Devon Energy (DVN) investor relations material

Cost optimization and free cash flow focus

• Set a $1 billion cost optimization target, initially aiming for $700 million over three years but raised to $1 billion by year-end 2026, manifesting in 2027.

• Free cash flow chosen as the organizational north star, aligning all teams toward this goal.

• Achieved rapid execution through organizational changes, including elevating the CTO to the executive committee to drive business optimization.

• Production optimization, enabled by technology and AI, is a significant contributor, estimated at $300–$400 million.

• Cost savings from midstream contracts and operational efficiencies are not fully credited toward the $1 billion target, maintaining credibility.

Technology and AI integration

• AI and technology are central to efficiency gains, with near 100% utilization of the internal ChatDVN platform at headquarters.

• AI applications include rock sample analysis, drilling optimization, and real-time production system management.

• AI-driven productivity improvements aim to flip time spent from data gathering to data analysis, targeting a 3x productivity multiplier.

• AI is used for exploration, leveraging deep learning models to identify new resource opportunities.

• Technology leadership is directly responsible for business optimization, ensuring a tech-driven approach to value creation.

Production and portfolio management

• AI and technology reduce base declines, improve recovery factors, and enhance inventory longevity.

• Maintenance capital requirements decrease as uptime and efficiency improve, supporting a virtuous cycle of optimization.

• Free cash flow is expected to grow, with a current run rate of about $3 billion annually, supported by capital efficiency and technology evolution.

• Portfolio maturity is managed by offsetting natural declines with efficiency and technology gains.

• The business is positioned for continued strong free cash flow in a mid-cycle commodity price environment.