Devon Energy Corporation · NYSE:DVN
Devon Energy — Investor Presentation (November 2001)
45 slides from Devon Energy's investor presentation, Nov 28, 2001
Slide 1: Risk Factors
OCVOH ewenay Risk Factors Information provided in this presentation includes “forward- looking statements” as defined by the SEC. Forward-looking statements are identified as “forecasts, projections, estimates, plans, expectations, etc.” and are subject to a variety of risk factors. For representati
Slide 2: Corporate Overview
OcVol ewenay Corporate Overview Shares outstanding: Equity capitalization: Enterprise value: Senior credit rating: S&P. Moody's Fitch (D&P) Pro forma data for the combination of Devon, Mitchell and! Anderson 155 MM x $5.2B #$13.2B BBB+ Baa2 BBB
Slide 3: Corporate Overview
OcVol enenay Corporate Overview Proved reserves: 2,044 MMBOE Production profile: 95% North America 5% International Production mix: 64% gas / 36% liquids RIP ratio: 9.8 years Pro forma data for the combination of Devon, Mitchell and Anderson.
Slide 4: Third Quarter Highlights
OCVOl ewenay Third Quarter Highlights + Record natural gas, oil and liquids production — 1.23 BCFD and 134 MBOD —5% increase over 2Q ‘01 — 6% increase over 3Q ‘00 * Cash margin of $388 MM — $2.94 per share + Net earnings of $90 MM — $.68 per share Note: Earnings before a non-recurring impairment cha
Slide 5: Third Quarter Operations
OVO enenay Third Quarter Operations Capital Expenditures: $304 MM 364 Development 51 Exploration Wells Drilled Wells Drilled 80% Success Rate @ Successful @ Dry
Slide 6: Track Record
Track Record Growth Strategy . Near-term Growth Projects Long-term/High-potential Projects
Slide 7: Reserve Growth
OCVOi ewenay Reserve Growth Proved Reserves (MMBOE @ 6:1) 208 ee Note: Fro forma for the Anderson and Mitchell acquisitions. 1987-1997 represents historical Devon as reported prior to the 1998 Northstar merger. 1998-1999 represents historical Devan as reported prior to the 2000 Santa Fe Snyder merge
Slide 8: Reserves Per Common Share
OCVOi ewenay Reserves Per Common Share 12.75 Proved Reserves (BOE @ 6:1) * diluted 581 479 518 424 4.94 3.76 256 261 282 219 2.96 ‘87 ‘88 ‘89 ‘90 ‘91 92 93 94 95 ‘96 ‘97 ‘SF ‘99 ‘00 Pro Forma Pro forma reserves combine Devon, 2s of 12/00, Mitchell as of /01 and Anderson as of 08/01. Proforma shares
Slide 9: Production Per Common Share
OcVoHl ewenay Production Per Common Share (BOE Per Share @ 6:1) 048 4 49 0.44 0.48 0.48 0.35 0.22 0.23 0.24 0.18 ‘87 88 89 90 91 92 93 ‘94 95 96 97 ‘98 ‘99 ‘00 ‘Ot Pro Forma Ii Represents annualized production for the quarter ended 620/01 for the combined Devon, Mitchell and Anderson, Pro forma basi
Slide 10: Cash Margin Per Common Share
OCVOH ewenay Cash Margin Per Common Share ($ Per Share) 276 2.54 2.66 2.68 4.15 0.98 1.01 137 1.34 ‘87 88 89 90 91 92 93 94 95 96 97 8 99 00 ‘Notel 2007 Gata Is etimated by annualaing the Second quarter pro forma combination of Devon, Anerson 3nd Michel 1987-1997 represents nstorical Devon as report
Slide 11: Growth Strategy
Track Record Growth Strategy . Near-term Growth Projects Long-term/High-potential Projects
Slide 12: Growth Strategy
OcVol ewenay Growth Strategy Integrate drilling and acquisitions | to establish focused, high-margin property concentrations.
Slide 13: E&P Capital Expenditures
OcVollenenay E&P Capital Expenditures (SMM) = “4 7 115 a "96 ‘07 ‘00 Est.'01 Est. "02 Note: 1896-1997 represents historical Devon as reported prior tothe 1998 Northstar merger, 1998-1999 represents historical Devon as reported prior to the 2000 Santa Fe Snyder merger.
