          four  primary factors:   (1) estimates  of future  yearly taxable
          income  which Devon  is expected  to generate;  (2) the  level of
          future taxable income necessary to utilize the carryforwards; (3)
          the  expiration dates,  if any,  of such  carryforwards, and  (4)
          certain   limitations   on   the  annual   utilization   of   the
          carryforwards as set forth by federal tax regulations.

               Based upon current estimates  of future production,  average
          prices  and  pre-tax expenses,  management believes  that taxable
          income  during the  carryforward  periods will  be sufficient  to
          utilize  all of  the  carryforwards currently  available.   Devon
          expects   the  tax   benefits   from  its   net  operating   loss
          carryforwards to be utilized between 1997 and 1999.  This is well
          before  the  2006  expiration  date  for  the  majority  of  such
          benefits.

               Management's  assessment  of  the   future  utilization   of
          Devon's deferred  tax assets is  based upon current  estimates of
          taxable income to be  generated in 1997 and beyond.   Significant
          changes in such estimates  from variables such as future  oil and
          gas  prices or capital expenditures could alter the timing of the
          eventual utilization of such  assets.  There can be  no assurance
          that Devon will generate any specific level of continuing taxable
          earnings.  

          Capital Expenditures, Capital Resources and Liquidity

               The following  discussion of  capital expenditures,  capital
          resources and liquidity  should be read  in conjunction with  the
          consolidated  statements of cash flows included in Part 1, Item 1
          elsewhere herein.

               Capital Expenditures.   Cash  used for capital  expenditures
          increased 22%  from $42.6 million  in the first  half of 1996  to
          $51.9 million in  the first  half of 1997.   Approximately  $50.0
          million  was  spent  in  1997  on  acquisition,  exploration  and
          development costs,  compared to $42.2 million in the 1996 period.
          The  1996  total  included  $7.1 million  to  acquire  additional
          interests in the Worland properties in Wyoming.

               Capital  Resources and  Liquidity.    Net cash  provided  by
          operating activities ("operating cash  flow") continued to be the
          primary  source of  capital and  liquidity in  the first  half of
          1997.   Operating cash flow in  the first six months  of 1997 was
          $93.8 million compared to  $35.1 million in the first  six months
          of 1996.

               Because  of the  amount of operating cash  flow generated in
          the first half  of 1997, Devon's credit lines were  not used as a
          significant source of capital.  Long-term debt at the end of 1996
          was $8 million.  During the first quarter of 1997, operating cash
          flow was utilized to eliminate this debt balance.

               Devon's domestic  long-term credit  facilities were  amended
          in the  first half of  1997.   At Devon's request,  the borrowing
          base  of the  facilities was  lowered from  $260 million  to $208
          million.  This will lower Devon's future cost of  borrowings.  If
          future capital needs arise, Devon believes that its lenders would
          increase its domestic credit lines to approximately $500 million.
          The  amendments to the credit  agreements also lowered the annual
          facilities fee from  0.25% of  the borrowing base  to 0.20%,  and
          extended  the  final  maturity  date  for  $200  million  of  the
          facilities  to  August  31, 2003.    The  maturity  date for  the
          remaining  $8 million  of credit  facilities is August  31, 2000.
          Also, the  amendments reduced Devon's minimum  tangible net worth
          required by the lenders.

               Impact  of  Recently  Issued Accounting  Standards  Not  Yet
          Adopted.   In February, 1997, the  Financial Accounting Standards
          Board issued Statement of Financial Accounting Standards No. 128,
          "Earnings  Per Share." SFAS  No. 128  is effective  for financial
          statements issued for periods ending after December 15, 1997, and
          restatement of prior-period earnings  per share data is required.
          The new standard  will not apply to  Devon's financial statements
          until the  fourth quarter  of 1997.    SFAS No.  128 revises  the
          current calculation methods and presentation of primary and fully
          diluted  earnings per share.  Devon has reviewed the requirements
          of SFAS No.  128, and  has concluded  that they  will not  affect
          Devon's  historical primary  earnings per  share data.   However,
          SFAS No. 128 will lower Devon's historical fully diluted earnings
          per  share amounts  by $0.01 per  share in each  of the following
          periods: the year 1994, the year 1995, the second quarter of 1996
          and the third quarter of 1996.

