ConocoPhillips · NYSE:COP
ConocoPhillips — Investor Presentation (November 2015)
50 slides from ConocoPhillips's investor presentation, Nov 3, 2015
Slide 1: Investor Overview
Investor Overview Last updated: Nov. 3, 2015
Slide 2: Cautionary Statement
Cautionary Statement The following presentation includes forward-looking statements. All statements included in this presentation other than statements of historical fact, including, without limitation, statements regarding production forecasts, anticipated production mix, estimates of operating cos
Slide 3: Company Overview
Company Overview 1,554 MBOED Production1 – 3Q15 North • Diversified asset base with significant scope and scale American 24% Liquids Gas • Multiple sources of growth LNG + • Large inventory of low cost of supply opportunities International 19% Gas 57% • Large positions in key resource trends • Relat
Slide 4: Compelling dividend, affordable growth, financial strength
Core Energy Holding Compelling dividend + Affordable growth + Financial strength 4
Slide 5: ConocoPhillips Leading Through Industry Downturn
ConocoPhillips Leading Through Industry Downturn • Deeper downturn than expected $120 • Exercised capital flexibility, especially $100 • Anticipated 2015 in Lower 48 unconventionals Capex of $16.5B • Accelerated operating cost $80 • Announced 2015 reductions and captured significant Capex of $13.5B
Slide 6: All Time Horizons Matter
All Time Horizons Matter Short Term Medium Term Long Term • Safely execute the • Meet or exceed cost • Maintain capital business targets across the flexibility business • Deliver current year • Shorten investment plan for lower cost • Maintain balance sheet cash cycle time strength • Increase the di
Slide 7: Leading in Volatile Times
Leading in Volatile Times External Average Brent Price Probabilities1 350 300 p100 • Uncertainty about future prices Real 2015 $ per Barrel 250 200 150 p90 • Prepared for lower mid-cycle 100 MEAN prices with more volatility 50 p10 p0 0 2014 2018 2022 2026 2030 • Capital flexibility, balance sheet 18
Slide 8: What Wins in a Lower, More Volatile Price Environment?
What Wins in a Lower, More Volatile Price Environment? Asset Characteristics Role in Portfolio Stable source of funding to Diverse, low-decline base sustain dividend Investment returns resilient Low cost of supply to lower prices Scalable growth in response to Flexible investment options higher or l
Slide 9: Full-Cycle Project Returns
Winning Portfolio: Increasing Flexibility and Returns, Decreasing Cost of Supply <$60/BOE Average Cost of Supply >$60/BOE Average Cost of Supply Reducing Future Deepwater Spending • Lowest cost of supply High >25% North American • Source of flexible growth Unconventionals Full-Cycle Project Returns
Slide 10: Diverse, Flexible, Low Cost of Supply Capital Allocation
Diverse, Flexible, Low Cost of Supply Capital Allocation % Capital Allocation – Example Total Resources – 44 BBOE 100% Oil Sands LNG Europe Today Proved Flexible Reserves APME Development Unconventional Canada Alaska Unsanctioned Challenged <$75/BOE Projects 20 BBOE Cost of Conventional Supply Long-
Slide 11: Lower 48 Unconventionals: Prudent Pace Preserves Value & Optionality
Lower 48 Unconventionals: Prudent Pace Preserves Value & Optionality • Priority on protecting value Reducing Cost of Supply • Maintaining capability and flexibility to adjust Drilling & Completions Efficiency • Continuing pilots, optimization and efficiency efforts Cost Focus & Deflation Capture • E
