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August Investor Presentation – Devon Energy Corp

Devon Energy Corp · Aug 8, 2011 · 53 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. August Investor Presentation – Devon Energy Corp – slide 1
    Investor Presentation August 2011
  2. August Investor Presentation – Devon Energy Corp – slide 2
    Devon Today Horn River Proved reserves: 2.9 billion BOE (12/31/10) Jackfish Deep Basin Pike Lloydminster Current production: 660 MBOED Canadian Oil Potential (Q2 2011) Sales revenue mix: 59% liquids Powder River 41% gas…
  3. August Investor Presentation – Devon Energy Corp – slide 3
    Devons Strengths Per share focus Emphasis on capital discipline Superior financial strength Strong full-cycle margins Deep inventory of oil and liquids-rich growth plays Significant exposure to emerging plays NYSE: DVN…
  4. August Investor Presentation – Devon Energy Corp – slide 4
    Capital Allocation Criteria Optimize per share returns on a debt-adjusted basis through: E&P capital projects Debt reduction Share repurchases Organizational NYSE: DVN focus on per share results www.devonenergy.com Slide…
  5. August Investor Presentation – Devon Energy Corp – slide 5
    Share Repurchase Plan Announced May 2010 Plan: Repurchase 3.5 billion of outstanding shares Expected completion: Year-end 2011 Progress to date: 35.1 million shares for 2.6 billion (Through 8/3/11) Compelling share value:…
  6. August Investor Presentation – Devon Energy Corp – slide 6
    Share Repurchase History % of Outstanding Time Period Shares Repurchased Shares 2004 2006 56.1 million shares 12% 2007 - 2008 10.6 million shares 2% 2010 August 2011 35.1 million shares 8% NYSE: DVN www.devonenergy.com…
  7. August Investor Presentation – Devon Energy Corp – slide 7
    Financial Strength & Flexibility As of June 30, 2011 Net debt-to-cap ratio: 5% Cash and short-term investments: 6.7 billion Senior unsecured ratings: Fitch: BBB+ Moodys: Baa1 S&P: BBB+ Note: Includes a non-GAAP measure,…
  8. August Investor Presentation – Devon Energy Corp – slide 8
    2011 E&P Capital Allocation 90% of capital allocated towards oil and liquids-rich projects Exploration Other activity Canada 20% Development activity Jackfish80% 5.5 5.9 Billion NYSE: DVN www.devonenergy.com…
  9. August Investor Presentation – Devon Energy Corp – slide 9
    2011 Capital Objectives Development of existing inventory Top-line production growth: 7% - 8% Oil and natural gas liquids growth: 16% - 18% Growth per debt-adjusted share: teens Accelerate Canadian and Permian exploration…
  10. August Investor Presentation – Devon Energy Corp – slide 10
    Devons Recycle Ratio North America Onshore Full-Year 2010 Results Per BOE Revenue (excluding hedges) 33.81 Cash costs (1) (13.42) Midstream capital ( 1.02) Cash margin per BOE 19.37 3-yr drilling F&D (includes performance…
  11. August Investor Presentation – Devon Energy Corp – slide 11
    Recycle Ratio Excluding Hedges Full-Year 2010 Results 177% 167% 138% 127% 113% 102% 52% Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Note: Peer group includes APA, APC, CHK, ECA, EOG, and NBL Source: SEC filings and…
  12. August Investor Presentation – Devon Energy Corp – slide 12
    Jackfish Projects Overview SAGD Development Each Jackfish project: 300 MMBO EUR (260 MMBO net) Jackfish 1 35 MBOD of production (30 MBOD net) Jackfish 2 Flat production profile Long reserve life 25 years Working interest: 100%…
  13. August Investor Presentation – Devon Energy Corp – slide 13
    Jackfish 1 Performance SAGD Production Per Well 90 Day Moving Average 2,400 Foster Creek MacKay River Firebag Christina Lake 2,200 Jackfish Long Lake Hangingstone Great Divide 2,000 Surmont Tucker Lake Hilda Lake Tangleflags…
