DVN - Earnings call transcript Q3 2018 | Devon Energy Corporation

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Operator

Welcome to Devon Energy's Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. This call is being recorded. I'd now like to turn the call over to Mr. Scott Coody, Vice President of Investor Relations. begin. may you Sir,

Scott Coody

release, good our hope that financial This our last and report. detailed chance were had to night. earnings includes package review and data guidance morning. you, and everyone operations I the released forward-looking Thank operational disclosures

today's slides call will These can make number refer the available for sure prepared over follow the to during cover our website Dave few slide remarks everyone President we On Devon. to today, Additionally, his will on so along. our slides our have supplement remarks. are call will we of that a directions provide CEO, preliminary I I thoughts prepared and then turn to and strategic on Hager. will items to and Dave the the call our

Operating in Vaughn, which that number perspective commentary this of answers are assumptions, may risks differ plans, we provide And and a I comments covering beyond remind the guarantees Officer, cover uncertainties, questions (XX:XX-XX:XX). actual control. to are Tony These should resource of our head Financial of Overall Chief dynamics on XX our are results statements performance forward-looking before a materially. to his not will last our would and to expectation and like from Jeff are we future answers call to up subject Dave, you contain will These prepared that our financial Officer, today and forecasts, Q&A. estimates comments market statements many and and minutes this few Canada. U.S. highlights. current will remarks highlights Following with our Ritenour, plays our wrap around then on the Chief

our President factors, CEO, that, Dave For please And our the turn Hager. Form review with a and call over to risk XX-K. of will I see

David A. Hager

and you, morning, good everyone. Thank

on call the Devon. of messages three will related today's key For to comments touch my direction strategic

to of this disciplined business, commitment is returns, measured program correct development business, At I windfall cash will we generate increasing investment the our key shareholders that and free cash our for any be Devon, want through our will plans. a to future flow of above believe approach is leader Turning level cash not amounts reward movement. we more this I of returns. our X, benefits levels balanced message simply Devon, cycles first the and With slide corporate fundamentally is this model grow of the the disciplined, optimize base all in to with and emphasize multiyear steadier free to the activity. the operating strategy to absolutely higher our convinced higher in business pricing am capital manifest plan E&P flow a

is to commentary value resulted backstopped actions in by accomplishments date. bold this several which Importantly, year enhancement has

to growth of in is space oil success light modifications Our no plan this capital running the E&P spending. with is our This combination ahead unique year. a

taken our of materially an have million cost $XXX delivering structure, We basis. annualized to on corporate action savings improve

have second in resulted generated year. and, divest inflows this nearly of XXXX with has capital Our we free billion discipline coupled cash flow proceeds, the in excess $X of cash half

times in strategy objectives underpinning share shareholders XXXX the We differentiating are $X we our our the of to through to program. returning we billion very raised maybe amounts expect most is have model high in level I And repurchase have of on our of this strategically deployed excess are disciplined plan. we deliver net continue all, the debt at cash and highlight business a to of executing All to results future. to cash to EBITDA a reduce debt the our X flow portion industry-leading X.X important ahead and of two target years nearly

Basin Delaware we to are key our second assets. Looking my that is message investment XXXX, ahead world-class accelerating in

the investment to a increasing total from with XXXX. than be our a wide to by billion this X, greater capital billion asset Turning E&P margin activity, XX% billion. nearly top by directionally company in will from to $X With expect $X.X range perspective, $X.X Delaware we to our slide funded

our past activity in given easy showcased QX As report, massive operations and decision productivity have change well in Delaware experienced we the in the increased allocation over capital the an is step improvement returns the year.

development have infrastructure secured chain, execute our the to supply on plans. Importantly, and capacity takeaway we

and assets the XXXX Delaware, activity contribute the our funded the Beyond expect also spacing, highest oil and our growth of approach refined doubling in to our in With Rockies for us STACK XXXX. growth will be second asset in we STACK the also to Rockies the important infill be initiatives. to will

have STACK, of Specifically confident we spacing spacing X the unit. optimum X determined wells we are per well very the drilling to in

capital program to at growth healthy expansion our expected This and volumes allocated prices. very an way designed of the flow in U.S. cash and resource is inflection capital both achieve importantly, high-single at returns quarter light to advance drive basis. Better in days assets XXXX rate soon plays. focused XX% for asset the program a today's STACK. highly will is margin oil U.S. to XXXX marks XX% growth digit total our this in share retained STACK. from This a strip point in are Most on competitive projected to to company-wide on deliver oil oriented be highly In per aggregate, XX% with volumes retained approximately high-growth total development our program the

multiyear associated message X, performance slide convey with track want that on Moving our to on the final the I deliver plan. are we to key business is targets to

U.S. be all goals we're business substantial the date, Devon not content plan to be on will accelerate our While Delaware this by with is funded growth want as so, details top value of cover the but progress will with effectively to will our we The management the product managing will costs. meet we mix will clear: exceed world-class plan. efficiencies This made allocate production I To have our just and we the barrels, at in striving and by growth. the returns platform. to our team associated of slide, not multiyear transition maximize toward not this capital we higher-margin do prioritizing asset will above I investment and

to portfolio. We strategic will opportunities grade continue to the high evaluate

generate forward, cash Going on turn for call we return beyond to current program. will additional and the excess flow, I billion growth dividend over that, additional the $X we our as will through the With Tony our free to our shareholders prioritize cash operations. share commentary repurchases the in of

