strategic re positioning

8/8/2019 Strategic Re Positioning

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March 11, 2010

Strategic RepositioningUpdate

NYSE: DVN www.devonenergy.com Slide 2

Investor Notices

Safe HarborInformation provided in this presentation includes forward-looking statements as defined bythe Securities and Exchange Commission. Forward-looking statements are identified asforecasts, projections, estimates, plans, expectations, targets, etc. and are subject to avariety of risk factors. For representative risk factors that could cause Devons actual results todiffer materially from the forward-looking statements contained herein, see Form 8-K filedNovember 16, 2009.

Cautionary Note to InvestorsThe United States Securities and Exchange Commission permits oil and gas companies, in theirfilings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC'sdefinitions for such terms, and price and cost sensitivities for such reserves, and prohibitsdisclosure of resources that do not constitute such reserves. This presentation may containcertain terms, such as resource potential and exploration target size. These estimates are bytheir nature more speculative than estimates of proved, probable and possible reserves andaccordingly are subject to substantially greater risk of being actually realized. The SECguidelines strictly prohibit us from including these estimates in filings with the SEC. Investorsare urged to consider closely the disclosure in our Form 10-K for the fiscal year ended December31, 2009, available from us at Devon Energy Corporation, Attn. Investor Relations, 20 NorthBroadway, Oklahoma City, OK 73102. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or from the SECs website at www.sec.gov.


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Outline

I. The Repositioning of DevonJohn Richels, President

II. Progress ReportJohn Richels, President

III. Kirby Joint VentureDave Hager, Executive Vice President, Exploration & Production

IV. Devon RepositionedJohn Richels, President


Repositioning Announcement

November 16, 2009

Devon announces plan to strategically reposition

company as high-growth, onshore North American

exploration and production company.


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Repositioning Summary

Sale of all Gulf and International assets

Accelerate development of top-tier onshore assets

Deliver organic growth throughout commodity price cycles

Strengthen balance sheet further

Maintain top quartile cost structure


Strategic Rationale

Extensive resource capture since 2000

Accelerate value realization through monetizationand redeployment

Compete where we are most competitive

Focus on areas with highest returns and lowest risk

Highly accretive in 2011 and beyond


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Reserves & Production Impact

ReservesLiquids

43%Gas57%

Liquids41%

Gas59%

ProductionLiquids

37%

Gas63%

Liquids32%

Gas68%

Devon RepositionedDevon Today

Based on 12/31/09 proved reserves and Q4 2009 production


Outline






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Maersk TransactionAnnounced: 12/22/09

Agreed to sell three Lower Tertiary discoveries

Cascade, Jack and St. Malo

$1.3 billion before-tax; $1.1 billion after-tax

Reduces 2010 capital requirements by $400 million

Transactions now closed

Note: Preferential rights were exercised by partners on Cascade and St. Malo.


BP AgreementAnnounced: 3/11/10

BP agrees to purchase: All deepwater Gulf of Mexico assets Entire Brazilian business Devons interest in ACG field in Azerbaijan

Purchase price: $7.0 billion

BP assumes drilling rig contracts

Devon purchases 50% of BPs interest in Kirby oilsands acreage

Purchase price: $500 million Devon pays $150 million carry


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West Sirius (Gulf of Mexico)

New-build 5 th generation semi-submersible owned by Seadrill

Contracted through July 2014; $500,000 per day

Rated to 37,500 drilling depth; 10,000 water depth

Deepwater Discovery (Brazil)

5th generation drillship owned by Transocean

Contracted through July 2013; $470,000 per day

Rated to 30,000 drilling depth; 10,000 water depth

Deepwater Rig Specifications


Remaining Divestiture Assets

2009 ProductionProvedReserves12/31/09(MMBOE)

25

4

12

9

Liquids(MBOD)

66

4

-

62

Gas(MMCFD)

3777Total

522Other International (1)1216China(1)

MBOED

2039Gulf Shelf

(1) Production excluded from 2009 results from continuing operations and reserves excluded from year-end 2009 reserve disclosures.


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Expected Proceeds

$6.5 - $6.9$8.3Announcements to date

$7.5 - $8.3$9.6 - $10.3Total Estimated Proceeds

$1.0 - $1.4$1.3 - $2.0Remaining assets

After-Tax ProceedsPre-Tax Proceeds

Plus transfer of deepwater drilling rig obligations

$ Billions


Allocation of Proceeds

Optimize per share returns on a debt-adjustedbasis through:

E&P capital projects

Debt reduction

Share repurchases


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Accretion

Highly accretive in 2011 and beyond to:

Earnings

Cash flow

Production

Reserves


Outline






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Kirby Joint Venture

Devon purchases 50% of BPs interest in Kirby oilsands leases

Devon to serve as operator

Multi-stage SAGD development opportunity

Gross risked resource potential: 1.0 - 1.5 billion barrels


Kirby Acreage Overview

Jackfish Acreage

Kirby Acreage

Access Pipeline

JackfishJackfish 2

Jackfish 3

Access Pipeline

R8 R7 R6 R5 R4

T76

T75

T74

T73

Ft. McMurray

Edmonton

Calgary

ALBERTABRITISHCOLUMBIA

Jackfish & Kirby


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Jackfish SAGD Projects

Field characteristics: Low F&D Flat production profile Long reserve life > 20 years Working interest: 100%

Each project: 300 MMBO EUR ( 260 MMBO net) 35 MBOD of production ( 30 MBOD net)

Jackfish: Maintain at full capacity in 2010

Jackfish 2:

Continue facilities construction Operational by late 2011

Jackfish 3: File regulatory application in 2010

420Risked locations:800 MMBONet risked resource:

ALBERTA

Ft. McMurray

B.C. SASK.

