Slide 1: Q1 2021 Earnings Presentation
Q1 2021 Earnings Presentation May 4, 2021 NYSE: DVN devonenergy.com
Slide 2: Key Takeaways From Our Presentation
Key Takeaways From Our Presentation FIXED + VARIABLE DIVIDEND EXPANDS EXECUTING ON OUR #1 Dividend payout increases 13% to $0.34 per share for Q1 DISCIPLINED PLAN (SEE PAGE 4 FOR DETAILS) BALANCE SHEET CONTINUES TO STRENGTHEN #2 Redeemed $743 million of debt year-to-date PRIORITIZING FREE CASH FLOW
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 & corporate cost reductions capital efficiencies, maximize returns and priorit
Slide 4: Executing on Our Disciplined Strategy
Executing on Our Disciplined Strategy FIRST-QUARTER 2021 HIGHLIGHTS RETURNING VALUE TO SHAREHOLDERS Paid industry-first fixed-plus-variable dividend in March $1.44 Billion $0.20B >65% Strengthened balance sheet with $743 MM debt reduction ALLOCATED TO (1) DIVIDENDS & $0.74B DEBT REDUCTION (1) Limite
Slide 5: Accelerating Cash Returns to Shareholders
Accelerating Cash Returns to Shareholders A history of returning cash to shareholders (Dividends per share) 28 FIXED + VARIABLE DIVIDEND CONSECUTIVE (BASED ON Q1 FINANCIAL RESULTS) YEARS OF DIVIDEND PAYMENTS FIXED DIVIDEND $0.11 PER SHARE (>10% CAGR SINCE 1993) VARIABLE VARIABLE DIVIDEND $0.23 PER S
Slide 6: Improving Our Investment-Grade Financial Position
Improving Our Investment-Grade Financial Position Substantial debt reduction completed year to date Outstanding debt maturities through 2030 ($MM) $4,900 $1.5B Reduced outstanding debt by $743 million year to date Cash Redeeming additional $500 million of debt in June $1,900 DEBT REDUCTION PROGR
Slide 7: Raising Annual Cost Savings Target to $600 Million
Raising Annual Cost Savings Target to $600 Million Cost synergies to exceed original savings target Targeted annual cost savings by area ($MM) OPERATING MARGIN IMPROVEMENTS (1) 70% $200 MILLION GENERAL & ADMINISTRATIVE(1) 70% $200 MILLION D&C >50% $125 MILLION EFFICIENCIES (+ $25 MM VS. PRIOR TARGET
Slide 8: Delivering Top-Tier ESG Performance
Delivering Top-Tier ESG Performance ENVIRONMENT SOCIAL & SAFETY GOVERNANCE (1) Achieved methane intensity reduction Fostering inclusion & diversity with our ESG incorporated in compensation target of 0.28% ahead of plan employees and community partners structure (including safety & emissions m
Slide 9: Asset Outlook Overview
AssetOutlook Overview NYSE: DVN devonenergy.com
Slide 10: Operations Scaled to Generate Free Cash Flow
Operations Scaled to Generate Free Cash Flow COMMITED TO FUTURE UPSIDE (1) MAINTENANCE CAPITAL 25% Excludes commodity hedges (FY 2021 OUTLOOK) 100% upfront cost synergies OIL PRODUCTION: 280-290 MBOD UPSTREAM CAPITAL: $1.6-$1.8 B 20% 15% FREE CASH FLOW 2021 OUTLOOK 12% YIELD 15% FREE CASH FL
Slide 11: Free Cash Flow Priorities
Free Cash Flow Priorities VARIABLE DIVIDEND STRATEGY FIXED DIVIDEND CALCULATED ON A QUARTERLY BASIS Paid quarterly at $0.11 per share Target payout: up to 10% of operating cash flow STEP 1: VARIABLE DIVIDEND CALCULATION Adjusted Cash Flow (Non-GAAP) VARIABLE DIVIDEND − Capital Expenditures (Accr
