Slide 1: Q3 2023 Earnings Presentation
Q3 2023 Earnings Presentation November 7, 2023 NYSE: DVN devonenergy.com
Slide 2: Key Takeaways From Our Presentation
Key Takeaways From Our Presentation 1 FIXED + VARIABLE DIVIDEND INCREASED 57% Total dividend of $0.77 per share announced with Q3 results 2 PRODUCTION PER SHARE EXPANDS 10% IN Q3 Delaware Basin results headline Q3 operating performance 3 FREE CASH FLOW GENERATION ACCELERATES >2x improvement in free
Slide 3: Our Disciplined Business Model
Our Disciplined Business Model DISCIPLINED MODERATED OIL GROWTH targets: up to 5% annually GROWTH STRATEGY Focused on growing per-share value CONSISTENT Returns-driven strategy prioritizes FREE CASH FLOW generation REINVESTMENT RATES Optimizing results with steady activity levels through the
Slide 4: Strategy Creating Significant Value for Shareholders
Strategy Creating Significant Value for Shareholders Delivering on our promise to shareholders > $12 BILLION Cumulative uses of cash since WPX merger ($ in billions) SINCE LATE 2020 (2-TIMES MERGER VALUATION) Strategy designed for sustainable free cash flow generation Industry-first cash-return
Slide 5: Portfolio Built to Deliver Sustainable Performance
Portfolio Built to Deliver Sustainable Performance PREMIER MULTI-BASIN PORTFOLIO WILLISTON BASIN 54 MBOED Acreage resides in top U.S. resource plays Underpinned by world-class Delaware Basin position POWDER RIVER BASIN $ DIVERSIFIED COMMODITY MIX 19 MBOED Balanced exposure to oil, NGLs & natur
Slide 6: Advantaged Operating Scale & Diversification
Advantaged Operating Scale & Diversification Top U.S. onshore pure-play producers Q3 2023 total production (MBOED) (1) Oil Gas 1,000 Volumes Volumes 48% 27% BALANCED 750 COMMODITY EXPOSURE NGL 500 Volumes 25% Total Production (MBOED) 250 Oil Production (MBOD) 0 TOP U.S. ONSHORE PRODUCERS (1) Sourced
Slide 7: Q3 Results & Updated 2023 Outlook
Q3 Results & Updated 2023 Outlook Q3 RESULTS Q4 OUTLOOK KEY MESSAGES TOTAL 665 ~ 650 Production per share increased 10% year over year in Q3 PRODUCTION (MBOED) (MBOED) Q4 outlook impacted by Williston declines & Delaware activity timing TOTAL (1) Capital investment declined 12% in Q3 vs. Q2 20
Slide 8: Improved Capital Efficiency in 2024
Improved Capital Efficiency in 2024 2024 OUTLOOK HIGH-GRADING CAPITAL FREE CASH FLOW GROWTH TOTAL CAPITAL ($ IN BILLIONS) ($ IN BILLIONS) ~10% ~20% TOTAL $3.3-$3.6 $3.80 $3.2 CAPITAL BILLION REDUCTION IMPROVEMENT $ BREAKEVEN FUNDING < $40 WTI OIL PRICE $3.45 $2.7 TOTAL ~650 VOLUMES MBOED (Oil: 315 M
Slide 9: Catalysts Driving Improved Outlook
Catalysts Driving Improved Outlook CONCENTRATING INVESTMENT IN THE DELAWARE Activity to focus on multizone Wolfcamp projects in core of play Infrastructure buildout progressing to ease constraints in 2024 DELAWARE-FOCUSED PROGRAM 60% > HIGH-GRADING ACTIVITY ACROSS OTHER KEY ASSETS Willis
Slide 10: Upcoming Quarterly Production Cadence
Upcoming Quarterly Production Cadence Dropped to 3 Frac Crews Adding in Delaware 4th Frac Crew Temporary 4th frac crew in in Delaware the Delaware was dropped 321 ~315 ~315 300 mid-year to replenish DUC inventory OIL PRODUCTION (MBOD) 250 Lower activity will result in production declines for Q4
Slide 11: Compelling Free Cash Flow Yield
Compelling Free Cash Flow Yield Devon’s attractive free cash flow yield Providing an opportunity vs. broader market 2024e free cash flow yield sensitivities 2024e free cash flow yield vs. broader market 14% FREE CASH FLOW YIELD 11% ADVANTAGED YIELD OPPORTUNITY FREE CASH FLOW 11% $4.0 YIELD 11% FREE
Slide 12: Free Cash Flow Priorities in 2024
Free Cash Flow Priorities in 2024 TARGET PAYOUT IN 2024 CASH-RETURN OBJECTIVES (% OF FREE CASH FLOW) Targeting ~70% cash-return payout to shareholders BALANCE SHEET 30% Expect GROWTH in fixed dividend payout Optimize allocation between BUYBACKS & VARIABLE 70% CASH RETURNS RETIRE maturing debt & IMPR
Slide 13: Committed to Improving Financial Strength
Committed to Improving Financial Strength TOTAL LIQUIDITY CASH BALANCE LOW LEVERAGE $3.8B $0.8B 0.7x CASH & UNDRAWN CASH POSITION NET DEBT-TO-EBITDAX CREDIT FACILITY AS OF 9/30/2023 AS OF 9/30/2023 CREDIT RATINGS DEBT REDUCTION TARGETED MATURITIES BBB/Baa2 ~$1.5B $1.0B (1) INVESTMENT-GRADE AT SINCE
Slide 14: Asset Operations Overview Update
