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Citi Global Energy Conference – Devon Energy Corp

Devon Energy Corp · Jun 7, 2012 · 51 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.

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  1. Citi Global Energy Conference – Devon Energy Corp – slide 1
    Citi Global Energy Conference June 7, 2012
  2. Citi Global Energy Conference – Devon Energy Corp – slide 2
    NYSE: DVN www.devonenergy.com Slide 3 Devon Today Proved reserves: ?3.0 billion BOE (42% liquids) Q1 2012 production: 694 MBOED Production mix: 21% oil 16% NGLs 63% natural gas Significant midstream business 2012e operating…
  3. Citi Global Energy Conference – 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. Citi Global Energy Conference – Devon Energy Corp – slide 4
    NYSE: DVN www.devonenergy.com Slide 5 Financial Strength & Flexibility Cash and short-term investments: $7.7 billion (As of 5/2/12) Net debt-to-cap ratio: 11%(1) Strong investment grade ratings ? Fitch: BBB+ ? Moody?s: Baa1 ? S&P:…
  5. Citi Global Energy Conference – 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. Citi Global Energy Conference – Devon Energy Corp – slide 6
    NYSE: DVN www.devonenergy.com Slide 7 Focused on High-Return Growth North American Onshore Historical Performance 240 223 168 220 207 182 2006 2007 2008 2009 2010 2011 233% 198% 269% 223% 175% 160% 2006 2007 2008 2009 2010…
  7. Citi Global Energy Conference – Devon Energy Corp – slide 7
    NYSE: DVN www.devonenergy.com Slide 8 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…
  8. Citi Global Energy Conference – Devon Energy Corp – slide 8
    NYSE: DVN www.devonenergy.com Slide 9 129% 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:…
  9. Citi Global Energy Conference – Devon Energy Corp – slide 9
    NYSE: DVN www.devonenergy.com Slide 10 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…
  10. Citi Global Energy Conference – Devon Energy Corp – slide 10
    NYSE: DVN www.devonenergy.com Slide 11 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…
  11. Citi Global Energy Conference – Devon Energy Corp – slide 11
    NYSE: DVN www.devonenergy.com Slide 12 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…
  12. Citi Global Energy Conference – Devon Energy Corp – slide 12
    NYSE: DVN www.devonenergy.com Slide 13 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…
  13. Citi Global Energy Conference – Devon Energy Corp – slide 13
    NYSE: DVN www.devonenergy.com Slide 14 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…
  14. Citi Global Energy Conference – Devon Energy Corp – slide 14
    NYSE: DVN www.devonenergy.com Slide 15 Long-Term Outlook Robust Oil & Liquids Production Growth Gas Liquids Liquids Gas Gas 63% NGLs 16% Oil 21% 694 MBOED (37% Oil & Liquids) Q1 2012 Gas 48% NGLs 20% Oil 32% 905-955…
  15. Citi Global Energy Conference – Devon Energy Corp – slide 15
    NYSE: DVN www.devonenergy.com Slide 16 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…
  16. Citi Global Energy Conference – Devon Energy Corp – slide 16
    NYSE: DVN www.devonenergy.com Slide 17 2012 Capital Program Delivering Strong Oil & Liquids Growth Gas 60% NGLs 17% Oil 23% ?710 MBOED (40% Oil & Liquids) 2012 Exit Rate Oil production ? Annual growth rate: 22% - 24% ? Driven…
  17. Citi Global Energy Conference – Devon Energy Corp – slide 17
    Field characteristics ? Low F&D ? Flat production profile ? Long reserve life >20 years Jackfish ? Top-tier operating performance ? Q1 2012 net production: 31 MBOPD Jackfish 2 ? Current production rate: 21 MBOPD ? Production…
  18. Citi Global Energy Conference – Devon Energy Corp – slide 18
    NYSE: DVN www.devonenergy.com Slide 19 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…
  19. Citi Global Energy Conference – Devon Energy Corp – slide 19
    NYSE: DVN www.devonenergy.com Slide 20 Long-Term Production Outlook Thermal Oil Net Barrels Per Day 46,000 Q1 2012 2020 150,000 175,000 17% CAGR 19% CAGR Net Risked Resource: ?1.4 BBO
  20. Citi Global Energy Conference – Devon Energy Corp – slide 20
    NYSE: DVN www.devonenergy.com Slide 21 Permian Basin Overview Oil & Liquids-Rich Opportunities Net risked resource: 2.8 BBOE Risked locations: >8,000 Net acres: 1.5 million basin-wide Q1 2012 net production: ? 56 MBOED (76%…
  21. Citi Global Energy Conference – Devon Energy Corp – slide 21
    NYSE: DVN www.devonenergy.com Slide 22 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…
  22. Citi Global Energy Conference – Devon Energy Corp – slide 22
    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 23 Cana Woodford Shale Liquids-Rich Gas…
  23. Citi Global Energy Conference – Devon Energy Corp – slide 23
    Barnett Shale Liquids-Rich Gas Development Net acreage: 624,000 Low average royalty burden: 18% Q1 2012 net production: 1.37 BCFED 2012e program: >30% of production is liquids Expanding gas processing capacity to: ? 72 MBPD of NGL…
  24. Citi Global Energy Conference – Devon Energy Corp – slide 24
    NYSE: DVN www.devonenergy.com Slide 25 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…
  25. Citi Global Energy Conference – Devon Energy Corp – slide 25
