ConocoPhillips · NYSE:COP
ConocoPhillips — Investor Day (March 2010)
115 slides from ConocoPhillips's investor day presentation, Mar 24, 2010
Slide 1: 2010 Analyst Meeting
MARCH 24, 2010 • NEW YORK, NEW YORK 2010 Analyst Meeting
Slide 2: 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, as amended and Section 21E of the Securities E
Slide 3: 2010 Analyst Meeting – Jim Mulva
2010 Analyst Meeting Jim Mulva Chairman & Chief Executive Officer March 24, 2010 New York, New York
Slide 4: ConocoPhillips Today
ConocoPhillips Today $88 B Capital Employed International, Integrated, Major oil and gas company 7% • ~50 BBOE captured resources 25% E&P 64% • 10 BBOE reserves R&M LUKOIL Chemicals • 2.3 MBOED production Midstream Emerging Business • 3.0 MMBPD refining capacity Geographic Capital Employed Uniqu
Slide 5: Economic and Political Environment
Economic and Political Environment Long‐term demand for hydrocarbons expected to increase Near‐term energy demand increasing as economy recovers Near‐term U.S. natural gas surplus, strong worldwide natural gas demand growth Refining margins challenged near‐term Difficult political environm
Slide 6: Demand for Hydrocarbons
Demand for Hydrocarbons World Energy Demand World Oil Demand 350 Renewables 120 Developing Million Barrels Oil Equivalent per Day Nuclear OECD 300 Coal 100 Natural Gas Million Barrels Oil per Day Oil 250 80 200 60 150 40 100 20 50 0 0 2000 2015 2030 2000 2015 2030 Fossil fuels will still be 80% of t
Slide 7: World Oil Demand Resumed Growth
World Oil Demand Resumed Growth Monthly Changes in World Oil Demand: 3‐Month Moving Average 4 Million Barrels per Day, Y/Y 3 2 1 0 ‐1 ‐2 ‐3 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Demand growth has resumed, driven by non‐OECD growth Source: Energy Intelligence Group, last data point is Jan
Slide 8: WTI Price Forecasts
WTI Price Forecasts 120 110 100 External Range 2009 $ / BBL 90 80 Futures 70 60 50 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Most WTI forecasts are $70‐80/BBL short‐term, higher long‐term Futures is NYMEX settle on 2/26/10. Forecasts from November 2009 – February 2010. 7
Slide 9: World Natural Gas Supply and Demand
World Natural Gas Supply and Demand BCFD 450 Projected Global Natural Gas Demand 400 350 300 Non‐US Production Growth 250 200 LNG 150 Non‐US Existing 100 50 US Supply 0 2009 2012 2015 2018 2021 2024 2027 2030 Observed post‐plateau decline rate of 6.7% based on IEA database. Source: IEA, Wood Mackenz
Slide 10: U.S. Natural Gas Supply Sources and Demand
U.S. Natural Gas Supply Sources 80 Projected U.S. Natural Gas Demand 70 Alaska CBM 60 LNG Imports Net Pipeline Imports 50 Tight Sands BCFD 40 30 Shale 20 Conventional 10 Existing Production 0 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 All sources needed to meet future demand Source:
Slide 11: Henry Hub Natural Gas Price Forecasts
Henry Hub Natural Gas Price Forecasts 9 8 Futures 2009 $/MMBtu 7 External Range 6 5 4 3 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Most HH forecasts are $5‐6/MMbtu short‐term, $6‐8/MMbtu long‐term Futures is NYMEX settle on 2/26/10. Forecasts from December 2009 ‐ February 2010. 10
Slide 12: Global Refinery Capacity vs. Global Oil Demand
Global Refinery Capacity vs. Global Oil Demand 100 Global Oil Demand 95 Global Oil Refining Capacity 3MMBD 90 Million Barrels per Day 5MMBD 85 3MMBD 80 6MMBD 75 8MMBD 70 65 60 55 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Surplus capacity will shrink due to closures a
Slide 13: Refining Margins Forecast
Refining Margins Forecast Global Light Oil Spread ‐ $/BBL Light‐Heavy Crude Differential ‐ $/BBL 20 20 External Forecast External Forecast 16 16 12 12 8 8 4 4 0 0 2003 2005 2007 2009 2011 2003 2005 2007 2009 2011 Refining margins likely to improve from market lows Forecasts from February / March 201
Slide 14: Summary of Consensus Forecasts
Summary of Consensus Forecasts Oil prices expected to trade in Short‐term: current range over near term $70 ‐ $80/BBL and increase with demand WTI Crude Oil Long‐term: recovery $80 ‐ $100/BBL Short‐term: Natural Gas prices expected to Henry Hub $5 ‐ $6/MMbtu rise over time as demand Natural Gas
Slide 15: Challenging Political Environment
Challenging Political Environment Increased fiscal take, higher taxes Climate change policy uncertainty Increased regulatory burden Restricted access Fuel‐specific mandates Geopolitical risk and influence of U.S. foreign policy Facing an increasing political headwind 14
Slide 16: Constrained IOC Access