Slide 12: An Advantaged Dividend with Sustainable Growth
An Advantaged Dividend with Sustainable Growth Differentiated yield opportunity vs. peers & broader market 2021e dividend yield based on midpoint guidance (1) >7% DEVON POSITIONED FOR SUSTAINABLE GROWTH Significant CASH FLOW UPSIDE with higher commodity prices VARIABLE Merger cost synergies to s
Slide 13: Asset Operations Overview Update
AssetOperations Overview Update NYSE: DVN devonenergy.com
Slide 14: Delaware Basin – Our Capital-Efficient Growth Engine
Delaware Basin – Our Capital-Efficient Growth Engine WORLD-CLASS OIL OPPORTUNITY Eddy Lea Stacked pay position across 400,000 net acres HIGH-RETURN PROLIFIC UPPER BONE SPRING DEVELOPMENT Diversified acreage: 65% non-federal land Right Meow (10,500’ laterals) WOLFCAMP DEVELOPMENT Danger Noodle (1
Slide 15: Delaware Basin – Operating Efficiencies Advance
Delaware Basin – Operating Efficiencies Advance Achieving capital efficiencies… Reducing field level costs… Delivering margin expansion Development D&C costs per foot (excludes facilities) LOE & GP&T per Boe (pro forma) Field-level operating margin ($/BOE) ↆ11% $32.07 $7.61 $940 $846 YEAR OVER YEAR
Slide 16: Anadarko Basin – Dow Drilling JV Commenced
Anadarko Basin – Dow Drilling JV Commenced Cash flows benefit from liquids-rich production mix SIGNIFICANT ACREAGE Anadarko production mix & Mt. Belvieu price ($/barrel) POSITION DOW DRILLING JV Blaine 300K FOCUS AREA NET >2X $25.81 ACRES 2021 Program Overview 2 operated rigs running Expect to s
Slide 17: On Track to Achieve 2021 Capital Objectives
On Track to Achieve 2021 Capital Objectives Committed to a maintenance capital program in 2021 WILLISTON Oil production (MBOD) BASIN 283 – 293 >290 280 – 290 FY 2020 POWDER RIVER 284 MBOD BASIN 2021e CAPITAL BUDGET $1.6-$1.8 Billion (80% ALLOCATED TO DELAWARE) Q2 2021e 2H 2021e FY 2021e ANADARKO BAS
Slide 18: Asset Appendix Overview
AssetAppendix Overview NYSE: DVN devonenergy.com
Slide 19: Q1 2021 – Variable Dividend Calculation
Q1 2021 – Variable Dividend Calculation VARIABLE DIVIDEND CALCULATION SECOND CONSECUTIVE $886 MM – Adjusted Cash Flow (Non-GAAP) − VARIABLE DIVIDEND DECLARED $487 MM – Capital Expenditures (Accrued) $399 MM – Adjusted Free Cash Flow (Non-GAAP) − $76 MM – Fixed Quarterly Dividend ($0.11/share) $323 M
Slide 20: Leading the Industry with Our Progressive Model
Leading the Industry with Our Progressive Model ABOVE AVERAGE PXD CLR LONGEVITY OF FREE CASH FLOW EQT FANG BCEI CNX PDCE MTDR NOG AVERAGE RRC MGY ESTE SM BRY XOG COG SWN CDEV CHK AR BELOW AVERAGE XEC EOG CPE OAS MRO LPI WLL STAGE OF SHALE 3.0 ADOPTION SHALE 2.0 SHALE 3.0 - SHALE 3.0 SHALE 3.0+ Spe
Slide 21: Investor Contacts & Notices
Investor Contacts & Notices Investor Relations Contacts restrictions, compliance costs and other risks relating to governmental regulation, including with respect to environmental matters; risks related to regulatory, social and market efforts to address climate change; risks related to our hedging