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June 2014 Investor Meeting – Devon Energy Corp

Devon Energy Corp · Jun 30, 2014 · 66 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. June 2014 Investor Meeting – Devon Energy Corp – slide 1
    Investor Meeting June Presentation
  2. June 2014 Investor Meeting – Devon Energy Corp – slide 2
    Devon Today Sharpening The Focus Devons Core & Emerging Assets Proved reserves: 2.6 billion BOE(1) Q1 2014 net production: 563 MBOED(1) Heavy Oil Core Oil & NGLs 50% of production mix Emerging Expect multi-year oil growth 20%…
  3. June 2014 Investor Meeting – Devon Energy Corp – slide 3
    First-Quarter 2014 Highlights U.S. Oil Production Growth(1) Delivered U.S. oil production growth of 56% YoY(1) 100 97.5 Net Production (MBOPD) Achieved excellent well results in the Delaware Basin 75 62.7 Eagle Ford…
  4. June 2014 Investor Meeting – Devon Energy Corp – slide 4
    Non-Core Asset Sales Sharpening The Focus Sold Canadian conventional business for C3.125 billion US2.7 billion after tax (5% effective tax rate after repatriation) Highly accretive transaction: 7 times 2013 EBITDA Closed April 1,…
  5. June 2014 Investor Meeting – Devon Energy Corp – slide 5
    2014 E&P Capital Program Delivering Strong Oil Growth 2014 Capital Budget Key Highlights 5.0 - 5.4 Billion 2014 E&P capital: 2% 5% Go-forward assets: 4.8 - 5.2 billion 11% 260 million attributable to non-core properties 28% 5%…
  6. June 2014 Investor Meeting – Devon Energy Corp – slide 6
    2014 Production Growth Targets U.S. Oil Production(1) Total Oil Production(1) BOE Production(1) (MBOPD) (MBOPD) (MBOED) 198 - 216 579 - 622 539 152 124 - 136 73 2013 2014e 2013 2014e 2013 2014e U.S. Canada 6:1…
  7. June 2014 Investor Meeting – Devon Energy Corp – slide 7
    Preliminary 2015 Outlook Total Oil Production(1) Key Highlights (MBOPD) On track to deliver 2015 oil production growth 20%(1) Driven by Eagle Ford, Permian and Jackfish 3 Oil 198 - 216 Increased activity levels expected at…
  8. June 2014 Investor Meeting – Devon Energy Corp – slide 8
    Devon Oil Production Significant Oil Producer in North America Q4 2013 Oil Production Pro Forma New Devon(1) vs. N.A. Onshore Pure-Play Peers 250 200 MBOPD 150 100 50 0 EOG CHK CLR WLL PXD CXO NFX OAS XEC SD MEG…
  9. June 2014 Investor Meeting – Devon Energy Corp – slide 9
    Permian Basin Overview 2014 Focus Areas NEW MEXICO OKLAHOMA Net acreage: 1.3 million basin-wide with stacked-pay potential New Mexico Texas TEXAS Q1 2014 net production: 91 MBOED Eastern Northwestern (60% oil) Midland…
  10. June 2014 Investor Meeting – Devon Energy Corp – slide 10
    Permian Basin Delivering Significant Oil Production Growth 60 50 Net Production (MBOPD) 40 30 20 10 0 2009 2010 2011 2012 2013 2014e NYSE: DVN www.devonenergy.com Slide 11
  11. June 2014 Investor Meeting – Devon Energy Corp – slide 11
    Delaware Basin Significant Resource Opportunity Operated rig count: 12 2014 plans: Drill 150 wells Activity focused on repeatable, high- Central impact Bone Spring Eddy Two recent high-rate Delaware Sands wells 30-day IP…
  12. June 2014 Investor Meeting – Devon Energy Corp – slide 12
    Delaware Basin Significant Resource Opportunity 2014e Risked Producing Activity Undrilled Formation Net Acres Wells (Wells Drilled) Locations Delaware Sands 80,000 78 20 700 Leonard Shale 60,000 40 1 700 Bone Spring 285,000…
  13. June 2014 Investor Meeting – Devon Energy Corp – slide 13
    Eagle Ford Overview World-Class Oil Asset OKLAHOMA Located in best part of Eagle Ford TEXAS Net acreage: 82,000 Working interest: 50% Net revenue interest: 38% Gonzales Acquisition closed on February 28th Lavaca Current…
