Devon Energy Corporation · NYSE:DVN
Devon Energy — Investor Presentation (November 2001)
43 slides from Devon Energy's investor presentation, Nov 28, 2001
Slide 1: Devon Energy
OCVOH enency
Slide 2: Risk Factors
OCVOH ewenay Risk Factors Information provided in this presentation includes “forward- looking statements” as defined by the SEC. Forward-looking statements are identified as “forecasts, projections, estimates, plans, expectations, etc.” and are subject to a variety of risk factors. For representati
Slide 3: Corporate Overview
OCVOH Ewenay Corporate Overview Shares outstanding: Equity capitalization: Enterprise value: Senior credit rating: S&P Moody's Fitch (D & P) Pro forma data for the cambination of Devan, Mitchell and Anderson 155 MM ~$5.8B w~ $13.8 B BBB+ Baa2 BBB
Slide 4: Corporate Overview
OCVOH Ewenay Corporate Overview Proved Reserves: 2,044 MMBOE Production Profile: 95% North America 5% International Production Mix: 64% gas / 36% liquids R/P Ratio: 9.8 years Pro forma data for the cambination of Devan, Mitchell and Anderson
Slide 5: Track Record
Track Record Growth Strategy . Near-term Growth Projects . Long-term/High-potential Projects
Slide 6: Reserve Growth
OCVOH ewenay Reserve Growth Proved Reserves (MMBOE @ 6:1) aoe ari = as We Sy Se pan Ero) i Note: Pro forma for the Anderson and Mitchell acquisitions. 1987-1997 represents historical Devan as. ‘reported prior to the 1998 Northstar merger. 1998-1999 represents historical Devan as reported prior to th
Slide 7: Reserves Per Common Share
OCVOH ewenay Reserves Per Common Share Proved Reserves (BOE @ 6:1) * diluted 12.75 5.61 aro 518 424 494 3.76 ase 261 282 319 296 ‘87 "88 ‘89 90° ‘91 92 93 ‘94 "95 ‘96 ‘97 ‘96 99 ‘00 ‘OT Pro Forma I Pro forma reserves combine Devon, as of 12/00, Mitchell as of 6/01 and Anderson as of 08/01. Pro forma
Slide 8: Production Per Common Share
OCVOH ewenay Production Per Common Share (BOE Per Share @ 6:1) 2 0.23 0.24 0.18 02 ‘87 ‘88 ‘89 90 91 92 93 ‘94 95 96 ‘97 ‘98 99 00 ‘01 Forma Il Represents annualized production for the quarter ended 6/0/01 combined Devon, Mitchell and Anderson. Pro. forma basic shares include 23.2 MM for Mitchell le
Slide 9: Cash Margin Per Common Share
OCVOH Enenay Cash Margin Per Common Share (S Per Share) 22.01 1907 1988 1989 1990 1901 1902 1902 1904 1995 1906 1907 1990 1990 2000 2001 Forma Note: 2001 datais estimiated by annualizing the second quater pro forma combination of Devon, Anderson ‘and Mitchell. 1987-1997 represents historical Devon a
Slide 10: Growth Strategy
Track Record Growth Strategy . Near-term Growth Projects . Long-term/High-potential Projects
Slide 11: Growth Strategy
OCVOH Ewenay Growth Strategy Integrate drilling and acquisitions to establish focused, high-margin property concentrations.
