Devon Energy Corporation · NYSE:DVN
Devon Energy — Q4 2019 Earnings Presentation
23 slides from Devon Energy's earnings presentation, Feb 18, 2020
Slide 1: Q4 2019 Operations Report
February 18, 2020 Q4 2019 Operations Report Exhibit 99.2
Slide 2: Devon Energy Overview
Defining Devon World-class U.S. oil portfolio Premier acreage position in top basins Achieving best-in-class operating results Multi-decade growth inventory Disciplined returns-driven strategy Plan designed to compete with top S&P 500 sectors Growing higher-margin oil production Aggressively improvi
Slide 3: Focused on Top-Tier ESG Performance
Focused on Top-Tier ESG Performance ESG metrics incorporated in compensation structure Strong governance: independent and diverse board Established methane emission reduction target Delivering top-tier ESG ratings vs. peers (see details ) Key Messages top-quartile vs. peers OVERALL SCORE DVN’s SCORE
Slide 4: Q4 2019 – Efficiently Advancing the Business
Q4 2019 – Efficiently Advancing the Business OIL VOLUMES EXCEED GUIDANCE (Q4 2019 +3 MBOD vs. midpoint guidance) CAPITAL SPENDING 6% BELOW MIDPOINT (Driven by efficiency gains achieved across asset portfolio) AUTHORIZED NEW $1 BILLION BUYBACK PROGRAM (On track to reduce share count by >35% by year e
Slide 5: 2019 – A Year of Outstanding Execution
2019 – A Year of Outstanding Execution Completed transformation to U.S. oil business (pg. 7) Oil volumes increased 21% vs. 2018 (+600 bps vs. budget) G&A run-rate savings reach $240 million (YE19 exit rate) Per-unit operating costs declined 20% (vs. 2018) returned ~$2 billion of cash to shareholders
Slide 6: 2019 – Operational & Financial Performance
2019 – Operational & Financial Performance LOE & GP&T (per Boe) G&A expenses ($MM) Financing costs ($MM) Upstream capital(1) ($MM) Operating cash flow ($MM) Average share count (MM) Annualized dividend (per share) $7.75 $475 $250 $1,828 $2,043 407 $0.35 -20% -27% -23% -18% +17% U.S. oil volumes(1) (
Slide 7: Portfolio Transformation Accelerates Value Creation
Portfolio Transformation Accelerates Value Creation Cotton draw (DELAWARE Midstream partnership) Proceeds: $100 million Gathering: 90 miles Compression: 4 stations CANADIAN HEAVY OIL Proceeds: CAD $3.8 billion Closed: Q2 2019 DOW JOINT-VENTURE (STACK DRILLING partnership) Drilling Carry: ~$100 milli
Slide 8: Building a Fortress Balance Sheet
Building a Fortress Balance Sheet Aggressive debt reduction improves financial strength Net debt(1) ($B) ($ in billions) Total debt (GAAP) $4.3 Less cash $1.8 Net debt (Non-GAAP)(1) $2.5 EBITDAX (Non-GAAP)(1)(2) $2.4 Net debt to EBITDAX ratio 1.0x Low leverage provides competitive advantage $485 $73
Slide 9: Disciplined Return of Capital to Shareholders
Disciplined Return of Capital to Shareholders 527 499 434 Delivering sustainable dividend growth Annualized dividend per share $0.44 $0.24 83% INCREASE (SINCE 2017) RETURNED >$5 BILLION OF CAPITAL TO SHAREHOLDERS SINCE 2018 415 397 383 ~340(1) Estimated share count at year-end 2020 and repurchase ac
Slide 10: Strategic Framework for Our 2020 Capital Allocation
Strategic Framework for Our 2020 Capital Allocation CAPITAL ALLOCATION PRIORITIES Maintain base production Pursue high-return growth projects Return excess cash to shareholders Fund dividends 1 2 3 4 Maintain capital discipline Free cash flow accelerates GREATER THAN $50 $50 $45 Protect financial st
Slide 11: 2020 Capital Activity
2020 CAPITAL ACTIVITY E&P CAPITAL ($MM) NEW WELLS ONLINE (Operated) Delaware Basin $1,050 (+15% YoY) 115-125 Powder River $350 45-55 Eagle Ford $300 95-105(1) STACK $75 (-75% YoY) 10 New Devon Total $1,700 - $1,850 lowering top-end of 2020 capital guidance by $50 million Driven by improvements in De
Slide 12: 2020 Outlook – Raising Per-Share Growth Targets
2020 Outlook – Raising Per-Share Growth Targets lowering top-end of 2020 guidance range by $50 million G&A cost savings trending ahead of plan (reach $350 MM by 2021) Board authorized new $1 billion repurchase program E&P capital G&A Share count Simplified asset portfolio streamlines cost structure
