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Barclay's CEO Conference – Devon Energy Corp

Devon Energy Corp · Sep 7, 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. Barclay's CEO Conference – Devon Energy Corp – slide 1
    Barclays CEO Conference September 7, 2011
  2. Barclay's CEO Conference – Devon Energy Corp – slide 2
    NYSE: DVN www.devonenergy.com Slide 3 Devon Today Proved reserves: ? 2.9 billion BOE (12/31/10) Current production: ? 660 MBOED (Q2 2011) Sales revenue mix: 59% liquids 41% gas (Q2 2011) Significant midstream business 2011e…
  3. Barclay's CEO Conference – Devon Energy Corp – slide 3
    NYSE: DVN www.devonenergy.com Slide 4 Devon?s 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…
  4. Barclay's CEO Conference – Devon Energy Corp – slide 4
    NYSE: DVN www.devonenergy.com Slide 5 Organizational focus on per share results Capital Allocation Criteria Optimize per share returns on a debt-adjusted basis through: ? E&P capital projects ? Debt reduction ? Share repurchases
  5. Barclay's CEO Conference – Devon Energy Corp – slide 5
    NYSE: DVN www.devonenergy.com Slide 6 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…
  6. Barclay's CEO Conference – Devon Energy Corp – slide 6
    NYSE: DVN www.devonenergy.com Slide 7 Share Repurchase History 2010 ? August 2011 2007 - 2008 2004 ? 2006 Time Period 10.6 million shares 2% 35.1 million shares 8% 56.1 million shares 12% % of Outstanding Shares Repurchased…
  7. Barclay's CEO Conference – Devon Energy Corp – slide 7
    NYSE: DVN www.devonenergy.com Slide 8 Financial Strength & Flexibility Net debt-to-cap ratio: 5% Cash and short-term investments: $6.7 billion Senior unsecured ratings: ? Fitch: BBB+ ? Moody?s: Baa1 ? S&P: BBB+ Note: Includes a…
  8. Barclay's CEO Conference – Devon Energy Corp – slide 8
    NYSE: DVN www.devonenergy.com Slide 9 2011 E&P Capital Allocation Jackfish Other Canada $5.5 ? $5.9 Billion 20% 80% Development activity Exploration activity > 90% of capital allocated towards oil and liquids-rich projects
  9. Barclay's CEO Conference – Devon Energy Corp – slide 9
    NYSE: DVN www.devonenergy.com Slide 10 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…
  10. Barclay's CEO Conference – Devon Energy Corp – slide 10
    NYSE: DVN www.devonenergy.com Slide 11 Devon?s Recycle Ratio North America Onshore Unit cash margin / F&D 167% 3-yr drilling F&D (includes performance revisions) $ 11.57 Cash margin per BOE $ 19.37 Midstream capital ( 1.02) Cash…
  11. Barclay's CEO Conference – Devon Energy Corp – slide 11
    NYSE: DVN www.devonenergy.com Slide 12 52% 102% 113% 127% 138% 167% 177% Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Recycle Ratio Excluding Hedges Note: Peer group includes APA, APC, CHK, ECA, EOG, and NBL Source: SEC filings…
  12. Barclay's CEO Conference – Devon Energy Corp – slide 12
    NYSE: DVN www.devonenergy.com Slide 13 Jackfish Projects Overview SAGD Development Jackfish acreage (100% WI) >15m (?50ft) continuous bitumen pay Ft. McMurray Edmonton Calgary ALBERTA BRITISH COLUMBIA Jackfish & Pike Each…
  13. Barclay's CEO Conference – Devon Energy Corp – slide 13
    NYSE: DVN www.devonenergy.com Slide 14 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 42 44 46 48 50 Foster Creek MacKay River Firebag Christina…
  14. Barclay's CEO Conference – Devon Energy Corp – slide 14
    NYSE: DVN www.devonenergy.com Slide 15 Jackfish 1 Performance Steam Oil Ratio (SOR) 9 8 7 6 5 4 3 2 1 0 10 0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 SAGD Project Comparison (Cumulative SOR) Cumulative SOR Jackfish Long…
  15. Barclay's CEO Conference – Devon Energy Corp – slide 15
    NYSE: DVN www.devonenergy.com Slide 16 Pike SAGD Development Pike joint venture leasehold: ? 50% operated working interest ? Similar reservoir characteristics to Jackfish ? Up to five SAGD development phases Pike 1 development…
  16. Barclay's CEO Conference – Devon Energy Corp – slide 16
    NYSE: DVN www.devonenergy.com Slide 17 Thermal Oil Production Growth Outlook Net Barrels Per Day 31,200 Q2- 2011 2020 150,000 175,000 18% CAGR 20% CAGR Net risked resource: ? 1.4 BBO
  17. Barclay's CEO Conference – Devon Energy Corp – slide 17