Slide 12: E&P Capital Expenditures
OCVOH ewenay E&P Capital Expenditures 2,100) ($MM) 4,100 a ‘98 00 Est. 01 Notes: (A) Estimated 2001 stand-alone Devon. (B) Estimated 2001 pro forma Devon, Anderson and Mitchell. 1996-1997 represents historical Devan as reported prior to the 1998 Northstar merger. 1998- 1999 represents historical Dev
Slide 13: Strategic Drivers for M&A
OCVOH ewenay Strategic Drivers for M&A Enhance Establish New Technology Strengthen Core Areas Core Areas Transfer Balance Sheet Alta (1994) KMG-NA (1996) Northstar (1998) PennzEnergy (1999) Santa Fe/Snyder (2000) e Anderson Exploration (2001) Mitchell (Est. Q4 2001)
Slide 14: M&A Criteria for Per Share Success
OCVOH ewenay M&A Criteria for Per Share Success Cash Flow Earnings Reserves Production Accretion Accretion Accretion Accretion Alta (1994) KMG-NA (1996) Northstar (1998) PennzEnergy (1999) Santa Fe/Snyder (2000) Anderson Exploration (2001) _ Mitchell (Est. Q4 2001)
Slide 15: Anderson Acquisition
Acton ewenay GD Ayveysoy Anderson Acquisition + 9/04/01: Announced purchase of Anderson by Devon * Terms: All cash tender of C$40 per Anderson share US$. 3.4 billion cash tender US$ 1.2 billion net debt and other obligations US$ 4.6 billion total transaction * Closed October 15, 2001
Slide 16: Mitchell Acquisition
Oevol enenay ARMitchell Energy Mitchell Acquisition 8/14/01: Announced purchase of Mitchell by Devon Terms: 50/50 cash and stock — $3.5 billion, including 0.4 billion of assumed debt Board approved / Mitchell commitment Expected close: Q4 2001
Slide 17: Integration
OCVOH Ewenay Integration « Mitchell & Anderson: well-run companies * Separate U.S. & Canadian integration teams ¢ Mitchell + Anderson: ~ $50 MM synergies
Slide 18: Reserve Growth from M&A
OcVO enenay Reserve Growth from M&A* ll Represents Anderson 7/21/01 reserves. ll Represents Mitchell 6/30/01 reserves. 135% 114% ‘87 ‘88 ‘89 "90 ‘91 ‘92 93 ‘94 ‘95 96 ‘97 ‘98 ‘99 ‘00 ‘01 Pro Forma + Proved reserves added fram mergers and acquisitions expressed as a % of begiming of the year reserves
Slide 19: Acquisition Financing (Term Loan)
OCVOH Ewenay Acquisition Financing (Term Loan) ° 5 year term loan: $3 billion « Rate as of 10/17/01: 3.41% —After-tax rate: 2.08% ¢ Back-end weighted amortization Note: Assumes combined federal and state income tax rate af 39%.
Slide 20: Acquisition Financing (Bonds)
OCVOH Ewenay Acquisition Financing (Bonds) After-tax Amount Maturity Rate Rate $1.75 B 2011 6.875% 1.65% $1.25 B 2031 7.875% 1.92% $3.00 B ‘Assumes combined federal and state or provincial income tax rates of 38.2% in Canada and 39.0% in the US
Slide 21: Debt Amortization Schedule
OCVOH ewenay Debt Amortization Schedule Year $ Millions Year 2002 2003 2004 2005 2006 2007 69 6 552 2,007 1,740 175 $ Millions 2008 - 2009 200 2010 - 2011 2,150 2012-2030 - 2031 1,250 Notes: Represents required amortization for all debt securities and bank debt agreements assuming ‘completion of Mit
Slide 22: Debt Reduction Plan
OCVOH Ewenay Debt Reduction Plan ¢ Cash flow from operations * = $1 billion non-core property sales
Slide 23: North American Core Areas
OCVOH ewenay North American Core Areas ‘Western Canadian Sedimentary Basin Gulf of Mexico/Gulf Coast Percent of Total Production Pro. Forma Permian/Mid-Continent 31% Rocky Mount 11% Gulf of Mexico/Gulf Coast __17% Canada 36% Total North America 95% Note: Pro forma production combining Devon, Mitchel
Slide 24: North American Operations
OCVOH Ewenay North American Operations Dominant player in core areas Technical team with proven track record Low cost, focused operations Access to multiple sales markets 70% of proved reserves are developed
Slide 25: Track Record
Track Record Growth Strategy . Near-term Growth Projects . Long-term/High-potential Projects
Slide 26: Barnett Shale
OCVOH enenay Barnett Shale * Strategic market access probes * 230,000 net acres + WI >90% ° 2.1 TCFE proved reserves (8% of gas in place) + Multi-TCF potential + 2000 wells drilled: 142 © Damentess ¢ 2001 wells planned: 276 __Infill Pilots
Slide 27: Light Sand Fracturing Technology
OcVOH ewenay Light Sand Fracturing Technology Mitchell - Barnett Shale Normalized Production Total Wells Drilled (576) 1,000 900 800 700 600 500 400 300 200 100 ~~ Pre 1999 Conventional Frac (406) — Post 1999-2000 LSF Wells (170) McFDMWell ° 12 24 Months on Production
Slide 28: Mitchell Production Growth
OCVOH ewenay (MMCFE/D) Mitchell Production Growth 437 : 313 - | 1200 2Q'00 3Q'00 4Q'00 1001 2Q'01
Slide 29: Powder River Basin
OCVOH enenay Powder River Basin '* 250,000 net acres * > 1,300 gross wells drilled to date * 400 wells awaiting tie-in * Net current production= 90 MMCF/D.