Slide 14: Acquisition Criteria
OCVo ewenay Acquisition Criteria Enhance Establish New Technology Strengthen Core Areas Core Areas Transfer Balance Sheet Alta (1994) v Vv KMG-NA (1996) Northstar (1998) PennzEnergy (1999) Santa Fe/Snyder (2000) Anderson Exploration (2001) Mitchell (Est. Q4 2001)
Slide 15: Per Share Financial Criteria
OcVol ewenay Per Share Financial Criteria Cash Flow Earnings Reserves Production Accretion Accretion Accretion Accretion Alta (1994) WM. KMG-NA (1996) Vv Northstar (1998) ow PennzEnergy (1999) aM. Santa Fe/Snyder (2000) Vv Anderson Exploration (2001) vd ’ Mitchell (Est. Q4 2001) Vv
Slide 16: Anderson Acquisition
OcvoHtenency GD Anderson Acquisition + 9/04/01: Announced purchase of Anderson by Devon + Terms: All cash tender of C$40 per Anderson share US$ 3.4 billion cash tender US$ 1.2 billion net debt and other obligations US$ 4.6 billion total transaction * Closed October 15, 2001
Slide 17: Mitchell Acquisition
OcVoHewenay AR Mitchell Energy Mitchell Acquisition ° 8/14/01: Announced purchase of Mitchell by Devon Terms: 50/50 cash and stock —$3.5 billion, including $0.4 billion of assumed debt Board approved/Mitchell commitment Expected close: Late 2001 - early 2002
Slide 18: Integration
OcVo ewenay Integration * Devon Canada management team in-place at closing ¢ Mitchell integration plans developed for implementation at closing * Mitchell + Anderson: ~ $50 MM synergies
Slide 19: Reserve Growth from M&A
OCVOH Ewenay Reserve Growth from M&A* lm Represerts Anderson 7/31/01 reserves i Represerts Mitchell 6/30/01 reserves. 135% 14% ‘87 ‘88 89 90 91 92 93 ‘94 95 ‘96 ‘97 ‘98 ‘99 ‘00 Pro Forma + Proved reserves axdeu from mergers and acquisitions expressed as a % of begining of the year reserves. Years 19
Slide 20: Acquisition Financing (Term Loan)
OCVOH ewenay Acquisition Financing (Term Loan) ¢ 5 year term loan: $3 billion * Rate as of 11/19/01: 3.15% —After-tax rate: 1.92% ¢ Back-end weighted amortization Note: Assumes combined federal and state income tax rate of 39%.
Slide 21: Acquisition Financing (Bonds)
OcVo ewenay Acquisition Financing (Bonds) After-tax Amount Maturity Rate Rate $1.75 B 2011 6.875% 1.65% $1.25 B 2031 7.875% 1.92% $3.00 B ‘Assumes combined federal and state or provincial income tax rates of 38.2% in Canada and 89.0% in me US
Slide 22: Debt Amortization Schedule
OcVo ewenay Debt Amortization Schedule Year $ Millions Year $ Millions 2002 69 2008 - 2003 6 2009 200 2004 552 2010 - 2005 2,007 2011 2,150 2006 1,740 2012-2030 - 2007 175 2031 1,250 Note: Represents required amortization forall dett securities and bank debt agreements assuming ‘completion of Mitche
Slide 23: Debt Reduction Plan
OcVOl ewenay Debt Reduction Plan ¢ Excess cash flow —Protect with hedges — Optimize capital budget ¢ Divest > $1 billion non-core properties —All five divisions contributing
Slide 24: 2002 Gas Hedges
OcVollewenay © 2002 Gas Hedges 1056 Fb 2002 Collar Ceiling 2002 Collar Floor 2002 Swaps & Fixed SIMCF ‘87 ‘88 89 "90 ‘91 92 93 04 95 "96 ‘87 ‘98 99 00 ‘01 Nine [lil Devon's historical average realized gas prices, Months Nate: Production percentages based on G2 2001 pro forma gas production for Devon
Slide 25: 2002 Oil Hedges
ro F it OcVolewenay 2002 Oil Hedges Floating sacle A ‘Swaps & Fixet 521.94) ‘87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 Nine WTI Cushing (NYMEX) Months Note: Production percentages based on G2 2001 pro forma oll production for Devon, Mitchell and Anderson,
Slide 26: North American Core Areas
OcVollewenay North American Core Areas Western Canadian Sedimentary Basin Gulf of Mexico/Guif Coast. Percent of Total Production Forma Permian/Mid-Continent N% Rocky Mountains 11% Gulf of M Gulf Coast 17% Canada 36% Total North America 95% Note: Pro forma production combining Devon, Mitchell ‘and An
Slide 27: North American Operations
OCVol ewenay North American Operations ¢ Dominant player in core areas ¢ Technical team with proven track record * Low-cost, focused operations ¢ Access to multiple sales markets ° 62% of proved reserves are developed
Slide 28: Growth Strategy
Track Record Growth Strategy . Near-term Growth Projects Long-term/High-potential Projects
Slide 29: Barnett Shale
OcVollenenay Barnett Shale Possible * Strategic market access + 230,000 net acres + WI >90% * 2.1 TCFE proved reserves (8% of gas in place) + Multi-TCF potential ‘+ 2000 wells drilled: 142 + 2001 wells planned: 300.
