090308 - devon energy lehman brothers -...

1

Lehman Brothers CEO Energy Conference

New YorkSeptember 3, 2008

NYSE: DVN www.devonenergy.com page 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 as“forecasts, projections, estimates, plans, expectations, targets, etc.” and are subject to avariety of risk factors. For representative risk factors that could cause Devon’s actual results todiffer materially from the forward-looking statements contained herein, see Form 8-K filedAugust 6, 2008.

Cautionary Note to U.S. InvestorsThe United States Securities and Exchange Commission permits oil and gas companies, in theirfilings with the SEC, to disclose only proved reserves that a company has demonstrated byactual production or conclusive formation tests to be economically and legally producible underexisting economic and operating conditions. In this presentation we may use certain terms,such as resource potential, reserve potential, probable resources, possible resources,contingent resources, prospective resources and exploration target size. The SEC guidelinesstrictly prohibit us from including these terms in filings with the SEC. U.S. Investors are urged toconsider closely the disclosure in our Form 8-K, File No. 001-32318, available from us at DevonEnergy Corporation, Attn. Investor Relations, 20 North Broadway, Oklahoma City, OK 73102. Youcan also obtain this form from the SEC by calling 1-800-SEC-0330.

2


Devon Today

Proved reserves (12/31/07): ≈ 2.5 Billion BOE

Current production (Q2 2008): ≈ 643 MBOED

Oil & gas production (Q2 2008): 66% gas

34% oil & NGLs

Production profile (Q2 2008): 94% North America

Reserves / production ratio: ≈ 11 years

Enterprise value: ≈ $49 Billion

Largest U.S.-based independent oil and gas producer

NYSE: DVN www.devonenergy.com page 4Organizational focus on per share results

Capital Allocation Criteria

Optimize per share growth on a debt-adjusted basis through:

• E&P capital projects

• Share repurchases

• Debt reduction

• High-grading asset portfolio

3


Property Divestitures2002-2007

$0.3Midstream

$3.9Total

$0.4 International

$1.4 Canada

$0.5 U.S. Offshore

$1.3 U.S. Onshore

Proceeds(In Billions)

Area


African Divestitures

84$3,019Total

55$2,226ClosedEquatorial Guinea

8$375ClosedEgypt

2nd Half ‘08

2nd Half ‘08

Closed

Expected Closing

17

-

4

Reserves (MMBBL)

$205Cote d’Ivoire

$8 Angola & Ghana

$205Gabon

Proceeds(In Millions)

4


10%

20%

30%

40%

50%

60%

70%

2002 2003 2004 2005 2006 2007 2008

Debt to Adjusted Capitalization

Notes: Excludes exchangeable debentures and 14.2 million shares of Chevron common stock owned by Devon. This is a non-GAAPmeasure, see appendix for required disclosures.

Through June 30, 2008


Common Stock Repurchases

$102.561%6,4842008*

$55.4314%66,594Total

$79.801%4,0862007

$59.611%4,2412006

$48.2810%46,7832005

$37.781%5,0002004

Average Price Per

Share

Percent of Outstanding

Shares

Number of Shares

(In Thousands)

*Through August 2008.

5


Potential Growth RatesProduction Per Debt-Adjusted Share

2007 2008 2009 2010 2011

Lower Case: 6% CAGR

Upper Case: 13% CAGR

Note: Production per debt-adjusted share converts annual average net debt into common shares outstanding based onannual average stock price.

$70 / 7.50$70 / 7.50$70 / 7.50$100 / 9.80Lower Case: Oil / Gas

$96 / 9.00$96 / 9.00$96 / 9.00$100 / 9.80Upper Case: Oil / Gas


Operating Strategy

• Optimize near-term growth throughdevelopment of low-risk property base

– Large individually-significant projects

– Principally North America

• Provide long-term growth opportunitiesthrough investing in high-impact projects