          Revisions to 1997 Estimates

               The  1996 annual report on  Form 10-K, and  a Form 8-K filed
          on February  11, 1997, contained  forward-looking information for
          the  year  1997.   Where  necessary,  that information  has  been
          revised  in  the following  discussion. The revised forward-looking
          statements provided in this discussion are based on management's
          examination of historical operating trends, the December 31, 1996
          reserve reports of independent petroleum consultants LaRoche Petro-
          leum Consultants, Ltd. and AMH Group Ltd., data in Devon's files, 
          other data available from third parties, and actual results for
          the first half of 1997.  Devon cautions that its future oil, gas
          and NGL production, revenues and expenses are subject to all of the
          risks and uncertainties normally incident to the exploration for and
          development and production of oil and gas.  These risks include,
          but are not limited to, environmental risks, drilling risks,
          regulatory changes, the uncertainty inherent in estimating future
          oil and gas production or reserves, and other risks as outlined
          below.  The scope of Devon's operations increased significantly
          with the KMG-NAOS transaction.  This increases the margin of error
          inherent in estimating Devon's 1997 production volumes, prices
          and expenses.  Also, the financial results for Devon's new Canadian
          operations, obtained in the KMG-NAOS transaction, are subject to 
          currency exchange rate risks.  

               Assumptions and Risks for Price and Production Estimates.  
          Prices for oil, natural gas and NGLs are determined primarily by
          prevailing market conditions.  Market conditions for these products
          are influenced by regional and world-wide economic growth, weather
          and other substantially variable factors.  These factors are beyond
          Devon's control and are difficult to predict.  Over 90% of Devon's
          revenues are attributable to sales of these three commodities.
          Consequently, the company's financial results and resources are
          highly influenced by this price volatility.

               Estimates for Devon's future production of oil, natural gas
          and NGLs are based on the assumption that market demand and prices
         for oil and gas will continue at levels that allow for profitable 
         production of these products.  Although Devon's management believes
         these assumptions to be reasonable,  there can be no assurance of
         such stability.

               Certain of Devon's individual oil and gas properties are
         sufficiently significant as to have a material impact on the 
         company's overall financial results.  With respect to oil production,
         these properties include the West Red Lake Field and the Grayburg-
         Jackson Unit, both in southeast New Mexico.  The company's interest
         in coal seam natural gas in the Northeast Blanco Unit and the 32-9
         Unit can have a substantive effect on overall gas production.

              The production, transportation and marketing of oil, natural
         gas and NGLs are complex processes which are subject to disruption
         due to transportation and processing availability, mechanical 
         failure, human error, meteorological events and numerous other
         factors.  The following forward-looking statements were prepared
         assuming demand, curtailment, producibility and general market
         conditions for Devon's oil, natural gas and NGLs for the last half
         of 1997 will be substantially similar to those of 1996, unless
         otherwise noted.

              Discussed below are those areas where revisions have been made
         to the 1997 estimates originally included in the aforementioned Form
         10-K and Form 8-K.

               Oil Production and Relative Prices.  Oil production for  the
          first six months of 1997 has slightly exceeded the upper range of
          Devon's original  estimate for the first  half of the year.   The
          original  estimate for the full year 1997 was between 5.9 million
          and  6.9  million  barrels.    Based  on  the  first  half-year's
          production, Devon has revised its estimate upward to  between 6.5
          million and 7.1 million barrels.

               The original  estimate for  Devon's 1997  average oil  price
          was  between $0.05  below West  Texas Intermediate  posted prices
          ("WTI")  to $0.20  above WTI.   For the  first six  months of the
          year, Devon's average  oil price  was $0.37 above  WTI.   Certain
          contracts which contributed toward the  higher price in the first
          six  months  have expired  and  been  replaced with  lower-priced
          contracts.   Therefore,  Devon  does not  expect its  average oil
          price for the last six months to exceed WTI by the same amount as
          in the  first half of the  year.  However, because  of the higher
          price  realized in the first six months, Devon has revised upward
          its estimate for  the full  year to between  $0.15 above WTI  and
          $0.30 above WTI.

