Professional Documents
Culture Documents
June 2013
Investor Notices
Safe Harbor Some of the information provided in this presentation includes forward-looking statements as defined by the Securities and Exchange Commission. Words such as forecasts," "projections," "estimates," "plans," "expectations," "targets," and other comparable terminology often identify forward-looking statements. Such statements concerning future performance are subject to a variety of risks and uncertainties that could cause Devons actual results to differ materially from the forward-looking statements contained herein, including as a result 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 February 20, 2013. Cautionary Note to Investors The United States Securities and Exchange Commission 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 and exploration target size. 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 from us at Devon Energy Corporation, Attn. Investor Relations, 333 West 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 www.sec.gov.
NYSE: DVN www.devonenergy.com Slide 2
Devon Today
Q1 2013 production: 687 MBOED Production mix: 24% oil 17% NGLs 59% natural gas Significant midstream business 2013e operating profit: $450 million Enterprise value: $30 billion
Rockies Oil
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Slide 3
Progress Report
First-Quarter Highlights
Total oil production increased 14% Permian Basin oil production up 24% Jackfish oil production up 18% Positive results in emerging oil plays Recent wells in Mississippian play >1,000 BOPD Promising high rate wells in the Rockies Added attractive oil and gas hedges for 2013 and 2014 Announced $2 billion repatriation of foreign cash to U.S.
Challenges
Transition to a higher oil-weighted production profile Near-term price realizations in North America
Slide 4
Devons Strengths
Disciplined focus on per share results Deep inventory of development opportunities Strong, highly-visible oil growth Significant positions in emerging oil plays Strong balance sheet
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Slide 6
Attractively Hedged
Oil Hedges
Q2-Q4 2013: 135 MBOPD at a protected price of $95 per BBL
(80% of forecasted oil production)
E&P capital projects Balancing resource capture and development Debt reduction Reduced net debt by 20% since 2003 Share repurchases Reduced net share count by 20% since 2004 Dividends Average annual increase of 24% since 2004
Note: Includes a non-GAAP measure, see appendix for required disclosures.
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Slide 8
Goal: Maximize return on investment Balance resource capture and resource development Current focus on high-margin oil opportunities Utilize joint ventures to recover exploration costs Maintain gas optionality
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7%
90%
2006
2007
2008
2009
2010
2011
2012
2013e
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OKLAHOMA
Texas
>8,000
Northwestern Shelf
Activity targeting several play types Expect 40% oil growth in 2013 29 operated rigs
Midland
Conventional
Diablo Platform
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Permian Basin
Bone Spring & Delaware
New Mexico
NW Shelf
Overview
Gaines Dawson
Net acreage: 210,000 Q1 2013 net production: 21 MBOED (65% oil) Low-risk, high-margin oil plays 12 operated rigs
Lea Eddy
Texas
Andrews
Martin
Doubled inventory over past year (1,300 locations) Bone Spring High impact wells (Best wells: IPs >1,000 BOED) Drilling depth: 8,000 10,500 Multi-year drilling inventory (700 2013 plans: Drill 100 wells
locations)
Midland
Loving Winkler Ector Midland
Ward
Crane
Upton
Reeves
Pecos
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Permian Basin
Central and Midland Basin Oil Opportunities
Midland-Wolfcamp Shale
New Mexico
Texas
Northwestern Shelf