    NYSE: DVN www.devonenergy.com Slide 28 ? Devon?s 2012-2016 forecast assumes: ? NGL realizations: 36% of WTI ? Current cost environment held constant ? Sinopec JV transaction ($900 million cash and $1.6 billion drilling carry) ?…
  26. Citi Global Energy Conference – Devon Energy Corp – slide 26
    NYSE: DVN www.devonenergy.com Slide 29 Long-Term Outlook Economic Assumptions E&P Capital ($ Billions) 2012 $6.3 2013 $6.6 2014 $7.4 2015 $7.3 2016 + $7.8 ? Devon?s E&P capital expenditure forecast through 2016:
  27. Citi Global Energy Conference – Devon Energy Corp – slide 27
    NYSE: DVN www.devonenergy.com Slide 30 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…
  28. Citi Global Energy Conference – Devon Energy Corp – slide 28
    NYSE: DVN www.devonenergy.com Slide 31 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…
  29. Citi Global Energy Conference – Devon Energy Corp – slide 29
    NYSE: DVN www.devonenergy.com Slide 32 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…
  30. Citi Global Energy Conference – Devon Energy Corp – slide 30
    NYSE: DVN www.devonenergy.com Slide 33 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…
  31. Citi Global Energy Conference – Devon Energy Corp – slide 31
    NYSE: DVN www.devonenergy.com Slide 34 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…
  32. Citi Global Energy Conference – Devon Energy Corp – slide 32
    NYSE: DVN www.devonenergy.com Slide 35 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 -…
  33. Citi Global Energy Conference – Devon Energy Corp – slide 33
    NYSE: DVN www.devonenergy.com Slide 36 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%…
  34. Citi Global Energy Conference – Devon Energy Corp – slide 34
    NYSE: DVN www.devonenergy.com Slide 37 Oil Hedges Oil Hedges Q2-Q4 2012 67,400 BOD collared: $89 floor and $124 ceiling 41,700 BOD swapped at $106 19,500 BOD of call options sold at $95 2013 41,000 BOD collared: $91 floor and $117…
  35. Citi Global Energy Conference – Devon Energy Corp – slide 35
    NYSE: DVN www.devonenergy.com Slide 38 Natural Gas Hedges Natural Gas Hedges Q2-Q4 2012 1.037 BCFD with an average protected price of $4.42 488 MMCFD of call options sold at $6.00 2013 150 MMCFD swapped at $4.50 2014 150 MMCFD of…
  36. Citi Global Energy Conference – Devon Energy Corp – slide 36
    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…
  37. Citi Global Energy Conference – Devon Energy Corp – slide 37
    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…
  38. Citi Global Energy Conference – Devon Energy Corp – slide 38
    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…
  39. Citi Global Energy Conference – Devon Energy Corp – slide 39
    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…
  40. Citi Global Energy Conference – Devon Energy Corp – slide 40
    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…
  41. Citi Global Energy Conference – Devon Energy Corp – slide 41
    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)…
  42. Citi Global Energy Conference – Devon Energy Corp – slide 42
    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…
  43. Citi Global Energy Conference – Devon Energy Corp – slide 43
    NYSE: DVN www.devonenergy.com Slide 46 Iron River Manatokan End Lake Lloydminster Lloydminster Oil Development Low-risk development Strong operating margins Q1 2012 net production: 39 MBOED 2012 plans: ?150 wells Net risked…
  44. Citi Global Energy Conference – Devon Energy Corp – slide 44
    NYSE: DVN www.devonenergy.com Slide 47 Granite Wash Oil & Liquids-Rich Development Net acreage: 63,700 Legacy land position held by production Low average royalty burden: 19% Q1 2012 net production: 19 MBOED Liquids drive superior…
  45. Citi Global Energy Conference – Devon Energy Corp – slide 45
    NYSE: DVN www.devonenergy.com Slide 48 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
  46. Citi Global Energy Conference – Devon Energy Corp – slide 46
    East Texas Unconventional Haynesville / Bossier Shale Net prospective acres: >100,000 Significant portion of acreage held by production or fee Low average royalty burden: 14% Low cost of entry Largely de-risked Carthage area…
  47. Citi Global Energy 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: 201,000 Working interest: 86% Q1…
  48. Citi Global Energy Conference – Devon Energy Corp – slide 48
    NYSE: DVN www.devonenergy.com Slide 51 Groesbeck Net acreage: 146,000 Working interest: 72% Q1 2012 net production: 77 MMCFED Nan-Su-Gail Dew Bald Prairie Personville Oaks Limestone Freestone Leon Robertson Texas OK TX…
  49. Citi Global Energy Conference – Devon Energy Corp – slide 49
    NYSE: DVN www.devonenergy.com Slide 52 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: ?7 TCFE Risked locations: >1,500…
  50. Citi Global Energy Conference – Devon Energy Corp – slide 50
    NYSE: DVN www.devonenergy.com Slide 53 Arkoma Woodford Shale Net acreage: 39,000 Low cost of entry: ?$400/acre Low average royalty burden: 20% Acreage held by production Q1 2012 net production: 62 MMCFED Strategic midstream…
  51. Citi Global Energy Conference – Devon Energy Corp – slide 51
    NYSE: DVN www.devonenergy.com Slide 54 Washakie Net acreage: 162,000 Working interest: 76% Q1 2012 net production: 136 MMCFED Low-risk, tight sand gas WY UT CO Washakie

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