Constrained IOC Access Reserves Today Many large resource countries Reserves held by not accessible by IOCs NOC reserves Russian companies (equity access) Some large resources 8% accessible at unattractive Full IOC 12% access terms 7% Worldwide competition from NOCs expanding outside host 73%
Slide 17: Companies Returning to N. America
Companies Returning to N. America Renewed focus by multi‐nationals on PetroChina /Athabasca ($1.7 B) Total / UTS ($0.7 B) North America Total / Syneco ($0.7 B) BP/ Husky ($1.1 B) hydrocarbons Western Statoil / NAOSC ($2.0 B) Shell / BlackRock ($2.1 B) ~$70 B in recent Canada Gas Oil Sands Total
Slide 18: Challenges
Challenges Exposure to N. America natural gas and refining Current ROCE below peer average Debt levels above target range Trading at discount to peer group Competition for new resources Balancing growth vs. returns 17
Slide 19: Strategic Options
Strategic Options Emphasize absolute production growth • Fully invest in available opportunities • Accept incremental projects with marginal economics • Higher leverage, no share repurchases Significant restructuring • Divest or spin out of significant business lines • Sale of legacy assets high
Slide 20: Key Strategic Objectives
Key Strategic Objectives Upstream • Exploit captured resource base • 100%+ organic reserve replacement • Grow production / share • Strengthen exploration results • Reduce operating costs • Improve returns on capital Downstream • Portfolio management • Margin enhancement • Reduce operating cost •
Slide 21: Key 2010 / 2011 Initiatives
Key 2010 / 2011 Initiatives Constrain capital program to highest return projects Execute $10 B two‐year asset sales program Reduce LUKOIL interest from 20% to 10% Reduce debt ratio to 20% Picture Increase dividend by 10% in 2010 Resume share repurchase program $20 B available for share r
Slide 22: $10 B Asset Sales Program
$10 B Asset Sales Program Approximately half in 2010 60‐80% Upstream Potential 2010 Dispositions • Syncrude • REX Pipeline • 10% of Lower 48 and Western Canada portfolio • Remaining U.S. downstream marketing 2010 / 2011 combined impact • Production: ~80 ‐ 120 MBOED • Reserves: ~400 ‐ 600 MMB
Slide 23: LUKOIL – Sale of 10% Interest
LUKOIL – Sale of 10% Interest Maintain strategic alliance Maintain board representation / equity accounting Open market sales Complete over 2010/2011 $5 B at recent share price levels Tax efficient Proceeds used for share repurchase Effectively exchanges LUKOIL shares for ConocoPhillip
Slide 24: Capital Investing Overview
Capital Investing Overview Capital Program ‐ $B 19.9 20 Base Capital LUKOIL Origin 16.4 4.8 16 2.7 12 ‐ 13 11 ‐ 12 per year per year 12 8 15.1 13.7 12.9 12.0 4 0 2006 2007 2008 2009 2010 ‐ 2011 2012 ‐ 2014 23
Slide 25: Annual Dividend Increases
Annual Dividend Increases COP Quarterly Dividend Growth 13.5% annualized growth 55 since 2002 Quarterly dividend (cents/share) 50 47 Eight consecutive annual 41 increases 36 31 Current Yield = 4.3% 25 20 22 Less than 20% of operating cash flow Annual increases expected '02 '03 '04 '05 '06
Slide 26: 2010 Peer Capex & Dividends vs. Cash Flow
2010 Peer Capex & Dividends vs. Cash Flow Capital Expenditures Dividends Free Cash Flow 120% 100% % of 2010E Cash Flow 80% 60% 40% 20% 0% COP XOM BP CVX TOT RDS Largest free cash flow percentage among peer group Source: Company reports, First Call Estimates. 25
Slide 27: Path to Increased Shareholder Value
Path to Increased Shareholder Value 2010 / 2011 Two‐Year Cash Sources and Uses ‐ $B 60 50 5 40 10 24 30 6 5–8 20 35 5 7 ‐ 10 10 20 0 Cash From Asset Sales Capital Available Debt Share Add'l Capex / Operations & LUKOIL Program & Cash Reduction Repurchase Add'l Share Dividends Repurchase Cash from ope
Slide 28: Key 2010 / 2011 Results
Key 2010 / 2011 Results Adjusted Net Income ‐ $B Cash From Ops ‐ $B Capital Program ‐ $B 25 25 25 20 20 20 15 15 15 10 10 10 5 5 5 0 0 0 2008 2009 2010E 2011E 2008 2009 2010E 2011E 2008 2009 2010E 2011E Share Repurchase ‐ $B Total Debt ‐ $B E&P Income ‐ $/BOE 10 35 20 8 30 25 15 6 20 10 4 15 10 2 5
Slide 29: E&P Production per Share Growth
E&P Production per Share Growth 0.56 BOE Production / share Returns focus creates short‐ term production plateau 0.52 Share repurchases create near‐term production per 0.48 share growth 0.44 Long‐term production growth 0.40 2008 2009 2010 2011 2012 2013 2014 Share repurchases accelerate per sh
Slide 30: Growth in Returns
