Overview

Devon Energy is a leading independent energy company engaged primarily in the exploration, development and production of oil, natural gas and natural gas liquids. The company’s operations are concentrated in various North American onshore areas that extend from the Canadian arctic to the Gulf Coast in the United States. Devon holds 13 million net acres, of which roughly two-thirds are undeveloped. This deep inventory of opportunities in premier North American growth plays will provide stable production and a platform for future growth.

Canada Overview

Exploration and development activities in Canada stretch from northeastern British Columbia across the Foothills, Plains and northeastern Alberta through to southern Saskatchewan. Current production, which is almost evenly split between liquids and natural gas, comes from conventional and shale gas resources in addition to cold-flow and thermal heavy oil resources. The company is well-positioned in Canada’s most important energy-producing areas, including the Athabasca oil sands and emerging oil and liquids-rich plays in the Ferrier Corridor and Greater Wapiti areas. Devon is among the largest independent oil and gas producers in Canada.

U.S. Overview

Devon’s operations in the United States are focused in four producing regions. Each region includes numerous producing fields with a vast inventory of undrilled locations. The company continues to explore for new resources from the expansive Rocky Mountains to the Gulf Coast of Texas and Louisiana. The Mid-Continent regions is home to two significant shale plays, the Cana Woodford Shale and Devon’s largest producing field, the Barnett Shale. The Permian Basin and Gulf Coast regions provide stable production as well as meaningful exploration and development opportunities.

Foothills

Located along the east side of the Rockies, the Foothills region is one of Canada's most under-explored areas with high-impact, long-lived reserve potential. Since Devon's initial discovery in 1998 in the Grizzly area, the company has had considerable success in the region, which is characterized by both deep and shallow gas plays.

Ferrier Corridor

The Ferrier Corridor area spans over roughly 240,000 acres in central Alberta. The acreage is prospective for Cardium oil, the liquids-rich Glauconite and other lower cretaceous zones. The company’s first phase of development is focused on approximately one third of the acreage and represents more than 100 million barrels of reserve potential. In conjunction with this development, Devon is constructing an oil battery and gas/liquids extraction processing facility in 2013, with completion scheduled for mid-2014. The company plans to test the potential beyond the currently sanctioned development and foresees additional phases of development in the future.

Horn River

The Horn River basin is situated in the far northeast of British Columbia and extends north into the Northwest Territories. The area’s Devonian and Triassic shale gas plays have similarities to the Barnett and other shale basins in the southern United States, which Devon and others are successfully developing.

Devon has a solid position in the Horn River Basin. The company is in the early stages of de-risking its acreage and is in the position to hold its acreage for many years as year-round roads and gas-gathering capabilities are expanded.

Greater Wapiti

The Greater Wapiti area spans 455,000 net acres in mid-western Alberta. Devon has used its large proprietary two-dimensional and three-dimensional seismic databases to build an extensive inventory of deep to mid-range drilling targets in this area and continues to drill for liquids rich plays in the multi zone Cretaceous Formations.

The region has winter-only access restrictions in many areas, but offers year-round access in others. Devon controls significant gas processing and transportation infrastructure throughout the region and operates the only major gas and liquids extraction facility in the Wapiti area.

Lloydminster

Cold-flow heavy oil from multi-zone Cretaceous sandstones is the main focus of Devon’s vertical drilling activities in the Lloydminster area. Concentrated in and around Iron River and Manatokan, the company has seen a steady rise in production from this area since the mid-2000’s  to a peak of over 40,000 Bod in 2009. While a consistent yearly vertical well program is currently maintaining production levels, new technologies such as horizontal wells and enhanced recovery techniques are being piloted to provide stable production in the future.

Thermal

Devon’s thermal heavy oil operations, located in the Athabasca oil sands in northeast Alberta, use an extraction process called steam-assisted gravity drainage (SAGD). Heat from a steam injection well liquefies very dense bitumen allowing it to migrate to a production well located beneath

Devon’s first commercial SAGD facility was Jackfish, which saw first production in 2007. Since that time, the company has increased its Jackfish operations to include Jackfish 2 and Jackfish 3. Devon has 100% working interest in all Jackfish properties.

In March of 2010, Devon increased its oil sands presence by acquiring a 50 percent interest in BP’s Pike leases. Devon will be the operator of the SAGD operations to be constructed on these lands.

