Investor Presentation January 2017 NYSE: DVN devonenergy.com - PowerPoint PPT Presentation

Investor Presentation January 2017 NYSE: DVN devonenergy.com

Investor Contacts & Notices Investor Relations Contacts Scott Coody, Vice President, Investor Relations (405) 552-4735 / scott.coody@dvn.com Chris Carr, Supervisor, Investor Relations (405) 228-2496 / chris.carr@dvn.com 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. 2

Devon Today A Leading North American E&P Retained Asset Production Heavy Oil Key Messages Q3 2016: 550 MBOED  Premier asset portfolio Gas  Focused in STACK and Delaware Basin Oil 38% Rockies Oil 45%  Delivering best-in-class results NGL 17%  Disciplined capital allocation driven by STACK value and returns Delaware Basin Barnett Shale  Significant financial strength Eagle Ford 3

Approach To The Current Environment  Achieve additional operating cost savings  Further increase capital productivity  Focused on value and returns  Accelerate activity in STACK and Delaware Basin  Preserve continuity in other U.S. resource plays  Invest directionally within cash flow  Divestiture proceeds enhance strength 4

Operating Strategy For Success  Maximize base production  Optimize capital program — Minimize controllable downtime — Disciplined project execution — Enhance well productivity — Perform premier technical work — Leverage midstream operations — Focus on development drilling — Reduce operating costs — Reduce capital costs 5

Significant LOE Savings  Achieving significant operating cost savings LOE Peak 2015 cost to Q3 2016 — Improved water and electrical infrastructure — Labor and supply chain expense declining LOE I M P R O V E M E N T $ Millions $562 $510 $480 $444 $416 $355 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 6

Consistent Productivity Gains  D&C costs reduced by up to 40% D&C Costs Decline Peak cost to Q3 2016 ― Driven by efficiencies and supply chain costs UP TO ― More than offsetting larger completions S A V I N G S  G&A savings to reach $400 million in 2016 ― 44% improvement from early 2015 Devon’s Avg. 90 -Day Wellhead IPs BOED, 20:1  Well productivity at record levels 600 ― Per well rates have risen by 250% 450 300 ― Driven by U.S. resource plays ≈250% 150 INCREASE 0 2012 2013 2014 2015 7

Delivering Best-In-Class Well Results Avg. 90-Day Wellhead IPs BOED, 20:1 600 450 300 150 0 Top U.S. Producers Source: IHS/Devon. Operators with more than 100 wells in 2015.  Devon delivered best well results of any U.S. producer  Key drivers of success: — Enhanced completion designs and improved well placement — Development drilling focused in top resource plays 8

Preliminary 2017 & 2018 Outlook Accelerating Activity Rig Activity – U.S. Resource Plays  Potential for 15-20 operated rigs in 2017 Operated Rigs — Focused in STACK and Delaware Basin 40 BY YEAR END 2017 RIGS — Invest directionally within cash flow 30 RIGS BY YEAR END 2016 20  Preliminary 2017 production targets (1) RIGS AT 9/30 10 — Double-digit U.S. oil growth 0 — Low to mid-single digit BOE growth 2015 2016 2017 2015 2016 2017e  Stronger growth expected in 2018 2017e — At $60 WTI cash flow expands by >200% from 2016 levels U . S . O I L G R O W T H (1) — Expect >30% STACK & Delaware top-line growth (1) Growth rates compared to Q4 2016. 9

Significant Financial Strength  Investment-grade balance sheet Adjusted Net Debt (1) 9/30/16 vs. 12/31/15  Adjusted net debt reduced 45% from 2015 (1) ― $2.5 billion of repayments and tenders ― Minimal debt maturities until mid-2021 D E C L I N E  Active hedging program protects cash flow ― A third of production hedged in 2017 ― Targeting ≈50% of production (1) Adjusted net debt is a non-GAAP measure. See Q3 2016 earnings release for reconciliation. 10