Multi-year drilling inventory (800 locations) 2013 plans: Drill >100 wells (7 operated rigs) Wolfberry Net acreage: 160,000 (2013 plans: Drill 80 wells) Predominantly vertical development program Upside: Downspacing and Wolfcamp exploitation Other Conventional Activity Legacy position enhances full-cycle returns Exploiting Central Basin Platform oil targets
(Tubb, Wichita-Albany, Strawn, Clear Fork & others)
Midland
Conventional
Cline Shale Net acreage: 389,000 (2013 plans: Drill 30 wells) High-impact exploration opportunity Joint venture minimizes capital commitment
Mississippian Trend
Emerging Oil Opportunity
Kansas Oklahoma
Kay
Net risked resource: >800 MMBOE Risked locations: Net acreage: 600,000
(450,000 net acres outside of Sinopec JV)
Osage
>5,000
Grant
Devon/Sinopec JV Acreage
page 16
Low F&D Flat production profile Long reserve life >20 years Jackfish 1 Top-tier operating performance Q1 2013 net production: 33 MBOPD Initiated solvent and gas co-injection pilots Jackfish 2 Q1 2013 net production: 21 MBOPD Installing facilities for additional pad
Jackfish 3
Jackfish 3 Construction 60% complete Pike Up to five SAGD development phases Regulatory approval expected by year-end
www.devonenergy.com Slide 17
NYSE: DVN
2.70
370
Industry Average
Industry Average
Note: Industry average includes: Bolney-Celtic, Christina Lake, Firebag, Foster Creek, Great Divide, Hangingstone, Kerrobert, Leismer, Long Lake, MacKay River, MEG, Orion, Senlac, Surmont, Tangleflags, Tucker, and Wolf Lake. Source: FirstEnergy Capital and company disclosures
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Slide 18
54,000
Q1 2013
NYSE: DVN www.devonenergy.com Slide 19
2020
Increased refinery capacity for heavier crudes 260 MBOPD of incremental demand by 2H 2013
(Whiting)
Significant pipeline expansions Flanagan South & Seaway: 585 MBOPD by mid-2014 Keystone XL : 830 MBOPD by 2015 Energy East: Up to 850 MBOPD by 2017 Trans Mountain & Northern Gateway: 1.1 MMBOPD by 2018
(>200 MBOPD by end of 2013)
Conclusion: Incremental demand and infrastructure additions support improved oil differentials
NYSE: DVN www.devonenergy.com Slide 20
Dewey
Blaine
OKLAHOMA
TEXAS
Canadian
Q1 2013 net production: 340 MMCFED 26% growth year over year Oil & NGLs production: 23,000 BOED
(41% of total production)
Cana Plant
Washita
Expanding gas processing facility: 30 MBPD of NGL capacity Significant undrilled liquids-rich inventory 3,000 locations
Caddo
Grady
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Barnett Shale
Liquids-Rich Gas Development
Net risked resource:
Wise Denton
Jack
14 TCFE 5,000
Denton
Bridgeport Plant
DRY GAS
175,000 net acres
LIQUIDS-RICH
440,000 net acres Ft. Worth
Johnson
Liquids-rich drilling inventory: 2,500 locations Operated rig count: reduced to 5 in Q2 2013
Hill
TEXAS
www.devonenergy.com
Edmonton
Ownership in 62 plants
Cana Plant
Enhances margins by $2 per BOE 2013e operating profit: $450 million 2013e capital: $1 billion
NYSE: DVN Profitable
Barnett Plant
Inlet: 790 MMCFD* Liquids: 63 MBPD*
*Capacity after 2Q13 expansion
Considering several options including: Joint Ventures Asset sales Midstream MLP
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Slide 24
Announced June 6, 2013 MLP will initially own a minority interest in Devons U.S. midstream business Devon will own the general partner Devon will initially own a majority of the partnership units following the IPO Allows the market to establish an independent value for midstream business
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Slide 25
Disciplined focus on per share results Deep inventory of development opportunities World-class SAGD position Strong Permian Basin position Premier positions in Barnett & Cana Shale plays
Strong, highly-visible oil growth Significant positions in emerging oil plays Strong balance sheet
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Slide 26
Thank You.
Appendix A
Strategic Objective
Devon strives to maximize long-term value for our shareholders by growing cash flow per share, adjusted for debt.