Pike

In March of 2010, Devon substantially increased its footprint in the Canadian oil sands by acquiring a 50 percent interest in BP’s Pike leases, in which it will act as operator. Combined with the Jackfish projects, Pike will allow Devon to grow its oil sands production to at least 150,000 barrels per day by 2020. This low-risk oil production is a significant contributor to Devon’s future growth. The Pike 1 development project will have gross production capacity of 105,000 barrels of oil per day.

Jackfish

Devon saw first production from Jackfish, its first 35,000 barrel per day capacity project, in 2007. As measured by production per well and steam-to-oil ratio, Jackfish is one of Canada’s most commercially successful SAGD projects.

Construction of Jackfish 2, a look-alike 35,000 barrel per day capacity project began in the fall of 2008 and was completed in the first quarter of 2011. Devon began steam injection in the second quarter of 2011, with first oil production coming in the second half of the year. Production is currently ramping up.

Construction of Jackfish 3 is well underway, with plant startup targeted around year-end 2014.

Peace River Arch

The Peace River Arch region, located along the British Columbia border in western Alberta, produces liquids-rich gas and light gravity oil. Multi-zone drilling opportunities from Cretaceous, Triassic, Devonian and Mississippian age formations are common in this area. Since initial exploitation in the 1970s, the region has seen significant infrastructure expansion. Devon owns and operates gas gathering and processing facilities in the area which enables our projects to be brought on production quickly. The Swan Hills area contains the second largest original oil-in-place accumulation in Western Canada, with over 1.4 billion barrels of light-sour crude.

Central Corridor

Devon’s Central Corridor region spans from northeastern British Columbia, through Alberta to southwest Saskatchewan. Natural gas, liquids rich gas and light gravity oil are all produced in this vast region which includes both winter-only and all-season access areas.  Devon owns and operates gas gathering and processing facilities throughout the area. Swan Hills is one key area of this region and is unique in that it contains the second-largest original oil-in-place accumulation in Western Canada, over 1.4 billion barrels of light-sour crude.

Rocky Mountains

Devon’s Rocky Mountain operations extend north from northern New Mexico up through parts of Colorado, Utah and Wyoming. The company’s assets in the Rocky Mountain region include interests in conventional oil and gas properties, as well as coalbed natural gas projects. Devon’s most important properties in the Rocky Mountains lie in the Washakie, Wind River, Big Horn, Green River and Powder River basins in Wyoming, and the Uinta Basin in Utah.

Mississippian

The Mississippian play spans millions of acres in northern Oklahoma and southern Kansas. Yielding light, sweet oil and natural gas liquids, this oil play has produced commercially from thousands of vertical wells for decades. Over the last few years, however, producers have begun applying advanced horizontal drilling techniques along with hydraulic fracturing to capture additional potential in the reservoir.

Devon’s Mississippian acreage position represents roughly 600,000 net acres and is located in north central Oklahoma. Devon is in the early stages of derisking its acreage, which is prospective for both the Mississippi Lime and Woodford Shale targets. Overall, Devon’s large position represents over 5,000 risked locations and more than 800 million equivalent barrels of net risked resource potential.

Bear Paw

Devon’s Bear Paw assets are located in north-central Montana. The reservoir is the Cretaceous age Eagle sand formation, which is a shoreline and deltaic deposit within the Western Interior Foreland Basin.

Powder River Basin Oil

The Powder River Basin has historically been an oil producing basin. However, early in the last decade Devon utilized its expertise, pioneered in the San Juan Basin, to focus on developing Powder River coalbed natural gas, an energy source produced from underground coal deposits. Today from its significant position in the basin, the company has shifted its focus back to oil exploration and development in the basin. Devon is currently targeting several Cretaceous oil objectives, including the Turner, Frontier and Parkman formations. To date we have identified roughly 600 risked locations across these three formations.

Wind River Basin

The Wind River Basin is located in central Wyoming and produces from many different formations in more than 80 fields. The primary reservoirs include the Cretaceous Mesaverde coals, Frontier and Muddy sandstones, Permian age Phosphoria and the Pennsylvanian Tensleep sandstone. With the success of Devon’s Madison CO₂ enhanced oil recovery project, evaluations of similar opportunities are underway.

Washakie

Devon has been among the most active drillers in the Washakie basin of southern Wyoming for many years. Targeting the Almond and Lewis formations, Devon produces approximately 115 million cubic feet of gas equivalent per day from this low-risk, tight sand gas play.