Advantaged Midstream Business EnLink Overview  Devon’s equity ownership interest ― 24% of MLP (ENLK: 95 million units) ― 64% of GP (ENLC: 115 million units) BILLION DVN’S ENLINK OWNERSHIP  Eliminates midstream capital requirements MARKET VALUE JANUARY 2017  Improves midstream growth potential  Provides visible cash flow stream ― Annual distributions: ≈$270 million 11

STACK Best-In-Class Position  World-class development opportunity Atoka Penn. Morrow — 430,000 net surface acres Springer Meramec – Core Area Kingfisher — Top targets: Meramec & Woodford Chester Dewey Mississippian Blaine — Q3 net production: 92 MBOED Meramec  Acreage concentrated in core of play Osage Woodford Devonian Custer  Provides visible long-term growth Hunton STACK Play Canadian  Accelerating activity Woodford – Core Area — Up to 6 operated rigs by year end — Drilling focused in Meramec formation Caddo — 2016 capital ≈$450 million 12

STACK A Multi-Decade Growth Opportunity Largest leasehold position of any operator Tremendous resource potential STACK Acreage STACK DRILLING INVENTORY Net Surface Acres 430,000 265,000 203,000 183,000 115,000 110,000 92,000 86,000 RISKED LOCATIONS Peers Source: Company and industry reports. Advantaged cost structure Strong production growth STACK Unit LOE STACK Production 92 $/BOE MBOED $6.24 67 38% $4.43 35% $4.14 $4.03 $3.95 INCREASE IMPROVEMENT Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q3 2015 Q3 2016 13

Meramec Results Validate Core Position Kingfisher  Favorable characteristics of Pony Express 27-1H Scheffler 1H-9X Born Free Staggered Pilot 30-Day IP: 2,100 BOED 30-Day IP: 2,000 BOED core oil window: 30-Day IP: 2,200 BOED Blaine Blurton 1-7-6XH Dewey Maybel 1H-13X 30-Day IP: 1,800 BOED 1. Attractive reservoir properties 30-Day IP: 1,900 BOED Marmot 19-1HX 30-Day IP: 2,600 BOED Pump House 7-well Pattern 2. Strong flow rates due to high 30-Day IP: 2,100 BOED Blue Ox 3130 -4AH 30 -Day IP: 3,200 BOED pressure gradients Cows Face 0805-4AH 30-Day IP: 2,200 BOED Compton 1-2-35XH Custer 30-Day IP: 2,200 BOED 3. Oil-weighted production Stiles 1407 2-4MH Parker 1-33H 30-Day IP: 1,900 BOED Canadian 30-Day IP: 2,000 BOED  Record-setting well Wort 1-21H Boomer 31-2AH Meramec Core Alma 5-Well Pilot 30-Day IP: 2,400 BOED 30-Day IP: 2,300 BOED Q3 2016 Wells 30-Day IP: 1,400 BOED productivity in Q3 2016 Liquids Over Normal Dry Gas Play Windows Rich Pressured Pressured Oil Oil Pressure Gradient (psi/ft.) >0.75 0.75 – 0.6 0.7 – 0.45 0.45 or less 14

Meramec Extended-Reach Laterals To Enhance Productivity  Delivering industry-leading STACK results Meramec Over-Pressured Oil - 10,000’ Lateral Type Well — Meramec 30-day rates 50% above peers (1) 1,900 - 2,300 EXTENDED-REACH IP LATERALS 30-Day, BOED — Driven by legacy 5,000’ lateral design 1,600 - 2,000 EUR MBOE  Future development to leverage long laterals $7.5 - 9.0 D&C OF 2017e ACTIVITY $MM  Further enhances capital & well productivity  Represents ≈ 60% of planned activity in 2017 (1) Productivity per 1,000’ lateral. See Devon’s Q3 2016 operations report for additional detail. 15