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March 2012 Investor Presentation – Devon Energy Corp

Devon Energy Corp · Mar 10, 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. March 2012 Investor Presentation – Devon Energy Corp – slide 1
    Investor Presentation March 2012
  2. March 2012 Investor Presentation – Devon Energy Corp – slide 2
    NYSE: DVN www.devonenergy.com Slide 3 Devon Today Proved reserves: ? 3.0 billion BOE (42% liquids) Current production: ? 680 MBOED (Q4 2011) Sales revenue mix: 45% oil 36% NGLs 19% natural gas (Q4 2011) Significant midstream…
  3. March 2012 Investor Presentation – 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 opportunities
  4. March 2012 Investor Presentation – 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. March 2012 Investor Presentation – Devon Energy Corp – slide 5
    NYSE: DVN www.devonenergy.com Slide 6 2011 - Completed $3.5 billion share buyback program Repurchased 116 million shares since 2004 ? Represents > 20% of outstanding common stock 2012 - Increased quarterly dividend 18% to $0.20 per…
  6. March 2012 Investor Presentation – Devon Energy Corp – slide 6
    NYSE: DVN www.devonenergy.com Slide 7 Financial Strength & Flexibility Cash and short-term investments: $7.1 billion Net debt-to-cap ratio: 11% Senior unsecured ratings: ? Fitch: BBB+ ? Moody?s: Baa1 ? S&P: BBB+ Note: Includes a…
  7. March 2012 Investor Presentation – Devon Energy Corp – slide 7
    NYSE: DVN www.devonenergy.com Slide 8 2012 E&P Capital Allocation Jackfish Other Canada $5.1 ? $5.5 Billion 10% 90% Development activity Exploration activity ($225 million for acreage) ?100% of capital allocated towards oil…
  8. March 2012 Investor Presentation – Devon Energy Corp – slide 8
    NYSE: DVN www.devonenergy.com Slide 9 2012 Capital Objectives Development of existing inventory Oil and natural gas liquids growth: 17% - 19% (Oil growth: >20%; NGL growth: teens) Top-line production growth: ?6% Accelerate testing…
  9. March 2012 Investor Presentation – Devon Energy Corp – slide 9
    NYSE: DVN www.devonenergy.com Slide 10 Devon?s Recycle Ratio North America Onshore $ Per BOE Revenue (excluding hedges) $ 36.90 Cash costs (1) (13.63) Midstream capital (1.39) Cash margin per BOE $ 21.88 3-yr drilling F&D…
  10. March 2012 Investor Presentation – Devon Energy Corp – slide 10
    NYSE: DVN www.devonenergy.com Slide 11 Jackfish Projects Overview SAGD Development Jackfish acreage (100% WI) >15m (?50ft) continuous bitumen pay Ft. McMurray Edmonton Calgary ALBERTA BRITISH COLUMBIA Jackfish & Pike Each…
  11. March 2012 Investor Presentation – Devon Energy Corp – slide 11
    NYSE: DVN www.devonenergy.com Slide 12 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…
  12. March 2012 Investor Presentation – Devon Energy Corp – slide 12
    NYSE: DVN www.devonenergy.com Slide 13 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…
  13. March 2012 Investor Presentation – Devon Energy Corp – slide 13
    NYSE: DVN www.devonenergy.com Slide 14 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…
  14. March 2012 Investor Presentation – Devon Energy Corp – slide 14
    NYSE: DVN www.devonenergy.com Slide 15 Thermal Oil Production Growth Outlook Net Barrels Per Day 43,000 Q4 2011 2020 150,000 175,000 Net risked resource: ? 1.4 BBO
  15. March 2012 Investor Presentation – Devon Energy Corp – slide 15
    NYSE: DVN www.devonenergy.com Slide 16 Devon?s Thermal Position Summary Top-tier oil sands position Approximately 1.4 billion net recoverable barrels Jackfish project: Industry-leading project performance Natural hedge to North…
  16. March 2012 Investor Presentation – Devon Energy Corp – slide 16
    NYSE: DVN www.devonenergy.com Slide 17 Permian Basin Overview Oil & Liquids-Rich Opportunities Eastern Shelf Midland Basin Northwestern Shelf Central Basin Platform Ozona Arch Diablo Platform Delaware Basin New Mexico…
  17. March 2012 Investor Presentation – Devon Energy Corp – slide 17
    NYSE: DVN www.devonenergy.com Slide 18 Permian Basin 2012 Activity Eastern Shelf Midland Basin Northwestern Shelf Central Basin Platform Ozona Arch Diablo Platform New Mexico Texas Midland Balanced exploration and…
  18. March 2012 Investor Presentation – Devon Energy Corp – slide 18
    NYSE: DVN www.devonenergy.com Slide 19 Cana Woodford Shale Liquids-Rich Gas Development Net risked resource: ? 11 TCFE Risked locations: > 5,000 Net acreage: 244,000 Low cost of entry: ? $2,200/acre Low average royalty burden: 20%…
  19. March 2012 Investor Presentation – Devon Energy Corp – slide 19
    NYSE: DVN www.devonenergy.com Slide 20 Barnett Shale Liquids-Rich Gas Development Parker Palo Pinto Hood Tarrant Johnson Erath Hill Jack Wise Denton Ft. Worth Denton Net acreage: 625,000 Low average acreage cost: ?…
  20. March 2012 Investor Presentation – Devon Energy Corp – slide 20
