Slide 1: Q4 2021 Earnings Presentation
Q4 2021 Earnings Presentation February 15, 2022 NYSE: DVN devonenergy.com
Slide 2: Key Takeaways From Our Presentation
Key Takeaways From Our Presentation FIXED + VARIABLE DIVIDEND INCREASES #1 Total dividend of $1.00 per share announced with Q4 results RAISING FIXED DIVIDEND BY 45% IN 2022 #2 Board approved a $0.05 per share increase effective in March #3 BUYBACK PROGRAM EXPANDED TO $1.6 BILLION $589 million of sha
Slide 3: Our Cash-Return Business Model
Our Cash-Return Business Model “Our CASH-RETURN business model is DISCIPLINED MODERATING OIL GROWTH targets: up to 5% annually designed to moderate growth, emphasize GROWTH STRATEGY Growing margins through operational scale & cost efficiencies capital efficiencies, maximize returns and prioritiz
Slide 4: Q4 2021 – Executing on Our Disciplined Plan
Q4 2021 – Executing on Our Disciplined Plan Outstanding Q4 execution Expanding free cash flow Increasing dividend payout Key quarterly highlights Free cash flow ($ in millions) Fixed-plus-variable payout ($/share) $1,104 $1.00 PRODUCTION 3% >4x $0.84 VOLUMES (MBOED) ABOVE GUIDANCE IMPROVEMENT REINVE
Slide 5: 2021 – A Year of Outstanding Achievement
2021 – A Year of Outstanding Achievement DELIVERING ON OUR COMMITMENT Completed TRANSFORMATIONAL merger TO SHAREHOLDERS Generated RECORD-SETTING free cash flow $1.3B Dividend Payments $589MM (Payout +190% YoY) Share Buyback Delivered MARKET-LEADING cash returns $2.9 (~2% of shares) BILLION FREE CASH
Slide 6: Strong Cash Flow Growth Continues in 2022
Strong Cash Flow Growth Continues in 2022 Prioritizing free cash flow over volume growth Positioned for an attractive free cash flow yield in 2022 2022e outlook 2022e free cash flow sensitivities 17% 570-600 18% TOTAL FREE CASH FLOW YIELD $6.5 PRODUCTION 14% MBOED (~50% oil) FREE CASH FLOW $ YIELD U
Slide 7: Accelerating Cash Returns to Shareholders
Accelerating Cash Returns to Shareholders A history of returning cash to shareholders (Dividends per share) ~2x CASH-RETURN STRATEGY (1) VS. 2021 29 CONSECUTIVE Raising fixed quarterly dividend by 45% to $0.16 per share in 2022 YEARS OF DIVIDEND PAYMENTS Variable dividend payout maintained at up
Slide 8: Delivering a Market-Leading Dividend Yield
Delivering a Market-Leading Dividend Yield 10% ~8% (1) OUR MARKET-LEADING YIELD ~6 TIMES HIGHER than the S&P 500 yield 8% 2022e Annualized Dividend Yield SHARE BUYBACK enhances cash returns (pg. 10) ORGANICALLY FUNDED within free cash flow 6% 4% 2% 0% Energy Utilities Real Estate Consumer Fina
Slide 9: Compelling Alternative for Yield-Seeking Investors
Compelling Alternative for Yield-Seeking Investors Historically low interest-rate environment has compressed yields across most asset classes 14% 10-YEAR U.S. TREASURY YIELD 12% S&P 500 DIVIDEND YIELD ADVANTAGED YIELD DEVON’S 2022E OPPORTUNITY DIVIDEND 6x HIGHER 10% (~8% YIELD) UP TO 8% VE RSUS BROA
Slide 10: Increasing Share-Repurchase Program to $1.6 Billion
Increasing Share-Repurchase Program to $1.6 Billion EXPANDING AUTHORIZATION TO $1.6 BILLION LEADING THE INDUSTRY WITH DISCIPLINE & CASH RETURNS Repurchased $589 million of shares in Q4 Retired at average price of $42 per share Board approves 60% increase in buyback program Program represents ~5% of
Slide 11: Improving Our Financial Strength
Improving Our Financial Strength Achieved balance sheet leverage target INVESTMENT-GRADE FINANCIAL POSITION Net debt-to-EBITDAX Strong liquidity: $2.3 billion of cash (as of 12/31/21) 1.4x Improved net debt by >20% since merger closed Minimal near-term debt maturities provides flexibility NET
Slide 12: Devon’s Unique Investment Proposition
Devon’s Unique Investment Proposition HIGH-QUALITY PORTFOLIO Underpinned by world-class Delaware Basin asset Margins & free cash flow to expand in 2022 MARKET-LEADING DIVIDEND MARKET-LEADING DIVIDEND Providing 2022e annualized yield of ~8% Dividend yield ~6 times higher than the S&P 500 HIGH
Slide 13: Asset Operations Overview Update
AssetOperations Overview Update NYSE: DVN devonenergy.com
Slide 14: 2022 Operating Outlook
2022 Operating Outlook Capital efficient 2022 program Delaware focused capital program Balanced commodity exposure 2022e capital activity Upstream capital (in billions) 2022e total production by product $1.9-$2.2 B GAS ~75% OIL UPSTREAM $1.9-$2.2 VOLUMES VOLUMES CAPITAL BUDGET BILLION ~25% ~50% ALLO