Balanced investments yield sustainable growth

6


2008 E&P Capital Forecast

Time Horizon

5%

68%

21%

6%

$7.3 – 7.6 Billion $5.8 - 6.0 Billion

Near-Term by Area

21%

79%

Long-Term

Near-Term

U.S.Onshore

Canada

InternationalGulf


Existing Development Inventory

JackfishLloydminster

CANADA

PolvoBRAZIL

Development inventory of large, individually significant projects

Barnett ShaleCarthageGroesbeckWoodford ShalePowder RiverWashakieGulf of Mexico

UNITED STATES

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Barnett Shale Regional SettingLargest Gas Field in Texas

Ft. Worth DallasDenton

Barnett Shale

OKLAHOMA

TEXAS

HoustonAustin

Oklahoma CityCovers 10 counties

Play-wide production: 4 BCFED

> 9,000 producing wells

(horizontal and vertical)

Note: From PI/Dwight‘s as of March 2008.


U.S. Shale ComparisonBest-In-Class

HighMediumMediumLowAbove ground risk(market, topography, regulatory environment)

726860147Total gas in-place(BCF/square mile)

6%7%6%6%Porosity

130’250’175’389’Net

150’275’175’433’Gross

Thickness

6,350’3,000’7,550’7,500’Depth

MarcellusFayettevilleWoodfordBarnett

8


Defining the Barnett ShaleClassification of Acreage Based on Industry Results

0.90.7

2.2

Primary Emerging Speculative

430 591

4,859

Primary Emerging Speculative

Average EUR by Area (BCFE)

Producing Horizontal Wells by Area*

ParkerPalo Pinto

Hood JohnsonErath

Hill

JackWise Denton

Primary

Emerging

Speculative

HighlyUrbanized

0 – 1 BCFE 1 – 1.5 BCFE 1.5 – 15.0 BCFE

Estimated Ultimate Recovery (EUR)

* Producing wells as of March 2008.


Barnett ShaleDevon’s Superior, First-Mover Position

527,300

78,600

ParkerPalo Pinto

Hood

Tarrant

JohnsonErath

Hill

JackWise Denton

Primary

Emerging

Speculative

Ft. Worth

HighlyUrbanized

Denton

Net Acreage

• Primary: 519,000 acres (73%)

• Emerging: 118,000 acres (16%)

• Speculative: 78,000 acres (11%)

• Total: 715,000 acres

Q2 ’08 net production: ≈ 1.1 BCFED

Producing wells: ≈ 3,500

2007 activity: Drilled 539 wells

2008 plans: Drill 630 - 660 wells

9


Devon Barnett ShaleHistory of Firsts

1st mover in the play

2002 1st horizontal program (1st well: Veale Ranch #1H, August 2002)

2003 1st horizontal well (Sandefur #2H, February 2003) in Johnson County

2005 1st 1,000’ spaced horizontal infill

2005 1st to reach 1 TCFE of net cumulative production

2007 1st to drill 1,000 horizontal wells

Q2 2008 1st to achieve 1 BCFED net production


Barnett Shale First-Mover Position Yields Superior Economics

$2,139

$1,181

$443

$0

$500

$1,000

$1,500

$2,000

$2,500

81% NRI, $2.8 M/acre 75% NRI, $10 M/acre 70% NRI, $15 M/acre

NRI% / Lease Cost

Befo

re-T

ax N

PV 1

0% (

In T

hous

ands

)

Note: Assumes EUR - 2.2 BFCE, drilling & completion costs - $3 MM, $7.50 per MCF, 80 surface acres per well (1,000’ apart).

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Devon Barnett Shale Net Production

0100200300400500600700800900

1,0001,100

MM

CFE

D

2002 2003 2004 2005 2006 2007 2008

Vertical Development De-Risking

Full Development

Through June 30, 2008


Barnett ResourcesHistory of Growth

2.1

2002

1.88.3

4.35.7

Total: 3.9 TCFE

2008

Total: 18.3 TCFE Risked4.7x

1.3 TCFE Produced

Proved Probable & Possible Contingent

11


Barnett Production Outlook Another Decade of Growth

> 7,500 risked undrilled locations

≈ 13 years of inventory

Rate potential: 1.6 – 2.0 BCFED


Carthage Field

Waskom

Bethany

Angelina

SanAugustine

Sabine

Shelby

RuskPanola

GreggHarrison

MarionUpshur

Camp Cass

Texas

NET PRODUCTION

0

10

20

30

40

50

2003 2004 2005 2006 2007 2008e

MBO

ED

0

60

120

180

240

300

MM

CFE

D

Appleby

OK

TX

Net acreage: 150,000

Working interest: 85%

Q2 ’08 net production: 273 MMCFED

Potential horizontal locations: ≈ 100

2007 activity: Drilled 138 vertical wells

13 horizontal wells

2008 plans: Drill ≈ 140 vertical wells> 20 horizontal wells

Carthage

Stockman

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Haynesville ShaleDevon’s Position

