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

NYSE: DVN devonenergy.com

Investor Presentation

December 2017

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| Investor Presentation

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.

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Devon’s Competitive Advantage

STACK & DELAWARE POTENTIAL LOCATIONS

>30,000

Multi-decade growth platform

STACK & Delaware focused Top-tier operating results Innovative culture Significant financial strength

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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

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2017 Capital Program

• Disciplined focus on value and returns
• Capital program funded within cash flow
• Shifting to full-field development
• Efficiencies driving capital costs lower

For additional information see our Q3 operations report.

2 0 1 7 e E & P C A P I T A L

$2.0-2.1 Billion

U.S. Rig Activity

(~20 development rigs in Q4) STACK & DELAWARE

90%

10%

OTHER ASSETS

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Expanding High-Returning Oil Production

• Rapidly growing highest-value product
• Driven by STACK & Delaware Basin
• Building operational momentum into 2018

102(1) Q4 2016 2017e Q4 2017e

+~15%

(vs. Q4 16)

+~20%

(vs. Q4 16)

U.S. Oil Production

MBOD For additional information see our Q3 operations report.

(1) Adjusted for the sale of minor, non-core assets

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Preliminary 2018 Outlook

STACK & DEL AWARE

>30% Increase $2.0-2.5 Billion

2 0 1 8 e E & P C A P I TA L

OPTIMIZED FOR RETURNS

F U N D E D W I T H I N O P E R AT I N G C A S H F LO W

$1 Billion

TA R G E T I N G

(2017 VS 2018)

OIL GROWTH DEBT REDUCTION

$

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Significant Financial Strength

• Investment-grade credit ratings
• Disciplined hedging program
• Significant investment in EnLink Midstream
• $1 billion divestiture program underway
• Additional multi-billion dollar divestiture potential

INVESTMENT- GRADE

CREDIT RATINGS

Excellent Liquidity

Cash: $2.8 billon

EnLink Investment

Market value: ~$3.5 billion

Disciplined Hedging

Q4 17:~65% 1H 18:~40%

PROTECTING OUR ABILITY TO EXECUTE

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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

Capture FULL VALUE Improve RETURNS

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200 400 600 800 1,000

T

• p-Tier Operating Performance

Best-in-class well productivity

• Avg. 90-Day Wellhead IPs BOED, 20:1

Peers

Across key U.S. plays since 2014

2%

D&C IMPROVEMENT

Operating expense & G&A since 2014 ($1.4B annual benefit)

34%

COST REDUCTION

>40%

BOTTOM LINE IMPACT FROM OPERATIONAL EXCELLENCE INITIATIVES

To annual base production ($100 MM benefit annually)

PRODUCTION UPLIFT

DEVON WELL ACTIVITY

(Since 2012)

~400%

I M P R O V E M E N T

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The Next Frontier Of Efficiency Gains

• Multi-zone manufacturing strategy underway
• Leading-edge development concept
• Debundling supply chain drives costs lower
• Massive technology upside remains

For additional information see our Q3 operations report.

$1 MILLION

SAVINGS PER WELL

ANACONDA

MULTI-ZONE PROJECT

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Innovation Momentum - T echnology Projects In Flight

Improved 3D seismic interpretation High-graded location selection Optimized landing zones Well productivity predictions Depletion analysis Geospatial optimization Cyber-geosteering Flat, in-zone wells Fiber-optic sensing Prolonged drill-bit life Coiled-tubing drill-outs Efficient flowbacks Cutting-edge frac modeling Accounting process automation World-class partnerships in digital innovation platforms Enterprise dashboards for information Accessible mobile applications across all aspects of the business Water-treatment options Frac fluid chemistry Data acquisition and management systems Leak detection in piping systems Water transfer and storage safety Predictive pump failures Field-issue prioritization Optimized compressors Production monitoring Flood optimization Inter-well communication (data analytics) Gas lift for EOR

Targeting hundreds of millions in value creation annually

S U B S U R F A C E D R I L L I N G & C O M P L E T I O N S P R O D U C T I O N O P E R A T I O N S W A T E R M A N A G E M E N T C O R P O R A T E

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STACK – Franchise Asset

Future Projects (Timing TBD) Upcoming Development Canadian Kingfisher Blaine Caddo Coyote

Drilling Underway (7 wells)

Showboat

Drilling Underway (24 wells)

Horsefly

Q4 2017 Spud (10 wells)

Fleenor Sonoyta Privott Bernhardt

2018 Spud (8 wells)

Smilodon Sidney

Best-in-class acreage position 670k net acres by formation Up to 4 target intervals per unit Accelerating development activity

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40 80 120 160

DVN MRO XEC CLR NFX ALTMES GST $4.97 ~$4.30 Q4 2016 Q4 2017e

STACK – Multi-Decade Growth Platform

Best-in-class well results Advantaged cost structure High-returning production growth Tremendous resource potential

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

BOED, 20:1

Peers

>70%

GROWTH

88 95 105 111 ~ 120 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17e

Lease Operating Expense

$/BOE

>11,000 POTENTIAL LOCATIONS

STACK RISKED LOCATIONS

>70% VS. PEER AVG.

