Slide 1: Investor Presentation
Investor Presentation December 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: Devon's Competitive Advantage
Devon’s Competitive Advantage HEAVY OIL World-class onshore portfolio Devon Overview Disciplined growth strategy NYSE Symbol: DVN Enterprise Value: ~$20 billion ROCKIES Q3 Production: 522 MBOE/D Investment-grade financial position Product Mix: 67% liquids STACK Committed to strong ESG perfor
Slide 4: Disciplined Growth Strategy
Disciplined Growth Strategy KEY STRATEGIC OBJECTIVES KEY ACCOMPLISHMENTS IN 2018 1 Fund high-return projects U.S. oil growth ahead of plan 2 Generate free cash flow No change to capital spending outlook Corporate cost savings: ~$475 million/year 3 Maintain financial strength Reduced consolid
Slide 5: Executing The Multi-Year Business Plan
Executing The Multi-Year Business Plan 2018e Multi-Year Targets (2017-2020) U.S. oil production +15% – 17% CAGR (retained assets) 17% YoY growth Total BOE production +5% – 7% CAGR (retained assets) 9% YoY growth in U.S. Per-unit cost savings >20% by 2020 (G&A, interest & LOE) G&A/interest: ↓$475 MM
Slide 6: Strategic Deployment Of Excess Cash
Strategic Deployment Of Excess Cash $4 billion share-repurchase program underway KEY INITIATIVES UNDERWAY — Represents ~20% of outstanding shares — $2.7 billion repurchased to date (as of 11/7/18) $4 Billion share-repurchase program underway Expect program to be completed by Q1 2019 Retired $8
Slide 7: Significant Financial Strength
Significant Financial Strength Investment-grade credit ratings PROTECTING OUR ABILITY TO EXECUTE Substantial liquidity: $3.1 billion of cash Excellent Liquidity Cash: $3.1B 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 8: Highly-Regarded ESG Performance
Highly-Regarded ESG Performance OVERALL SCORE ENVIRONMENT SCORE ENVIRONMENT SCORE SOCIAL SCORE +41% +10% TOP-QUARTILE PERFORMANCE 58 Peer Group Avg. 54 79 SOCIAL SCORE VERSUS PEER AVG. VERSUS PEER AVG. DVN’s SCORE: 2 DVN’s SCORE: 3 PEER AVERAGE: 3.4 PEER AVERAGE: 3.3 0 0 25 Percentile 50 75 100 100
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: 2019 Preview: Keeping Our Discipline
2019 Preview: Keeping Our Discipline $ OPTIMIZED FOR RETURNS OIL GROWTH SHARE REDUCTION E & P C A P I TA L P R O G R A M U . S . R E TA I N E D A S S E T S O U T S TA N D I N G S H A R E S $2.4-$2.7 Billion 15%-19% Growth ~20% Reduction POSITIONED FOR D R I V E N BY LO W - R I S K ENHANCING PER-SHAR
Slide 11: Protecting Pricing & Flow Assurance
Protecting Pricing & Flow Assurance KEY MESSAGES Access to Premium Gulf Coast Markets Majority of production has access to Gulf Coast STACK Delaware Basin oil production is price protected • Firm transport: 30 MBOD (Marketlink) • Firm transport: ~20 MBOD (Longhorn) • Firm sales: 100 MBOD (guaran
Slide 12: Securing The Supply Chain
Securing The Supply Chain Expect mid-single digit inflation in 2019 SERVICES& &SUPPLIES SUPPLIESSECURED SECURED SERVICES — Efficiencies expected to offset cost pressures Multi-year development plans allow for longer-term commitments at below-market rates — Decoupling bundled services across supp
Slide 13: Delaware Basin – Franchise Asset
Delaware Basin – Franchise Asset POTATO BASIN Eddy Lea World-class oil opportunity TODD North Thistle 34 Drilling Boundary Raider Area Spud Muffin Multi-decade growth platform Drilling Q4 2018 Spud Up to 15 target intervals COTTON DRAW THISTLE/GAUCHO Flagler Lusitano Accelerating development activit
Slide 14: Delaware Basin – Advantaged State-Line Area
