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Credit Suisse Energy Summit – Devon Energy Corp

Devon Energy Corp · Feb 9, 2011 · 49 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. Credit Suisse Energy Summit – Devon Energy Corp – slide 1
    Credit Suisse Energy Summit February 9, 2011
  2. Credit Suisse Energy Summit – Devon Energy Corp – slide 2
    NYSE: DVN www.devonenergy.com Slide 3 Devon Today North America Onshore Proved reserves (12/31/09): ? 2.6 Billion BOE Current production (Q3 2010): ? 613 MBOED Sales revenue mix (Q3 2010): 51% gas Production mix (Q3 2009): 49%…
  3. Credit Suisse Energy Summit – Devon Energy Corp – slide 3
    NYSE: DVN www.devonenergy.com Slide 4 Repositioning Announcement November 16, 2009 Devon announces plan to strategically reposition company as high-growth, onshore North American exploration and production company.
  4. Credit Suisse Energy Summit – Devon Energy Corp – slide 4
    NYSE: DVN www.devonenergy.com Slide 5 Results & Allocation of Proceeds Share repurchases ($3.5) Resource capture (acreage acquisitions) ($0.7) $ in Billions Balance $1.3 - $1.9 Debt repayments ($1.7) Pike oil sands transaction…
  5. Credit Suisse Energy Summit – Devon Energy Corp – slide 5
    NYSE: DVN www.devonenergy.com Slide 6 2010 Leasehold Additions Pike 50,000 50,000 1st, 2nd & 3rd Bone Spring 20,000 170,000 Wolfberry 60,000 197,000 635,000 260,000 130,000 115,000 2010 Net Acreage Additions Total Undisclosed…
  6. Credit Suisse Energy Summit – Devon Energy Corp – slide 6
    NYSE: DVN www.devonenergy.com Slide 7 Devon Repositioned Summary Deep inventory in key North American growth plays Significant financial strength Balanced product mix Flexibility in capital deployment Enhanced growth per share
  7. Credit Suisse Energy Summit – Devon Energy Corp – slide 7
    NYSE: DVN www.devonenergy.com Slide 8 Devon?s Recycle Ratio North America Onshore Unit cash margin / F&D 174% 3-yr drilling F&D (includes performance revisions) $ 10.98 Cash margin per BOE $ 19.10 Midstream capital ( 1.02) Cash…
  8. Credit Suisse Energy Summit – Devon Energy Corp – slide 8
    NYSE: DVN www.devonenergy.com Slide 9 47% 94% 109% 174% 167% 157% 150% 136% 122% 118% Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Recycle Ratio Excluding Hedges Note: Peer group includes APA, APC, CHK,…
  9. Credit Suisse Energy Summit – Devon Energy Corp – slide 9
    NYSE: DVN www.devonenergy.com Slide 10 2010 E&P Capital Allocation Liquids Versus Natural Gas Jackfish Shale Plays Other Canada Other U.S. $4.9 ? $5.3 Billion(1) 45% 17% 38% Oil & Condensate Driven Activity North American…
  10. Credit Suisse Energy Summit – Devon Energy Corp – slide 10
    NYSE: DVN www.devonenergy.com Slide 11 Preliminary 2011 Outlook E&P capital budget: $4.5 to $4.9 billion ? > 90% directed towards oil and liquids opportunities Total capital budget(1): $5.5 to $5.9 billion Expected production growth:…
  11. Credit Suisse Energy Summit – Devon Energy Corp – slide 11
    NYSE: DVN www.devonenergy.com Slide 12 Jackfish SAGD Projects Field characteristics: ? Low F&D ? Flat production profile ? Long reserve life > 20 years ? Working interest: 100% Each project: ? 300 MMBO EUR (?260 MMBO net) ? 35…
  12. Credit Suisse Energy Summit – Devon Energy Corp – slide 12
    NYSE: DVN www.devonenergy.com Slide 13 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 Foster Creek MacKay River Firebag Christina Lake Jackfish…
  13. Credit Suisse Energy Summit – Devon Energy Corp – slide 13