Tony D. Vaughn

and an on dynamics our be provide also to in will thoughts current related key Thank few focused a you, our some Canada. remarks Today market Dave. messages on will growth my platform U.S. the I point believe well on world-class with in fair to achieved massive improvement it with XXXX. state the slide Basin Beginning Delaware these have in X, reached that assets productivity I inflection is

Bone quarter legacy also focused our the XX% from of productivity day, outstanding the change IPs this core three improved aggregate, economic than BOEs prolific between in well in our year. productivity programs While by step our our have of stole by to development technical more combination XXXX play. driven the Wolfcamp XXXX reaching a staff This and work consistently in average delivered formations, the area. these more is and with activity in wells good per Spring the program in the Leonard headlines Delaware results this In has compared

oil decline the quarter the and in excites scalable positioned takeaway in What assets as we into This further XXXX. strong to me growth well is activity advantage are investment we as oil to will expect accelerate XX% Delaware these unit to per Basin fourth and LOE provide. rates in XXXX the deliver exit growth in around upfront plan in just water in to higher will and targets due top Importantly, volume achieve XX% XXXX exploit tier result power, made much infrastructure. have XX% XXXX the we the rate to

to slide next X, I'd on the my to infill STACK shift to Now like commentary our with associated spacing program. steps moving focus

you infill over-pressured present the oil unit up with initial drilling XX to per window. associated our with As acreage were aware, are designed wells spacing to the test in pilots upside value net our

from both we of X and go-forward activity which our spacing XX recalibrated per these provided have advanced were we quickly Collectively, tests XX designs and in respectively. of result, strategy approach data spacing testing to further at and be well flowback development STACK. project, initial understanding optimal in a sized infill the our the will four the Bernhardt unit, With our and wells per to as Horsefly, play, completion section wells the at results our received Showboat have improve eight

you can spacing density projects several map see achieving in As on of X, production these slide QX. are lighter first on the

development. from XXXX. before confirming Turner this By With Niobrara and expectations rigs the our to is mid-XXXX. The growth year, ready appraisal would with of are discuss strong XX% of accelerate last more the growth we expect is of is Powder resource in XX to and highly the high-return targeting optimal plan best I wells the Basin, well program, the approach Turner no of from this be production shortage the in momentum future activity. activity economic will next recent to activity of With to to Mario our and highest XX% deliver asset which Super this results growth low-risk, to the activity STACK than expect by drill drive field, Upper early development more asset America. we with development projects I costs declining ready the Importantly, end vast are that The that we in in our what North underpins our in accelerate during view than are production Meramec strong for sweet activity full-field wells we this versus This spot, new believe Meramec these vast inventory and and opportunity growth. this River will this results by the the competitive legacy majority be STACK growth be activity, emerging drive these early XXXX, portfolio to U.S. year. highly second we like have in returns. our undeveloped, Coupled asset to our majority to will funded double four program year,

our also with We more aggressively Niobrara delineate new will wells. in XXXX than more potential XX

platform potential the beyond. for of growth during at a resource facility we as our we for the incremental and opportunity XXX,XXX few Canada, play be disclosed turnaround net significant ago, an in us position XXXX provides Our acres a the now And scalable Devon Niobrara work and is efforts repair that in finally, complete. weeks important identified has to repeatable Jackfish

in of complex operational, nameplate were we capacity. Jackfish at fully and producing October is roughly Our XXX%

production on that this based note the have to was is our continue However, are we in rates the issued incorporated ago. decisions a future important pricing, lower at pricing November, these QX expect proactive should weeks few and weakness with undervalued. to into we defer we adjusted extremely in guidance continue Jackfish. be action It in our real-time volumes curtailment These to barrels to previously

see on As we slide initiatives in you have X, look when protect can XXXX, ahead we cash flow. several flight to help to

will hedges. to opportunistically financial continue We add

our a access Gulf contracted for actively tranche we transport for Coast firm portion have We a advantaged of and real terms pricing of volumes our are to negotiating the production.

it America. declines, Canada, important Looking which minimal capabilities. asset, long premium compared focus on North attributes low this be asset capital highly generating believe maintenance I at include to beyond of other long-life near-term and unique it a the capital plays pricing attributes term comes valued intensive the substantial attractive issues free of cash in this When valuation to across to is should flow these

just more our for I normalized Jeff will turn $XXX additional flow. a price last environment, cash our over year, the on over financial this At assets Canadian call to in in results. generated point, commentary fact, In million

Jeffrey L. Ritenour

year with key highlights today slide our the Thanks, to were U.S., few is low rates in Gulf our period to On where spend Devon our capitalize to Approximately provides we secured pricing which and waterborne compared revenue Coast, place the flow Across a driver my key doubling Tony. are NGLs compared growth and assurance regions, producers the transportation one largest a access we of XX% a ago, tailwind pricing the and quarter. Conway barrels. nearly NGL in like the great I'd start fractionating same as this quarter. able with of volumes the for of our advantage through of to to pricing contractually Mont Belvieu, reserve is Belvieu have capacity X, for key structural our Kansas. have NGL financial to premium Mont market the a time prices, access on landlocked we market. discussing access have a the fixed to for Y-grade in NGL-producing to

of we plans through secured end have supports the In capacity growth our the currently fact, excess decade. fractionating that

also our and excellent Combined quarter. revenue came capital investment our addition X% cash third we stream, excess in in quarterly completely midpoint operating that the generated the discipline. noncore enhanced asset were our $XXX at investments results from point. spending In This our the In funded exceeded excess the to minor the within guidance stronger flow, capital with was free million inflows quarter, of cash with proceeds quarter, $XXX of in cash the flow during million in closed QX. sales total below

at like Devon's begin Moving the common current of have the an initiatives Devon with provide to excess to date. $X on share cash year prices, slide underway inflows to we our billion now strategically which XX% stock. about update X, I outstanding repurchase would to I'll represents generated program, at deploy

have XX buyback at of expect our $X repurchased million shares XXXX. complete $X.X today, total billion. quarter As during the now a billion share of approximately We of to we first cost program

