Q3 2017 Operations Report October 31, 2017 NYSE: DVN devonenergy.com - PowerPoint PPT Presentation

Q3 2017 Operations Report October 31, 2017 NYSE: DVN devonenergy.com Highlights & CEO Perspective 2 STACK 10 Contents Key Modeling Stats 3 Delaware Basin 14 Overview & Outlook 4 Rockies 17 Operational Excellence 8 Cash Flow Generating Assets 19 | Q3 2017 OPERATIONS REPORT

Highlights & CEO Perspective Q3 Highlights & Outlook CEO Perspective Production exceeds midpoint of hurricane-adjusted guidance  Devon’s “2020 Vision” U.S. oil production on track to increase ~20% in Q4  We recently unveiled our “2020 Vision,” which Drill-bit momentum: 50 high-rate wells brought online in Q3  is Devon’s strategic plan through the end of Capital spending 12% below budget YTD  the decade. The intent of our operating plan is to deliver top-tier returns on invested Free cash flow increases cash balances to $2.8 billion  capital while delivering sustainable, long-term Dave Hager growth for our business. President & CEO Asset Level Results We plan to attain peer leading returns with our “2020 Vision” by pursuing the following objectives: STACK production advances 26% YTD  1) Disciplined capital allocation that builds scale in the Meramec pilot achieves average IP30 ~3,500 BOED per well  STACK & Delaware Basin Multi-zone Showboat project in STACK underway  2) Maximize returns by growing higher-value liquids production Multi-zone Delaware project delivers savings of $1MM per well  and lowering expenses with a technology focus across all areas of the business Jackfish complex exits Q3 24% above nameplate capacity  3) Further high-grade portfolio with monetization of several billion dollars of assets 4) Reduce debt balances (net debt to EBITDA target 1.0x – 1.5x) Portfolio & Resource Updates 5) Return cash to shareholders Divestiture program advances with $420 million of asset sales  For more commentary on our “2020 Vision,” I encourage every Johnson County divestiture package progressing investor to listen to our Q3 conference call where I will provide more  details on this differentiating plan. | Q3 2017 OPERATIONS REPORT 2

Key Modeling Stats HEAVY OIL Q3 RESULTS Q3 GUIDANCE Q3 ACTUALS U.S. oil (MBbls/d) 107 - 112 (1) 112 Canada oil (MBbls/d) 117 - 122 121 Total NGLs (MBbls/d) 91 - 96 (1) 94 ROCKIES Total gas (MMcf/d) 1,173 - 1,205 1,201 Total (MBoe/d) 511 - 531 (1) 527 Marketing & midstream operating profit $225 - $245 $242 Lease operating expenses $360 - $410 $391 STACK General & administrative expenses $150 - $170 $153 BARNETT DELAWARE BASIN Production and property taxes $65 - $75 $71 Depreciation, depletion & amortization $375 - $425 $400 EAGLE FORD Net financing costs $125 - $135 $127 Exploration & development capital $550 - $600 $548 Q3 OPERATIONAL DETAIL STACK DELAWARE BASIN ROCKIES EAGLE FORD BARNETT HEAVY OIL Oil (MBbl/d) 27 31 12 30 1 121 NGL (MBbl/d) 32 11 1 12 36 0 Gas (MMcf/d) 313 90 11 88 672 16 Total (MBoe/d) 111 57 16 57 148 124 Exploration & development capital $211 $129 $46 $29 $10 $78 Operated development rigs (9/30/17) 8 9 2 n/a 0 Operated spuds (Q3/YTD) 25/58 25/49 7/13 7/22 2/2 Operated wells tied-in (Q3/YTD) (2) 23/71 11/30 3/9 23/61 0/0 Note: all dollars shown in millions. (1) Adjusted for curtailments related to Hurricane Harvey (see Sept. 15 th press release) (2) Wells that achieved 1 st production (not 30-day peak rates) | Q3 2017 OPERATIONS REPORT 3

