Devon Energy Corporation · NYSE:DVN
Devon Energy — Q4 2017 Earnings Presentation
24 slides from Devon Energy's earnings presentation, Feb 20, 2018
Slide 1: Q4 2017 Operations Report
Highlights & CEO Perspective 2 2020 Vision: Strategic Priorities 3 2020 Vision: 3-Year Outlook 4 2018 Detailed Guidance 6 Q4 2017 Key Modeling Stats 8 Q4 2017 Operating Results 9 Delaware Basin11 STACK15 Rockies19 Cash Flow Generating Assets21 Q4 2017 Operations Report February 20, 2018 NYSE: DVN de
Slide 2: Highlights & CEO Perspective
Highlights & CEO Perspective Dave Hager President & CEO Three-Year Outlook >15% corporate-level rates of return $2.5 billion of cumulative free cash flow through 2020 Per-unit cash cost savings of ~15 percent by 2020 Potential to monetize >$5 billion of non-core assets Positioned for sustainable inc
Slide 3: 2020 Vision: Strategic Priorities
2020 Vision: Strategic Priorities Leverage technology to optimize base production and aggressively reduce per-unit cash costs. Optimize returns across the portfolio through more measured and consistent capital investment in the Delaware & STACK. Bring forward value by monetizing non-core assets at t
Slide 4: 2020 Vision: 3-Year Outlook
2020 Vision: 3-Year Outlook >15% CORPORATE LEVEL RETURNS >25% CAGR DELAWARE + STACK OIL PRODUCTION FREE CASH FLOW GENERATION ABOVE $50 WTI & $3 HH ~15% COST SAVINGS EXPECTED BY 2020 PORTFOLIO SIMPLIFICATION POTENTIAL FOR >$5 BILLION OF ASSET DIVESTITURES 1.0x-1.5x NET DEBT TO EBITDA >15% CAGR UPSTRE
Slide 5: 2020 Vision: Management Incentives
2020 Vision: Management Incentives In an effort to further refine performance management within Devon, the company has modified its compensation program to prioritize two new targets that measure rate of return. These return measures will fully support Devon’s top strategic objective of capital-effi
Slide 6: 2018 Detailed Guidance: Shift to Development Mode
2018 Detailed Guidance Shift to Development Mode Drives Capital Efficiency Higher In 2018, Devon’s E&P capital investment is expected to range from $2.2 to $2.4 billion (see table). Nearly 90% of the capital expenditures are devoted to U.S. resource plays, with the vast majority concentrated in the
Slide 7: 2018 Detailed Guidance: Strategic Deployment of Excess Cash
2018 Detailed Guidance Strategic Deployment of Excess Cash The company’s top capital allocation priority in 2018 is to fund its operational plans in the Delaware Basin and STACK as these early-stage assets transition to full-field development. The company’s next priority will be to utilize a portion
Slide 8: Q4 2017 Key Modeling Stats
Q4 2017 Key Modeling Stats Q4 RESULTS Q4 GUIDANCE Q4 ACTUALS U.S. oil (MBbls/d) 120 - 125 114 Canada oil (MBbls/d) 135 - 140 132 Total NGLs (MBbls/d) 99 - 103 106 Total gas (MMcf/d) 1,184 - 1,216 1,175 Total (MBoe/d) 551 - 571 548 Marketing & midstream operating profit $245 - $265 $272 LOE, gatherin
Slide 9: Q4 2017 Operating Results
Q4 2017 Operating Results Devon’s production averaged 548,000 Boe per day in the fourth quarter (64% liquids). Q4 oil production totaled 246,000 barrels per day. This result was 14,000 barrels per day below midpoint guidance (see table). During the quarter, Devon’s U.S. oil production was limited by
Slide 10: Q4 2017 Operating Results: Reserves Growth
Q4 2017 Operating Results Drill-Bit Success Drives U.S. Oil Reserves 32% Higher At Dec. 31, 2017, Devon’s proved reserves totaled 2.2 billion Boe (81% proved developed). Of this amount, 1.7 billion Boe of reserves resided within Devon’s U.S. resource plays, which exhibited strong growth by adding 32
Slide 11: Delaware Basin Highlights
Delaware Basin Highlights Current daily rates ~65 MBOED Exit rate growth of >40% in 2018 Production ramps at Anaconda Record drilling times at Boomslang Wolfcamp drilling activity accelerates in Rattlesnake area Momentum Builds with 2nd Frac Crew Net production increased to 60,000 Boe per day in Q4.