And addition we are owners our dividend with repurchase In Devon's growth and to investment-grade date the have interest strengthening by share with payment. than Devon financial quarterly shareholders along can our in made XX% by highlight also dividend upstream our $X like sustainable more a significant XX%, retirement debt flow, Earlier growth growing expect EnLink, raised to we this to billion. of over cash time. progress position. our and sale cash we to our the dividend in of our continued of with year, with Year activity, reduced finally, we operating consolidated both debt, returning in the I'd to

retirement as are our ratio we net times are EBITDA plan. $XXX million targeted X.X our our to and maturing an expect ratio the of to over to to this we of we Additionally, they execute further today, leverage reduce where on next the lower of With incremental strip with debt. months expect debt within X prices trend multiyear

summary, in multiyear disciplined the significant our we with executing have So strategy plan. progress made associated financial business

even further that, and back With evaluating investment-grade shareholders I'll the position. we Looking into cash to opportunities decade, the XXXX along strengthen prioritize our call Q&A. turn to of over to our with next will financial return to Scott continue for to the

Scott Coody

Thanks, Jeff.

will follow-up. We to the question Please yourself and one Q&A. open limit now call to one

we first as our have With you that, further time questions, re-prompt you If permits. take can operator, will question.

Operator

Subash Chandra Guggenheim Your go first Securities. question comes Please from with ahead.

Subash Chandra

Good assets everybody. noncore proceeds, on show that sales, was something EUR morning, think first My is expected thank Midland Hi. timing was update I The an report. for Yeah, you. you your question on asset the so near-term. in instance, divested ops the the on

valuation statements, Eagle Canada, Husky/MEG if on on which conversations BPX Canadian And referred have Second, you but thoughts third, Ford. in Energy been in the the your given thoughts your prepared there of to assets your with situation.

David A. Hager

Subash. Hi,

I think, those. me Let is on to remember noncore But all first, Dave. the this – try

the plugs you rooms more up on report Central slide divestments, production operations the you in the data up then the look that of noncore and XX have Rockies But open, we detail still the that. the platform, Basin. arch of on two Basin our Central Permian COX at the Basin On in can gives

So rooms both are see you of those scale data open; divestments. those the can

retain valuations the decision this floods for the we assets. of that on to based that at the a point and Basin, divest operated have have made received in portion to Midland We those portion the on non-operated we

billion process two is will the the are asset. ones target. assets concluded. reach that that's essentially So remaining the But that $X Those

obviously one maybe to in In third Canada, question. Canada, ahead, trying here, sorry. Subash. remember I'm – Secondly, Go regard and I'm to, regard the

Subash Chandra

was that third one just – yes. going was to you I tell

David A. Hager

BP, BP. yeah. Oh,

me constructive far and very a position. we and likely BP be early have that we one had on third working can very had And on. first. think No them all but so that with conversations been conversation we point, Ford, have cover with that tell Let the in Eagle commitments constructive look this that rig forward I and we've you positive, some firm to to moving at we'll is it the

On good made all news think, from that an MEG. for Husky I really obviously that that attractive valuation, was So front. Canada,

talk and assets in basis what valuation of uniquely think we why I that have obviously made that that that unique why and that that a marker better the to MEG offer offer the interested you up is they value the MEG for on there. and the of they're we made assets, obviously but them think long-term shows

it number, interesting think an shows we have. I and the So it was value

Subash Chandra

flowback elaborate in the was And performance if Right. hurt my you the pilots. Bernhardt. could is particular seems if you. which of in STACK about And talked that some that other the could Well, your thank strategy to in just and you strategy pilots flowback elaborate follow-up also on used have you

David A. Hager

who's in area that. to Wade? the that going have We're Senior Wade President Vice Hutchings charge of talk about

Wade Hutchings

think tested note rates, looked So on what (XX:XX). done it. are, measured bit program what that it we'd that I I Bernhardt indications oil been looks bit little Horsefly on a on may very early is to at concluded the we (XX:XX) aggressive is on broadly too We an past positive high similar flowback flowback and used a Showboat strategy just the approach. have from we would of level wells. But operational terms in a The decline more that we

we You'll as continue (XX:XX-XX:XX). us that move to optimize

Subash Chandra

Thanks, Okay. everyone.

Operator

from comes JPMorgan. Your next Please Jayaram question ahead. go with Arun

Arun Jayaram

of XXXX. about a on light morning. thinking JPM. Good growth Yeah. how oil question Had outside in the quick Arun Jayaram you're from Delaware

had for XX% about growth but Rockies? STACK target thinking you are oil a I Eagle like the at the how think Delaware, and you Ford,

Scott Coody

with that Delaware's operations to that see contributor obviously highlighted firm BP, the growth we that Dave the perspective. in well a Tony script. a their right, growth have too Ford. should level STACK and high-level, regard activity on next will Eagle come in you'll that in most sort be of we deliver significant the the to us Rockies, hit year. about portions working give early well report a going oil At start guide early ramp the on for Arun, well, talked here out talked as our to Obviously, to about from partner, an We're the up with our Rockies this as bit to particular of It's that still budget as you Scott. growth. as especially any And is it and

in not to the the timeframe. in beyond would capital and regards also that midyear see targets bring we with you'll the Delaware, that asset kicking put up start we've around with what So call STACK for firm But our what for and here probably each we'll of do, that plan which guidance to specific the supports that only wells QX growth profile. typically we be online but amount out

