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IPAA OG Investment Symposium – Devon Energy Corp

Devon Energy Corp · Apr 16, 2012 · 54 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. IPAA OG Investment Symposium – Devon Energy Corp – slide 1
    IPAA Oil & Gas Investment Symposium April 16, 2012
  2. IPAA OG Investment Symposium – Devon Energy Corp – slide 2
    NYSE: DVN www.devonenergy.com Slide 3 Devon Today Proved reserves: ?3.0 billion BOE (42% liquids) Q4 2011 production: ?680 MBOED (35% liquids) Sales revenue mix: 45% oil 36% NGLs 19% natural gas (Q4 2011) Significant midstream…
  3. IPAA OG Investment Symposium – Devon Energy Corp – slide 3
    NYSE: DVN www.devonenergy.com Slide 4 Devon?s Strengths Committed to delivering: ? Top quartile per share results ? Strong full-cycle returns Deep inventory of repeatable opportunities in current environment Strong, highly-visible…
  4. IPAA OG Investment Symposium – Devon Energy Corp – slide 4
    NYSE: DVN www.devonenergy.com Slide 5 Financial Strength & Flexibility Cash and short-term investments: $7.1 billion Net debt-to-cap ratio: 11% Strong investment grade ratings ? Fitch: BBB+ ? Moody?s: Baa1 ? S&P: BBB+ Disciplined…
  5. IPAA OG Investment Symposium – Devon Energy Corp – slide 5
    NYSE: DVN www.devonenergy.com Slide 6 Capital Allocation Criteria E&P capital projects ? Balancing resource capture and development (Exploration & leasehold capital: ?20% of E&P capital since 2009) Debt reduction ? Reduced net debt…
  6. IPAA OG Investment Symposium – Devon Energy Corp – slide 6
    NYSE: DVN www.devonenergy.com Slide 7 Devon?s Recycle Ratio North America Onshore $ Per BOE Revenue (excluding hedges) $ 36.90 Cash costs(1) (12.78) Midstream capital (1.39) Cash margin per BOE $ 22.73 3-yr drilling F&D (includes…
  7. IPAA OG Investment Symposium – Devon Energy Corp – slide 7
    NYSE: DVN www.devonenergy.com Slide 8 129% 124% 151% 162% 180% 177% 176% 65% Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Recycle Ratio Excluding Hedges Note: Peer group includes APA, APC, CHK, ECA, EOG, NBL and NFX Source:…
  8. IPAA OG Investment Symposium – Devon Energy Corp – slide 8
    NYSE: DVN www.devonenergy.com Slide 9 Devon?s Risked Resource Base High-Quality and Balanced Note: Includes 12/31/11 proved reserves of 3.0 BBOE. Risked Resource By Product (BBOE) Oil (29%) 4.7 NGLs (19%) 3.1 Gas (52%) 8.4 Total…
  9. IPAA OG Investment Symposium – Devon Energy Corp – slide 9
    NYSE: DVN www.devonenergy.com Slide 10 New Venture Positions Five Oil and Liquids-Rich Plays Partnered with Sinopec Mississippian Rockies Oil Utica Ohio Tuscaloosa Michigan JV Acreage (Net to DVN) 230,000 (153,000 net) 320,000…
  10. IPAA OG Investment Symposium – Devon Energy Corp – slide 10
    NYSE: DVN www.devonenergy.com Slide 11 Joint Venture Agreement Deal Structure and Rationale Deal Structure ? $2.5 billion transaction with Sinopec ($900 million cash and $1.6 billion carry) ? Sinopec receives 33% of Devon?s interest…
  11. IPAA OG Investment Symposium – Devon Energy Corp – slide 11
    NYSE: DVN www.devonenergy.com Slide 12 Mississippian Tuscaloosa Shale Rockies Oil Utica Ohio Michigan Growing the Resource Base New Ventures Exploration Cline Shale ? Net acreage: 500,000 (closed & committed) ? 2012 plans: Drill…
  12. IPAA OG Investment Symposium – Devon Energy Corp – slide 12
    NYSE: DVN www.devonenergy.com Slide 13 Long-Term Outlook Robust Oil & Liquids Production Growth 2011a 2012e 2013e 2014e 2015e 2016e Natural gas Liquids Oil 240 Production Data in MMBOE 255 (253-257) 5-Year Production CAGR By…
  13. IPAA OG Investment Symposium – Devon Energy Corp – slide 13
    NYSE: DVN www.devonenergy.com Slide 14 2012 E&P Capital Allocation Jackfish Other Canada $6.1 ? $6.5 Billion 75% 17% 8% Development activity Leasehold capture ?100% of capital allocated towards oil and liquids-rich projects…
