Slide 1: Q1 2022 Earnings Presentation
Q1 2022 Earnings Presentation May 2, 2022 NYSE: DVN devonenergy.com
Slide 2: Key Takeaways From Our Presentation
Key Takeaways From Our Presentation #1 FIXED + VARIABLE DIVIDEND INCREASES 27% Total dividend of $1.27 per share announced with Q1 results #2 BUYBACK PROGRAM EXPANDED TO $2.0 BILLION Repurchased 3% of outstanding shares since program inception #3 BALANCE SHEET CONTINUES TO STRENGTHEN Cash balance in
Slide 3: Our Cash-Return Business Model
Our Cash-Return Business Model “Our CASH-RETURN business model is DISCIPLINED MODERATING OIL GROWTH targets: up to 5% annually designed to moderate growth, emphasize GROWTH STRATEGY Growing margins through operational scale & cost efficiencies capital efficiencies, maximize returns and prioritiz
Slide 4: Diversified Portfolio Built to Deliver Sustainable Results
Diversified Portfolio Built to Deliver Sustainable Results WILLISTON BASIN 48 MBOED GAS OIL VOLUMES VOLUMES POWDER RIVER BASIN 26% 50% 18 MBOED DIVERSIFIED COMMODITY EXPOSURE OUR SUSTAINABLE PLATFORM % OF TOTAL PRODUCTION MULTI-DECADE NGL RESOURCE OPPORTUNITY VOLUMES (SEE PAGE 20 FOR DETAILS) ANADAR
Slide 5: Q1 2022 – Another Impressive Financial Performance
Q1 2022 – Another Impressive Financial Performance Key financial metrics Q1 2022 Change (vs. Q4’21) Fixed-plus-variable dividend payout >270% $1.27 Core earnings (per share) $1.88 35% $1.00 EBITDAX ($MM) $2,135 18% DIVIDEND GROWTH VS. Q1 2021 $0.84 Leverage (net debt-to-EBITDAX) 0.6x 25% $0.49 Opera
Slide 6: 2022 Outlook – No Change to Our Disciplined Plan
2022 Outlook – No Change to Our Disciplined Plan Prioritizing free cash flow over volume growth Positioned for an attractive free cash flow yield in 2022 2022e outlook 2022e free cash flow sensitivities 18% TOTAL PRODUCTION 570-600 18% 16% FREE CASH FLOW YIELD MBOED (~50% oil) 14% FREE CASH FLOW YIE
Slide 7: A History of Returning Cash to Shareholders
A History of Returning Cash to Shareholders Delivering dividend growth through the cycle (Dividends per share) (1) OUR DIVIDEND FRAMEWORK >$4.75 29 CONSECUTIVE Raised fixed quarterly dividend by 45% to $0.16 per share in 2022 YEARS OF DIVIDEND PAYMENTS Variable dividend payout includes up to 50%
Slide 8: Delivering a Market-Leading Dividend Yield
Delivering a Market-Leading Dividend Yield 10% ~8% (1) OUR MARKET-LEADING YIELD ~6 TIMES HIGHER than the S&P 500 yield 8% 2022e Annualized Dividend Yield SHARE BUYBACK enhances cash returns (pg. 9) ORGANICALLY FUNDED within free cash flow 6% 4% 2% 0% Energy Utilities Real Estate Consumer Finan
Slide 9: Opportunistically Repurchasing Our Shares
Opportunistically Repurchasing Our Shares EXPANDING AUTHORIZATION TO $2.0 BILLION LEADING THE INDUSTRY WITH DISCIPLINE & CASH RETURNS Repurchased $891 million of shares to date Retired at average price of $47 per share Board approved 25% increase in buyback program Program represents 5% of outstandi
Slide 10: Improving Our Financial Strength
Improving Our Financial Strength Achieved balance sheet leverage target INVESTMENT-GRADE FINANCIAL POSITION Net debt to EBITDAX (Trailing 12-months) Strong liquidity: $2.6 billion of cash (as of 3/31/22) 1.4x Reduced net debt by ~30% since merger close NET DEBT-TO-EBITDAX TARGET: 1.0x COMMIT
Slide 11: It's Still Early – Devon's Unique Value Proposition
It’s Still Early – Devon’s Unique Value Proposition Energy sector weighting as % of the S&P 500 index vs. (1) Iran Oil Embargo 29% S&P 500 30% VALUATIONS REMAIN AT 4x EV/EBITDA 13x HISTORICALLY LOW LEVELS 25% 16% FCF Yield 5% Energy Market Capitalization as % of S&P 500 ~8% Dividend Yield 1.5% 20% G
Slide 12: Asset Operations Overview Update
AssetOperations Overview Update NYSE: DVN devonenergy.com
Slide 13: Delaware Basin – Our Franchise Growth Asset
