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2013 UTICA SHALE OFFERING
Bids Due: March 13, 2013

Scotia Waterous (USA) Inc. (“Scotia Waterous”) has been retained as exclusive advisor by Devon Energy Corporation (“Devon” or the “Company”) to advise and assist in the sale of the Company’s Utica Shale / Point Pleasant assets in Eastern Ohio (the “Offering”). The Utica / Point Pleasant play is currently in the early stages of appraisal and development. Regional well results are promising and there is growing confidence in the prospectivity of the play given very significant leasing and drilling activity.


Location Map

Note: Hydrocarbon windows are courtesy of the Ohio Department of Natural Resources (ODNR)



BACKGROUND TO SALE

Devon is a leading independent oil and natural gas exploration and production company headquartered in Oklahoma City, Oklahoma. Devon’s operations are focused onshore in the United States and Canada. The Offering represents a complete sale of Devon’s position in the Utica Shale / Point Pleasant play, including all acreage associated with the previously announced joint venture with China Petrochemical Corporation (“Sinopec”).



OFFERING OVERVIEW

This Offering provides an opportunity to acquire a material leasehold position within the prolific Utica / Point Pleasant play. The Offering consists of approximately 244,000 gross acres (195,000 net) in eastern Ohio across in the liquids-prone portion of the play. The acreage is largely held by existing production (existing production is not included in this offering) with significant upside development potential in the Guernsey County area. Please see the Introductory Map for more details.



INVESTMENT HIGHLIGHTS

  • Opportunity to acquire substantial leasehold within the emerging Utica / Point Pleasant play of eastern Ohio with attractive lease terms
    • Largely operated acreage offers control position in one of the hottest shale plays in North America
    • Approximately 244,000 gross acres (195,000 net with average W.I. of 79.7% and average royalty plus minor additional burdens of 13.2%)
  • Active leasing, well permitting, and drilling with encouraging results in the region
    • Approximately 270 horizontal well permits have been issued in eastern Ohio as of December 2012
    • Operators have been actively acquiring acreage surrounding Devon’s position with recent transactions in Guernsey, Noble and Tuscarawas Counties
    • Regionally, initial horizontal well results from nearby positions are encouraging:
      • Devon Chumney Family Trust 1H: 448 bbl/day + 1,203 Mcf/day (Guernsey County)
      • Gulfport Groh 12H: 1,816 bbl/day + 2,800 Mcf/day (Guernsey County)
      • Anadarko Spencer 5H: 415 bbl/day + 406 Mcf/day (Guernsey County)
      • Anadarko Brookfield 3H: 598 bbl/day + 785 Mcf/day (Noble County)
      • CNX Troyer 3H: 400 bbl/day (Tuscarawas County)
  • Existing and planned infrastructure as well as differentials will enhance ability of buyer to develop the asset base
    • 40 to 50° API oil currently receives up to $4.00 premium to WTI due to demand from local refineries
    • Major highways adjacent to the acreage and existing on-lease road infrastructure
    • Potential future oil/liquids pipeline infrastructure development
    • Tennessee Gas, Columbia Gas, and Dominion have major gas lines throughout Devon’s leasehold


TRANSACTION PROCESS

Interested parties are required to execute a Confidentiality Agreement (“CA”) and may be required to provide sufficient evidence of financing capabilities. The executed CA should be sent to Anne Rutherford via e-mail (anne.rutherford@scotiabank.com) or by fax (713) 222-0572. Approved interested parties will be provided access to the Online Virtual Data Room, the Physical Data Room and other confidential materials and information. The anticipated timetable for the Offering is as follows:

Milestone Date
Online VDR Access February 1, 2013
Physical Data Room Presentations   February 4 - March 8, 2013
Bid Date March 13, 2013
   


CONTACTS

The Physical Data Room will be located in Scotia Waterous’ Houston office, where interested parties may participate in a Technical Presentation. At no time should any interested party contact the Company’s personnel regarding the Offering, unless otherwise directed by Scotia Waterous. Should you have any questions regarding the Offering, please feel free to contact a Scotia Waterous representative listed below:

Scotia Waterous
Michael Buckingham
Director
(713) 437-5067
E-mail: michael.buckingham@scotiabank.com
Boris Markhasin
Director, Geology
(713) 437-5058
E-mail: boris.markhasin@scotiabank.com
Robert Urquhart
Associate Director, Corp. Finance & Marketing
(713) 437-5046
E-mail: robert.urquhart@scotiabank.com
Jonathan Chung
Associate Director, Engineering
(832) 426-6029
E-mail: jonathan.chung@scotiabank.com
Santiago Garavito
Associate, Corporate Finance
(832) 426-6045
E-mail: santiago.garavito@scotiabank.com
Anne Rutherford
Analyst, Corporate Finance
(832) 476-6404
E-mail: anne.rutherford@scotiabank.com



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