Conocophillips · NYSE:COP
Conocophillips — Merger or Acquisition (October 2020)
23 slides from Conocophillips's merger presentation, Oct 19, 2020
Slide 1: ConocoPhillips & Concho Resources Transaction Announcement
Conoco. ..P.... .hllh. psI c ·o·MN c H oConocoPhillips & Concho ResourcesTransaction Announcement,- ..-------·--- .... ....., ... , ... ... ... ... .. .. ,' .......... ........ ... ... #' .. .. .. ... " ... ... .. ' ...... ' ... ......... ....OCTOBER 19, 2020; .......·-... ' ......... ..............
Slide 2: Cautionary Statement
Cautionary StatementCAUTIONARY STATEMENT FOR THE PURPOSES OFTJ-IE "SAFE HARBOR" PROVISIONS OFTJ-IE PRNATE SECURmES LmGATION REFORM ACT OF 1995 This commumcation relates to a proposed business combination transaction between ConocoPhillips ("ConocoPhillips") and Concho Resources Inc. reoncho•). Forwa
Slide 3: Cautionary Statement: No Offer or Solicitation
Cautionary StatementNo Offer or Solicitation This communication is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction
Slide 4: Cautionary Statement: Use of Non-GAAP Financial Information
Cautionary StatementUse of Non-GAAP Financial InformationThis presentation may include non-GAAP financial measures, which help facilitate comparison of company operating performance across periods and with peer companies. Any non-GAAP measures related to historical periods included herein will be ac
Slide 5: The Transaction Premise - A New Era of Energy Leadership
The Transaction Premise- A New Era of Energy LeadershipThis is not just another industry deal it-'s an affirmation of our joint commitment to lead a structural change for our vital industry sector. RYAN LANCETIM LEACHThis transaction ushers in a new era ofenergy leadership with a compelling. leadin
Slide 6: Transaction Overview
Transaction OverviewTRANSACTION ECONOMICSTransaction Enterprise Value $13 billionAll-Stock;fixed exchange ratio of 1.46 shares of ConocoPhillips for each Concho sharePro forma equity ownership 79% ConocoPhillips and 21% ConchoAll-in acquisition cost of supply <$50/BBLLEADERSHIP & GOVERNANCEChairman
Slide 7: Combination Creates Leading Company with Scale & Relevance
Combination Creates Leading Company with Scale & Relevance$ r·o_J •••IDIDCJc:::JQSHARED BEST-IN- SIGNIFICANT IMMEDIATELY TOP-TIER, ELEVATED VIS ION CLASS, AND ACCRETIVE RESILIENT COMMITMENT FOR LOW COST SUSTAINABLE TO KEY BALANCE TO ESG DELIVERING OF SUPPLY COST AND CONSENSUS SHEET EXCELLENCE SUPERI
Slide 8: Shared Vision to Deliver Superior Returns Through Cycles
Shared Vision to Deliver Superior Returns Through CyclesSTRATEGY ALIGNED TO BUSINESS REALITIESFOUNDATIONAL PRINCIPLESCLEAR PRIORITIESPRICE UNCERTAINTY Low breakeven price Financial strengthCAPITAL INTENSITY Diverse,low cost of supply portfolio Optimized capital investmentsMATURITYStrong free cash fl
Slide 9: Best-in-Class, Global, Low Cost of Supply Portfolio
Best-in-Class, Global, Low Cost of Supply Portfolio23 BILLION BBL RESOURCE WITH AN AVERAGE CoS <$30/BBL WTITOTAL RESOURCE1 - COMBINED COMPANY PRO FORMA6'}o ASIA PACIFIC19%6 o57%,-....NORWAYEUROPE fl.SIACANADALOWER 48Atlantic OceanMIDDLE EASTCHINA ('IBYA PacificALASKAPRODUCTION2 COMBINED COMPANY PRO
Slide 10: Competitive Advantage from Scale, Diversification & Low Capital Intensity
Competitive Advantage from Scale,Diversification & Low Capital IntensitylQ 2020 TOTAL PROOUCTION1 INDEPENDENT E&Ps - NET MBOEDMEGATREND2 TOP 10 E&Ps- NET MBOED• UNCONVENTIONAL • CONV E NTIONAl • LNGOIL SANDS • HEAVY OIL1,800 y1,6001,4001,2001,0008006004002000PRO FORMA COMPANY +-"o" NCHO0 500 1,000 1
Slide 11: "Core-of-the-Core" Times Four
"Core-of-the-Core" Times FourEAGLE FORD I "" 200,000 NET ACRES""-BAKKEN I ""620,000 NET ACR ESLOW HIGH SINGLE WELL COST OF SUPPLY1'Source:En\l'erus & Conocol'hillipsAliGNED VIS 0'. BEST IN CLASS, LOW CoSSUSTAINABLE SAVINGS ACCilETIVE METRICSBALANCE SHEET STRENGlll ESG COMMITMENT ....,- I · u
Slide 12: Pacing Development for Value-Optimization