• Approximately 483,000 net acres under lease– Royalty burden less than 20%

• Four wells currently on production and one well in the completion phase

• First horizontal well will be drilled in Q3’08

• Early estimates of > 70 TCF of gas in-place under Devon’s net acreage

• Continuing to evaluate acreage and working to optimize location selection and accelerate development


Canada Oil SandsJackfish and Jackfish 2

Field characteristics:

• Low F&D

• Flat production profile (35 MBOD)

• Long reserve life > 20 years

• Working interest: 100%

Each project: 300 MMBO EUR

2008 Jackfish plans:• Ramp up production

2008 Jackfish 2 plans: • Expect regulatory approval (Q3 ‘08)

• Complete engineering and budgeting

• Sanction project

• Begin construction

Jackfish 2

Jackfish

B. C.

Alberta

Sask.

Q2 exit rate: ≈ 14,500 barrels per day

13


Iron River

Manatokan

End Lake

Lloydminster

Lloydminster

Net acreage: 2.1 million

Q2 ’08 net production: ≈ 42 MBOED

Multi-year inventory ≈ 2,000 risked locations

Low-risk development

Manatokan plant expansion underway• Expected completion: Q4 ‘08


2008 plans: ≈ Drill 445 wells

NET PRODUCTION

0

10

20

30

40

50

2003 2004 2005 2006 2007 2008e

MBO

ED0

60

120

180

240

300

MM

CFE

D

B. C.

Alberta

Sask.


North America Onshore Position

OK

TX

NM

WY

MT

Largest U.S.-based independent producer

Net acreage: ≈ 5,164,0002008 plans: Drill ≈ 740 wells

2nd Largest independent gas producer

Net acreage: ≈ 1,145,0002008 plans: Drill ≈ 50 wells

Net acreage: ≈ 623,0002008 plans: Drill ≈ 240 wells

Largest independent gas producer4th Largest independent oil producer



Largest independent gas producer

Net acreage: ≈ 1,863,0002008 plans: Drill ≈ 1,100 wells

Alberta / B.C.

Montana

Wyoming

New Mexico

Oklahoma

Texas

Major player throughout central / western U.S. and Canada

AlbertaB.C.

Rankings and drilling plans as of 8/5/2008. Acreage as of 12/31/2007.

14


Gas Gathering & Processing

Profitable midstream enhances operational effectiveness

Ownership in 11,320 miles of pipelines

• 4,700 Domestic

• 6,620 Canada

Ownership in 63 plants

• 7 Domestic

• 56 Canada

2008e Marketing & midstream operating profit: $700 - $760 million


2007 Results & 2008 Targets

Delivering competitive results

240 – 244 MMBOE224 MMBOEEstimated production(1)

450 – 480 MMBOE390 MMBOEDrill-bit reserve additions:

$7.8 – 8.1 Billion$5.8 BillionDrill-bit capital:

$0.5 Billion$0.4 BillionCapitalized G&A and interest:

$7.3 – 7.6 Billion$5.4 BillionE&P capital budget:

2008e2007

(1) Production from continuing operations. Note: Includes non-GAAP measures, see appendix for required disclosures.

15


Low-Risk Production Growth

MMBOE

2006 2007 2008e 2009e

Note: Production from continuing operations.