  14. IPAA OG Investment Symposium – Devon Energy Corp – slide 14
    NYSE: DVN www.devonenergy.com Slide 15 2012 Capital Program Delivering Strong Oil & Liquids Growth Gas 60% NGLs 17% Oil 23% >710 MBOED (40% Liquids) 2012 Exit Rate Oil production ? Annual growth rate: 22% - 24% ? Driven by…
  15. IPAA OG Investment Symposium – Devon Energy Corp – slide 15
    Field characteristics ? Low F&D ? Flat production profile ? Long reserve life >20 years Jackfish ? Top-tier operating performance ? Q4 2011 net production: 31 MBOPD Jackfish 2 ? Q4 2011 production exit rate: 14 MBOPD ? Production…
  16. IPAA OG Investment Symposium – Devon Energy Corp – slide 16
    NYSE: DVN www.devonenergy.com Slide 17 Note: Industry average includes: Bolney-Celtic, Christina Lake, Firebag, Foster Creek, Great Divide, Hangingstone, Hilda Lake, Long Lake, MacKay River, Orion, Senlac, Surmont, Tangleflags, and…
  17. IPAA OG Investment Symposium – Devon Energy Corp – slide 17
    NYSE: DVN www.devonenergy.com Slide 18 Long-Term Production Outlook Thermal Oil Net Barrels Per Day 43,000 Q4 2011 2020 150,000 175,000 17% CAGR 19% CAGR Net Risked Resource: ?1.4 BBO
  18. IPAA OG Investment Symposium – Devon Energy Corp – slide 18
    NYSE: DVN www.devonenergy.com Slide 19 Permian Basin Overview Oil & Liquids-Rich Opportunities Net risked resource: >2.8 BBOE Risked locations: >8,000 Net acres: 1.5 million basin-wide Q4 2011 net production: ? 53 MBOED (75%…
  19. IPAA OG Investment Symposium – Devon Energy Corp – slide 19
    Dewey Blaine Custer Washita Caddo Grady Canadian Play Fairway Play Fairway DRY GAS ?51,000 Net Acres OIL & LIQUIDS-RICH ?193,000 Net Acres Cana Plant NYSE: DVN www.devonenergy.com Slide 20 Cana Woodford Shale Liquids-Rich Gas…
  20. IPAA OG Investment Symposium – Devon Energy Corp – slide 20
    Barnett Shale Liquids-Rich Gas Development Net acreage: 624,000 Low average royalty burden: 18% Q4 2011 net production: 1.32 BCFED 2012e program: >30% of production is liquids Expanding gas processing capacity to: ? 890 MMCFD with…
  21. IPAA OG Investment Symposium – Devon Energy Corp – slide 21
    NYSE: DVN www.devonenergy.com Slide 22 Why Own Devon? Committed to delivering: ? Top quartile per share results ? Strong full-cycle returns Deep inventory of repeatable opportunities in current environment Strong, highly-visible oil…
  22. IPAA OG Investment Symposium – Devon Energy Corp – slide 22
    NYSE: DVN www.devonenergy.com Slide 25 ? Devon?s 2012-2016 forecast assumes: ? Strip pricing as of March 20, 2012 (rounded): ? NGL benchmark price: 47% of WTI ? Current cost environment held constant ? Sinopec JV transaction ($900…
  23. IPAA OG Investment Symposium – Devon Energy Corp – slide 23
    NYSE: DVN www.devonenergy.com Slide 27 Focused on High-Return Growth North American Onshore Historical Performance 240 223 168 220 207 183 2006 2007 2008 2009 2010 2011 233% 198% 269% 223% 175% 160% 2006 2007 2008 2009…
  24. IPAA OG Investment Symposium – Devon Energy Corp – slide 24
    NYSE: DVN www.devonenergy.com Slide 28 Resource By Asset Strong Foundation for Growth Unrisked Resource Proved Reserves Additional Risked Potential Total Risked Resources Permian Basin 7.6 0.2 2.6 2.8 Barnett Shale 4.3 1.2…
  25. IPAA OG Investment Symposium – Devon Energy Corp – slide 25
    NYSE: DVN www.devonenergy.com Slide 29 5.1 11.7 2.3 4.5 3.4 N.A. On shore Growth: 117% Risked Resource Base History of Growth U.S. Onshore Canada Gulf & International (47%) (21%) (32%) 10.8 BBOE (72%) (28%) March 2008…
  26. IPAA OG Investment Symposium – Devon Energy Corp – slide 26
    NYSE: DVN www.devonenergy.com Slide 30 1.8 2.3 0.4 0.7 0.2 N.A. Onshore Growth: 37% Proved Reserves History of Growth U.S. Onshore Canada Gulf & International (73%) (17%) (10%) 2.4 BBOE (76%) (24%) December 31, 2008…
  27. IPAA OG Investment Symposium – Devon Energy Corp – slide 27
