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Credit Suisse Energy Summit – Devon Energy Corp

Devon Energy Corp · Feb 8, 2012 · 45 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 2012 February 8, 2012
  2. Credit Suisse Energy Summit – 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: ? 661 MBOED (Q3 2011) Sales revenue mix: 57% liquids 43% gas (Q3 2011) Significant midstream business 2011e…
  3. Credit Suisse Energy Summit – 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
  4. Credit Suisse Energy Summit – 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. Credit Suisse Energy Summit – Devon Energy Corp – slide 5
    NYSE: DVN www.devonenergy.com Slide 6 Share Repurchase History 2010 ? November 2011 2007 - 2008 2004 ? 2006 Time Period 10.6 million shares 2% 49.2 million shares 11% 56.1 million shares 12% % of Outstanding Shares Repurchased…
  6. Credit Suisse Energy Summit – Devon Energy Corp – slide 6
    NYSE: DVN www.devonenergy.com Slide 7 Financial Strength & Flexibility Net debt-to-cap ratio: 10% Cash and short-term investments: $6.8 billion Senior unsecured ratings: ? Fitch: BBB+ ? Moody?s: Baa1 ? S&P: BBB+ Note: Includes a…
  7. Credit Suisse Energy Summit – Devon Energy Corp – slide 7
    NYSE: DVN www.devonenergy.com Slide 8 2011 E&P Capital Allocation Jackfish Other Canada $6.1 ? $6.2 Billion 22% 78% Development activity Exploration activity > 90% of capital allocated towards oil and liquids-rich projects
  8. Credit Suisse Energy Summit – Devon Energy Corp – slide 8
    NYSE: DVN www.devonenergy.com 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…
  9. Credit Suisse Energy Summit – Devon Energy Corp – slide 9
    NYSE: DVN www.devonenergy.com Slide 10 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…
  10. Credit Suisse Energy Summit – Devon Energy Corp – slide 10
    NYSE: DVN www.devonenergy.com Slide 11 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…
  11. Credit Suisse Energy Summit – Devon Energy Corp – slide 11
    NYSE: DVN www.devonenergy.com Slide 12 Jackfish Projects Overview SAGD Development Jackfish acreage (100% WI) >15m (?50ft) continuous bitumen pay Ft. McMurray Edmonton Calgary ALBERTA BRITISH COLUMBIA Jackfish & Pike Each…
  12. Credit Suisse Energy Summit – Devon Energy Corp – slide 12
    NYSE: DVN www.devonenergy.com Slide 13 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…
  13. Credit Suisse Energy Summit – Devon Energy Corp – slide 13
    NYSE: DVN www.devonenergy.com Slide 14 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…
  14. Credit Suisse Energy Summit – Devon Energy Corp – slide 14
    NYSE: DVN www.devonenergy.com Slide 15 Thermal Oil Production Growth Outlook Net Barrels Per Day 44,000 Dec-2011 2020 150,000 175,000 17% CAGR 19% CAGR Net risked resource: ? 1.4 BBO
  15. Credit Suisse Energy Summit – Devon Energy Corp – slide 15
    NYSE: DVN www.devonenergy.com Slide 16 Iron River Manatokan End Lake Lloydminster Lloydminster Oil Development Low-risk development Strong operating margins Q3 ?11 net production: ? 40 MBOED 2011 plans: ? 190 wells Risked…
  16. Credit Suisse Energy Summit – Devon Energy Corp – slide 16
    NYSE: DVN www.devonenergy.com Slide 17 Barnett Shale Liquids-Rich Gas Development Parker Palo Pinto Hood Tarrant Johnson Erath Hill Jack Wise Denton Ft. Worth Denton Net acreage: 623,000 Low average acreage cost: ?…
  17. Credit Suisse Energy Summit – Devon Energy Corp – slide 17
    NYSE: DVN www.devonenergy.com Slide 18 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%…
  18. Credit Suisse Energy Summit – Devon Energy Corp – slide 18
    NYSE: DVN www.devonenergy.com Slide 19 Granite Wash Oil & Liquids-Rich Development Net acreage: 63,000 Legacy land position held by production Low average royalty burden: 19% Q3 ?11 net production: 16 MBOED Liquids drive superior…
  19. Credit Suisse Energy Summit – Devon Energy Corp – slide 19
    NYSE: DVN www.devonenergy.com Slide 20 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…
  20. Credit Suisse Energy Summit – Devon Energy Corp – slide 20
    NYSE: DVN www.devonenergy.com Slide 21 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…
  21. Credit Suisse Energy Summit – Devon Energy Corp – slide 21
    NYSE: DVN www.devonenergy.com Slide 22 New Ventures Assembled 1.4 million net acres Five high-impact plays Targeting oil and liquids-rich opportunities Low acreage costs and low royalty rates Drilled initial wells in each play…
  22. Credit Suisse Energy Summit – Devon Energy Corp – slide 22
