Dvn august-investor-presentation

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  • NYSE:DVNdevonenergy.com

    BusinessUpdate

    August2016

  • InvestorContacts&Notices

    2

    InvestorRelationsContactsHowardJ.Thill,SeniorVicePresident,Communications&InvestorRelations(405)5523693/howard.thill@dvn.com

    ScottCoody,Director,InvestorRelations(405)5524735/scott.coody@dvn.com

    ChrisCarr,Supervisor,InvestorRelations(405)2282496/chris.carr@dvn.com

    ForwardLookingStatementsThispresentationincludes"forwardlookingstatements"asdefinedbytheSecuritiesandExchangeCommission(theSEC).Suchstatementsaresubjecttoavarietyofrisksanduncertaintiesthatcouldcauseactualresultsordevelopmentstodiffermateriallyfromthoseprojectedintheforwardlookingstatements.PleaserefertotheslideentitledForwardLookingStatementsincludedinthispresentationforotherimportantinformationregardingsuchstatements.

    UseofNonGAAPInformationThispresentationmayincludenonGAAPfinancialmeasures. SuchnonGAAPmeasuresarenotalternativestoGAAPmeasures,andyoushouldnotconsiderthesenonGAAPmeasuresinisolationorasasubstituteforanalysisofourresultsasreportedunderGAAP. ForadditionaldisclosureregardingsuchnonGAAPmeasures,includingreconciliationstotheirmostdirectlycomparableGAAPmeasure,pleaserefertoDevonsmostrecentearningsreleaseatwww.devonenergy.com.

    CautionaryNotetoInvestorsTheSECpermitsoilandgascompanies,intheirfilingswiththeSEC,todiscloseonlyproved,probableandpossiblereservesthatmeettheSEC'sdefinitionsforsuchterms,andpriceandcostsensitivitiesforsuchreserves,andprohibitsdisclosureofresourcesthatdonotconstitutesuchreserves.Thispresentationmaycontaincertainterms,suchasresourcepotential,riskedorunriskedresource,potentiallocations,riskedorunriskedlocations,explorationtargetsizeandothersimilarterms. Theseestimatesarebytheirnaturemorespeculativethanestimatesofproved,probableandpossiblereservesandaccordinglyaresubjecttosubstantially greaterriskofbeingactuallyrealized. TheSECguidelinesstrictlyprohibitusfromincludingtheseestimatesinfilingswiththeSEC.InvestorsareurgedtoconsidercloselythedisclosureinourForm10K,availableatwww.devonenergy.com.YoucanalsoobtainthisformfromtheSECbycalling1800SEC0330orfromtheSECswebsiteatwww.sec.gov.

  • DevonTodayALeadingNorthAmericanE&P

    3

    KeyMessages

    Premierassetportfolio Focusedintoptierresourceplays

    Deepinventoryofopportunities

    Significantfinancialstrength

    Deliveringtoptierresults

    Disciplinedcapitalallocation

    HeavyOil

    RockiesOil

    BarnettShale

    STACK

    Oil44%

    NGL19%

    Gas37%

    RetainedAssetProductionForecasted2016:558 578MBOED

    DelawareBasin

    EagleFord

  • ApproachToTheCurrentEnvironment

    4

    Investwithincashflow

    Divestiturestoenhancefinancialstrength

    Achieveadditionaloperatingcostsavings

    Furtherincreasecapitalproductivity

    AccelerateactivityinSTACKandDelawareBasin

    PreservecontinuityinotherU.S.resourceplays

  • SuccessfulAssetDivestitureProgramEnhancingFinancialStrength

    5

    MidlandBasin$1.0BillionExpectedclose:Q32016

    SanJuanBasinUndisclosedValueClosed

    AccessPipeline$1.1BillionExpectedclose:Q32016

    GraniteWash$0.3BillionClosed

    Divestitureprogramcomplete

    Totalproceeds:$3.2billion

    E&Passetsales:$2.1billion

    Accesspipelinesale:$1.1billion

    Minimalcashtaxesexpected

    Majorityofproceedstoreducedebt

    Mississippian$0.2BillionClosed

    EastTexas$0.5BillionClosed

  • SignificantFinancialStrength

    6

    Investmentgradebalancesheet Adjustedcashbalance:$4.6billion(1)