Slide 15: Delaware Basin – Our Franchise Growth Asset
Delaware Basin – Our Franchise Growth Asset HIGH-MARGIN GROWTH +34% 416 LEADING DELAWARE VS. Q1 2021 ACREAGE POSITION 400K 409 TOP-FUNDED AREA: MBOED NET SOUTHEAST NEW MEXICO ACRES 358 2022 Program Overview Running 9 operated rigs 310 125-135 new wells online Eddy Lea New Mexico Q1 2021 Q2 2021
Slide 16: Efficiencies Mitigating Inflationary Pressures
Efficiencies Mitigating Inflationary Pressures Drilled & completed feet per day Drilled & completed cost per foot (1) Delaware Basin development activity Delaware Basin development activity 2,200 $940 Completions 168% $846 41% Drilling COMPLETION 1,600 D&C COST IMPROVEMENT IMPROVEMENT $614 1,190 1,1
Slide 17: Anadarko Basin – Dow Partnership Builds Momentum
Anadarko Basin – Dow Partnership Builds Momentum Improved capital efficiency with up-spaced developments FREE CASH FLOW >$550 MILLION IN 2021 MERAMEC DEVELOPMENTS FLOWING BACK $9.0 25% 250 Initial Results (4-well avg.) Type Curve D&C COST 200 (1) Cumulative volumes (MBOE) 12 Meramec wells (3 units
Slide 18: Free Cash Flow Generating Assets
Free Cash Flow Generating Assets High-margin oil resource opportunity in economic core of the play WILLISTON “Our free cash flow generating assets Generated ~$700 million of free cash flow in 2021 BASIN are critical to the continued success and Expect to deploy comparable levels of capital act
Slide 19: Strengthening Our Environmental Performance
Strengthening Our Environmental Performance Committed to aggressive emissions targets Reducing Scope 1 & 2 GHG emissions Targeting net zero GHG emissions by 2050 (Scope 1&2) (Million tonnes CO2e) Plan to reduce methane emissions by 65% by 2030 ~20% 4.91 REDUCTION IN Executive compensation tied
Slide 20: Asset Appendix Overview
AssetAppendix Overview NYSE: DVN devonenergy.com
Slide 21: Free Cash Flow Priorities
Free Cash Flow Priorities Q4 VARIABLE DIVIDEND CALCULATION FIXED + VARIABLE DIVIDEND #1 Fixed dividend is paid quarterly at $0.16 per share $1,718 MM – Adjusted Cash Flow (Non-GAAP) − Variable dividend is up to 50% of excess free cash flow $521 MM – Capital Expenditures (Accrued) $1,197 MM – Adj
Slide 22: Expanding Full Cycle Corporate Returns
Expanding Full Cycle Corporate Returns Disciplined plan is delivering excellent returns Return on capital employed (ROCE) (1) 2021 ROCE CALCULATION (Non-GAAP) (1) >30% SUPERIOR RETURNS VS. BROADER MARKET $2,374 MM – Core Earnings $282 MM – After-Tax Net Interest Expense $2,656 MM – Pre-Interest Core
Slide 23: Innovation & Technology Contributing to Performance
Innovation & Technology Contributing to Performance OUR COMMITTED DELIVERING SCALING RESULTING TECHNOLOGY TO TECHNOLOGY TIMELY & TECHNOLOGY IN ENHANCED STRATEGY INVESTMENT QUALITY DATA WITH PARTNERS PERFORMANCE OUR TECHNOLOGY EVOLUTION Enterprise-wide data and Artificial intelligence deployed Moved
Slide 24: Efficiently Adding Proved Reserves
Efficiently Adding Proved Reserves Strong proved reserve performance in 2021 Proved reserves (MMBOE) 155 (7) (209) 43 228 1,625 1,415 Legacy WPX 2021 RESERVE HIGHLIGHTS Reserves Reserve additions replace >200% of production in 2021 Legacy Vast majority of reserves added in Delaware Basin DVN Res
Slide 25: Our Investment-Grade Financial Strength
Our Investment-Grade Financial Strength Substantial debt reduction completed in 2021 Outstanding debt maturities through 2030 ($MM) $5,300 Reduced outstanding debt by >$1.2 billion in 2021 EXECUTING ON OUR Net debt-to-EBITDAX: 0.8x (as of 12/31/2021) Cash FINANCIAL $2,300 Significant flexibili
Slide 26: Committed to Aggressive Emissions Reductions
Committed to Aggressive Emissions Reductions ENVIRONMENTAL PERFORMANCE TARGETS 0.5 GHG EMISSIONS GHG EMISSIONS INTENSITY METHANE EMISSIONS FLARING INTENSITY ROUTINE FLARING 50 65 % ENTIRELY SCOPE 1 & 2 SCOPE 1 & 2 INTENSITY NET ZERO GHG EMISSIONS FOR % % OR LOWER ELIMINATE OF GROSS NATURAL GAS AS DE
Slide 27: Investor Contacts & Notices
Investor Contacts & Notices risks relating to governmental regulation, including with respect to federal lands and environmental matters; risks related to climate change; Investor Relations Contacts the uncertainties, costs and risks involved in our operations, including as a result of employee misc