    NYSE: DVN www.devonenergy.com Slide 18 Iron River Manatokan End Lake Lloydminster Lloydminster Oil Development Net acreage: 2.5 million Low-risk development Strong operating margins Q2 ?11 net production: ? 39 MBOED 2011 plans:…
  18. Barclay's CEO Conference – Devon Energy Corp – slide 18
    NYSE: DVN www.devonenergy.com Slide 19 Barnett Shale Liquids-Rich Gas Development Parker Palo Pinto Hood Tarrant Johnson Erath Hill Jack Wise Denton Ft. Worth Denton Net acreage: 624,000 Low average acreage cost: ?…
  19. Barclay's CEO Conference – Devon Energy Corp – slide 19
    NYSE: DVN www.devonenergy.com Slide 20 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…
  20. Barclay's CEO Conference – Devon Energy Corp – slide 20
    NYSE: DVN www.devonenergy.com Slide 21 Cana Woodford Shale Liquids-Rich Gas Development Risked locations: > 5,000 Net risked resource: ? 11 TCFE Net acreage: 243,000 Low cost of entry: ? $2,200/acre Low average royalty burden: 20%…
  21. Barclay's CEO Conference – Devon Energy Corp – slide 21
    NYSE: DVN www.devonenergy.com Slide 22 Granite Wash Oil & Liquids-Rich Development Net acreage: 63,000 Legacy land position held by production Low average royalty burden: 19% Q2 ?11 net production: 17 MBOED Liquids drive superior…
  22. Barclay's CEO Conference – Devon Energy Corp – slide 22
    NYSE: DVN www.devonenergy.com Slide 23 Permian Basin Exploration Oil & Liquids-Rich Opportunities Net risked resource: > 1 BBOE Net prospective acreage: ? 1 million Expect ? 20% production growth in 2011 2011 plans: Drill ? 300…
  23. Barclay's CEO Conference – Devon Energy Corp – slide 23
    NYSE: DVN www.devonenergy.com Slide 24 Canadian Exploration Oil & Liquids-Rich Opportunities Deep Basin - Cardium (light oil) - Lower Cretaceous zones (liquids-rich gas) Ferrier Area - Cardium (light oil) Kindersly Area - Viking…
  24. Barclay's CEO Conference – Devon Energy Corp – slide 24
    NYSE: DVN www.devonenergy.com Slide 25 New Ventures Activity 2011 capital: ? $350 million Targeting oil and liquids-rich gas 2011 plans: ? Continue to add to positions ? Acquire seismic data ? Drill/participate in > 30 wells…
  25. Barclay's CEO Conference – Devon Energy Corp – slide 25
    NYSE: DVN www.devonenergy.com Slide 26 New Ventures Activity Location Oil and gas in silica rich shale zone Oil and gas in shale and carbonate zones Oil in carbonate rich shale zone Oil in matrix and fractured carbonate zone…
  26. Barclay's CEO Conference – Devon Energy Corp – slide 26
    NYSE: DVN www.devonenergy.com Slide 27 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…
  27. Barclay's CEO Conference – Devon Energy Corp – slide 27
    NYSE: DVN www.devonenergy.com Slide 30 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…
  28. Barclay's CEO Conference – Devon Energy Corp – slide 28
    NYSE: DVN www.devonenergy.com Slide 31 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)…
  29. Barclay's CEO Conference – Devon Energy Corp – slide 29
    NYSE: DVN www.devonenergy.com Slide 32 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…
  30. Barclay's CEO Conference – Devon Energy Corp – slide 30
    NYSE: DVN www.devonenergy.com Slide 33 2011 Capital Update What?s Changed? Acceleration of Canadian and Permian exploration drilling Expanded acreage capture and accelerated testing of new venture opportunities Increased…
  31. Barclay's CEO Conference – Devon Energy Corp – slide 31
    NYSE: DVN www.devonenergy.com Slide 34 2011 Capital Reconciliation Revised 2011 E&P budget $5.5 ? $5.9 Total increase $1.0 Inflation & foreign exchange $0.3 External factors: Barnett & Cana efficiency/working interest $0.3…
  32. Barclay's CEO Conference – Devon Energy Corp – slide 32
    NYSE: DVN www.devonenergy.com Slide 35 Expected Proceeds BP - Brazil $3.2 Q2 2011 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 -…
  33. Barclay's CEO Conference – Devon Energy Corp – slide 33
    NYSE: DVN www.devonenergy.com Slide 36 Historical Performance North American Onshore 223 168 220 207 183 2006 2007 2008 2009 2010 233% 198% 269% 223% 175% 2006 2007 2008 2009 2010 $13.57 $13.30 $13.05 $15.74 $6.59 2006…
  34. Barclay's CEO Conference – Devon Energy Corp – slide 34
    NYSE: DVN www.devonenergy.com Slide 37 Devon?s Thermal Oil Position SAGD Development Ft. McMurray Edmonton Calgary ALBERTA BRITISH COLUMBIA Jackfish & Pike Devon?s SAGD characteristics: ? Low F&D ? Low geologic risk ? High…
