Devon Energy Corporation · NYSE:DVN
Devon Energy — Q2 2019 Earnings Presentation
22 slides from Devon Energy's earnings presentation, Aug 6, 2019
Slide 1: Q2 2019 Operations Report
Q2 2019 Operations Report August 6, 2019 Exhibit 99.2
Slide 2: Defining the "New Devon"
Defining the “New Devon” World-class U.S. oil portfolio Unrivaled acreage position in top basins Multi-decade growth inventory Resource depth allows for portfolio high-grading Disciplined returns-driven strategy Aggressively improving cost structure Growing higher-margin oil production Generating fr
Slide 3: Unleashing Potential of World-Class Oil Assets
Unleashing Potential of World-Class Oil Assets U.S. well productivity showcases asset quality Source: IHS/Devon. All wells drilled from 2015 through 2019 YTD. Includes operators with more than 150 wells. Avg. 90-Day IPs BOED, 20:1 PEER AVG. Top 50 U.S. Producers SUPERIOR WELL RESULTS >45% VS. PEER A
Slide 4: Executing on Our Disciplined Strategy
Executing on Our Disciplined Strategy Oil growth outlook raised for 2nd time in 2019 Delaware well productivity drives volumes +58% (pg. 14) Capital spending outlook lowered in 2019 (pg. 6) Cost savings program: $780 million/year (>70% in 2019) Divestiture program advances with sale of Canada Debt r
Slide 5: Devon Delivers Strong Q2 Outperformance
Beat Q2 guidance Devon Delivers Strong Q2 Outperformance LOE & GP&T (per Boe) G&A expenses ($MM) EBITDAX(3) ($MM) Upstream capital(1) ($MM) Free cash flow(3)(4) Average share count (MM) Dividend (per share) $7.61 $114 $627 $478 $59 415 $0.09 -11% -16% +4% -11% n/a -20% +13% U.S. oil volumes(1) (MBOD
Slide 6: Lowering 2019 Capital Outlook by $50 Million
lowering 2019 capital outlook by $50 million Structural improvements driving capital efficiency: Wolfcamp cycle times and costs improving (pg. 16) Turner development activity lowering PRB costs (pg. 19) Eagle Ford D&C costs improving (pg. 20) STACK activity tailored to current environment (pg. 21) r
Slide 7: Optimizing New Devon's Cost Structure
Cost savings initiatives trending ahead of plan Estimated cost savings by area as of 7/31/19 ($MM) Optimizing New Devon’s Cost Structure Aggressively pursuing improved cost structure New Devon expected cost savings by area vs. 2018 results ($MM) $780 ANNUAL COST SAVINGS BY 2021 MILLION G&A $300 MM I
Slide 8: Marketing Strategy to Maximize Margins
Multi-basin portfolio provides market diversification Physical & financial hedges further mitigate risk Q2 oil realizations: 97% of WTI(1) (72% of revenue) Flexibility to move product to advantaged markets Positioned for flow assurance & advantaged pricing Majority of oil has exposure to Gulf Coast
Slide 9: Committed to Return of Capital to Shareholders
Dedicated to disciplined allocation of capital Committed to Return of Capital to Shareholders $10.3 Billion 30% SHARE COUNT REDUCTION 527 ~380(3) 521 491 459 415 ~ 402 Debt reduction includes debt that was redeemed in July 2019. Share buyback includes repurchases made year-to-date. Assumes remaining
Slide 10: Building a Fortress Balance Sheet
Building a Fortress Balance Sheet Aggressive debt reduction improves financial strength Net debt ($B) $10.8 $2.0 >80% SINCE 2015 ($ in billions) Total debt (GAAP)(1) $4.3 Less cash(1) $2.3 Net debt (Non-GAAP) $2.0 EBITDAX (Non-GAAP)(2) $2.6 Net debt to EBITDAX ratio 0.8x Low leverage provides compet
Slide 11: Divestiture Program Accelerates Value Creation
Divestiture Program Accelerates Value Creation New Devon Assets Divestiture Assets POWDER RIVER STACK DELAWARE BASIN EAGLE FORD Rockies CO2 Barnett Shale Q2 Production: 100 MBOED Data room: Open Q2 Production: 3 MBOED Sales process: Ongoing ACCRETIVE MULTIPLE: ~10x CASH FLOW SOLD SALES PRICE: CAD $3