    NYSE: DVN www.devonenergy.com Slide 21 Canadian Exploration Oil & Liquids-Rich Opportunities Deep Basin Lower Cretaceous zones (liquids-rich gas) Ferrier Area Cardium (light oil) Kindersly Area Viking (light oil) Exposure to…
  21. March 2012 Investor Presentation – 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 Early stages of evaluation 2011/2012…
  22. March 2012 Investor Presentation – Devon Energy Corp – slide 22
    NYSE: DVN www.devonenergy.com Slide 23 New Ventures Plays Mississippian Niobrara Utica Ohio Tuscaloosa Michigan Net Acres Assembled 230,000 320,000 ? 220,000 PRB ? 100,000 DJ Basin 235,000 265,000 350,000 Location Average…
  23. March 2012 Investor Presentation – Devon Energy Corp – slide 23
    NYSE: DVN www.devonenergy.com Slide 24 Sinopec Agreement Announced: 1/3/12 Sinopec acquires 33% of Devon?s interest in 1.4 million net acres across five new venture plays Transaction price: $2.5 billion ? $900 million cash payment…
  24. March 2012 Investor Presentation – 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. March 2012 Investor Presentation – 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 opportunities
  26. March 2012 Investor Presentation – Devon Energy Corp – slide 26
    NYSE: DVN www.devonenergy.com Slide 29 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…
  27. March 2012 Investor Presentation – Devon Energy Corp – slide 27
    NYSE: DVN www.devonenergy.com Slide 30 Expected 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 -…
  28. March 2012 Investor Presentation – Devon Energy Corp – slide 28
    NYSE: DVN www.devonenergy.com Slide 31 Historical Performance North American Onshore 240 223 168 220 207 183 2006 2007 2008 2009 2010 2011 233% 198% 269% 223% 175% 160% 2006 2007 2008 2009 2010 2011 $13.57$13.30$13.05…
  29. March 2012 Investor Presentation – 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. March 2012 Investor Presentation – Devon Energy Corp – slide 30
    NYSE: DVN www.devonenergy.com Slide 33 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…
  31. March 2012 Investor Presentation – Devon Energy Corp – slide 31
    NYSE: DVN www.devonenergy.com Slide 34 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…
  32. March 2012 Investor Presentation – Devon Energy Corp – slide 32
    NYSE: DVN www.devonenergy.com Slide 35 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…
  33. March 2012 Investor Presentation – Devon Energy Corp – slide 33
    NYSE: DVN www.devonenergy.com Slide 36 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…
  34. March 2012 Investor Presentation – 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. March 2012 Investor Presentation – Devon Energy Corp – slide 35
    NYSE: DVN www.devonenergy.com Slide 38 8 6 4 2 0 10 12 14 16 18 20 2005 2006 2007 2008 2009 2010 2011 U.S. Wellhead Production (BCFD) Barnett Haynesville Fayetteville Appalachian Arkoma Woodford Eagleford Cana Woodford Slide…
  36. March 2012 Investor Presentation – 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. March 2012 Investor Presentation – Devon Energy Corp – slide 37
    NYSE: DVN www.devonenergy.com Slide 40 Barnett Shale Performance Reserve Revisions Year Performance Reserve Revisions (BCFE) 2004 +186 2005 +378 2006 +24 2007 +234 2008 +132 2009 +288 2010 +154 2011 +30
  38. March 2012 Investor Presentation – 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. March 2012 Investor Presentation – Devon Energy Corp – slide 39
    NYSE: DVN www.devonenergy.com Slide 42 East Texas Unconventional Haynesville / Bossier Shale Net prospective acres: >100,000 Significant portion of acreage held by production or fee Low average royalty…
  40. March 2012 Investor Presentation – Devon Energy Corp – slide 40
    NYSE: DVN www.devonenergy.com Slide 43 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…
  41. March 2012 Investor Presentation – 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 Q4 2011 net production: 68 MMCFED Strategic midstream…
  42. March 2012 Investor Presentation – 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: 199,000 Working interest: 86% Q4…
  43. March 2012 Investor Presentation – Devon Energy Corp – slide 43
    NYSE: DVN www.devonenergy.com Slide 46 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…
  44. March 2012 Investor Presentation – Devon Energy Corp – slide 44
    NYSE: DVN www.devonenergy.com Slide 47 Washakie Net acreage: 157,000 Working interest: 76% Q4 2011 net production: 136 MMCFED Low-risk, tight sand gas WY UT CO Washakie
  45. March 2012 Investor Presentation – Devon Energy Corp – slide 45
    NYSE: DVN www.devonenergy.com Slide 48 Access Pipeline EDMONTON HARDISTY Express P/L To U.S. Rockies Access Bitumen Blend Pipeline Access Diluent Pipeline Oil Pipelines From Edmonton, Alberta to Jackfish: ? 200 miles Devon…

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