Devon Energy Corporation · NYSE:DVN
Devon Energy — Barclays Global CEO-Energy Power Conference 2018
25 slides from Devon Energy's conference presentation, Sep 5, 2018
Slide 1: Barclays Global CEO-Energy Power Conference
Barclays Global CEO-Energy Power Conference September 5, 2018 NYSE: DVN devonenergy.com
Slide 2: Investor Contacts & Notices
Investor Contacts & Notices additional reserves; the uncertainties, costs and risks involved in oil and gas operations; regulatory restrictions, compliance costs and Investor Relations Contacts other risks relating to governmental regulation, including with respect to environmental matters; risks re
Slide 3: Investment Thesis
Investment Thesis World-class N.A. onshore portfolio Accelerating free cash flow generation Multi-decade development inventory Returning significant cash to shareholders Disciplined, high-return growth strategy Investment-grade financial position Largest buyback program in E&P industry(1
Slide 4: Devon's 2020 Vision
Devon’s 2020 Vision TOP OBJECTIVE: OPTIMIZE RETURNS & DELIVER CAPITAL-EFFICIENT, CASH-FLOW GROWTH Leverage technology to optimize base production Maximize cash flow Improve margins by aggressively lowering cost structure Enhance returns through disciplined capital investment Focus on capital e
Slide 5: 2020 Vision: Driving Significant Cash Flow Growth
2020 Vision: Driving Significant Cash Flow Growth Growing higher-value production Cost savings to expand margins U.S. Oil Production (MBOD) Per-Unit Cost ($/BOE) 195 >20% COST SAVINGS MID-TEENS CAGR $15 165 DRIVEN BY >25% CAGR IN Interest DELAWARE & STACK G&A LOE 135 114 105 2017 2018e 2019e 2020e 2
Slide 6: Shareholder-Friendly Initiatives
Shareholder-Friendly Initiatives $4 billion share-repurchase program underway KEY INITIATIVES UNDERWAY — Largest authorization of any E&P company to date(1) — ASR program underway for remaining authorization $4 Billion — Repurchase program to be completed by 1H 2019 share-repurchase program underw
Slide 7: Divestiture Program: Next Steps
Divestiture Program: Next Steps Resource quality & depth allows for high-grading Marketing Non-Core Assets Across the U.S. of portfolio Announced $4.4 billion of divestitures to date Rockies CO2 — Closed EnLink transaction in July ($3.125 billion) Production: 4 MBOED (~80% oil) Data room: Q3 201
Slide 8: Significant Financial Strength
Significant Financial Strength Investment-grade credit ratings PROTECTING OUR ABILITY TO EXECUTE Substantial liquidity: $1.5 billion of cash Excellent Liquidity Cash: $1.5B Low Net debt to EBITDA target: 1.0x to 1.5x Leverage Net debt to EBITDA — Currently within target range target: <1.5x INV
Slide 9: Operational Excellence
Operational Excellence Capture Improve FULL VALUE RETURNS Maximize base production Optimize capital program Minimize controllable downtime Disciplined project execution Enhance well productivity Perform premier technical work Leverage midstream operations Focus on development drilling
Slide 10: Updated 2018 Outlook
Updated 2018 Outlook U.S. oil production exceeding budget YTD Positioned for significant cash flow expansion — On track to deliver 16% growth vs. 2017 — Driven by high-margin U.S. oil growth — ~200 basis points above original budget — G&A and interest savings: ~$175 MM annually — No change to or
Slide 11: The Next Frontier Of Efficiency Gains
The Next Frontier Of Efficiency Gains Multi-zone projects to drive returns higher — Increase rig & frac crew efficiencies — Centralized facilities improve cost structure — Higher recoveries from stacked pay — Focused activity maintains short cycle times Initial Delaware & STACK development highl
Slide 12: Securing The Supply Chain
Securing The Supply Chain Services and supplies secured through 2019 SERVICES& &SUPPLIES SUPPLIESSECURED SECURED SERVICES — Dedicated frac crews in Delaware & STACK — Development efficiencies driving rig reductions — Self-sourcing regional sand (~30% savings) — Industry leader in water recycling
Slide 13: Protecting Pricing & Flow Assurance