  14. August Investor Presentation – Devon Energy Corp – slide 14
    Jackfish 1 Performance Steam Oil Ratio (SOR) SAGD Project Comparison (Cumulative SOR) 10 Jackfish 9 Long Lake MacKay River 8 Firebag Foster Creek 7 Christina Lake Cumulative SOR 6 5 Jackfish 4 3 2 Industry…
  15. August Investor Presentation – Devon Energy Corp – slide 15
    Pike SAGD Development Pike joint venture leasehold: Jackfish Pike 1A, 1B & 1C Focus Area 50% operated working interest Similar reservoir characteristics to Jackfish Up to five SAGD development e Pike Joint Venture phases…
  16. August Investor Presentation – Devon Energy Corp – slide 16
    Thermal Oil Production Growth Outlook Net Barrels Per Day 175,000 Net risked resource: 1.4 BBO 150,000 AGR C % 20 R C AG 18 % 31,200 Q2- 2011 2020 NYSE: DVN www.devonenergy.com Slide 17
  17. August Investor Presentation – Devon Energy Corp – slide 17
    Lloydminster Oil Development Iron River Net risked resource: 120 MMBOE Risked locations: 1,000 Manatokan Net acreage: 2.5 million Low-risk development End Lake Strong operating margins Q2 11 net production: 39 MBOED…
  18. August Investor Presentation – Devon Energy Corp – slide 18
    Barnett Shale Liquids-Rich Gas Development Jack Wise Denton Net risked resource: 18 TCFE Risked locations: 7,000 Denton Net acreage: 624,000 Low average acreage cost: 2,800/acre Parker Tarrant Low average royalty burden: 18%…
  19. August Investor Presentation – Devon Energy Corp – slide 19
    Barnett Drilling Density Johnson County Burleson Johnson county net acreage: 119,000 Johnson County net acreage: 117,000 Drilled 800 horizontal wells to date Drilled 700 horizontal wells to date Venus Alvarado…
  20. August Investor Presentation – Devon Energy Corp – slide 20
    Cana Woodford Shale Liquids-Rich Gas Development Net risked resource: 11 TCFE Risked locations: 5,000 Net acreage: 243,000 Low cost of entry: 2,200/acre Low average royalty burden: 20% Q2 11 net production: 189 MMCFED 2011…
  21. August Investor Presentation – Devon Energy Corp – slide 21
    Granite Wash Oil & Liquids-Rich Development Net risked resource: 200 MMBOE Risked locations: 350 net wells Net acreage: 63,000 Legacy land position held by production Hemphill Low average royalty burden: 19% Q2 11 net…
  22. August Investor Presentation – Devon Energy Corp – slide 22
    Permian Basin Exploration Oil & Liquids-Rich Opportunities Net prospective acreage: 1 million New Mexico Net risked resource: 1 BBOE Texas f el Sh Wolfcamp rn s te Expect 20% production growth in 2011 Conventional e…
  23. August Investor Presentation – Devon Energy Corp – slide 23
    Canadian Exploration Oil & Liquids-Rich Opportunities Unrisked resource potential: 1 BBOE Net prospective acres: 4 million 2011 capital: 200 million Testing 10 new play types including: Viking (light oil): Potential locations:…
  24. August Investor Presentation – Devon Energy Corp – slide 24
    New Ventures Activity Net prospective acres: 1.1 million 2011 capital: 350 million Targeting oil and liquids-rich gas Michigan 2011 plans: Niobrara Utica Ohio Continue to add to positions Mississippian Acquire seismic…
  25. August Investor Presentation – Devon Energy Corp – slide 25
    New Ventures Activity Niobrara Mississippian Utica Ohio Michigan Tuscaloosa 300,000 Net Acres 200,000 110,000 300,000 250,000 200,000 PRB Target: 150,000 100,000 DJ Basin MT KS MI PA MS Location WY OK IN OH MI TX LA WV…
  26. August Investor Presentation – Devon Energy Corp – slide 26
    Why Own Devon Per share focus Emphasis on capital discipline Superior financial strength Strong full-cycle margins Deep inventory of oil and liquids-rich growth plays Significant exposure to emerging plays NYSE: DVN…
  27. August Investor Presentation – Devon Energy Corp – slide 27
    Thank You.