David A. Hager

the be of oil going say, you growth the is U.S. the driver Delaware Arun, As Basin. biggest to

there growth optimized oil we four have of that eight spacing we make do drilling spacing understanding feel optimized projection oil want Now, wells unit. to XXXX for much built we now the I do new based into what in our STACK that on our have of and to growth some is, XXXX we have spacing (XX:XX) better clear for is STACK per as expectations in

Arun Jayaram

the from relative WCS screens the in was what potential. in as if Dave, it. of firm that And mitigate we see do rail maybe could of heavy transportation initiatives to Got some terms comment in get risk a well our of you to on the you series you it. Gulf wondering pricing? can I we of uplift think you margin have those Got about as the oil. to initiatives highlighted both how Coast the

David A. Hager

the Lafferty's marketing do our And I'm in efforts. here expert Kevin our as of real room let in that, charge going Arun, to

Kevin D. Lafferty

Good morning, Arun. is Kevin. This

South on all, Coast, have on of they that have the we of but years when the the season we First talked to barrels XX% had capacity, that our it's this, and going several comment and about open firm of Enbridge Flanagan the the ago piece system, on about that. and have capacity we have Gulf blended previously we

all barrels now. for So we of are portfolio down Houston, to our that's and a been to the able way move those years part several here

assets used the is every Mid-Con On rail really, here, any or what a big picture we the This than taking approach. do we're side, with we're portfolio single have how different is to of no product. the Delaware the or trying our

of So financial to sales firm, combination local that other we a sales, cetera. hedging, people have export, use et

is those come putting for to that of being So we're to this derisk sales, end; years to And and expansion or be barrels find of load the the the able and need of or mitigation into to move. it to all XL have railcars trains; get the trying it Mountain really aggressively our requires transportation terminal; But unit see we together rail rail solutions. part Keystone to in you pieces complexity to any a your portfolio of Trans bridge tankage course on the other then and to a future. several of

Arun Jayaram

Great. Thanks.

Operator

Your ahead. next from Citi. question Morris comes Please with Bob go

Robert Scott Morris

lot here, the But parent looking the quarter your the were a about given look closer IPXXs quarter higher last type to XX% you. STACK although below running below well Coyote well the parent curve the MBOE, Thank that type this lot to look X.X X.X IPXXs of IPXXs at Showboat, further I decline. only Dave, know curve.

peers four know a degradation that going to you about And per few well expect in parent range four here XX% if forward? type noted wells you to section, quarters here one wells eight to So zone. what of would of per degradation your reference, section ago versus curve go I a per for going

forward you do then, your in going So view that, program? how

Wade Hutchings

Bob, one. this Wade I'll is Hutchings. that take

the northwest It's of unique zone. lowest Meramec play, on a for the the area First, let side actually me reservoir. clarify really Coyote that very you the there

performance Coyote. wells of there seeing a the quarter what strong if like are in area that targets play really than we've you the the volatile saw there. window, in out Showboat of And core and actually all focus We reservoirs at the saw has you've we're primary put on As we've will. lot, but over South, well quarter, the been different oil our

a even this are fourth not type new So we are us quarter four mode. IP ready we to and in That's what infill critical broadly give for coming online really new because today that degradation EUR the wells the expectation per of seeing narrow to in spacing curve we're We to clear. model confirming We're seeing have eight an be. are fourth first of section we're the the course at have tracking will early well well They're that internal results encouraging. that in approach The working. here our is essentially part against. quarter density this lighter down

more if think just Bernhardt we already confirmed I little and Horsefly, Showboat. step of saw I with a what two and at back broadly those lot indicate a projects

of upper Upper than wells is lower critical. that the And you being Lower; stronger impact more parents so the commensurate much where with And are so important, just targets wells between we've to expected. the we and lastly, and able to remind of than then parent communication saw the Meramec space performance again, is

do that to we're So are programs as the and we year, next see in key the quarter forward focusing move online things. with Upper essentially Meramec. in wells most us into fourth come is going What doing you'll three of the the

the nine-month XX% Meramec. say As will of wells Tony program in six- noted, be forward, the over Upper to

return we're to wells results reservoir as we fit-for-purpose confident efficiency spacing able much a expected we're impact. back to key every entry the is, lower, their lastly, costs the in we're The that type adjusting tailored, we're that into second that for parent to a maintain mode. really And target of mitigate we've for trying expectation. the our landing limited curve that's we're and in. thing more that us closer per-well going we're moved to point that last is stimulations original to we as the infill capital is And approach give driving We're come rates way the that doing then, driven

Robert Scott Morris

that. Great. that's color. great Wade, I appreciate

here the barrels on shut-ins; know XX,XXX I Canadian month-to-month of currently given as But really the think of in shut quarter a total I there production how a up that's steaming price sort day, without there differentials is Second you're move is works that XX,XXX as could forward in decision potentially and that in barrels around more shutting sort this question, just with the can SAGD, a you that is go of here? day, you shut max you Or your up a issues production around. causing there.