    NYSE: DVN www.devonenergy.com Slide 14 9 8 7 6 5 4 3 2 1 0 10 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 Jackfish Performance Steam Oil Ratio (SOR) Cumulative SOR SAGD Project Comparison (Cumulative…
  14. Credit Suisse Energy Summit – Devon Energy Corp – slide 14
    NYSE: DVN www.devonenergy.com Slide 15 Pike Oil Sands Project SAGD Development Jackfish Acreage Pike Acreage Access Pipeline Risked locations: 580 Net risked resource: 550 MMBO 50% working interest Devon operated Multi-stage…
  15. Credit Suisse Energy Summit – Devon Energy Corp – slide 15
    NYSE: DVN www.devonenergy.com Slide 16 Thermal Oil Production Growth Outlook Net Barrels Per Day 25,600 2010-YTD 2020 150,000 175,000 19% CAGR 21% CAGR Net risked resource: ? 1.4 BBO
  16. Credit Suisse Energy Summit – Devon Energy Corp – slide 16
    NYSE: DVN www.devonenergy.com Slide 17 Iron River Manatokan End Lake Lloydminster Lloydminster Oil Development Net acreage: 2.4 million Low-risk development Strong operating margins Q3 ?10 net production: ? 40 MBOED 2010…
  17. Credit Suisse Energy Summit – Devon Energy Corp – slide 17
    NYSE: DVN www.devonenergy.com Slide 18 Permian Basin Oil Opportunities Net acres: ? 1 million overall Q3 ?10 net production: ? 44 MBOED Activity targeting several play types: Wolfberry: ? 197,000 net acres ? 5 operated rigs…
  18. Credit Suisse Energy Summit – Devon Energy Corp – slide 18
    NYSE: DVN www.devonenergy.com Slide 19 Granite Wash Oil & Liquids-Rich Opportunity Net acreage: 58,000 Legacy land position held by production Low average royalty burden: 18% Q3 ?10 net production: ? 14,300 BOED Liquids drive…
  19. Credit Suisse Energy Summit – Devon Energy Corp – slide 19
    NYSE: DVN www.devonenergy.com Slide 20 Devon?s 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…
  20. Credit Suisse Energy Summit – Devon Energy Corp – slide 20
    NYSE: DVN www.devonenergy.com Slide 21 Cana Woodford Shale First-Mover Yields Superior Position Risked locations: > 5,000 Net risked resource: > 10 TCFE Net acreage: 240,000 Low cost of entry: ? $2,200/acre Low average royalty…
  21. Credit Suisse Energy Summit – Devon Energy Corp – slide 21
    NYSE: DVN www.devonenergy.com Slide 22 Barnett Shale Superior, First-Mover Advantage Parker Palo Pinto Hood Tarrant Johnson Erath Hill Jack Wise Denton Ft. Worth Highly Urbanized Denton Low average acreage cost: ?…
  22. Credit Suisse Energy Summit – Devon Energy Corp – slide 22
    NYSE: DVN www.devonenergy.com Slide 23 Avalon Shale Oil and Liquids-Rich Gas Opportunity Prospective net acres: ? 235,000 Average royalty burden: ? 22% Early drilling results indicate repeatable play with strong economics Continue…
  23. Credit Suisse Energy Summit – Devon Energy Corp – slide 23
    NYSE: DVN www.devonenergy.com Slide 24 Additional Natural Gas Opportunities Groesbeck Washakie East Texas Unconventional Deep Basin Powder River Horn River Arkoma Woodford Deep Basin 545,000 acres Powder River 255,000 acres…
  24. Credit Suisse Energy Summit – Devon Energy Corp – slide 24
    NYSE: DVN www.devonenergy.com Slide 25 Gas Gathering & Processing Ownership in more than 13,000 miles of pipelines ? > 6,000 Domestic ? > 7,000 Canada Ownership in 65 plants ? 9 Domestic ? 56 Canada Marketing & midstream operating…
  25. Credit Suisse Energy Summit – Devon Energy Corp – slide 25
