ConocoPhillips · NYSE:COP
ConocoPhillips — Merger or Acquisition (July 2011)
19 slides from ConocoPhillips's merger presentation, Jul 14, 2011
Slide 1: Creating Two Leading Energy Companies
Creating Two Leading Energy Companies Analyst Meeting July 14, 2011
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. These statements relate to future events, such as anticipated revenues, earnings, business strategies, competi
Slide 3: Historical Strategy
Historical Strategy Key Premises • Integration creates value • Scale and scope needed to compete • Growth in hydrocarbon demand • Resource capture will be more difficult and expensive Execution • Positioned each business line to compete effectively – E&P, R&M, Midstream and Chemicals • Quality a
Slide 4: Current Focus
Current Focus Cash from Operations ROCE improvement 16% Margin enhancement OECD 84% Non‐OECD Per share growth $92 B Capital Employed 9% Shareholder distributions E&P 25% 66% R&M Other Increasing shareholder value 2010 cash from operations and average capital employed. Corporate capital employed dist
Slide 5: Current Strategic Objectives
Current Strategic Objectives Improve ROCE • Expand margins per BOE • Maintain capital discipline • Portfolio optimization Grow per share • Reserves and production • Earnings and cash flow Increase distributions • Annual dividend increases • Share repurchases Creating shareholder value 4
Slide 6: Key 2011 / 2012 Initiatives
Key 2011 / 2012 Initiatives Disciplined $28 B capital program Additional $5‐10 B in asset sales $10+ B in share repurchases 100%+ reserve replacement Reduce refining capacity Improve ROCE 5
Slide 7: Strategy Assessment
Strategy Assessment Integrated Strategy has been effective • Increased reserves and production • Generated competitive shareholder returns Environment has changed • Downstream capability not key to resource access • Resource Nationalism and NOC competition • Movement to “service” agreements Va
Slide 8: Transaction Summary
Transaction Summary Pursuing tax free spin of Downstream business New independent pure‐play publicly‐held Downstream company ConocoPhillips becomes leading pure‐play E&P company Expect transaction completion in first half 2012 Creates two strong independent companies 7
Slide 9: Strategic Rationale
Strategic Rationale Create two profitable and independent companies • E&P Strategy unchanged • Downstream given opportunity to add value through portfolio optimization Greatest opportunity to create differential value • Independent but consistent strategies • Both companies continue to benefit f
Slide 10: New ConocoPhillips Description
New ConocoPhillips Description Largest U.S. pure‐play E&P company • 1.7 MM BOED 2011 production • 8.5 B BOE reserves / 43 B BOE captured resource • Strong OECD position Financial and technical capability on par with Insert Upstream Picture larger integrated majors No change in upstream strateg
Slide 11: E&P Overview
E&P Overview Alaska North Sea Russia / Caspian 240 MBOED 350 MBOED 50 MBOED Largest oil & gas High value exploitation Large resource potential producer & major projects Canada 270 MBOED Asia Pacific Lower 48 World class SAGD1 280 MBOED portfolio & new Diverse & expanding 440 MBOED resource plays leg
Slide 12: ConocoPhillips Production
ConocoPhillips Production Q1 2011 Worldwide Production ‐ MMBD 4.8 Peer Group Domestic Integrated 3.6 3.5 Domestic Pure Plays 2.8 2.4 1.7 0.7 0.7 0.7 0.6 0.4 0.4 0.4 0.2 P on X il T Y M e BP n o ss S s TO CO ch yO OX CV RD ce rk vo He XO th da a ur De ph a Ap so ar a ur An M Re M G EO Source: Company
Slide 13: Production Outlook
Production Outlook Production by Product ‐ MMBOED Sources of Growth 2.5 Liquids LNG Int'l gas N America gas Asia Pacific • APLNG, Malaysia, Indonesia 2.0 North Sea • Jasmine, Clair, Ekofisk, Eldfisk 1.5 Caspian 1.0 • Kashagan L48 liquids 0.5 • Eagle Ford, Bakken, Barnett, Permian Canada SA
Slide 14: 2011-2015 New Production
2011‐2015 New Production MBOED Asset / Region 2010 Cash Margins 800 Rest of World Various Other L48 & $14 ‐ $40 / BOE 600 W Canada North Sea $29 / BOE 400 SAGD $30 / BOE L48 liquids growth $31 / BOE 200 Asia Pacific $35 / BOE Qatargas 3 Attractive 0 2010 2011E 2012E 2013E 2014E 2015E Improving margi
Slide 15: New Downstream Company
New Downstream Company Global Refining & Marketing leader • 2.4 MM BPD worldwide refining capacity • Low cost, integrated Marketing and Transportation • 2 MM BPD domestic capacity – Significant position in mid‐continent – Exposure to all PADDs Insert Downstream Picture Strong investment grade cr
Slide 16: U.S. Refining
U.S. Refining Q1 2011 U.S. Refining Capacity ‐ MMBD 2.2 Peer Group 2.0 1.9 Domestic Integrated Domestic Pure Plays 1.5 1.1 0.9 0.8 0.7 0.5 0.4 0.2 0.2 Valero COP XOM BP Marathon CVX RDS Tesoro Sunoco HOC/FTO TOT Murphy Leading domestic refining company with portfolio of top quartile assets Source: C
Slide 17: Downstream ROCE Improvement
Downstream ROCE Improvement Selective asset sales Finalization of Wood River CORE project Capital discipline • Implementing selective high return projects Optimization initiatives • Increase utilization and clean product yield • Lower cost structure • Capture feedstock advantage Generate mid
Slide 18: Key Milestones
Key Milestones Detailed separation planning followed by IRS tax ruling request Announcement of new board and leadership teams Favorable IRS ruling Final COP Board approval Expected closing first half of 2012 17
Slide 19: Delivering Shareholder Value
Delivering Shareholder Value 100%+ reserves replacement Continued asset sales Strong OECD‐based cash flow Production per share growth Enhanced queue of growth projects Improved returns Disciplined capital investment EPS/CFPS growth Strengthened portfolio Increased distributions Restructuri