               Gas  Production  and   NGL  Production.    Devon  originally
          estimated  that its 1997 gas production would be between 64.0 Bcf
          and 75.0 Bcf,  and that its NGL  production would be  between 1.1
          million and 1.3 million barrels.  Certain of the gas wells on the
          KMG-NAOS Properties  have produced  higher quantities  of liquids
          than originally estimated.   The gas containing  these liquids is
          processed,  with the liquids  stripped and  sold as  NGL volumes.
          This has caused  the residual  volumes of natural  gas sold  from
          these wells to  be less  than originally estimated,  but the  NGL
          volumes have been greater  than anticipated.  As a  result, Devon
          is reducing its 1997 estimate of gas production to between 65 Bcf
          and 71 Bcf, and is increasing its 1997 estimate of NGL production
          to between 1.4 million and 1.6 million barrels.

               Income Taxes.   Devon originally estimated  that the current
          portion  of its  1997  income tax  expense  would be  between  $9
          million  and $13 million.  An upward revision to expected pre-tax
          earnings for the year  has caused the current income  tax expense
          estimate  to also  be  revised to  between  $11 million  and  $15
          million.   The original estimate of Devon's total income tax rate
          of between 38% and 42% has not been revised.

<PAGE>


                      DEVON ENERGY CORPORATION AND SUBSIDIARIES
                      Notes to Consolidated Financial Statements




          Part II.  Other Information

               Item 1.   Legal Proceedings

                    None

               Item 2.   Changes in Securities

                    None

               Item 3.   Defaults Upon Senior Securities

                    None

               Item 4.   Submission  of  Matters  to  a  Vote  of  Security
          Holders

               (a)  The Company's  annual meeting of  shareholders was held
                    in Oklahoma City, Oklahoma at 11:00 a.m. local time, on
                    Wednesday, May 21, 1997.

               (b)  Proxies  for the  meeting  were solicited  pursuant  to
                    Regulation  14  under the  Securities  Exchange  Act of
                    1934,  as  amended.    There  was  no  solicitation  in
                    opposition to the nominees for election as directors as
                    listed  in the  proxy statement  and all  nominees were
                    elected.

               (c)  Out of  a total of  32,141,295 shares  of the Company's
                    common   stock  outstanding   and  entitled   to  vote,
                    29,524,001 shares were present at the meeting in person
                    or by  proxy, representing approximately  92 percent of
                    the  total  outstanding.   Matters  voted  upon  at the
                    meeting were as follows:

                    (i)  Election  of  three  directors  to  serve  on  the
                         Company's board of directors until the 2000 annual
                         meeting of shareholders.  The vote tabulation with
                         respect to each nominee was as follows:
<TABLE>
<CAPTION>
                             Nominee                  For    Authority Withheld

                         <S>                      <C>            <C>
                         Thomas F. Ferguson       29,403,976     120,025
                         J. Larry Nichols         29,414,728     109,273
                         Lawrence H. Towell       29,403,152     120,849
</TABLE>

                    (ii) The adoption of the Devon Energy Corporation  1997
                         Stock  Option  Plan  was  approved by  a  vote  of
                         26,757,156 shares for,  1,443,963 shares  against,
                         94,033 shares abstaining and 1,228,849 broker non-
                         votes.

               Item 5.   Other Information

                         None

               Item 6.   Exhibits and Reports on Form 8-K

               (a)       Exhibits  required by Item  601 of  Regulation S-K
          are as follows:

                   Exhibit
                     No.  

                    2.1  Agreement  and Plan  of  Merger among  Registrant,
                         Devon  Energy   Corporation  (Nevada),  Kerr-McGee
                         Corporation,  Kerr-McGee  North  American  Onshore
                         Corporation  and  Kerr-McGee Canada  Onshore Ltd.,
                         dated October 17, 1996 (incorporated  by reference
                         to  Addendum  A to  Registrant's  definitive proxy
                         statement for  a special meeting  of shareholders,
                         filed on November 6, 1996).

