Slide 1: Second-Quarter 2014 Earnings Conference Call
Second-Quarter 2014 Earnings Conference Call August 6, 2014
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. Words such as “forecasts," "projections," "estimates," "plans," "expectations," "targets," and other comparable terminology o
Slide 3: Second-Quarter 2014 Highlights
Second-Quarter 2014 Highlights • Completed portfolio transformation announced late last year — Contracted to sell U.S. non-core assets for $2.3 billion • Delivered U.S. oil production growth of 79% year over year(1) — Achieved excellent well results in the Delaware Basin — Eagle Ford contributed a f
Slide 4: Delivering Strong Oil Growth
Delivering Strong Oil Growth Q2 2014 Results Total Oil Production (1) U.S. Oil Production (1) Q4 2014e Product Mix (1) (MBOD) (MBOD) 205 153 128 37% 43% 71 20% Q2 2013 Q2 2014 Q2 2013 Q2 2014 U.S. Canada Oil NGLs Natural Gas (1) Excludes assets sold or contracted to sell. Slide 4
Slide 5: Higher Revenues & Expanding Margins
Higher Revenues & Expanding Margins Oil-Weighted Upstream Revenue Pre-Tax Cash Margin per BOE (1) Increased 42% Year over Year Q2 2014 Revenue Mix $30.47 12% $21.82 61% 27% Q2 2013 Q2 2014 Oil NGLs Natural Gas (1) Pre-tax cash margin is defined as unhedged upstream revenues and midstream operating p
Slide 6: Non-Core Asset Sales
Non-Core Asset Sales Sharpening The Focus • Announced U.S. non-core assets sale for $2.3 billion (June 30, 2014) — Accretive transaction: 7 times 2013 EBITDA — Expected to close in the third quarter of 2014 • Total U.S. & Canadian divestiture proceeds: >$5 billion (pre-tax) — Accretive transactions:
Slide 7: Devon Today
Devon Today Sharpening The Focus Devon’s Core & Emerging Assets • Q2 2014 net production: 620 MBOED(1) • Oil & NGLs ≈60% of production by year-end Heavy Oil Core • Deep inventory of oil opportunities Emerging — Top-tier Eagle Ford development — High-quality Permian Basin position — World-class heavy
Slide 8: 2014 Production Growth Targets
2014 Production Growth Targets Total Oil Production (1) U.S. Oil Production (1) BOE Production (1) (MBOD) (MBOD) (MBOED) 579 - 622 198 - 216 539 152 124 - 136 73 2013 2014e 2013 2014e 2013 2014e U.S. Canada 6:1 20:1 (1) Excludes assets sold or contracted to sell. Slide 8
Slide 9: 2014 E&P Capital Program
2014 E&P Capital Program Delivering Strong Oil Growth 2014 E&P Capital Budget E&P Capital % of $5.0 - 5.4 Billion (1) Spent ($B) (1) Budget 2% 5% Q1 2014 $1.2 23% 5% Q2 2014 $1.3 24% 7% 28% 1st Half Total $2.5 47% 11% • $0.1 billion of 1st half E&P capital related to non-core divestitures 21% 21% •
Slide 10: Potential Drop Down Asset: Access Pipeline
Potential Drop Down Asset Access Pipeline (Heavy Oil Midstream) JACKFISH & PIKE • Three ≈180 mile pipelines from Sturgeon Terminal to Devon’s thermal acreage • ≈30 miles of dual pipeline from Sturgeon Terminal to Edmonton • Devon ownership: 50% — ≈$1B invested to date • Capacity net to Devon: Sturge
Slide 11: Potential Drop Down Asset: Victoria Express Pipeline
Potential Drop Down Asset Victoria Express Pipeline (VEX) (Eagle Ford) • ≈56 mile crude oil pipeline from Eagle Colorado Gonzales Ford core to Port of Victoria terminal Lavaca Wharton • 50 MBOPD start-up capacity (expandable) DeWitt • ≈300,000 barrels of storage available Jackson Karnes Matagorda •
Slide 12: Preliminary 2015 Outlook
Preliminary 2015 Outlook Total Oil Production(1) Key Highlights (MBOD) • On track to deliver 2015e oil production growth >20% (1) — Driven by Eagle Ford, Permian and Jackfish 3 198 - 216 • Expect top-line production in the mid-single digits • High-margin production growth expected to further expand
Slide 13: Delaware Basin
Delaware Basin Delivering Outstanding Well Results • Activity focused on repeatable, high-impact Bone Spring — Brought 22 wells online in Q2 — 30-day IP rate: 660 BOED Central Eddy • Recent Delaware Sands success — Two high-rate wells in Q2 — 30-day IP rate: ≈1,000 BOED (70% oil) Lea • Operated rig
Slide 14: Disciplined Risking Methodology
Disciplined Risking Methodology Multi-Variant Analysis • Multi-disciplinary, multi-variant Geology Geophysics analysis • Utilizes geologic, geophysical, completion and production data • Allows us to characterize and predict future reservoir performance Completions Production • Multi-variant model re
