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Jefferies Global Energy Conference – Devon Energy Corp

Devon Energy Corp · Nov 12, 2014 · 60 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. Jefferies Global Energy Conference – Devon Energy Corp – slide 1
    Jefferies Global Energy Conference November 12, 2014
  2. Jefferies Global Energy Conference – Devon Energy Corp – slide 2
    Devon Today Delivering Shareholder Value A leading North American E&P Focused and balanced portfolio Oil driving production growth Expanding margins Strong financial position Accelerating activity NYSE: DVN…
  3. Jefferies Global Energy Conference – Devon Energy Corp – slide 3
    Devon Today Strong North American Pure Play Devons Core & Emerging Assets Q3 2014 net production: 640 MBOED(1) Deep inventory of oil opportunities Heavy Oil Core Top-tier Eagle Ford development Emerging High-quality Permian…
  4. Jefferies Global Energy Conference – Devon Energy Corp – slide 4
    Focused & Balanced Portfolio Positioned in top North American Q3 2014 Product Mix(1) basins Completed asset divestiture program 34% 5 billion in gas-weighted asset sales 45% Oil & NGL: 55% of production 21% Focused on oil…
  5. Jefferies Global Energy Conference – Devon Energy Corp – slide 5
    2014 Production Growth Targets U.S. Oil Production(1) Total Oil Production(1) BOE Production(1) (MBOPD) (MBOPD) (MBOED) 614 - 620 206 - 209 539 152 127 - 128 73 2013 2014e 2013 2014e 2013 2014e U.S. Canada 6:1…
  6. Jefferies Global Energy Conference – Devon Energy Corp – slide 6
    Preliminary 2015 Outlook Total Oil Production(1) Key Highlights (MBOPD) On track to deliver 2015 oil production growth of 20 - 25%(1) Driven by Eagle Ford, Permian and Jackfish 3 206 - 209 Top-line BOE growth: mid-single…
  7. Jefferies Global Energy Conference – Devon Energy Corp – slide 7
    Devon Oil Production Significant Oil Producer in North America Q2 2014 Oil Production Devon(1) vs. N.A. Onshore Pure-Play Peers 300 250 200 MBOD 150 100 50 0 EOG CLR CHK WLL PXD MEG CXO NFX XEC OAS ECA SD LPI FANG…
  8. Jefferies Global Energy Conference – Devon Energy Corp – slide 8
    Expanding Margins Pre-Tax Cash Margin Per Boe(1) High-margin oil growth (September Year to Date) 29.51 Improved price realizations 21.47 Effective cost management Non-core asset divestitures 2013 YTD 2014 YTD (1)…
  9. Jefferies Global Energy Conference – Devon Energy Corp – slide 9
    Financial Strength & Flexibility Strong investment-grade ratings Cash balances: 3.4 billion (9/30/14) Net debt(1): 6.8 billion (excluding EnLink) Cash flow protected by hedges Majority of Q4 production hedged above current…
  10. Jefferies Global Energy Conference – Devon Energy Corp – slide 10
    Asset Overview
  11. Jefferies Global Energy Conference – Devon Energy Corp – slide 11
    Permian Basin Delaware Basin Delivering Outstanding Results Activity focused on repeatable, high-impact Bone Spring Brought 13 wells online in Q3 30-day IP rate: 900 BOED (80% oil) Central Eddy Results 50% higher than type…
  12. Jefferies Global Energy Conference – Devon Energy Corp – slide 12
    Bone Spring Raising Type Curve 30-Day IP Rates Key Modeling Stats (MBOED) 750+ 30-Day IP (BOED) 750+ EUR (MMBOE) 450+ 575 D&C Cost (in millions) 6 - 7 Oil / NGL (% of Production) 65% / 20% WI / NRI 71% / 56% Previous…
  13. Jefferies Global Energy Conference – Devon Energy Corp – slide 13
    Delaware Basin Significant Resource Opportunity Gross Risked 2014e Net Risked Risked Wells Undrilled Activity Formation Acres Per Section Locations (Wells Drilled) Delaware Sands 80,000 4 700 20 Leonard Shale 60,000 5 700 1…
  14. Jefferies Global Energy Conference – Devon Energy Corp – slide 14