    NYSE: DVN www.devonenergy.com Slide 31 2012 Exploration & Leasehold Budget Reconciliation $ Millions Original 2012 exploration & leasehold budget $530 Undisclosed oil play #1 (Captured 250,000 net acres; targeting 500,000 net…
  28. IPAA OG Investment Symposium – Devon Energy Corp – slide 28
    NYSE: DVN www.devonenergy.com Slide 32 2011a 2012e Base Production Thermal Permian Cana Barnett 17% - 19% Liquids Growth (Oil growth: 22% - 24%) 2012 Liquids Growth By Key Asset 81 MMBOE 96 MMBOE +3 MMBOE +3 MMBOE +3 MMBOE +6…
  29. IPAA OG Investment Symposium – Devon Energy Corp – slide 29
    NYSE: DVN www.devonenergy.com Slide 33 2012 F&D Target E&P capital $6.1 ? $6.5 billion Capitalized G&A and interest $0.4 billion Drill-bit capital $6.5 ? $6.9 billion Drill-bit reserve additions(1) 360 - 390 MMBOE F&D(1) ?$16 -…
  30. IPAA OG Investment Symposium – Devon Energy Corp – slide 30
    NYSE: DVN www.devonenergy.com Slide 34 Long-Term Outlook Production By Key Asset 2011a 2012e 2013e 2014e 2015e 2016e Other Assets Barnett Cana Permian Basin Themal Exploration Production Data in MMBOE Total Production CAGR: 6% - 8%…
  31. IPAA OG Investment Symposium – Devon Energy Corp – slide 31
    NYSE: DVN www.devonenergy.com Slide 35 Long-Term Outlook Robust Oil & Liquids Production Growth Gas Liquids Liquids Gas Gas 65% NGLs 15% Oil 20% 680 MBOED (35% Liquids) Q4 2011 Gas 48% NGLs 20% Oil 32% 905-955 MBOED…
  32. IPAA OG Investment Symposium – Devon Energy Corp – slide 32
    NYSE: DVN www.devonenergy.com Slide 36 Devon?s Compelling Valuation Enterprise Value to 2013e EBITDA Multiple Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Note: Peer group includes APA, APC, CHK, ECA, EOG, NBL and NFX Source:…
  33. IPAA OG Investment Symposium – Devon Energy Corp – slide 33
    NYSE: DVN www.devonenergy.com Slide 37 Misconceptions About Devon Natural gas focused with minimal liquids exposure ? 42% of proved reserves are liquids (Oil ?60% of liquids reserves) ? Production >50% liquids by 2016 Key assets are…
  34. IPAA OG Investment Symposium – Devon Energy Corp – slide 34
    NYSE: DVN www.devonenergy.com Slide 38 2012 Hedged Position Oil Hedges Full-Year 2012 54,000 BOD collared: $86 floor and $126 ceiling 22,000 BOD swapped at $107 19,500 BOD of call options sold at $95 Natural Gas Hedges Full-Year…
  35. IPAA OG Investment Symposium – Devon Energy Corp – slide 35
    NYSE: DVN www.devonenergy.com Slide 39 Repositioning Proceeds 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…
  36. IPAA OG Investment Symposium – Devon Energy Corp – slide 36
    NYSE: DVN www.devonenergy.com Slide 40 Ft. McMurray Edmonton Calgary ALBERTA BRITISH COLUMBIA Jackfish & Pike Devon?s SAGD Today Devon?s SAGD characteristics ? Low F&D ? Low geologic risk ? High reservoir quality ? Flat…
  37. IPAA OG Investment Symposium – Devon Energy Corp – slide 37
    NYSE: DVN www.devonenergy.com Slide 41 Jackfish East Jackfish acreage (100% WI) >15m (?50ft) continuous bitumen pay 1 Mile Jackfish 3 Jackfish East 2015 2016 2017 2018 2019 Regulatory Application & Review Engineering Plant…
  38. IPAA OG Investment Symposium – Devon Energy Corp – slide 38
    NYSE: DVN www.devonenergy.com Slide 42 Pike Project Overview Pike leasehold ? 50% operated working interest ? Similar reservoir characteristics to Jackfish ? Up to five 35 MBOPD SAGD development phases Potential Pike 1…
  39. IPAA OG Investment Symposium – Devon Energy Corp – slide 39
    NYSE: DVN www.devonenergy.com Slide 43 Pike Stratigraphic 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…
  40. IPAA OG Investment Symposium – Devon Energy Corp – slide 40
    NYSE: DVN www.devonenergy.com Slide 44 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 MBOD) Pike 1A (35 MBOD) Pike 1B (35 MBOD)…
  41. IPAA OG Investment Symposium – Devon Energy Corp – slide 41