Slide 13: Built to Deliver Sustainable Long-Term Growth
Consistent capital program optimizes returns Upstream capital ($ billions) High-value oil growth to expand profitability Projected oil production growth (year-over-year) Built to Deliver Sustainable Long-Term Growth +7.5%-9.0% $1.8 $1.70-$1.85 KEY TAKEAWAYS Capital allocation process balances high-r
Slide 14: Improved Outlook Lowers Breakeven Funding
Improved Outlook Lowers Breakeven Funding $1.6B Cumulative Free Cash Flow ($B) (before dividends) $1.0B Free Cash Flow Yield (Annual Avg.)(1) Cumulative Free Cash Flow Free Cash Flow Yield (Annual Avg.) $0.4B Cumulative Free Cash Flow Cumulative Free Cash Flow Cumulative Free Cash Flow (1) Free cash
Slide 15: Q4 2019 – Asset Detail
Q4 2019 - ASSET DETAIL NEW DEVON DELAWARE STACK POWDER RIVER EAGLE FORD OTHER PRODUCTION Oil (MBbl/d) 160 84 27 20 23 6 NGL (MBbl/d) 74 32 30 2 9 1 Gas (MMcf/d) 634 234 295 28 76 1 Total (MBoe/d) 340 154 107 27 45 7 ASSET MARGIN (per Boe) Realized price $32.72 $35.05 $24.28 $42.45 $36.51 $47.99 Leas
Slide 16: Delaware Basin – Our Capital-Efficient Growth Engine
Delaware Basin – Our Capital-Efficient Growth Engine Eddy New Mexico Lea POTATO BASIN THISTLE/GAUCHO RATTLESNAKE COTTON DRAW TODD Lusitano 2.0 (7,400’ laterals) 5 Bone Spring & Wolfcamp wells Avg. IP30: 3,100 BOED/well Cat Scratch Fever 2.0 (7,500’ laterals) 10 Bone Spring wells Avg. IP30: 3,000 BOE
Slide 17: Delaware Basin – Delivering Best-In-Class Well Results
Delaware Basin – Delivering Best-In-Class Well Results PEER AVERAGE Source: Enverus, J.P. Morgan North America Equity Research Acreage quality & strong execution driving superior well productivity Average cumulative 6-month oil production per foot, MBO (2019) PROLIFIC WELL RESULTS DRIVEN BY >50% VS.
Slide 18: Delaware Basin – Step-Change in Operating Efficiencies
Delaware Basin – Step-Change in Operating Efficiencies Drilling and completion efficiencies accelerate Drilled and completed feet per day (Wolfcamp formation) 62% COMPLETION IMPROVEMENT Drilling Completions 48% DRILLING IMPROVEMENT 925 900 625 1,176 Operating scale driving per-unit costs lower Delaw
Slide 19: Delaware – Diversified Program to Drive 2020 Results
Delaware – Diversified Program to Drive 2020 Results Diversified program across core development areas 2020e Delaware Basin drilling activity Potato Basin Rattlesnake Thistle/ Gaucho Cotton Draw Todd 2020 DRILLING ACTIVITY 20% 25% 15% 20% 20% ~130 SPUDS Substantial stacked-pay resource opportunity G
Slide 20: Powder River Basin – Accelerating Niobrara Activity
Powder River Basin – Accelerating Niobrara Activity Emerging oil growth opportunity with high margins Strong production growth in Q4 (+54% vs. Q4 2018) Light-oil volumes reach 74% of product mix 19 wells online in the quarter (Avg. IP30: 1,300 BOED) Niobrara appraisal continues to progress (2 wells
Slide 21: Eagle Ford – Operational Momentum Established
Eagle Ford – Operational Momentum Established Strong production momentum heading into 2020 December 2019 exit rate: 53 MBOED 21 new wells online in quarter (Avg. IP30: 2,900 BOED) Well-control event impacted Q4 volumes (↓9 MBOED) Delivered sustainable well cost reductions in 2019 D&C cost savings re
Slide 22: STACK – Dow JV Driving Improved Capital Efficiency
STACK – Dow JV Driving Improved Capital Efficiency Infill program achieving strong operational results 2019 developments optimized at 4-6 wells per unit Well cost savings reach 30% vs. legacy activity Q4 net production: 107 MBOED (54% liquids) top highlight: Fleenor project (IP30: 1,800 BOED/well) D
Slide 23: Investor Contacts & Notices
Investor Contacts & Notices Investor Relations Contacts Scott CoodyChris Carr VP, Investor RelationsManager, Investor Relations 405-552-4735405-228-2496 Email: investor.relations@dvn.com Forward-Looking Statements This presentation includes “forward-looking statements” as defined by the Securities a