Slide 1: Q2 2020 Earnings Presentation
Q2 2020 Earnings Presentation August 4, 2020 NYSE: DVN devonenergy.com
Slide 2: Key Takeaways From Our Earnings Presentation
Key Takeaways From Our Earnings Presentation KEY DEVON ATTRIBUTES #1 Q2 operating results drive improved 2020 outlook OIL WEIGHTED: 78% of revenue (2020 YTD) STRONG LIQUIDITY: $4.7 billion (6/30/20) #2 Barnett Shale closing accelerated to Oct. 1 POWDER RIVER BASIN 24 MBOED (76% OIL) TOP-TIER ESG PER
Slide 3: Our Approach to Managing the Business
Our Approach to Managing the Business “The fundamental changes PROGRESSIVE MODERATED OIL GROWTH targets: up to 5% annually GROWTH STRATEGY Expand margins through operational & corporate cost reductions that underpin our transition to a cash-return business model REDUCED Targeting 70%-80% of op
Slide 4: Q2 2020 – Operating Highlights
Q2 2020 – Operating Highlights RESILIENT CAPITAL IMPROVED PRODUCTION EFFICIENCIES COSTS OIL PRODUCTION C A P I TA L I N V E S T M E N T G&A EXPENSES 153 MBOD $203 million $79 million 3 MBOD ABOVE GUIDANCE 10% BELOW GUIDANCE 31% YEAR-OVER-YEAR Key Messages Curtailments limited oil volumes by ~10,00
Slide 5: Q2 2020 – Asset-Level Highlights
Q2 2020 – Asset-Level Highlights MULTI-BASIN PORTFOLIO DELIVERING STRONG RESULTS Q2 OUTPERFORMANCE DRIVES IMPROVED OUTLOOK (SEE PAGE 6 FOR DETAILS) Exited quarter with 9 rigs & 1 frac crew running DELAWARE Industry-leading Wolfcamp efficiencies ACCELERATE (pg. 10) BASIN Per-unit production exp
Slide 6: Strong Execution Driving Improved 2020 Outlook
Strong Execution Driving Improved 2020 Outlook vs. Prior Updated Guidance Key Messages Guidance Driven by improvements in Delaware Basin COSTS & CYCLE TIMES Upstream capital $950 – $1,000 $25 Million ($ in millions) Improvement Expect to bring online 65 to 70 wells in 2H 2020 (~60% in Q4) Rais
Slide 7: Accelerating Barnett Shale Closing Date
Accelerating Barnett Shale Closing Date Barnett divestiture bolsters liquidity Generating excess cash flow in second half of 2020 ($ in billions) $1.6 B $0.4 B DIVEST (1) BARNETT SHALE DIVESTITURE PROCEEDS (CLOSING DATE: OCT. 1, 2020) Accelerated closing to October 1st (previously YE20) $0.8 B R
Slide 8: Significant Financial Strength & Liquidity
Significant Financial Strength & Liquidity Strong liquidity with no near-term debt maturities Balance sheet strength provides competitive advantage (1) Outstanding debt maturities ($MM) Net debt to 2020e EBITDAX $4,700 6.0x SIGNIFICANT Excellent liquidity ($4.7 billion) ADVANTAGED POSITION TOP-QUA
Slide 9: Investment Concentrated in the Delaware Basin
Investment Concentrated in the Delaware Basin Efficiencies driving improved outlook Q2 RESULTS – RATES RESTRICTED DUE TO MARKET CONDITIONS 2020e E&P capital ($MM) THISTLE/GAUCHO $950 - $1,000 WOLFCAMP & BONE SPRING VALIDATES 3RD (ↆ$25 MM REDUCTION) CO-DEVELOPMENT IN TODD BONE SPRING POTENTIAL ~75% T
Slide 10: Operational Efficiencies Continue to Accelerate
Operational Efficiencies Continue to Accelerate Delivering best-in-class capital efficiency… While achieving superior well results Drilled and completed feet per day (Wolfcamp formation) Average cumulative 6-month oil production per foot, MBO (2019) 42% >50% (1) 20 D&C 1,700 SUPERIOR COSTS WELL IMPR
Slide 11: Efficiencies Drive Maintenance Capital Improvements
Efficiencies Drive Maintenance Capital Improvements Wolfcamp success driving capital efficiency gains Preserving productive capacity into 2021 Maintenance capital ($ millions) (1) Oil production (MBOD) THIRD FRAC CREW IN DELAWARE $1,300 TIMING OF DRIVES HIGHER DUC INVENTORY COMPLETIONS TO ACTIVITY P
Slide 12: Sustainable Improvements to Cash Cost Structure
Sustainable Improvements to Cash Cost Structure Cash cost reductions by year-end 2020 Committed to driving corporate costs lower Cost savings by category vs. Q2 2020 annual run-rate ($MM) Annual G&A & financing costs ($MM) $1,000 $932 G&A LOE & Financing Costs $100 GP&T $125 G&A MILLION MILLION $300
