Devon Energy Corporation · NYSE:DVN
Devon Energy — Investor Presentation (February 2017)
30 slides from Devon Energy's investor presentation, February 2017
Slide 1: Investor Presentation
Investor Presentation February 2017 NYSE: DVN devonenergy.com
Slide 2: Investor Contacts & Notices
Investor Contacts & Notices Investor Relations Contacts Scott Coody, Vice President, Investor Relations (405) 552-4735 / scott.coody@dvn.com Chris Carr, Supervisor, Investor Relations (405) 228-2496 / chris.carr@dvn.com Forward-Looking Statements This presentation includes "forward-looking statement
Slide 3: Devon Today
Devon Today A Leading North American E&P Heavy Oil Production Key Messages 2017e: 539 - 561 MBOED Premier asset portfolio Gas Multi-decade growth platform 36% Oil Rockies Oil 46% Focused in STACK and Delaware Basin NGL 18% Delivering top-tier execution STACK Delaware Basin Significant fina
Slide 4: Strategic Approach To 2017
Strategic Approach To 2017 Further increase capital productivity Maintain improved cost structure Focused on value and returns Concentrate activity within STACK and Delaware Harvest cash flow from other assets Invest directionally within cash flow Disciplined hedging program 4
Slide 5: Operating Strategy For Success
Operating Strategy For Success Maximize base production Optimize capital program — Minimize controllable downtime — Disciplined project execution — Enhance well productivity — Perform premier technical work — Leverage midstream operations — Focus on development drilling — Control operating costs
Slide 6: Delivering Record-Setting Well Productivity
Delivering Record-Setting Well Productivity Best drilling results in Devon’s 45-year history — Development drilling focused in top resource plays — Enhanced completion designs and improved well placement 750 Avg. 90-Day Wellhead IPs BOED, 20:1 600 450 300 150 IMPROVEMENT 0 2012 2013 2014 2015 2016
Slide 7: Efficiency Gains Create Tremendous Value
Efficiency Gains Create Tremendous Value Achieved $1.3 billion of annual cost savings Operating Costs and G&A $ Billions ― LOE and G&A reduced ≈30% from peak rates $4.1 Base production initiatives yielding excellent results ― Efforts achieving 2% production uplift $2.8 ― Creating ≈$100 million o
Slide 8: Performance Transformation Continues In 2017
Performance Transformation Continues In 2017 Drilling activity to shift to longer laterals — Improves capital efficiency & well productivity Control supply chain to reduce costs — Unbundling historical, high-margin services — Utilizing more diversified vendor universe — Adding longer-term contra
Slide 9: Accelerating Capital Investment
Accelerating Capital Investment 2017 Capital Outlook Rig Activity – U.S. Resource Plays Disciplined capital allocation focused on returns Operated Rigs 40 UP TO 2017 E&P capital: $2.0 to $2.3 billion RIGS BY YEAR END 2017 30 — 90% devoted to U.S. resource plays RIGS AT YEAR END 2016 20 — Concent
Slide 10: Rapid Expansion Of High-Margin Production
Rapid Expansion Of High-Margin Production 2017 & 2018 Outlook Accelerated investment drives strong oil growth U.S. Oil Production Growth MBOD — U.S. oil growth: 13% - 17% (2017 vs. Q4 16) ≈ (vs. 2017) — Production growth resumes in Q1 2017 (vs. Q4 2016) Higher growth rates expected in 2018 105 —
Slide 11: Expanding The Resource Base
Expanding The Resource Base Drilling Schedule Catalyst Rich In 2017 Impactful appraisal work underway in STACK and Delaware STACK Initial multi-zone Meramec — >1 million surface acres development program — 30,000 potential locations (1/3 derisked) Ongoing Meramec infill tests to define future
Slide 12: STACK: Best-In-Class Position
STACK Best-In-Class Position World-class development opportunity Blaine Meramec – Core Area Dewey — >600,000 net acres by formation(1) Kingfisher — Top targets: Meramec & Woodford — Q4 net production: 88 MBOED Custer Largest leasehold position of any operator Woodford – Core Area Canadian — Deep
Slide 13: STACK: Positioned For Strong Production Growth
STACK Positioned For Strong Production Growth Production expected to increase >35% during 2017 Product mix shifting to higher-margin oil and liquids production >120 STACK Production Growth MBOED 88 GROWTH Q4 2016 Q1 2017e Q2 2017e Q3 2017e Q4 2017e 13
Slide 14: STACK: Meramec Moving To Full-Field Development
STACK Meramec Moving To Full-Field Development Initial Meramec spacing pilots successful STACK PILOTS – OPERATED & NON-OPERATED — Tested multi-zone, staggered laterals Blaine Showboat Development ≈15 wells (2H 2017) Born Free Staggered Pilot — Spacing up to 7 wells in a single interval Parent