Jackfish

Jackfish 3

JackfishJackfish 2


Source: FirstEnergy Capital Corp.

Jackfish PerformanceSAGD Production Per Well

0

20 0

40 0

60 0

80 0

1,000

1,200

1,400

1,600

1,800

2,000

2,200

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36

Foster Creek M acKay River Firebag Christina Lake

Jackfish Long Lake Hangingstone Great Divide

Surmont Tucker Lake Hilda Lake Tangleflags

B p

d P e r

W e

l l

Months After Well Start Up

90 Day Moving Average

Jackfish


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Jackfish PerformanceSteam Oil Ratio (SOR)

SAGD Project Comparison (Cumulative SOR)

0

1

2

3

4

5

6

7

8

9

10

1 3 5 7 9 1 1 1 3 1 5 1 7 1 9 2 1 2 3 2 5 2 7 2 9 3 1 3 3 3 5 3 7 3 9 4 1 4 3 4 5 4 7 4 9 5 1 5 3 5 5 5 7 5 9 6 1 6 3 6 5 6 7 6 9 7 1 7 3 7 5 7 7

Time since Startup (months)

C u m u

l a t i v e

S O R

JackfishLong LakeMacKay RiverFirebagFoster CreekChristina Lake

P90

P10

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77

C u m u

l a t i v e

S O R

10

9

8

7

6

5

4

3

2

10

Time Since Startup (Months)

JackfishLong LakeMacKay RiverFirebagFoster CreekChristina Lake

SAGD Project Comparison (Cumulative SOR)

Source: IHS database

Jackfish


Existing well control data and seismic

Thick and continuous reservoir

Good oil saturation and porosity levels

Minimal depositional shale

Good cap rock

Minimal water issues

Kirby Similarities to Jackfish

Similar reservoir characteristics to Jackfish


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Kirby Summary

Top-tier resource

Comparable to industry-leading Jackfish project

Opportunity to leverage SAGD expertise

Natural hedge to North American gas


Outline






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Product Mix & Capital OutlookNorth American Onshore

41%

59% 25%

13%

40%

22%Oil Sands

ShalePlays

NaturalGas

Liquids

OtherCanada

OtherU.S.

$4.4 4.8 Billion (1)

2010 e E&P Capital12/31/09 Proved Reserves

(1) 2010 capital forecast increased by $500 million to reflect Kirby oil sands purchase.


Hedging Philosophy

Protect prices on approximately 50 percent of forecasted oil and gasproduction for all periods

55% of estimated 2010 gas production hedged

1.4 Bcf/d with an average floor of $6.12

220 MMcf/d of regional basis hedges in Rockies and Canada

71% of estimated 2010 oil production hedged 79,000 Bbl/d collared with an average floor of $67.47 and an

average ceiling of $96.48

Note: The pricing points referenced above are weighted average prices. Percentages of production are based on productionfrom retained assets only.


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Potential Growth RatesTotal Production

2010e 2011e 2012e 2013e 2014e

H i g h P r i c

e C a s e :

1 2 % C A G

R

Note: Assumes current industry cost environment, reinvestment of all cash flow from operations and redeployment of $0.8 billion of salesproceeds in the high price case and $1.5 billion in the strip case. Strip case represents forward strip prices as of 3/8/10.

$89; $6.50$88; $6.25$87; $6.00$86; $5.50$83; $5.00Strip Case:$90; $7.50$90; $7.50$90; $7.50$90; $7.00$85; $6.50High Case:

Benchmark Prices (WTI and Henry Hub)

S t r i p P r i c e C a s e :

6 % CA G R

North American Onshore


Historical PerformanceNorth American Onshore

168

220

207

183

2006 2007 2008 2009

233% 198%

269%

223%

2006 2007 2008 2009

$13.57 $13.30 $13.05

$6.59

2006 2007 2008 2009

$7.28 $8.01$8.78

$6.87

2006 2007 2008 2009

Production Growth(MMBOE)

Drill-bit Reserve Replacement (1)(% of Production Replaced) Drill-Bit F&D(1)

($/BOE)

LOE per BOE($/BOE)

(1) Excludes price revisions

9 % C A G

R


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2010 F&D TargetsNorth American Onshore

$0.3$0.3Capitalized G&A and interest:

$4.4 - $4.8 (1)$3.9 - $4.3E&P capital budget:

$14 $16/BOE $12 $14/BOEDrill-bit F&D:

320 340 MMBOE320 340 MMBOEDrill-bit reserve additions:

$4.7 - $5.1$4.2 - $4.6Drill-bit capital:

2010eWith Kirby

2010eWithout Kirby

$ Billions

Note: Includes non-GAAP measures, see appendix for required disclosures.(1) 2010 capital forecast increased by $500 million to reflect Kirby oil sands purchase.


Resource PotentialNorth America Onshore

58 055 080 0Kirby

1,6001,2304,570Haynesville Shale

8,1302,0203,090Other Canada

7,1402,8904,730Other U.S. Onshore

42 080 099 0Jackfish

1,6001,6302,420Horn River

Total RiskedUndrilledLocations

Total RiskedResources(MMBOE)

Total UnriskedResources(MMBOE)

2,15027 043 0Arkoma Woodford Shale

13,560 (1)

1,170

3,000

25,200

2,000

6,170

32,620

3,500

7,500

Total

Cana Woodford Shale

Barnett Shale

(1) Includes 12/31/09 proved reserves of 2.6 BBOE.


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Summary

Repositioning approaching completion

Increased presence in prime SAGD area

Superior balance sheet strength

Deep North American onshore resource inventory

Self-funded organic growth

Highly accretive to debt-adjusted metrics

Thank You.

strategic re positioning

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