Tony D. Vaughn

Bob, here. this is Tony

kind summed employ a those it XX,XXX have you've reduced on of predicated to month-to-month that up to wells as back are recovering is have right the curtailment original on be to chosen the barrel more that day we we that I of capable the would this decision steam think quickest. really rate

it. days we we're operational put be so XX the And put X feel back within that the at into to oil to comfortable think we're able time not to we going incurring risk. to pipeline We back decide to full steam

area with the There the with increase barrel chamber additional of managing feel that. right ability day winter-type comfortable that risk carries that that pressure, that, steam at this we is with range activities: variables point. other about most an now, is So a XX,XXX really to some the and managing associated on

barrels day is a comfort you real XX,XXX the for zone us. initially just So stated, a as

Robert Scott Morris

Great. it. you. Thank Appreciate

Operator

comes go Doug ahead. Please America question with Your Leggate Merrill next of Lynch. from Bank

Doug Leggate

if Good program feature Thanks. date. it's got everybody. looks than I Todd development a I going little area the could Dave bit deeper. like and to over-pressured. a well is recollect, about the type curves morning, or XXXX. your Tony, Todd talk to It's potentially I take substantially for Delaware your plans for wonder back little second you fairly better to prominently, as It's a but

I'll into we follow-up, rate of as about go change So as we in think to next how I a the question if well well wonder speak as I if your second may. my performance can take should you year. incremental And

David A. Hager

Senior he so President Rick Vice give can Great. have best Rick's to the I'm you Delaware the in our Rick, And Doug, on detail charge answer going Gideon, of that. that.

Richard A. Gideon

This Doug. Hi, question. is Rick Gideon. Great

of As also see year Wolfcamp Draw the our results in report, and slide Lusitano. if into Cotton XX next a out look you at look we've had ops take in we our area you'll and and our XX great

that can in IPXXs And X,XXX averaged see our a you BOE given as be Wolfcamp day in You Todd will area. the growth area. there stated,

You Bone the second see Springs. can

see you'll think area focus Draw Rattlesnake the area I the in and along Cotton also. with Thistle

be So out we execute as there. to will reduce program spreading we our risk through

see program, see you'll your Bone – I balance program. and bit it Doug, going between Springs, to or a you'll tanks. your good Leonard, your be through little a Wolfcamp, that – balanced pretty Whether talk be whether pressure I'm pretty a move in think as it we

seen going productivity, the of growth year. continue to next that as hopefully to those As move increased type continue We're in see as we step change with and the XXXX. far into you've improvements improvements

Doug Leggate

I'm way can is like and these little the want exit I with rates year, you my touch this the figure just some us you I you an idea the that follow-up, guess, maybe to you think you like, could leave, exit really exit of at could what end actually, explicit on type on look to exit, guidance Rick, might your us for you but point? flow I think conservative wonder much the out. assurance that too covers XXXX are. press tricky of Guys, Frankly, at next if don't little improvement, given you've kind kind can haven't out up curves that substantial could what they is you coming might And because think a to out the still been I Delaware. you about whether But the look it's give we and a what productivity, this, if of play for given being but on getting

Scott Coody

QX more quarter directionally plans Doug, into of with of cadence process well holistic the tell healthy throughout pretty still we've But give QX that refining those the you. through targets up this in any as you but regards we're stairstep to of is I what we'll of we'll for it's you the we head is a provided here go selection proportions throughout there, and expect reporting XXXX, What from update consistent pretty our profile. firm and the specific as call. a just today, targets sort can you necessarily XXXX you, a activity ramp-up our on Won't very any each Scott. provide beyond steady year. obviously, can Obviously some growth a

Doug Leggate

at Scott, can XXXX? of assurance the the on touch exit issue you flow

Scott Coody

sorry, there. Doug, out I'm you cut

Doug Leggate

the XXXX? the at rate go guessing to on. Sorry, coming I'm out touch – on assurance could you you're flow exit

Sorry.

David A. Hager

mean a can yeah. Well, program. but I execute the gas the talk more in to cetera. about you takeaway to have we it, processing, about here little can talk bit and is Kevin et But everything line the Kevin place bottom that

Kevin D. Lafferty

lay we especially upper On slide lot oil. right. out of we absolutely is where about the in that Dave's previously, done talked this a XX things on the we've right,

over And about so next you coming it to Cactus we feel from couple name pipes online really with the that incremental years. the good all of

feel for confident that have gas room described. conversion, plenty markets On firm, the with very SoCal growth access, we even going that of still feel we And the but basin Mont firm, as have and of Western side, NGL the previously sales plans. to sales they're have though the comfortable the type side, with the and Jeff EPIC also capacity, and we allowing of we getting on for actively people and had they and we out local think our Coast also into have there's even we that XXXX us not have us NGL comfortable Belvieu, telling just to don't

as and throughout out single good feel about we So and we'll every beyond. can it be we XXXX get able best and get to product, values

David A. Hager

essentially. handling one extensive the the And have New in that, are of And we water place, infrastructures of southeast course, most Mexico. beyond in permits

Doug Leggate

Thanks appreciate the for my answers. guys. Thanks. taking questions, I

David A. Hager

Yeah.