5,700

>35% VS. Q4 2016

IMPROVEMENT

~15%

MBOED

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STACK - Development Activity

Showboat Development

First multi-zone STACK development

MERAMEC UPPER LOWER WDFD

Kingfisher

• Full-field development underway
• Activity focused on Coyote & Showboat
• Projects offset by prolific well results
• 1st production expected in 1H 2018

For additional information see our Q3 operations report. Coyote

Drilling Underway (7 wells)

Faith Marie

24-Hr IP: 5,100 BOED

Blaine Showboat

Drilling Underway (24 wells) 5 operated rigs (2 drilling units)

Privott 17-H

24-Hr IP: 6,000 BOED

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Delaware Basin – Franchise Asset

World-class oil opportunity Multi-decade growth platform Up to 15 target intervals Accelerating development activity

Future Projects (Timing TBD) Upcoming Development Core Development Area

POTATO BASIN TODD THISTLE/GAUCHO COTTON DRAW RATTLESNAKE

Lusitano

Q4 17 Spud (6 wells)

Boomslang

Completing (11 wells)

Seawolf

Drilling (12 wells)

Medusa

Q4 17 Spud (20 wells)

Anaconda

Flowing Back (10 wells)

Spud Muffin Snapping Fighting Okra Mean Green Cobra Tomb Raider Eddy Loving Lea

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Anaconda: Initial Multi-Zone Delaware Project

• Co-developing 3 Leonard shale intervals
• Achieved savings of $1 MM per well (~20%)
• Early flow rates are positive

— 2 wells with 30-day IPs: 1,600 BOED

• Peak production rates expected in Q4

THISTLE/GAUCHO

Lea Anaconda Project

Testing 19 wells per section across 3 landing zones

LEONARD A B C

Initial Development

Future Potential

For additional information see our Q3 operations report.

TODD

Anaconda

Peak rates: Q4 17

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Delaware Basin – Multi-Decade Growth Platform

Note: Graphic for illustrative purposes only and not necessarily representative across Devon’s entire acreage position.

Basin Slope

DELAWARE SANDS Madera Lower Brushy LEONARD A B C BONE SPRING 1st 2nd

(Upper & Lower)

3rd WOLFCAMP X/Y A, B, C & D

Risked Location Unrisked Location

1 Section 1 Section

>4,000’

OF PAY

6,500

>1.3 MM

RISKED LOCATIONS NET EFFECTIVE ACRES

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Devon’s Competitive Advantage

STACK & DELAWARE POTENTIAL LOCATIONS

>30,000

Multi-decade growth platform

STACK & Delaware focused Top-tier operating results Innovative culture Significant financial strength

Thank you.

Thank you.

For additional information see our

Q3 Operations Report

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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: DVN devonenergy.com

Appendix

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Cash-Flow Generating Assets

30%

EAGLE FORD

20%

BARNETT

15%

ENLINK

$2.2B

>

CASH FLOW 2017e

35%

HEAVY OIL

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

HEAVY OIL BARNETT EAGLE FORD

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Rockies – An Emerging Oil Growth Asset

• Premier Powder River Basin position

— Q3 net production: 16 MBOED (80% oil) — >400,000 net surface acres

• Stacked pay: >10 prospective intervals
• Initial “Super Mario” Turner results expected

in Q4

POWDER RIVER BASIN ACTIVITY

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STACK Resource

STACK RESOURCE

FORMATION WINDOW NET ACRES GROSS RISKED LOCATIONS GROSS UNRISKED LOCATIONS Meramec Over-Pressured Oil 130,000 1,700 3,000 Liquids-Rich Gas 150,000 TBD >1,000 280,000 1,700 >4,000 Woodford Condensate 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

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Delaware Basin Resource

DELAWARE BASIN RESOURCE

FORMATION NET 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

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Johnson County Divestiture Package

• Massive position in core of the Barnett

— Net acres: 610,000 — Q3 net production: 148 MBOED (25% liquids)

• Pursuing divestiture for Johnson County area

— ~30 MBOED — Data rooms open — Initial bids expected in Q4 2017

Wise Parker Hood Tarrant

• Ft. Worth

Denton

Denton

Johnson

Divest Area

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Hedge Position – As of 10/27/17

OIL DERIVATIVES

SWAPS COLLARS COMBINED

PERIOD VOLUME (MBPD) WEIGHTED

• AVG. PRICE

($/BBL) VOLUME (MBPD) WEIGHTED AVG. FLOOR PRICE ($/BBL) WEIGHTED AVG. CEILING PRICE ($/BBL) PERIOD VOLUME (MBPD) PROTECTED PRICE

Q4 2017 83.2 $54 79.2 $46 $57 2017 162 $50 Q1-Q4 2018 35.5 $52 45.9 $46 $56 2018 81 $49

NATURAL GAS DERIVATIVES

SWAPS COLLARS COMBINED

PERIOD VOLUME (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

Q4 2017 357.7 $3.20 455.0 $3.03 $3.41 2017 813 $3.10 Q1-Q4 2018 339.4 $3.07 165.0 $2.98 $3.29 2018 504 $3.04