Protecting Pricing & Flow Assurance Majority of U.S. oil production has access to Gulf Coast Access to Premium Gulf Coast Markets markets (premium to WTI pricing) STACK Delaware Basin positioned for attractive oil pricing • Firm transport: 30 MBOD (Marketlink) • Firm transport: ~20 MBOD (Longhor
Slide 14: Delaware Basin – Franchise Asset
Delaware Basin – Franchise Asset POTATO BASIN North Thistle 34 2018 Spud World-class oil opportunity TODD Medusa Potato Basin Cobra Completing Tomb Raider Multi-decade growth platform Up to 15 target intervals COTTON DRAW THISTLE/GAUCHO Eddy Flagler Lea Accelerating development activity Lusitano Com
Slide 15: Delaware Basin – Advantaged State-Line Area
Delaware Basin – Advantaged State-Line Area Activity targeting the most prolific zones Delivering strong well productivity 2018 E&P ACTIVITY Leonard Bone Spring Wolfcamp AVERAGE 30-DAY IP: 2,000 2018 WELLS TIED-IN YTD BOED(1) (1) Represents 40 wells brought online through Q2 2018 with an average oil
Slide 16: Delaware Basin – Significant Growth Opportunity
Delaware Basin – Significant Growth Opportunity Multi-decade oil growth opportunity Massive stacked-pay potential ─ ~300k net surface acres focused in state-line area ─ >1.3 million net effective acres (up to 15 target intervals) ─ Significant resource upside with Wolfcamp delineation DELAWARE BAS
Slide 17: STACK – Franchise Asset
STACK – Franchise Asset Blaine Kingfisher Best-in-class acreage position Showboat(1) Avg. 30-Day IP 1,800 BOED Cascade >600k net acres by formation Scott Northwoods 2018 Spud 2018 Spud Safari Up to 4 target intervals per unit Kraken Drilling Shangri-La Drilling Drilling Accelerating development acti
Slide 18: STACK – Infill Development Strategy
STACK – Infill Development Strategy Initial Coyote project delivers strong rates (IP30 4,400 BOED) Current Projects to Inform Future Activity Showboat Next 3 projects designed to refine future infill spacing 12 wells per drilling unit Avg. 30-Day IP: 1,800 BOED(1) Coyote All wells online at Sh
Slide 19: Rockies – An Emerging Oil Growth Asset
Rockies – An Emerging Oil Growth Asset RECENT POWDER RIVER BASIN ACTIVITY Emerging oil opportunity continues to deliver Converse strong results Turner Niobrara Super Mario Area — Oil production up 22% year over year RU JFW Fed 13-24s Completing 2 wells RU State Fed 2X & 4X — Driven by Turner “Supe
Slide 20: Investment Thesis
Investment Thesis World-class N.A. onshore portfolio Accelerating free cash flow generation Multi-decade development inventory Returning significant cash to shareholders Disciplined, high-return growth strategy Investment-grade financial position Largest buyback program in E&P industry(1
Slide 21: Thank you.
Thank you. For additional information see our Q2 Operations Report Thank you.
Slide 22: Key Modeling Stats
Key Modeling Stats KEY METRICS Q2 ACTUALS(1) Q2 GUIDANCE Q2 2018 - ASSET DETAIL DELAWARE STACK ROCKIES EAGLE FORD BARNETT(1) HEAVY OIL U.S. oil (MBbls/d) 136 129 - 134 PRODUCTION Canada oil (MBbls/d) 109 110 - 115 Oil (MBbl/d) 46 35 16 28 1(1) 109 NGLs (MBbls/d) 105 97 - 100 NGL (MBbl/d) 16 38 2 13
Slide 23: Eagle Ford
Eagle Ford EAGLE FORD OVERVIEW Prolific well results drive strong Q2 oil growth Premium — Net production 31% higher vs. Q1 2018 Oil Pricing (103% of WTI) Margins benefit from premium LLS oil pricing 25% Oil — Q2 oil realizations 103% of WTI Growth Q2 Results 15 Lower Eagle Ford (vs. Q1 2018) Avg
Slide 24: Barnett Shale
Barnett Shale Johnson County sale completed in May BARNETT SHALE OVERVIEW — Gross proceeds: $553 million 2018 ACTIVITY — Q2 production: 21 MBOED (80% gas) New Drills Refracs Stable production outlook for remainder of year — Driven by Dow JV and refrac program Minimum volume commitments to expi
Slide 25: Heavy Oil
Heavy Oil Q2 volumes impacted by turnaround and royalties — Jackfish maintenance impact: ~15 MBOD SAGD Sweet Spot — Royalties ~2 percentage points higher than Q1 18 Net production increases to ~120 MBOED in Q3 — Turnaround efforts at Jackfish identified additional maintenance requirements — Main
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