200224

240 - 244265 - 280

CAGR ≈ 10 - 12%

Strong production growth from existing assets


Operating Strategy

• Optimize near-term growth throughdevelopment of low-risk property base

– Large individually-significant projects

– Principally North America

• Provide long-term growth opportunitiesthrough investing in high-impact projects

Balanced investments yield sustainable growth

16


2008 E&P Capital Forecast

9%

17%60%

14%21%

79%

$7.3 – 7.6 Billion $1.5 – 1.6 Billion

Long-Term by AreaTime Horizon

Long-Term

Near-Term U.S.Onshore

Canada

International

Gulf


Exploration InventoryNet Unrisked Resource Potential

GULF OF MEXICO CHINA

4 – 7 BBOE40 Prospects


BRAZIL


Multi-year, high-impact

17


Exploring on 4 licensed blocks

1 – 2 BBOE of net unrisked resource potential

2008 plans:

• 11/34: Drill in second half ‘08

• 42/05, 53/30 & 64/18: Acquire 2D

& 3D seismic to accelerate

evaluation programs

C H I N A

11/34100% WI

15/3424.5% WI

53/30100% WI

64/18100% WI

South ChinaSea

Yellow Sea

2008 Planned Exploration Activity

China Exploration

42/05100% WI


BM-BAR-3100% WI

BM-CAL-13100% WI

BM-C-3025% WI

BM-C-3240% WI

BM-C-860% WI

BC-217.65% WI

Exploring on 9 licensed blocks(4 blocks with Petrobras)

2 – 4 BBOE of net unrisked resourcepotential

2008 plans:

• Finish 3-D seismic reprocessingover 4 concessions

• BM-C-30: Currently drilling

• Mobilize Deepwater Discovery drill ship to Brazil late 2008 / early2009

BM-C-3450% WI

2008 Planned Exploration Activity

BM-C-3535% WI

B R A Z I L

BarreirinhasBasin

CamamuBasin

Campos Basin

Brazil Exploration

18


Texas

Louisiana

Deepwater Gulf of Mexico Exploration Trends

Lower Tertiary Trend196 Blocks

Miocene Trend160 Blocks

Block Ownership:• 2nd largest in trend• 1st among independents

Block Ownership:• 9th largest in trend• 3rd among independents

Lower Tertiary trend data for Alaminos Canyon, Keathley Canyon and Walker RidgeMiocene trend data for East Breaks, Garden Banks, Green Canyon, Atwater Valley, Mississippi Canyon


Estimated Discovered Resource Net to Devon: 300 – 900 MMBOE

2≈ 800’26.7%2006Kaskida

2> 350’25.0%2004Jack

3> 450’22.5%2003St. Malo

2> 450’50.0%2002Cascade

Wells Drilled

Net Feet of Hydrocarbon Sands

Working Interest

Year DiscoveredProject

Devon’s Lower Tertiary Summary of Discoveries

19


TertiaryLower Trend

Trend

Devon’s Lower Tertiary Prospect Inventory

• 4 significant discoveries to date

• 25 additional prospects

Devon Discovery

Devon Prospect

Cascade

Jack

Kaskida

St. Malo

Merope

Cherry Bomb

Capella

Sardinia West

Propus

Bottle Rocket

Gorgona

Navi

Knik

M80

Jericho

Vinita

Cypress West

Bass

Azha

Dart

Latigo

TertiaryLower Trend Ponza Deep

FistKampilan

Bolt

FuryWombat

Damascus

Cordoba


Texas

Louisiana

Devon’s Miocene Prospect Inventory

Devon Miocene Prospect

Devon Miocene Discovery

Mission Deep

Sturgis

Impala

Colorado

Erie

Tuscany W

Sabre

Winter Park

Arbalest

Shelby Petard

ChapsKoala West

Sturgis North

Portage

Koala East

Comet

20


3 – 5

300 - 500+

50%

25

Lower Tertiary

1 – 2

100 - 250

55%

15

Miocene Total

40Undrilled prospects identified:

50%Average working interest:

4 - 7 Devon’s net unrisked potential (BBOE):

100 - 500+ Gross potential per prospect (MMBOE):

Gulf of Mexico Deepwater


Texas

Louisiana

Upcoming Deepwater Gulf Exploration Activity

Jack No. 3 AppraisalQ3 2007 Spud

Currently Drilling

Sturgis NorthQ1 2008 Spud

Currently Drilling

Cascade No. 3 Q4 2008 Spud

Deepwater Miocene

Deepwater Lower Tertiary

St. Malo No. 4 AppraisalQ4 2007 Spud

Currently Drilling

Kaskida Appraisal2nd Half 2008 Spud

BassQ3 2008 Spud

Currently Drilling

Mission Deep AppraisalQ3 2008 Spud

Currently Drilling

DamascusQ3 2008 Spud

Koala WestQ4 2008 Spud

21


Resource Potential InventoryStrong Foundation for Growth

10,770

100

180

250

330

510

580

610

790

950

1,150

2,270

3,050

Risked Total Resources(MMBOE)