                    3.1  Registrant's  Certificate   of  Incorporation,  as
                         amended (incorporated by reference to Exhibit B to
                         Registrant's  definitive  Proxy Statement  for its
                         1995 Annual Meeting of Shareholders filed on April
                         21, 1995).

                    3.2  Registrant's    Certificate   of    Amendment   of
                         Certificate  of   Incorporation  (incorporated  by
                         reference  to  Exhibit 2  to  Registrant's Current
                         Report on Form 8-K dated December 31, 1996).

                    3.3  Registrant's Bylaws (incorporated by  reference to
                         Exhibit 3.2 to Registrant's Registration Statement
                         on Form 8-B filed on June 7, 1995).

                    4.1  Form of Common  Stock Certificate (incorporated by
                         reference   to   Exhibit   4.1   to   Registrant's
                         Registration Statement on  Form 8-B filed  on June
                         7, 1995).

                    4.2  Rights  Agreement between Registrant and The First
                         National Bank of Boston (incorporated by reference
                         to  Exhibit  4.2   to  Registrant's   Registration
                         Statement on Form 8-B filed on June 7, 1995).

                    4.3  First  Amendment  to   Rights  Agreement   between
                         Registrant and  The First National  Bank of Boston
                         dated October 16, 1996 (incorporated  by reference
                         to Exhibit  H-1  to  Addendum  A  to  Registrant's
                         definitive proxy  statement for a  special meeting
                         of shareholders, filed on November 6, 1996).

                    4.4  Second  Amendment  to  Rights   Agreement  between
                         Registrant and the First National Bank of  Boston,
                         dated December 31, 1996 (incorporated by reference
                         to Exhibit 4.2  to Registrant's Current  Report on
                         Form 8-K dated December 31, 1996).

                    4.5  Certificate  of Designations  of  Series A  Junior
                         Participating   Preferred   Stock  of   Registrant
                         (incorporated  by  reference  to  Exhibit  3.3  to
                         Registrant's  Registration  Statement on  Form 8-B
                         filed on June 7, 1995).

                    4.6  Certificate  of  Trust  of Devon  Financing  Trust
                         [incorporated  by  reference  to  Exhibit  4.5  to
                         Amendment  No.  1  to   Registrant's  Registration
                         Statement on Form S-3 (No. 333-00815)].

                    4.7  Amended and Restated Declaration of Trust of Devon
                         Financing Trust  dated as of  July 3, 1996,  by J.
                         Larry Nichols, H. Allen Turner, William T. Vaughn,
                         The Bank of  New York (Delaware)  and The Bank  of
                         New York as Trustees and the Registrant as Sponsor
                         [incorporated  by  reference  to  Exhibit  4.6  to
                         Amendment  No.  1  to   Registrant's  Registration
                         Statement on Form S-3 (No. 333-00815)].  

                    4.8  Indenture dated  as of  July 3, 1996,  between the
                         Registrant and The Bank of New  York [incorporated
                         by reference to Exhibit 4.7 to Amendment  No. 1 to
                         Registrant's  Registration  Statement on  Form S-3
                         (No. 333-00815)].

                    4.9  First Supplemental Indenture  dated as of July  3,
                         1996, between  the Registrant and The  Bank of New
                         York [incorporated by reference to Exhibit  4.8 to
                         Amendment  No.  1  to   Registrant's  Registration
                         Statement on Form S-3 (No. 333-00815)].

                    4.10 Form  of 6  1/2% Preferred  Convertible Securities
                         (included as Exhibit A-1 to Exhibit 4.5 above).

                    4.11 Form  of  6 1/2%  Convertible  Junior Subordinated
                         Debentures (included in Exhibit 4.7 above).

                    4.12 Preferred  Securities  Guarantee  Agreement  dated
                         July  3, 1996,  between Registrant,  as Guarantor,
                         and The  Bank of New York,  as Preferred Guarantee
                         Trustee [incorporated by reference to Exhibit 4.11
                         to  Amendment No.  1 to  Registrant's Registration
                         Statement on Form S-3 (No. 333-00815)].

                    4.13 Stock Rights  and Restrictions Agreement  dated as
                         of December 31, 1996, between Registrant and Kerr-
                         McGee  Corporation  (incorporated by  reference to
                         Exhibit 4.3 to Registrant's Current Report on Form
                         8-K dated December 31, 1996).