Operator

Johnston question ahead. comes Phillips with go next from One. Please Capital Your

Phillips Johnston

Hey, you. guys. Thank

has on past have the I over years value. sense you make given an a Just takeaway the be case a recognizing the Canada question the could sale? of board of the normalized guys pricing, to that grown at that look asset that's to environment, more rail near very the Canada, to potential pipeline in to highlighted and may maximum still the pursuing in price challenge Subash's while as assume up term level on getting monetize aggressive we follow eventually also but appetite get and time just out more improved

David A. Hager

job thing have very We our the other the level each higher-decline, would normalized portfolio and SAGD – the provide offset in unconventional at obviously we in position. done flow we'll one can cash that differential on you, a through Canada portfolio be year there's Canadian every asset type Canadian the attributes to is discussion premier of an a type some that outstanding asset tell the basis. the team about can it certainly the have one active And helpful operating our has ongoing positions I free that years. And say and environment in Well, asset board the the to of of an business. that in positive an

times that we the differentials environment We that's think we encountering. of we one very understand, asset recognize And that the more that this on that to now about that relative it a not are. – asset Now but to in right have it reality right is that. the certainly discussion we with even active high because large monetizing currently obviously an now is differentials challenged of that are we're

a is it So discussion.

I look been $XX years. historically, billion you of there's done – if we've at XX over last the transactions company the about think worth

what sure the in think is So the we what of lack the do assets in position willingness It's to the decision. et make right consider of company. what are, matter right right a of for general just I truly market and asset don't the we're the the is interest making there's interest of the what given cetera, just is, company a

Phillips Johnston

low then, free normalized a it cash is yeah, more it's ton generates And a an environment, price in Okay. asset flow and of clearly decline. you as that, mentioned,

the where willing So of naturally order to stock multiple to inherent base would has the trading? to you a but be levels, an on sales your portfolio than sort Or higher rate? dilution be growth obviously that need in is asset EBITDA just streamline can't some scenario, you to comment in would a of theoretical higher currently level valuation sacrifice

Jeffrey L. Ritenour

monetize on all and strategic can, course the Yeah, monetization as extent of potential This we of to is that proposition. we we we acceleration Jeff. value Phillips. think Clearly Hey, these the those things, of to about, look as assets for evaluate talked assets but and how an there's and that complexities our that factors a of lot that as our especially above with know, valuation, we think current to discuss multiples portfolio. is broader are asset that, at like through our you Board, Dave

Phillips Johnston

theoretical and it Okay. all-cash for look or would would deal? you take stock eventually maybe be mix if a an And also a were of perspective, you be sold, cash willing to to from

David A. Hager

gets the details longer value shareholders. term, we're, but into returning of transaction, Well, I that think the obviously to our in interested

we if took for so shareholders. our into about, we And have to could how that stock, value think we turn

Phillips Johnston

Thank you, Dave. Great.

Operator

comes question with Your Please from next Brian Sachs. ahead. Goldman go Singer

Brian Singer

morning. XXXX, you. $X.X goes in that Is above lower? kind which billion consider Philosophically, to lower you cash downside that into are prices how fixed flow And to in the you. to Good the think upside, when do to if $X.X about of billion you surprises oil all do higher willingness raise CapEx case? the Thank look how or Thank CapEx prices event event your the oil you are shareholders?

David A. Hager

capital We driving returns program on that fundamentally are consistent to the believe of a our keys capital high program. one

regard that are side lower, But changes anticipate to the unless for one foresee on on either capital cash we're us capital company. course the prices our in lower flow significantly program surprise, more have we is if than to program, higher. higher or Canadian closely higher thing differentials And I not the we and very the of significant that the certainly tremendous have that may monitoring the impact do So raising do then not what the side.

to more through through the likely a We'll important dividend. repurchases we the through and most time program. would prepared either directed an deliver highest in consistent cash As be shareholders share repurchases, share above then that through increasing the we return said have think to remarks, it's and flow towards return

Brian Singer

Great. the Thank for Basin, in follow-up, And was you the trajectory that Can highlighted you. about XXXX LOE the Delaware on go one my the costs. of unit things you beyond? And to in see or you where there? the then opportunity drop talk

Richard A. Gideon

place Rick standpoint, infrastructure I the and decrease. place. But into standpoint, an put a in continue is to about This on is the the had next just talked to in change and over last over tell as infrastructure you XXXX, increases quarters, you move water standpoint, We few being as hope a rate to about XX% same, just from then earlier. provided What I Gideon years, and we've quarter, can quarter takeaway XX% the again. Absolutely. from Kevin step the you'll volume see due and talked we from handling electrical the a remember

Scott Coody

And hey, Brian, Scott. this is

few Delaware, probably, and $X.XX $X.XX to from to our as $X.XX his year. in the you we've Just upwards that, take to year, in so a look XXXX. regards with this provide And to down remarks, to Tony figures to we'll XX% be it LOE next when could to anywhere a step running certainly been talked change lower $X.XX XX% about of

expand will to play. high-quality margins continue certainly in that So

Brian Singer

Thank you.

Operator

Your Ryan from ahead. next Todd Simmons comes Energy. go question Please with

Ryan Todd

this to to XXXX cash from of on reduced Maybe to grow redeploy consistent thanks. sustainably into It cost on not distribution from least follow-up our shareholders. savings activity the commitment the numbers, of with a usage is Great, decision that, some earlier. would cash appear STACK at your

XQ the to as a think in how returning dividend program method of XXXX, completion potential we buyback that $X expected active maintain buyback about with forward the billion shareholders? cash the going versus a of program to With should balance

Jeffrey L. Ritenour

comments, is as our said Yeah, in this Dave Jeff. opening his absolutely expectation. No, that's

from targets free we've As spot there. comfortable the good beyond, We're about. feel feel we always that XXXX hit that a financial really position. one, we flow additional generate about make a and is in number sure We going sheet balance good cash we're the to in

to next done look additional to repurchase, cash again we'll our already to beyond is obviously our it's we've we that for which for growth board shareholders. billion back dividend more share then about Our utilize the so do to look $X year. go with each talk board, beyond to authorization return that, And the

