Barclays CEO Energy-Power Conferences2.q4cdn.com/462548525/files/doc...(Hager)-090717.pdf ·...

NYSE: DVNdevonenergy.com

Barclays CEO Energy-Power Conference

September 7, 2017

2| Investor Presentation

Investor Contacts & Notices

Investor Relations Contacts

Scott Coody, Vice President, Investor Relations

(405) 552-4735 / [email protected]

Chris Carr, Supervisor, Investor Relations

(405) 228-2496 / [email protected]

Forward-Looking Statements

This presentation includes "forward-looking statements" as defined by the Securities and Exchange Commission (the “SEC”). Such statements are subject to a variety of

risks and uncertainties that could cause actual results or developments to differ materially from those projected in the forward-looking statements. Please refer to the

slide entitled “Forward-Looking Statements” included in this presentation for other important information regarding such statements.

Use of Non-GAAP Information

This presentation may include non-GAAP financial measures. Such non-GAAP measures are not alternatives to GAAP measures, and you should not consider these non-

GAAP measures in isolation or as a substitute for analysis of our results as reported under GAAP. For additional disclosure regarding such non-GAAP measures, including

reconciliations to their most directly comparable GAAP measure, please refer to Devon’s most recent earnings release at www.devonenergy.com.

Cautionary Note to Investors

The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC's definitions for such

terms, and price and cost sensitivities for such reserves, and prohibits disclosure of resources that do not constitute such reserves. This presentation may contain certain

terms, such as resource potential, risked or unrisked resource, potential locations, risked or unrisked locations, exploration target size and other similar terms. These

estimates are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being

actually realized. The SEC guidelines strictly prohibit us from including these estimates in filings with the SEC. Investors are urged to consider closely the disclosure in our

Form 10-K, available at www.devonenergy.com. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or from the SEC’s website at www.sec.gov.

http://www.devonenergy.com/

http://www.devonenergy.com/

http://www.sec.gov/


A Leading North American E&P

STACK & DELAWARE POTENTIAL LOCATIONS>30,000

Multi-decade growth platform

STACK & Delaware focused

Best-in-class well productivity

Rapid cash flow expansion

Financial capacity to execute


Devon’s 2020 Vision

Advance STACK & Delaware activity

Monetize less competitive assets

Multi-billion dollar divestiture potential

Further high-grade asset portfolio

Expand per-unit margins Shift production to higher value products

Maximize margins by lowering cost structure

Improve balance sheet strength Divestiture proceeds to reduce debt

Net debt to EBITDA target: 1.0x – 1.5x

Focus on financial returns Deliver top-tier returns on invested capital

Return cash to shareholders


2017 Capital Program

Disciplined focus on value and returns

Ramping to ~20 rigs by year-end

Efficiencies YTD drive improved 2017 outlook

Visible funding for multi-year capital plan

U.S. Rig Activity

STACK &

DELAWARE

90%10%OTHER

ASSETS

2017e E&P CAPITAL

$100 MILLIONFROM PREVIOUS GUIDANCE

$1.9 - 2.2 Billion

For additional information see our Q2 operations report.


Rapidly Expanding High-Margin Production

Building operational momentum in 2017

Positioned for higher growth in 2018

Strong growth driven by STACK & Delaware

105

120

Q4 2016 1H 2017 2017e Exit Rate

+18 - 23%

U.S. Oil ProductionMBOD



Peer-Leading Cash Flow Expansion

Cost savings boost margins

Delivering peer-leading cash flow expansion

42%

52%

61% 61%~65%

2013 2014 2015 2016 Q4 2017e

$4.1$3.7

$2.8 ~$2.7

2014 2015 2016 2017e

2016 2017e

$ Billions

Upstream Cash Flow EnLink Distributions

(1) Assumes $50 WTI and $3 Henry Hub in 2017; excludes EnLink operating cash flow.

(2) 2016 excludes $150 million of cash flow associated with divestiture assets and

includes $265 million of cash associated with debt repayments.