Slide 12: Eagle Ford: Industry-Leading Performance
Eagle Ford: Industry-Leading Performance LOWEST COST OF SUPPLY • ~220 M net acres; 2.5 BBOE net Lowest Cost of Supply2 Highest NPV per Acre3 resource1 70 90 80 60 • Developing on 80-acre high/low 70 spacing WTI Breakeven ($/BBL) 50 NPV10 per Acre ($M) 60 • Testing triple stack development 40 50 pote
Slide 13: Bakken: Growth from Highest Value Part of Play
Bakken: Growth from Highest Value Part of Play • ~620 M net acres; mostly HBP or mineral fee • 0.6 BBOE net resource1 • Developing at 160-acre combined spacing2 • >10 years of drilling inventory remaining MCKENZIE • Average 5 operated rigs in 2015 Nesson • ~$20/BOE full-cycle F&D cost Anticline Wood
Slide 14: Permian Unconventional: Appraising Long-Term Opportunity
Permian Unconventional: Appraising Long-Term Opportunity • High-graded acreage position NEW MEXICO • ~100 M net acres of stacked play opportunity TEXAS Midland • 1 BBOE net resource1 • >25 years of drilling inventory remaining • Average 2 rigs in 2015 EDDY LEA China Draw Red Hills Permian Appraisal
Slide 15: Western Canada: Appraising and Developing Unconventional Plays
Western Canada: Appraising and Developing Unconventional Plays North Central South ConocoPhillips Acreage • Mix of mature and emerging unconventionals Alberta • >6,000 feet of stacked pay • Applying learnings from Lower 48 Falher/ unconventionals Cretaceous Wilrich Alberta 6,000ft • Predominately ex
Slide 16: Oil Sands: Surmont Startup in 2015
Oil Sands: Surmont 2 Startup in 2015 FIRST OIL ACHIEVED IN 3Q15 • First oil achieved in 3Q15 Total Surmont Capital Total Surmont Production • Ramping up through 2017 1 80 • Increases gross capacity to 150 MBOED 60 MBOED • Optimization and debottlenecking studies $B underway 0.5 40 S2 • >30 years of
Slide 17: APME: Long-Term Cash Flow Generation from APLNG
APME: Long-Term Cash Flow Generation from APLNG FIRST CARGO EXPECTED IN 4Q15 • First cargo expected in 4Q15 APLNG Capital APLNG Production 120 2 • Downstream mechanical runs successfully 100 completed 1.5 80 MBOED $B • 14 of 15 upstream gas processing facilities 60 1 running SELF 40 • >20 years of l
Slide 18: Deepwater Exploration: Reducing Future Spend
Deepwater Exploration: Reducing Future Spend • 2015 exploration and appraisal program • Currently drilling Vernaccia and Gibson wells; Melmar expected to spud in 4Q15 • Appraisal activity ongoing at Gila, Shenandoah and Tiber • Appraisal expected to begin offshore Senegal Gulf of Mexico in 4Q15 • Te
Slide 19: Key Takeaways: Creating Value Through the Cycles
Key Takeaways: Creating Value Through the Cycles • Focused on short-, medium- and long-term horizons DIVIDEND REMAINS TOP PRIORITY • Dividend is highest priority use of cash CASH FLOW • Sustained cash flow neutrality at range of prices NEUTRALITY IN 2017 AT RANGE OF PRICES • High degree of capital f
Slide 20: Appendix
Appendix
Slide 21: Annualized Net Income Sensitivities
Annualized Net Income Sensitivities • Crude • Brent/ANS: $85-95MM for $1/BBL change • WTI: $40-45MM for $1/BBL change • WCS¹: $30-40MM for $1/BBL change • North American NGL • Representative blend: $5-10MM for $1/BBL change • Natural Gas • Henry Hub: $90-100MM for $0.25/MCF change • International ga
Slide 22: 2015 Outlook Guidance
