Slide 1: Devon and Crosstex to Create New Midstream Business
Devon and Crosstex to Create New Midstream Business October 21, 2013 NYSE: DVN www.devonenergy.com NASDAQ: XTEX / XTXI www.crosstexenergy.com
Slide 2: Investor Notices
Investor Notices Safe Harbor Some of the information provided in this presentation includes “forward-looking statements” as defined by the Securities and Exchange Commission (SEC). Words such as “forecasts," "projections," "estimates," "plans," "expectations," "targets," and other comparable termino
Slide 3: Transaction Overview
Transaction Overview John Richels Devon President and CEO NYSE: DVN NASDAQ: XTEX & XTXI
Slide 4: Strategic Combination
Strategic Combination Devon and Crosstex to combine midstream assets to form new general partner (New GP) and master limited partnership (MLP) Creates new midstream business with high-quality upstream sponsorship Combined 2014e adjusted EBITDA ≈ $700 million (pre-synergies) Investment-grade
Slide 5: Strategic Highlights
Strategic Highlights Immediate and meaningful value accretion for both Devon and Crosstex equity holders Increased scale and diversification Devon upstream sponsorship Enhanced financial strength Improved cash flow stability Enhanced growth outlook Cultural alignment and experienced le
Slide 6: Transaction Overview
Transaction Overview Devon Energy Corporation ❶ Devon forms and contributes (NYSE: DVN) substantially all of its U.S. based midstream assets to Devon ❶ Form Holdings Holdings. ❷ Devon contributes $100 million in Devon Midstream cash and 50% LP interest in Devon Holdings, LP Holdings to the New GP in
Slide 7: Pro Forma Ownership Structure
Pro Forma Ownership Structure Devon Energy Corporation (NYSE: DVN) New GP Public Unitholders ≈70% ≈53% LP ≈30% General Partner 100% Incentive Distribution Rights (IDRs) (“New GP”) General Partner, MLP ≈7% LP and Public IDRs Unitholders Master Limited Partnership Dist./Q Splits (“MLP”) ≈40% LP ≤ $0.2
Slide 8: Governance
Governance Board of Directors: 5 Devon, 1 management and 3 independent Chairman of the Board: John Richels (Devon’s President and CEO) President and CEO: Barry Davis (Crosstex’s President and CEO) Chief Financial Officer: Mike Garberding (Crosstex’s Chief Financial Officer) Other senior of
Slide 9: Benefits to Devon
Benefits to Devon Accretive to shareholders $4.8 billion transaction is highly accretive (15x distributable cash flow; 11x adjusted EBITDA) Provides immediate market-based valuation for Devon’s U.S. midstream business Publicly held general partner units Publicly held master limited partner
Slide 10: Strategic Highlights
Strategic Highlights Barry E. Davis Crosstex President and CEO NYSE: DVN NASDAQ: XTEX & XTXI
Slide 11: Benefits to Crosstex
Benefits to Crosstex Immediately accretive to distributable cash flow and shareholder returns Significantly increases scale and diversification Partners Crosstex with high-quality upstream sponsor Significantly enhances financial strength and improves cash flow stability Increases and acce
Slide 12: Accretive to Investor Returns
Accretive to Investor Returns Financial Benefits to Crosstex Combined 2014e adjusted EBITDA ≈$700 million (pre-synergies) Increased capacity for cash distributions Potential for significant Upstream Sponsored MLP Yields equity appreciation 8.0% 7.0% 6.7% Devon sponsorship of MLP should lead
Slide 13: Increased Scale & Diversification
Increased Scale & Diversification Diversity of Midstream Services & Geographies PA Gas Gathering and Transportation OH ≈6,500 miles of gathering and MARCELLUS transmission lines CANA-WOODFORD OK Gas Processing UTICA 13 plants with 3.3 Bcf/d of total net inlet capacity ARKOMA- WV WOODFORD NGL Tra
Slide 14: Strong Sponsorship
Strong Sponsorship Devon is Committed to the New Company’s Success Devon has dedicated ≈800,000 net Devon’s Upstream Portfolio & Remaining Midstream Assets acres to partnership Horn River Long-term contracts in place to Greater Jackfish Oil stabilize future cash flows Wapiti Pike Liquids-Rich Ac
Slide 15: Improved Cash Flow Stability
Improved Cash Flow Stability High Quality & Diversified Revenue Streams Upstream Producers Devon is largest customer (> 50% of combined 2014e adjusted EBITDA) Diversified industry customer base Growth projects focused on liquids Emphasis on fee-based contracts Transporters Contract Type Prod
Slide 16: Financial Highlights
Financial Highlights Mike Garberding Crosstex Chief Financial Officer NYSE: DVN NASDAQ: XTEX & XTXI
Slide 17: Enhanced Financial Strength
Enhanced Financial Strength Devon contributes assets without debt Initial MLP pro forma leverage is 2.1x(1) 2013e EBITDA (MLP & GP combined <1.5x(1) 2013e EBITDA) Investment-grade credit profile Increases access to capital Lowers cost of capital Strong liquidity position No near-term d
Slide 18: Enhanced Growth Outlook
Enhanced Growth Outlook Maximizing Earnings & Distribution Growth Execute on growth projects underway Exploit sponsor-related opportunities Support Devon’s upstream growth needs Potential to acquire additional Devon assets Right of first offer for Access Pipeline Financial capacity to ag
Slide 19: Enhanced Growth Outlook: 2014e Financial Outlook
Enhanced Growth Outlook 2014e Financial Outlook 2014e adjusted EBITDA (pre-synergies) Pro Forma 2014e ≈$700 MM combined Outlook ≈$500 MM at the MLP Combined Adjusted EBITDA $700 MM Synergies contribute to distributable cash MLP Adjusted EBITDA $500 MM flow growth: Distribution Per Unit (MLP)
Slide 20: Summary
Summary John Richels Devon President and CEO NYSE: DVN NASDAQ: XTEX & XTXI
Slide 21: Summary
Summary Immediate and meaningful value accretion for both Devon and Crosstex equity holders Increased scale and diversification Devon upstream sponsorship Enhanced financial strength Improved cash flow stability Enhanced growth outlook Cultural alignment and experienced leadership NYSE
Slide 22: Q&A
Q&A NYSE: DVN www.devonenergy.com NASDAQ: XTEX / XTXI www.crosstexenergy.com