Slide 15: STACK: Meramec Resource Continues To Expand
STACK Meramec Resource Continues To Expand Appraisal & infill success increases inventory MERAMEC INVENTORY — Raised inventory 40% above previous estimates — Meramec inventory: 1,700 risked locations 1,700 RISKED LOCATIONS Future development to leverage long laterals — Further enhances capital a
Slide 16: STACK: Woodford Shale Liquids-Rich Development
STACK Woodford Shale: A Top-Tier Liquids-Rich Development Hobson Row completion activity underway Woodford Eastern Core Activity Kingfisher — 5-section development with ≈40 wells Blaine Hobson Row — Testing larger completions, tighter spacing and ≈40 Wells drilled (5-sections) increased lateral le
Slide 17: Delaware Basin: A World-Class Oil Play
Delaware Basin A World-Class Oil Play Industry leader in basin Bone Spring — 670,000 net acres by formation SLOPE 285,000 net acres Lea Eddy Wolfcamp — Acreage concentrated in core of the play 225,000 net acres Leonard Shale — Q4 net production: 54 MBOED 60,000 net acres Delaware Sands BASIN 80,00
Slide 18: Delaware Basin: Maximizing The Value Of Every Barrel
Delaware Basin Maximizing The Value Of Every Barrel Majority of cost savings are sustainable Delaware Basin Unit LOE Peak cost to Q4 2016 — Improved electrical infrastructure — Enhanced water-handling infrastructure IMPROVEMENT Delaware Basin Unit LOE $/BOE $16.87 $14.80 $12.62 $12.00 $10.76 $8.82
Slide 19: Delaware Basin: Accelerating Drilling Activity
Delaware Basin Accelerating Drilling Activity Delaware Basin 2017 Drilling Plans Ramping up to 10 rigs by year-end 2017 ≈100 Operated Wells Delaware — Development activity targeting Bone Spring & Leonard Sands 5% — Significant appraisal work in Wolfcamp play 23% 36% Wolfcamp Bone Spring Producti
Slide 20: Delaware Basin: Total Reservoir Access Concept (TRAC)
Delaware Basin Total Reservoir Access Concept (TRAC) A disciplined development approach to drive returns higher — More efficient permitting process — Minimizes surface disturbance — Utilizes integrated surface facilities — Flexibility to add/defer development zones — Allows for simultaneous operat
Slide 21: Delaware Basin: Growing Resource Opportunity
Delaware Basin Growing Resource Opportunity Basin Slope 1 Section 1 Section DELAWARE Identified >5,800 risked locations Madera SANDS Lower Brushy Massive upside with >20,000 potential locations A LEONARD B C Catalyst-rich drilling activity in 2017 1st BONE SPRING — ≈60% of drilling in Wolfcamp
Slide 22: Advantaged Capital Structure
Advantaged Capital Structure Investment-grade credit ratings ― Strong liquidity: $2 billion of cash (12/31/16) ― No significant debt maturities until 2021 Disciplined risk management protects cash flow ― ≈50% of production hedged in 2017 ― Program consists of systematic & discretionary hedges
Slide 23: Devon Energy
Devon Energy A Leading North American E&P 23
Slide 24: Thank you.
Thank you. devon
Slide 25: Forward-Looking Statements
Forward-Looking Statements This presentation includes "forward-looking statements" as defined by the SEC. Such statements include those concerning strategic plans, expectations and objectives for future operations, and are often identified by use of the words “expects,” “believes,” “will,” “would,”
Slide 26: Appendix
Appendix NYSE: DVN devonenergy.com
Slide 27: Canadian Heavy Oil
Canadian Heavy Oil Thermal Heavy Oil Projects Top-tier thermal oil position Operational Projects — High reservoir quality: <2.5 SOR(1) — Massive risked resource: 1.4 BBO Jackfish complex oil production up 26% YoY — Q4 production: 121 MBOD — 15% above nameplate capacity Significant cash flow ge
Slide 28: Eagle Ford
Eagle Ford Top-tier acreage position — 65,000 net acres focused in DeWitt Co. — Best-in-class productivity MILLION — Q4 net production: 60 MBOED (75% liquids) 2016 FREE CASH FLOW Completion activity underway AUSTIN CHALK Multi-Zone “Diamond” Pilot — Reduce DUCs to 30 to 40 by year-end 2017 (9-we
Slide 29: Rockies Oil
Rockies Oil Premier Powder River Basin position Initial Powder River Focus Areas — 470,000 net surface acres Parkman Campbell Turner — Q4 net production: 15 MBOED (74% oil) Teapot Weston Johnson >50% improvement in LOE from early 2016 Drilling activity resumed in the Power River Natrona — Targ
Slide 30: Barnett Shale
Barnett Shale Significant gas optionality Future Development — Net acres: 610,000 DENTON — Q4 net production: 163 MBOED (27% liquids) Wise Denton Future development activity to unlock significant value — Identified 1,000 horizontal refrac locations FT. WORTH Tarrant — Improved rig economics for