Devon Energy Corporation · NYSE:DVN
Devon Energy — Investor Presentation (June 2021)
19 slides from Devon Energy's investor presentation, June 2021
Slide 1: Investor Presentation
Investor Presentation June 2021 NYSE: DVN devonenergy.com
Slide 2: A Leading U.S. Energy Company
A Leading U.S. Energy Company DEVON ENERGY OVERVIEW ENTERPRISE VALUE: $26 billion (June ‘21) PREMIER MULTI-BASIN PORTFOLIO OIL-WEIGHTED: 76% of revenue (Q1 ‘21) LOW LEVERAGE: ~1.0x by YE 2021 (1) DISCIPLINED RETURNS-DRIVEN STRATEGY SIGNIFICANT FINANCIAL STRENGTH & LIQUIDITY PRIORITIZING CASH RETURNS
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: Executing on Our Disciplined Strategy
Executing on Our Disciplined Strategy FIRST-QUARTER 2021 HIGHLIGHTS RETURNING VALUE TO SHAREHOLDERS Paid industry-first fixed-plus-variable dividend in March $1.44 Billion $0.20B >65% Strengthened balance sheet with $743 MM debt reduction ALLOCATED TO (1) DIVIDENDS & $0.74B DEBT REDUCTION (1) Limite
Slide 5: On Track to Achieve 2021 Capital Objectives
On Track to Achieve 2021 Capital Objectives Committed to a maintenance capital program in 2021 WILLISTON Oil production (MBOD) BASIN 283 – 293 >290 280 – 290 FY 2020 POWDER RIVER 284 MBOD BASIN 2021e CAPITAL BUDGET $1.6-$1.8 Billion (80% ALLOCATED TO DELAWARE) Q2 2021e 2H 2021e FY 2021e ANADARKO BAS
Slide 6: Delaware Basin – Our Capital-Efficient Growth Engine
Delaware Basin – Our Capital-Efficient Growth Engine WORLD-CLASS OIL OPPORTUNITY Eddy Lea Stacked pay position across 400,000 net acres HIGH-RETURN PROLIFIC UPPER BONE SPRING DEVELOPMENT Diversified acreage: 65% non-federal land Right Meow (10,500’ laterals) WOLFCAMP DEVELOPMENT Danger Noodle (1
Slide 7: Operations Scaled to Generate Free Cash Flow
Operations Scaled to Generate Free Cash Flow COMMITTED TO FUTURE UPSIDE (1) MAINTENANCE CAPITAL 25% Excludes commodity hedges (FY 2021 OUTLOOK) 100% upfront cost synergies OIL PRODUCTION: 280-290 MBOD UPSTREAM CAPITAL: $1.6-$1.8 B 20% 15% FREE CASH FLOW 2021 OUTLOOK 12% YIELD 15% FREE CASH F
Slide 8: Free Cash Flow Priorities
Free Cash Flow Priorities VARIABLE DIVIDEND STRATEGY FIXED DIVIDEND CALCULATED ON A QUARTERLY BASIS Paid quarterly at $0.11 per share Target payout: up to 10% of operating cash flow STEP 1: VARIABLE DIVIDEND CALCULATION Adjusted Cash Flow (Non-GAAP) VARIABLE DIVIDEND − Capital Expenditures (Accr
Slide 9: 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 Q1 FINANCIAL RESULTS) YEARS OF DIVIDEND PAYMENTS FIXED DIVIDEND $0.11 PER SHARE (>10% CAGR SINCE 1993) VARIABLE VARIABLE DIVIDEND $0.23 PER S
Slide 10: An Advantaged Dividend with Sustainable Growth
An Advantaged Dividend with Sustainable Growth Differentiated yield opportunity vs. peers & broader market 2021e dividend yield based on midpoint guidance (1) >7% DEVON POSITIONED FOR SUSTAINABLE GROWTH Significant CASH FLOW UPSIDE with higher commodity prices VARIABLE Merger cost synergies to s
Slide 11: Improving Our Investment-Grade Financial Position
Improving Our Investment-Grade Financial Position Substantial debt reduction completed year to date Outstanding debt maturities through 2030 ($MM) $4,900 $1.5B Reduced outstanding debt by $1,243 million year to date Cash Net debt to EBITDAX on track to reach 1.0x by year end $1,900 DEBT REDUCTIO
Slide 12: Raising Annual Cost Savings Target to $600 Million
Raising Annual Cost Savings Target to $600 Million Cost synergies to exceed original savings target Targeted annual cost savings by area ($MM) OPERATING MARGIN IMPROVEMENTS (1) 70% $200 MILLION GENERAL & ADMINISTRATIVE(1) 70% $200 MILLION D&C >50% $125 MILLION EFFICIENCIES (+ $25 MM VS. PRIOR TARGET
Slide 13: Committed to Aggressive Emissions Reductions
Committed to Aggressive Emissions Reductions ENVIRONMENTAL PERFORMANCE TARGETS “We know that STRONG ENVIRONMENTAL GHG EMISSIONS GHG EMISSIONS INTENSITY METHANE EMISSIONS 50 65 SCOPE 1 & 2 SCOPE 1 & 2 INTENSITY PERFORMANCE IS ESSENTIAL to protecting NET ZERO GHG EMISSIONS FOR % % the communities in w
Slide 14: Why Own the Go-Forward Devon?
Why Own the Go-Forward Devon? PREMIER MULTI-BASIN PORTFOLIO DISCIPLINED RETURNS-DRIVEN STRATEGY SIGNIFICANT FINANCIAL STRENGTH & LIQUIDITY PRIORITIZING CASH RETURNS TO SHAREHOLDERS COMMITTED TO ESG EXCELLENCE | Investor Presentation 14
Slide 15: Asset Appendix
AssetAppendix Overview NYSE: DVN devonenergy.com
Slide 16: Q1 2021 – Variable Dividend Calculation
Q1 2021 – Variable Dividend Calculation VARIABLE DIVIDEND CALCULATION SECOND CONSECUTIVE $886 MM – Adjusted Cash Flow (Non-GAAP) − VARIABLE DIVIDEND DECLARED $487 MM – Capital Expenditures (Accrued) $399 MM – Adjusted Free Cash Flow (Non-GAAP) − $76 MM – Fixed Quarterly Dividend ($0.11/share) $323 M
Slide 17: Delaware Basin – Operating Efficiencies Advance
Delaware Basin – Operating Efficiencies Advance Achieving capital efficiencies… Reducing field level costs… Delivering margin expansion Development D&C costs per foot (excludes facilities) LOE & GP&T per Boe (pro forma) Field-level operating margin ($/BOE) ↆ11% $32.07 $7.61 $940 $846 YEAR OVER YEAR
Slide 18: Anadarko Basin – Dow Drilling JV Commenced
Anadarko Basin – Dow Drilling JV Commenced Cash flows benefit from liquids-rich production mix SIGNIFICANT ACREAGE Anadarko production mix & Mt. Belvieu price ($/barrel) POSITION DOW DRILLING JV Blaine 300K FOCUS AREA NET >2X $25.81 ACRES 2021 Program Overview 2 operated rigs running Expect to s
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