Growth in Returns Improve portfolio via asset Capital Efficiency ‐ ROCE and CROCI sales program 25% ROCE CROCI Constrain capital / invest at 20% competitive F&D costs 15% Maximize asset uptime 10% Reduce operating costs 5% Modest increase in market 0% 2009 2012 2009 2012 returns Improved r
Slide 31: Strategy Implementation
Strategy Implementation Long‐Term Key Metrics 2009 Position 2012 Outlook Expectation Portfolio Balance (E&P / R&M) 72% / 28% 73% / 27% 85% / 15% E&P 5‐year F&D Cost / BOE $16.42 ~$15 ~$15 E&P 5‐year Reserve Replacement 122% 100%+ 100%+ E&P Production ‐ MMBOED 1.85 ~1.7 2 ‐ 3% growth Annual E&P Produ
Slide 32: Decisive Actions to Increase Value
Decisive Actions to Increase Value Sell assets and reduce debt Increase ROCE / CROCI 10 BBOE resources to reserves in 10 years Grow production per share 3% per year Increase distributions Closing the Valuation Gap 31
Slide 33: 2010 Analyst Meeting – John Carrig
2010 Analyst Meeting John Carrig President & Chief Operating Officer March 24, 2010 New York, New York
Slide 34: Total Company Safety
Total Company Safety Total Recordable Incident Rate Incidents per 200,000 hours worked 1.2 Contractors Employees 2009 combined workforce performance improved 1.0 0.8 Reduced process safety 0.6 incident rate 0.4 Reduced permit / 0.2 regulatory exceedances 0.0 2004 2005 2006 2007 2008 2009 Our g
Slide 35: 2009 Accomplishments
2009 Accomplishments Improved HSE performance $2 B cost reduction $3 B capital expenditure reduction 141% reserve replacement 4% growth in E&P production Improved operating efficiencies 34
Slide 36: Continued Reduction in Controllable Costs
Continued Reduction in Controllable Costs 14% Reduction ’08 to ‘09 Drive 2010 costs below 7% operational + 7% market $B 2010 Goal 15 +5% operational reduction 2009 levels through: • Procurement savings 10 • Optimized turnarounds • Lower Corporate overhead 5 • Emphasis on unit costs • Increased acc
Slide 37: Upstream Controllable Costs
Upstream Controllable Costs Reduction of 13% in 2009 Upstream Controllable Costs ‐ $B • $1.1 B savings 9 8 Top quartile within many 7 major operating basins 6 5 Future opportunities 4 • Portfolio rationalization 3 • Strategic sourcing 2 • Supplier management 1 • Operating efficiency 0 2008 200
Slide 38: Downstream Margin Enhancement
Downstream Margin Enhancement Controllable cost reduction of Downstream Controllable Costs ‐ $B 16% in 2009 7 • ~$1 B savings 6 2010 Improvements 5 • Additional controllable cost 4 reduction opportunities 3 • Increase clean product yields 1% 2 • Optimization • Strategic sourcing 1 • Supplier man
Slide 39: Competitive SG&A Costs
Competitive SG&A Costs SG&A Costs Selling, general and 140 Peer Range administrative costs 19% 130 ConocoPhillips below 2005 levels 120 Reduced costs during period Indexed (2005 = 100) 110 of industry cost growth 100 90 Continuing focus on cost 80 constraint as markets recover 70 Sustainable
Slide 40: Procurement Excellence
Procurement Excellence Exceeded 2009 cost reduction targets 2010 Initiatives 1000 Industry is expecting slow recovery Savings ‐ $MM 500 Carry momentum from 2009 into 2010 0 2009 Actual 2010 Target High Impact Areas Contract Services Logistics Maintenance Engineering 39
Slide 41: 2010 Capital Program
2010 Capital Program By Segment By Region By Product R&M Europe, Refining & Other $1.3 $1.5 Africa & Mideast Exploration $2.7 $1.4 LNG $1.5 Asia $3.2 Gas E&P $2.3 $9.7 North America Oil $5.1 $4.5 All figures in $B. Capital program by segment and by region includes $0.2B in Other. 40
Slide 42: Operating Efficiency
Operating Efficiency Refining Availability 100% Efficiency continues to improve 95% 2009 Refining LPO volumes 90% down 27% vs. 2008 85% 80% 2009 E&P Direct Operating 2008 2009 Efficiency best in 3 years E&P Uptime 100% 2010 focus on: 95% • Asset & Operating Integrity 90% • Planning & Schedul
Slide 43: Upstream Production
Upstream Production Production ‐ MMBOED Constraining near‐term 2.5 Production Dispositions reinvestment rate • Not compelled to drill to hold 2.0 most acreage 1.5 Near‐term production at 2008 levels 1.0 • Per share production growth 3% near term, 3 ‐ 5% long term 0.5 3% underlying and 8% per 0
Slide 44: Operations Summary
Operations Summary Building on strong 2009 safety and operating efficiency Driving further accountability on cost reductions • Operating efficiency • Project execution Driving on‐time start up of major projects Maximizing production while growing reserves Operational excellence is the founda
Slide 45: 2010 Analyst Meeting – Willie Chiang
2010 Analyst Meeting Willie Chiang Senior Vice President Refining, Marketing & Transportation March 24, 2010 New York, New York