Slide 15: Disciplined Risking Methodology: Delaware Basin Inventory
Disciplined Risking Methodology Delaware Basin Inventory Gross Net Risked Risked Prospective Risk Net Risked Wells Per Undrilled Formation Acres Factor(1) Acres Section Locations Delaware Sands 160,000 50% 80,000 4 700 Leonard Shale 85,000 30% 60,000 5 700 Bone Spring 440,000 35% 285,000 5 3,500 Wol
Slide 16: Eagle Ford Production Results and Outlook
Eagle Ford Production Results and Outlook 2014 Results to Date Multi-Year Production Outlook (MBOED) (MBOED) >100 73 70 – 80 (1) 65 49 March 2014 Q2 2014 June 2014 2014e 2015e (1) Represents Devon’s estimated net production from March through December. Slide 16
Slide 17: Lower Eagle Ford Upside
Lower Eagle Ford Upside Lavaca County Devon’s Lavaca County Pavlicek Un 2H • Net acres: 32,000 24-Hr IP: 1,319 BOED Zebra Hunter 2H • Significant upside potential 24-Hr IP: 1,511 BOED • Early results exceeding Zebra Hunter 3H expectations 24-Hr IP: 2,250 BOED Pavlicek Un 5H 24-HR IP: 1,411 BOED Gonz
Slide 18: Upper Eagle Ford Potential
Upper Eagle Ford Potential OKLAHOMA Sustr #1H Targac #1H • Encouraging industry results 24-Hr IP: 1,054 BOED 24-Hr IP: 1,398 BOED TEXAS • Pay thickest in DeWitt County Fojtik #1H 24-Hr IP: 1,209 BOED Martinsen 2H 24-Hr IP: 1,360 BOED • Spud first well in Q3 Welhausen A 2H Gonzales • Additional test
Slide 19: SAGD Heavy Oil Developments
SAGD Heavy Oil Developments Jackfish & Pike SAGD Characteristics: Jackfish 1 T76 • Low F&D Jackfish 2 • Low geologic risk • Flat production profile Jackfish 3 T75 • Long reserve life >20 years Jackfish 1 & 2: T74 Pike Project Area • Q2 2014 production: — Gross production: 60 MBOPD (3% increase YOY)
Slide 20: Jackfish SAGD Developments: Free Cash Flow Outlook
Jackfish SAGD Developments Significant Free Cash Flow Generation Free Cash Flow Outlook $1,200 $1,000 $800 $ in millions $600 $400 $200 $0 2014e 2015e 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e Assumptions: 1) $90 WTI oil and $4.50 Henry Hub natural gas 2) Bitumen realizations at 65
Slide 21: Cana-Woodford Completions Enhanced
Cana-Woodford Completions Enhanced Old Design: 10 Frac Stages 40 Perf Clusters Sand: 3.5 MM lbs. Fluid: 130k Bbls. New Design: 20 Frac Stages 80 Perf Clusters Sand: 6.0 MM lbs. Fluid: 140k Bbls. NYSE: DVN www.devonenergy.com Slide 21
Slide 22: Cana-Woodford Q2 Results
Cana-Woodford Q2 Results Liquids-Rich Core 30-Day IP Rates (MBOED) EURs 1,250 (MMBOE) 920 1.7+ 1.4 2014 Type Curve Q2 Results Cost Per Well ($MM) $8.0 $8.0 2014 Type Curve Q2 Results 2014 Type Curve Q2 Results Slide 22
Slide 23: Cana-Woodford Production
Cana-Woodford Production Revitalizing Base Production Gross Operated Production 440 420 400 Acid Treatments 380 MMCFD 360 340 320 300 Jan-14 Jun-14 Jan-15 Oct-13 Feb-14 Apr-14 Nov-13 Dec-13 Mar-14 May-14 Aug-14 Sep-14 Jul-14 Oct-14 Nov-14 Dec-14 NYSE: DVN www.devonenergy.com Slide 23
Slide 24: Cana-Woodford Acquisition
Cana-Woodford Acquisition Accelerating Activity • Acquired 50,000 net acres (announced May 2014) Dewey — Directly overlaps existing leasehold — Increases Cana position to ≈280,000 net acres Blaine Kingfisher • Improved completion design enhancing returns • Workover activity yielding excellent result
Slide 25: Rockies Oil
Rockies Oil Powder River Basin • Net acreage: 150,000 MONTANA • Stacked oil targets (Parkman, Turner, Frontier & others) WYOMING • Activity focused on repeatable Parkman formation — Two high-rate wells in Q2 Current Focus Area — 30-day IP rate: 950 BOED (95% light oil) • Risked drilling inventory: ≈
Slide 26: devon
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Slide 27: Discussion of Risk Factors
Discussion of Risk Factors Information provided in this presentation includes “forward-looking statements” as defined by the Securities and Exchange Commission. Forward-looking statements are identified in this presentation as “forecasts, projections, estimates, plans, expectations, targets, opportu
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation Net Debt Devon defines net debt as debt less cash and cash equivalents. Devon believes that netting these sources of cash against debt provides a clearer picture of the future demands on cash to repay debt. RECONCILIATION TO GAAP INFORMATION (in billions) June 30, 2014 Total