ConocoPhillips · NYSE:COP
ConocoPhillips — Investor Presentation (August 2014)
64 slides from ConocoPhillips's investor presentation, Aug 14, 2014
Slide 1: Company Overview
Company Over view Updated Aug. 14, 2014.
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 Objective is to Deliver Double-Digit Returns to Shareholders
Our Objective is to Deliver Double-Digit Returns to Shareholders We offer the marketplace an E&P investment that delivers sustainable double-digit returns annually to shareholders through cash flow growth and a competitive dividend. 3
Slide 4: Our Value Proposition is Unchanged
Our Value Proposition is Unchanged • 3 – 5% production growth rate • 3 – 5% margin growth rate • Competitive dividend • Ongoing priority to improve financial returns • Relentless focus on safety and execution Production and cash margin reflect compound annual growth rates. Unless otherwise noted, th
Slide 5: Unmatched Position Today
Unmatched Position Today 1,556 MBOED Production1 – 2Q14 North Liquids • Diversified asset base with scope and scale American 24% Gas • Multiple sources of growth LNG + 57% International 19% • Massive positions in key resource trends Gas • Growing portfolio with options and choices 8.9 BBOE Reserves
Slide 6: 2014: Set for Growth
2014: Set for Growth Average Capital • Significant shift in capital toward development ~$16B programs Exploration & Exploration & Appraisal Appraisal • 2013: 1,472 MBOED1 is base for growth Major Projects • 2014: Expect 3-5% production growth Major Projects • Range of 1,525-1,550 MBOED • Expect to e
Slide 7: Capital Allocation Drives Profitable Growth
Capital Allocation Drives Profitable Growth Average Capital Production1 ~$16B 2.0 100% 1.8 90% North American 1.6 >$40/BOE 80% Margin Unconventional 45% of Capital 1.4 70% 1.2 LNG MMBOED 60% Oil Sands 1.0 50% International 0.8 40% Oil & Gas $30-$40/BOE Margin 0.6 50%30%of Capital 20% North American
Slide 8: High-Margin Production Growth Drives Cash Margin Improvement
High-Margin Production Growth Drives Cash Margin Improvement 2017 Production1 Cash Margin Production CAGR1 $/BOE 2013-2017 North American North American 2013 Production1 Unconventional >40 ~22% Unconventional North American Unconventional LNG >40 ~10% LNG Oil Sands Oil Sands 30-40 ~21% North America
Slide 9: High-Margin Growth Generates Long-Term Cash Flow Improvements
High-Margin Growth Generates Long-Term Cash Flow Improvements Cash From Continuing Operations¹ • Continued cash margin growth in 2014+ $B • Ongoing production mix shift • Increased production in areas with more favorable fiscal regimes • Declining production in North American natural gas fields $20-
Slide 10: Committed to Shareholder Returns
Committed to Shareholder Returns Dividend Yield • Competitive dividend remains key to our value proposition • Highest priority use of cash 3.3% • Enhances capital discipline • Predictable portion of shareholder returns • Differential to independent peers • Dividend increased 5.8 percent in July Inte
Slide 11: The Power of Portfolio: Margins, Decline Rates and Returns
The Power of Portfolio: Margins, Decline Rates and Returns $10-15/BOE Margins $30-40/BOE Margins >$40/BOE Margins North American • Short-cycle cash flow High >25% Unconventionals • Avoid over capitalizing • Increases capital intensity of portfolio Full-Cycle Project Returns North American Convention
Slide 12: North American Unconventionals: Unmatched Portfolio and Capabilities
