ConocoPhillips · NYSE:COP
ConocoPhillips — Barclays Energy Conference 2012
32 slides from ConocoPhillips's conference presentation, Sep 5, 2012
Slide 1: Barclays Energy Conference – September 5, 2012
Barclays Energy Conference – September 5, 2012 Ryan Lance Chairman and CEO
Slide 2: Cautionary Statement
Cautionary Statement The following presentation includes forward-looking statements. These statements relate to future events, such as anticipated revenues, earnings, business strategies, competitive position or other aspects of our operations or operating results. Actual outcomes and results may di
Slide 3: Our Value Proposition
Our Value Proposition Sector-leading distributions 3 – 5% production CAGR 3 – 5% margin CAGR Ongoing priority to improve returns Relentless focus on safety and execution 3
Slide 4: ConocoPhillips: Positioned for Success
ConocoPhillips: Positioned for Success Production: 1,565-1,585 MBOED (2012e) Largest North American-based independent “Majors” asset base with compelling growth High-margin legacy assets Lower risk, diversified international portfolio Proved Reserves: 8.4 BBOE (YE 2011) Massive unconventional
Slide 5: Disciplined Investment Approach
Disciplined Investment Approach 75-80% of CFO allocated to capex for growth Current Dividend Yield and returns Sustainable production growth 100%+ organic reserve replacement Build inventory of future investment options 20-25% of CFO allocated to shareholder distributions Shareholder distrib
Slide 6: Investing for Profitable Growth
Investing for Profitable Growth Disciplined allocation of ~$15 B annual capex generates 3 – 5% CAGR with high margins and lower risk Capital Production – MMBOED * 2012 full-year impact of disposition candidates 6
Slide 7: Visible Improvement in Margins
Visible Improvement in Margins Margins increase Production and Margin Growth ~$5/BOE by 2016 Mix shifts to high-value liquids Additional benefits from Divestitures Decline in North American Gas Fields Growth in favorable tax jurisdictions 1 Based on flat (2012 real) prices of $80 WTI / $85 Bre
Slide 8: Focused on Absolute and Relative Returns
Focused on Absolute and Relative Returns Capital allocation optimized for 2011 ROCE growth and returns Goal to continue absolute improvement in returns Close gap and maintain strong relative position Diligence on cost structure and efficiency Independents: APA, APC, BG, DVN, OXY; integrateds: BP, CV
Slide 9: 2012-2013: Investment Priorities and Actions
2012-2013: Investment Priorities and Actions Sources of Cash Uses of Cash by Priority June 2012 Cash Balance1 Annual Dividend $6 billion ~$3 billion Cash From Operations2 Annual Capital Program $12-14 billion ~$15 billion Asset Dispositions Debt Reduction $8 - $10 billion Maintain “A” Credit Rating
Slide 10: Portfolio Overview: Impactful North American Position
Portfolio Overview: Impactful North American Position Largest independent producer in North America 3 – 5% production CAGR projected from high-return programs Technical strengths in unconventional, heavy oil and arctic 2011 Production – MBOED 2012 – 2016 Production – MBOED Source: Evaluate Energy 10
Slide 11: Portfolio Overview: Lower Risk International Position
Portfolio Overview: Lower Risk International Position Majority of production in long-lived assets in OECD countries 4 – 6% production CAGR expected from major projects Technical capabilities in conventional, deepwater, LNG, unconventional Production – MBOED YE 2011 Proved Reserves – BBOE Internation
Slide 12: Compelling Near-Term Growth Projects
Compelling Near-Term Growth Projects Five high-margin projects will account for 550+ MBOED by 2016 Lower risk geographies and geologies; diversified plays Canada Europe SAGD ~90 MBOED ~80 MBOED Eagle Ford Malaysia Permian deepwater Bakken ~80 MBOED SAGD US L48 unconventional North ~210 MBOED Sea Aus
Slide 13: Massive Land Position in L48 and Canada
Massive Land Position in L48 and Canada COP Acreage Lower 48: 15.3 MM Net Acres Williston Western Canada: 5.9 MM Net Acres Total North America: 21 MM Net Acres Bakken Rockies San Juan Panhandle Barnett Permian Eagle Ford Asset Areas Fee Minerals 21 MM net acres for organic growth in prolific, liquid
Slide 14: Strong Unconventional Technology Capability
Strong Unconventional Technology Capability Sweet spot identification Reservoir & completion performance Field Optimization Pilot Well construction Well intervention Completions Optimization Life-of-field optimization Downhole Temperature Sensors 14
Slide 15: Eagle Ford – Best Position in Best Play
Eagle Ford – Best Position in Best Play 228 M net acres in liquids-rich play (77% liquids) with 1.8 BBOE resources 2012 program: over 180 wells with 16 rigs; $2.5 B investment; 50%+ return 1 Wells lead industry performance with $37/BBL breakeven WTI2 Production – MBOED COP Acreage 1 Project returns
Slide 16: Permian – Emerging Liquids Growth
Permian – Emerging Liquids Growth 1.1 MM net acres in liquids-rich play (60% liquids) with 1.1 BBOE resources 2012 program: over 300 gross wells; $0.6 B investment; 40%+ return1 Exposure in every play; over 7,000 gross identified well locations Promising early results in Avalon and Wolfcamp plays Pr