2015 Outlook Guidance • Capital Expenditures of ~$10.2B • DD&A of ~$9.0B • Operating Costs of ~$8.2B • Exploration Dry Hole and Impairment Expense of ~$0.8B • Corporate segment net loss of ~$0.8B 22
Slide 23: Abbreviations and Glossary
Abbreviations and Glossary • ANS: Alaska North Slope • MM: million • B: billion • MBOED: thousands of barrels of oil equivalent per day • BBL: barrel • MCF: thousand cubic feet • BBOE: billions of barrels of oil equivalent • MMBOE: millions of barrels of oil equivalent • BOE: barrels of oil equivale
Slide 24: Investor Information
Investor Information Stock Ticker Investor Relations Contacts: NYSE: COP Telephone: +1 281.293.5000 Website: www.conocophillips.com/investor Ellen DeSanctis: ellen.r.desanctis@conocophillips.com Sidney J. Bassett: sid.bassett@conocophillips.com Headquarters Vladimir R. dela Cruz: v.r.delacruz@conoco
Slide 25: Back Up
Back Up Slides in back up are from the company’s April 8, 2015 Analyst and Investor Meeting and have not been updated unless specifically noted on the slide. Last updated: April 8, 2015
Slide 26: Capital Allocation for a Lower, More Volatile Price Environment
Capital Allocation for a Lower, More Volatile Price Environment Prior Plan ~$16B/year Exploration Reduce & Re-allocate Execute Plan with Growing Flexibility Major Projects Strategy Drivers ~$11.5B ~$11.5B • Exploration: Limiting new access Exploration Exploration Development Major Projects Major Pro
Slide 27: Flexibility, Resilience and Growth for ~$11.5B
Flexibility, Resilience and Growth for ~$11.5B 2-3% PRODUCTION GROWTH 2014-2015 Average Capital ~$11.5B Production 1.7 MMBOED 1.8 Exploration 1.5 MMBOED 1.6 Major Projects 1.4 1.2 MMBOED Development 1.0 0.8 0.6 0.4 Base 0.2 - 2015-2017 2014 2017 Production represents continuing operations, excluding
Slide 28: Completion of Major Projects Increases Capital Flexibility
Completion of Major Projects Increases Capital Flexibility 5 Projects in Execution 4 Canada >90% Future Major Projects COMPLETE Capital Spend ($B) SURMONT 2 3 APLNG APME Canada Canada 2 APME APME Europe Europe 1 Europe Alaska 45% CAPITAL Alaska Alaska Future Projects Future Projects Future Projects
Slide 29: Capital Flexibility Directed Toward Development Drilling
Capital Flexibility Directed Toward Development Drilling 7 FLEXIBLE Other SHORT-CYCLE 6 LOW COST OF SUPPLY Other Canada Canada Permian 5 Permian Capital Spend ($B) Canada Bakken Bakken 4 Permian Bakken 3 Eagle Ford Eagle Ford Eagle Ford 2 1 Conventional Conventional Conventional 50% CAPITAL 0 INCREA
Slide 30: Diversified, Low Cost of Supply Portfolio Delivering 1.7 MMBOED in 2017
Diversified, Low Cost of Supply Portfolio Delivering 1.7 MMBOED in 2017 2015-2017 Average Capital ~$11.5B Alaska Europe ~11% of Production Alaska New projects Canada Europe APME offsetting decline ~21% of ~12% of Production Production Canada Completed major High-quality oil sands and unconventional
Slide 31: Delivering Capital and Operating Cost Efficiencies
Delivering Capital and Operating Cost Efficiencies Integrated Operations Centers Lowering Costs Operating Cost Reductions 80% $1B Production Under Management1 UK Australia • Reduce lifting costs globally 60% Alaska • Continue focus on operations excellence OPERATING Eagle Ford COST REDUCTION 40% Ind
Slide 32: Aggressively Pursuing Operating Cost Reductions
