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Strategic Update and Q4 2018 Operations Report – Devon Energy Corp

Devon Energy Corp · Feb 19, 2019 · 27 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. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 1
    Strategic Update & Q4 2018 Operations Report February 19, 2019 NYSE: DVN devonenergy.com
  2. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 2
    Completing Transformation to a U.S. Oil Growth Company Sharpens focus on world-class U.S. oil assets New Devon Overview Delaware, STACK, Eagle Ford and Powder River Production: 296 MBOED (Q4 2018) High-margins and low cost of supply…
  3. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 3
    A Track Record of Execution Conventional Canadian Heavy Oil(1) DIVESTITURE PROCEEDS 30 Billion Assets Russia POWDER RIVER Rockies CO2 (marketing) Washakie Uinta Azerbaijan San Juan Mississippian China Granite Wash…
  4. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 4
    New Devons World-Class Oil Assets Visualized Portfolio positioned in top oil basins Well level breakeven (PV-10, WTI to HH 20:1) (/bbl) 4 90 TOP 80 DOMINANT OIL 70 POSITION IN PLAYS Breakeven(/bbl20:1 WTI:HH) 60 Net…
  5. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 5
    Unleashing Potential of World-Class Oil Assets U.S. well productivity showcases asset quality +40% Source: IHS/Devon. All wells drilled since 2015 and includes operators with more than 100 wells. SUPERIOR 900 WELL Avg. 90-Day IPs…
  6. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 6
    Inventory Supports Sustainable Long-Term Growth High-Return Inventory Potential(1) Gross operated inventory locations 6,500 operated 20 YEAR INVENTORY (AT CURRENT ACTIVITY PACE) locations (Avg. lateral…
  7. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 7
    Next Steps to Optimize New Devon Cost Structure Aggressively pursuing improved cost structure Timing of annual cost savings New Devon expected cost savings by area vs. 2018 results (MM) Cumulative estimated annual cost savings (MM) 800…
  8. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 8
    Disciplined Returns-Focused Strategy KEY STRATEGIC OBJECTIVES APPROACH TO THE CURRENT ENVIRONMENT WTI PRICE(1) 1 Fund high-return projects Maintain financial strength and 40 operational continuity (New Devon FCF breakeven below 40…
  9. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 9
    New Devon: 3-Year Performance Targets RETURN ON CAPITAL TARGET: 15% (1) (At 50 WTI & 3 HH) CUMULATIVE FREE CAPITAL PROGRAM CASH FLOW OIL GROWTH COST SAVINGS DEBT TARGET Funded 1.6 (2) 12% 17% 780 MM 1.0x to 1.5x At 46 WTI BILLION…
  10. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 10
    New Devon: Free Cash Flow Yield to Investors (1) 2.3B 10% 2.4 3-YEAR CAPITAL PLAN Cumulative Free Cash Flow 2.0 OIL CAGR: 12%-17% 8% (1) BREAKEVEN: 46 WTI 1.6B Cumulative Free Cash Flow (B) Free Cash Yield (Annual Avg.)…
  11. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 11
    Attractive Entry Point for World-Class Oil Business Peer trading multiples New Devon: trading at significant discount 2019e EV/EBITDAX(1) in Billions 10.0x 24 Peer Multiple * New DVN EBITDAX Valuation 9.0x (6.8x * 2.5B) Gap 8.0x…
  12. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 12
    Why Own New Devon New Devon Overview World-class U.S. oil company Production: 296 MBOED (Q4 2018) Unrivaled acreage position in top basins Revenue: 84% oil & liquids Multi-decade inventory to drive sustainable growth Oil growth…
  13. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 13
    Q4 2018 Operations Report & 2019 Outlook NYSE: DVN devonenergy.com
  14. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 14
    Q4 2018 - Key Modeling Stats Q4 2018 - ASSET DETAIL DELAWARE STACK PRB EAGLE FORD PRODUCTION Oil (MBbl/d) 45 31 13 30 NGL (MBbl/d) 18 37 2 15 Gas (MMcf/d) 127 343 20 95 Total (MBoe/d) 84(1) 126 18(1) 61 ASSET MARGIN (per Boe)…
