Devon Energy Corporation · NYSE:DVN
Devon Energy — Investor Presentation (March 2021)
20 slides from Devon Energy's investor presentation, March 2021
Slide 1: Investor Presentation
Investor Presentation March 2021 NYSE: DVN devonenergy.com
Slide 2: A Leading U.S. Energy Company
A Leading U.S. Energy Company PREMIER MULTI-BASIN PORTFOLIO WILLISTON BASIN + 87 MBOED TRANSACTION CLOSED DISCIPLINED RETURNS-DRIVEN STRATEGY JANUARY 7, 2021 POWDER RIVER BASIN 22 MBOED SIGNIFICANT FINANCIAL STRENGTH & LIQUIDITY ANADARKO BASIN 81 MBOED DELAWARE BASIN PRIORITIZING CASH RETURNS TO SHA
Slide 3: Our Disciplined Cash-Return Business Model
Our Disciplined Cash-Return Business Model “Our CASH-RETURN business model is PROGRESSIVE DISCIPLINED OIL GROWTH targets: up to 5% annually designed to moderate growth, emphasize GROWTH STRATEGY Growing margins through operational & corporate cost reductions capital efficiencies, maximize return
Slide 4: Committed to Maintenance Capital in 2021
Committed to Maintenance Capital in 2021 Operations scaled to lower breakeven funding Free cash flow provides attractive investment opportunity 2021e outlook 2021e free cash flow sensitivities OIL PRODUCTION 16% 280-290 $2.5 (MBOD) <$32 WTI BREAKEVEN PRICING 12% SCENARIO FREE CASH FLOW YIELD $2.0 12
Slide 5: Free Cash Flow Priorities
Free Cash Flow Priorities VARIABLE DIVIDEND STRATEGY FIXED DIVIDEND CALCULATED ON A QUARTERLY BASIS Paid quarterly at $0.11 per share Target payout: up to 10% of cash flow STEP 1: VARIABLE DIVIDEND CALCULATION Adjusted Cash Flow (Non-GAAP) DEBT REDUCTION PROGRAM − Capital Expenditures (Accrued)
Slide 6: Prioritizing Cash Returns to Shareholders
Prioritizing Cash Returns to Shareholders 28 consecutive years of returning cash to shareholders ($ per share) Variable Dividend INDUSTRY-FIRST VARIABLE DIVIDEND (BASED ON PRO FORMA Q4 FINANCIAL RESULTS) Special Dividend $0.68 Fixed Quarterly Dividend $128 MILLION ($0.19 PER SHARE) SPECIAL DIVIDEND
Slide 7: Improving Investment-Grade Financial Strength
Improving Investment-Grade Financial Strength OUTSTANDING DEBT REDUCTION COMMITTED TO LIQUIDITY POSITION EFFORTS PROGRESSING LOWERING LEVERAGE $5.6B INCLUDES CASH & CREDIT FACILITY $1.5B AUTHORIZED PROGRAM ~1.0x NET DEBT TO EBITDAX TARGET $5,600 SIGNIFICANT FINANCIAL FLEXIBILITY Cash ~$500 MM MINIMA
Slide 8: Capturing $575 Million in Annual Cost Savings
Capturing $575 Million in Annual Cost Savings On track to achieve cost synergies by year-end 2021 Targeted annual cost savings by area ($MM) OPERATING MARGIN IMPROVEMENTS (1) 70% $200 MILLION GENERAL & ADMINISTRATIVE (1) 70% $200 MILLION D&C EFFICIENCIES 50% $100 MILLION ANNUAL COST SAVINGS SAVINGS
Slide 9: Committed to Top-Tier ESG Performance
Committed to Top-Tier ESG Performance ENVIRONMENT SOCIAL & SAFETY GOVERNANCE Achieved methane intensity reduction Fostering inclusion & diversity with our ESG incorporated in compensation target of 0.28% ahead of plan employees and community partners structure (including safety & emissions met