Aggressively Pursuing Operating Cost Reductions 2014 Operating Costs – $9.7B¹ • Cost reduction programs underway to source $1B of reductions in 2016 compared to 2014 SG&A Exploration G&A and G&G • Internal costs account for ~1/3 of total • Implemented salary freeze; headcount reduction Production an
Slide 33: On Track to Achieve Significant Savings in 2015+
On Track to Achieve Significant Savings in 2015+ Deflation Realized in-line with Expectations $870MM Savings Identified To Date1 • ~$600MM capital savings identified to date In Progress 8% Operating Other 10% Expense Final 31% Europe • ~$270MM operating cost savings identified Negotiation 15% 24% to
Slide 34: Capturing Benefit from Rapid Cost Deflation
Capturing Benefit from Rapid Cost Deflation 9 Land Rigs LAG TIME Highly SHRINKING Stimulation Sensitive Shallow Well Services Water Rigs Midwater Floaters Tubulars Deepwater Rigs 6 Helicopters Sensitivity of Steel Activity Levels Fabricated Moderate Oil & Gas Field to Oil/Gas Price Equipment Equipme
Slide 35: Eagle Ford: Driving Drilling and Completion Efficiencies
Eagle Ford: Driving Drilling and Completion Efficiencies 2013 2015 • Continued drilling and completion efficiencies Job Size Job Size 3.8 MM lbs 7.7 MM lbs • Pilot studies optimizing recovery • DEEP implementation to reduce drilling days even further Drilling Execution Efficiency Platform (DEEP) ~30
Slide 36: Eagle Ford: Optimizing Field Development Through Pilot Programs
Eagle Ford: Optimizing Field Development Through Pilot Programs Transition to High/Low Completed 2015: Testing Tighter Spacing and Triple Stack Development 2015 Pilot Program Focus Areas Triple stack pilot tests GR BVI 80-acre1 high/low spacing Horizontal spacing pilot tests AC Upper Eagle Ford Texa
Slide 37: Bakken: Optimizing Field Development Through Pilot Programs
Bakken: Optimizing Field Development Through Pilot Programs North Dakota Current Testing Tighter Spacing Evaluating Further Upside WILLIAMS MOUNTRAIL 160-acre1 in Bakken / 80-acre1 in Bakken/ Additional Wells in GR BVH Upper Three Forks Upper Three Forks Middle Three Forks 1 test well 3 test wells U
Slide 38: Canada: Growth from Two Vast Resource Positions
Canada: Growth from Two Vast Resource Positions 2017 Product Mix • >$1B capital focused on unconventionals and oil sands NGL 7% • Exploration drilling offshore Nova Scotia Gas • Shift to development programs as Surmont 2 completed 29% • Production through 2017 grows by 80 MBOED Oil Bitumen 2% 62% Oi
Slide 39: Asia Pacific & Middle East: High-Margin Growth Underway
Asia Pacific & Middle East: High-Margin Growth Underway • APLNG: Two 4.5 MTPA trains; long-term Asia sales 2017 Product Mix Beijing LNG Oil Bohai Bay • Attractive opportunities in Malaysia 38% 27% CHINA • High-return developments in China and Indonesia Hong Kong North Field • Steady LNG volumes from
Slide 40: Alaska: New Projects Maintain Strong Performance in Alaska
Alaska: New Projects Maintain Strong Performance in Alaska Beaufort Product Mix - 2017 Beaufort Sea Sea LNG 2% 1H NEWS NGL Colville River Unit Alaska 6% CD5 Gas Oil DS-2S Prudhoe Bay Unit 87% GMT1 5% Nuiqsut Kuparuk River Unit Alaska Capital Production • Largest producer in Alaska 2 200 • Improved f
Slide 41: Europe: Optimizing Performance in Mature Assets
Europe: Optimizing Performance in Mature Assets PL720 PL615B • 3 major project startups in 2015 2017 Product Mix PL615 PL603 PL718 PL218 • Drilling from new infrastructure offsets decline NGL Barents Sea Heidrun 4% NORWAY Norwegian Sea • Clair Ridge & Aasta Hansteen provide future volumes SWEDEN FIN