North American Unconventionals: Unmatched Portfolio and Capabilities Montney Duvernay • Great positions in proven and emerging plays • Eagle Ford and Bakken sweet spots Bakken • Exceptional growth in high-margin resource base Niobrara Permian Anadarko • Decades of drilling inventory with upside Barn
Slide 13: Eagle Ford: Significant Resource Increase
Eagle Ford: Significant Resource Increase • ~220 M net acres; acreage capture complete • 96% average operated working interest • 1.8 BBOE to 2.5 BBOE net EUR increase • >3,000 identified drilling locations • Outlook based on 12-rig program • $20-25/BOE full-cycle F&D cost Average 1 Capital Productio
Slide 14: Eagle Ford: Premium Value from Best Wells in the Play
Eagle Ford: Premium Value from Best Wells in the Play 250 Highest Oil Rates per Well1 60 Industry-Leading Value2 50 200 Gross Operated Production (BPD) 40 NPV10 per Acre ($M) 150 30 100 20 50 10 0 0 Competitors Competitors 1Texas Railroad Commission, 2013. 2Wood Mackenzie. 14
Slide 15: Bakken: High-Margin Growth
Bakken: High-Margin Growth • ~620 M net acres; mostly HBP or mineral fee • 45% average operated working interest • 600 MMBOE net EUR • >1,800 identified gross drilling locations • Outlook based on average 10-rig program • $20-25/BOE full-cycle F&D cost 1 Average Production Product Mix 100% Capital 9
Slide 16: Bakken: Advantaged Position in the Heart of the Trend
Bakken: Advantaged Position in the Heart of the Trend Montana North Dakota Bakken Acreage Values by Area (NPV10 per Acre)1 VALLEY ROOSEVELT WILLIAMS MOUNTRAIL Nesson Anticline Anticline Parshall-Sanish Fort Berthold Williams Core MCCONE Nesson West Nesson Anticline Northern Mountrail MCKENZIE Elm Co
Slide 17: Permian Unconventional: Early Appraisal Results Encouraging
Permian Unconventional: Early Appraisal Results Encouraging New Mexico Texas • Positions in Delaware and Midland basins Central Delaware Platform Midland Basin • Thick column of both shale and tight rock intervals Basin Basin • Four rigs running in Delaware Basin • 26 horizontal wells planned for 20
Slide 18: Niobrara: Early Appraisal Results Encouraging
Niobrara: Early Appraisal Results Encouraging ADAMS ADAMS • ~130 M net acres in the DJ Basin • Appraisal program ongoing; 1 rig running DENVER ARAPAHOE • 19 horizontal wells planned for 2014 ARAPAHOE • Optimization of drilling and completions design DOUGLAS ELBERT • Average early rates from new desi
Slide 19: LNG: Positioned in High-Margin Markets
LNG: Positioned in High-Margin Markets AKLNG • Oil-linked contracts; robust cash flows Kenai • Darwin and Qatar: High-liquids yield; premium markets • Kenai: Restarting for seasonal exports Qatar Darwin LNG • AKLNG: Executed JV agreement APLNG • APLNG: Project on schedule Average Production Capital
Slide 20: Oil Sands: Significant Growth from World Class SAGD Portfolio
Oil Sands: Significant Growth from World Class SAGD Portfolio Saleski Fort McMurray • Second largest net SAGD producer Surmont Thornbury Narrows • Top quartile steam-to-oil ratio Lake • Executing 7 major projects and 2 optimization projects Crow Lake Christina Lake McMillian Lake • 2017+ net cash fl
Slide 21: International Oil & Gas: Major Projects Driving Growth
International Oil & Gas: Major Projects Driving Growth Norway U.K. • Strong legacy positions • 130 MBOED major projects growth expected by 2017 Libya • 2013: Ekofisk South and Jasmine started on schedule China • 2014: 5 projects in Europe and Malaysia Malaysia Indonesia • 2015-2017: 7 projects expec
Slide 22: North American Conventional Oil: Protecting and Growing the Base