1,280890East Texas

530820Canada Unconventional

24,080

180

390

280

720

830

980

4,740

1,170

6,240

6,840

Total Unrisked Resources(MMBOE)

20,319Total

225South Texas

47Gulf of Mexico Shelf

500

1,570

3,550

2,230

480

2,260

67

7,500

Total Risked UndrilledLocations

Mid Continent

Permian Basin

Rocky Mountains

International

Canada Conventional

Canada Oil Sands

Gulf of Mexico Deepwater

Barnett Shale


Emerging Play Exposure

8,5501,330Total

520East Texas Unconventional

110Mid Continent Unconventional

120Rocky Mountain Unconventional Gas #2

Unrisked Resource Potential

(MMBOE)Net Acreage (In Thousands)

160Canada Unconventional Gas

420Rocky Mountain Unconventional Gas #1

22


Why Own Devon

• Assets: The best of North America

• Significant resource potential

– >20,000 risked undrilled locations

– 10.8 BBOE risked potential

• Focus on growth per share

Thank You.

23

Appendix A

Additional Low-Risk Development


NET PRODUCTION

0

4

8

12

16

2001 2002 2003 2004 2005 2006 2007 2008e

MBO

ED

0

24

48

72

96

MM

CFE

DGroesbeck

OK

TX



Q2 ’08 net production: ≈ 90 MMCFED

Horizontal success at Nan-Su-Gail and Oaks

Potential horizontal locations: ≈ 125

2007 activity: Drilled 17 vertical wells4 horizontal wells

2008 plans: Drill ≈ 12 horizontal wells5 vertical wells

Nan-Su-Gail

Dew

Bald Prairie

Personville

Oaks

Limestone

Freestone

Leon

Robertson

Texas

24


Net acreage: 54,000

Q2 ’08 net production: ≈ 38 MMCFD

6 operated rigs running

Constructing gas processing plant• Processing capacity: 200 MMCFD

• Completion expected: October 2008


2008 plans: Drill ≈ 110 wells

Woodford Shale

OK

TX

Hughes

Pittsburg

Atoka

Coal

Pushmataha

Oklahoma


Washakie



Q2 ’08 net production: ≈ 111 MMCFED

Undrilled locations: > 300

Low-risk, tight sand gas

Initiated drilling on 1st horizontal well (Q2 2008)


2008 plans: Drill ≈ 110 wells

NET PRODUCTION

0

4

8

12

16

20

2003 2004 2005 2006 2007 2008e

MBO

ED

0

20

40

60

80

100

120

MM

CFE

D

25




Q2 ’08 net production: ≈ 88 MMCFD


2008 plans: Drill > 110 wellsWY

COUT

NET PRODUCTION

0

5

10

15

20

2003 2004 2005 2006 2007 2008e

MBO

ED

0

30

60

90

120M

MC

FD

Powder River

Projected net production to exceed 100 MMCFD by the end of 2008

NatronaConverse

Johnson

Sheridan

Campbell

Wyoming

Montana


Access Pipeline

EDMONTON

HARDISTYEnbridge P/L

To Midwest

Express P/LTo U.S. Rockies

Terasen P/LTo Pacific NW

ACCE

SS P

IPEL

INE

Atha

basc

a

Enbr

idge

P/L

IPF

Cold

Lak

e

IPF Cold Lake

AO

SPL

Sunc

orO

SPL

Rainbow P/L

Pembina P/L

Access BitumenBlend PipelineAccess DiluentPipelineOil Pipelines

From Edmonton, Alberta to Jackfish: ≈ 200 miles

Devon ownership: 50%

Bitumen Blend Pipeline:

