August Investor Presentation

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August Investor Presentation


  • 1. Investor PresentationAugust 2014

2. Investor NoticesSafe HarborSome of the information provided in this presentation includes forward-looking statements as defined by theSecurities and Exchange Commission. Words such as forecasts," "projections," "estimates," "plans,""expectations," "targets," and other comparable terminology often identify forward-looking statements. Suchstatements concerning future performance are subject to a variety of risks and uncertainties that could causeDevons actual results to differ materially from the forward-looking statements contained herein, including as aresult of the items described under "Risk Factors" in our most recent Form 10-K; and the items described under"Information Regarding Forward-Looking Estimates" in our Form 8-K filed August 6, 2014.Cautionary Note to InvestorsThe United States Securities and Exchange Commission permits oil and gas companies, in their filings with theSEC, to disclose only proved, probable and possible reserves that meet the SEC's definitions for such terms, andprice and cost sensitivities for such reserves, and prohibits disclosure of resources that do not constitute suchreserves. This presentation may contain certain terms, such as resource potential and exploration targetsize. These estimates are by their nature more speculative than estimates of proved, probable and possiblereserves and accordingly are subject to substantially greater risk of being actually realized. The SEC guidelinesstrictly prohibit us from including these estimates in filings with the SEC. Investors are urged to consider closelythe disclosure in our Form 10-K, available from us at Devon Energy Corporation, Attn. Investor Relations, 333West Sheridan, Oklahoma City, OK 73102-5015. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or from the SECs website at DVN Slide 2 3. Anadarko BasinSlide 3Devon TodaySharpening The FocusDevons Core & Emerging AssetsCoreEmergingHeavy OilRockies OilMississippian-WoodfordBarnett ShalePermian BasinEagle Ford Q2 2014 net production:620 MBOED(1) Oil & NGLs 60% of production by year-end Deep inventory of oil opportunities Top-tier Eagle Ford development High-quality Permian Basin position World-class heavy oil projects Upside potential in emerging plays Strong liquids-rich gas optionality EnLink ownership valued at $8 billion Additional midstream value in Accessand Victoria Express pipelines(1) Excludes assets sold or contracted to sell.NYSE: DVN 4. Second-Quarter 2014 Highlights(1) Excludes assets sold or contracted to sell.140120100806040200U.S. Oil Production Growth(1)Q2 2013 Q2 2014Net Production (MBOPD)71128Pre-Tax Cash Margin Per Boe(2) Completed portfolio transformation announcedlast year Closed on sale of Canadian gas business for $2.8 billion Added 50,000 net acres to Cana-Woodford play Contracted to sell U.S. non-core assets for $2.3 billion Delivered U.S. oil production growth of 79% YoY(1) Achieved excellent well results in the Delaware Basin Eagle Ford contributed full quarter of production Expanded pre-tax cash margin by 40% YoY Completed several major projects Jackfish 3 Access and Victoria Express pipelines$40.00$30.00$20.00$10.00(2) Pre-tax cash margin is defined as unhedged upstream revenues and midstream operating profit less LOE and production &property taxes, G&A and net financing costs, divided by BOE production.$21.82$30.47$0.00Q2 2013 Q2 2014 5. 2014 Production Growth Targets73124 - 1362013 2014eTotal Oil Production(1)(MBOPD)(1) Excludes assets sold or contracted to sell.2013 2014eNYSE: DVN Slide 5539579 - 6222013 2014eU.S. Oil Production(1)(MBOPD)BOE Production(1)(MBOED)U.S. Canada152198 - 2166:1 20:1 6. Accelerating Drilling ActivitySlide 6 Delaware Basin Currently: 12 operated rigs Expected by year-end 2015: up to 20 operated rigs Cana-Woodford Currently: 1 operated rig Expected by Q1 2015: 10 total rigs (op and non-op) Powder River Basin Currently: 3 operated rigs Expected by year-end 2014: 4 operated rigsNYSE: DVN 7. Slide 7Preliminary 2015 Outlook2014e 2015eOilNGLsNaturalGasTotal Oil Production(1)(MBOPD)Key Highlights On track to deliver 2015 oil productiongrowth >20%(1) Driven by Eagle Ford, Permian and Jackfish 3 Increased activity levels expected at Cana High-margin production growth expectedto expand operating margins Growing cash flow to comfortably fundcapital demands198 - 216(1) Excludes assets sold or contracted to sell. 8. Permian BasinDelaware Basin Delivering Outstanding ResultsBone Spring285,000 net acresSlide 8LovingWinklerWardReevesLeaEddyCentralNew MexicoTexasDelaware Sands80,000 net acresLeonard Shale60,000 net acresWolfcamp>100,000 net acresNEW MEXICO OKLAHOMATEXAS Activity focused on repeatable,high-impact Bone Spring Brought 22 wells online in Q2 