  28. August Investor Presentation – Devon Energy Corp – slide 28
    Appendix
  29. August Investor Presentation – Devon Energy Corp – slide 29
    2011 & 2012 Hedged Position Oil Hedges Q3-Q4 2011 45,000 BOD collared: 75 floor and 109 ceiling ( 35% of oil production) 19,500 BOD of call options sold at 95 Full-Year 2012 54,000 BOD collared: 86 floor and 126 ceiling 22,000…
  30. August Investor Presentation – Devon Energy Corp – slide 30
    2011 Reserve Addition Targets Drill-bit reserve additions(1): 370 390 MMBOE Reserve replacement: 160% Finding and development costs(2): 15 - 17/BOE (1) Excludes price revisions (2) Calculation includes capitalized G&A and…
  31. August Investor Presentation – Devon Energy Corp – slide 31
    Cana Plant Update Following May 24, 2011 Tornado Plant and major vessels structurally sound Increased electrical and foundation repairs Insured for damage and business interruption Estimated downtime: 4 6 months Estimated…
  32. August Investor Presentation – Devon Energy Corp – slide 32
    2011 Capital Update Whats Changed Acceleration of Canadian and Permian exploration drilling Expanded acreage capture and accelerated testing of new venture opportunities Increased efficiency/working interest in the Barnett and…
  33. August Investor Presentation – Devon Energy Corp – slide 33
    2011 Capital Reconciliation Billions Original 2011 E&P budget 4.5 - 4.9 Increased activity: Accelerating exploration & new ventures 0.4 Barnett & Cana efficiency/working interest 0.3 External factors: Inflation & foreign…
  34. August Investor Presentation – Devon Energy Corp – slide 34
    Expected Proceeds Billions Pre-Tax Proceeds Closing Maersk - Deepwater GOM 1.3 Q1 2010 BP Deepwater GOM 1.8 Q2 2010 Apache GOM Shelf 1.1 Q2 2010 CNOOC, CVX, BP China 0.6 Q2 & Q3 2010 BP - Azerbaijan 2.0 Q3 2010 BP - Brazil…
  35. August Investor Presentation – Devon Energy Corp – slide 35
    Historical Performance North American Onshore Production Growth LOE per BOE (MMBOE) (/BOE) 220 223 207 8.78 7.28 8.01 7.32 183 6.87 R CAG 168 7 % 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Drill-Bit Reserve…
  36. August Investor Presentation – Devon Energy Corp – slide 36
    Devons Thermal Oil Position SAGD Development Devons SAGD characteristics: Jackfish 1 T76 Low F&D Jackfish 2 Low geologic risk T75 High reservoir quality Jackfish 3 Flat production profile T74 Long reserve life 25 years…
  37. August Investor Presentation – Devon Energy Corp – slide 37
    SAGD Development Timeline Timing Range of Expected Plant Start-Up Pike 2 (35 MBOD) Jackfish East (20-25 MBOD) Pike 1C (35 MBOD) Pike 1B (35 MBOD) Pike 1A (35 MBOD) Small-Scale SAGD Jackfish 3 (35 MBOD) Jackfish 2 (35…
  38. August Investor Presentation – Devon Energy Corp – slide 38
    Jackfish 1 Performance Capacity Utilization 90 Day Moving Average 100 90 Jackfish Industry Average 80 % of Project Capacity Utilized 70 60 50 40 30 20 10 Plant Turnaround 0 0 2 4 6 8 10 12 14 16 18 20 22 24 26…
  39. August Investor Presentation – Devon Energy Corp – slide 39
    Jackfish East Additional SAGD Potential Potential Jackfish expansion phase Jackfish East 150 MMBO EUR (130 MMBO net) Jackfish 1 20 MBOD of production (17 MBOD net) Similar reservoir quality with minimal bottom water…
  40. August Investor Presentation – Devon Energy Corp – slide 40
    Pike 2010/11 Winter Delineation Program Existing well data: 250 wells Jackfish 2010/11 Winter 2010/11 winter program: Program Focus Area Drilled 135 stratigraphic wells Acquired 59 square miles of seismic lin e Pike Joint…