Slide 12: Delaware Basin Production Ramps at Anaconda
DELAWARE BASIN DEVELOPMENT ACTIVITY Delaware Basin Production Ramps at Anaconda A key driver of production growth in Q4 was the Anaconda project, which is Devon’s 1st multi-zone development in the Delaware. The 10-well project, which co-developed 3 Leonard intervals, attained average per-well 30-day
Slide 13: Delaware Basin Record Drilling Efficiencies at Boomslang
Delaware Basin Record Drilling Efficiencies at Boomslang Another key multi-zone project is the 11-well Boomslang project in the Thistle area, which is co-developing both the Leonard Shale and multiple Bone Spring intervals. Devon’s 2-rig drilling program at Boomslang concluded in early 2018, with ri
Slide 14: Delaware Basin Future Projects Accelerated by Permitting Strategy
Delaware Basin Future Projects Accelerated by Innovative Permitting Strategy Devon possesses massive resource upside in the Delaware Basin with up to 15 different prospective intervals across 300,000 surface acres or >1.3 million net effective acres. To accelerate permitting associated with Devon’s
Slide 15: STACK Highlights
STACK Highlights Current daily rates ~130,000 BOED STACK oil production advances 52% YoY Five wells exceed rates of 4,000 BOED Showboat drilling efficiencies reach 30% Initial Coyote well achieves 24-hour IP of 8,200 BOED Production Accelerates in Early 2018 Devon’s STACK production averaged 117,000
Slide 16: STACK Full-Field Development Accelerates: Projects Scheduled for 2018
STACK Full-Field Development Accelerates: 7 Projects Scheduled for 2018 As Devon’s STACK assets transition from appraisal to full-field development, an increasing amount of go-forward capital will be devoted to larger, multi-zone projects. In 2018, the company expects to bring online >100 operated w
Slide 17: STACK Drilling Efficiencies Reach 30% at Showboat
STACK DEVELOPMENT ACTIVITY STACK Drilling Efficiencies Reach 30% at Showboat Devon’s initial multi-zone STACK development, the Showboat project, consists of 24 wells across 2 drilling units in the over-pressured oil window (see map). The 5-rig drilling program at Showboat concluded in January with a
Slide 18: STACK Best-In-Class Position: Ownership in 90% of Top 50 Wells
STACK Best-In-Class STACK Position: Ownership in 90% of Top 50 Wells Devon has the premier STACK position in the industry with >600,000 net acres by formation in the core of the play providing the opportunity to deliver repeatable, high-returning wells for the foreseeable future. Across the STACK, t
Slide 19: Rockies Highlights
Rockies Highlights Production advances 26% in Q4 Turner spacing tests online Super Mario activity accelerates in 2018 Niobrara delineation activity underway Super Mario Highlights Q4 Activity Production averaged 19,000 Boe per day, a 26% increase compared to Q3 2017. Production growth in Q4 was driv
Slide 20: Rockies Niobrara Appraisal Underway
Rockies Niobrara Appraisal Underway Devon possesses significant upside potential in the Powder River Basin with ~400,000 net surface acres and >10 different prospective intervals identified across its acreage position. To further define the potential across this stacked-pay asset, the company will b
Slide 21: Cash Flow Generating Assets Summary
Cash Flow Generating Assets Summary Devon possesses top-tier cash flow generating assets in North America (see graphic) and the company’s strategy with these assets is two-fold: 1) Efficiently manage base production and maintain a low cost structure. 2) Redeploy harvested cash flow into Delaware Bas
Slide 22: Eagle Ford Partner Completion Activity to Accelerate in Q2 2018
Cash Flow Generating Assets Eagle Ford Partner Completion Activity to Accelerate in Q2 2018 Net production in the Eagle Ford averaged 55,000 Boe per day in Q4. The sale of Lavaca County impacted production by 3,000 Boe per day. For the full-year 2018, the company is budgeting a capital investment of
Slide 23: Barnett Shale Johnson County Divestiture Package Progressing
Cash Flow Generating Assets Barnett Shale Johnson County Divestiture Package Progressing Net production averaged 149,000 Boe per day or 894 MMcfe per day during Q4. Capital activity in the quarter was highlighted by a 6-well drilling pilot primarily centered in Denton County that leveraged an improv
Slide 24: Contacts & Investor Notices
Contacts & Investor Notices Investor Relations Contacts Scott CoodyChris Carr VP, Investor RelationsSupervisor, 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 Securitie