                    4.14 Registration Rights Agreement, dated  December 31,
                         1996, by  and  between Registrant  and  Kerr-McGee
                         Corporation (incorporated by reference  to Exhibit
                         4.4  to Registrant's  Current Report  on Form  8-K
                         dated December 31, 1996).

                    10.1 Credit  Agreement  dated  August 30,  1996,  among
                         Devon  Energy  Corporation (Nevada),  as Borrower,
                         the   Registrant   and   Devon  Energy   Operating
                         Corporation, as Guarantors, NationsBank  of Texas,
                         N.A., as  Agent, and  NationsBank of  Texas, N.A.,
                         Bank One, Texas, N.A., Bank of Montreal, and First
                         Union National Bank of North  Carolina, as Lenders
                         (incorporated  by  reference  to  Exhibit  10.1 to
                         Registrant s Quarterly Report on Form 10-Q for the
                         quarter ended September 30, 1996).

                    10.2 First Amendment,  dated March 15, 1997,  to Credit
                         Agreement among Devon Energy Corporation (Nevada),
                         as   Borrower,   the  Registrant,   as  Guarantor,
                         NationsBank   of  Texas,   N.A.,  as   Agent,  and
                         NationsBank of Texas, N.A., Bank One, Texas, N.A.,
                         Bank of Montreal and  First Union National Bank of
                         North  Carolina,  as   Lenders  (incorporated   by
                         reference   to   Exhibit   10.2  to   Registrant's
                         Quarterly  Report  on Form  10-Q  for the  quarter
                         ended March 31, 1997).

                    10.3 Devon  Energy Corporation  1988 Stock  Option Plan
                         [incorporated  by reference  to  Exhibit  10.4  to
                         Registrant's  Registration  Statement on  Form S-4
                         (No. 33-23564)].*

                    10.4 Devon  Energy Corporation  1993 Stock  Option Plan
                         (incorporated   by  reference  to   Exhibit  A  to
                         Registrant's Proxy Statement  for the 1993  Annual
                         Meeting of Shareholders filed on May 6, 1993).*

                    10.5 Devon  Energy Corporation  1997 Stock  Option Plan
                         (incorporated  by   reference  to  Exhibit   A  to
                         Registrant's  Proxy Statement for  the 1997 Annual
                         Meeting of Shareholders filed on April 3, 1997).*

                    10.6 Severance Agreement among Devon Energy Corporation
                         (Nevada),  Registrant  and Mr.  J.  Larry Nichols,
                         dated December 3,  1992 (incorporated by reference
                         to Exhibit  10.10 to Registrant's  Amendment No. 1
                         to Annual  Report on Form 10-K for  the year ended
                         December 31, 1992).*

                    10.7 Severance Agreement among Devon Energy Corporation
                         (Nevada),  Registrant and  Mr.  J. Michael  Lacey,
                         dated December 3, 1992 (incorporated  by reference
                         to Exhibit  10.12 to Registrant's  Amendment No. 1
                         to Annual Report  on Form 10-K for  the year ended
                         December 31, 1992).*

                    10.8 Severance Agreement among Devon Energy Corporation
                         (Nevada),  Registrant  and  Mr.  H.  Allen Turner,
                         dated  December 3, 1992 (incorporated by reference
                         to Exhibit  10.13 to Registrant's  Amendment No. 1
                         to Annual Report  on Form 10-K for the  year ended
                         December 31, 1992).*

                    10.9 Severance Agreement among Devon Energy Corporation
                         (Nevada),  Registrant  and Mr.  Darryl  G. Smette,
                         dated December 3,  1992 (incorporated by reference
                         to Exhibit  10.14 to Registrant's  Amendment No. 1
                         to Annual Report on  Form 10-K for the  year ended
                         December 31, 1992).*

                    10.10     Severance   Agreement   among  Devon   Energy
                         Corporation (Nevada), Registrant  and Mr.  William
                         T. Vaughn, dated December 3, 1992 (incorporated by
                         reference   to   Exhibit  10.15   to  Registrant's
                         Amendment No.  1 to Annual Report on Form 10-K for
                         the year ended December 31, 1992).*