Slide 42: Growing Our Low Cost of Supply Resource Base
Growing Our Low Cost of Supply Resource Base 7 BBOE RESOURCE ADDITIONS <$75 COST OF SUPPLY 2014 VS. 2011 2011 vs. 2014 Resources <$75/BOE 2014 Resources By Megatrend 24 BBOE 24 BBOE Deepwater 7 BBOE $60-$75/BOE Deepwater: Development of discovered LNG 20 BBOE Added resources globally $60-$75/BOE Sin
Slide 43: Conventional Resources: Substantial Inventory for Growth
Conventional Resources: Substantial Inventory for Growth North Sea Aasta Conventional Resources Hansteen 24 BBOE 8.7 BBOE $60-$75/BOE $45-$60/BOE Alaska North Slope Clair Bohai Bay Proved Fiord West NEWS Bear CD5 China Conventional Tooth Jade Prudhoe West End Eldfisk, Tor, Unit GMT1 DS-2S Developmen
Slide 44: Unconventional Resources: Top-Tier, Low Cost of Supply Resource
Unconventional Resources: Top-Tier, Low Cost of Supply Resource Unconventional Resources • 25% of resources with cost of supply <$75/BOE 24 BBOE 6.0 BBOE are unconventionals $60-$75/BOE • Only 0.9 BBOE booked as proved reserves $45-$60/BOE Unconventional • Consistent track record of adding resources
Slide 45: Unconventional Resources: Unlocking Upside with Technology
Unconventional Resources: Unlocking Upside with Technology Common Industry Interpretations • Stimulated rock volume (SRV) drives production and recovery • Logged and cored fracture-stimulated reservoir • Results challenge common industry RECOVERY Map View assumptions and interpretations Low High Cum
Slide 46: Oil Sands: Reducing Cost of Supply in Massive Captured Resource
Oil Sands: Reducing Cost of Supply in Massive Captured Resource $12/BOE COST OF SUPPLY REDUCTION1 ALREADY PROVEN Targeting $25/BOE Reduction in Cost of Supply1 Oil Sands Resources 24 BBOE 5.2 BBOE $60-$75/BOE $12/BOE Oil Sands $13/BOE Proved Megatrend Cost of Supply Cost of supply reflects Brent pri
Slide 47: Oil Sands: Technology and Optimization Reducing Cost of Supply
Oil Sands: Technology and Optimization Reducing Cost of Supply Proven Technology and Optimizations In Development Technology and Optimizations Central Central Processing Processing Wells Wells $12 Facility ~$13 Facility /BOE Captured /BOE Potential Reduction Reduction Pads Pads Accelerating Recovery
Slide 48: LNG: Evaluating Monetization Opportunities
LNG: Evaluating Monetization Opportunities • Attractive options to backfill or expand LNG Resources Darwin LNG 24 BBOE 3.4 BBOE LNG $60-$75/BOE • Pre-FEED studies underway to commercialize >1 BBOE net of North Slope gas $45-$60/BOE • Significant APLNG unbooked resource Proved • Proprietary Optimized
Slide 49: Global Deepwater: Developing Low Cost of Supply Discoveries
Global Deepwater: Developing Low Cost of Supply Discoveries 2015 Drilling Deepwater Resources Previous Drilling 24 BBOE 0.9 BBOE ConocoPhillips Lease $45-$60/BOE Gila ConocoPhillips Prospect or Discovery Gibson Tiber Shenandoah North Keathley Canyon Proved Walker Ridge Megatrend Cost of Supply Cost
Slide 50: Large, Diverse, Low Cost of Supply Resource Base
Large, Diverse, Low Cost of Supply Resource Base YE 2014 Total Resource – 44 BBOE Today • 8.9 BBOE proved reserves Proved Reserves • 16 year R/P from existing proved reserves Challenged <$75/BOE 20 BBOE Cost of Supply 24 BBOE Conventional • Unbooked resource base provides diverse source of new reser
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