Slide 30: Light Sand Fracturing Technology
OcVoH ewenay Light Sand Fracturing Technology Mitchell - Barnett Shale Normalized Production Total Wells Drilled (576) ~ Pre 1989 Conventional Frac (406) — Post 1999-2000 LSF Wells (170) "geee28e888 ° 12 24 Months on Production
Slide 31: Mitchell Gas Production Growth
OCVOH enenay Mitchell Gas Production Growth (MMCFD) 420 403 288 = aa | 19°00 =2Q00 320 4010 11 21 3Q°01
Slide 32: Powder River Basin
OVO enenay Powder River Basin * 250,000 net acres * > 1,300 gross wells drilled to date * 300 wells awaiting tie-in * Net current production ~ 94 MMCFD
Slide 33: Vermejo Park Ranch
OCVo ewenay Vermejo Park Ranch Raton Basin 280,000 gross acres (minerals) WI=25%, NRIF42% 228 wells drilled to date 0.5-1.0 TCF net target Coal seam thickness: > eoreer (Ml > corcer I > sorcer [i > 20 reer
Slide 34: Cherokee Basin CBM
OcVoll ewenay Cherokee Basin CBM * 400,000 net acres * Geology: —Depths 800 - 3,000' — Pennsylvanian coals * Current Status: —3 rigs drilling — Drilling + 2001: 110 wells * 2002: 300 - 400 wells — Major Pipelines}
Slide 35: Coalbed Methane Target Rates
OCVot ewenay Coalbed Methane Target Rates RATE, MMCFE/D 600 100 480 80 360 60 : 240 ao # é 120 i 20 0 0 2000 = 2001.-«S «2002S 2003:«S 2004 «= 2005» 2006
Slide 36: Peace River Arch
OcVoll ewenay Peace River Arch 900,000 net undeveloped acres = Q3 ‘01 pro forma production — Gas: 159 MMCFD — Liquids: 6,860 BOD + Low-risk exploitation + Recent exploration success at Girouxville * Ownership in key infrastructure + Drilling rigs utilized — Currently: 4 — ‘01/02 winter plans: 8
Slide 37: Deep Basin
OCVot ewenay Deep Basin * 700,000 net undeveloped acres * Q3 ‘01 pro forma production — Gas: 85 MMCFD — Liquids: 3,300 BOD * Multi-zone gas production * Ownership in key infrastructure + Drilling rigs utilized: 14 (devon Acreage [Anderson Acreage
Slide 38: NW Alberta/NE B.C.
OcVoll enenay NW Alberta/NE B.C. * Significant operational synergy * Q3 ‘01 pro forma production — Gas: 154 MMCFD — Liquids: 7,000 BOD * Strong growth potential from multi-zone gas targets
Slide 39: Growth Strategy
Track Record Growth Strategy . Near-term Growth Projects . Long-term/High-potential Projects
Slide 40: Northern Foothills
OVO ewenay Northern Foothills + Multi-zone sour and sweet gas potential + ‘01 activity: 4 sour and 6 sweet gas wells * > 100 MMCFD net shut-in gas + Narraway — 134 MMCFD — Est. on-stream Q2 ‘02 - 42% WI, operated * Westcoast sour line planned on- stream late ‘02
Slide 41: West Africa
Ocho ewenay West Africa ‘02 Exploration Marine IX Block / 47.5% interest 285 MMBOE gross target —Agali Block / 50% interest >300 MMBOE gross target On trend w/ Triton’s La Ceiba ™ Devon Blocks ‘03 Exploration Keta Block / 60% interest $8.25 MM 3-D program >200 MMBOE targets
Slide 42: Mackenzie Delta
Ocvonl enenay Mackenzie Delta High potential area —Large, high-impact targets Est. 65 TCFE in area Largest exploratory land holder Interest in 48% of Mackenzie Delta — 2MM net acres north of 60° 4 well per year program
Slide 43: Azerbaijan
Ocho ewenay Azerbaijan Northern Route Western Route MEP (Proposed) (| Operator: BP Amoco 5.6% carried interest Current production: 430 MBOD (gross) Gross proven reserves: 4.2 BBO Ultimate gross potential: > 6 BBO.
Slide 44: Summary
OCVOi ewenay Summary Focused, North American assets Low-risk, near-term growth High-potential exploration upside Track record of per share growth
Slide 45: Investors and security holders are advised to read the definitive joint proxy statement
Investors and security holders are advised to read the definitive joint proxy statement/ prospectus that will be included in the Registration Statement on Form S-4 filed with the Securities and Exchange Commission in connection with the proposed transaction because it will contain important informat