Slide 46: Refining and Marketing
Refining and Marketing Post merger • Strong operating excellence • Competitive, low‐cost businesses • $5 B+ in asset sales 2010 • Drive $500 MM improvement • Reduce capital spend • $1 B in asset sales Long‐term expectation • R&M 15% of COP portfolio • 10%+ returns • Positive net cash flow Deli
Slide 47: 2009 Improvement Results
2009 Improvement Results Downstream Personnel Headcount Cut $1 B in controllable costs 25,000 47% Reduction 20,000 Optimized crude and product 15,000 slate, clean product yield 10,000 5,000 improved by 1% 0 2004 2005 2006 2007 2008 2009 Reduced 200 MBD of U.S. Refinery Utilization ‐ % marginal
Slide 48: Peer Comparison
Peer Comparison U.S. Operations Income ‐ $/BBL Core refining business 6 with integrated low‐cost Peer Range 5‐year ROCE 16% marketing and logistics 5 4 Completing 5‐year plan to 3 divest company‐owned 2 retail assets 1 • United States • Southeast Asia 0 • Select European markets (1) 2005 2006 20
Slide 49: Outlook
Outlook Global Light Oil Crack1 ‐ $/BBL Challenging market, regulatory 20 and legislative environment 15 External Range Further refining rationalization 10 5 expected 0 Global economic recovery on 2003 2005 2007 2009 2011 the horizon Light‐Heavy Crude Differential ‐ $/BBL 20 COP portfolio po
Slide 50: 2010 Improvement Initiatives
2010 Improvement Initiatives 2008 Solomon Operating Cost Peer Ranking Reduce operating expenses Alliance • Material, service and en t s Billings Borger supply costs ve m Ferndale m pro Humber ng I • Streamline organization D rivi Lake Charles Melaka San Francisco MiRO • Energy efficiency Whitegate
Slide 51: Capital Expenditures
Capital Expenditures No reduction in capital for Capital Program ‐ $B operating excellence and 3 asset integrity Sustaining / Reliability Regulatory Strategic Investments 2009 DD&A Reduced strategic capital 2 from prior years 36% Completing committed 1 regulatory projects Base capital target
Slide 52: Strategic Investments
Strategic Investments Wood River Refinery WRB Wood River CORE Project (WRB JV ‐ COP/Cenovus) • Start up mid 2011 • Integration with Canada production • Improves realized margin $4.00/BBL Yanbu Export Refinery Opportunity • 400 MBD high conversion refinery WRB Wood River CORE Project • Final inve
Slide 53: Downstream Portfolio Management
Downstream Portfolio Management Asset sales Asset Sales1 ‐ $B • $5 B+ of assets sold since 2003 1.6 • $1 B in asset sales in 2010 1.2 • Evaluating further dispositions 0.8 0.4 Implement portfolio options at 0.0 the right time and value 2003 2004 2005 2006 2007 2008 2009 2010E • COP refinery comb
Slide 54: Refining and Marketing Summary
Refining and Marketing Summary Deliver operating excellence Drive $500 MM improvement Maintain disciplined capital spend Pursue portfolio options aggressively Streamlined portfolio will yield 10%+ returns Delivering improved returns and cash generation 53
Slide 55: 2010 Analyst Meeting – E&P Presenters
2010 Analyst Meeting Ryan Lance Senior Vice President – E&P International Kevin Meyers Senior Vice President – E&P Americas Larry Archibald Senior Vice President – Exploration & BD March 24, 2010 New York, New York
Slide 56: Exploration & Production Strategy
Exploration & Production Strategy 100%+ organic reserve replacement 2 ‐ 3% long‐term production growth Convert 10 BBOE resources to reserves over 10 years Competitive F&D cost High‐impact exploration Consistently high‐grade portfolio Improve returns Operational and safety excellence
Slide 57: Global Overview
Global Overview Alaska North Sea Russia / Caspian 270 MBOED 390 MBOED 50 MBOED Largest oil and gas High value exploitation Large resource potential and producer Canada well positioned 290 MBOED World class SAGD1 portfolio and new China resource plays 50 MBOED High margin oil Lower 48 production 490
Slide 58: E&P Cash Margins – $/BOE
E&P Cash Margins ‐ $/BOE 1‐year 3‐year 5‐year 25 25 25 20 20 20 15 15 15 10 10 10 5 5 5 0 0 0 CVX COP TOT BP RDS XOM CVX COP XOM TOT BP RDS COP CVX XOM TOT RDS BP Consistent delivery of top quartile margins Cash contribution is calculated as income plus DD&A based on total BOE production. All compan
Slide 59: Discovered Resource
Discovered Resource YE2009 Resource by Product ‐ BBOE YE2009 Resource by Region ‐ BBOE Russia Caspian Middle East & Africa Asia Pacific Lower 48 Gas Alaska 37% Australia North Sea Liquids 63% Canada Canada Arctic SAGD Canada Gas Canada Syncrude 43 BBOE resource with long‐life, low‐decline assets Exc