North American Conventional Oil: Protecting and Growing the Base • Development drilling and major projects in Alaska ALASKA • Infill drilling and waterflood expansion in the Permian • Drilling and expanded waterflood recovery at Ursa • Liquids-focused drilling in the Anadarko Basin • Technology and
Slide 23: North American Gas: Low-Cost Option on Significant Resource Base
North American Gas: Low-Cost Option on Significant Resource Base • Capital program focused on liquids-rich gas • ~$1.10/MCF lifting cost • 6.5 BBOE total resource • >15,000 identified well locations • ~$1.5 billion annual cash from operations at $4/MCF gas Average 1 Capital Production Product Mix Oi
Slide 24: 2014: Testing Global Portfolio
2014: Testing Global Portfolio Norway Greenland Barents Chukchi NPR-A Canol Montney, UK & Norway Duvernay Poland Baltic Basin Nova Scotia Azerbaijan China Bohai Niobrara China Delaware & Sichuan Midland Gulf of Mexico Bangladesh Senegal Myanmar1 Malaysia Colombia Middle Magdalena Indonesia Bonaparte
Slide 25: Appraising Gulf of Mexico Discoveries
Appraising Gulf of Mexico Discoveries TEXAS LOUISIANA Tiber • 18% working interest • Lower Tertiary oil discovery in 2009 • Multiple reservoir intervals • Appraisal commenced in 2013; continues in 2014 Shenandoah Gila Tiber Coronado Shenandoah • 30% working interest ConocoPhillips Acreage • Lower Te
Slide 26: Angola: Deepwater Exploration
Angola: Deepwater Exploration • Block 36: 50% working interest; operator Atlantic Ocean Luanda • Block 37: 30% working interest; operator Block 36 Orca • Pre-salt lacustrine carbonate play in Kwanza Basin Lontra Kamoxi-1 Block 20 • Analogous to Brazilian Santos/Campos Basins and Mavinga Cameia-1 Cam
Slide 27: Key Messages
Key Messages • Value proposition unchanged • Visible growth in 2014 • Significant identified resource upside in unconventionals • Options and choices for organic growth beyond 2017 • Strategic linkage between capex, volume growth and margin expansion • Cash flow is growing, financial position is str
Slide 28: Supplemental Slides
SAFETY ConocoPhillips technology on Sea REPUTATION set FOP Portoiio Optimization GROWTH ENERGY innovation BAKKEN SPIRIT Values COLLABORATION Ekofisk South Supplemental Slides
Slide 29: Our Strategy Achieves Value Proposition
Our Strategy Achieves Value Proposition Average Capital Production1 ~$16B 2.0 100% 15% Exploration & Delivers 2017+ 1.8 90% Appraisal growth 1.6 80% Generates strong production 1.4 70% 30% Major Projects growth 1.2 MMBOED 60% 1.0 50% 0.8 40% 45% Development Mitigates base 30% Programs decline 0.6 20
Slide 30: Diversified and High-Margin Reserve Base
Diversified and High-Margin Reserve Base 8.9 BBOE Reserves – YE 2013 By Region By Product By Margin1 Other North American North American NGL Unconventional 4% Gas Asia Pacific & Alaska 8% Oil 16% 8% LNG Middle East 19% 16% 11% Natural 31% Gas International 29% Oil and Gas Europe 9% 18% 25% 23% Oil S
Slide 31: Current Status of Unconventional Plays
Current Status of Unconventional Plays 31
Slide 32: Disciplined Pace of Development Maximizes Value
Disciplined Pace of Development Maximizes Value Reasons to Accelerate Reasons to Optimize Acreage Retention Cost Learning Curve Benefits Technology Learning Curve Benefits Driven by Growth Infrastructure Efficiency Faster Cash from Operations Higher Ultimate Recovery 32
Slide 33: Eagle Ford: Acreage in Heart of the Sweet Spot
Eagle Ford: Acreage in Heart of the Sweet Spot Thermal Maturity Pressure & Thickness A B TEXAS GONZALES WILSON LAVACA ConocoPhillips A Acreage DE WITT ATASCOSA KARNES B Maturity FRIO Sweet Spot ConocoPhillips Acreage Dry Gas Dry Gas LA SALLE Volatile Oil, Cond., Wet Gas Volatile Oil, Cond., Wet Gas
