Devon Energy Corporation · NYSE:DVN
Devon Energy — J.P. Morgan Energy Conference 2018
27 slides from Devon Energy's conference presentation, Jun 18, 2018
Slide 1: J.P. Morgan Energy Conference
J.P. Morgan Energy Conference June 18, 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 Delaware & STACK focused Rapidly expanding cash flow Multi-decade growth platform Disciplined capital allocation >30,000 DELAWARE & STACK POTENTIAL LOCATIONS Significant financial strength | Investor Presentation 3
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) Upstream Per-Unit Cash Cost ($/BOE) 200 $18 15% COST SAVINGS 175 $12 Interest 150 MID-TEENS CAGR G&A Op. Cost DRIVEN BY >25% CAGR IN $6 125 114 DELAWARE & STACK
Slide 6: Portfolio Simplification Strategy
Portfolio Simplification Strategy Resource quality & depth allows for high- grading of portfolio Heavy Oil Announced >$4 billion of divestitures to date — Monetized entire EnLink ownership ($3.125 billion) — Upstream asset sales: $1.1 billion Rockies Portfolio Simplification — No incremental cas
Slide 7: Shareholder-Friendly Initiatives
Shareholder-Friendly Initiatives $4 billion share-repurchase program underway KEY INITIATIVES UNDERWAY — Represents ~20% of shares outstanding — Authorization in place through 2019 $4 Billion — Expect to utilize accelerated share-repurchase share-repurchase program initiated program(1) Raised qu
Slide 8: Significant Financial Strength
Significant Financial Strength Investment-grade credit ratings PROTECTING OUR ABILITY TO EXECUTE Substantial liquidity: $1.4 billion of cash Excellent Liquidity Cash: $1.4B Low Net debt to EBITDA target: 1.0x to 1.5x Leverage Net debt to EBITDA target: <1.5x INVESTMENT- Disciplined hedging p
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 Raised 2018 U.S. oil production guidance Positioned for significant cash flow expansion — 16% growth vs. 2017 (~30% exit-rate growth) — Driven by high-margin U.S. oil growth — Guidance increased by ~200 basis points — Canadian WCS pricing improving — Driven by efficiencies a
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 Price & Flow Assurance
Protecting Price & Flow Assurance Premium Pricing in the Delaware Basin Majority of U.S. oil production has access to gulf coast markets (significant premium to WTI pricing) Delaware Basin positioned for attractive oil pricing Delaware gas volumes flow to west coast markets In-basin oil sales —
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 Drilling Tomb Raider Multi-decade growth platform Anaconda Boomslang 10 Wells Online Flowing Back Up to 15 target intervals COTTON DRAW THISTLE/GAUCHO Eddy Flagler Lea
Slide 15: STACK – Franchise Asset
STACK – Franchise Asset Blaine Kingfisher Best-in-class acreage position Showboat Flowing back Minnie Haha >600k net acres by formation Coyote Avg. 30-Day IP 4,400 BOED Cascade 2018 Spud Kraken Up to 4 target intervals per unit 2018 Spud Northwoods Centaur Geis Accelerating development activity Hors
Slide 16: Investment Thesis
Investment Thesis Delaware & STACK focused Rapidly expanding cash flow Multi-decade growth platform Disciplined capital allocation >30,000 DELAWARE & STACK POTENTIAL LOCATIONS Significant financial strength | Investor Presentation 16
Slide 17: Thank you.
Thank you. For additional information see our Q1 Operations Report Thank you.
Slide 18: Delaware Basin – Advantaged State-Line Area
Delaware Basin – Advantaged State-Line Area Activity targeting the most prolific zones Delivered the top wells in Delaware Basin history Boundary Raider IP24: 12,868 BOED (82% oil) 2018 Leonard 6-7 Com 212H E&P Bone Spring ACTIVITY Wolfcamp Boundary Raider 6-7 Com 213H IP24: 11,149 BOED (76% oil) Po
Slide 19: Delaware Basin – Significant Growth Opportunity
Delaware Basin – Significant Growth Opportunity Massive stacked-pay potential Multi-decade oil growth opportunity ─ ~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 20: Rockies – An Emerging Oil Growth Asset
Rockies – An Emerging Oil Growth Asset KEY POWDER RIVER BASIN ACTIVITY Premier Powder River Basin position T Cosner Fed 29-1XPH Q1 2018 Activity — Q1 net production: 23 MBOED Key Wells to Date Parkman 30-Day IP: 1,850 BOED Upcoming Turner Tests — Stacked pay: >10 prospective intervals T Cosner Fed
Slide 21: Heavy Oil
Heavy Oil Oil production at high end of guidance in Q1 SAGD Sweet Spot Q2 volumes impacted by turnaround and royalties — Jackfish turnaround impact: ~15 MBOD — Higher royalties: ~3 MBOD WCS hedges protecting cash flow in 2018 — ~50% hedged at $15 off WTI — Free cash flow in 2018: $550 million(
Slide 22: STACK – Infill Projects Delivering Efficiencies
STACK – Infill Projects Delivering Efficiencies Record flow rates achieved at Coyote project Showboat cost savings: ~$1.5 million per well ─ Project developing Lower Meramec sweet spot ─ 30% faster drill times vs. prior activity ─ Average IP30: 4,400 BOED (60% oil) ─ 2x improvement in frac stage
Slide 23: STACK – Meramec Drives Strong Oil Growth
STACK – Meramec Drives Strong Oil Growth Activity concentrated in over-pressured oil window Activity shifting to economic core (best returns in play) WOODFORD MERAMEC ACTIVIT Y Multi-zone projects to accelerate production growth Positioned for significant resource & inventory upside 2018 >95%
Slide 24: Eagle Ford
Eagle Ford Strong production growth in Q2 (chart below) EAGLE FORD HIGHLIGHTS — Two frac crews currently on site Two Completion Crews — 25 wells to be tied-in 25 Wells Expected Online in Q2 Plan in place to stabilize production 15 Staggered laterals — 35 to 40 new wells online in 2H 2018 Lower E
Slide 25: Barnett Shale
Barnett Shale Johnson County divestiture announced 2018 BARNETT SHALE ACTIVITY OUTLOOK — Proceeds: $553 million (closing late May) — Q1 production: 33 MBOED (18% liquids) Dow JV Acreage 2018e activity: ~20 wells drilled Partnership formed with DowDupont — Selling ½ working interest in 116 locati
Slide 26: Innovation Momentum - Technology Projects In Flight
Innovation Momentum - Technology Projects In Flight DRILLING & PRODUCTION WAT E R SUBSURFACE COMPLETIONS O P E R AT I O N S MANAGEMENT C O R P O R AT E Improved 3D seismic Cyber-geosteering Predictive pump failures Water-treatment options Accounting process interpretation automation Flat, in-zone we
Slide 27: Hedge Position
Hedge Position OIL DERIVATIVES SWAPS COLLARS MIDLAND BASIS SWAPS WCS BASIS SWAPS WEIGHTED WEIGHTED AVG. WEIGHTED AVG. WEIGHTED AVG. WEIGHTED AVG. PERIOD VOLUME AVG. PRICE VOLUME FLOOR PRICE CEILING PRICE VOLUME DIFF. to WTI VOLUME DIFF. to WTI (MBPD) ($/BBL) (MBPD) ($/BBL) ($/BBL) (MBPD) ($/BBL) (MB