ConocoPhillips · NYSE:COP
ConocoPhillips — UBS Conference 2010
29 slides from ConocoPhillips's conference presentation, May 25, 2010
Slide 1: UBS Conference
UBS Conference Austin, Texas May 25, 2010 Clayton Reasor VP Corporate and Investor Relations c.c.reasor@conocophillips.com
Slide 2: Strategic Options
Strategic Options Emphasize absolute production growth • Fully invest in available opportunities • Accept marginal economic projects • Maintain leverage with no share repurchases Significant restructuring • Divest or spin out of significant business lines • Sale of legacy assets highly tax ineff
Slide 3: Near Term Initiatives
Near Term Initiatives Constrain capital program to highest return projects Execute $10 B two‐year asset sales program Reduce LUKOIL ownership from 20% to 10% Reduce debt to cap ratio to 20% Picture Increase dividend annually Resume share repurchase program $20 B in free cash flow availab
Slide 4: Improve Returns
Improve Returns Capital Efficiency ‐ ROCE and CROCI Shift capital allocation 25% ROCE CROCI 20% Reduce capital growth 15% Cut operating and F&D costs 10% Capture market price 5% improvements 0% 2009 2012 2009 2012 Closing the returns gap See appendix for additional information. 3
Slide 5: Asset Sale Program
Asset Sale Program Two‐year, $10 B 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 6: Asset Sale Impacts
Asset Sale 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&M assets
Slide 7: Cash Sources and Uses
Cash Sources and Uses 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 Remaining Operations & LUKOIL Program & Cash Reduction Repurchase Cash Dividends Cash from operations estimated as 2x 2010 First C
Slide 8: 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 9: BOE Production per Share
BOE Production per Share 0.56 BOE Production / share Capital constraint creates production plateau through 0.52 2013 0.48 Share repurchases create production per share growth 0.44 Underlying 2‐3% production growth resumes in 2014 0.40 2008 2009 2010 2011 2012 2013 2014 Share repurchases accele
Slide 10: 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. 9
Slide 11: 2010 E&P Capital Program
2010 E&P 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
Slide 12: 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 13: Exploration
Exploration 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 Sales 208 & 21
Slide 14: R&M Capital Program
R&M Capital Program Capital Program ‐ $B Maintain capital for operating 3 Sustaining / Reliability Regulatory excellence and asset integrity Strategic Investments 2009 DD&A Reduce strategic investments 2 36% Fund regulatory projects 1 Target capital at or below current DD&A levels 0 2007 200
Slide 15: Performance Measures and Targets
Performance Measures and Targets Key Metrics 2009 Position 2012 Outlook Long Term 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 Producti
Slide 16: ROCE/CROCI
ROCE/CROCI Return on Capital Employed Cash Return on Capital Invested 30% 30% 20% 20% 10% 10% 15% 16% 18% 19% 21% 5% 6% 7% 9% 10% 0% 0% 1Q09 2Q09 3Q09 4Q09 1Q10 1Q09 2Q09 3Q09 4Q09 1Q10 Peer Group All companies adjusted to exclude certain non-core earnings impacts. See Appendix for additional inform
Slide 17: Value Creating Activities
Value Creating Activities Sell assets and reduce debt Increase ROCE and CROCI 10 BBOE resources to reserves in ten years Grow production per share 3% per year Increase shareholder distributions Actions Expected to Close the Valuation Gap 16
Slide 18: Appendix
ConocoPhillips Appendix 17
Slide 19: 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 20: 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 21: 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 $1/BBL Gulf Gulf Coast Coast Crack Crack
Slide 22: 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 23: 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 24: 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 25: 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 26: 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
Slide 27: 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 28: 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 29: 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