    NYSE: DVN www.devonenergy.com Slide 45 Heavy Oil Midstream Infrastructure 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…
  42. IPAA OG Investment Symposium – Devon Energy Corp – slide 42
    NYSE: DVN www.devonenergy.com Slide 46 Permian Basin 2012 Activity 2012 Program ? Balancing exploration and development ? Oil-focused activity ? Horizontal drilling emphasis Wolfberry ? 160,000 net acres (Drill ?100 wells) Bone…
  43. IPAA OG Investment Symposium – Devon Energy Corp – slide 43
    NYSE: DVN www.devonenergy.com Slide 47 Iron River Manatokan End Lake Lloydminster Lloydminster Oil Development Low-risk development Strong operating margins Q4 2011 net production: ?39 MBOED 2012 plans: ?150 wells Net risked…
  44. IPAA OG Investment Symposium – Devon Energy Corp – slide 44
    NYSE: DVN www.devonenergy.com Slide 48 Granite Wash Oil & Liquids-Rich Development Net acreage: 63,000 Legacy land position held by production Low average royalty burden: 19% Q4 2011 net production: 19 MBOED Liquids drive superior…
  45. IPAA OG Investment Symposium – Devon Energy Corp – slide 45
    NYSE: DVN www.devonenergy.com Slide 49 Free Cash Flow Generation Barnett Shale 2012 Drilling Program $ Millions Revenue(1) $2,100 Operating costs(2) ($400) Operating margin $1,700 E&P & midstream capital ($1,100) Free cash flow…
  46. IPAA OG Investment Symposium – Devon Energy Corp – slide 46
    NYSE: DVN www.devonenergy.com Slide 50 Performance Reserve Revisions Barnett Shale Year Performance Reserve Revisions (BCFE) 2004 +186 2005 +366 2006 +30 2007 +240 2008 +132 2009 +288 2010 +156 2011 +30
  47. IPAA OG Investment Symposium – Devon Energy Corp – slide 47
    NYSE: DVN www.devonenergy.com Slide 51 Rate of Return Matrix Barnett Shale 2012 Drilling Program Henry Hub Natural Gas Price WTI-NYMEX Price $2.50 $3.00 $3.50 $4.00 $80.00 12% 22% 30% 35% $90.00 15% 24% 33% 37% $100.00 17% 28% 35%…
  48. IPAA OG Investment Symposium – Devon Energy Corp – slide 48
    NYSE: DVN www.devonenergy.com Slide 52 Rate of Return Matrix Cana Woodford 2012 Drilling Program Henry Hub Natural Gas Price WTI-NYMEX Price $2.50 $3.00 $3.50 $4.00 $80.00 20% 22% 28% 31% $90.00 23% 29% 31% 35% $100.00 27% 32% 34%…
  49. IPAA OG Investment Symposium – Devon Energy Corp – slide 49
    NYSE: DVN www.devonenergy.com Slide 53 East Texas Unconventional Haynesville / Bossier Shale Net prospective acres: >100,000 Significant portion of acreage held by production or fee Low average royalty…
  50. IPAA OG Investment Symposium – Devon Energy Corp – slide 50
    NYSE: DVN www.devonenergy.com Slide 54 Carthage Field Waskom Bethany Angelina San Augustine Sabine Shelby Rusk Panola Gregg Harrison Marion Upshur Camp Cass Texas Appleby Net acreage: 199,000 Working interest: 86% Q4…
  51. IPAA OG Investment Symposium – Devon Energy Corp – slide 51
    NYSE: DVN www.devonenergy.com Slide 55 Groesbeck Net acreage: 146,000 Working interest: 72% Q4 2011 net production: 83 MMCFED Nan-Su-Gail Dew Bald Prairie Personville Oaks Limestone Freestone Leon Robertson Texas OK TX…
  52. IPAA OG Investment Symposium – Devon Energy Corp – slide 52
    NYSE: DVN www.devonenergy.com Slide 56 Horn River Basin Net acreage: 174,000 Natural gas shale play Thickest section of the basin Minimal drilling required to hold acreage Net risked resource: 10 TCFE Risked locations: 1,600…
  53. IPAA OG Investment Symposium – Devon Energy Corp – slide 53
    NYSE: DVN www.devonenergy.com Slide 57 Arkoma Woodford Shale Net acreage: 42,000 Low cost of entry: ? $400/acre Low average royalty burden: 19% Acreage held by production Q4 2011 net production: 68 MMCFED Strategic midstream…
  54. IPAA OG Investment Symposium – Devon Energy Corp – slide 54
    NYSE: DVN www.devonenergy.com Slide 58 Washakie Net acreage: 157,000 Working interest: 76% Q4 2011 net production: 136 MMCFED Low-risk, tight sand gas WY UT CO Washakie

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