$0.9(2)

>$2.5(1)

Liquids % of Total Product Mix

Operating Costs and G&A ($ Billions)

Shifting to higher-value production

INCREASE>175%

>30% IMPROVEMENT

~55% PRODUCT SHIFT


Financial Capacity To Execute

Investment-grade credit ratings

Disciplined hedging program

Significant investment in EnLink Midstream

$1 billion divestiture program underway

Additional multi-billion dollar divestiture potential

INVESTMENT-GRADEcredit ratings

Excellent Liquidity(Cash: $2.4 billon)

EnLink Investment(Market value: ~$3.5 billion)

DisciplinedHedging

PROTECTING OUR ABILITY TO EXECUTE


Operational Excellence

Maximize base production

Minimize controllable downtime

Enhance well productivity

Leverage midstream operations

Control operating costs

Optimize capital program

Disciplined project execution

Perform premier technical work

Focus on development drilling

Increase capital efficiency

CaptureFULL VALUE

ImproveRETURNS


Best-In-Class Well Productivity

Avg. 90-Day Wellhead IPsBOED, 20:1

200

400

600

800

1,000

Top 30 U.S. Producers

Source: IHS/Devon. Top operators with more than 40 wells over the trailing 12-months.

DEVON WELL ACTIVITY(Since 2012)

>450%I M P R O V E M E N T


Efficiencies Offsetting Industry Inflation

Completely offset industry inflation

Significant efficiency gains in STACK & Delaware

Innovative supply-chain initiatives

— Unbundling historical, high-margin services

— Utilizing diversified vendor universe

Supply chain savings reach 15% YTD

SUPPLY CHAIN SAVINGS ACHIEVED YTD

15%



Devon’s Technology Leadership

Culture of embracing technology

Industry leader in deploying advanced analytics

Contributing to best-in-class performance

Technology revolution still in early stagesBillion dollar-plus annual prize

Targeting hundreds of millions

in value creation annually


Devon’s Technology Leadership

SUBSURFACE

Improved 3D seismic

interpretation/integration

High-graded location selection

Optimized landing zones

Well productivity predictions

Depletion analysis

Geospatial optimization

Cutting-edge frac modeling

DRILLING & COMPLETIONS

Cyber-geosteering

~99% time in zone

Fiber-optic sensing

Screen-out prediction

Prolonged drill-bit life

Coiled-tubing drill-outs

Efficient flowbacks

PRODUCTION OPERATIONS

Predictive pump failures

Field issue prioritization

Faster response times

Optimized compressors

2% annual production uplift

In D&C costs across

key plays since 2014

>40% IMPROVEMENTIn 90-day well productivity

since 2012 (peer leading)>450% INCREASE

To annual base production

($100 million benefit annually)2% UPLIFT

BOTTOM LINE IMPACT FROM OPERATIONAL EXCELLENCE INITIATIVES


Multi-Zone Manufacturing

Multi-Zone Development – Full Section Development concept in STACK & Delaware

The next frontier of efficiency gains

Benefits of multi-zone manufacturing

— LOE and capital efficiencies

— Simultaneous operations

— Increase recoveries

— Optimize surface facilities

— Short cycle times >40%NP V UP L I FT

MULTI-ZONE

MANUFACTURING



STACK – Franchise Growth Asset

Drilling Unit

World-class resource opportunity

670K net acres by formation

Up to 4 target intervals per unit

Accelerating multi-zone activity

Canadian

Kingfisher

Blaine

Caddo

Upcoming Development

CoyoteQ1 2018 Spud (~10 wells)

ShowboatQ3 2017 Spud (~25 wells)

B-HardtMid-2018 Spud (10-15 wells)

JacobsQ4 2017 Spud (40-50 wells)

HorseflyQ1 2018 Spud (10-15 wells)


STACK – Multi-Decade Growth Platform

Best-in-class well results

Advantaged cost structure

Strong production growth

Tremendous resource potential

143

STACK Avg. 90-Day Wellhead IPs Per 1,000’ Lateral

BOED, 20:1

Peers

Note: 2016 to current state data. Peers include XEC, MRO, CLR and NFX.

