Devon Energy Corporation · NYSE:DVN

Devon Energy — Merger or Acquisition (September 2020)

21 slides from Devon Energy's merger presentation, Sep 28, 2020

  1. Slide 1: Devon and WPX Strategic Merger of Equals

    + Devon and WPX Strategic Merger of Equals September 28, 2020 NYSE: DVN devonenergy.com NYSE: WPX wpxenergy.com

  2. Slide 2: A Leading Multi-Basin Energy Company

    A Leading Multi-Basin Energy Company + ACCRETIVE ON ALL RELEVANT FINANCIAL METRICS (Combines the best capabilities of both organizations) ACCELERATES CASH-RETURN BUSINESS MODEL POWDER RIVER BASIN WILLISTON BASIN 63 MBOED (Merger enhances free cash flow generating capabilities) 24 MBOED MAINTAINS STR

  3. Slide 3: Transaction is Accretive in Year-One

    Transaction is Accretive in Year-One + ACCRETION TO SHAREHOLDERS PRO FORMA FOR YEAR-ONE SYNERGIES SIGNIFICANT FINANCIAL 5%-10% BENEFITS FOR SHAREHOLDERS OPERATING CASH FLOW IMPROVEMENT FREE CASH FLOW >2X GENERATION IMPROVEMENT (FCF YIELD: 8%) IMPROVES FUNDED AT MAINTENANCE $33 WTI CAPITAL BREAKEVEN

  4. Slide 4: Transaction Overview

    Transaction Overview +  Transaction value: $12 billion (enterprise value) TRANSACTION  All-stock, merger of equals transaction STRUCTURE  Exchange ratio: 0.5165 shares of Devon for each share of WPX  Pro forma equity ownership: 57% Devon and 43% WPX  Combined company headquartered in Oklahoma C

  5. Slide 5: Accelerates Cash-Return Business Model

    Accelerates Cash-Return Business Model + “With this strategic combination we are PROGRESSIVE  DISCIPLINED OIL GROWTH targets: up to 5% annually accelerating our transition to a CASH-RETURN GROWTH STRATEGY  Growing margins through operational & corporate cost reductions business model, which modera

  6. Slide 6: Maintains Strong Financial Position

    Maintains Strong Financial Position + Strong liquidity with minimal near-term maturities Balance sheet strength provides competitive advantage (1) Pro forma outstanding debt maturities over the next five years ($MM) Net debt to 2020e EBITDAX $4,700 6.0x SIGNIFICANT  Excellent liquidity ($4.7 billio

  7. Slide 7: Combination Enhances Operating Scale

    Combination Enhances Operating Scale + Creating one of the largest unconventional oil producers in the U.S. 2021e oil production estimates (MBOD) KEY METRICS PRO FORMA 400 600 Enterprise Value ($B) $6.4 $5.7 $12.1 350 450 Q2 2020 Oil Production (MBOD) 153 124 277 Q2 2020 Total Production (MBOED) 325

  8. Slide 8: Our Capital-Efficient Growth Engine

    Our Capital-Efficient Growth Engine + COMBINED DELAWARE BASIN ACREAGE POSITION  World-class oil resource opportunity DELAWARE PRODUCTION — Stacked-pay position across 400,000 net acres PROFILE — Acreage in economic core of the play 60% OF TOTAL COMPANY — Multi-decade inventory opportunity  Diversi

  9. Slide 9: Acreage Located in the Best Part of the Play

    Acreage Located in the Best Part of the Play + Top-tier well productivity… Highest oil content… Lower operating costs (less water disposal) IP BOE/Lateral foot Gas-oil ratio, SCF/BBL Water-oil ratio, BBL/BBL DVN & WPX Focus Area DVN & WPX Focus Area DVN & WPX Focus Area IP BOE/Lateral Gas-Oil Ratio

  10. Slide 10: Track Record of Operational Excellence

    Track Record of Operational Excellence + Well productivity showcases asset quality SUPERIOR ~40% All wells drilled since 2018. Includes operators with more than 100 wells (source IHS/Devon) WELL Avg. 90-Day IPs BOED, 20:1 1,000 RESULTS ABOVE PEER AVG. 850 PEER AVG. 700 550 400 250 100 Top 45 U.S. Pr