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Slide 31
Portfolio Management
Goal: Optimize depth, diversity, and quality of drilling inventory Harvesting mature and lower return assets
(Since 2002 divested $18 billion of assets)
New leasehold capture (Since 2009 invested >$4 billion into leasehold capture and exploration) Joint ventures / farm-ins
(Closed $4.0 billion of joint ventures in 2012)
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Slide 32
Objective: Utilize partnerships in exploration Improves capital efficiency Accelerates de-risking and commercialization Mitigates exploration risk Flexibility to generate new prospects Preserves cash flow for development projects
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Net Acreage Position >4 million acres 209,000 acres 178,000 acres 170,000 acres 162,000 acres 109,000 acres 40,000 acres 37,000 acres
Washakie
Groesbeck Washakie
Arkoma Woodford
Groesbeck
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Natural Gas Play Canada Conventional Powder River Carthage Horn River Groesbeck Washakie Arkoma Woodford East Texas Unconventional
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Net Acreage Position >4 million acres 109,000 acres 209,000 acres 178,000 acres 170,000 acres 162,000 acres 40,000 acres 37,000 acres
Net Production Q1 2013 448 MMCFED 47 MMCFED 178 MMCFED 7 MMCFED 61 MMCFED 112 MMCFED 55 MMCFED 16 MMCFED
Slide 35
Proved Reserves 12/31/12 684 BCFE 19 BCFE 818 BCFE n/m 218 BCFE 446 BCFE 210 BCFE 54 BCFE
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Project Type
In-Situ Projects Mining Projects
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Slide 36
Pike leasehold
Jackfish
50% operated working interest Similar reservoir characteristics to Jackfish Up to five 35 MBOPD SAGD development phases
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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 Update 1st pilot program: Initiated in Q1 2013
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Slide 38
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 capital commitments
(30% of the capital required for traditional SAGD projects)
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Slide 39
200 mile dual pipeline from Edmonton to Devons thermal acreage Devon ownership: 50% Capacity net to Devon Blended bitumen: 105 MBOPD
(170 MBOPD after expansion in 2014)
Sturgeon Terminal
Condensate: 45 MBPD
(95 MBPD after expansion in 2014)
EDMONTON
Access to Edmonton condensate, synthetic crude and light oil markets HARDISTY Flexibility enhances economics
Express P/L
To U.S. Rockies www.devonenergy.com Slide 40
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Lloydminster
Oil Development
Iron River
60 MMBOE >1,000
Manatokan
End Lake
Lloydminster
Alberta
Lloydminster
B. C.
Sask.
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Slide 41
Ferrier
Emerging Liquids Opportunity
Net acreage: 240,000 Multiple target formations:
(Cardium oil, Viking, Glauconite, & Lower Cretaceous)
Phase 1 development: >200 drilling locations >1 MMBOE risked resource Liquids 50% of expected production
B. C. Alberta
Ferrier Corridor
Inlet capacity: 100 MMcfd Liquids: 13,000 Bbl/d Expected completion: Mid-2014
Sask.
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Granite Wash
Oil & Liquids-Rich Development
Net risked resource: Risked locations: Net acreage: 66,000 Legacy land position held by production
Hemphill
Granite Wash
TEXAS
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Slide 43
Sinopec receives 33% of Devons interest Net acreage in joint venture: 1.5 million
Rockies Oil Michigan Utica Ohio
Tuscaloosa Shale
Sumitomo receives 30% of Devons interest Net acreage in joint venture: 650,000 Devon serves as operator
Sinopec joint venture assets Sumitomo joint venture assets NYSE: DVN www.devonenergy.com
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Appendix B
Financial
Interest Rate 0.4% 5.6% 2.4% 1.9% 8.3% 6.3% 4.0% 3.3% 4.8% - 8.0%
$ In Millions $3,697 $500 $500 $750 $125 $700 $500 $1,000 $4,380 $12,152 $6,501 $5,651
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Q2-Q4 2013 750 MMCFD collared: $3.55 floor and $4.19 ceiling 988 MMCFD swapped at $4.09 FY 2014 140 MMCFD collared: $4.00 floor and $4.62 ceiling 763 MMCFD swapped at $4.40 500 MMCFD of call options sold at $5.00
Note: The pricing points referenced above are weighted average prices. NYSE: DVN www.devonenergy.com
Slide 47
Oil Hedges
Q2-Q4 2013 65 MBOPD collared: $90 floor and $112 ceiling 70 MBOPD swapped at $100 35 MBOPD swapped at a differential to WTI of $22 (WCS regional basis swaps) 10 MBOPD of call options sold at $120 FY 2014 10 MBOPD collared: $87 floor and $103 ceiling 21 MBOPD swapped at $95 41 MBOPD of call options sold at $116.30
Note: The pricing points referenced above are weighted average prices. NYSE: DVN www.devonenergy.com
Slide 48
WTI-Cushing Price $80.00 $90.00 $100.00 $5.0 $5.0 $5.1 $5.0 $5.1 $5.2 $5.3 $5.4 $5.5
Note: Operating cash flow assumes the mid-point of Devons full-year guidance for production, price differentials, and costs. For more details on Devons guidance see the form 8-K filed on February 20, 2013.