  41. August Investor Presentation – Devon Energy Corp – slide 41
    Pike 2010/11 Drilling Confirms High-Quality Reservoir Pike Type Log Pike Jackfish Depth (Ft, TVD) 1,400 1,560 1,320 1,380 Wabiskaw Pay Thickness 49 - 144 49 164 (Ft) McMurray Porosity (%) 30 35 30 - 33 Sand McMurray B Sand…
  42. August Investor Presentation – Devon Energy Corp – slide 42
    Devons North American Shale Position Low cost of entry and low royalty rates Minimal term acreage expirations High liquids content Economics enhanced by midstream business Multi-year growth capacity Continued improvement in…
  43. August Investor Presentation – Devon Energy Corp – slide 43
    U.S. Shale Gas Production (1) Major U.S. Shale Plays 12.0 10.0 8.0 BCFD 6.0 4.0 2.0 0.0 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09…
  44. August Investor Presentation – Devon Energy Corp – slide 44
    Devons 30-Day IP Trend Barnett Shale Horizontal Wells 2,000 1,500 MCFED 1,000 500 0 2005 2006 2007 2008 2009 2010 Year of 1st Production Note: Average daily rate for the best month in the first year of production…
  45. August Investor Presentation – Devon Energy Corp – slide 45
    Barnett Shale Performance Reserve Revisions Performance Reserve Year Revisions (BCFE) 2004 +186 2005 +378 2006 +24 2007 +234 2008 +132 2009 +288 2010 +260 NYSE: DVN www.devonenergy.com Slide 46
  46. August Investor Presentation – Devon Energy Corp – slide 46
    East Texas Unconventional Haynesville / Bossier Shale Marion Significant portion of acreage held by Louisiana Texas Greater Carthage Harrison Caddo Bossier production or fee 110,000 Net Acres Low average royalty…
  47. August Investor Presentation – Devon Energy Corp – slide 47
    Horn River Basin EOG Net risked resource: 10 TCFE 94-O-15 94-O-16 Risked locations: 1,600 Quicksilver Stone Mtn. Net acreage: 174,000 Thickest section of the basin 94-O-10 94-O-9 Minimal drilling required to hold acreage…
  48. August Investor Presentation – Devon Energy Corp – slide 48
    Arkoma Woodford Shale Net risked resource: 1.6 TCFE Risked locations: 2,100 Hughes Pittsburg Net acreage: 43,000 Low cost of entry: 400/acre Low average royalty burden: 19% OK Acreage held by production Oklahoma City…
  49. August Investor Presentation – Devon Energy Corp – slide 49
    Carthage Texas Camp Cass Marion Net acreage: 212,000 Upshur Waskom Harrison Gregg Working interest: 86% Bethany Carthage Field Panola Q2 11 net production: 212 MMCFED Rusk Stockman Shelby 2011 plans: 30 wells…
  50. August Investor Presentation – Devon Energy Corp – slide 50
    Groesbeck Nan-Su-Gail Texas Net acreage: 147,000 Freestone Personville Working interest: 72% Limestone Q2 11 net production: 87 MMCFED Dew Oaks Leon 2011 plans: 15 wells Bald Prairie Robertson OK TX Groesbeck…
  51. August Investor Presentation – Devon Energy Corp – slide 51
    Washakie Net acreage: 157,000 Working interest: 76% Q2 11 net production: 138 MMCFED Low-risk, tight sand gas 2011 plans: 60 wells WY Washakie UT CO NYSE: DVN www.devonenergy.com Slide 52
  52. August Investor Presentation – Devon Energy Corp – slide 52
    Access Pipeline JACKFISH From Edmonton, Alberta to Jackfish: PL 200 miles r OS Ra Sunco Devon ownership: 50% inb L AOSP E ow IN P/L L Bitumen Blend Pipeline: PE PI Pe Jackfish to Sturgeon…
  53. August Investor Presentation – Devon Energy Corp – slide 53

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