Slide 1: Q3 2014 Management Commentary
Q3 2014 Management Commentary November 4, 2014 NYSE: DVN devonenergy.com
Slide 2: Investor Notices
Investor Notices Use of Slides The following slide presentation is intended to be viewed in conjunction with the oral management commentary for the quarter posted on Devon’s website on November 4, 2014. The commentary and other materials furnished in connection with the quarterly earnings release in
Slide 3: Agenda: Third-Quarter Highlights, Operations Update, Financial Review & Outlook
I. Third‐Quarter Highlights John Richels, President & Chief Executive Officer II. Operations Update Dave Hager, Chief Operating Officer III. Financial Review & Outlook Tom Mitchell, Chief Financial Officer IV. Summary John Richels, President & Chief Executive Officer
Slide 4: Third-Quarter 2014 Highlights
Third‐Quarter 2014 Highlights U.S. Oil Production Growth(1) Oil production exceeded guidance Net Production (MBOD) 136 2014 production growth increased to 14% 77 77% Capital plans remain unchanged Growth Q3 2013 Q3 2014 High‐margin production expanded profitability Pre‐Tax Cash Margin(2) Unit of Pro
Slide 5: Devon Today
Devon Today Strong North American Pure Play Heavy Oil Q3 2014 net production: 640 MBOED(1) — Oil & NGL: 55% of production Deep inventory of oil opportunities Rockies Oil — Top‐tier Eagle Ford development — High‐quality Permian Basin position — World‐class heavy oil projects — Strong liquids‐rich gas
Slide 6: Preliminary 2015 Outlook
Preliminary 2015 Outlook Total Oil Production(1) Key Highlights: (MBOD) 2015 oil production growth: 20 ‐ 25%(1) — Driven by Eagle Ford, Permian & Jackfish 3 206 ‐ 209 Top‐line BOE growth: mid‐single digits(1) 20‐25% Capital efficient growth achievable with Growth similar spend rate to 2014 2014e 201
Slide 7: Financial Strength & Flexibility
Financial Strength & Flexibility Cash flow protected by hedges — Majority of Q4 production hedged above current pricing levels — >50% of 2015 oil protected at $91 per barrel Significant midstream drop‐down optionality — Victoria Express and Access Pipeline operational — Candidates for drop down as e
Slide 8: Why Own Devon?
Why Own Devon? A leading North American E&P Focused and balanced portfolio Oil driving production growth Expanding margins Strong financial position Attractive valuation 8
Slide 9: Agenda: Operations Update
I. Third‐Quarter Highlights John Richels, President & Chief Executive Officer II. Operations Update Dave Hager, Chief Operating Officer III. Financial Review & Outlook Tom Mitchell, Chief Financial Officer IV. Summary John Richels, President & Chief Executive Officer
Slide 10: Permian Basin
Permian Basin Bone Spring Play Delivers Outstanding Results 2014 oil production on track to increase ≈20% Permian Oil Production Growth 2009 – 2014e Raising Bone Spring type curve New completion design provides further upside 175 % Delaware Basin downspacing Permian Basin Successful Wolfcamp test in
Slide 11: Eagle Ford
Eagle Ford World‐Class Development Project Production has increased 76% over past 6 months September Exit Rate Net Production Q4 to benefit from accelerated completions 2014 & 2015 production targets on track 87 MBOED Upside initiatives underway in DeWitt County Encouraging results in Lavaca County
Slide 12: Heavy Oil
Heavy Oil Jackfish Complex Achieves Record Production Heavy oil production exceeded guidance Oil Exceeded Expectations Compared to Mid‐Point of Guidance +7.5 MBOD Q3 gross production at Jackfish increased 20% YoY Jackfish 1 production exceeded name‐plate capacity — Q3 gross production averaged 36 MB
Slide 13: Anadarko Basin
Anadarko Basin Accelerating Cana‐Woodford Activity Record production increased 17% YoY Cana‐Woodford Type Curve Increase 30‐Day IP Rate Improved completions enhancing results +30 % Raising Cana‐Woodford type curve Anadarko Basin Accelerating to >10 rigs by Q1 2015 13
Slide 14: Rockies Oil
Rockies Oil Powder River Basin Delivers High‐Rate Wells Oil production increased 23% YoY Accelerating Activity Focused on Development Six high‐rate wells brought online in Q3 — — Targeting Parkman and Turner formations 30‐day IP rate: 1,080 BOED (85% light oil) 4 RIGS Rockies Oil Risked drilling inv
Slide 15: Agenda: Financial Review & Outlook
I. Third‐Quarter Highlights John Richels, President & Chief Executive Officer II. Operations Update Dave Hager, Chief Operating Officer III. Financial Review & Outlook Tom Mitchell, Chief Financial Officer IV. Summary John Richels, President & Chief Executive Officer
Slide 16: Financial Review & Outlook
Financial Review & Outlook Oil production increases 44% YoY(1) Q3 oil sales >60% of upstream revenue Raising 2014 midstream operating profit outlook Pre‐tax cash costs(2) decline 3% from last quarter Cash inflows reached ≈$4 billion in Q3 Q4 oil production expected to increase >40% YoY(1) (1) Exclud
Slide 17: Agenda: Summary
I. Third‐Quarter Highlights John Richels, President & Chief Executive Officer II. Operations Update Dave Hager, Chief Operating Officer III. Financial Review & Outlook Tom Mitchell, Chief Financial Officer IV. Summary John Richels, President & Chief Executive Officer
Slide 18: Summary
Summary Laser focused on execution Strong operational momentum Capital efficient growth Excellent financial position Disciplined capital allocation Positioned to deliver significant shareholder value 18
Slide 19: Discussion of Risk Factors
Discussion of Risk Factors Forward‐Looking Statements: Information provided in this presentation includes “forward‐looking statements” as defined by the Securities and Exchange Commission (SEC). Forward‐looking statements are often identified by use of the words “forecasts”, “projections”, “estimate