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BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp

Devon Energy Corp · Jan 11, 2011 · 50 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. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 1
    BMO Capital Markets Unconventional Resource Conference January 11, 2011
  2. BMO Capital Markets Unconventional Resource Conference – 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. BMO Capital Markets Unconventional Resource Conference – 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. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 4
    NYSE: DVN www.devonenergy.com Slide 5 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 -…
  5. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 5
    NYSE: DVN www.devonenergy.com Slide 6 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
  6. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 6
    NYSE: DVN www.devonenergy.com Slide 7 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…
  7. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 7
    NYSE: DVN www.devonenergy.com Slide 8 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:…
  8. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 8
    NYSE: DVN www.devonenergy.com Slide 9 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…
  9. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 9
    NYSE: DVN www.devonenergy.com Slide 10 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 ($0.5) Total…
  10. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 10
    NYSE: DVN www.devonenergy.com Slide 11 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
  11. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 11
    NYSE: DVN www.devonenergy.com Slide 12 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…
  12. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 12
    NYSE: DVN www.devonenergy.com Slide 13 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,…
  13. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 13
    NYSE: DVN www.devonenergy.com Slide 15 Q4-2009a Q1-2010a Q2-2010a Q3-2010a Q4-2010e 2010 Production Growth North American Onshore MBOE Per Day Production Growth ? 10% 587 625 ? 635 613 611 (1) 573 (1) Excludes an out-of-period…
  14. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 14
    NYSE: DVN www.devonenergy.com Slide 16 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:…
  15. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 15
    NYSE: DVN www.devonenergy.com Slide 17 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…
  16. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 16
    NYSE: DVN www.devonenergy.com Slide 18 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…
  17. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 17
    NYSE: DVN www.devonenergy.com Slide 18 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…
  18. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 18
    NYSE: DVN www.devonenergy.com Slide 19 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…
  19. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 19
    NYSE: DVN www.devonenergy.com Slide 20 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…
  20. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 20
    NYSE: DVN www.devonenergy.com Slide 21 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
  21. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 21
    NYSE: DVN www.devonenergy.com Slide 22 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…
  22. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 22
    NYSE: DVN www.devonenergy.com Slide 23 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…
  23. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 23
    NYSE: DVN www.devonenergy.com Slide 24 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…
  24. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 24
    NYSE: DVN www.devonenergy.com Slide 25 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…
  25. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 25
    NYSE: DVN www.devonenergy.com Slide 26 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…
  26. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 26
    NYSE: DVN www.devonenergy.com Slide 27 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: ?…
  27. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 27
    NYSE: DVN www.devonenergy.com Slide 28 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…
  28. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 28
    NYSE: DVN www.devonenergy.com Slide 29 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…
  29. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 29
    NYSE: DVN www.devonenergy.com Slide 30 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…
  30. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 30
    NYSE: DVN www.devonenergy.com Slide 31 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…
  31. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 31
    NYSE: DVN www.devonenergy.com Slide 32 Enterprise Value per Flowing Barrel Notes: Production based on year-to-date third-quarter 2010 reported results; Enterprise value as of 12/27/10. $50,400 $49,200 $58,500 $65,100 $71,900…
  32. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 32
    NYSE: DVN www.devonenergy.com Slide 33 Relative Valuation Enterprise Value to 2011e EBITDA 8.0 7.2 6.9 6.6 6.3 6.2 6.2 5.8 5.4 4.9 SWN PXD NBL EOG ECA NFX CHK DVN APC APA Source: Independent investment bank 12/27/10
  33. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 33
    NYSE: DVN www.devonenergy.com Slide 36 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…
  34. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 34
    NYSE: DVN www.devonenergy.com Slide 37 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…
  35. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 35
    NYSE: DVN www.devonenergy.com Slide 38 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…
  36. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 36
    NYSE: DVN www.devonenergy.com Slide 39 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…
  37. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 37
    NYSE: DVN www.devonenergy.com Slide 40 Devon?s Historical Frac Costs Barnett Shale
  38. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 38
    NYSE: DVN www.devonenergy.com Slide 41 Barnett Shale Performance Reserve Revisions 2005 +378 2006 +24 2007 +234 2009 +288 2008 +132 2004 +186 Performance Reserve Year Revisions (BCFE)
  39. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 39
    NYSE: DVN www.devonenergy.com Slide 42 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…
  40. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 40
    NYSE: DVN www.devonenergy.com Slide 43 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…
  41. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 41
    NYSE: DVN www.devonenergy.com Slide 44 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…
  42. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 42
    NYSE: DVN www.devonenergy.com Slide 45 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…
  43. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 43
    NYSE: DVN www.devonenergy.com Slide 47 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. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 44
    NYSE: DVN www.devonenergy.com Slide 47 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…
  45. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 45
    NYSE: DVN www.devonenergy.com Slide 48 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
  46. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 46
    NYSE: DVN www.devonenergy.com Slide 49 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…
  47. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 47
    NYSE: DVN www.devonenergy.com Slide 50 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…
  48. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 48
    NYSE: DVN www.devonenergy.com Slide 51 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…
  49. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 49
    NYSE: DVN www.devonenergy.com Slide 52 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…
  50. BMO Capital Markets Unconventional Resource Conference – Devon Energy Corp – slide 50

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