Ryan Todd

results for point, the have follow-up profile That's helpful. of kind type and you maybe a what I on next feel you're confidence STACK. it then maybe of idea how Can for current terms cost productivity does year's said And and a STACK. XXXX one of Thanks. versus maybe in Great. number you ready production production? maybe plan? similar budget well the and STACK And your you the how curve update rough assume conservative you're but well that give recent is know us given a us and cut not assuming the to at you oil versus this

Wade Hutchings

Ryan, Wade. is this

I of couple pieces a think context for you. of

performance on well getting control our The here first order of the right. is spacing

what most get case been right. well per from back we've reverting us on And confident the eight geared And that right. is the for we've That's so to in results base around to spacing of wells four work We're doing, us got identified. industry important band now you're that to all thing all seeing section. quite been monitoring been really getting our now tests we've have narrow that

going density well In new terms spacing is revised a the expecting certainly of what year expectations performance any far next baked under to out future type details of say next as all would of than of what will though, view We're into reveal the year, that lower not guidance out curve for saw so you've come of out these That'll our programs. stronger certainly belt. we yet. fourth yield. these I you've our saw density programs, strong higher broadly, wells early well are quarter we come get

and way, and when parent in and results. you get internally offset And based ground cut. going on I confident space But you from we is when that think the producing both tracking that already strong the targeted wells IP, the what we'll these you in on be even key stimulate that to we're have a so we're that's properly, oil EUR them wells them

next well, infill Meramec capital ballpark we've you'd Horsefly as from your programs. that as was our good to and on for the year part Bernhardt question results that think side, the delivered certainly for of in I we're a aiming guides look

Ryan Todd

(XX:XX)

David A. Hager

data, basis nearly eight course It's a production based early through fact that we're brought here brought you to imagine the quarter, we these half we're that wells nearly we delivering of that is confident about. going based with on talking what we've on the Without based in fourth so data date four to detail, very the but we're today, the we're in wells the lot data and so still wells. some through that online that we on and to of sit can halfway quarter, of we've planned fourth there seen production as on

Ryan Todd

I Thanks. the appreciate additional color.

Operator

Meade go Your next question comes ahead. Johnson Please Charles Rice. with from

Charles A. Meade

And morning, if want to more you test your Good I thing there. to team whole it. but to and I of this could add a a a Dave, you to bit I spacing on STACK more. see wanted little bit lot just have chew just guys given detail, little

going four talk exclusively are not going but – to guys you going Meramec. also about Upper to to eight DSU. it You And Meramec, all of per are sounds be wells they're to Upper like be most those

at you the talk you eight, about wells, you're landing can different be when that, it And it's it's many and zone two? from when looking to four you're you're when talking four talking landing one going go case to So is wells? zones eight how

David A. Hager

I'll this, Yeah, Wade cover help start bit too. out him but and sure a here I'm will to little

STACK, the So geology across move too. as the remember changes you

drill optimum across entire as in Meramec the the zone isn't same complete is the you and what the So to move necessarily play. across

the from Wade, So that's you there. And can go part of to answer it.

Wade Hutchings

That's Yeah, thank you, Dave. absolutely true.

or spot volatile every core for the of evaluate I think three that are DSUs. answer of four my those zones to literally on still just one I'll landing limit we of the play. There the complexity focus sweet oil

pilots early communicating communicating, though, One and is certainly stimulation, of learned pressure fracture our appears the also that during a we've production. basis upon key on are zones that those it infill things, from

So and moving that forward how as one develop now, at we really Meramec interval reservoir compartment, it. influencing that's really are to we looking are

moved has Meramec us infill we've that Now than better generally mode. well Lower, into specifically, heard note performance you've already the Upper had particularly the much as

on a in Lower Upper. of And a two in basis, Meramec so over will that we viable one the bias see we the to or target, wells will, a put But case-by-case where wells three-quarters we DSU.

means Getting And to lower zones. that of the two end four just much across so, to high spacing we is likely the end The more the spacing yes, spread be wells you're Meramec. on focused likely near that generally of eight-well would up that correct. Upper

Charles A. Meade

Got it. That's helpful.

David A. Hager

see that's It's make obviously, what answer, data don't have reservoir are all we But calls. is to is those reservoirs why line based where. on bottom which you the the the the developed

Charles A. Meade

Dave. Right,

Wade Hutchings

conditions basis, a Lower last if and or what add the that I Charles, well-by-well I an Meramec approach on in parent depending to Upper particular depending on customizing it's the well, interval. Yeah, simulation also a are we the think thing is well are would Meramec that, on

And optimizing that last several well-by-well taking every bit literally the collected data we're years over basis. of on we've so stimulations and

Charles A. Meade

Basin? much you here any guys particularly of how what you got development the with follow-up say, to to you've those changing because your not appetite wells that Dave, have your the going it, the basin? those to in And, was before stretch, that Got Coyote up a of this about is but are development that applicable experience would northwest, And spaced I as it what are way in your in in that my it. on may to previous as is how in plans quarters, look Delaware of the be, we reservoir at properties. STACK, be much learned tightly doing this talked But and