Slide 60: Proved Reserves Replacement
Proved Reserves Replacement Reserves Replacement ‐ % 2010 ‐ 2014 Reserve Additions 200% Russia Exploration Caspian Middle East & Africa 150% Lower 48 Alaska Asia Pacific 100% Australia 50% North Sea Canada 0% 2005 ‐ 2009 2009 2010E ‐ 2014E F&D ($/BOE) 16.42 10.07 ~15.00 Reserves replacement >100% at
Slide 61: Production & Reserves Growth
Production & Reserves Growth Production ‐ MBOED Proved Reserves ‐ BBOE 2.5 Liquids Gas Dispositions 12 2014E 5‐yr avg. RRR >100 % 10 2.0 Dispositions LNG 8 LNG 1.5 Gas 6 Gas 1.0 4 Heavy oil Heavy oil 0.5 2 Oil Oil 0.0 0 2008 2009 2010E 2014E 2019E 2009 2014E Excludes LUKOIL. 60
Slide 62: 2010 Capital Program
2010 Capital Program Capital ‐ $B Major Projects 12 10 Other FCCL 8 partnership 6 Kashagan Surmont 2 Jasmine, 4 Clair Ridge & GEA2 2 Qatargas 3 0 APLNG 2008 2009 2010 Bohai II Malaysia Maintenance Major projects Exploitation 1 Exploration Lower 48 and Canada exploration1 Focusing on exploration and
Slide 63: L48 & Canada Competitive Advantages
L48 & Canada Competitive Advantages 21 MM net acres with extensive optionality and limited lease expiries ~14 TCFE net proved reserves Horn River 100 (85% proved developed) Montney 170 Deep Basin 3,300 ~25% of liquids production by volume Bakken 240 Significant shale position acquired at low
Slide 64: 2010 L48 & Canada Programs
2010 L48 & Canada Programs Capital Spend by Resource Onshore Drilling Other Bakken Permian Other Eagle Ford San Juan Barnett WCG Other Investing $1.2 B in 20101 Deep Basin Focus on shale plays, oil and NGL rich assets & proven low cost basins Shale play ~40% Reserves accessed ~90 MMBOE Tight s
Slide 65: Lower 48 & Canada Resource Plays
Lower 48 & Canada Resource Plays Cost of service ($/MMbtu)1 COP acreage Other resource plays 10 1,300 M acres 3,300 M acres 240 M acres 240 M acres 100 M acres 8 6 4 2 0 n2 r lle P i ie ep s ve d An ver ce y M Fo & 2) M h) sin 3) Ea ille M Ha ash an g BM Ho ma ko an ss ie De llu Fa tne t ( kke or ur
Slide 66: 2010 Capital – Exploitation Programs
2010 Capital – Exploitation Programs Alaska Australia Investing $340 MM in 2010 Investing $100 MM in 2010 Drilling at WNS1 and Prudhoe satellites; 6 well program at Bayu‐Undan CTD2 program at Kuparuk Reserves accessed ~8 MMBOE Reserves accessed ~35 MMBOE Adds 4 MBOED production Adds
Slide 67: 2010 Capital – Exploitation Programs
2010 Capital – Exploitation Programs United Kingdom Norway Investing $170 MM in 2010 Investing $360 MM in 2010 Drilling at Southern North Sea, Drilling at Greater Ekofisk, Heidrun, Britannia, J‐Block, Clair and others Alvheim and others Reserves accessed ~25 MMBOE Reserves accessed ~45 M
Slide 68: World Class Canadian SAGD Portfolio
World Class Canadian SAGD Portfolio Cumulative Steam Oil Ratios ‐ BBL/BBL Exceptional 15+ BBOE resource Christina Lake Foster Creek Peers Surmont I Surmont lifecycle 2nd largest SAGD producer in Canada 8 Leading steam oil ratios • Lower capital and operating costs 6 • Lower energy usage and em
Slide 69: Canadian SAGD Portfolio Margins
Canadian SAGD Portfolio Margins SAGD Earnings1 ‐ $/BOE FCCL & Surmont 2008 WTI avg. 2009 WTI avg. 80 $100/BBL $62/BBL 60 40 20 0 2010 capital = $950 MM2 2008 2009 DD&A Project F&D = $8 ‐ $12/BOE3 Fuel cost Non‐fuel O&O Taxes & other Profit margin / bitumen barrel Robust margins and returns 1 Sur
Slide 70: Canadian SAGD Production Growth
Canadian SAGD Production Growth MBOED (NBR)1 MBOED (NBR)1 140 2007 to 2014 350 2007 to 2019 Saleski (WI 100%) CAGR ~20% CAGR ~20% 120 Syncrude 300 (WI 9.03%) 100 250 80 200 Thornbury Surmont (WI100%) (WI 50%) 60 150 40 Christina Lake 100 Surmont (WI 50%) 4.7 20 50 0 Clyden 0 Clyden (WI 100%) 2007 (W
Slide 71: Australia Pacific LNG
Australia Pacific LNG Largest, best‐developed APLNG Resource Maturation ‐ TCF CBM resource 35 Premium acreage in best 30 coal fairways 25 3 LNG trains & existing contracts1 Production capacity for sales 20 2 LNG trains & existing contracts1 to domestic market exceeds 15 230 MMSCFD gross 10 Tot
Slide 72: APLNG – Competitive Advantages
APLNG ‐ Competitive Advantages Queensland Gas Resource1 ‐ TCF Cost of Service2 ‐ $/MMbtu Peer projects Peer average APLNG 10 9 BG 8 Shell / Arrow 7 6 Santos / Petronas 5 0 2 4 6 8 10 12 14 G NG o NG on ne ut LN rg to CL GL Pl AP Go s Q at Proved Probable Possible he W High‐quality and most defined r
Slide 73: APLNG – Key Milestones
APLNG ‐ Key Milestones Milestone Timing Site selected Complete Commence FEED Underway Resource maturation On schedule Binding HOA1 for LNG sales Q3/Q4 2010 2010 capital = $850 MM Final Investment Decision Q4 2010 Multi‐train LNG project Project F&D = $6 ‐ $8/BOE2 First LNG production Q4 2014 P