Drunkard's Wash

In 2008, Devon acquired an interest in the Drunkard’s Wash coalbed natural gas play in Utah. The field is located between the southern margin of the Uinta Basin, the eastern margin of the Wasatch Plateau and the western margin of the San Rafael Swell.

Mid-Continent

Devon’s Mid-Continent operations encompass Oklahoma, the Texas panhandle and north Texas. Devon’s most important Mid-Continent assets include the Barnett Shale in the Fort Worth Basin of north Texas, the Cana-Woodford Shale in western Oklahoma, the Arkoma-Woodford Shale in southeastern Oklahoma and the Granite Wash in the Texas panhandle. Each of these fields produces liquids-rich natural gas, further enhancing returns. In aggregate, these fields represent many years of future growth with approximately 30 trillion cubic feet equivalent of net risked resource and roughly 17,000 undrilled locations.

Granite Wash

Another condensate and liquids-rich play for Devon is the Granite Wash in the Texas panhandle. In 2005, the company initiated a vertical drilling program targeting the multiple stacked conglomerate sandstones of the Granite Wash formation. Through this successful vertical program, optimum horizontal targets were identified leading to the company’s first operated horizontal in 2006.

Devon’s legacy land position in the Granite Wash is held by production and provides some of the best economics in the company’s portfolio. High initial production rates and strong liquid yields contribute to the superior full-cycle rates of return. The company continues to evaluate the additional potential of multiple untapped Granite Wash sands.

Cana Woodford Shale

Leveraging its shale expertise, Devon established a significant first-mover position in the Cana Woodford Shale. The Cana Woodford in western Oklahoma is a leading growth area for Devon and has rapidly emerged as one of the most economic shale plays in North America. Only a few companies dominate the play. Devon has the largest position in the play, holding more than 50% of the best acreage.

The Cana Woodford Shale is especially attractive because of the liquids-rich nature of the gas. Some areas of play can yield upwards of 300 barrels of oil and natural gas liquids per million cubic feet of natural gas produced. In addition to the high natural gas liquids content, the Cana Woodford offers a significant condensate component that further enhances drilling economics. The company’s current drilling activity is focused in the liquids-rich portion of the field.

With over 11 trillion cubic feet equivalent of risked resource potential and with approximately 5,400 risked locations remaining, the Cana provides many years of highly-economic production and reserve growth.

Arkoma Woodford Shale

Using expertise gained in the Barnett Shale, Devon also established a position in the Arkoma Woodford Shale located in southeast Oklahoma in the Arkoma basin. Most of Devon’s acreage is held by production and technical evaluation of the play has optimized economic returns from long-lateral horizontals.

Barnett Shale

The Barnett Shale, located in the Fort Worth Basin of north Texas, kicked-off shale gas production in North America and has emerged as the largest natural gas field in Texas. The Barnett Shale is a “tight” reservoir that does not allow gas to flow freely to the well bore. Hydraulic fracturing is required to release the trapped gas. After acquiring a substantial position in 2002, Devon was the first to apply horizontal drilling techniques in the Barnett, further enhancing production and transforming the Fort Worth Basin into one of the top producing gas fields in North America.

By virtue of its first mover position, Devon has acquired the largest and arguably the best acreage position in the play. Since 2002, the company has drilled more than 4,800 wells into the Barnett Shale. Devon is the most prolific producer in the Barnett, accounting for approximately 1.4 billion cubic feet of natural gas equivalent per day.

The company continues to achieve outstanding results through pad drilling and improved drilling efficiencies. With risked resource potential of approximately 14 trillion cubic feet of natural gas equivalent and thousands of undrilled locations, the Barnett provides Devon with many years of economic, organic growth.

Permian Basin

Devon’s operations in the Permian Basin of west Texas and southeast New Mexico provide the company with both oil and gas production. The Permian Basin was the source of some of the earliest oil and gas discoveries in the United States. It covers roughly 66,000 square miles and contains hundreds of oil and gas fields. Horizontal drilling and other technological advances are being used to unlock the vast resource that still remains.

The Permian Basin has been a legacy asset for Devon and continues to offer exploration and low-risk development opportunities from many geologic reservoirs and play types, including the oil-rich Wolfberry, Bone Spring, Wolfcamp Shale, Delaware, Cline Shale and various conventional formations. These and other emerging oil and liquids-rich opportunities across Devon’s acreage in the Permian Basin will deliver high margin growth for many years to come.