Slide 34: Eagle Ford: Value-Driven Approach to Well Density
Eagle Ford: Value-Driven Approach to Well Density 2013 2014 Transition to High/Low Evaluating Further Upside Lower Eagle Ford 80-acre1 Single Layer Lower Eagle Ford 80-acre1 High/Low Lower Eagle Ford 40-acre2 1.8 BBOE EUR 2.5 BBOE EUR Upper Eagle Ford/Austin Chalk 1660’ between 1-mile long wells is
Slide 35: Scientific Piloting: Accelerating Pace of Learning
Scientific Piloting: Accelerating Pace of Learning Pressure Monitoring Instrumented Wells Logging and Coring Stimulated Rock Volume Producer Post-Stimulation Pilot Well Cored Section Pre-Stimulation Pilot Well Map View 35
Slide 36: Eagle Ford: Value-Driven Approach to Fracture Stimulation Design
Eagle Ford: Value-Driven Approach to Fracture Stimulation Design Optimizing Proppant Density • Extensive pilot testing to verify stimulation models 40% • Constantly enhancing fracture stimulation design EUR Increase 30% • 30% increase in EUR per well from increased proppant 20% • >100% production in
Slide 37: Eagle Ford: Delivering Capital Efficiencies
Eagle Ford: Delivering Capital Efficiencies • ~40% reduction in drilling days Drilling Cost Efficiency1 100% • ~40% reduction in completion cost per unit of proppant 80% • 75% of 2014 wells benefit from multi-well pad drilling 60% 40% • Leveraging size to realize contract savings 20% • Testing addit
Slide 38: Drilling Execution Efficiency Platform (DEEP)
Drilling Execution Efficiency Platform (DEEP) • Optimizes drilling performance in real time 1,250 Drilling Rate (feet/day) 20% Faster • Currently being field piloted in Eagle Ford 1,100 and Permian 950 • Demonstrated >20% increase in drilling rate 800 in the build and lateral section of horizontal W
Slide 39: Operations Excellence: Unlocking Full Eagle Ford Potential
Operations Excellence: Unlocking Full Eagle Ford Potential Eagle Ford Integrated Operations Center • Leveraging success from conventional asset base 300 600 # of Eagle Ford Flowing Wells Center Opens • Integrated operations centers in 9 locations worldwide 250 500 Well Shut-In Events1 200 400 • Impr
Slide 40: Bakken: Optimal Well Spacing and Placement
Bakken: Optimal Well Spacing and Placement Current Testing Tighter Spacing Evaluating Further Upside 320-acre1 in Bakken/ 160-acre2 in Bakken/ Additional Wells in Upper Three Forks Upper Three Forks Middle Three Forks 11,320’ between 2-mile long wells is equivalent to 320-acre spacing. 2660’ between
Slide 41: Bakken: Delivering Capital Efficiencies
Bakken: Delivering Capital Efficiencies Drilling Cost Efficiency1 • ~30% reduction in drilling days 100% 29% 80% Improvement • ~50% reduction in completion cost per unit of proppant 60% • 90% of 2014 wells to benefit from multi-well pad drilling 40% • Leveraging size to realize contract savings 20%
Slide 42: Other N.A. Unconventionals: Strong Position in Emerging Plays
Other N.A. Unconventionals: Strong Position in Emerging Plays Montney • Focused on high-margin, liquids-rich opportunities Montney Duvernay • >500 M net acres under appraisal Bakken • Key programs in Permian, Niobrara and Canada Niobrara Anadarko • Leveraging Eagle Ford and Bakken learnings Permian
Slide 43: Canada: Appraising Montney and Duvernay
Canada: Appraising Montney and Duvernay Montney • ~230 M net acres • 90% average working Interest Montney • Focused on 135 M net acres with 30-40% liquid yield Duvernay • 14 horizontal wells planned for 2014 • Access to existing infrastructure ConocoPhillips Acreage Duvernay • ~120 M net acres • 100