  15. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 15
    New Devon: Pro Forma Financials KEY METRICS Q4 2018 FY 2018 FY 2019 (ASSUMES PRO FORMA COSTS) (WTI / HH) (58.80 / 3.65) (64.79 / 3.09) (50 / 3) Oil production (MBbls/d) 125 121 137 - 143 NGL production (MBbls/d) 73 69 70 - 74 Gas…
  16. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 16
    Executing on Disciplined Strategy in 2018 KEY ACCOMPLISHMENTS 6.8 Billion 0.2B 1.2B 60% OF CASH ALLOCATED TO Shifted U.S. oil assets into development SHAREHOLDER-FRIENDLY INITIATIVES U.S. oil growth +17% in 2018 (vs. 2017)…
  17. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 17
    Capital Efficiencies Accelerate in 2019 Focused on top-tier oil development opportunities 2019 CAPITAL ACTIVITY 2019e E&P capital (New Devon) E&P CAPITAL NEW WELLS ONLINE (MM) (Operated) Delaware Basin 900 100-110 DELAWARE STACK…
  18. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 18
    Disciplined Growth Benefits From Buyback Activity Focused on delivering sustainable, high-margin Positioned for high-return growth in 2019 20% growth (funded at 46 WTI) New Devon U.S oil production (MBOD) (2019 exit rate vs. FY…
  19. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 19
    Delaware Basin Capital-Efficient Growth Engine High-rate wells drive Q4 growth DELAWARE BASIN OVERVIEW Net production increased 49% vs. Q4 2017 Q4 2018 Key Wells Q4 2018 KEY WELLS 2,800 Lea BOED January 2019 production: 96 MBOED…
  20. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 20
    Step-Change in Delaware Basin Well Productivity Well productivity reaching record highs Significant growth platform at 50 WTI Average cumulative oil production per well (MBO) Gross operated inventory locations generating IRR 20%(1) 300…
  21. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 21
    Focusing on Wolfcamp & Bone Spring Projects in 2019 Wolfcamp program: 45% of 2019 drilling activity Development of Bone Spring in Todd area underway Six key projects underway in Rattlesnake area Activity offsetting prolific Boundary…
  22. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 22
    Delaware Basin Focused Development Plan in 2019 Top-funded asset in portfolio (900 million) Infrastructure drives sustainable savings and ESG benefits Low-risk development activity: 95% of program Operating costs to improve 60% vs.…
  23. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 23
    STACK Optimizing Infill Spacing Net production increases 11% vs. Q4 2017 STACK DEVELOPMENT ACTIVITY Oil production increased 9% (vs. Q3 2018) Developments Online Faith Marie (2 wells) Kingfisher Avg. IP30: 3,100 BOED Growth driven…
  24. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 24
    STACK 2019 Strategic Priorities Transitioning infill developments to 4-6 wells per unit Updated infill development type curve expectations Early results in line with type curve expectations (BOED) Investment concentrated in…
  25. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 25
    Eagle Ford Q4 production averaged 61 MBOED (50% oil) EAGLE FORD OVERVIEW Net production 11% higher vs. Q4 2017 FREE CASH FLOW 15 new wells: Avg. IP30 3,700 BOED 515 High-rates driven by larger completion design MILLION IN 2018…
  26. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 26
    Powder River Basin Net production increased 27% vs. Q4 2017 KEY POWDER RIVER BASIN ACTIVITY 8 wells online in late December (Avg. IP30: 1,500 BOED) PRB Activity 2019 Activity January 2019 production: 22 MBOED (+25% vs. Q4) 50 Spuds…
  27. Strategic Update and Q4 2018 Operations Report – Devon Energy Corp – slide 27
    Barnett Shale Canada Dow JV efficiently maintaining base production Q4 impacted by curtailments & royalties Q4 production: 103 MBOED (30% NGLs) Reduced production due to market conditions (17 MBOD) Minimum volume commitments expired…

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