    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 15
  15. Jefferies Global Energy Conference – Devon Energy Corp – slide 15
    Eagle Ford Overview World-Class Oil Asset Located in best part of Eagle Ford OKLAHOMA Net acreage: 82,000 TEXAS DeWitt: 48% WI / 36% NRI (50,000 net acres) Lavaca: 81% WI / 63% NRI (32,000 net acres) September exit rate: 87 MBOED 2014e…
  16. Jefferies Global Energy Conference – Devon Energy Corp – slide 16
    Eagle Ford Production Results and Outlook 2014 Results to Date Multi-Year Production Outlook (MBOED) (MBOED) 100 87 70 80(1) 49 March 2014 September 2014 2014e 2015e (1) Represents Devons estimated net production…
  17. Jefferies Global Energy Conference – Devon Energy Corp – slide 17
    Lower Eagle Ford Upside Lavaca County Devons Lavaca County Net acreage: 32,000 Bock Unit (3 wells) Non-operated Berger 1H Lower Eagle Ford Lower Eagle Ford Q3 results highlighted by 7 24-Hr IP: 1,291 BOED 24-Hr IP: 2,401 BOED Avg.…
  18. Jefferies Global Energy Conference – Devon Energy Corp – slide 18
    Upper Eagle Ford Potential DeWitt and Lavaca Counties OKLAHOMA Encouraging industry results TEXAS Robin 1H Pay thickest in DeWitt County Q4 Spud Medina 2H Angela 1H Spud first well in Q3 Q4 Completion Q4 Spud Gonzales 5 additional…
  19. Jefferies Global Energy Conference – Devon Energy Corp – slide 19
    Heavy Oil Developments Jackfish & Pike SAGD Characteristics: Jackfish 1 Jackfish 2 Low F&D T75 Low geologic risk Jackfish 3 Flat production profile Long reserve life 20 years T74 Pike Project Area Access Pipeline Each SAGD…
  20. Jefferies Global Energy Conference – Devon Energy Corp – slide 20
    Jackfish Heavy Oil Developments Delivering Visible Oil Growth Jackfish Complex: Q3 2014 production: Gross production: 64 MBOPD (20% higher YoY) Net production: 53 MBOPD Delivering top-tier operating results at J1 Plant…
  21. Jefferies Global Energy Conference – Devon Energy Corp – slide 21
    Anadarko Basin Cana-Woodford Accelerating Activity Cana-Woodford Overview: Net acreage: 280,000 Stacked-pay potential 200,000 net acres in oil and liquids window Q3 2014 net production: 71 MBOED Production increased 25% YoY Oil…
  22. Jefferies Global Energy Conference – Devon Energy Corp – slide 22
    Raising Cana-Woodford Type Curve Liquids-Rich Core EURs (MMBOE) 30-Day IP Rates (BOED) 1.7 1,200 1.4 920 Previous Revised Cost Per Well (MM) 8.0 8.2 Previous Revised Previous Revised
  23. Jefferies Global Energy Conference – Devon Energy Corp – slide 23
    Rockies Oil Powder River Basin Net acreage: 150,000 Stacked oil targets (Parkman, Turner, Frontier & others) Activity focused on repeatable Parkman formation Six high-rate development wells in Q3 30-day IP rate: 1,080 BOED (85%…
  24. Jefferies Global Energy Conference – Devon Energy Corp – slide 24
    Innovative Midstream Combination EnLink Midstream Overview Devon retains majority ownership General partner (ENLC 70%) MLP (ENLK 52%) EnLink transaction highly accretive to shareholders Market value of Devons EnLink…
  25. Jefferies Global Energy Conference – Devon Energy Corp – slide 25
    Why Own Devon A leading North American E&P Focused and balanced portfolio Oil driving production growth Expanding margins Strong financial position Accelerating activity NYSE: DVN www.devonenergy.com Slide 26
  26. Jefferies Global Energy Conference – Devon Energy Corp – slide 26
    Thank You
  27. Jefferies Global Energy Conference – Devon Energy Corp – slide 27
    Appendix A Strategy & Operations
  28. Jefferies Global Energy Conference – Devon Energy Corp – slide 28
    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…