    NYSE: DVN www.devonenergy.com Slide 26 Why Own Devon? Deep inventory in premier North American growth plays ? >32,000 risked undrilled locations ? >13 BBOE risked resource potential Visible oil production growth Early-mover…
  26. Credit Suisse Energy Summit – Devon Energy Corp – slide 26
    NYSE: DVN www.devonenergy.com Slide 27 Enterprise Value per Flowing Barrel Notes: Production based on year-to-date third-quarter 2010 reported results; Enterprise value as of 2/1/11. $55,700 $53,500 $61,100 $69,400 $82,300 $79,100…
  27. Credit Suisse Energy Summit – Devon Energy Corp – slide 27
    NYSE: DVN www.devonenergy.com Slide 28 Relative Valuation Enterprise Value to 2011e EBITDA 8.5 8.0 7.1 7.0 6.4 6.4 6.3 6.2 5.8 4.7 SWN PXD EOG NBL ECA CHK DVN NFX APC APA Source: Independent investment bank 2/1/11
  28. Credit Suisse Energy Summit – Devon Energy Corp – slide 28
    NYSE: DVN www.devonenergy.com Slide 31 Expected Proceeds BP - Brazil $3.2 Pending BP ? Deepwater GOM $1.8 Q2 2010 Apache ? GOM Shelf $1.1 Q2 2010 CNOOC, CVX, BP ? China $0.6 Q2 & Q3 2010 Maersk - Deepwater GOM $1.3 Q1 2010 BP -…
  29. Credit Suisse Energy Summit – Devon Energy Corp – slide 29
    NYSE: DVN www.devonenergy.com Slide 32 Organizational focus on per share results Capital Allocation Criteria Optimize per share returns on a debt-adjusted basis through: ?Share repurchases ?Debt reduction ?E&P capital projects
  30. Credit Suisse Energy Summit – Devon Energy Corp – slide 30
    NYSE: DVN www.devonenergy.com Slide 33 Share Repurchase Plan Compelling share value: Plan: Repurchase $3.5 billion of outstanding shares Commenced: May 2010 Expected completion: 2011 Shares repurchased through 11/3/10: 15 million…
  31. Credit Suisse Energy Summit – Devon Energy Corp – slide 31
    NYSE: DVN www.devonenergy.com Slide 34 Debt Repayment Repaid $1.7 billion of debt in 2010 Net debt to cap ratio: 8% Cash and cash equivalents: $4.0 billion Senior unsecured ratings: ? S&P: BBB+ ? Moody?s: Baa1 ? Fitch: BBB+ Note:…
  32. Credit Suisse Energy Summit – Devon Energy Corp – slide 32
    NYSE: DVN www.devonenergy.com Slide 35 2010-2012 Hedged Position North American Onshore Fourth-Quarter 2010 ? 1.6 BCFD with an average protected price of $5.87 (? 60% of gas production) ? 79,000 BOD collared: $67.47 floor and $96.48…
  33. Credit Suisse Energy Summit – Devon Energy Corp – slide 33
    NYSE: DVN www.devonenergy.com Slide 36 2010 E&P Capital Forecast Jackfish Shale Plays Other Canada Other U.S. $4.9 ? $5.3 Billion(1) 18% 23% 47% 12% Oil Sands Shale Plays Other Unconventional Plays North American…
  34. Credit Suisse Energy Summit – Devon Energy Corp – slide 34
    NYSE: DVN www.devonenergy.com Slide 37 Historical Performance North American Onshore 168 220 207 183 2006 2007 2008 2009 233% 198% 269% 223% 2006 2007 2008 2009 $13.57 $13.30 $13.05 $6.59 2006 2007 2008 2009 $7.28 $8.01…
  35. Credit Suisse Energy Summit – Devon Energy Corp – slide 35
    NYSE: DVN www.devonenergy.com Slide 38 Devon?s 30-Day IP Trend Barnett Shale Horizontal Wells 0 500 1,000 1,500 2,000 2004 2005 2006 2007 2008 2009 MCFED Spud Year Note: Average daily rate for the best month in the first year…
  36. Credit Suisse Energy Summit – Devon Energy Corp – slide 36
    NYSE: DVN www.devonenergy.com Slide 39 Devon?s Historical Frac Costs Barnett Shale
  37. Credit Suisse Energy Summit – Devon Energy Corp – slide 37
    NYSE: DVN www.devonenergy.com Slide 40 Barnett Shale Performance Reserve Revisions 2005 +378 2006 +24 2007 +234 2009 +288 2008 +132 2004 +186 Performance Reserve Year Revisions (BCFE)
