Devon Energy Corporation · NYSE:DVN
Devon Energy — Q1 2019 Earnings Presentation
20 slides from Devon Energy's earnings presentation, Apr 30, 2019
Slide 1: Q1 2019 Operations Report
Q1 2019 Operations Report April 30, 2019 Exhibit 99.2
Slide 2: Defining the "New Devon"
Defining the “New Devon” World-class U.S. oil company Unrivaled acreage position in top basins Multi-decade inventory to drive sustainable growth Resource depth allows for high-grading of portfolio (exiting Canada & Barnett positions) Focused on operational excellence Aggressively reducing costs Shi
Slide 3: Efficiently Advancing the Business
Efficiently Advancing the Business RAISING U.S. OIL GUIDANCE (Q1 2019 +8 MBOD vs. top-end of guidance range) WORLD-CLASS DELAWARE RESULTS (Cat Scratch Fever wells drive Q1 production 76% higher) PRIORITIZING CASH RETURNS FOR SHAREHOLDERS (Returned >$4 billion to shareholders over past year) COST SAV
Slide 4: "New Devon" Delivers Strong Q1 Outperformance
“New Devon” Delivers Strong Q1 Outperformance “New Devon” oil production exceeds guidance 8,000 barrels per day above top end of range 24% increase in oil production vs. Q1 2018 Delaware well productivity drives Q1 oil beat Results headlined by cat scratch fever wells (pg. 14) High-rate Wolfcamp wel
Slide 5: Committed to Capital Discipline
Committed to Capital Discipline Focused on top-tier oil development opportunities New Devon 2019e E&P capital $1.8-$2.0 E&P CAPITAL 50% DELAWARE 20% STACK 15% POWDER RIVER 15% EAGLE FORD BILLION 15% MORE WELLS FOR ~10% LESS CAPITAL (VS. 2018) 2019 outlook reflects $200 million of D&C efficiencies St
Slide 6: Raising Our 2019 Growth Outlook
Raising Our 2019 Growth Outlook HIGH-RATE WELLS DRIVE Q2 OIL BEAT ~17% OIL GROWTH 2018 vs 2019 midpoint Raising “New Devon” 2019 oil production outlook New Devon U.S oil production (MBOD) Repurchase program accelerates per-share growth Outstanding shares (MM) >25% SHARE COUNT 527 ~390(1) 521 491 459
Slide 7: Optimizing New Devon's Cost Structure
Cost savings initiatives trending ahead of plan Estimated cost savings by area as of 4/30/19 ($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 $300 MM I
Slide 8: G&A Cost Savings: Path to Completion
G&A Cost Savings: Path to Completion G&A cost savings: 3-year performance targets Annualized G&A expense ($MM) $650 ~$350 (YE 2021) $300 MM TARGETED SAVINGS Cost savings initiatives outperforming plan YTD G&A expense ($MM) Targeting >$200 million of G&A savings by year-end Q1 results 8% below midpoi
Slide 9: New Devon: 3-Year Performance Targets
New Devon: 3-Year Performance Targets CUMULATIVE FREE CASH FLOW OIL GROWTH COST SAVINGS DEBT TARGET CAPITAL PROGRAM RETURN ON CAPITAL TARGET: >15%(1) $2.3 At $60 WTI 12% – 17% CAGR (FY2018 – 2021) Light-Oil Production $780 MM By 2021 See page 7 for update 1.0x to 1.5x Debt to EBITDA ratio Funded See
Slide 10: New Devon: Free Cash Flow Yield to Investors
New Devon: Free Cash Flow Yield to Investors ($55 WTI) ($60 WTI) Cumulative Free Cash Flow $3.0B Cumulative Free Cash Flow ($B) Cumulative Free Cash Flow $2.3B Free Cash Yield (Annual Avg.) Cumulative Free Cash Flow $1.6B Note: Free cash flow yield assumes market capitalization based on current shar