  29. Jefferies Global Energy Conference – Devon Energy Corp – slide 29
    Non-Core Asset Sales Sharpening The Focus Sold Canadian conventional business for C3.125 billion US2.8 billion (after foreign exchange) Accretive transaction: 7 times 2013 EBITDA Closed April 1, 2014 Sold U.S. non-core assets…
  30. Jefferies Global Energy Conference – Devon Energy Corp – slide 30
    2014 E&P Capital Program Delivering Strong Oil Growth 2014 E&P Capital Budget E&P Capital % of 5.0 - 5.4 Billion(1) Spent (B)(1) Budget 2% 5% Q1 2014 1.2 23% 5% Q2 2014 1.3 23% 7% 28% Q3 2014 1.3 25% Sept YTD 3.8 72% 11%…
  31. Jefferies Global Energy Conference – Devon Energy Corp – slide 31
    Permian Basin Overview 2014 Focus Areas NEW MEXICO OKLAHOMA Net acreage: 1.3 million basin-wide with stacked-pay potential New Mexico Texas TEXAS Q3 2014 net production: 98 MBOED Eastern Northwestern (60% oil) Midland…
  32. Jefferies Global Energy Conference – Devon Energy Corp – slide 32
    Permian Basin Midland-Wolfcamp Shale Oil Development Net acreage: 122,000 Low-risk, high-margin light oil play Thick pay with multiple intervals (up to 1,100) Reagan Irion Q3 2014 net production: 15 MBOED (150% higher…
  33. Jefferies Global Energy Conference – Devon Energy Corp – slide 33
    Pike Overview SAGD Oil Development Jackfish Pike 1 Development Pike leasehold Area 50% operated working interest Similar reservoir characteristics to Jackfish Up to five 35 MBOPD SAGD Pike development phases Potential Pike…
  34. Jefferies Global Energy Conference – Devon Energy Corp – slide 34
    Lloydminster Oil Development Iron River Net acreage: 700,000 Manatokan Low-risk development Strong operating margins End Lake Q3 2014 net production: 31 MBOED 2014 plans: 150 wells Lloydminster Alberta Lloydminster…
  35. Jefferies Global Energy Conference – Devon Energy Corp – slide 35
    Mississippian-Woodford Trend Emerging Oil Opportunity OKLAHOMA Net acres to DVN in JV area: 180,000 TEXAS Drilling activity focused on joint venture acreage Multiple oil-bearing intervals Q3 2014 net production rate: 21,000…
  36. Jefferies Global Energy Conference – Devon Energy Corp – slide 36
    Barnett Shale Liquids-Rich Gas Development Jack Wise Denton Net acreage: 625,000 Denton Low average royalty burden: 18% Q3 2014 net production: 1.2 BCFED Palo Pinto Parker DRY GAS Liquids 27% of total production LIQUIDS-RICH…
  37. Jefferies Global Energy Conference – Devon Energy Corp – slide 37
    Anadarko Basin Granite Wash Net acreage: 66,000 Legacy land position held by production Low average royalty burden: 19% Hemphill Q3 2014 net production: 21 MBOED Wheeler Granite Wash OKLAHOMA Oklahoma City…
  38. Jefferies Global Energy Conference – Devon Energy Corp – slide 38
    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: 280 million (9/30/14) Sinopec receives 33% of Devons…
  39. Jefferies Global Energy Conference – Devon Energy Corp – slide 39
    Potential Drop Down Assets Access & Victoria Express Pipelines Access Pipeline Victoria Express Pipeline JACKFISH & PIKE Colorado Gonzales 16 Diluent Line Lavaca Wharton (Edmonton to Jackfish Area) 24 Diluent Line DeWitt…
  40. Jefferies Global Energy Conference – Devon Energy Corp – slide 40
    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…
  41. Jefferies Global Energy Conference – Devon Energy Corp – slide 41
    Attractively Hedged Oil Hedges 60% of oil production hedged (Q4 2014) 75 MBOPD swapped at 94 per BBL 65 MBOPD collared at 89 - 100 per BBL 50 MBOPD WCS basis swapped at 17 off WTI 138 MBOPD of oil production hedged in 2015 107…
  42. Jefferies Global Energy Conference – Devon Energy Corp – slide 42
    Appendix B Supply & Demand
