Slide 1: Q4 2023 Earnings Presentation
Q4 2023 Earnings Presentation February 27, 2024 NYSE: DVN devonenergy.com
Slide 2: Key Takeaways From Our Presentation
Key Takeaways From Our Presentation 1 PRODUCTION EXCEEDS TOP END OF Q4 GUIDANCE Delaware Basin drives production beat across all products 2 FREE CASH FLOW REACHES $2.7 BILLION IN 2023 Q4 marks 14th consecutive quarter of free cash flow generation 3 SHARE BUYBACKS DRIVE CASH RETURNS IN Q4 Total cash-
Slide 3: Our Disciplined Business Model
Our Disciplined Business Model DISCIPLINED MODERATED OIL GROWTH targets: up to 5% annually GROWTH STRATEGY Focused on growing per-share value CONSISTENT Returns-driven strategy prioritizes FREE CASH FLOW generation REINVESTMENT RATES Optimizing results with steady activity levels through the
Slide 4: Advantaged Scale & Diversification
Advantaged Scale & Diversification WILLISTON BASIN PREMIER MULTI-BASIN PORTFOLIO 55 MBOED Acreage resides in top U.S. resource plays Underpinned by world-class Delaware Basin position POWDER RIVER BASIN 19 MBOED $ DIVERSIFIED COMMODITY MIX Balanced exposure to oil, NGLs & natural gas productio
Slide 5: Asset Quality Enhanced by Efficiency Gains
Asset Quality Enhanced by Efficiency Gains CONSISTENT EFFICIENCY GAINS ACHIEVING SUPERIOR WELL RESULTS DRILLED & COMPLETED FEET PER DAY (ALL FORMATIONS) 12-MONTH CUME. OIL VOLUMES (MBO PER 1,000’) 25 Completions +16% ~30% Drilling COMPLETION IMPROVEMENT VS. INDUSTRY PEERS 2,092 20 1,987 1,944 PEER A
Slide 6: Strategy Creating Significant Value for Shareholders
Strategy Creating Significant Value for Shareholders Delivering on our promise to shareholders Cumulative uses of cash ($ in billions) > $13 BILLION SINCE 2020 Industry-first cash-return framework unveiled in 2020 Strategy designed for sustainable free cash flow generation Flexibility to optim
Slide 7: 2023 – Year in Review
2023 – Year in Review DELIVERING PRODUCTION GROWTH ACHIEVING SUPERIOR RETURNS (MBOED) RETURN ON CAPITAL EMPLOYED (ROCE) 8% 658 23% +8% 20% 6% S&P 500 PRODUCTION GROWTH AVG. 4% (VS. 2022 AVG.) 2% 0% 2023 Production 2020-2022 2023 (Average) ENHANCING PER-SHARE RESULTS RETURNING CASH TO SHAREHOLDERS (S
Slide 8: Improved Capital Efficiency in 2024
Improved Capital Efficiency in 2024 2024 OUTLOOK HIGH-GRADING CAPITAL MAINTAINING PRODUCTION TOTAL CAPITAL ($ IN BILLIONS) TOTAL PRODUCTION (MBOED) ~10% TOTAL $3.3-$3.6 $3.80 ~650 MBOED CAPITAL BILLION REDUCTION $ BREAKEVEN FUNDING ~$40 WTI OIL PRICE $3.45 GAS NGL OIL 312-318 OIL VOLUMES MBOD RAISIN
Slide 9: 2024 Production & Capital Cadence
2024 Production & Capital Cadence Winter Weather 700 Impact 2% No change to previously (~12 MBOED) ~650 650 issued production & capital guidance for full-year 2024 600 ~640 TOTAL PRODUCTION (MBOED) Expect 2% impact to Q1 550 2024 production due to severe winter weather 500 4th Delaware frac cr
Slide 10: Our Advantaged Capital Efficiency
Our Advantaged Capital Efficiency BREAKEVEN FUNDING FOR 2024 CAPITAL PROGRAM $75 Base Dividend Impact Pre-Dividend Breakeven $60 INDUSTRY AVERAGE WTI (1) $45 $30 DELIVERING TOP-TIER $15 CAPITAL EFFICIENCY TOP U.S. PRODUCERS Note: Sourced from BMO Capital research dated 12/12/2023. (1) Estimated comm
Slide 11: Catalysts Driving Improved 2024 Outlook
Catalysts Driving Improved 2024 Outlook 1 IMPROVED DELAWARE WELL PRODUCTIVITY Higher allocation towards core of the play in New Mexico Infrastructure progressing to support optimized plan >60% $3.3-$3.6 CAPITAL ALLOCATED TO DELAWARE BASIN BILLION 2 HIGH-GRADED ACTIVITY IN WILLISTON BASIN Act
Slide 12: Improving Delaware Well Productivity in 2024
Improving Delaware Well Productivity in 2024 PARKWAY WELL PRODUCTIVITY EXPECTATIONS 2024 Projects 10% POTATO BASIN THISTLE/GAUCHO Core Focus Areas 225 TODD UP TO CUMULATIVE OIL VOLUMES (NORMALIZED FOR 10,000’ LATERALS) IMPROVEMENT 180 (VS. 2023 PROGRAM) 2024e Projection 2023 Results 135 Eddy COTTON
Slide 13: Delaware Infrastructure Buildout Supports 2024 Plan