    Undrawn$3billioncreditfacility

    Netdebt(2) reduced>45%fromearly2016

    Tenderoffersoutstandingtorepurchasedebt $1.2billionprogramunderway

    Targetingneartermmaturities$8.7

    $4.7

    Jan.2016 Current

    NetDebt(2)$Billions

    >45%DECLINE

    (1) CashbalanceadjustedforassetdivestituresthathaveclosedandthoseexpectedtocloseinQ32016.(2) NetdebtisanonGAAPmeasuredefinedastotaldebtlesscashandcashequivalentsand

    debtattributabletotheconsolidationofEnLinkMidstream.NetdebtisadjustedforassetdivestituresthathaveclosedandthoseexpectedtocloseinQ32016.

    PRO FORMA L IQUIDITYBILLION

  • AdvantagedMidstreamBusiness

    7

    Devonsequityownershipinterest 24%ofMLP(ENLK:95millionunits)

    64%ofGP(ENLC:115millionunits)

    Eliminatesmidstreamcapitalrequirements

    Improvesmidstreamgrowthpotential

    Providesvisiblecashflowstream Annualdistributions:$270million

    EnLinkOverview

    DVNS ENLINK OWNERSHIPBILLION

    MARKETVALUEAT6/30/16

  • OperatingStrategyForSuccess

    8

    Maximizebaseproduction

    Minimizecontrollabledowntime

    Enhancewellproductivity

    Leveragemidstreamoperations

    Reduceoperatingcosts

    Optimizecapitalprogram

    Disciplinedprojectexecution

    Performpremiertechnicalwork

    Focusondevelopmentdrilling

    Reducecapitalcosts

  • DeliveringBestInClassWellResults

    9

    DevondeliveredbestwellresultsofanyU.S.producerduring2015

    Keydriversofsuccess:

    Enhancedcompletiondesignsandimprovedwellplacement

    DevelopmentdrillingfocusedintopN.A.resourceplays

    0

    150

    300

    450

    600

    2015Avg.90DayWellheadIPsBOED,20:1

    0

    150

    300

    450

    600

    2012 2013 2014 2015 TopU.S.Producers

    Source: IHS/Devon.Operatorswithmorethan100wells.

    DevonsAvg.90DayWellheadIPsBOED,20:1

    250%INCREASE

  • AchievingSignificantCostSavings

    10

    D&CWellCostDeclinesPeakcosttoQ22016

    S A V I N G S

    DecliningD&Ccostsacrossportfolio

    Upto40%lowerthanpeakrates

    Drivenbyefficienciesandsupplychaincosts

    Morethanoffsettinglargercompletions

    Deliveringsignificantoperatingcostsavings

    LOEandG&Areduced>30%frompeaklevels

    Operatingcoststodeclineby$1billionin2016

    UP TO

    2015 2016e

    2016eFieldLevelOperatingCostsandG&A(1)$Billions

    $1BSAVINGS

    $3.7

    $2.7 $2.9

    LOE

    Prod.Taxes

    G&A

    (1)IncludescapitalizedG&A.