70

>120

2014 2015 2016 2017e Exit Rate

>70%GROWTH

2014 to 2017e Exit Rate Production

MBOED

$5.30

$4.30~$4.00

2015 2016 2017e Exit Rate

2015 to 2017e LOE Decline

$/BOE

>11,000 POTENTIAL LOCATIONS

STACK RISKED LOCATIONS

>50% VS. PEER AVG.

25% IMPROVEMENT

5,700


Delaware Basin – Franchise Growth Asset

Massive acreage position in core of play

Stacked pay: 15 prospective intervals

Development activity building momentum

Production growth accelerates in 2H 2017

Lea

New Mexico

TexasRattlesnake

Thistle/GauchoCotton Draw

Todd

Potato Basin

Loving

Eddy

Core Development

Emerging

LusitanoExpected spud: Q3 2017

7 Wells

MedusaExpected spud: Q4 2017

20 Wells

BoomslangDrilling

11 Wells

AnacondaCompleting

10 Wells

SeawolfExpected spud: Q3 2017

12 Wells



Delaware Basin – Multi-Decade Growth Platform

Note: Graphic for illustrative purposes only and not necessarily

representative across Devon’s entire acreage position.

Basin Slope

DELA

WA

RE

SA

ND

S Madera

Lower

Brushy

LEO

NA

RD A

B

C

BO

NE

SP

RIN

G 1st

2nd

(Upper &

Lower)

3rd

WO

LFC

AM

P

X/Y

A, B, C

& DRisked Location Unrisked Location

1 Section 1 Section

>4

,00

0’

OF

PA

Y

6,500

>1.3 MM

RISKED LOCATIONS

NET EFFECTIVE ACRES


STACK & Delaware: A Prolific Growth Engine

142

149

161

>185

Q4 2016 Q1 2017 Q2 2017 2017e Exit Rate

STACK & Delaware Basin ProductionMBOED

>30% GROWTHYear over year


A Leading North American E&P

STACK & DELAWARE POTENTIAL LOCATIONS>30,000

Multi-decade growth platform

STACK & Delaware focused

Best-in-class well productivity

Rapid cash flow expansion

Financial capacity to execute

Thank you.

Thank you. For additional information see our

Q2 Operations Report


Forward-Looking Statements

This presentation includes "forward-looking statements" as defined by the SEC. Such statements include those concerning strategic plans, expectations and objectives

for future operations, and are often identified by use of the words “expects,” “believes,” “will,” “would,” “could,” “forecasts,” “projections,” “estimates,” “plans,”

“expectations,” “targets,” “opportunities,” “potential,” “anticipates,” “outlook” and other similar terminology. All statements, other than statements of historical facts,

included in this presentation that address activities, events or developments that the company expects, believes or anticipates will or may occur in the future are

forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company.

Statements regarding our business and operations are subject to all of the risks and uncertainties normally incident to the exploration for and development and

production of oil and gas. These risks include, but are not limited to: the volatility of oil, gas and NGL prices; uncertainties inherent in estimating oil, gas and NGL

reserves; the extent to which we are successful in acquiring and discovering additional reserves; the uncertainties, costs and risks involved in exploration and

development activities; risks related to our hedging activities; counterparty credit risks; regulatory restrictions, compliance costs and other risks relating to governmental

regulation, including with respect to environmental matters; risks relating to our indebtedness; our ability to successfully complete mergers, acquisitions and divestitures;

the extent to which insurance covers any losses we may experience; our limited control over third parties who operate our oil and gas properties; midstream capacity

constraints and potential interruptions in production; competition for leases, materials, people and capital; cyberattacks targeting our systems and infrastructure; and

any of the other risks and uncertainties identified in our Form 10-K and our other filings with the SEC. Investors are cautioned that any such statements are not

guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-

looking statements in this presentation are made as of the date of this presentation, even if subsequently made available by Devon on its website or otherwise. Devon

does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.

