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
1 FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Cautionary Statement The following presentation includes forward-looking statements. These statements relate to future events, such as anticipated revenues, earnings, business strategies, compe
Slide 3: Historical Strategy
2 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 assets - but port
Slide 4: Current Focus: Increasing shareholder value
3 Cash from Operations $92 B Capital Employed ROCE improvement Margin enhancement Per share growth Shareholder distributions Current Focus Increasing shareholder value 2010 cash from operations and average capital employed. Corporate capital employed distributed across segments. 16% 84% OECD Non-OEC
Slide 5: Current Strategic Objectives
4 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
Slide 6: Key 2011 / 2012 Initiatives
5 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
Slide 7: Strategy Assessment
6 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 Value of IOC ass
Slide 8: Transaction Summary
7 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
Slide 9: Strategic Rationale
8 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 from size a
Slide 10: New ConocoPhillips Description
9 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 larger integrated majors No change in upstream strategy Improve ROCE Per share growth in
Slide 11: E&P Overview
10 Total 2010 Production 1.75 MMBOED ~80% OECD E&P Overview Lower 48 440 MBOED Competitive opportunity set 2011 Exploration & appraisal activity International growth opportunities underpinned by OECD position Canada 270 MBOED World class SAGD1 portfolio & new resource plays North Sea 350 MBOED High
Slide 12: Peer Group: Worldwide Production
11 Peer Group XOM 4.82 BP 3.578 RDS 3.504 CVX 2.76 TOT 2.371 COP 1.702 Apache 0.732 OXY 0.73 Anadarko 0.69 Devon 0.63 EOG Resources 0.409 Marathon 0.4 Hess 0.399 Murphy Oil 0.182 ConocoPhillips Production Q1 2011 Worldwide Production - MMBD Peer Group Domestic Integrated Domestic Pure Plays Source:
Slide 13: Production Outlook
12 Production Outlook Production by Product - MMBOED Total - Prod 2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Sycrude 12 0 0 0 0 0 0 0 0 0 0 Bitumen 60 55 65 74 85 114 158 175 201 224 251 Crude 763 722 699 730 738 762 756 757 770 754 782 NGL 150 144 146 152 149 146 144 141 138 1
Slide 14: 2011-2015 New Production
13 2011-2015 New Production MBOED Improving margins through major projects and exploitation Exploitation and Major Projects - MBOED 2010 2011E 2012E 2013E 2014E 2015E Qatargas 3 0 67 72 72 71 73 Asia Pacific 0 6 16 55 85 185 L48 shale 0 21 54 101 93 94 SAGD 0 1 8 18 29 58 North Sea 0 1 30 84 120 137
Slide 15: New Downstream Company
14 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 Strong investment grade credit with significant financial flexi
Slide 16: Peer Group: U.S. Refining Capacity
15 Peer Group Peer Average Valero 2.17 COP 1.986 XOM 1.873 BP 1.478 Marathon 1.114 CVX 0.941 RDS 0.773 Tesoro 0.665 Sunoco 0.505 HOC/FTO 0.443 TOT 0.174 Murphy 0.16 Q1 2011 U.S. Refining Capacity - MMBD U.S. Refining Leading domestic refining company with portfolio of top quartile assets Peer Group
Slide 17: Downstream ROCE Improvement
16 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-teens return
Slide 18: Key Milestones
17 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 1st half of 2012
Slide 19: Delivering Shareholder Value
18 Delivering Shareholder Value 100%+ reserves replacement Production per share growth Improved returns EPS/CFPS growth Increased distributions Continued asset sales Strong OECD-based cash flow Enhanced queue of growth projects Disciplined capital investment Strengthened portfolio Restructuring cons