Pacing Development for Value-OptimizationU.S. UNCONVENTOI 2019NET MBODNAL OIL PRODUCTION 1CAPITAL ALLOCATION APPROACH REFLECTS VALUE-OPTIMIZATION PACE500450400PRO FORMA COMPANY100% >95%MAX NPVPACE350300250200150100500Soun:e:Wood MacEAGL£ FORD MIDLAND> 0... z X <t ::::E u. 0 ';/.75%<$40/BBL CoS THRES
Slide 13: Premier Permian Unconventional Position
Premier Permian Unconventional Position0 CONOCOPHILLIPS AND CONCHO0 ... • •.•.• "t-'..i1-Balanced portfolio across • 0 Delaware and Midland basinsE L AWARE BASIN= ..".. .. D ·ddf:t' ' o·, " \ ":I 0 Do"· ' ,0 ,IIa c9 cCompetitive,low cost of supply and low GHG-intensity resource \D r;, ..Extending di
Slide 14: Significant and Sustainable Cost and Capital Savings
Significant and Sustainable Cost and Capital Savings$250 MM/YR$150MM/YR $500 MM/YRPLAN TO ACHIEVE FULL SAVINGS BY 2022DIRECT COSTSOfficers,board and corporate costsEXPLORATIONRefocused exploration program (Capital, G&A and G&G)1. Pre-Tax$100 MM/YRDIRECT COSTSEXPLORATIONCORPORATE & EXPECTED REGIONAL
Slide 15: Value Creation from Scale, Execution Excellence & Shared Learnings
Value Creation from Scale, Execution Excellence & Shared Learnings.rf•-".MARGIN IMPROVEMENTSCrude oil transport flexibilityTop 5 natural gas marketer by volume within U.S. (>8 BCFD)DEVELOPMENT STRATEGYLeveraging Concho expertise to accelerate Permian learningSharing technologies across North America
Slide 16: Combination Enhances Delivery of Proven Priorities
Combination Enhances Delivery of Proven PrioritiesCOVERING 1st PRIORITY AT "'$41/BBL WTIPRO FORMA 2021ESTIMATED SOURCES AND USES OF CASH (ASSUMES FUllYEAR COST SAVINGS) ---------------------------------------------------------------------------------------------------- ------------------------------
Slide 17: Transaction Immediately Accretive to Key Consensus Metrics
Transaction Immediately Accretive to Key Consensus MetricsSTRONGER FREE CASH FLOW GENERATIONAbsolute free cash flow improvementFree cash flow yield improvementPRESERVES STRONG BALANCE SHEETMaintains top-tier balance sheetPlan performs against low-price scenariosIMPROVED RETURN ON CAPITALAccretive to
Slide 18: Top-Tier Balance Sheet Competitive Advantage Through Cycles
Top-Tier Balance Sheet Competitive Advantage Through CyclesDISTINCTIVE LIQUIDITY AND BALANCE SHEET CAPACITY$138STRONG, RESILIENT BALANCE SHEET NET DEBT TO CF02-------..,PRO FORMA LIQUIDITY 2021-2025 MATURITIESStructured for resilience at low pricesCommitted to maintain investment-grade credit rating
Slide 19: Performance With Purpose - Elevating Our Commitment to ESG Excellence
Performance With Purpose- Elevating Our Commitment to ESG ExcellenceCOMBINING STRONG SUSTAINABILITY TRACK RECORDS.. ,;ENVIRONMENTAL• Paris-aligned climate risk strategy• Operational emissions intensity reductions• Targeting 35-45%1 by 2030• Ambition for net-zero by 2050• Advocacy for end-use emissio
Slide 20: Unique Combination Delivers Superior Returns Through Cycles
Unique Combination Delivers Superior Returns Through Cycles$ Shared vision on va lue creation23BBOE resource; average CoS <$30/BBL[·o_J $SOOMM/YR sustainable savingsBALANCE SHEET STRENGTH••• IGoOouFocus on FCF generation and returns<l.Sx combined net debt to CFOlCASH FLOW EXPANSIONESGPEER - LEADING
Slide 21: Appendix: Reconciliations and Definitions
ConocriP'hillipsAppendix----- ..... . - - .- .. .. RECONCILIATIONS- ..- .... 'AND DEFINITIONS... • •
Slide 22: Non-GAAP Reconciliations
Non-GAAP ReconciliationsUse of Non-GAAP FinancialInformation-This presentation includes non-GAAP financial measures,which help facilitate comparison of company operating performance across periods and with peer companies. Any non-GAAP measures related to historicalperiods included herein will be acc
Slide 23: Definitions
Definitions I AppendixNON-GAAP TERMSCash from operations (CFO): Cash provided by operating activities excluding the impact from operating working capital. Estimated CFO assumes no operating working capital changes, and therefore CFO equals cash provided by operating activities. Free cash flow (FCF):
ConocoPhillips — Merger or Acquisition (October 2020) on 6ix