                    10.11     Severance   Agreement   among  Devon   Energy
                              Corporation (Nevada), Registrant and  Duke R.
                              Ligon dated March 26, 1997.*

                    10.12     Employment  Agreement between  Registrant and
                              Duke R. Ligon dated February 7, 1997.*

                    10.13     Supplemental   Retirement  Income   Agreement
                              among  Devon   Energy  Corporation  (Nevada),
                              Registrant  and John  W. Nichols  dated March
                              26, 1997.*

                    10.14     Sale  and  Purchase  Agreement   relating  to
                         Registrant's   San   Juan  Basin   gas  properties
                         (incorporated by  reference  to Exhibit  10.15  to
                         Registrant's Quarterly Report on Form 10-Q for the
                         quarter ended September 30, 1995).

                    10.15     Second Restatement of  and Amendment to  Sale
                         and  Purchase  Agreement relating  to Registrant's
                         San Juan  Basin  gas properties  (incorporated  by
                         reference   to   Exhibit  10.16   to  Registrant's
                         Quarterly  Report  on Form  10-Q  for the  quarter
                         ended September 30, 1995).

                    10.16     Purchase and Sale Agreement between Union Oil
                         Company of California and Devon Energy Corporation
                         (Nevada) (incorporated by  reference to Exhibit  2
                         to Registrant's  Current Report on Form  8-K dated
                         December 18, 1995).

                    10.17     Registration Rights Agreement  dated July  3,
                         1996, by and among the Registrant, Devon Financing
                         Trust   and  Morgan  Stanley  &  Co.  Incorporated
                         [incorporated  by  reference  to Exhibit  10.1  to
                         Amendment  No.  1  to   Registrant's  Registration
                         Statement on Form S-3 (No. 333-00815)].

                    11   Computation of earnings per share

                         * Compensatory plans or arrangements.

               (b)  Reports on Form 8-K - No reports on Form 8-K were filed
                    during the three months ended June 30, 1997.


<PAGE>


                                      SIGNATURES





               Pursuant to the requirements of  the Securities Exchange Act
          of 1934, the registrant  has duly caused this report to be signed
          on its behalf by the undersigned thereunto duly authorized.


                                             DEVON ENERGY CORPORATION




          Date:  July 21, 1997                /s/William T. Vaughn         
                      
                                             William T. Vaughn
                                             Vice President - Finance


<PAGE>



                                   INDEX TO EXHIBITS

                                                                           
                                                                  Page

          2.1  Agreement  and  Plan of  Merger  among Registrant,   #
               Devon  Energy  Corporation   (Nevada),  Kerr-McGee
               Corporation,  Kerr-McGee  North  American  Onshore
               Corporation  and  Kerr-McGee Canada  Onshore Ltd.,
               dated October 17, 1996

          3.1  Registrant's  Certificate  of   Incorporation,  as   #
               amended

          3.2  Registrant's   Certificate    of   Amendment    of   #
               Certificate of Incorporation

          3.3  Registrant's Bylaws                                  #

          4.1  Form of Common Stock Certificate                     #

          4.2  Rights Agreement between Registrant  and The First   #
               National Bank of Boston

          4.3  First  Amendment  to   Rights  Agreement   between   #
               Registrant and The First  National Bank of  Boston
               dated October 16, 1996

          4.4  Second  Amendment  to  Rights   Agreement  between   #
               Registrant and the First  National Bank of Boston,
               dated December 31, 1996

          4.5  Certificate  of  Designations of  Series  A Junior   #
               Participating Preferred Stock of Registrant

          4.6  Certificate of Trust of Devon Financing Trust        #

          4.7  Amended  and  Restated  Declaration  of  Trust  of   #
               Devon Financing  Trust dated as  of July  3, 1996,
               by J. Larry  Nichols, H. Allen Turner,  William T.
               Vaughn, The  Bank of New  York (Delaware)  and The
               Bank of  New York as  Trustees and  the Registrant
               as Sponsor

          4.8  Indenture dated  as of July  3, 1996,  between the   #
               Registrant and The Bank of New York

          4.9  First  Supplemental Indenture dated  as of July 3,   #
               1996, between the  Registrant and The Bank  of New
               York