Delaware Basin – Advantaged State-Line Area Well productivity reaching record highs Accelerating activity in 2019 Average Cumulative Oil Production Per Well (MBO) Upstream Capital ($B) ~$ 1 Billion 150 2018 2015-2017 avg. 100 2019e 50 >70% IMPROVEMENT Capital 2018 VERSUS 3-YEAR AVERAGE TOP FUNDED AS
Slide 15: STACK – Next Steps To Optimize Development Returns
STACK – Next Steps To Optimize Development Returns Upcoming activity highly accretive to corporate UPCOMING STACK DEVELOPMENT ACTIVITY return targets Developments Online Kingfisher Showboat — Growth trajectory re-established by year end Upcoming Developments 12 wells per unit 7 — Well placement fo
Slide 16: Rockies – An Emerging Growth Opportunity
Rockies – An Emerging Growth Opportunity Accelerating capital activity in 2019 RECENT POWDER RIVER BASIN ACTIVITY Turner — Expect to operate 4 rigs by early next year Niobrara RU JFW Fed 13 3X & 4X Super Mario Area Avg. 30-Day IP: 1,500 BOED per well — Represents 2x increase in activity from 2018
Slide 17: Devon's Competitive Advantage
Devon’s Competitive Advantage HEAVY OIL World-class onshore portfolio Devon Overview Disciplined growth strategy NYSE Symbol: DVN Enterprise Value: ~$20 billion ROCKIES Q3 Production: 522 MBOE/D Investment-grade financial position Product Mix: 67% liquids STACK Committed to strong ESG perfor
Slide 18: Thank you.
Thank you. For additional information see our Q3 Operations Report Thank you.
Slide 19: Q3 2018 – Key Modeling Stats & Outlook
Q3 2018 – Key Modeling Stats & Outlook KEY METRICS Q3 ACTUALS Q3 2018 - ASSET DETAIL DELAWARE STACK ROCKIES EAGLE FORD BARNETT HEAVY OIL U.S. oil – retained (MBbls/d) 125 RETAINED PRODUCTION Canada oil (MBbls/d) 102 Oil (MBbl/d) 44 29 15 31 - 102 NGLs – retained (MBbls/d) 107 NGL (MBbl/d) 19 40 2 15
Slide 20: 2018 Outlook: U.S. Growth Initiatives Ahead Of Plan
2018 Outlook: U.S. Growth Initiatives Ahead Of Plan U.S. growth exceeding expectations YTD KEY MESSAGES 2018e oil production growth rates (retained assets) +17% (vs. 2017) U.S. oil growth to accelerate into 2019 No change to activity with higher pricing +15% +200 (vs. 2017) Generating free cas
Slide 21: Divestiture Program Accelerates Value Creation
Divestiture Program Accelerates Value Creation Resource quality & depth allows for high-grading T R A N S A C T I O N D E TA I L S of portfolio Announced $4.7 billion of divestitures to date — Closed EnLink transaction in July ($3.125 billion) SALES PRICE: ACCRETIVE MULTIPLE: — Upstream asset sa
Slide 22: Eagle Ford & Barnett Shale
Eagle Ford & Barnett Shale EAGLE FORD OVERVIEW BARNETT SHALE OVERVIEW 10% FREE CASH FLOW 500 2018 Dow JV Activity ~$ OIL GROWTH MILLION IN 2018e (VS Q2 2018) Dewitt Divest Details Sale price: ~$50 million Q3 Results Wise Denton 20 Eagle Ford Wells Production: ~4 MBOED Avg. 30-Day IP: ~3,000 BOED/Wel
Slide 23: Heavy Oil – Overview & Outlook
Heavy Oil – Overview & Outlook Q3 net production: 104,000 Boe per day SAGD Sweet Spot — Jackfish 1 maintenance impact: ~15 MBOD — Jackfish 2&3 produced at nameplate capacity — LOE per Boe declined 16% vs. Q2 2018 Full-scale operations restored at Jackfish complex — Rates reach ~110% of nameplate
Slide 24: Heavy Oil – Mitigating Pricing Pressures In 2019
Heavy Oil – Mitigating Pricing Pressures In 2019 Actively adding WCS financial swaps in 2019 Canadian Heavy Oil Marketing Opportunities (21 MBOD at ~$23 off WTI in 1H 2019) Jackfish Secured firm transport to Gulf Coast WCS Pricing Edmonton (Agreements cover ~10% of production) ~$30 off WTI in 20