30-day IP rate: 660 BOED Recent Delaware Sands success Two high-rate wells in Q2 30-day IP rate: 1,000 BOED (70% oil) Operated rig count: 12 2014 plans: Drill 150 wells 9. Delaware BasinSignificant Resource OpportunityNet RiskedAcresRisked WellsPer SectionGross RiskedUndrilledLocationsFormationNYSE: DVN Slide 92014eActivity(Wells Drilled)80,000 4 700 2060,000 5 700 1285,000 5 3,500 120>100,000 n/a UnderEvaluation 320,000 4 >200 4>500,000 >5,000 150Delaware SandsLeonard ShaleBone SpringWolfcampOther (Yeso & Strawn)Total 10. Delaware Basin UpsideEnhanced Completions & Tighter Spacing Evaluating larger, more focused frac designin the Delaware Basin Testing >2,000 lbs of proppant per lateral foot Delivering more complex fracturing network closerto the wellbore Potential to improve recovery of oil in place2,5002,0001,5001,000500- Pursuing tighter well spacing in Bone Spring intervalsProppant Per Lateral Foot Testing downspacing pilots with up to 8 wells per section Evaluating staggered lateral development scheme to further tighten well spacing Potential to significantly increase risked inventorySlide 10Current Design PilotPounds Per FootUp to 1,200>2,000 11. Permian BasinDelivering Significant Oil Production Growth60504030201002009 2010 2011 2012 2013 2014eNet Production (MBOPD)NYSE: DVN Slide 11 12. OKLAHOMASlide 12Eagle Ford OverviewWorld-Class Oil Asset Located in best part of Eagle Ford Net acreage: 82,000 Working interest: 50% Net revenue interest: 38% Q2 2014 net production: 65 MBOED 2014e net production: 70 80 MBOED(1) 57% Oil 19% NGLs 24% Gas Risked resource: 400 MMBOE Drilling inventory: 1,200 80% resides in DeWitt County 2014 capital: $1.1 billionKarnesDevon AcreageGonzalesDeWittLavacaTEXAS(1) Represents Devons average estimated net production from March through December. 13. Eagle Ford Production Results andOutlook2014 Results to Date(MBOED)70 80 (1)Slide 13736549March 2014 Q2 2014 June 2014Multi-Year Production Outlook(MBOED)>1002014e 2015e(1) Represents Devons estimated net production from March through December. 14. Lower Eagle Ford UpsideLavaca CountyPavlicek Un 2H24-Hr IP: 1,319 BOEDZebra Hunter 2H24-Hr IP: 1,511 BOEDZebra Hunter 3H24-Hr IP: 2,250 BOEDGonzalesRonyn 1H24-Hr IP: 1,585 BOEDDeWittPavlicek Un 5H24-HR IP: 1,411 BOEDWelhausen B 1H24-Hr IP: 1,446 BOEDLavacaDevons Lavaca County Net acres: 32,000 Significant upside potential Early results exceedingexpectationsLower Eagle Ford ActivityNYSE: DVN Slide 14IndustryDevon OperatedDevon acreage 15. Upper Eagle Ford PotentialDeWitt and Lavaca CountiesUpper Eagle Ford ActivityRecent Industry ResultsDevon Operated LocationDevon acreageOKLAHOMATEXASSustr #1H24-Hr IP: 1,054 BOEDFojtik #1H24-Hr IP: 1,209 BOEDMedina 2HDrillingTargac #1H24-Hr IP: 1,398 BOEDGonzalesMartinsen 2H24-Hr IP: 1,360 BOEDLavacaDeWittNet Pay (ft.)4035302520151050 Encouraging industry results Pay thickest in DeWitt County Spud first well in Q3 Additional test planned forlater this yearWelhausen A 2H24-Hr IP: 2,165 BOED 16. Heavy Oil DevelopmentsJackfish & PikeSlide 16Ft. McMurrayBRITISH ALBERTACOLUMBIAJackfish & PikeEdmontonCalgaryJackfish 1Jackfish 2Jackfish 3Access PipelineR8 R7 R6 R5 R4T76T75T74T73Jackfish Acreage (100% WI)Pike Acreage (50% WI)Access Pipeline(50% Ownership)Pike Project Area6 MilesSAGD Characteristics: Low F&D Low geologic risk Flat production profile Long reserve life >20 yearsEach SAGD Project: 300 MMBO gross EUR Proved reserves 12/31/13: 552 MMBO Risked resource: 1.4 BBO 17. Jackfish Heavy Oil DevelopmentsDelivering Visible Oil GrowthSlide 17Jackfish Complex: Q2 2014 production: Gross production: 60 MBOPD (52 MBOPD net) Delivering top-tier operating results at J1 Plant start-up began on July 13th at J3 Expect ramp-up to 35,000 MBOPD over next 18 months Provides visible multi-year oil growth beginningin 2015 Begins era of free cash flow generation fromJackfish complexNYSE: DVN 18. Jackfish Heavy Oil DevelopmentsSignificant Free Cash Flow Generation2014e 2015e 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025eAssumptions: 1) $90 WTI oil and $4.50 Henry Hub natural gas 2) Bitumen realizations at 65% of WTI 3) Non-fuel operating costs of $12 perbarrel 4) Free cash flow is after maintenance capital (average of $300 million per year) and before income tax.$1,200$1,000$800$600$400$200$0NYSE: DVN Slide 18$ in millionsFree Cash Flow Outlook 19. Slide 19Anadarko BasinCana-Woodford Acquisition & Upside Q2 2014 net production: 64 MBOED (>40% liquids) Workover activity yielding excellent results Acid treatments performed on 200+ wells Avg. rates per well increased 1 to 2+ MMCFED Payback period for treatment 100 additional future locations Improved completion design enhancing returns Acquired 50,000 net acres (closed June 2014) Directly overlaps existing leasehold Increases Cana position to 280,000 net acres Significant undrilled well inventory To