Overview & Outlook Production Exceeds Midpoint of High-Returning Oil Growth to Accelerate in Q4 Hurricane-Adjusted Guidance With operations fully restored from storm-related impacts, Devon remains on track to achieve  Net production averaged 527,000 Boe per both its full-year 2017 and Q4 exit-rate growth targets for U.S. oil production (chart below).  day, exceeding the midpoint of the The key drivers of growth in the U.S. are the company’s STACK and Delaware Basin assets.  company’s Hurricane Harvey adjusted Combined, these two franchise assets are expected to increase their production by >30% by the guidance by 6,000 Boe per day. end of 2017 compared to Q4 2016. Devon’s U.S. resource plays averaged 403,000  Devon’s heavy oil operations will also contribute growth in Q4. With maintenance activity  Boe per day in Q3 (51% liquids). Production complete, net production in Canada is expected to increase to ~140,000 Boe per day. was reduced by ~15,000 barrels per day in Overall, top-line production from retained assets (1) is projected to range from 551,000 to Q3 due to storm-related issues.  571,000 Boe per day in Q4. Based on the midpoint this represents a ~7% increase from Q3. In Canada, net production was at the top-end  of guidance averaging 124,000 Boe per day U.S. Oil Production during Q3. MBOD GROWTH ON TRACK +~20% Divestiture Proceeds Reach $420 Million (vs. Q4 16) In Q3, the company’s divestiture program  +~15% continued to progress with an additional $80 (vs. Q4 16) million of sales, increasing proceeds to $420 102 (1) million to date. Due to the closing of the Lavaca County  assets and other minor transactions, Devon’s net production is expected to be reduced by ~5,000 Boe per day in Q4 (60% oil). Q4 2016 2017e Q4 2017e (1) Adjusted for the sale of minor, non-core assets | Q3 2017 OPERATIONS REPORT 4

Overview & Outlook Drill-Bit Momentum: 50 High-Rate Wells Brought Online Capital Spending 12% Below Budget YTD During the quarter, Devon commenced production on 50 wells that Devon’s E&P capital spending totaled $ 548 million in Q3, which was   below the low end of guidance for the 3 rd consecutive quarter . averaged initial 30-day IP rates of >2,100 Boe per day (~50% oil). Year to date, E&P spending has been 12% below midpoint guidance or  65% of the company’s original 2017 budget. Q3 HIGH-RATE WELLS In the upcoming quarter, Devon expects to run ~20 development rigs  50 across the U.S. along with 7 frac crews. AVG. 30-DAY IP: 2,100 With this level of activity, the company plans to bring online ~60  > operated wells and invest $650-$700 million of upstream capital in Q4. WELLS BOED For 2017, the company expects to invest $2.0 to $2.1 billion of E&P  capital. This level of investment is expected to be funded within operating cash flow and EnLink distributions for the year. This strong drill-bit productivity was highlighted by 14 new Meramec  wells in the over-pressured oil window that achieved average 30-day Rig Activity – U.S. Resource Plays rates of >2,300 Boe per day, of which ~55% was light oil production. Operated Rigs 20 RIGS The top STACK wells in the quarter were associated with the Fleenor  25 BY YEAR-END 2017 pilot in Blaine County. The Fleenor wells averaged 30-day production rates of ~3,500 Boe per day (see pg. 11). 20 10 RIGS The Delaware Basin also delivered several high-rate oil wells. This  15 YEAR-END 2016 activity was headlined by 4 Bone Spring wells around the state-line 2 RIGS area that attained 30-day rates of 1,750 Boe per day (~75% oil). 10 Q3 2016 These strong wells in Q3 continue a trend of outstanding results. Over  5 the past year, Devon has the top well productivity of any U.S. operator, exceeding the peer average by ~50%. 0 2016 2017 2016 2017 | Q3 2017 OPERATIONS REPORT 5

Overview & Outlook Free Cash Flow Increases Cash Balances to $2.8 Billion Johnson County Divestiture Package Progressing The company’s upstream operations generated free cash flow in Q3, With $420 million of asset sales achieved to date, Devon’s divestiture   helping increase Devon’s cash balances by $400 million to $2.8 billion program is now expected to exceed its original target of $1 billion. at the end of September. The most significant asset remaining within this divestiture program is  This is the 3 rd straight quarter that the company has increased its cash select leasehold within the Barnett Shale, primarily in Johnson County.  balance, representing a total cash build of ~$800 million year-to- Data rooms for the Johnson County properties were opened at the end  date . of September and initial bids are expected during Q4. Production In addition to strong liquidity, Devon possesses investment-grade credit associated with these assets is ~30,000 Boe per day (map below).  ratings and has no significant debt maturities until mid-2021. Hedging Position Bolsters Financial Strength BARNETT SHALE: JOHNSON COUNTY Devon’s financial strength is further bolstered by its hedge position,  with ~65% of its oil and gas production hedged for the remainder of 2017. The company also is protecting its regional pricing through various  basis swaps in the Delaware Basin and Canada (see Q3 earnings release pg. 16 for more hedging details). For the first half of 2018, Devon has increased its hedge position to  ~40% of estimated production and is actively accumulating additional hedges for the upcoming 6 quarters. This disciplined, risk-management program consists of systematic  hedges added on a quarterly basis and discretionary hedges that DATA ROOMS INITIAL BIDS supplement the systematic program when favorable market conditions NOW OPEN EXPECTED Q4 exist. | Q3 2017 OPERATIONS REPORT 6