Slide 1: Strategic Alliance
September 29 & 30, 2004 Jim Mulva President and CEO ConocoPhillips Vagit Alekperov President LUKOIL STRATEGIC ALLIANCE
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 The following presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Sec
Slide 3: Strategic Equity Alliance
Jim Mulva President and CEO ConocoPhillips STRATEGIC EQUITY ALLIANCE
Slide 4: Responding to the Global Challenges
Strategic factors favor cooperation of efforts in global oil industry Focus on capital intensive production in difficult conditions LUKOIL and ConocoPhillips form a strategic alliance to respond Accelerated development of Russian oil and gas reserves Further bi-lateral energy development between US
Slide 5: Alliance of Two Strong Partners
ALLIANCE OF TWO STRONG PARTNERS ConocoPhillips LUKOIL Operations Over 40 countries Over 30 countries Market Cap $56B $27B 2003 Production 1.6 mln boe/day 1.7 mln boe/day YE 2003 Reserves* 7.8 BBOE 20.1 BBOE Refining Largest in the U.S. 4th largest in world Largest Russian refiner Note: ConocoPhillip
Slide 6: World Class Reserves and Production
WORLD CLASS RESERVES AND PRODUCTION XOM LUKOIL* BP Yukos* RD Shell CVX TOT COP ENI 12.075 16 10.316 14.7 6.6 8.599 7.323 5.171 4.138 9.1282 4.1 7.7548 1.3 7.5 3.365 3.7112 2.6767 3.134 21.2032 20.1 18.07 16 14.1 11.964 11.034 7.8477 7.272 Source: Company Filings. * LUKOIL and Yukos reserves are SPE
Slide 7: Transaction Overview
ConocoPhillips becomes strategic equity investor in LUKOIL First step taken with purchase of 7.6% of LUKOIL at privatization Near term ownership objective is 10% ConocoPhillips is permitted to acquire up to 20% of LUKOIL pursuant to a comprehensive Shareholder Agreement Joint development of world cl
Slide 8: Equity Transaction
Strategic Equity Investor in LUKOIL ConocoPhillips becomes LUKOIL's exclusive equity partner ConocoPhillips is permitted to acquire up to 20% of LUKOIL ConocoPhillips near-term ownership objective is 10% Initial acquisition of 7.6% of LUKOIL through government privatization process at $30.76/share,
Slide 9: Corporate Governance
Components: LKOD COP US GAAP accounts* Y Y Quarterly reporting Y Y Listing LSE NYSE Independent BOD members Y Y Audit Committee Y Y Management stock incentives Y Y Alliance of partners with strong corporate governance foundations Initially one ConocoPhillips Board member (full BOD of 11 members) wit
Slide 10: Management Exchange
ConocoPhillips and LUKOIL will exchange management and other employees through secondment 15-20 managers initially, starting Q1-2005 Long-term with involvement in the host company's processes Secondment Objectives: Sharing of organizational and technological practices Development of cross-functional
Slide 11: The Right Transaction for ConocoPhillips
Strategic alliance with Russia's leading international oil and gas company Meaningful ownership position and governance rights Active JV participation in Russia Vast undeveloped hydrocarbon region Potential large opportunity in Iraq Participation in key corporate and operational decisions Enhances c
Slide 12: Cooperation in Upstream
Vagit Alekperov President LUKOIL COOPERATION IN UPSTREAM
Slide 13: The Right Transaction for Russia
Affirms government's openness to foreign investment in Russia Successfully concludes Russian government's privatization of LUKOIL Russian government to receive $1.988 billion in auction proceeds Enhances energy cooperation and economic and political ties with United States Potential for Russian crud
Slide 14: The Right Transaction for LUKOIL
Strategic alliance with trusted long-term partner Sharing experience in the international energy business through management exchange Enhancement to growth plans through exposure to global best practices and technology, including arctic & offshore operations, gas commercialization, refining and info
Slide 15: Northern Timan-Pechora JV
NORTHERN TIMAN-PECHORA JV MOSCOW Existing ConocoPhillips Joint Venture (Polar Lights) Northern Timan-Pechora Joint Venture Varandey ConocoPhillips joins LUKOIL in development of Timan- Pechora - its premier near-term growth region YK Development Area 16,289 sq. km. (over 4 MM acres) AMI for further
Slide 16: Timan-Pechora JV
World-class oil assets Largely undeveloped basin with significant discoveries New production from YK field expected to initiate in 2007 Total JV production ramping up to ~200 MBOPD in 2008-2011 Exported through terminal at Varandey, with planned expansion to capacity of 240 MBOPD Governance principl
Slide 17: West Qurna
WEST QURNA - 2 Turkey Saudi Arabia Iraq Syria Kuwait City Basra Rumailah FIeld West Qurna Baghdad Extension of giant 22 BBOE Rumailah Field LUKOIL and ConocoPhillips to jointly pursue West Qurna PSA in Iraq Subject to confirmation from the Iraqi government that PSA is still valid Assuming completion
Slide 18: Summary
Innovative transaction expands on strong historical ConocoPhillips / LUKOIL relationship Serves strategic objectives of both companies For ConocoPhillips, increased access to important resource regions with strong partner For LUKOIL, application of global energy company management practices to its w
Slide 19: Questions and Answers
September 29 & 30, 2004 Jim Mulva President and CEO ConocoPhillips Vagit Alekperov President LUKOIL STRATEGIC ALLIANCE QUESTIONS AND ANSWERS