  38. Credit Suisse Energy Summit – Devon Energy Corp – slide 38
    NYSE: DVN www.devonenergy.com Slide 41 Barnett Drilling Density Johnson County Johnson county net acreage: 119,000 Drilled ? 700 horizontal wells to date Devon Acreage Devon Well Cities Lakes Industry Well Cleburne Alvarado…
  39. Credit Suisse Energy Summit – Devon Energy Corp – slide 39
    NYSE: DVN www.devonenergy.com Slide 42 U.S. Shale Gas Production Major U.S. Shale Plays (1) 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07…
  40. Credit Suisse Energy Summit – Devon Energy Corp – slide 40
    NYSE: DVN www.devonenergy.com Slide 43 East Texas Unconventional Haynesville / Bossier Shale Significant portion of acreage held by production or fee Low average royalty burden: < 20% Low cost of entry Largely de-risked Carthage…
  41. Credit Suisse Energy Summit – Devon Energy Corp – slide 41
    NYSE: DVN www.devonenergy.com Slide 44 Arkoma Woodford Shale Net acreage: 56,000 Low cost of entry: ? $400/acre Low average royalty burden: 19% Acreage held by production Q3 ?10 net production: ? 65 MMCFED Strategic midstream…
  42. Credit Suisse Energy Summit – Devon Energy Corp – slide 42
    NYSE: DVN www.devonenergy.com Slide 45 Carthage Field Waskom Bethany Angelina San Augustine Sabine Shelby Rusk Panola Gregg Harrison Marion Upshur Camp Cass Texas Appleby Net acreage: 230,000 Working interest: 86% Q3…
  43. Credit Suisse Energy Summit – Devon Energy Corp – slide 43
    NYSE: DVN www.devonenergy.com Slide 46 Groesbeck Net acreage: 126,000 Working interest: 72% Q3 ?10 net production: ? 95 MMCFED 2009 activity: Drilled 13 wells 2010 drilling: ? 25 wells Nan-Su-Gail Dew Bald Prairie Personville…
  44. Credit Suisse Energy Summit – Devon Energy Corp – slide 44
    NYSE: DVN www.devonenergy.com Slide 47 Washakie Net acreage: 157,000 Working interest: 76% Q3 ?10 net production: ? 133 MMCFED Low-risk, tight sand gas 2009 activity: Drilled 94 wells 2010 drilling: ? 115 wells WY UT CO Washakie
  45. Credit Suisse Energy Summit – Devon Energy Corp – slide 45
    NYSE: DVN www.devonenergy.com Slide 48 Net acreage: 255,000 Working interest: 75% Q3 ?10 net production: ? 120 MMCFED 2009 activity: Drilled 15 wells 2010 drilling: ? 35 wells Powder River Natrona Converse Johnson Sheridan…
  46. Credit Suisse Energy Summit – Devon Energy Corp – slide 46
    NYSE: DVN www.devonenergy.com Slide 49 Horn River Basin Net acreage: 170,000 Thickest section of the basin Minimal drilling required to hold acreage Early stages of de-risking Firm transportation secured 27% working interest in…
  47. Credit Suisse Energy Summit – Devon Energy Corp – slide 47
    NYSE: DVN www.devonenergy.com Slide 50 Existing well control data and seismic Thick and continuous reservoir Good oil saturation and porosity levels Minimal depositional shale Good cap rock Minimal water issues Pike Similarities to…
  48. Credit Suisse Energy Summit – Devon Energy Corp – slide 48
    NYSE: DVN www.devonenergy.com Slide 51 Access Pipeline EDMONTON HARDISTY Enbridge P/L To Midwest Express P/L To U.S. Rockies Terasen P/L To Pacific NW ACCESS PIPELINE Athabasca Enbridge P/L IPF Cold Lake IPF Cold Lake…
  49. Credit Suisse Energy Summit – Devon Energy Corp – slide 49
    NYSE: DVN www.devonenergy.com Slide 52 Gas Gathering & Processing 1,088 1,783 1,575 1,274 2006 2007 2008 2009 Gas Pipeline Throughput (MMCF Per Day) 18% CAGR 635 874 816 715 2006 2007 2008 2009 Plant Inlet Volumes (MMCF…

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