  11. Slide 11: Capturing $575 Million in Annual Cost Savings

    Capturing $575 Million in Annual Cost Savings + Combination to drive cost synergies by year-end 2021 Annual cost savings expected by year-end 2021 ($MM) > $2BILLION All-In PV-10 Costs (1) $100 OF COST $125 SAVINGS OVER THE NEXT 5 YEARS $75 $300 Savings $100 $75 ↆ$575 MM $100 Total Savings DEVON LEGA

  12. Slide 12: Framework for 2021 Capital Allocation

    Framework for 2021 Capital Allocation + TOP PRIORITIES IN CURRENT MARKET 1 1 Protect financial strength GREATER THAN  Evaluate select growth projects $45  Limit reinvestment: up to 5% growth 2 Fund fixed quarterly dividend  Prioritize free cash flow growth $40-$45  Variable dividend payout expan

  13. Slide 13: Positioned for Attractive Free Cash Flow Yields

    Positioned for Attractive Free Cash Flow Yields + Operations scaled to lower breakeven funding Free cash flow at maintenance capital 2021e pro forma maintenance capital assumptions (1) 2021e pro forma free cash flow sensitivities 31% OIL PRODUCTION 2020e EXIT-RATE >280 32% $33 WTI FREE CASH FLOW YIE

  14. Slide 14: Free Cash Flow Priorities

    Free Cash Flow Priorities + VARIABLE DIVIDEND STRATEGY FIXED QUARTERLY DIVIDEND EFFECTIVE UPON CLOSE OF TRANSACTION  Maintained at $0.11 per share  Target payout: up to 10% of cash flow STEP 1: VARIABLE DIVIDEND CALCULATION Operating Cash Flow (GAAP) DEBT REDUCTION PROGRAM − Cash Capital Expenditu

  15. Slide 15: Attractive Valuation for Delaware-Driven Entity

    Attractive Valuation for Delaware-Driven Entity + Potential for significant multiple expansion 2021e EV/EBITDAX(1) HIGHLY COMPETITIVE METRICS WITH TOP PEERS ~20% Pro Forma Peer SIGNIFICANT Key Metrics Devon Average (2) 6.0x MULTIPLE UPSIDE DISCOUNT POTENTIAL VS. PEER AVG. Operating scale (market cap

  16. Slide 16: Committed to Top-Tier ESG Performance

    Committed to Top-Tier ESG Performance + ENVIRONMENT SOCIAL & SAFETY GOVERNANCE  Water recycling has increased >500%  Permian Strategic Partnership provided  ESG incorporated in COMPENSATION since 2017 in the Delaware Basin(1) $30 MILLION to communities in 2019(3) STRUCTURE (including safety & emi

  17. Slide 17: Why Own the Go-Forward Devon?

    Why Own the Go-Forward Devon? +  Premier multi-basin portfolio POWDER RIVER BASIN WILLISTON BASIN 63 MBOED  Disciplined returns-driven strategy 24 MBOED  Delivering top-tier operating results ANADARKO BASIN DELAWARE BASIN 90 MBOED 302 MBOED  Significant financial strength & liquidity EAGLE FORD

  18. Slide 18: Investor Contacts & Notices

    Investor Contacts & Notices + INVESTORS AND SECURITY HOLDERS OF DEVON AND WPX ARE ADVISED TO READ THE REGISTRATION STATEMENT, THE JOINT PROXY Investor Relations Contacts STATEMENT/PROSPECTUS, INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, AND ANY OTHER RELEVANT DOCUMENTS THAT WILL BE FI

  19. Slide 19: Forward-Looking Statements

    Forward-Looking Statements + Forward-Looking Statements This communication includes “forward-looking statements” as defined by the SEC. Such statements include those concerning strategic plans, Devon’s and WPX’s expectations and objectives for future operations, as well as other future events or con

  20. Slide 20: Appendix

    Appendix

  21. Slide 21: A Proven Team Committed to Value Creation

    A Proven Team Committed to Value Creation + Dave Hager Rick Muncrief Jeff Ritenour Clay Gaspar Executive Chairman President & CEO EVP & Chief Financial Officer EVP & Chief Operating Officer David Harris Dennis Cameron Tana Cashion EVP & Chief Corporate EVP & General Counsel SVP of Human Resources De

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