Slide 74: Long-Term Incremental Production
Long‐Term Incremental Production MBOED (net) 800 600 400 200 0 2010 2015 2020 2025 2030 2035 Canadian SAGD projects APLNG Qatargas 3 Long life, low decline projects with combined F&D ~$10/BOE Canadian SAGD production is net after royalty and includes all currently identified stages of development ex
Slide 75: 2010 Capital – Major Growth Projects
2010 Capital ‐ Major Growth Projects Qatargas 3 Gumusut / KBB / Malikai Photo courtesy of Qatargas Investing $450 MM in 2010 Investing $300 MM in 2010 First production second half 2010 Multiple deepwater developments ~80 MBOED net peak production ~0.4 BBOE net discovered resource1 Agre
Slide 76: 2010 Capital – Major Growth Projects
2010 Capital ‐ Major Growth Projects Bohai Phase II Jasmine Bohai WHP‐B Judy platform Investing $250 MM in 2010 Investing $200 MM in 2010 60 MBOED net current production First production in 2012 ~0.5 BBOE net discovered resource1 Additional exploration upside ~70 MBOED net peak product
Slide 77: Shah Gas Project
Shah Gas Project Large gas/condensate resource Development plan • 1 BCFD gas processing plant • Natural gas and liquid pipelines • Sulfur exporting facilities at Ruwais Ruwais Joint Venture and Field Entry Agreements signed July 2009 Shah Gas Project Project sanction decision in 2010 76
Slide 78: 2009 – 2014 Major Project Startups
2009 ‐ 2014 Major Project Startups Ekofisk South Alpine West (CD5) Lookout (CD6) Ekofisk South Christina Lake 1 C/D Foster Creek 1 D/E Jasmine Kashagan 1 Foster Creek Bohai Phase II Golden Pass El Merk Qatargas 3 Eagle Ford Faregh 2 Panyu Growth Su Tu Den NE NLNG T4‐6 North Belut Gumusut Bawal KBB /
Slide 79: 2015+ Major Project Startups
2015+ Major Project Startups Parsons Lake Eldfisk II Amauligak Tommeliten Alpha Umiak Tor Redevelopment Clair II Prudhoe WRD1 ANS Gas Kashagan 2+ WNS Developments2 Kalamkas Aktote Kairan Foster Creek 1 F/G/H Bohai Phase III Christina Lake 1 E/F/G Narrows Lake Surmont II Tiber N Gialo Pisagan Surmont
Slide 80: Long-Term Resource Outlook
Long‐Term Resource Outlook Exploration & BD Resources 35 BBOE Reserves 8 BBOE Expect to convert 10 BBOE 43 BBOE Reserves resources over next 10 years 8 BBOE Excludes LUKOIL. 79
Slide 81: Exploration Key Messages
Exploration Key Messages 2009 Results • Poseidon and Tiber significant discoveries • Resource additions exceeded 2009 production • Step change improvement in finding costs Building deeper portfolio focused on material exploration opportunities • Kazakhstan, Caspian Sea N‐Block • Gulf of Mexico S
Slide 82: Progressing Giant Discoveries
Progressing Giant Discoveries Tiber Poseidon KC 102 #1 well Potential appraisal well location Salt Lower Tertiary Pay Zone ~10 Miles Tiber appraisal well and proprietary seismic Kronos‐1 well in progress program in 2010 Poseidon‐2 well confirmed downdip limits Maturing additional Lower Terti
Slide 83: 2010 Exploration & Appraisal Activity
2010 Exploration & Appraisal Activity Alaska Chukchi Sea: Environmental North Atlantic & Europe and drilling studies UK & Norway: Central Graben HPHT Mid‐Norway Eastern Canada: Laurentian basin Poland: Shale gas North America onshore Horn River Basin Caspian Sea Eagle Ford, Bakken, Bar
Slide 84: Caspian Sea – Block N
Caspian Sea – Block N Kashagan Kashagan discovery World class petroleum system discovery Providing drilling & subsurface KAZAKHSTAN expertise to Joint Operating Company Aqtau • COP 24.5% • Mubadala 24.5% NBlock N Block • Kazmunaigaz 51% Rak More wildcat to spud 2H 2010 TURKMENISTAN Baku Nurs
Slide 85: Gulf of Mexico – 2010 Coronado Wildcat
Gulf of Mexico – 2010 Coronado Wildcat Mature, high quality Lower Tertiary prospect near 2009 Shenandoah discovery Shenandoah Discovery Salt Coronado Prospect In area with high quality reservoir and fluids Coronado well to spud 2Q 2010 • COP working interest = 29% • Planned total depth ~34,000
Slide 86: 2010 Resource Play Exploration
2010 Resource Play Exploration Horn River, B.C. Bakken, N. Dakota Poland Qinshui Basin, China Testing 100,000 acre Accelerating drilling Testing shale gas play in Option for 35% WI in position in heart of program on >240,000 good gas market. Option >1 MM acres. Using emerging play acres on 70% WI in
Slide 87: Exploration Forward Path