  14. June 2014 Investor Meeting – Devon Energy Corp – slide 14
    Eagle Ford Low-Risk Development Inventory OKLAHOMA TEXAS Devon Existing Undrilled Acreage Producer Infill Derisked and ready for development Risked resource: 400 MMBOE DeWitt 80% resides in DeWitt County Risked…
  15. June 2014 Investor Meeting – Devon Energy Corp – slide 15
    Eagle Ford Production Outlook 2014e Production Outlook Multi-Year Production Outlook (MBOED) (MBOED) 100 80 85 70 80 (1) 65 70 64 49 March 2014 Current Q2 2014e 2H 2014e 2014e 2015e (1) Represents Devons estimated…
  16. June 2014 Investor Meeting – Devon Energy Corp – slide 16
    Eagle Ford Upside Recent Industry Success - Lavaca County Sustr 1H Devons Lavaca County 24-Hr IP: 1,054 BOED Pavlicek Un 2H Net acres: 32,000 24-Hr IP: 1,319 BOED Targac…
  17. June 2014 Investor Meeting – Devon Energy Corp – slide 17
    SAGD Oil Developments Jackfish & Pike SAGD Characteristics: Jackfish 1 T76 Jackfish 2 Low F&D Low geologic risk Jackfish 3 T75 High reservoir quality Flat production profile Long reserve life 20 years T74 Pike Project Area…
  18. June 2014 Investor Meeting – Devon Energy Corp – slide 18
    Jackfish SAGD Developments Visible Oil Growth Oil Production Growth Outlook Jackfish 1 100 Facility running above name-plate capacity Q1 2014 production: 37 MBOPD gross (32 MBOPD net) 77 - 82 Delivering top-tier operating…
  19. June 2014 Investor Meeting – Devon Energy Corp – slide 19
    Jackfish SAGD Developments Significant Free Cash Flow Generation Free Cash Flow Outlook 1,200 1,000 800 in millions 600 400 200 0 2014e 2015e 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e…
  20. June 2014 Investor Meeting – Devon Energy Corp – slide 20
    Mississippian-Woodford & Rockies Emerging Oil Opportunities Mississippian-Woodford Multiple oil-bearing intervals Rockies Oil Q1 2014 net production increased 35% sequentially Net Acres: 150,000 (Powder River Basin) Drilling activity…
  21. June 2014 Investor Meeting – Devon Energy Corp – slide 21
    Liquids-Rich Gas Barnett Shale & Anadarko Basin Net risked resource: 25 TCFE Risked locations: 10,000 Net acreage: 900,000 Hemphill Blaine Canadian Oklahoma City Low average royalty…
  22. June 2014 Investor Meeting – Devon Energy Corp – slide 22
    Anadarko Basin Resource Capture Cana-Woodford Acquisition & Upside Acquired 50,000 net acres (announced May 2014) Dewey Directly overlaps existing leasehold Increases Cana position to 300,000 net acres Blaine Kingfisher Improved…
  23. June 2014 Investor Meeting – Devon Energy Corp – slide 23
    Disciplined Capital Allocation Top objective: Maximize shareholder returns by optimizing cash flow per share, adjusted for debt Investing in E&P capital projects Accelerating development of high-margin oil projects Leveraging JV…
  24. June 2014 Investor Meeting – Devon Energy Corp – slide 24
    Financial Strength & Flexibility Investment-grade ratings Fitch: BBB Moodys: Baa1 S&P: BBB+ Cash balances at 3/31/14: 2.0 billion Pro forma net debt at 3/31/14(1): 11 billion (9B excluding EnLink) Future divestiture proceeds…
  25. June 2014 Investor Meeting – Devon Energy Corp – slide 25
    Innovative Midstream Combination EnLink Midstream Overview PA Devon retains majority ownership OH MARCELLUS General partner (ENLC 70%) CANA- OK MLP (ENLK 52%) WOODFORD UTICA ARKOMA- WV EnLink transaction highly accretive…
  26. June 2014 Investor Meeting – Devon Energy Corp – slide 26