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Slide 49
2009 Operating Cash Flow Asset Sales / JV Proceeds Capital Expenditures 4.8 0.0 (5.4)
(0.6)
5.5
2.0
(1.7)
5.2
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Appendix C
2012
2013e
2014e
2015e
2016e
2017e
2018e
Current Export & Local Demand Capacity Flanagan South Trans Mountain Expansion Northern Gateway
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Canadian Oil
Pipeline Capacity Additions
Flanagan South: Chicago to USGC Capacity: 0.6 MMBOPD
Kitimat Edmonton Hardisty Canaport
Estimated in service by mid-2014 Keystone XL: Hardisty to USGC Capacity: 0.8 MMBOPD Estimated in service by 2015 Trans Mountain: Edmonton to Vancouver Incremental capacity: 0.6 MMBOPD Estimated in service by 2017 Energy East: Hardisty to Canaport Capacity: Up to 0.9 MMBOPD Estimated in service by mid-2017
U.S. Gulf Coast (USGC)
Vancouver
Chicago
Cushing
Northern Gateway: Edmonton to Kitimat Capacity: 0.5 MMBOPD Estimated in service by 2018
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Potential Rail Costs Oil Sands Trucking & Loading Rail Car Rental Transport Fee West Coast Refining East Coast Refining Offloading Fee
Heavy Oil
Refinery Expansions
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70 70
65
2013 Baseline
Industrial
Res/Com
Power
LNG Exports
2017e
Source: and company data NYSE: DVN Wood Mackenzie, EIA, Bentek, www.devonenergy.com
Slide 56
Potential Demand
2 0.8 0.5 2013e 0.7 2014e 1.0 2015e 2016e 2017e 2.6 3.0
Source: Platts, and company data NYSE: DVN Wood Mackenzie, CRA, NYMEX, www.devonenergy.com
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22 21 20 19 BCFD 18 17 16 15
2008
2009
2010
2011
2012
2013e
2014e
2015e
2016e
2017e
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Slide 58
Facility
Sabine Pass Freeport LNG Cameron Cove Point Jordan Cove Oregon LNG Lavaca Bay LNG
Developer(s)
Cheniere Freeport LNG Sempra Energy Dominion Fort Chicago LNG Development Co Excelerate
Location
Cameron, LA Freeport, TX Hackberry, LA Lusby, MD Coos Bay, OR Astoria, OR Floating LNG, Corpus Christi, TX Lake Charles, LA Corpus Christi, TX Brownsville, TX Port Arthur, TX
StartUp Date
4Q 2015 2016 2017 2017 2017 2017 2017
Approval FERC
Approved Filed Filed -----
Lake Charles Corpus Christi Gulf Coast LNG Golden Pass Others
-Filed ----
------
20 to 21.5
www.devonenergy.com
Facility
Douglas Channel Energy Kitimat LNG Goldboro LNG LNG Canada Pacific Northwest LNG BG Group LNG
Developer(s)
LNG Partners, Haisla Nation Apache, Chevron Pieridae Energy Shell, Mitsubishi, KOGAS, PetroChina Petronas, Japex BG Group
Location
Floating LNG, Kitimat, B.C. Kitimat, B.C. Nova Scotia Kitimat, B.C. Prince Rupert, B.C. Prince Rupert, B.C. CANADA TOTAL
Capacity (BCFD)
0.1 0.7 1.3 1.6 1.6 3.9* 9.2
Start-Up Date
2015 2018 2018 2019 2019 2020
* Announced pipeline capacity of 4.2 Bcf/d. Liquefaction estimated based on pipe capacity.
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