Avalon Shale

The Avalon Shale (also referred to as the Leonard Shale) has become a very active play within the Delaware Basin because of the condensate and liquids-rich nature of the natural gas. The Avalon is a shaley unit located within the First Bone Spring formation. Horizontal wells are currently being drilled to develop this shale in New Mexico and extending into Texas. Although Devon is still in the early stages of evaluating its acreage in the play, initial drilling results indicate an attractive, repeatable play with outstanding economics.

Conventional Formations

Devon has an active drilling program in numerous conventional oil formations within the Permian Basin. Pay zones the company is targeting include the Delaware Sands present within the Delaware Basin, Wolfcamp Carbonates located along the Northwest Shelf, and Clearfork and Wolfcamp Carbonates deposited along the Central Basin Platform. The majority of the company’s acreage associated with these targets is legacy leasehold and held by existing production. Both vertical and horizontal wells are being drilled to either in-fill or expand existing producing fields.

Bone Spring

The Bone Spring is a Permian age formation located in the Delaware Basin of west Texas and southeast New Mexico. The formation is comprised of three intervals, the First, Second and Third Bone Spring. Each are predominantly comprised of limestone, shale or sandstone. These three Bone Spring intervals are currently among the most active oil plays in the Permian Basin. While the Bone Spring has been a target for many years using conventional vertical drilling, new horizontal drilling techniques are now being applied to the formation with great success.

Wolfberry

The Wolfberry is a light, sweet oil field in the Midland Basin of west Texas. It consists of several geologic formations including the Permian Spraberry, Dean, Leonard and Wolfcamp. Since drilling its first Wolfberry well in 2008, Devon has significantly de-risked its acreage position. The company has identified over 400 low-risk drilling locations in the play. Wolfberry drilling is especially attractive because of the high rates of return generated and the positive impact on cash flow.

Gulf Coast

Devon’s Gulf Coast operations cover more than one million net acres in south and east Texas, Louisiana and Mississippi. Most of the company’s production and reserves in the region come from long-lived oil and natural gas reservoirs found in conventional sandstone formations. Exploration and development activity in this area is enhanced by the stacked nature of these sandstone formations. Often, wells drilled in the region can be completed in multiple pay zones, further enhancing economics. In recent years, the use of three-dimensional seismic technology and horizontal drilling techniques has unlocked new opportunities.

Carthage

Earliest development of the Carthage area in east Texas occurred from the mid-1930s through the 1940s with the drilling of the shallower, high permeability carbonate, gas-bearing Pettit intervals. Production dramatically increased with the development of the deeper Travis Peak sandstone intervals and Cotton Valley sands. Recent application of horizontal drilling and hydraulic fracturing in the Cotton Valley sand interval has been especially successful.

North Louisiana

The majority of Devon’s production in North Louisiana comes from the Hosston and Cotton Valley Sands also found in east Texas. Recent efforts have been focused on low-risk infill drilling and horizontal drilling for the Lower Cotton Valley sands.

Haynesville/Bossier Shale

Devon has 36,500 net acres prospective for the Haynesville/Bossier shale located primarily in the Greater Carthage area. Since the majority of the company’s position was established before the play was discovered, Devon benefits from a low cost of entry. In addition, much of this acreage is held by existing production from other formations, whereby allowing Devon the option to pursue its Haynesville and Bossier Shale drilling when market conditions for dry gas improve. Exploration activities and production from the company’s producing wells have confirmed large natural gas deposits and high reservoir pressures that support a repeatable economic play. With some 1,250 future drilling locations, the Haynesville and Bossier shale formations have significant future potential.

Groesbeck

The Groesbeck area is located on the west flank of the East Texas Basin. Early production from the Rodessa, Pettit and Travis Peak formations occurred in the late 1950s. Today, current practices include horizontal drilling and hydraulic fracturing in Bossier sands and Haynesville Lime intervals. When horizontal drilling is not feasible, vertical wells are drilled and production is commingled from multiple zones.

South Texas/South Louisiana

Devon’s south Texas properties are primarily located in Zapata, Webb and Matagorda counties in far southern Texas. Recent activity in these areas have focused on the Middle Wilcox/Lobo trend in Zapata and Webb counties and the Deep Frio trend in Matagorda county. The company has also had recent success with horizontal drilling in the Middle Wilcox formation in Webb county. Efforts are currently focused on identifying and extending horizontal drilling techniques to other suitable areas on the company’s south Texas acreage.