Slide 1: Q2 2022 Earnings Presentation
Q2 2022 Earnings Presentation August 1, 2022 NYSE: DVN devonenergy.com
Slide 2: Key Takeaways From Our Presentation
Key Takeaways From Our Presentation #1 FIXED + VARIABLE DIVIDEND INCREASES 22% Total dividend of $1.55 per share announced with Q2 results #2 BUYBACK PROGRAM CONTINUES TO PROGRESS Repurchased 4% of outstanding shares since program inception #3 DELAWARE BASIN DRIVES Q2 OUTPERFORMANCE Operating result
Slide 3: Our Disciplined Business Model
Our Disciplined Business Model DISCIPLINED MODERATING OIL GROWTH targets: up to 5% annually GROWTH STRATEGY Focused on delivering per-share financial growth STRATEGY ANCHORED BY REDUCED Returns-driven strategy prioritizes FREE CASH FLOW generation HIGH-QUALITY REINVESTMENT RATES Pursuing a m
Slide 4: Portfolio Built to Deliver Sustainable Performance
Portfolio Built to Deliver Sustainable Performance PREMIER MULTI-BASIN PORTFOLIO WILLISTON BASIN 45 MBOED Acreage resides in top U.S. resource plays Underpinned by world-class Delaware Basin position POWDER RIVER BASIN 19 MBOED $ DIVERSIFIED COMMODITY MIX Balanced exposure to oil & natural gas
Slide 5: Creating Significant Value for Shareholders
Creating Significant Value for Shareholders Delivering on our promise to return value to shareholders Cumulative value returned ($ in billions) >100% OF MERGER VALUATION (1) RETURNED TO SHAREHOLDERS $6.2 Cash-return framework unveiled with WPX merger Designed for sustainable free cash flow gener
Slide 6: Q2 2022 – Another Impressive Financial Performance
Q2 2022 – Another Impressive Financial Performance Key financial metrics Q2 2022 Change (vs. Q1’22) Fixed-plus-variable dividend payout >200% $1.55 Core earnings (per share) $2.59 38% $1.27 EBITDAX ($MM) $2,833 33% DIVIDEND GROWTH VS. Q2 2021 $1.00 Leverage (net debt-to-EBITDAX) 0.4x 37% $0.84 Opera
Slide 7: Updated Outlook – Free Cash Flow Profile Improves
Updated Outlook – Free Cash Flow Profile Improves Raising financial & operating outlook for 2022 Free cash flow generation outlook strengthens 2022e outlook 2022e free cash flow ($ in billions) 600-610 $1.75 ($0.15) PRODUCTION ($0.10) $6.5 VOLUMES (MBOED) +3% vs. BUDGET PRODUCTION PER ~8% (1) $5.0 S
Slide 8: Compelling Free Cash Flow Yield
Compelling Free Cash Flow Yield Devon’s attractive free cash flow yield Providing an opportunity vs. broader market 2022e free cash flow yield sensitives 2022e free cash flow yield vs. broader market 17% 16% 18% 16% FREE CASH FLOW FREE CASH FLOW ADVANTAGED YIELD 15% YIELD YIELD FREE CASH FLOW YIELD
Slide 9: Free Cash Flow Priorities
Free Cash Flow Priorities SHAREHOLDER-FRIENDLY STRATEGY FIXED + VARIABLE DIVIDEND #1 Fixed dividend is paid quarterly at $0.18 per share 16% FCF Yield ~75% Variable dividend is up to 50% of excess free cash flow ALLOCATED TO SHARE REPURCHASES DIVIDENDS & #2 $2.0 billion buyback authorization i
Slide 10: A History of Returning Cash to Shareholders
A History of Returning Cash to Shareholders Delivering dividend growth through the cycle Dividends per share (1) OUR CASH-RETURN STRATEGY ~$5.00 30 CONSECUTIVE Raised fixed quarterly dividend by 13% to $0.18 per share for Q2 2022 YEARS OF DIVIDEND PAYMENTS Variable dividend payout includes up to
Slide 11: Delivering a Market-Leading Dividend Yield
Delivering a Market-Leading Dividend Yield 10% OUR MARKET-LEADING YIELD (1) >8% ~6 TIMES HIGHER than the S&P 500 yield 8% 2022e Annualized Dividend Yield SHARE BUYBACK enhances cash returns (pg. 12) ORGANICALLY FUNDED within free cash flow 6% 4% 2% 0% Energy Real Estate Utilities Consumer Fina
Slide 12: Opportunistically Repurchasing Our Shares
Opportunistically Repurchasing Our Shares $2.0 BILLION BUYBACK PROGRAM UNDERWAY LEADING THE INDUSTRY WITH DISCIPLINE & CASH RETURNS Repurchased $1.2 billion of shares to date Retired at average price of $50 per share Program represents ~6% of outstanding shares Authorization extends through May 2023