    Potential Drop Down Asset Access Pipeline (SAGD Oil Midstream) JACKFISH & PIKE Three 180 mile pipelines from Sturgeon Terminal to Devons thermal acreage 30 miles of dual pipeline from Sturgeon Terminal to Edmonton Devon ownership:…
  27. June 2014 Investor Meeting – Devon Energy Corp – slide 27
    Why Own Devon Disciplined focus on returns Deep inventory of oil opportunities Top-tier Eagle Ford development Strong Permian Basin position World-class SAGD oil projects Upside potential in emerging oil plays Visible,…
  28. June 2014 Investor Meeting – Devon Energy Corp – slide 28
    Thank You
  29. June 2014 Investor Meeting – Devon Energy Corp – slide 29
    Appendix A Strategy & Operations
  30. June 2014 Investor Meeting – Devon Energy Corp – slide 30
    Strategic Objective Devon strives to maximize long-term value for our shareholders by growing cash flow per share, adjusted for debt. NYSE: DVN www.devonenergy.com Slide 31
  31. June 2014 Investor Meeting – Devon Energy Corp – slide 31
    We Pursue Our Strategic Objective By: Exercising capital discipline Maintaining a low-cost structure to maximize operating margins Focusing on high-return projects Improving performance through midstream business…
  32. June 2014 Investor Meeting – Devon Energy Corp – slide 32
    Advantaged Resource Base Low entry costs (acreage and royalties) Large, concentrated positions High-graded portfolio (capturing and divesting) Strategic midstream business NYSE: DVN www.devonenergy.com Slide 33
  33. June 2014 Investor Meeting – Devon Energy Corp – slide 33
    Portfolio Management Goal: Optimize depth, diversity, and quality of drilling inventory Harvesting mature and lower-return assets New leasehold capture Joint ventures / farm-ins NYSE: DVN www.devonenergy.com Slide 34
  34. June 2014 Investor Meeting – Devon Energy Corp – slide 34
    Pike Overview SAGD Oil Development Pike leasehold Jackfish Pike 1 50% operated working interest Development Area Similar reservoir characteristics to Jackfish Up to five 35 MBOPD SAGD development phases Pike Project Area…
  35. June 2014 Investor Meeting – Devon Energy Corp – slide 35
    SAGD Upside Solvents Potential Benefits Increases production rates per well and plant production capacity Lower steam-oil ratios (15% - 50% decrease) Reduces plant emissions Risks Access to solvent Solvent recovery Status…
  36. June 2014 Investor Meeting – Devon Energy Corp – slide 36
    Small-Scale SAGD Reusable SAGD facilities designed to exploit smaller accumulations of bitumen (4 prospects identified) Targeted resource: 35-70 MMBO per project Peak production rates up to 10 MBOPD per project Less upfront…
  37. June 2014 Investor Meeting – Devon Energy Corp – slide 37
    Lloydminster Oil Development Iron River Net acreage: 700,000 Manatokan Low-risk development Strong operating margins End Lake Q1 2014 net production: 30 MBOED 2014 plans: 150 wells Lloydminster Alberta Lloydminster…
  38. June 2014 Investor Meeting – Devon Energy Corp – slide 38
    Mississippian-Woodford Trend Emerging Oil Opportunity OK Net acres to DVN in JV area: 200,000 Noble Garfield Drilling activity focused on joint venture acreage Pawnee Multiple oil-bearing intervals Q1 2014 net production…
  39. June 2014 Investor Meeting – Devon Energy Corp – slide 39
    Rockies Oil Powder River Basin MT Net acreage: 150,000 Sheridan WY Stacked oil targets (Parkman, Turner, Frontier & others) High impact wells (Best wells: IPs 1,000 BOED) Johnson Operated rig count: 3 Campbell 2014…
  40. June 2014 Investor Meeting – Devon Energy Corp – slide 40
    Barnett Shale Liquids-Rich Gas Development Jack Wise Denton Net acreage: 600,000 Denton Bridgeport Plant Low average royalty burden: 18% Q1 2014 net production: 1.3 BCFED Palo Pinto Parker DRY GAS Liquids 27% of total…