Slide 12: Strong Execution Driving Improved 2019 Outlook
Strong Execution Driving Improved 2019 Outlook Scalable growth in Delaware & PRB driving U.S. costs lower Canada exit improves G&A outlook by ~$80 million annually $1.7 billion debt redeemed YTD (reduced interest by >$60 million) LOE & GP&T G&A Financing costs Run-rate savings to exceed $200 million
Slide 13: Q2 2019 Asset Detail
Q2 2019 - ASSET DETAIL NEW DEVON DELAWARE STACK POWDER RIVER EAGLE FORD(3) OTHER NEW DEVON PRODUCTION Oil (MBbl/d) 142 67 31 15 23 6 NGL (MBbl/d) 82 27 40 2 12 1 Gas (MMcf/d) 575 158 313 22 81 1 Total (MBoe/d) 321 120 124 21 49 7 ASSET MARGIN (per Boe) Realized price $31.68 $34.83(2) $23.96 $45.44 $
Slide 14: Delaware Basin – Capital-Efficient Growth Engine
Delaware Basin – Capital-Efficient Growth Engine Generating high-return production growth Production (MBOED) 120 76 Operating scale driving per-unit costs lower LOE & GP&T expense ($/BOE) >30% IMPROVEMENT Gas NGL Oil GROWTH 58% Activity diversified by formation across 5 core areas 28 new wells: Avg.
Slide 15: Development Projects Advancing on Plan
Development Projects Advancing on Plan POTATO BASIN TODD COTTON DRAW THISTLE/GAUCHO RATTLESNAKE Eddy Lea New Mexico Texas DELAWARE BASIN DEVELOPMENT ACTIVITY N Thistle 10 Jayhawk Spud Muffin Lusitano (Phase 2) Cat Scratch (Phase 2) 2019 developments online Projects underway Belloq Rio Blanco (7,000’
Slide 16: Step-Change in Well Productivity and Efficiency Gains
Step-Change in Well Productivity and Efficiency Gains Strong initial rates translating into improving recoveries Oil EUR improvement by Northern Delaware operator (2018 vs. 2017) 200% IMPROVEMENT SINCE 2015 > Development focus driving productivity gains Avg. 90-day IPs BOED results (20:1) 600 2,000
Slide 17: Delaware – Acreage Located in the Best Part of the Play
Delaware – Acreage Located in the Best Part of the Play Top-tier well productivity… IP BOE/Lateral foot Highest oil content… Gas-oil ratio, SCF/BBL Lower operating costs (less water disposal) Water-oil ratio, BBL/BBL DVN Focus Area Source: Tudor Pickering, Holt & Company IP BOE/Lateral Low High Gas-
Slide 18: Acreage Trades Optimizing Value of Our Resource
Acreage Trades Optimizing Value of Our Resource Delaware Leonard Bone Spring Wolfcamp Thistle Cotton Draw Todd Potato Basin Rattlesnake ~5,000 feet of pay (Resource potential) Acreage trades enhancing the value of stacked-pay position Graphic for illustrative purposes Leading acreage position in SE
Slide 19: Powder River Basin – Oil Growth Accelerating
Powder River Basin – Oil Growth Accelerating Net production increased 29% year over year Delivering highest margins in portfolio (+18% vs. Q1) 6 wells brought online (Avg. IP30: 1,500 BOED; 80% oil) Turner development driving operational efficiencies YTD drilling times improve ~40% vs. 2018 D&C cost
Slide 20: Eagle Ford – Expanding Resource Opportunity
Eagle Ford – Expanding Resource Opportunity Muir 5 Lower Eagle Ford wells Avg. IP30: 3,600 BOED/Well EAGLE FORD ACTIVITY Vasbinder A 11H EF Redevelopment well Avg. IP30: 2,400 BOED 2019 Refrac Program Krause B 2H Eagle Ford Refrac Avg. IP30 Uplift: 1,250 BOED Bednorz B 11H EF Redevelopment well Avg.
Slide 21: STACK – Optimizing Development Activity
STACK – Optimizing Development Activity Lighter-spaced projects delivered strong results 17 strong Meramec wells online in Q2 Top highlights: Baker & Everett projects (see map) YTD drilling times improve ~20% vs. 2018 Tailoring capital activity to current environment reducing capital outlook by $50
Slide 22: 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