Slide 44: APLNG: Long-Term Cash Flow Generation
APLNG: Long-Term Cash Flow Generation • Two 4.5 MTPA trains with long-term sales to Asia • Project ~75% complete at the end of 2Q14 • On schedule for first LNG in mid-2015 • ~$25/BOE full-cycle F&D cost • 2017+ distributions ~$1 billion per year Awaiting better graphic 3 APLNG Project Capital Produc
Slide 45: Surmont 2: Progressing Toward Startup
Surmont 2: Progressing Toward Startup • Construction 68% complete at the end of 1Q14 • First steam expected in mid-2015 • Surmont 2 increases gross capacity to 150 MBOED • Optimization and debottlenecking studies underway • ~$20/BOE full-cycle F&D cost • Significant remaining development potential T
Slide 46: Creating Value from Operations Excellence and Technology
Creating Value from Operations Excellence and Technology Oil Sands SAGD Projects Steam-Oil Ratio1 • Operations Excellence 6 • Surmont 1 operating >15% above design capacity SOR (2013 Average) 5 4 • Reduced drilling cost by 12% in 2013 3 • Longest SAGD wells in industry 2 1 • Proven Technologies 0 •
Slide 47: Robust Technology Pipeline Targeting Improved Project Returns
Robust Technology Pipeline Targeting Improved Project Returns Flow Control Devices (FCD) 1,600 FCD Cumulative Oil Production 1,400 • Accelerates production and reduces SOR 1,200 • Successfully deployed and expanding application 1,000 MBOE 800 SAGD Well With FCD • Pilot performance improvements 600 A
Slide 48: North Sea: Revitalization from High-Margin Projects
North Sea: Revitalization from High-Margin Projects • 2014: Jasmine and Ekofisk South ramp up; Britannia LTC startup • 2015: Eldfisk II and Enochdhu startups • 2016/17: Alder, Clair Ridge and Aasta Hansteen startups • 5% production CAGR from 2013 to 2017 • Additional projects under evaluation Aasta
Slide 49: Malaysia: Building a Legacy Position
Malaysia: Building a Legacy Position • 2014: Milestone year with 3 project startups expected • Siakap North-Petai (SNP): First production achieved • Gumusut FPS: 3Q14 startup targeted • KBB gas development: 4Q14 startup targeted • Progressing exploration and development opportunities Malaysia – Majo
Slide 50: Alaska: Increased Investment Targeting Resource Development
Alaska: Increased Investment Targeting Resource Development • Increased investments reflect better fiscal terms • Technology mitigating decline in mature fields • CD5 project in execution • Drill site 2S, GMT1 and 1H NEWS projects progressing • Prudhoe Bay pad expansions and projects Capital Kuparuk
Slide 51: Exploration: Material High-Value Resource Adds
Exploration: Material High-Value Resource Adds 1 Cumulative Discovered Resources 6.0 High-Value Organic Growth 8 2 U.S. Unconventional Exploration – 2003-2012 7 5.0 6 5 Independent Companies Integrated Companies Full-Cycle NPV10 per BOE ($/BOE) 4.0 4 BBOE 3 3.0 2 1 2.0 Bubble Size Represents 0 Total
Slide 52: Australia: Appraising Discoveries at Poseidon and Barossa
Australia: Appraising Discoveries at Poseidon and Barossa Greater Poseidon Complex Barossa • 40% working interest; operator • 37.5% working interest; operator • Discovered in 2009 • Discovered in 2006 • Jurassic Plover and Elang formation reservoirs • Jurassic Plover and Montara formation reservoirs
Slide 53: Senegal: Deepwater Exploration
Senegal: Deepwater Exploration Rufisque • 35% working interest AFRICA SENEGAL • FAN-1 well spud in 2Q 2014 • Cretaceous pinch-out play Sangomar The Gambia • Similar age as the recent Mauritanian discovery Atlantic Ocean Sangomar Deep approximately 360 miles north-east ConocoPhillips Acreage GUINEA-B