  41. June 2014 Investor Meeting – Devon Energy Corp – slide 41
    Permian Basin Midland-Wolfcamp Shale Oil Development Overview Net acreage: 117,000 Low-risk, high-margin light oil play Delivering consistent economic results Thick pay with multiple intervals (up to 1,100) Reagan Irion…
  42. June 2014 Investor Meeting – Devon Energy Corp – slide 42
    Granite Wash Oil & Liquids-Rich Gas Development Net acreage: 66,000 Legacy land position held by production Low average royalty burden: 19% Hemphill Q1 2014 net production: 22 MBOED Wheeler Granite Wash OKLAHOMA…
  43. June 2014 Investor Meeting – Devon Energy Corp – slide 43
    Joint Venture Transactions Oil & Liquids Exploration Sinopec Joint Venture 2.5 billion transaction (900 million cash and 1.6 billion drilling carry) Drilling carry balance: 685 million (3/31/14) Sinopec receives 33% of Devons…
  44. June 2014 Investor Meeting – Devon Energy Corp – slide 44
    Attractively Hedged Oil Hedges 70% of go-forward oil production hedged (Q2-Q4 2014) 75 MBOPD swapped at 94 per BBL 69 MBOPD collared at 89 - 100 per BBL 12 MBOPD swapped at an 18 differential to WTI (WCS basis swap) 80 MBOPD of…
  45. June 2014 Investor Meeting – Devon Energy Corp – slide 45
    EnLink Midstream Business Ownership Structure Devon Energy Corporation (NYSE: DVN) GP Public Unitholders 70% (115 MM units) 52% LP (120 MM units) 30% General Partner 100% Incentive Distribution Rights (IDRs) EnLink Midstream…
  46. June 2014 Investor Meeting – Devon Energy Corp – slide 46
    Potential Drop Down Asset Victoria Express Pipeline (VEX) (Eagle Ford) 56 mile crude oil pipeline from Eagle Colorado Ford core to Devons Port of Victoria Gonzales terminal Lavaca Wharton 50 MBOPD start-up capacity (expandable)…
  47. June 2014 Investor Meeting – Devon Energy Corp – slide 47
    Appendix B Supply & Demand
  48. June 2014 Investor Meeting – Devon Energy Corp – slide 48
    Canadian Crude Oil Supply & System Export Capacity 9.0 8.0 7.0 6.0 MMBOD 5.0 4.0 3.0 2.0 1.0 0.0 2011 2012 2013 2014e 2015e 2016e 2017e 2018e Oil Supply Current Export & Local Demand Capacity Rail Alberta…
  49. June 2014 Investor Meeting – Devon Energy Corp – slide 49
    Canadian Oil Pipeline Capacity Additions Flanagan South: Flanagan to USGC Capacity: staged increments up to 0.6 MMBOPD Estimated in service: Q3 2014 Kitimat Alberta Clipper/Southern Access: Hardisty to Flanagan Capacity: staged…
  50. June 2014 Investor Meeting – Devon Energy Corp – slide 50
    Canadian Oil Rail Transport Fees Potential Rail Per BBL Costs Oil Sands Trucking & Loading 5.00 Rail Car Rental 2.50 Transport Fee Variable (Mileage Based) West Coast Refining Offloading Fee 2.00 East Coast Refining…
  51. June 2014 Investor Meeting – Devon Energy Corp – slide 51
    Heavy Oil Refinery Expansions In-Service Capacity Operator Location Date Increase (BOPD) Husky Lima, Ohio 2016 40,000 Northwest Edmonton, Alberta 2017 80,000 Upgrading Total Capacity Increase 120,000 NYSE: DVN…
  52. June 2014 Investor Meeting – Devon Energy Corp – slide 52
    U.S. Natural Gas Demand Growth By Sector 2013-2018 90 85 6.5 0.5 80 2.1 BCFD 3.7 75 2.5 87 -0.5 70 72 65 60 2013 Industrial Res/Com Electric Mex/Can Other LNG 2018 Total Baseline Exports Exports Source:…
  53. June 2014 Investor Meeting – Devon Energy Corp – slide 53
    U.S. Natural Gas Cumulative Coal Retirement Demand Forecast 6 4 3.7 2.9 2 1.6 BCFD 0.0 0 -0.2 -2 2014F 2015F 2016F 2017F 2018F Renewable Generation Coal Retirements Fuel Switching Net Effect Source: NYSE:…