David A. Hager

in not speaking, is, play as here to reached from what and and STACK. plays. to seen extent, that this unique are have or a aerial STACK it's is But has in vary let philosophically unconventional other to in They degree – every Tony another. I'll And large detail. they we've this we're an to to happened of the play the talking Well, be present, been to area, going one some are parent-child this about area about talk is here the as issues from the not going greater

lot And the the parent degree seeing from, basins Permian historically haven't the have instance, Basin, well you reached you results other in for been these so in you've STACK. that more a of and in maturity

the reservoir properties. applies and which are we – it the so degree it on to depends, depends And also now

every I equally relevant learnings in But Devon, question, very only So is on these all that we entire other transferring and think more certainly that. not lot industry. But play. are is the Tony, something than basic of plays. have it's the a for but detail phenomenon immediately do there applicable you for I not a it's to

Tony D. Vaughn

Charles.

think we've in. for exercise we've unconventional multiple that I through plays that followed you're been been we resource long a play in this single us aware participate you've same time every and in so

and coming we've at drilled we feel now part. inside done us year that question and scenario like inside So transferring been XXXX information of is plus in learnings from the probably the for knew work our calendar understand we really, play a the lateral wells uncovered across that of the optimum STACK library this we've most and we've positive development of we was have the

in And to other participated so that quickly comparison has reacted we quite there in. resource plays industry

much painful the like plays experience Ford. in a saw You prolonged, more Eagle

earlier, that as Delaware, extent pressure the things we're we different STACK. responding about is more of Rick resource column mentioned the is there have three guys what have and So thick, aerial quickly. plays than out the positive tanks there's identified. our quite The spread in quite the that for And

aware associated learnings they're team it's good felt the come And the guys learnings of have with we less STACK done a but to and quite like that time, the the risk really had. so the and is has in job Delaware over going

on and And organization feel like an talked that the in we've area data-driven we a quickly. very is so able we're that Charles, about pretty capitalize being past, to

Charles A. Meade

for you Thank the added detail.

Operator

then with Basin Macquarie. a Inc. Powder touch program I any Mid-Con build you Capital Paul going Macquarie ahead. Paul issues (USA), on those have constraints in into on with could was the you takeaway in guys also STACK Hi. River or Your and you've both from gas hoping forward. the oil next potential on XXXX question gas and go how on Grigel you Please takeaway and comes that Grigel visibility as - dealt

Kevin D. Lafferty

is This Kevin. Paul. Hi,

contracted and that assets highlight Rockies, on First though we have the we Rockies at have that takeaway other to it's in our we price have contract. the price report similar we the really good recently feel even page ample numbers there similarly blown on just Bakken, out our our to our want ops through really our contracted fact, protected good and in oil of to all,

NGLs, takeaway, up gas, gas mix So entire processing, we in product the about feel good Rockies. the

will do for Cheniere period in something have of that relief. players to know Mid-Con, a the provide and lot and here Midship online we operated in the long Oklahoma, markets have that gas Moving we comes lot a and of is a Pipeline XXXX the we with of all the and here that time,

are use we markets working make we every firm the Mid-Con. aggressively the to clear that avenue So and other to sure sales our

Moving via Mid-Con, over NGLs Marketlink access to we Coast to well. the have availability oil our transportation as and in the access ample have for capacity, and we Gulf

full budget? into with fixed a dictate? of every Great. kind float willing guess feel then and for deck that price No. we is plenty Paul as I product And you not as areas kind the comfortable Could takeaway a So is Inc. use that (USA), initial in every forward only plan of XXXX then pricing but one. may budget to you XXXX full give again, level of into for room market it And you. we higher all think that Macquarie is very going you XXXX and the that the Capital Grigel for convicted price our of or your detail single basin. and beyond, what the Thank have -

David A. Hager

program our have program price steady looked a based to $X – a gas about year on and $XX Well, talked a at natural that. and when we we oil that ago, a on wanted about based capital we

continue look to the and that were building grow cash going built we higher bit into had fact Even flat that was than high XXXX capital higher – oil, as today. we So we at margin our oil, we when than in And et that's are though to be in where XXXX, $X had XXXX deck, flow light we production. our in a price $XX you XXXX, cetera. little that

the that when we we philosophy thought returns that a that have So we we really we is out ago. our again we in going program we have when to consistent really have were look with at highest year And produce what it, – capital. think to do relative the we goes consistent plans XXXX XXXX with along laid that

Paul it Inc. (USA), cash Now, look not is at has how subject the changed. what obviously think for flow capital, actual Capital about et - is Great. current company when Macquarie the Grigel pricing, we to Thank But No. you. cetera. you differentials,

Scott Coody

I out Chris which your don't appreciate hour. hesitate Relations myself the a show we're consists in to interest at to Have of team, Investor the top and good today, of everyone's Carr. to day. we please question I if reach get the and didn't Devon,

Operator

Thank you. conference concludes call. This today's

You may now disconnect.

Scott Coody	Devon Energy Corp.
David A. Hager	Devon Energy Corp.
Tony D. Vaughn	Devon Energy Corp.
Jeffrey L. Ritenour	Devon Energy Corp.
Wade Hutchings	Devon Energy Corp.
Kevin D. Lafferty	Devon Energy Corp.
Richard A. Gideon	Devon Energy Corp.
Subash Chandra	Guggenheim Securities LLC
Arun Jayaram	JPMorgan Securities LLC
Robert Scott Morris	Citigroup Global Markets, Inc.
Doug Leggate	Bank of America Merrill Lynch
Phillips Johnston	Capital One Securities, Inc.
Brian Singer	Goldman Sachs & Co. LLC
Ryan Todd	Simmons & Company International, Energy Specialists of Piper Jaffray
Charles A. Meade	Johnson Rice & Co. LLC
Paul Grigel	Macquarie Capital (NYSE:USA), Inc.

Devon Energy (DVN) 7 Nov 182018 Q3 Earnings call transcript