Slide 54: International Unconventional Exploration
International Unconventional Exploration Poland Colombia • 70% working interest; operator • Santa Isabel – 70% working interest (~70 M net acres) • ~350 M net acres in the Baltic Basin • VMM Blocks – 30% working interest (~115 M net acres) • Drilling two vertical wells and one long lateral well in 2
Slide 55: Strength and Flexibility Throughout the E&P Value Creation Cycle
Strength and Flexibility Throughout the E&P Value Creation Cycle Balance Capital Resources & Profitability Shareholder Sheet Investment Reserves Production & Cash Flow Distributions Asset Sales • Growing portfolio of high-return, high-margin investments • Track record of reserve replacement at compe
Slide 56: Shifting Portfolio Driving Peer-Leading Cash Margin Growth
Shifting Portfolio Driving Peer-Leading Cash Margin Growth 2013 vs. 2012 Cash Margin/BOE • Visible margin growth in 2013 Relative Improvement 1 11% • 9% price normalized cash margin growth • Liquids growth in Lower 48, Canada and APME • Shift to more favorable fiscal regimes • Reduced North American
Slide 57: Appendix
SAFETY ects ceater ConocoPhillips echnolo on Sea “te REPUTATION set FOP Portoiio Optimization GROWTH. ENERGY lie SPIRIT Values COLLABORATION Ekofisk South Appendix
Slide 58: Annualized Net Income Sensitivities
Annualized Net Income Sensitivities • Crude • Brent/ANS: $80-90MM change for $1/BBL change • WTI: $35-40MM change for $1/BBL change • WCS¹: $30-40MM change for $1/BBL change • North American NGL • Representative blend: $10-15MM change for $1/BBL change • Natural Gas • Henry Hub: $100-110MM change fo
Slide 59: On Track To Meet Production Growth Of 3-5%
On Track To Meet Production Growth Of 3-5% 2H14 Drivers • 3Q Major Turnarounds Actual • Alaska Actual • UK • Canada • APME • Major Project Startups • Foster Creek Phase F • Gumusut • KBB • Britannia LTC • Ramp gas sales to third-party LNG project 1Q14 2Q14 3Q14 4Q14 FY14 Continuing Operations 1,530
Slide 60: 2014 Outlook Guidance
2014 Outlook Guidance • 2014 DD&A of ~$8.5 B • Higher DD&A from Jasmine and Gumusut startup • Reflects reserve booking schedule in unconventionals • Expenses from continuing operations • Production and SG&A expense of ~$8.7-$8.9B 1 • Exploration expense of ~$1.5B • Corporate segment costs of ~$950 M
Slide 61: Segment Production (MBOED)
Segment Production (MBOED) 250 Alaska 500 Canada 700 Lower 48 & Latin America 600 200 400 500 150 300 400 300 100 200 200 50 100 100 0 0 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 500 250 Europe APME 5 Other International1 400 200 4 300 150 3 200 100 2 50 100 1 0 0
Slide 62: Margin Class Categorization
Margin Class Categorization North American International North American North American Unconventionals LNG Oil Sands Oil & Gas Conventional Oil Gas • Bakken • AKLNG • Christina Lake • China • Alaska North Slope • Lobo • Barnett • APLNG • Foster Creek • Indonesia • Anadarko • San Juan • Canada Unconv
Slide 63: Abbreviations and Glossary
Abbreviations and Glossary • 4-D: four dimensional • MM: million • ANS: Alaska North Slope • MBOED: thousands of barrels of oil equivalent per day • Average Cash Margin (2014-2017): Average cash margin represents the projected cash flow from operating activities, excluding working capital, divided •
Slide 64: Investor Information
Investor Information Stock Ticker Investor Relations Contacts: NYSE: COP Telephone: +1 212.207.1996 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