Slide 11: Divestiture Program Accelerates Value Creation
Divestiture Program Accelerates Value Creation Resource quality & depth allows for high-grading of portfolio Pursuing strategic alternatives for Barnett Shale and Canadian assets Outright sale or spin-off Data rooms: open Q2 2019 Expect to complete by year end Proceeds will be utilized for debt repa
Slide 12: Q1 2019 - Asset Detail
Q1 2019 - ASSET DETAIL NEW DEVON DELAWARE STACK POWDER RIVER EAGLE FORD(3) OTHER NEW DEVON PRODUCTION Oil (MBbl/d) 138 60 32 15 25 6 NGL (MBbl/d) 73 23 35 2 12 1 Gas (MMcf/d) 581 146 333 18 83 1 Total (MBoe/d) 308 107 123 21 50 7 ASSET MARGIN (per Boe) Realized price $32.60 $35.89(2) $26.65 $41.69 $
Slide 13: Delaware Basin – Capital-Efficient Growth Engine
Delaware Basin – Capital-Efficient Growth Engine Net production increased 76% year over year Q1 oil realizations: 97% of WTI (details on pg. 15) Minimal exposure to West Texas Light crude Swaps protect >90% of gas volumes ($1.46 off HH) Cat Scratch Fever wells deliver top Q1 highlight Five 2nd Bone
Slide 14: Delaware Basin – Prolific Wells Drive Q1 Results
Delaware Basin – Prolific Wells Drive Q1 Results Todd Area Eddy Boundary Raider (2 wells) Avg. IP24 hr: 12 MBOED/well RATTLESNAKE DEVELOPMENT AREA Rattlesnake Area Lea ACCELERATING TODD DEVELOPMENT PROGRAM Flagler (Phase 1) Completing Peak rates: 2H 2019 Lea Ko Lanta (2 Leonard wells) Avg. IP30: 2,6
Slide 15: Delaware Basin – Positioned for High-Return Growth
Delaware Basin – Positioned for High-Return Growth Well productivity reaching record highs Average cumulative oil production per well (MBO) Months Online 2018 average 2015-2017 average BONE SPRING & WOLFCAMP (SEE PG. 14 FOR Q1 2019 RESULTS) FOCUS IN 2019 2018 Boundary Raider wells (>90% improvement
Slide 16: Delaware Basin – A Multi-Decade Growth Platform
Delaware Basin – A Multi-Decade Growth Platform Bone Spring Wolfcamp Leonard High-return inventory at $50 WTI Gross operated inventory locations generating IRR >20%(1) 2,000 locations (Avg. lateral length: 7,500’) 16-YEAR INVENTORY (AT CURRENT ACTIVITY PACE) Weighted Avg. IRR: >50% (1) IRR on E&P ca
Slide 17: STACK – Optimizing Infill-Development Results
STACK – Optimizing Infill-Development Results Lighter-spaced projects delivering optimized results Average cumulative production per well (MBOE) Type Curve (10K LATERAL) 30-DAY IP (BOED) 1,300 – 1,600 EUR (MBOE) 1,200 – 1,400 D&C COST ~$7.5 MM Type Well Pony Express(1) Scott(1) Q1 production average
Slide 18: Powder River Basin – Oil Growth Set to Accelerate
Powder River Basin – Oil Growth Set to Accelerate Net production increased 15% vs. Q4 2018 Activity increasing: 4 rigs & dedicated frac crew Expect >50% oil exit rate growth (Q4’ 19 vs. Q4’ 18) Oil volume growth to accelerate in 2H 2019 High-return growth to benefit from improving margins Light-oil
Slide 19: Eagle Ford – Expanding Resource Opportunity
Eagle Ford – Expanding Resource Opportunity (in $MM) Last 12 months Revenue $930 Production Expenses $215 Cash Margin $715 Capital Expenditures $172 Free Cash Flow $543 Substantial free cash flow Q1 production averaged 50 MBOED (~50% oil) 9 wells achieved IP30s in Q1 (avg. 3,100 BOED) Activity incre
Slide 20: 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