J.P. Morgan Energy Conference June 18, 2018 NYSE: DVN - PowerPoint PPT Presentation

J.P. Morgan Energy Conference June 18, 2018 NYSE: DVN devonenergy.com

Investor Contacts & Notices additional reserves; the uncertainties, costs and risks involved in oil and gas operations; regulatory restrictions, compliance costs and Investor Relations Contacts other risks relating to governmental regulation, including with respect to environmental matters; risks related to our hedging activities; counterparty credit risks; risks relating to our indebtedness; cyberattack risks; our limited control over third parties who operate our oil and gas properties; midstream capacity constraints and potential interruptions in production; the extent to which insurance covers any Scott Coody Chris Carr losses we may experience; competition for leases, materials, people and capital; our ability to successfully complete mergers, acquisitions VP, Investor Relations Supervisor, Investor Relations and divestitures; 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 405-552-4735 405-228-2496 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 Email: investor.relations@dvn.com obligation to update the forward-looking statements as a result of new information, future events or otherwise. 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 Investor Notices 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, Forward-Looking Statements please refer to Devon’s first-quarter 2018 earnings release at www.devonenergy.com. This presentation includes "forward-looking statements" as defined by the Securities and Exchange Commission (the “SEC”). Such Cautionary Note to Investors statements include those concerning strategic plans, expectations The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that meet and objectives for future operations, and are often identified by use the SEC's definitions for such terms, and price and cost sensitivities for such reserves, and prohibits disclosure of resources that do not of the words “expects,” “believes,” “will,” “would,” “could,” “forecasts,” constitute such reserves. This presentation may contain certain terms, such as resource potential, potential locations, risked and unrisked “projections,” “estimates,” “plans,” “expectations,” “targets,” locations, estimated ultimate recovery (EUR), exploration target size and other similar terms. These estimates are by their nature more “opportunities,” “potential,” “anticipates,” “outlook” and other similar speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being terminology. All statements, other than statements of historical facts, actually realized. The SEC guidelines strictly prohibit us from including these estimates in filings with the SEC. Investors are urged to included in this presentation that address activities, events or consider closely the disclosure in our Form 10-K, available at www.devonenergy.com. You can also obtain this form from the SEC by developments that the Company expects, believes or anticipates will calling 1-800-SEC-0330 or from the SEC’s website at www.sec.gov. 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 2 | Investor Presentation

Investment Thesis Delaware & STACK focused Rapidly expanding cash flow Multi-decade growth platform Disciplined capital allocation >30,000 DELAWARE & STACK POTENTIAL LOCATIONS Significant financial strength 3 | Investor Presentation

Devon’s 2020 Vision TOP OBJECTIVE: OPTIMIZE RETURNS & DELIVER CAPITAL-EFFICIENT, CASH-FLOW GROWTH Leverage technology to optimize base production  Maximize cash flow Improve margins by aggressively lowering cost structure  Enhance returns through disciplined capital investment  Focus on capital efficiency Concentrated activity in economic core of Delaware & STACK  High-grade resource-rich asset portfolio  Portfolio simplification >$5 billion asset divestiture target  Further improve investment-grade credit ratings  Improve financial strength Net debt to EBITDA target: 1.0x – 1.5x  $4 billion share repurchase program underway  Return cash to shareholders Consistently grow and sustain dividend  4 | Investor Presentation

2020 Vision: Driving Significant Cash Flow Growth Growing higher-value production Cost savings to expand margins U.S. Oil Production (MBOD) Upstream Per-Unit Cash Cost ($/BOE) 15% COST SAVINGS 200 $18 175 $12 Interest MID-TEENS CAGR 150 G&A Op. Cost $6 DRIVEN BY >25% CAGR IN 125 114 DELAWARE & STACK $- 100 2017 2018e 2019e 2020e 2017 2018e 2019e 2020e Note: 2017 costs are pro forma for revenue recognition accounting rules recently implemented. Significant free cash flow generation Driving upstream cash flow expansion Through 2020 ($60 WTI & $2.75 HH) $ Billions ($60 WTI & $2.75 HH) 2.5 Billion $2.2 >25% CAGR CUMULATIVE FREE CASH FLOW 2017 2018e 2019e 2020e 5 | Investor Presentation

Portfolio Simplification Strategy  Resource quality & depth allows for high- grading of portfolio Heavy O vy Oil  Announced >$4 billion of divestitures to date — Monetized entire EnLink ownership ($3.125 billion) Portfolio Simplification — Upstream asset sales: $1.1 billion Rocki ckies >$5 Billion DIVESTITURE — No incremental cash taxes from transactions TARGET  Currently marketing additional ~$1 billion of STA TACK non-core asset packages De Delaw aware Bas Basin Barnet nett  Expect to reach >$5 billion divestiture target by Eagle Fo le Ford year-end 6 | Investor Presentation

Shareholder-Friendly Initiatives  $4 billion share-repurchase program underway KEY INITIATIVES UNDERWAY — Represents ~20% of shares outstanding $4 Billion — Authorization in place through 2019 share-repurchase program initiated — Expect to utilize accelerated share-repurchase program (1) 33% Increase  Raised quarterly dividend by 33% — Target cash flow payout ratio: 5% - 10% in quarterly cash dividend — Positioned for sustainable dividend growth  Recently tendered $807 million of debt $1 Billion — Plan to retire $277 million of maturing debt debt reduction plan (next 9 months) (1) Accelerated share repurchase program expected to begin in the third quarter. 7 | Investor Presentation

Significant Financial Strength PROTECTING OUR ABILITY  Investment-grade credit ratings TO EXECUTE  Substantial liquidity: $1.4 billion of cash Excellent Liquidity Cash: $1.4B Low Leverage  Net debt to EBITDA target: 1.0x to 1.5x Net debt to EBITDA target: <1.5x INVESTMENT- GRADE  Disciplined hedging program CREDIT RATINGS — ~60% of 2018 oil & gas volumes protected — Attractive WCS & Midland basis swaps Disciplined Hedging 2018: ~60% 8 | Investor Presentation

Operational Excellence Capture Improve FULL VALUE RETURNS 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  Control operating costs  Accelerate operational efficiencies 9 | Investor Presentation

Updated 2018 Outlook  Raised 2018 U.S. oil production guidance  Positioned for significant cash flow expansion — Driven by high-margin U.S. oil growth — 16% growth vs. 2017 (~30% exit-rate growth) — Guidance increased by ~200 basis points — Canadian WCS pricing improving — Driven by efficiencies and well productivity — G&A and interest savings: ~$175 MM annually Growing upstream cash flow (1) Improving 2018 oil production outlook U.S. oil production (retained assets) (MBOD) ($MM) ~35% 145 - 150 135 - 142 $800 GROWTH 129 - 134 122 $600 ~30% EXIT-RATE 114 INCREASE VS. 2017 $400 FY 2017 Q1 2018 Q2 2018e 2H 2018e 2018e Exit Rate Q1 2018 Q2 2018e Q3 2018e Q4 2018e (1) Represents Devon upstream cash flow. Assumes $65 WTI and $2.75 Henry Hub for Q2 – Q4 2018. 10 | Investor Presentation