ConocoPhillips · NYSE:COP
ConocoPhillips — Investor Day (2009)
21 slides from ConocoPhillips's investor day presentation, Dec 22, 2009
Slide 1: John Carrig, President & Chief Operating Officer
John Carrig President & Chief Operating Officer
Slide 2: 2009 Operational Objectives
2009 Operational Objectives E&P Production (ex LUKOIL) 1.8 million BOED Reserve Replacement 100+% Refining Crude Capacity Availability 95+% Capital Program $12.5 billion Cost Reduction 10+% Improve employee and HSE Performance contractor TRR
Slide 3: Major Focus Areas for 2009
Major Focus Areas for 2009 Capital Optimization Cost Reduction Operational Excellence
Slide 4: Capital Optimization
Capital Optimization Fund a competitive, balanced, and flexible capital program Capital Optimization Maintain optionality No reduction in maintenance Cost Reduction Continue funding long-term growth projects and strategic investments Focus on migrating 50 BBOE resource Operational base to
Slide 5: 2009 Capital Program
2009 Capital Program E&P Capital Program $Billions ~$10.3 B 11.9 16.4 12.9 19.9 12.5 Maintenance Strategic Projects 14% Exploitation 8% 36% Long-term Growth Major 6% Average (ex LUKOIL & Origin) Projects 37% R&M Capital Program ~$2.0 B Maintenance 60% 2005 2006* 2007 2008 2009 Estimate Major Project
Slide 6: Capital Program Focal Points in 2009
Capital Program Focal Points in 2009 $1.8 B $0.7 B $6.8 B $1.2 B $2.0 B Capturing resources Migrating resources → reserves → production Increasing conversion capability Refining & Marketing Improving reliability and efficiencies Exploration & Production Prioritizing high-margin investments
Slide 7: Project Management Excellence
Project Management Excellence Project Development Facilities Management Construction Management Procurement Oversight & Influence Contracting HSE Risk Assessment Project Governance Upstream/Downstream Cost Estimation Project Management Engineering (Subsurface, Process, etc.) Strategy & Business Deve
Slide 8: Benchmarking Our Project Performance
Benchmarking Our Project Performance Performance Traders More expensive Less expensive “Best” Faster but more expensive Faster and cost less Faster Faster Cycle Time Index Slower Slower Underachievers Performance Traders Cost Performance Index Slow and expensive Less expensive but slower More expens
Slide 9: Appropriate Cost Control
Appropriate Cost Control Capital Optimization Focused cost reduction efforts, including workforce optimization Coordinated Procurement Cost Reduction Excellence approach Capitalize on market weaknesses to Operational improve relative margins Excellence
Slide 10: Broadly Pursuing Cost Reductions
Broadly Pursuing Cost Reductions Driving costs below 2007 levels • Targeting $1.4 B year-on-year reduction • Focused on returning margins to pre-run-up levels Cost control across the business: • Procurement • Crude slate optionality • Energy efficiency • Workforce reduction Workforce reduction
Slide 11: Procurement Excellence
Procurement Excellence High Impact Areas are High Priority 2008 Impact Area Opportunity Category Spend U/S D/S Projects Corp Operations ~$1.3 B Engineering, Procurement & Construction Contracts >$3.0 B Well Operations ~$4.0 B Original Equipment Manufacturer ~$2.9 B Catalyts & Chemicals ~$0.6 B Corpo
Slide 12: Operational Excellence
Operational Excellence Operate safely and reliably Capital Optimization Ensure environmental compliance Enable solutions to climate change and energy security Cost Reduction Applying and advancing technology Operational Excellence Increasing efficiency / optimizing utilization
Slide 13: HSE Excellence Process
HSE Excellence Process E&P Total Recordable Incident Rates RM&T Total Recordable Incident Rates Incidents per 200,000 hours Incidents per 200,000 hours 2.0 2.0 Contractors Employees Contractors Employees 1.6 1.6 1.2 1.2 0.8 0.8 0.4 0.4 0.0 0.0 2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2
Slide 14: Environmental Stewardship
Environmental Stewardship Downstream Emissions Focused on minimizing Tonnes/Yr 80,000 SO2 and NOx Emissions environmental footprint 52% Reduction 60,000 • Energy efficiency 40,000 • GHG abatement projects 20,000 • Water management 0 2006 2007 2008 2009 2010 2011 2012 2013 SO SO22 NO NOXx • Address
Slide 15: Managing Climate Change
Managing Climate Change Measuring and forecasting product / process emissions Reducing emissions New business opportunities in biofuels and carbon capture Leveraging technology and trading Engaging in policy development Implementing a comprehensive management plan
Slide 16: Leveraging Technology to Unlock Value
Leveraging Technology to Unlock Value ~$325MM in technology expenditures Technology priorities • Exploitation of existing reserves and finding new resources - $300MM in 2008 • Heavy oil – Improved recovery / X-SAGD (steam-assisted gravity drainage) / Solvent extraction • Gas hydrates / Oil shale
Slide 17: Ensuring Reliable Operations
Ensuring Reliable Operations Upstream Facility Efficiency* Refining Capacity Availability 100% 100% Hurricane and Market Impacts Global Utilization 95% 95% 90% 90% 85% 85% 80% 80% 2006 2007 2008 2004 2005 2006 2007 2008 Strong operational focus on optimizing production and throughput *Represents bas
Slide 18: Human Resource Excellence
Human Resource Excellence Critical Skills Age Profile 30% 2008 2004 25% % of Total Workforce 20% 15% 10% 5% 0% <25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61+ Continuing optimization of human resources for a strong future • Diversity and inclusion are emphasized in workforce plans • Maintaining
Slide 19: Exploration & Production
Exploration & Production >10 BBOE Proven Reserves >900 MBOED New Production Oil Converting reserves to new production Gas 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 >50 BBOE Captured Resources 2009 to 2013 Five-year average reserve replacement 100+% Oil Gas Migrating captured resources to pro
Slide 20: Refining & Marketing
Refining & Marketing Crude Advantage Product Yield Investment Impacts San Francisco Wood River Wilhelm shaven Yanbu Refinery Crude Clean Advantaged Capacity Products Crude 2008 Future 2008 Future Sweet Other Medium Sour Gasoline Heavy Sour Distillate Improving margins through conversion capability a
Slide 21: Positioned to Create Shareholder Value
Positioned to Create Shareholder Value Capital Operating Discipline & Shareholder Excellence Project Financial Value Execution Optimization Shareholder Technology & Innovation Value Portfolio of High-Quality Assets Maximizing the value of our assets Setting aggressive operational goals Maintai