  • DisciplinedCapitalAllocationYieldingStrongResults

    11

    37%

    21%

    17%

    15%

    10%

    STACK

    DelawareBasin

    EagleFord

    HeavyOil

    Other

    2016E&PCapitalBudget$1.1Billion $1.3Billion

    CapitalprogramfocusedontopU.S.resourceplays

    AcceleratingactivityinSTACKandDelawareBasin

    Addingupto7operatedrigsbyyearend2016

    Preparingforfullfielddevelopmentin2017

    Raised2016productiontargets

    Drivenbystrongbaseproductionresults

    RetainedMidlandassetsboostU.S.oilguidance

    Positionedtostabilizeandgrowproductionbymid2017

  • StrongReturnsAtLowerPrices

    12

    IRRBTAX

    noG&A

    IRRATAX

    w/G

    &A

    OtherProperties

    AssetsinbestU.S.resourceplays

    Inventoryattractivelypositionedoncostcurve

    >10,000riskedlocationsinSTACKandDelaware

    Preparedtofurtheraccelerateactivity

    IncrementalWellEconomicsAt$50Oil&$2.50Gas

    DelawareBasinSTACK MeramecEagleFordRockies

    STACK WoodfordBarnett(hz.refracs)

    Note: ThecapitalcomponentoftheIRRcalculationincludesthecosttodrillandcompleteanincrementalwell.SeismicandG&Gcosts areexcludedfromthiscalculation.

    30%+

    30%to

    15%

    15%to

    0%

    20%+

    20%to

    10%

    10%to

    0%

  • STACKBestInClassPosition

    13

    Canadian

    Kingfisher

    Blaine

    Hunton

    Woodford

    Mississippian

    Chester

    Springer

    Morrow

    Devon

    ian

    Penn

    .

    Osage

    Atoka

    Meramec

    Custer

    Caddo

    Meramec BestResults Strongflowrates Oilweightedproduction Lowwellcosts

    Woodford CoreArea Repeatabledevelopment Highliquidsproduction

    STACKPlay

    Worldclassdevelopmentopportunity 430,000netsurfaceacres Toptargets:Meramec&Woodford Q2netproduction:91MBOED

    Acreageconcentratedincoreofplay Deepinventoryoflowriskprojects

    Acceleratingactivityin2H2016 Upto6operatedrigsbyyearend 2016capital$450million DrillingfocusedinMeramecformation

    Dewey

  • STACKAMultiDecadeGrowthOpportunity

    14

    Largestleaseholdpositionofanyoperator

    Advantagedcoststructure

    Strongproductiongrowth

    Significantresource

    430,000

    265,000203,000 171,000

    130,00083,000

    STACKAcreageNetAcres

    PeersSource:Companyreports.

    59

    91

    Q22015 Q32015 Q42015 Q12016 Q22016

    54%INCREASE

    STACKProductionMBOED

    $5.88 $5.96

    $4.42 $4.48$3.78

    Q22015 Q32015 Q42015 Q12016 Q22016

    36%IMPROVEMENT

    STACKFieldLevelOperatingCosts(1)$/BOE

    RISKED LOCATIONS

    STACKDRILLINGINVENTORY

    (1)IncludesLOEandproductiontaxes.

  • STACKMeramecResultsValidateCorePosition

    15

    OverPressuredOil

    LiquidsRich

    DryGasPlayWindows NormalPressuredOil

    PressureGradient(psi/ft.) >0.75 0.75 0.6 0.7 0.45 0.45orless

    OilWeightedProduction30DayIPs:60%oilEURs:40%oil

    Custer

    Dewey

    Canadian

    Kingfisher

    Blaine

    Favorablecharacteristicsofcoreoilwindow:

    1. Attractivereservoirproperties(thickness,permeability,porosity)

    2. Strongflowratesduetohighpressuregradients

    3. Returnsenhancedbyoilweightedproduction

    4. Lowwellcosts

    PonyExpress271H30DayIP:2,100BOED BornFreeStaggeredPilot

    30DayIP:2,200BOED

    Scheffler1H9X30DayIP:2,000BOED

    Sidney1H30DayIP:1,700BOED

    Blurton176XH30DayIP:1,800BOED

    Compton1235XH30DayIP:2,200BOED

    Alma5WellPilot30DayIP:1,400BOED Otto1H

    30DayIP:1,900BOED

    Parker133H30DayIP:2,000BOED

    Maybel1H13X30DayIP:1,900BOED

    CowsFace08054AH30DayIP:2,200BOED

    Stiles140724MH30DayIP