Slide 17: Bakken – Legacy Oil in Heart of Trend
Bakken – Legacy Oil in Heart of Trend 207 M net lease / 419 M net mineral acres in oil play with 0.4 BBOE resources1 2012 program: over 120 gross wells; $0.6 B investment; 25%+ return 2 Managed pace based on access to service and infrastructure Drilling inventory of 1,300 gross proved and probable l
Slide 18: Canada SAGD – World-Class Assets
Canada SAGD – World-Class Assets 2012 program: $2.3 B investment; average project returns of 13%+1 Repeatable manufacturing improves capital efficiency and time to first oil Opportunity to unlock additional 8.6 BBOE resources with technology Production – MBOED Surmont 1 Central Processing Facility 1
Slide 19: Europe – New Opportunities
Europe – New Opportunities Near-term, high-return projects: Eldfisk II, Ekofisk South, Jasmine, Clair Ridge 2012 major project program: $2.2 B investment; returns of 20%+1 Future opportunities include Tor Redevelopment ,Tommeliten Alpha and other near-field growth options Production – MBOED Ekofisk
Slide 20: Malaysia Projects – Deepwater Growth
Malaysia Projects – Deepwater Growth Includes 3 sanctioned projects, with 4th sanction expected late 2012 2012 program: $0.5 B investment; project returns of 17 – 20%1 Appraisal and development planning underway on 4 additional discoveries Production – MBOED Malaysia Assets 1 Project returns use int
Slide 21: Australia Pacific LNG – Project Update
Australia Pacific LNG – Project Update On schedule with first cargo targeted for June 2015 2012 program: $2.0 B; full-cycle project returns of 8 – 10%1 Current ownership: 37.5%; FID achieved on both 4.5 MTPA trains Project financing agreements signed Production – MBOED Capital Cost of Australian LNG
Slide 22: 2012 – 2016 Growth Summary
2012 – 2016 Growth Summary Production – MMBOED Compelling growth post-repositioning Executing visible growth projects High-return, lower risk opportunities Shift to liquids Margins expand 2012 – 2016 Reserve Additions Organic reserves replacement >100% Average F&D of $20/BOE Resources alre
Slide 23: Future Growth from Unconventional Exploration
Future Growth from Unconventional Exploration North America: accessing and testing many high- quality, high-value, liquids-rich plays Canol Added >700,000 net acres in North America since 2011 Horn River Material working interest in liquids-rich opportunities Montney Duvernay Numerous shale pi
Slide 24: Future Growth from Conventional Deepwater Exploration
Future Growth from Conventional Deepwater Exploration North America: 6th largest deepwater Gulf of COP leases Mexico lease owner Lower Tertiary Play Shenandoah 1.5 MM net acres Currently participating in 2 wells: Coronado wildcat and Shenandoah appraisal Expecting to participate in 5 – 8 wells
Slide 25: Our Value Proposition
Our Value Proposition Sector-leading distributions 3 – 5% production CAGR 3 – 5% margin CAGR Ongoing priority to improve returns Relentless focus on safety and execution Unique combination of growth, returns and yield 25
Slide 26: Q&A
ConocoPhillips. Q&A
Slide 27: Annualized Income Sensitivities
Annualized Income Sensitivities Crude Brent/ANS: $85-95 MM change for $1/BBL change WTI: $20-25 MM change for $1/BBL change WCS: $20-25 MM change for $1/BBL change North American NGL Representative blend: $20-25 MM change for $1/BBL change Natural Gas HH: $120-125 MM change for $0.25/MCF c
Slide 28: Asset Sales Provide Flexibility
Asset Sales Provide Flexibility Selection criteria Asset Total Non-strategic Mature, high-cost properties Vietnam Ability to achieve fair value Alba – North Sea Tax efficient $3.0 B Statfjord – North Sea Limited growth potential APLNG Selldown Current list of assets Naryan-Mar NefteGaz - R
Slide 29: Captured Resource Potential
Captured Resource Potential YE 2011 Resource by Region Exploration & BD Resources 35 BBOE 43 BBOE Proved Reserves 8 BBOE Resource includes probable, and possible reserves and contingent resource; excludes prospective resource. Natural gas production, reserves and resources targeted toward liquefied
Slide 30: COP Non GAAP Reconciliation
COP Non GAAP Reconciliation Return on Capital Employed (ROCE) $ Millions except as indicated 2011 Upstream estimated ROCE earnings $ 9,174 E&P segment special items (1,047) Non-E&P segment ROCE earnings 255 E&P segment GAAP ROCE earnings 8,382 Less: E&P segment after-tax interest expense 79 E&P segm
Slide 31: COP Non-GAAP Reconciliations
COP Non-GAAP Reconciliations E&P - ROCE 2010 Numerator ($MM) Net income 9,251 After-tax interest expense 91 GAAP ROCE earnings 9,342 Non-core earnings impacts (2,444) Adjusted earnings 6,898 Denominator ($MM) GAAP average capital employed 1 58,511 Annualized ROCE 12% Annualized GAAP ROCE 16% 1 Total
Slide 32: Abbreviations and Glossary
Abbreviations and Glossary 3-D: three dimensional M: thousand ANS: Alaska North Slope MM: million B: billion MBOED: thousand of barrels of oil equivalent per Base Production: production from existing day infrastructure MMBOED: millions of barrels of oil equivalent per BBOE: billions of barrels oil e