Slide 13: Operations Scaled to Generate Free Cash Flow
Operations Scaled to Generate Free Cash Flow Substantial improvements to breakeven funding Free cash flow yield at maintenance capital 2021e pro forma capital & cost efficiencies (per Boe) 2021e free cash flow yield sensitivities FUNDED AT $7 25% $950 MILLION 21% $35 WTI (1) PER BBL FREE CASH FLOW I
Slide 14: Free Cash Flow Priorities
Free Cash Flow Priorities FUNDING ALL PRIORITIES WITH CASH ON-HAND Committed to low financial leverage >$2 Billion (1) — Resuming DEBT REDUCTION program (up to $1.5 billion) — Targeting net debt-to-EBITDAX ratio: 0.5x – 1.0x DIVIDENDS $0.2B QUARTERLY & SPECIAL Maintain quarterly dividends DISTRI
Slide 15: Diversified Portfolio Provides Optionality
Diversified Portfolio Provides Optionality NET FEDERAL 2020e FEDERAL Federal acreage limited to 20% of total leasehold ACREAGE LEASEHOLD % SPUDS PERMITS — >50% of acreage in Delaware & Powder River (1) Delaware Basin >200,000 55% 120 400 Powder River Basin >300,000 60% 15 >150 — No exposure in Eag
Slide 16: Highly-Regarded ESG Performance
Highly-Regarded ESG Performance ENVIRONMENT SOCIAL & SAFETY GOVERNANCE On track to meet our methane intensity Provided STEM resources across our ESG metrics incorporated in target of 0.28% or lower by 2025 communities, impacting 17,000 students COMPENSATION STRUCTURE U.S. recycled water incr
Slide 17: Why Own Devon?
Why Own Devon? KEY DEVON ATTRIBUTES OIL WEIGHTED: 78% of revenue (2020 YTD) Premier multi-basin portfolio STRONG LIQUIDITY: $4.7 billion (6/30/20) POWDER RIVER BASIN 24 MBOED (76% OIL) TOP-TIER ESG PERFORMANCE (pg. 16) Significant financial strength & liquidity Disciplined returns-driven strat
Slide 18: Appendix
Appendix NYSE: DVN devonenergy.com
Slide 19: Q2 2020 – Asset-Level Modeling Stats
Q2 2020 – Asset-Level Modeling Stats Q2 2020 - ASSET DETAIL DEVON DELAWARE POWDER RIVER EAGLE FORD ANADARKO OTHER PRODUCTION Oil (MBbl/d) 153 79 18 27 21 8 NGL (MBbl/d) 69 29 2 12 25 1 Gas (MMcf/d) 614 241 20 87 262 4 Total (MBoe/d) 325 149 24 53 90 9 ASSET MARGIN (per Boe) Realized price $14.37 $15
Slide 20: Delaware – Development Projects Advancing on Plan
Delaware – Development Projects Advancing on Plan DELAWARE BASIN UPCOMING ACTIVITY Diversified capital program across core development areas Upcoming developments in second-half of 2020 Eddy Lea Q2-2020a Q3-2020e Q4-2020e Q1-2021e Belloq 2.0 5 Wolfcamp & Bone Spring wells Purrito 5 Bone Spring wells
Slide 21: Powder River Basin – Advancing Niobrara Appraisal
Powder River Basin – Advancing Niobrara Appraisal NIOBRARA TYPE LOG Q2 production averaged 24 MBOED NIOBRARA DELINEATION ACTIVITY — Light-oil volumes >75% of production mix Upcoming Activity 3-WELL NIOBRARA — Production expense improved 11% vs. Q1 2020 Prior Activity SPACING TEST — STACKED-PAY pos
Slide 22: Eagle Ford – Expanding Resource Opportunity
Eagle Ford – Expanding Resource Opportunity EAGLE FORD ACTIVITY Q2 production averaged 53 MBOED (51% oil) NET PRODUCTION — 13 new lower Eagle Ford wells online in Q2 (see map) — Net production increased 7% vs. prior quarter 53 MBOED Q2 2020 2ND REDEVELOPMENT SPACING TEST Sandy (4,700’ laterals) —
Slide 23: Anadarko Basin – Optimizing Base Production Results
Anadarko Basin – Optimizing Base Production Results Base production efforts improve decline profile ANADARKO BASIN RECENT ACTIVITY — Q2 net production: 90 MBOED (52% liquids) DOW DRILLING JV INFILL DEVELOPMENT ~$100 (ACTIVITY NOT RELATED TO DOW) — OUTPERFORMED PLAN 7% year-to-date MILLION CARRY Pr
Slide 24: Investor Contacts & Notices
Investor Contacts & Notices differ materially from the forward-looking statements in this presentation due to the COVID-19 pandemic and related impacts, including, by, among other Investor Relations Contacts things: contributing to a sustained or further deterioration in commodity prices; causing ta