Slide 13: Improving Our Financial Strength
Improving Our Financial Strength Achieved balance sheet leverage target INVESTMENT-GRADE FINANCIAL POSITION Net debt to EBITDAX (Trailing 12-months) Strong liquidity: $3.5 billion of cash (as of 6/30/22) 1.4x Reduced net debt by >40% since merger close NET DEBT-TO-EBITDAX TARGET: 1.0x COMMIT
Slide 14: Preliminary Thoughts on 2023 Outlook
Preliminary Thoughts on 2023 Outlook NO CHANGE TO OUR STRATEGIC PLAN Focused on PER-SHARE financial growth Planning for STEADY & CONSISTENT activity PRIORITIZING free cash flow generation Committed to MARKET-LEADING cash returns | Q2 2022 Earnings Presentation 14
Slide 15: Asset Operations Overview Update
AssetOperations Overview Update NYSE: DVN devonenergy.com
Slide 16: Executing on Our Disciplined Plan
Executing on Our Disciplined Plan Outstanding Q2 execution Controlling capital costs Delivering margin expansion Key quarterly highlights Upstream capital ($ in millions) Field-level operating margin ($/BOE) 5% 62% $540 $60.12 PRODUCTION 4% VOLUMES (MBOED) ABOVE GUIDANCE BELOW MIDPOINT IMPROVEMENT V
Slide 17: Delaware Basin – Our Franchise Growth Asset
Delaware Basin – Our Franchise Growth Asset HIGH-MARGIN GROWTH WOLFCAMP & BONE SPRING +22% CO-DEVELOPMENT VS. Q2 2021 436 Mr. Potato Head (9,800’ laterals) MBOED 9 Wolfcamp & Bone Spring wells SUCCESSFUL Avg. IP30: 3,100 BOED/well WOLFCAMP DEVELOPMENTS Todd Area (10,000’ laterals) 12 Wolfcamp
Slide 18: Acreage Trades Optimizing Value of Our Resource
Acreage Trades Optimizing Value of Our Resource TRADES UNLOCK CORE INVENTORY ADDING ACREAGE IN CORE OF PLAY >200 DRILLING TOP HIGHLIGHT STATELINE AREA TRADE Traded ~7,000 net acres year to date LOCATIONS ~3,000 ACRES (~7,000 NET ACRES TRADED) Eddy (9 WOLFCAMP DRILLING UNITS) Lea Top highlight: S
Slide 19: Bolt-On Acquisition Enhances Williston Position
Bolt-On Acquisition Enhances Williston Position PURCHASE DETAILS OVERLAPS EXISTING POSITION IN CORE OF THE PLAY Contiguous operated position of 38,000 net acres Mountrail Price: $865 million (100% cash) Effective Date: 4/1/2022 Secures >100 highly economic drilling locations Closed: 7/21
Slide 20: Diversified Across Top U.S. Resource Plays
Diversified Across Top U.S. Resource Plays 3.0 Repeatable resource play with exposure to rising gas & NGL prices >$ ANADARKO Capital efficiency enhanced by $100 million drilling carry with Dow BASIN Expect to bring online 40 wells carried by Dow in second half of 2022 High-margin resource op
Slide 21: Asset Appendix Overview
AssetAppendix Overview NYSE: DVN devonenergy.com
Slide 22: Free Cash Flow Priorities
Free Cash Flow Priorities FIXED + VARIABLE DIVIDEND Q2 VARIABLE DIVIDEND CALCULATION #1 Fixed dividend is paid quarterly at $0.18 per share Variable dividend is up to 50% of excess free cash flow $2,480 MM – Adjusted Cash Flow (Non-GAAP) − $580 MM – Capital Expenditures (Accrued) $1,900 MM – Adj
Slide 23: Our Investment-Grade Financial Strength
Our Investment-Grade Financial Strength Strong liquidity with minimal near-term debt maturities Outstanding debt maturities through 2030 ($MM) $6,500 Reduced outstanding debt by >$1.2 billion since merger close EXECUTING ON OUR Net debt-to-EBITDAX: 0.4x (as of 6/30/2022) Cash FINANCIAL $3,500
Slide 24: 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 Joined Oil & Gas Methane
Slide 25: 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 26: Investor Contacts & Notices
Investor Contacts & Notices restrictions, compliance costs and other risks relating to governmental regulation, including with respect to environmental matters; risks Investor Relations Contacts related to regulatory, social and market efforts to address climate change; risks related to our hedging