    New Ventures Plays Location Oil and gas in shale and carbonate zones Oil and gas in silica rich shale zone Oil in carbonate rich shale zone Oil in matrix and fractured carbonate zone Oil in matrix and fractured carbonate…
  23. Credit Suisse Energy Summit – Devon Energy Corp – slide 23
    NYSE: DVN www.devonenergy.com Slide 24 Sinopec Agreement Announced: 1/4/12 Sinopec acquires 33% of Devon?s interest in 1.4 million net acres across five new venture plays Purchase price: $2.5 billion ? $900 million cash payment at…
  24. Credit Suisse Energy Summit – Devon Energy Corp – slide 24
    NYSE: DVN www.devonenergy.com Slide 25 Sinopec Agreement Rationale Reduces capital requirements Improves capital efficiency Accelerates de-risking and commercialization Mitigates exploration risk Provides additional flexibility to…
  25. Credit Suisse Energy Summit – Devon Energy Corp – slide 25
    NYSE: DVN www.devonenergy.com 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
  26. Credit Suisse Energy Summit – Devon Energy Corp – slide 26
    NYSE: DVN www.devonenergy.com Slide 29 2011 & 2012 Hedged Position Oil Hedges Q4 2011 45,000 BOD collared: $75 floor and $109 ceiling 19,500 BOD of call options sold at $95 Full-Year 2012 54,000 BOD collared: $86 floor and $126…
  27. Credit Suisse Energy Summit – Devon Energy Corp – slide 27
    NYSE: DVN www.devonenergy.com Slide 30 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 -…
  28. Credit Suisse Energy Summit – Devon Energy Corp – slide 28
    NYSE: DVN www.devonenergy.com Slide 31 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…
  29. Credit Suisse Energy Summit – Devon Energy Corp – slide 29
    NYSE: DVN www.devonenergy.com Slide 32 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…
  30. Credit Suisse Energy Summit – Devon Energy Corp – slide 30
    NYSE: DVN www.devonenergy.com Slide 33 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…
  31. Credit Suisse Energy Summit – Devon Energy Corp – slide 31
    NYSE: DVN www.devonenergy.com Slide 34 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…
  32. Credit Suisse Energy Summit – Devon Energy Corp – slide 32
    NYSE: DVN www.devonenergy.com Slide 35 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…
  33. Credit Suisse Energy Summit – Devon Energy Corp – slide 33
    NYSE: DVN www.devonenergy.com Slide 36 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…
  34. Credit Suisse Energy Summit – Devon Energy Corp – slide 34
    NYSE: DVN www.devonenergy.com Slide 37 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…
  35. Credit Suisse Energy Summit – Devon Energy Corp – slide 35
    NYSE: DVN www.devonenergy.com Slide 38 U.S. Shale Gas Production Source: IHS database (data through June 2011) 8 6 4 2 0 10 12 14 16 18 20 BCFD Major U.S. Shale Plays Barnett Haynesville Fayetteville Appalachian Arkoma…
  36. Credit Suisse Energy Summit – 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 2005 2006 2007 2008 2009 2010 MCFED Year of 1st Production Note: Average daily rate for the best month in the…
  37. Credit Suisse Energy Summit – Devon Energy Corp – slide 37
    NYSE: DVN www.devonenergy.com Slide 40 Barnett Shale Performance Reserve Revisions 2009 +288 2005 +378 2006 +24 2007 +234 2010 +260 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 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…
  40. Credit Suisse Energy Summit – Devon Energy Corp – slide 40
    NYSE: DVN www.devonenergy.com Slide 43 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…
  41. Credit Suisse Energy Summit – Devon Energy Corp – slide 41
    NYSE: DVN www.devonenergy.com Slide 44 Arkoma Woodford Shale Net acreage: 42,000 Low cost of entry: ? $400/acre Low average royalty burden: 19% Acreage held by production Q3 ?11 net production: ? 75 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: 204,000 Working interest: 86% Q3…
  43. Credit Suisse Energy Summit – Devon Energy Corp – slide 43
    NYSE: DVN www.devonenergy.com Slide 46 Groesbeck Net acreage: 146,000 Working interest: 72% Q3 ?11 net production: ? 82 MMCFED 2011 plans: ? 15 wells Nan-Su-Gail Dew Bald Prairie Personville Oaks Limestone Freestone Leon…
  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 ?11 net production: ? 143 MMCFED Low-risk, tight sand gas 2011 plans: ? 60 wells WY UT CO Washakie
  45. Credit Suisse Energy Summit – Devon Energy Corp – slide 45
    NYSE: DVN www.devonenergy.com Slide 48 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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