Slide 1: Q2 2021 Earnings Presentation
Q2 2021 Earnings Presentation August 3, 2021 NYSE: DVN devonenergy.com
Slide 2: Key Takeaways From Our Presentation
Key Takeaways From Our Presentation FIXED + VARIABLE DIVIDEND INCREASES 44% LEADING THE INDUSTRY WITH #1 DISCIPLINE & DIVIDENDS Total dividend of $0.49 per share announced with Q2 results FREE CASH FLOW GENERATION ACCELERATES #2 Free cash flow increases >6x vs. prior quarter BALANCE SHEET CONTINUES
Slide 3: Our Cash-Return Business Model
Our Cash-Return Business Model “Our CASH-RETURN business model is DISCIPLINED MODERATING OIL GROWTH targets: up to 5% annually designed to moderate growth, emphasize GROWTH STRATEGY Growing margins through operational & corporate cost reductions capital efficiencies, maximize returns and priorit
Slide 4: Q2 2021 – Executing on Our Disciplined Strategy
Q2 2021 – Executing on Our Disciplined Strategy Outstanding Q2 execution Expanding free cash flow Returning value to shareholders Key quarterly highlights Free cash flow ($ in millions) Q2 2021 cash allocation ($ in billions) (2) $589 $1.4 B ~ 65% 9% > 6x CAPITAL SPEND ($MM) BELOW GUIDANCE IMPROVEME
Slide 5: Outlook Strengthens in Second Half of 2021
Outlook Strengthens in Second Half of 2021 FREE CASH FLOW SET TO EXPAND FUTURE UPSIDE (2) (1) (2H 2021 outlook vs. 1H 2021 results) 34% Unhedged commodity view OIL PRODUCTION: +4% 100% upfront cost synergies TOTAL CAPITAL: ↆ>10% CORPORATE COSTS: ↆ7% 28% 24% FREE CASH FLOW 20% YIELD 21% SEC
Slide 6: Accelerating Cash Returns to Shareholders
Accelerating Cash Returns to Shareholders A history of returning cash to shareholders (Dividends per share) 28 FIXED + VARIABLE DIVIDEND CONSECUTIVE (BASED ON Q2 FINANCIAL RESULTS) YEARS OF DIVIDEND PAYMENTS FIXED DIVIDEND $0.11 PER SHARE (>10% CAGR SINCE 1993) VARIABLE VARIABLE DIVIDEND $0.38 PER S
Slide 7: Highest Dividend Yield Opportunity in S&P 500 Index
Highest Dividend Yield Opportunity in S&P 500 Index Fixed-plus-variable dividend strategy results in market-leading payout Annualized dividend yield based on 2H 2021e midpoint guidance >10% (1) HIGHEST DIVIDEND YIELD IN S&P 500 INDEX #1 ranked yield in the S&P 500 by a wide margin VARIABLE >7 ti
Slide 8: Our Investment-Grade Financial Strength
Our Investment-Grade Financial Strength Substantial debt reduction completed year to date Outstanding debt maturities through 2030 ($MM) $4,500 Reduced outstanding debt by $1.2 billion year to date EXECUTING ON OUR Net debt-to-EBITDAX on track to reach <1.0x by year-end Cash FINANCIAL $1,500 S
Slide 9: Devon's Unique Value Proposition
Devon’s Unique Value Proposition Beginning stages of a new energy upcycle Energy market capitalization as % of S&P 500 3 Devon offers a unique 18% Great Recession Value Proposition… 16% Gulf War 15% (1) VERSUS S&P 500 1 Roughly every decade Energy Market Capitalization as % of S&P 500 brings with it
Slide 10: Preliminary Thoughts on 2022 Outlook
Preliminary Thoughts on 2022 Outlook #1 POSITIONED FOR STRONG CASH FLOW GROWTH IMPROVED hedge book accelerates revenue growth A TRUSTED NAME Captured merger SYNERGIES to substantially EXPAND MARGINS IN THE ENERGY INDUSTRY Integration COMPLETED, no cash outflows from restructuring Cumulative
Slide 11: Asset Operations Overview Update
AssetOperations Overview Update NYSE: DVN devonenergy.com
Slide 12: On Track to Achieve 2021 Capital Objectives
On Track to Achieve 2021 Capital Objectives No change to disciplined capital plan in 2021 WILLISTON Oil production (MBOD) BASIN 291 290-300 280 – 290 FY 2020 284 MBOD POWDER RIVER BASIN 2021e UPSTREAM BUDGET $1.6-$1.8 Billion Q2 2021 Q3 2021e FY 2021e (80% ALLOCATED TO DELAWARE) ANADARKO Note: 2020
Slide 13: Delaware Basin – Our Capital-Efficient Growth Engine
Delaware Basin – Our Capital-Efficient Growth Engine KEY ASSET ATTRIBUTES HIGH-MARGIN OIL GROWTH Eddy Lea +22% 191 NET ACRES: 400,000 VS. Q2 2020 MBOD DIVERSIFED: 65% non-federal land 3 POTATO BASIN APPRAISAL 172 PERMIT INVENTORY: 4 years 2nd Bone Spring test (3 wells) 166 Avg. lateral len
Slide 14: Delaware Basin – Operating Efficiencies Advance
Delaware Basin – Operating Efficiencies Advance Achieving capital efficiencies… Reducing field level costs… Delivering margin expansion Development D&C costs per foot (excludes facilities) LOE & GP&T per Boe Field-level operating margin ($/BOE) ↆ7% $33.79 $940 $6.44 $846 YEAR OVER YEAR $5.97 42% $61
Slide 15: Free Cash Flow Generating Assets
Free Cash Flow Generating Assets Liquids-rich resource play with exposure to rising gas & NGL prices ANADARKO CASH FLOW UPSIDE Dow JV drilling program underway with plans to spud up to 30 wells in 2021 BASIN 6 legacy Meramec DUCs brought online in Q2 (avg. IP30: 1,800 BOED) Divestiture conti
Slide 16: 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 17: Asset Appendix Overview
AssetAppendix Overview NYSE: DVN devonenergy.com
Slide 18: Free Cash Flow Priorities
Free Cash Flow Priorities FIXED DIVIDEND Q2 VARIABLE DIVIDEND CALCULATION #1 Paid quarterly at $0.11 per share Target payout: up to 10% of operating cash flow $1,099 MM – Adjusted Cash Flow (Non-GAAP) − $509 MM – Capital Expenditures (Accrued) VARIABLE DIVIDEND $590 MM – Adjusted Free Cash Flow
Slide 19: Investor Contacts & Notices
Investor Contacts & Notices Investor Relations Contacts restrictions, compliance costs and other risks relating to governmental regulation, including with respect to environmental matters; risks related to regulatory, social and market efforts to address climate change; risks related to our hedging