Delaware Infrastructure Buildout Supports 2024 Plan GAS PROCESSING & DOWNSTREAM LOCALIZED INFRASTRUCTURE WATER HANDLING CAPABILITIES 2 BCFD of gas processing capacity Investing ~$100 million annually in WaterBridge JV provides water additions by end of Q1 2024 field-level gathering & compressi
Slide 14: Inventory Depth to Sustain Performance
Inventory Depth to Sustain Performance DELAWARE BASIN INVENTORY BY KEY OPERATOR SOURCE: ENVERUS INTELLIGENCE 10,000 New Mexico Multi-decade resource opportunity 8,000 PV-10 breakeven: ~$40 WTI oil price (1) Gross Operated Locations Texas ~60% of total company risked resource 6,000 4,000 Geolog
Slide 15: Positioned for Significant Free Cash Flow Generation
Positioned for Significant Free Cash Flow Generation Devon’s attractive free cash flow yield Providing an opportunity vs. broader market 2024e free cash flow yield sensitivities 2024e free cash flow yield vs. broader market 13% 9% FREE CASH FLOW YIELD ADVANTAGED YIELD OPPORTUNITY FREE CASH FLOW 9% 1
Slide 16: Disciplined Return of Capital to Shareholders
Disciplined Return of Capital to Shareholders TARGET PAYOUT IN 2024 Targeting 70% CASH-RETURN payout to (% OF FREE CASH FLOW) shareholders in 2024 BALANCE SHEET Prioritizing SHARE BUYBACK program at 30% current valuation RAISING fixed dividend by 10% to $0.22 per share (effective with March 28th dis
Slide 17: Significant Financial Strength & Liquidity
Significant Financial Strength & Liquidity TOTAL LIQUIDITY CASH BALANCE LOW LEVERAGE $3.9 B $0.9 B 0.7x CASH & UNDRAWN CASH POSITION NET DEBT-TO-EBITDAX CREDIT FACILITY AS OF 12/31/2023 AS OF 12/31/2023 CREDIT RATINGS DEBT REDUCTION TARGETED MATURITIES BBB/Baa2 ~$1.5 B $1.0 B INVESTMENT-GRADE AT SIN
Slide 18: Committed to Environmental Excellence
Committed to Environmental Excellence 2023 SUSTAINABILITY REPORT HIGHLIGHTS ENVIRONMENTAL TARGETS Flared volume intensity was reduced by 77% (1) GHG EMISSIONS SCOPE 1 & 2 Scope 1 & 2 GHG emissions intensity declined by 19% (1) NET ZERO GHG EMISSIONS FOR SCOPE 1 & 2 BY 2050 GHG EMISSIONS INTENSITY SC
Slide 19: Compelling Valuation & Upside in Energy
Compelling Valuation & Upside in Energy Energy sector weighting as % of the S&P 500 index Iran Oil Embargo 29% 30% >10% VALUATIONS REMAIN AT OF S&P 500 HISTORICALLY LOW LEVELS S&P 500 (EBITDA TTM) 25% EARNINGS Energy Market Capitalization as % of S&P 500 (BY SECTOR) 20% Great Recession 16% Gulf War
Slide 20: Devon's Unique Investment Proposition
Devon’s Unique Investment Proposition DISCIPLINED STRATEGY Focused on growing per-share value Returns-driven strategy prioritizes free cash flow DISCIPLINED STRATEGY HIGH-QUALITY PORTFOLIO Acreage high-graded to the top U.S. resource plays Underpinned by world-class Delaware Basin asset
Slide 21: Asset Appendix
AssetAppendix Overview NYSE: DVN devonenergy.com
Slide 22: 2024 – Detailed Activity by Asset
2024 – Detailed Activity by Asset Capital Investment Operated Rigs Wells Online ($ in Billions) (Average) (Gross Operated) DELAWARE BASIN $2.0 16 205-225 EAGLE FORD $0.65 4 85-95 ANADARKO BASIN $0.2 3 60-70 WILLISTON BASIN $0.1 1 15-25 POWDER RIVER BASIN $0.2 1 10-15 | Q4 2023 Earnings Presentation
Slide 23: Q4 2023 – Cash Return Payout
Q4 2023 – Cash Return Payout Q4 CASH RETURN PAYOUT DETAILS + Million $234 Share Repurchases in Q4 23 (Retired 5.2 million shares) + Million $127 Fixed Dividend Paid in Q4 23 (Paid $0.20 per share on 12/31/23) + Million $140 Variable Dividend Declared (Declared $0.22 per share; payable on March 28th)
Slide 24: Industry Activity Levels
Industry Activity Levels Declining U.S. onshore rig count Drilled uncompleted wells (DUC) at multi-year lows 700 9,000 650 >20% 8,000 >50% RIG REDUCTION DUC DECREASE Drilled Uncompleted Wells (DUC) VS. PEAK 600 7,000 U.S. Rig Count 550 6,000 500 5,000 450 4,000 2018 2019 2020 2021 2022 2023 2024 Not
Slide 25: Investor Contacts & Notices
Investor Contacts & Notices risks related to our hedging activities; our limited control over third parties who operate some of our oil and gas properties; midstream capacity Investor Relations Contacts constraints and potential interruptions in production, including from limits to the build out of