          4.10 Form of  6 1/2%  Preferred Convertible  Securities   #
               (included as Exhibit A-1 to Exhibit 4.5 above)

          4.11 Form  of  6 1/2%  Convertible  Junior Subordinated   #
               Debentures (included in Exhibit 4.7 above)

          4.12 Preferred  Securities  Guarantee  Agreement  dated   #
               July 3,  1996, between  Registrant, as  Guarantor,
               and The Bank  of New York, as  Preferred Guarantee
               Trustee

          4.13 Stock  Rights and Restrictions  Agreement dated as   #
               of  December  31,  1996,  between  Registrant  and
               Kerr-McGee Corporation

          4.14 Registration Rights Agreement, dated  December 31,   #
               1996,  by and  between  Registrant and  Kerr-McGee
               Corporation

          10.1 Credit  Agreement  dated August  30,  1996,  among   #
               Devon  Energy  Corporation (Nevada),  as Borrower,
               the   Registrant   and   Devon  Energy   Operating
               Corporation, as Guarantors, NationsBank  of Texas,
               N.A., as  Agent, and  NationsBank of  Texas, N.A.,
               Bank One,  Texas,  N.A.,  Bank  of  Montreal,  and
               First Union National  Bank of  North Carolina,  as
               Lenders

          10.2 First Amendment,  dated March 15, 1997,  to Credit   #
               Agreement   among    Devon   Energy    Corporation
               (Nevada),   as   Borrower,   the  Registrant,   as
               Guarantor, NationsBank  of Texas, N.A.,  as Agent,
               and NationsBank of  Texas, N.A., Bank One,  Texas,
               N.A., Bank of Montreal,  and First Union  National
               Bank of North Carolina, as Lenders

          10.3 Devon Energy Corporation 1988 Stock Option Plan      #

          10.4 Devon Energy Corporation 1993 Stock Option Plan      #

          10.5 Devon Energy Corporation 1997 Stock Option Plan      #

          10.6 Severance    Agreement    among    Devon    Energy   #
               Corporation (Nevada), Registrant and  Mr. J. Larry
               Nichols, dated December 3, 1992

          10.7 Severance    Agreement    among    Devon    Energy   #
               Corporation  (Nevada),  Registrant   and  Mr.   J.
               Michael Lacey, dated December 3, 1992

          10.8 Severance    Agreement    among    Devon    Energy   #
               Corporation (Nevada),  Registrant and Mr. H. Allen
               Turner, dated December 3, 1992

          10.9 Severance    Agreement    among    Devon    Energy   #
               Corporation  (Nevada),  Registrant and  Mr. Darryl
               G. Smette, dated December 3, 1992

          10.10     Severance   Agreement  among   Devon   Energy   #
                    Corporation  (Nevada),  Registrant   and  Mr.
                    William T. Vaughn, dated December 3, 1992

          10.11     Severance   Agreement  among   Devon   Energy   31
                    Corporation (Nevada), Registrant and  Duke R.
                    Ligon dated March 26, 1997

          10.12     Employment Agreement  between Registrant  and   44
                    Duke R. Ligon dated February 7, 1997

          10.13     Supplement Retirement Income  Agreement among   50
                    Devon     Energy    Corporation     (Nevada),
                    Registrant and  John W.  Nichols dated  March
                    26, 1997

          10.14     Sale  and  Purchase  Agreement   relating  to   #
                    Registrant's San Juan Basin gas properties

          10.15     Second  Restatement of and  Amendment to Sale   #
                    and    Purchase   Agreement    relating    to
                    Registrant's San Juan Basin gas properties

          10.16     Purchase  and  Sale  Agreement between  Union   #
                    Oil Company  of California  and Devon  Energy
                    Corporation (Nevada)

          10.17     Registration  Rights Agreement  dated July 3,   #
                    1996,  by  and  among  the Registrant,  Devon
                    Financing Trust  and  Morgan  Stanley  &  Co.
                    Incorporated

          11   Computation of earnings per share                    58

          ____________________________________
          # Incorporated by reference.
<PAGE>