Slide 30: Vermejo Park Ranch
OCVOH ewenay Vermejo Park Ranch Raton Basin 280,000 gross acres (minerals) WI=25%, NRIF42% 190 wells drilled to date 0.5-1.0 TCF net target Coal seam thickness: > 80 FEET > 60 FEET > 40 FEET > 20FEET
Slide 31: Cherokee Basin CBM
OCVOH enenay Cherokee Basin CBM Kansas Oklahoma > 374,000 net acres * Geology: — Depths 800 - 3,000' — Pennsylvanian coals > Current Status: — 3 rigs drilling; acquiring fourth — Drilling - 2001: 100 wells - 2002: 400 - 500 wells
Slide 32: Coalbed Methane Target Rates
OCVOH ewenay Coalbed Methane Target Rates RATE, MMCFE/D. 80 480 2 3 3 60 40 RATE, MBOE/D. 20 0 " 0 2000 2001 2002 2003 2004 2005 2006 San Juan ~ PRB = Raton = Arkoma/Cherokee
Slide 33: Deep Basin
OcvoH enenay Deep Basin + Large, multi-zone targets + 670,000 net undeveloped acres Northen Plains * Controls gathering and processing infrastructure
Slide 34: Peace River Arch
OcvoH enenay _ Peace River Arch + Multi-zone exploitation and exploration * 784,000 net undeveloped acres + Light oil growth potential
Slide 35: Track Record / Growth Strategy / Projects
I. Track Record Il. Growth Strategy Ill. Near-term Growth Projects IV. Long-term/High-potential Projects
Slide 36: Foothills
NEB.C Peace. Ft stm | River sin | Arch Deep Basin OCVOH ewenay Foothills High impact targets: — Narraway — Cabin Creek — Bighorn — Weejay — West Ojay > 450,000 net undeveloped acres Prospect size: > 50 BCF Pipeline completion: mid-2002
Slide 37: Ladyfern Area
5 a evo ewency Ladyfern Area Current production: > 8 MBOE/D 300,000 net undeveloped acres 6 recent 3D seismic programs Multiple target zones: 5-30 BCF i CHINCHAGA = : 2001 YTD: 3 discoveries
Slide 38: West Africa
TTAFRICA bs OCVOH Ewenay West Africa Marine IX Block 150 MMBOE gross target 37.5% working interest Expected spud: Q1 2002 Agali Block On trend w/Triton’s La Ceiba 150 MMBOE gross target 50% working interest Expected spud: mid-2002
Slide 39: Mackenzie Delta
OCVOH Ewenay Mackenzie Delta High potential area Large, high-impact targets —Est. 65 TCFE in area Largest land holder Interest in 48% of Mackenzie Delta - 2 MM net acres north of 60° 4 well per year program:
Slide 40: Azeri-Chirag Guneshli Unit
OCVOH Ewenay Azeri-Chirag Guneshli Unit cas 41999 Appraisal Well) cas > GcA4 ae 10 Miles: Azerbaijan Operator: BP Amoco 5.6% carried interest Current production: 115 MBO/D (gross) Gross proven reserves: 4+ BBO Ultimate gross potential: 6+ BBO
Slide 41: Summary
OCVOH Ewenay Summary Focused, North American assets Low-risk, near-term growth High-potential exploration upside Track record of per share growth
Slide 42: Investors and security holders are advised to read the proxy statement
Investors and security holders are advised to read the definitive joint proxy statement/ prospectus that will be included in the Registration Statement on Form S-4 filed with the Securities and Exchange Commission in Connection with the proposed transaction because it will contain important informat
Slide 43: Devon Energy
OCVOH enency