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October 29, 2012 PowerPoint Presentation
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October 29, 2012

October 29, 2012

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October 29, 2012

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  1. October 29, 2012 Florida Energy Conference Shale Revolution Presentation

  2. Devon Today Proved reserves: 3.0 billion BOE (42% liquids) Q2 2012 production: 679 MBOED Production mix: 22% oil 15% NGLs 63% natural gas Significant midstream business 2012e operating profit: ≈$385 million Enterprise value: $25 billion NYSE: DVN www.devonenergy.com Slide 2

  3. North America Natural Gas Production BCFD Note: Production based on second quarter 2012 reported results. www.devonenergy.com

  4. Larger than you might think… Enterprise value US$, billions Source: Enterprise value as stated on Yahoo! Finance on Jan. 3, 2012. www.devonenergy.com page 4

  5. DVN Shale Revolution • Shale Evolution: • A Look Back • Technology’s Impact • US Shale Plays • Efficiency www.devonenergy.com

  6. Look Back to Early 2000 Natural Gas View • In 2003, Alan Greenspan stated that the US will become a major importer of LNG – Wall Street Journal Source: EIA, Devon www.devonenergy.com page 6

  7. Shale Drilling Evolution Traps vs. Shales Fracture stimulation 5,000’ – 15,000’ below the surface Hydrocarbon Trap Impermeable Sealing Layer MigratingHydrocarbons Shale Organic RichSource Layer Frack Porous & Permeable Reservoir Layer www.devonenergy.com page 7

  8. North American Shale Gas Plays Impact of Shale Gas Plays • Shale play development has been the primary driver in U.S. Lower 48 supply. Sources: EIA, Potential Gas Committee, Ziff Energy www.devonenergy.com

  9. U.S. shale gas productionMajor U.S. shale plays BCFD Source: Wood Mackenzie (data through July 2012) www.devonenergy.com

  10. How Technology Ramped Up Growth Total Field Production 2009 > 4.9 BCFD Horizontal Technology Light Sand Fracture Technology Devon Acquires Mitchell Currently 1.1 Barnett Recognized in 1981 Devon alone has increased its estimated resource base approaching 5X since 2002. Source: IHS Energy. Gross wellhead production by operator. www.devonenergy.com

  11. Horizontal Drilling Technology Fracture Stimulation Shale Reservoir Frac Barrier Water Bearing Fm. www.devonenergy.com

  12. Barnett ShalePad development www.devonenergy.com

  13. Rigs Continue to Drill New Wells Faster, Despite Increasing Well Lateral Lengths Wells New Wells/Rig/Month Feet Total Length 13

  14. Devon – Shale Revolution • Infrastructure Revolution • Pipeline Expansion • Storage Increase • Stable Price Environment www.devonenergy.com

  15. Major pipeline infrastructure updates2009 to 2012 Recent capacity additions (Bcfd) Rockies Express 1.80 Midcontinent Express 1.80 Gulf Crossing 1.70 SESH 1.00 Fayetteville/Greenville 1.30 Total 7.60 Committed capacity additions (Bcfd) ETC Tiger (Haynesville) 2.40 Enterprise (Haynesville) 2.10 Regency (Haynesville) 1.10 Gulf South (Haynesville) .50 Centerpoint (Haynesville) .30 Transco (Marcellus) .75 Texas Eastern (Marcellus) .45 Tennessee (Marcellus) .35 Transco (S.E. & Florida Mkts.) .56 FGT (Florida Markets) .82 Trans Canada Bison (Rockies) .48 El Paso Ruby (Rockies) 1.50 Total 11.31 www.devonenergy.com page 15

  16. Marcellus Take-away Capacity Projects 16 Does not include gathering or shorter intra-regional projects.

  17. Natural Gas Storage1999 to 2015 • Storage Capacity has increased by roughly .5 TCF over the last 10 years • Storage Capacity is expected to increase by another .5 TCF by 2015 Source: Wood Mackenzie www.devonenergy.com page 17

  18. Gas price stabilityAs supply grows, price remains low, stable • Lower 48 gas supply has grown by 20 Bcfd since 2000, up 50% • Driven by shale and infrastructure development post 2005 • Result: lower, more stable pricing Strong global economy Price run-up with crude oil Hurricanes Katrina & Rita Cold weather www.devonenergy.com page 18

  19. What’s Next • Stable Prices have Revitalized US Industrial Sector • Steel Industry • “Cheap Natural Gas Gives Hope to the Rust Belt” – Wall Street Journal • 10 New Plants Planned with 2 additional expansions • Fertilizer Plants • 9 Plants in the making - (1 New, 4 Restarts, 4 Expansions) • Ethylene Crackers and Petrochemical Expansion • 31 Plants coming on line (17 New, 5 Restarts, 9 Expansions) • Gas to Liquids (GTL) • 4 GTL Plants in the planning process NYSE: DVN www.devonenergy.com www.devonenergy.com page 19

  20. America’s “New” Natural Gas:Choice, Reliability, Competition, Price Stability • 100+ years of natural gas supply – and growing with technology • New shale gas resources: • Efficiency Gains • Pad Drilling • Longer Laterals • Rig Efficiencies • Long-term supply stability • Wells produce for 40 - 50 years or more • Expanding technology to additional resources – What’s Next?? • New resources onshore are easier and less expensive to develop - Efficiencies • Pipeline and storage infrastructure to deliver gas on a reliable basis Bottom line: Greater energy and economic security; more stable, predictable prices www.devonenergy.com page 20