Devon Energy Obtains Approval for Third Jackfish Oil Sands Project

05.12.2011  |  Business Wire

Devon Energy Corporation (NYSE:DVN) today announced that it has received
regulatory approval from the Alberta Energy Resources Conservation Board
and Alberta Environment and Water to move forward with the company′s
third oil sands project in Canada. Construction of the 100 percent
Devon-owned Jackfish 3 project will begin next month with startup
targeted for late 2014.

Jackfish 3 will utilize a recovery method known as Steam Assisted
Gravity Drainage (SAGD), the same method currently employed at the
company′s two previously completed Jackfish projects. Once fully
operational, Jackfish 3 is expected to produce an average of 35,000
barrels of oil per day before royalties. Like Jackfish 1 & 2, Jackfish 3
represents an estimated 300 million barrels of gross recoverable oil.
Devon expects to deploy approximately $1.3 billion of capital on
Jackfish 3 through startup.

Devon′s original Jackfish project continues to produce near facility
capacity and is among the best performing SAGD projects in the industry
with high per well production rates, a low steam-oil-ratio and
industry-leading operating costs. Jackfish 2 began producing in June of
2011 and net production volumes are ahead of plan, currently at 13,000
barrels per day. The company expects to reach full production capacity
at Jackfish 2 of 35,000 barrels of oil per day in late 2012.

'We are eager to move forward with the third phase of Jackfish,? said
John Richels, Devon′s president and chief executive officer. 'The
success of our first two projects gives us tremendous confidence and
speaks to both the high reservoir quality in the Jackfish area and the
technical competency of our thermal heavy oil team.?

To further leverage Devon′s SAGD expertise, last year the company
announced a joint-venture with BP in which it acquired 50 percent of
BP′s interest in the Pike oil sands leases. The Pike leases are
immediately adjacent to Jackfish and are of similar quality. Ultimately,
this acreage will be developed through multiple phases similar to
Jackfish. Devon expects its Pike and Jackfish projects to drive the
company′s net thermal oil production from its current 44,000 barrels per
day to between 150,000 and 175,000 barrels per day by 2020. This
represents a 17 to 19 percent compound annual growth rate.

Devon is the only U.S. independent with active operations in the oil
sands and was among the first in the industry to use SAGD technology.
The innovative method allows production from oil sands reservoirs that
are too deep for conventional mining operations. Steam injected into the
reservoir heats the thick oil allowing it to flow to the surface. SAGD
requires less surface disturbance per unit of production when compared
with other methods of oil production. In addition, Devon′s Jackfish
projects are specially designed to utilize saline water rather than
fresh water thus minimizing environmental disturbance.

Devon Energy Corporation is an Oklahoma City-based independent energy
company engaged in oil and gas exploration and production. Devon is a
leading U.S.-based independent oil and gas producer and is included in
the S&P 500 Index. For additional information, visit www.devonenergy.com.

This press release includes 'forward-looking statements' as defined
by the Securities and Exchange Commission. Such statements are those
concerning strategic plans, expectations and objectives for future
operations. All statements, other than statements of historical facts,
included in this press release that address activities, events or
developments that the company expects, believes or anticipates will or
may occur in the future are forward-looking statements. Such statements
are subject to a number of assumptions, risks and uncertainties, many of
which are beyond the control of the company. These risks include, but
are not limited to the volatility of oil, natural gas and NGL prices;
political, economic or public policy changes; uncertainties inherent in
estimating oil, natural gas and NGL reserves; drilling risks; and
environmental risks. Investors are cautioned that any such statements
are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the
forward-looking statements. The forward-looking statements in this press
release are made as of the date of this press release, even if
subsequently made available by Devon on its website or otherwise. Devon
does not undertake any obligation to update the forward-looking
statements as a result of new information, future events or otherwise.