NYSE: DVNdevonenergy.com

Appendix


Cash-Flow Generating Assets

30%EAGLE FORD

20%BARNETT

15%ENLINK

$2B>CASH FLOW

2017e

35%HEAVY OIL

(1) Represents field-level cash flow before G&A and taxes

(1)

HEAVY OIL

BARNETT

EAGLE FORD


Rockies – An Emerging Oil Growth Asset

Premier Powder River Basin position

— Q2 net production: 18 MBOED (80% oil)

— 470,000 net surface acres

Stacked pay: >10 prospective intervals

Running 2 operated rigs

POWDER RIVER BASIN ACTIVITY


STACK Resource

STACK RESOURCE

FORMATION WINDOW NET ACRESGROSS RISKED

LOCATIONS

GROSS UNRISKED

LOCATIONS

MeramecOver-Pressured Oil 130,000 1,700 3,000

Liquids-Rich Gas 150,000 TBD >1,000

280,000 1,700 >4,000

WoodfordCondensate Corridor 135,000 2,000 3,800

Liquids-Rich & Dry Gas 170,000 2,000 3,000

305,000 4,000 6,800

NW Exploration 85,000 TBD >1,000

Total 670,000 5,700 >11,000


Delaware Basin Resource

DELAWARE BASIN RESOURCE

FORMATIONNET EFFECTIVE

ACRES

GROSS RISKED

LOCATIONS

GROSS UNRISKED

LOCATIONS

Delaware Sands 160,000 600 1,500

Leonard Shale 160,000 1,000 3,500

Bone Spring 530,000 3,200 6,000

Wolfcamp 460,000 1,500 8,500

Other (Yeso & Strawn) 20,000 200 1,000

Total >1,300,000 6,500 >20,000


Hedge Position – As of 7/27/17

OIL DERIVATIVES

SWAPS COLLARS COMBINED

PERIODVOLUME

(MBPD)

WEIGHTED

AVG. PRICE

($/BBL)

VOLUME

(MBPD)

WEIGHTED AVG.

FLOOR PRICE

($/BBL)

WEIGHTED AVG.

CEILING PRICE

($/BBL)

PERIOD VOLUME

(MBPD)

PROTECTED

PRICE

Q3-Q4 2017 78.9 $54 69.8 $46 $58 2017 148.7 $50

Q1-Q4 2018 15.3 $51 22.4 $46 $56 2018 37.7 $48

NATURAL GAS DERIVATIVES

SWAPS COLLARS COMBINED

PERIODVOLUME

(MMBTU/D)

WEIGHTED

AVG. PRICE

($/MMBTU)

VOLUME

(MMBTU/D)

WEIGHTED AVG.

FLOOR PRICE

($/MMBTU)

WEIGHTED AVG.

CEILING PRICE

($/MMBTU)

PERIOD VOLUME

(MMBTU/D)

PROTECTED

PRICE

Q3-Q4 2017 237.5 $3.24 437.5 $3.03 $3.42 2017 675 $3.10

Q1-Q4 2018 120.1 $3.13 87.0 $3.09 $3.41 2018 207 $3.11


Significant Financial Strength

$5.4 billion of liquidity (credit facility matures in 2019)

No significant near-term debt maturities

Liquidity$ Millions

2017 2018 2019 2020 2021

$20

$95$162

$500

$0

$200

$400

$600

$800

$1,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Debt Maturities – Next 5 Years6/30/17, $ Millions

Liquidity

Credit

Facility

Cash

$5,400


Johnson County Divestiture Package

Massive position in core of the Barnett

— Net acres: 610,000

— Q2 net production: 155 MBOED (27% liquids)

Pursuing divestiture for Johnson County area

— 20% of Devon’s Barnett position

— Data room: open in Q3 2017

Wise

Parker

Hood

Tarrant

Ft. Worth

Denton

Denton

Johnson

Divest Area

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