  43. Jefferies Global Energy Conference – Devon Energy Corp – slide 43
    Canadian 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 Clipper -…
  44. Jefferies Global Energy Conference – Devon Energy Corp – slide 44
    Canadian Oil Pipeline Capacity Additions Flanagan South: Flanagan to USGC Capacity: staged increments up to 0.6 MMBOPD Estimated in service: Q4 2014 Kitimat Alberta Clipper/Southern Access: Hardisty to Flanagan Capacity: staged…
  45. Jefferies Global Energy Conference – Devon Energy Corp – slide 45
    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…
  46. Jefferies Global Energy Conference – Devon Energy Corp – slide 46
    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…
  47. Jefferies Global Energy Conference – Devon Energy Corp – slide 47
    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:…
  48. Jefferies Global Energy Conference – Devon Energy Corp – slide 48
    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:…
  49. Jefferies Global Energy Conference – Devon Energy Corp – slide 49
    U.S. Natural Gas Annual Industrial Demand 25 22.5 22.9 22.1 22 21.1 21.5 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…
  50. Jefferies Global Energy Conference – Devon Energy Corp – slide 50
    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,…
  51. Jefferies Global Energy Conference – Devon Energy Corp – slide 51
    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,…
  52. Jefferies Global Energy Conference – Devon Energy Corp – slide 52
    Natural Gas Liquids Supply Estimated Ethane Rejection U.S. NGL Supply by Component (MMBPD) 2.0 4.5 Ethane Extraction Ethane Rejection 4.0 1.5 3.5 MMBPD 3.0 1.0 2.5 2.0 0.5 1.5 1.0 0.0 0.5 Jan-10 Jan-11 Jan-12 Jan-13…
  53. Jefferies Global Energy Conference – Devon Energy Corp – slide 53
    U.S. Natural Gas Liquids Demand U.S. NGL Demand Petchem Other End Use Refinery/Blender Exports 5.0 4.5 4.3 4.1 3.9 3.9 4.0 3.8 3.6 3.7 3.5 3.5 3.2 3.2 3.3 3.0 3.0 MMBPD 2.5 2.0 1.5 1.0 0.5 0.0 Q1 Q2 Q3 Q4…
  54. Jefferies Global Energy Conference – Devon Energy Corp – slide 54
    Natural Gas Liquids Demand LPG and Ethane Exports 1600 Exports of Propane 1400 Exports of Butane Exports of Ethane LPG (Propane & Butane) Export Capacity 1200 LPG + Ethane Export Capacity 1000 MBPD 800 600…
  55. Jefferies Global Energy Conference – Devon Energy Corp – slide 55
    Natural Gas Liquids Cracking Rates & Inventories U.S. Ethane Cracking Rates U.S. Ethane Inventories 5 Yr. High/Low 2014 2013 5 Yr Avg. 5 Yr. High/Low 2014 2013 5 Yr. AVG. 1.3 45 40 1.1 35 MMBbl MMBbl 30 0.9 25 0.7 20…
  56. Jefferies Global Energy Conference – Devon Energy Corp – slide 56
    Appendix C Key Modeling Statistics
  57. Jefferies Global Energy Conference – Devon Energy Corp – slide 57
    Key Modeling Statistics Based on 2014 Drilling Program Bone Spring (Permian Basin) Midland-Wolfcamp Shale (Permian Basin) Working interest / royalty: 71% / 21% Working interest / royalty: 69% / 24% Drill & complete costs: 6 - 7 MM…
  58. Jefferies Global Energy Conference – Devon Energy Corp – slide 58
    Key Modeling Statistics Based on 2014 Drilling Program Eagle Ford (DeWitt County) Eagle Ford (Lavaca County) Working interest / royalty: 48% / 25% Working interest / royalty: 81% / 22% Drill & complete costs: 9 - 10 MM Drill &…
  59. Jefferies Global Energy Conference – Devon Energy Corp – slide 59
    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%…
  60. Jefferies Global Energy Conference – Devon Energy Corp – slide 60
    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 - 8.5 MM Drill & complete costs: 3 -…

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