  54. June 2014 Investor Meeting – Devon Energy Corp – slide 54
    U.S. Natural Gas Annual Industrial Demand 25 22.1 22.5 21.7 22 21.1 20.5 20.0 19 BCFD 16 13 10 2008 2009 2010 2011 2012 2013A 2014F 2015F 2016F 2017F 2018F Base Y/Y Growth Source: Devon estimates NYSE: DVN…
  55. June 2014 Investor Meeting – Devon Energy Corp – slide 55
    U.S. Natural Gas LNG Projects Total Capacity Non-FTA Final DOE Approval Approval Facility Developer(s) Location FTA/Non-FTA Capacity Start-Up Date Investment Non-FTA FERC (BCFD) (BCFD) Decision (FID) Sabine Pass Cheniere Cameron,…
  56. June 2014 Investor Meeting – Devon Energy Corp – slide 56
    Canadian Natural Gas LNG Projects Capacity Start-Up NEB Export Facility Developer(s) Location (BCFD) Date License Douglas Channel Energy LNG Partners, Haisla Floating LNG, 0.1 2017 Approved Nation Kitimat, B.C. Kitimat LNG Apache,…
  57. June 2014 Investor Meeting – Devon Energy Corp – slide 57
    Natural Gas Liquids Supply Estimated Ethane Rejection U.S. NGL Supply by Component** (MMBPD) 1.4 4.5 Ethane Extraction Ethane Rejection 1.2 4.0 3.5 1.0 3.0 MMBPD 0.8 2.5 0.6 2.0 1.5 0.4 1.0 0.2 0.5 0.0 0.0 Jan 2010…
  58. June 2014 Investor Meeting – Devon Energy Corp – slide 58
    U.S. Natural Gas Liquids Demand 4.5 4.1 4.1 3.9 4.0 3.7 3.8 3.6 0.8 0.8 0.6 3.4 3.5 3.2 3.1 0.4 0.8 3.0 0.8 0.5 3.0 0.5 0.3 0.4 2.5 MMBPD 2.0 1.5 1.0 0.5 0.0 Q1 Q2 Q3 Q4 Q1F Q2F Q3F Q4F 2012 2013 2013…
  59. June 2014 Investor Meeting – Devon Energy Corp – slide 59
    Natural Gas Liquids Demand LPG exports 1,200 1,000 800 MBPD 600 400 200 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 Actual LPG Exports Current LPG Capacity Planned LPG Capacity Source: EIA, Argus,…
  60. June 2014 Investor Meeting – Devon Energy Corp – slide 60
    Natural Gas Liquids Inventories & Cracking Rates U.S. Ethane Inventories U.S. Ethane Cracking Rate 5 Yr. High/Low 2013 2012 5 Yr. AVG. 5 Yr. High/Low 2013 2012 5 Yr Average 40 1.3 35 1.1 30 MMBPD MMBbl 25 0.9 20 15…
  61. June 2014 Investor Meeting – Devon Energy Corp – slide 61
    Appendix C Key Modeling Statistics
  62. June 2014 Investor Meeting – Devon Energy Corp – slide 62
    Key Modeling Statistics Based on 2014 Drilling Program Bone Spring (Permian Basin) Midland-Wolfcamp Shale (Permian Basin) Working interest / royalty: 76% / 21% Working interest / royalty: 62% / 24% Drill & complete costs: 6 MM…
  63. June 2014 Investor Meeting – Devon Energy Corp – slide 63
    Key Modeling Statistics Based on 2014 Drilling Program Eagle Ford (DeWitt County) Eagle Ford (Lavaca County) Working interest / royalty: 50% / 25% Working interest / royalty: 50% / 25% Drill & complete costs: 9 - 10 MM Drill &…
  64. June 2014 Investor Meeting – Devon Energy Corp – slide 64
    Key Modeling Statistics Based on 2014 Drilling Program Mississippian Lime (Mississippian-Woodford Trend) Woodford Oil Shale (Mississippian-Woodford Trend) Working interest / royalty: 35% / 19% Working interest / royalty: 42% / 22%…
  65. June 2014 Investor Meeting – Devon Energy Corp – slide 65
    Key Modeling Statistics Based on 2014 Drilling Program Cana-Woodford Shale Barnett Shale Working interest / royalty: 51% / 21% Working interest / royalty: 89% / 18% Drill & complete costs: 8 MM Drill & complete costs: 3 - 3.5 MM…
  66. June 2014 Investor Meeting – Devon Energy Corp – slide 66
    Non-GAAP Reconciliation Net Debt Devon defines net debt as debt less cash, cash equivalents and short-term investments. Devon believes that netting these sources of cash against debt provides a clearer picture of the future demands on…

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