• Jackfish to Sturgeon Terminal: 24” pipe

• Sturgeon Terminal to Edmonton: 30” pipe

Diluent Pipeline:• Edmonton to Jackfish: 16” pipe• Can access condensate, synthetic

crude and light oil markets in Edmonton

System designed for expansion to serviceadditional phases of Jackfish and/or thirdparty crude

JACKFISH

Flexibility enhances economics

Sturgeon Terminal

26


Polvo Project


1st production: July 2007

Expected peak production: 50 MBOED gross

B R A Z I L

Appendix B

Additional High-Impact Exploration

27


TertiaryLower Trend

Tertiary

Lower

Trend

TertiaryLower Trend

Tertiary

Lower

Trend

Industry Discovery

Industry Non-Commercial

Results Unannounced

• 14 announced discoveries out of 23 wells drilled

• Trend data for Alaminos Canyon, Keathley Canyon and Walker Ridge only

• Additional penetrations along trend to the northeast

Cascade

Jack

Chinook

Stones

St. Malo

Kaskida

Tobago

Gotcha

Great White

Silvertip

Trident

Tiger

Toledo

Baha

Sardinia

HadrianDiamondbackDas Bump

Tucker

Julia

Lower Tertiary TrendIndustry Results to Date

Hal

Green Bay

Chuck


Phased Development OptionLeased FPSO

28


Phased Development OptionOwned FPSO


Large Field Development Option

29


Field 1

Field 2

Field 3

FSO

Multi-Field Development Option


5th generation moored semi-submersibleowned by Diamond Offshore Drilling Inc.

4-year fixed term contractsecured by Devon followingrig conversion

Rig specs:

• Rated to 35,000’ drilling depth

• 8,000’ water depth rating

• Enhanced 12 pt. mooring

Ocean Endeavor

30


New build 5th generation semi-submersibleowned by Seadrill Management AS

6-year fixed term contract securedby Devon following rig construction

July 2008 delivery

Rig specs:

• Rated to 37,500’ drilling depth

• 10,000’ water depth rating

• Designed and outfitted for subsea completions / development

• Dynamically positioned

West Sirius


Sub-Salt Seismic Imaging

SALT

Time Migration Depth Migration

Source: TGS-NOPEC Geophysical Company

31


Alaminos Canyon, Keathley Canyon & Walker Ridge

7790

245

196178

167 159

128 124

98

Chevron BP Statoil Anadarko Hess Shell Petrobras ConocoPhillips ExxonMobi

Lower Tertiary Block Ownership

Source: OWL Database ©1991-2007, Lexco Data Systems, Inc. – August 2008


5,700’50%DVNKeathley CanyonFury

6,721’50%DevonWalker RidgeBolt

6,232’50%PetrobrasWalker RidgeCordoba

7,030’25%ChevronWalker RidgeDamascus

4,685’50%DevonKeathley CanyonDart

5,820’50%DevonWalker RidgeFist

6,237’12.5%ChevronKeathley CanyonCypress West

6,324’33.3%ChevronKeathley CanyonCherry Bomb

5,511’75%DevonKeathley CanyonCapella

6,475’50%DevonKeathley CanyonBass

4,189’16.7%AnadarkoKeathley CanyonBottle Rocket

5,583’100%DevonKeathley CanyonAzha

Prospect Water DepthDVN Block

W.I.OperatorArea

Lower Tertiary Prospect Inventory

32


5,525’75%DevonKeathley CanyonVinita

6,059’25%ChevronKeathley CanyonGorgona

4,200’100%DevonGarden BanksJericho

6,500’50%PetrobrasKeathley CanyonKampilan

6,764’100%DevonWalker RidgeKnik

5,500’55%DevonAtwater ValleyWombat

6,062’35%ChevronKeathley CanyonSardinia West

6,219’25%ChevronKeathley CanyonPonza Deep

6,364’50%DevonKeathley CanyonNavi

3,422’100%DevonGarden BanksMerope

5,645’50%ChevronKeathley CanyonM80

4,094’50%DevonKeathley CanyonLatigo

Propus

Prospect

6,482’50%ChevronKeathley Canyon

Water DepthDVN Block

W.I.OperatorArea

Lower Tertiary Prospect Inventory - Continued

090308 - devon energy lehman brothers -...

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