Delaware Basin – Our Franchise Growth Asset HIGH-MARGIN GROWTH +27% VS. Q1 2021 MBOED 394 PROLIFIC UPPER WOLFCAMP DEVELOPMENT Marwari (10,200’ laterals) HIGH-RETURN AVALON DEVELOPMENT 374 4 Wolfcamp wells Bell Lake (4,600’ laterals) Avg. IP30: 4,000 BOED/well 6 Avalon Shale wells Avg. IP30:
Slide 14: Delaware Basin – Operating Efficiencies Advance
Delaware Basin – Operating Efficiencies Advance Drilling and completion efficiencies (feet per day) Field-level operating margins (per unit) >85% 135% 65% 1,160 1,925 $52.99 DRILLING COMPLETION MARGIN $44.59 IMPROVEMENT IMPROVEMENT GROWTH $39.28 625 820 $33.79 $32.07 2018 Q1 2022 2018 Q1 2022 Q1 202
Slide 15: Devon-Owned Sand Mine to Improve Capital Efficiency
Devon-Owned Sand Mine to Improve Capital Efficiency Initial sand mine integrated into operations in Q2 DEVON-OWNED SURFACE ACREAGE IN TEXAS Provides up to 25% of Delaware sand requirements Estimated savings: >$200,000 per well Improves safety & emissions performance Potential to expand program acros
Slide 16: Diversified Across Top U.S. Resource Plays
Diversified Across Top U.S. Resource Plays $ 3.0 Repeatable resource play with exposure to rising gas & NGL prices ANADARKO Capital efficiency enhanced by $100 million drilling carry with Dow BASIN Columbine 3-mile development success: payback <3 months High-margin resource opportunity in ec
Slide 17: Asset Appendix Overview
AssetAppendix Overview NYSE: DVN devonenergy.com
Slide 18: Free Cash Flow Priorities
Free Cash Flow Priorities Q1 VARIABLE DIVIDEND CALCULATION FIXED + VARIABLE DIVIDEND #1 Fixed dividend is paid quarterly at $0.16 per share $2,000 MM – Adjusted Cash Flow (Non-GAAP) − Variable dividend is up to 50% of excess free cash flow $564 MM – Capital Expenditures (Accrued) $1,436 MM – Adj
Slide 19: Compelling Alternative for Yield-Seeking Investors
Compelling Alternative for Yield-Seeking Investors Historically low interest-rate environment has compressed yields across most asset classes 14% 10-YEAR U.S. TREASURY YIELD 12% S&P 500 DIVIDEND YIELD ADVANTAGED YIELD DEVON’S 2022E OPPORTUNITY DIVIDEND 6x HIGHER 10% (~8% YIELD) UP TO 8% VE RSUS BROA
Slide 20: Inventory Underpins Sustainability of Business Model
Inventory Underpins Sustainability of Business Model >2,500 >10 YEARS OF INVENTORY incremental (AT CURRENT ACTIVITY PACE) operated locations Identified >10 years of LOW-RISK & HIGH-RETURN Includes only operated activity development inventory (at current drilling pace) Represents low-risk devel
Slide 21: Our Investment-Grade Financial Strength
Our Investment-Grade Financial Strength Strong liquidity with minimal near-term debt maturities Outstanding debt maturities through 2030 ($MM) $5,625 Reduced outstanding debt by >$1.2 billion since merger close EXECUTING ON OUR Net debt-to-EBITDAX: 0.6x (as of 3/31/2022) Cash FINANCIAL $2,625
Slide 22: Strengthening Our Environmental Performance
Strengthening Our Environmental Performance Committed to aggressive emissions targets Reducing Scope 1 & 2 GHG emissions Targeting net zero GHG emissions by 2050 (Scope 1 & 2) (Million tonnes CO2e) Plan to reduce methane emissions by 65% by 2030 ~20% 4.91 REDUCTION IN Executive compensation ti
Slide 23: Committed to Aggressive Emissions Reductions
Committed to Aggressive Emissions Reductions ENVIRONMENTAL PERFORMANCE TARGETS 0.5 GHG EMISSIONS GHG EMISSIONS INTENSITY METHANE EMISSIONS FLARING INTENSITY ROUTINE FLARING 50 65 % ENTIRELY SCOPE 1 & 2 SCOPE 1 & 2 INTENSITY NET ZERO GHG EMISSIONS FOR % % OR LOWER ELIMINATE OF GROSS NATURAL GAS AS DE
Slide 24: Investor Contacts & Notices
Investor Contacts & Notices restrictions, compliance costs and other risks relating to governmental regulation, including with respect to environmental matters; risks Investor Relations Contacts related to regulatory, social and market efforts to address climate change; risks related to our hedging