AssetOperations Overview Update NYSE: DVN devonenergy.com
Slide 15: Delaware Basin – Our Franchise Growth Asset
Delaware Basin – Our Franchise Growth Asset PARKWAY POTATO BASIN 400K New Mexico NET ACRES TODD Texas THISTLE/GAUCHO CAPITAL-EFFICIENT GROWTH Eddy COTTON DRAW RATTLESNAKE Lea +5% VS. Q2 2023 VOLUMES (MBOED) 440 STATELINE New Mexico 420 Texas 415 MONUMENT DRAW 2023 YTD Projects Loving Core Focus Area
Slide 16: Delaware Basin – High-Impact Results in Q3
Delaware Basin – High-Impact Results in Q3 HIGH-IMPACT WOLFCAMP “A” PROJECT ADDING VALUE WITH ACREAGE TRADES CO-DEVELOPING WOLFCAMP “A” & “B” 4,600 BOED 4,100 BOED 3,200 BOED AVG. IP30 RATES/WELL AVG. IP30 RATES/WELL AVG. IP30 RATES/WELL CBR 17 (10,200’ laterals) Haflinger (9,900’ laterals) 8 Wolf
Slide 17: Delaware – Capital Efficiency Improvements
Delaware – Capital Efficiency Improvements IMPROVING WELL PRODUCTIVITY COMPLETION EFFICIENCIES AVG. 30-DAY INITIAL PRODUCTION RESULTS COMPLETED FEET PER DAY (ALL FORMATIONS) 2,856 >20% 3,010 23% 2,101 1,955 IMPROVEMENT 1,713 1,911 (VS. 1H 2023) IMPROVEMENT (2023 vs. 2020) 2,470 2020 2021 2022 2023 Y
Slide 18: Delaware – Capital Efficiency to Improve in 2024
Delaware – Capital Efficiency to Improve in 2024 IMPROVING DELAWARE WELL PRODUCTIVITY KEY DRIVERS OF IMPROVEMENT Higher allocation towards core of the 225 10% 12-MONTH CUMULATIVE OIL VOLUMES (MBO) UP play in New Mexico TO IMPROVEMENT 180 Wolfcamp focused program with less (NORMALIZED FOR 10,000’
Slide 19: Inventory Depth Underpins Delaware Sustainability
Inventory Depth Underpins Delaware Sustainability DELAWARE BASIN INVENTORY BY KEY OPERATOR SOURCE: ENVERUS INTELLIGENCE 10,000 Multi-decade resource opportunity across 400,000 net acres 8,000 PV-10 breakeven: ~$40 WTI per economically proven location Delaware represents ~60% of total company r
Slide 20: Diversified Across Top U.S. Resource Plays
Diversified Across Top U.S. Resource Plays 2.5 Validus acquisition drives year-over-year production growth in Q3 $ EAGLE Asset is projected to generate >$1 billion of cash flow in 2023 FORD 2024 capital efficiency enhanced by higher allocation to DeWitt County Repeatable resource play with e
Slide 21: Committed to Environmental Excellence
Committed to Environmental Excellence 2023 SUSTAINABILITY REPORT HIGHLIGHTS ENVIRONMENTAL TARGETS Flared volume intensity was reduced by 77% (1) GHG EMISSIONS SCOPE 1 & 2 Scope 1 & 2 GHG emissions intensity declined by 19% (1) NET ZERO GHG EMISSIONS FOR SCOPE 1 & 2 BY 2050 GHG EMISSIONS INTENSITY SC
Slide 22: Asset Appendix Overview
AssetAppendix Overview NYSE: DVN devonenergy.com
Slide 23: Attractive Dividend Payouts Through the Cycle
Attractive Dividend Payouts Through the Cycle Dividend framework provides torque to higher oil prices Dividend yield sensitivities based on Q3 2023 results (annualized Q3 dividend declared) OUR CASH-RETURN STRATEGY 12% 11.5% Raised fixed quarterly dividend by 11% to $0.20 per share in 2023 9% 6.5%
Slide 24: Repurchasing Shares Through the Cycle
Repurchasing Shares Through the Cycle Repurchase program accelerates per-share growth Outstanding shares (MM) 677 (1) $3.0 BILLION BUYBACK PROGRAM Repurchased $2.1 billion of shares to date Upsized authorization 3-times since inception Program represents ~9% of outstanding shares 6% 641 SHARE
Slide 25: Our Investment-Grade Financial Position
Our Investment-Grade Financial Position Strong liquidity with minimal near-term debt maturities Outstanding debt maturities through 2030 ($MM) $3,761 Reduced outstanding debt by ~$1.5 billion since merger close EXECUTING ON OUR Net debt-to-EBITDAX: 0.7x (at 9/30/2023) Cash FINANCIAL $761 Signi
Slide 26: Inventory Underpins Long-Term Sustainability
Inventory Underpins Long-Term Sustainability High-quality & multi-decade inventory >20YEAR Gross operated inventory locations (Avg. lateral length is ~2 miles) UNRISKED INVENTORY (WITH APPRAISAL & TIGHTER SPACING) ~10,000 locations ~12YEAR RISKED INVENTORY (AT CURRENT ACTIVITY PACE) >4,500 locations
Slide 27: Investor Contacts & Notices
Investor Contacts & Notices Investor Relations Contacts risks related to our hedging activities; our limited control over third parties who operate some of our oil and gas properties; midstream capacity constraints and potential interruptions in production, including from limits to the build out of