Slide 10: Asset Operations Overview Update
AssetOperations Overview Update NYSE: DVN devonenergy.com
Slide 11: Delaware Basin – Our Capital-Efficient Growth Engine
Delaware Basin – Our Capital-Efficient Growth Engine DELAWARE PRODUCTION PROFILE WORLD-CLASS OIL OPPORTUNITY Stacked pay position across 400,000 net acres 350 Q4 2020 MBOED Multi-decade inventory opportunity Q4 ACTIVITY Eddy Lea DELIVERING TOP-TIER RESULTS New Mexico Operating efficiencies acc
Slide 12: Delaware Basin – Legacy Devon Results
Delaware Basin – Legacy Devon Results Outstanding Q4 execution Achieving record well productivity Best-in-class capital efficiencies Key operating results Average cumulative 12-month oil production per foot, MBO Drilling and completion costs per foot (excludes facilities) HIGH-MARGIN +41% 30 $940 OI
Slide 13: Delaware Basin – Legacy WPX Results
Delaware Basin – Legacy WPX Results STATELINE AREA DRIVES Drilled & completed cost per foot (excludes allocation of facility costs) Q4 PERFROMANCE 44% REDUCTION STATELINE $983 26 Wells Online SINCE 2018 Bone Spring & Wolfcamp focus $774 Avg. IP30: 2,300 BOED/well $685 $553 MONUMENT DRAW 2018 2019 1H
Slide 14: 2021 Operating Outlook
2021 Operating Outlook Capital efficient 2021 program Delaware focused capital program Driving per-unit costs lower 2021e capital activity Upstream capital (in billions) LOE PER BOE GP&T PER BOE 8% $1.6-$1.8 B $8.22 ~ 80% UPSTREAM $1.6-$1.8 CAPITAL BUDGET BILLION $7.94 IMPROVEMENT ALLOCATED TO vs. 2
Slide 15: Asset Appendix Overview
AssetAppendix Overview NYSE: DVN devonenergy.com
Slide 16: Q4 2020 – Variable Dividend Calculation
Q4 2020 – Variable Dividend Calculation VARIABLE DIVIDEND CALCULATION INDUSTRY-FIRST VARIABLE $795 MM – Adjusted Cash Flow (Non-GAAP) − DISTRIBUTION DECLARED $486 MM – Capital Expenditures (Accrued) $309 MM – Adjusted Free Cash Flow (Non-GAAP) − $42 MM – Fixed Quarterly Dividend ($0.11/share) $267 M
Slide 17: Q4 2020 – Pro Forma Operational & Financial Results
Q4 2020 – Pro Forma Operational & Financial Results Key Metrics ($ IN MILLIONS) Legacy Devon Legacy WPX Pro Forma Oil Production (MBOD) 156 149 305 Total Production (MBOED) 333 251 584 LOE & GP&T (PER BOE) $7.21 $8.05 $7.57 General & Administrative $82 $62 $144 Net Financing Costs $71 $48 $119 Opera
Slide 18: Pro Forma Outstanding Debt Maturities
Pro Forma Outstanding Debt Maturities Strong liquidity with minimal near-term debt maturities Pro forma outstanding debt maturities as 12/31/20 ($MM) $5,600 Cash $2,600 >50% OF OUTSTANDING DEBT MATURES AFTER 2030 POTENTIALTO CALL Credit (2) Facility REDEEMED IN Q2 2021 $1,250 (1) (3) IN Q1 2021 $900
Slide 19: Diversified Across Top Resource Plays
Diversified Across Top Resource Plays WILLISTON BASIN $406 Million (TTM) ANADARKO Liquids-rich play focused on maximizing free cash flow BASIN Commencing Dow JV drilling program in 2021 (25-30 spuds) POWDER RIVER BASIN (400,000 NET ACRES) 2021 operating costs to benefit from expiration of MVCs
Slide 20: 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