Exploration Forward Path Appraising 2009 discoveries Continue building bigger, more balanced portfolio of high‐impact prospects/plays • Adding large prospects in proven conventional plays • Expanding footprint in promising deepwater plays • Early mover positions in prospective frontier basins •
Slide 88: Exploration & Production Summary
Exploration & Production Summary Geographically diverse portfolio with high‐ margin OECD assets Disciplined North American exploitation that maintains optionality Growth portfolio of high‐margin, long‐life, low‐decline assets 10 BBOE resources converted to reserves over next 10 years at comp
Slide 89: 2010 Analyst Meeting – Jeff Sheets
2010 Analyst Meeting Jeff Sheets Senior Vice President – Planning & Strategy March 24, 2010 New York, New York
Slide 90: LUKOIL Equity Ownership
LUKOIL Equity Ownership 20% interest moving to 10% over 2 years Market Cap of $50 B • Russian and London exchanges • Active markets with good liquidity Operating Statistics1 • 2.2 MMBPD production • 17.5 BBOE proved reserves • 1.3 MMBPD refining capacity BBB Credit Rating Dividend yield of
Slide 91: DCP Midstream Joint Venture
DCP Midstream Joint Venture 50 / 50 JV with Spectra Energy 10th year of operation Leading gas gathering and processer • 6 Bcf/day • Largest U.S. NGL producer • Located in most major gas basins Standalone entity • ~$3 B distributions to COP over last five years • $8 B total assets • COP capit
Slide 92: Chevron Phillips Chemical JV
Chevron Phillips Chemical JV 50 / 50 JV with Chevron 10th year of operation Global chemical company • World‐scale facilities • Significant and growing Middle East position Standalone entity • ~$1.5 B distributions to COP over last five years • $7 B total assets • COP capital employed = ~$2 B
Slide 93: Asset Sales Program
Asset Sales Program $10 B two‐year program 2010 Potential Dispositions Asset Mix: Syncrude (9% interest) • $6 ‐ $8 B Exploration & Production • $2 ‐ $4 B Refining, Midstream, Other REX Pipeline (25% interest) 10% of Lower 48, Western Key Criteria: Canada gas portfolio • Lack of strategic fit R
Slide 94: Asset Dispositions Impacts
Asset Dispositions Impacts Asset Timing Value Production Reserves 2009 Income 2010 Syncrude 3Q 2010 10% of L48 / WCG 4Q 2010 60 ‐ 90 275 ‐ 450 ~$100 – 150 REX Pipeline 4Q 2010 $5 – 6 B MBOED MMBOE MM Marketing Assets 3Q 2010 Other Misc. Assets Various 2011 E&P assets 20 ‐ 30 125 ‐ 150 ~$100 – 150 R&
Slide 95: Creating Shareholder Value
Creating Shareholder Value Improved Strengthened Production per Balance Sheet Share Improved E&P Share Price Higher Capital Income and Cash Appreciation Efficiency Flow per BOE Improved R&M Consistent and Other Distribution Earnings Growth 94
Slide 96: Improving Financial Flexibility
Improving Financial Flexibility Net Debt to Capital Ratio 35% Target near‐term debt 30% ratio of 20% 25% Declines towards 15% 20% with equity growth 85%+ fixed‐rate debt 15% 10% 5% Well‐structured maturity profile 0% COP TOT BP RDS CVX XOM Strong liquidity position Rating A AA AA AA+ AA AA
Slide 97: Slowing the Growth of Capital Employed
Slowing the Growth of Capital Employed Average Capital Employed ‐ $B 100 90 1% CAGR Constrain capital expenditures to highest return projects 80 9% CAGR 70 Sell assets and use proceeds 60 to reduce debt and 50 repurchase shares 40 30 Focus on exploitation of 20 captured resource base 10 0 2005
Slide 98: Shift in Capital Employed
Shift in Capital Employed % of Total Capital Employed Contribution 100% ROCE Legacy Assets 90% R&M 80% L48 & Canada Gas 13% 52% 70% 63% 60% 7% Total ROCE 13% Total ROCE 50% 40% 1% 26% 30% 23% 20% 10% 1% 22% 14% 0% 2009 2012 Portfolio shift helps drive returns improvement See appendix for additional
Slide 99: Growth in Returns
Growth in Returns Improve portfolio via asset Capital Efficiency ‐ ROCE and CROCI sales program 25% ROCE CROCI Constrain capital / invest at 20% competitive F&D costs 15% Maximize asset uptime 10% Reduce operating costs 5% Modest increase in market 0% 2009 2012 2009 2012 returns Improved r
Slide 100: Distributions – 2004 to 2009
Distributions – 2004 to 2009 Total Distributions as % of Cash From Operations 100% Net Share Repurchase 90% Dividends 80% 70% 60% 50% Peer Average = 45% 40% 30% 20% 10% 0% COP CVX TOT RDS BP XOM Capacity to increase distributions Source: Company filings. 99
Slide 101: Price/Cash Flow vs. Cash Distribution
Distributions Price/Cash Flow vs. Cash Distribution 2010E vs. 2004‐2009 Increased cash distributions 8 will improve trading R2 = 0.66 multiples XOM 7 Distributions moving from 25% toward 40% Price/CF 6 CVX 5 RDS BP TOT COP 4 20% 30% 40% 50% 60% 70% % of CFOA Distributed Source: Company filings.