  35. Barclay's CEO Conference – Devon Energy Corp – slide 35
    NYSE: DVN www.devonenergy.com Slide 38 SAGD Development Timeline Timing Range of Expected Plant Start-Up Jackfish 1 (35 MBOD) Jackfish 2 (35 MBOD) Jackfish 3 (35 MBOD) Jackfish East (20-25 MBOD) Pike 1A (35 MBOD) Pike 1B (35…
  36. Barclay's CEO Conference – Devon Energy Corp – slide 36
    NYSE: DVN www.devonenergy.com Slide 39 0 10 20 30 40 50 60 70 80 90 100 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 Jackfish 1 Performance Capacity Utilization % of Project Capacity Utilized…
  37. Barclay's CEO Conference – Devon Energy Corp – slide 37
    NYSE: DVN www.devonenergy.com Slide 40 Jackfish East Additional SAGD Potential Jackfish acreage (100% WI) >15m (?50ft) continuous bitumen pay Ft. McMurray Edmonton Calgary ALBERTA BRITISH COLUMBIA Jackfish & Pike 1 Mile…
  38. Barclay's CEO Conference – Devon Energy Corp – slide 38
    NYSE: DVN www.devonenergy.com Slide 41 Pike 2010/11 Winter Delineation Program Existing well data: > 250 wells 2010/11 winter program: ? Drilled 135 stratigraphic wells ? Acquired 59 square miles of seismic ? Delineated two of…
  39. Barclay's CEO Conference – Devon Energy Corp – slide 39
    NYSE: DVN www.devonenergy.com Slide 42 Pike 2010/11 Drilling Confirms High-Quality Reservoir Pike Jackfish Depth (Ft, TVD) 1,400 ? 1,560 1,320 ? 1,380 Pay Thickness (Ft) 49 - 144 49 ? 164 Porosity (%) 30 ? 35 30 - 33 Permeability…
  40. Barclay's CEO Conference – Devon Energy Corp – slide 40
    NYSE: DVN www.devonenergy.com Slide 43 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…
  41. Barclay's CEO Conference – Devon Energy Corp – slide 41
    NYSE: DVN www.devonenergy.com Slide 44 U.S. Shale Gas Production Source: IHS database (data through March 2011) Barnett Fayetteville Arkoma Woodford Cana Woodford Haynesville 8 6 4 2 0 10 12 14 16 BCFD Major U.S. Shale Plays…
  42. Barclay's CEO Conference – Devon Energy Corp – slide 42
    NYSE: DVN www.devonenergy.com Slide 45 Devon?s 30-Day IP Trend Barnett Shale Horizontal Wells 0 500 1,000 1,500 2,000 2005 2006 2007 2008 2009 2010 MCFED Year of 1st Production Note: Average daily rate for the best month in the…
  43. Barclay's CEO Conference – Devon Energy Corp – slide 43
    NYSE: DVN www.devonenergy.com Slide 46 Barnett Shale Performance Reserve Revisions 2009 +288 2005 +378 2006 +24 2007 +234 2010 +260 2008 +132 2004 +186 Performance Reserve Year Revisions (BCFE)
  44. Barclay's CEO Conference – Devon Energy Corp – slide 44
    NYSE: DVN www.devonenergy.com Slide 47 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…
  45. Barclay's CEO Conference – Devon Energy Corp – slide 45
    NYSE: DVN www.devonenergy.com Slide 48 Horn River Basin Net acreage: 174,000 Thickest section of the basin Minimal drilling required to hold acreage Early stages of de-risking Firm transportation secured 27% working interest in…
  46. Barclay's CEO Conference – Devon Energy Corp – slide 46
    NYSE: DVN www.devonenergy.com Slide 49 Arkoma Woodford Shale Net acreage: 43,000 Low cost of entry: ? $400/acre Low average royalty burden: 19% Acreage held by production Q2 ?11 net production: ? 80 MMCFED Strategic midstream…
  47. Barclay's CEO Conference – Devon Energy Corp – slide 47
    NYSE: DVN www.devonenergy.com Slide 50 Carthage Field Waskom Bethany Angelina San Augustine Sabine Shelby Rusk Panola Gregg Harrison Marion Upshur Camp Cass Texas Appleby Net acreage: 212,000 Working interest: 86% Q2…
  48. Barclay's CEO Conference – Devon Energy Corp – slide 48
    NYSE: DVN www.devonenergy.com Slide 51 Groesbeck Net acreage: 147,000 Working interest: 72% Q2 ?11 net production: ? 87 MMCFED 2011 plans: ? 15 wells Nan-Su-Gail Dew Bald Prairie Personville Oaks Limestone Freestone Leon…
  49. Barclay's CEO Conference – Devon Energy Corp – slide 49
    NYSE: DVN www.devonenergy.com Slide 52 Washakie Net acreage: 157,000 Working interest: 76% Q2 ?11 net production: ? 138 MMCFED Low-risk, tight sand gas 2011 plans: ? 60 wells WY UT CO Washakie
  50. Barclay's CEO Conference – Devon Energy Corp – slide 50
    NYSE: DVN www.devonenergy.com Slide 53 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…

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