Slide 102: Decisive Actions to Increase Value
Decisive Actions to Increase Value Sell assets and reduce debt Increase ROCE / CROCI 10 BBOE resources to reserves in 10 years Grow production/share 3% per year Increase distributions Closing the Valuation Gap 101
Slide 103: 2010 Analyst Meeting
2010 Analyst Meeting March 24, 2010 New York, New York
Slide 104: Appendix
2010 Analyst Meeting Appendix March 24, 2010 New York, New York
Slide 105: Definitions
Definitions RESOURCE The company uses the term “resources” in this presentation. The company has estimated its total resources based on a system developed by the Society of Petroleum Engineers. The system classifies recoverable hydrocarbons into six categories based on their status at the time of re
Slide 106: 2010 Sensitivities
2010 Sensitivities $MM $1/BBL Crude Worldwide E&P 150 Worldwide R&M (fixed (fixed & & other other co‐products) co‐products) (20) Net Crude Impact 130 $1/MMBtu Natural Gas Worldwide E&P 600 Worldwide R&M (utilities) (utilities) (100) Net Gas Impact 500 $1/BBL Gulf Coast Crack Refining Margins (95% (9
Slide 107: 2010 Other Drivers
2010 Other Drivers Selected Items Estimates Pre‐Tax Expense Estimates Corporate: $1.2 B (after‐tax) Turnaround costs: $0.5 B Pension funding: $0.7 B Exploration expenses1: $1.3 B • US: $0.5 B DD&A: $9.2 B • Int’l: $0.2 B 1 Includes dry hole and lease impairment costs 106
Slide 108: COP Non-GAAP Reconciliations
COP Non‐GAAP Reconciliations Consolidated COP 2008 2009 Earnings (loss) $ (16,998) 4,858 Less: Goodwill impairment 25,443 - LUKOIL investment impairment 7,410 - Impairments - other 1,292 729 Net gain on asset sales/share issuance (814) (175) Severance accruals 99 (40) Adjusted earnings $ 16,432 5,37
Slide 109: COP Non-GAAP Reconciliations
COP Non‐GAAP Reconciliations 2005 2006 2007 2008 2009 1 GAAP R&M U.S. Net Income - $MM 3,329 3,915 4,615 1,540 (192) GAAP R&M U.S. Net Income - $ / BBL 3.31 3.95 4.96 1.76 (0.22) non-core earnings impacts - $MM gains and (losses) on asset dispositions 16 121 32 asset impairments (227) (12) (370) (11
Slide 110: COP Non-GAAP Reconciliations
COP Non‐GAAP Reconciliations Consolidated COP 2009 GAAP ROCE 7% non-core earnings impacts - $MM gains and (losses) on asset dispositions 87 asset impairments (729) tax legislation / regulatory / other 26 ROCE 7% Consolidated COP 2009 GAAP CFOA 12,479 GAAP cash interest payments 998 GAAP CROCI 15% Ad
Slide 111: Major Projects
Major Projects Significant Project Gross Peak Start‐ Current Project Region WI% Production Up (start date) Phase MBOED Golden Pass 12 ‐ Construction Lower 48 Eagle Ford 95 TBD1 Appraise Canada Christina Lake C 50 402 Execute Qatar Qatargas 3 30 260 Execute 2010‐ 2011 Libya Faregh 2 16 40 Execute Wes
Slide 112: Major Projects
Major Projects Significant Project Gross Peak Start‐ Current Project Region WI% Production Up (start date) Phase MBOED Lower 48 Tiber 18 TBD1 Appraise Foster Creek F/G/H 50 902 Optimize Christina Lake D 50 402 Execute Christina Lake E/F/G 50 1202 Optimize Narrows Lake A/B 50 802 Appraise Surmont II
Slide 113: Major Projects
Major Projects Significant Project Gross Peak Start‐ Current Project Region WI% Production Up (start date) Phase MBOED Prudhoe WRD1 36 20 – 25 Define ANS Gas 36 600 – 700 Appraise Alaska WNS Developments2 78 35 – 40 Define Kuparuk Viscous Oil3 56 20 – 30 Appraise Jasmine 37 80 – 90 Define 2012+ Unit
Slide 114: Major Projects
Major Projects Significant Project Gross Peak Start‐ Current Project Region WI% Production Up (start date) Phase MBOED Kashagan 1 8 4501 Execute Kashagan 2 8 10501 Optimize Russia / Caspian Kalamkas 8 70 – 90 Appraise Aktote 8 70 – 90 Appraise Kairan 8 60 – 80 Appraise Algeria El Merk (EMK) 17 60 Ex
Slide 115: Major Projects
Major Projects Significant Project Gross Peak Start‐ Current Project Region WI% Production Up (start date) Phase MBOED Gumusut 33 140 Execute Kebabangan 301 130 – 140 Define Malikai 35 60 – 70 Define Malaysia Ubah 35 30 – 50 Appraise Petai ‐ Pisagan 35 30 – 50 Appraise Kamunsu East 30 60 – 80 Apprai