ConocoPhillips · NYSE:COP
ConocoPhillips — Q3 2004 Earnings Presentation
23 slides from ConocoPhillips's earnings presentation, Oct 27, 2004
Slide 1: 3rd Quarter Earnings Conference Call
3rd Quarter Earnings Conference Call J.J. Mulva October 27, 2004
Slide 2: Cautionary Statement
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 and Section 21E of the Sec
Slide 3: Highlights
Highlights Net Income 1.48 MMBOED Production $2.006 B 94% Refining Utilization Cash From Higher Crude Oil Prices Operations $4.41 B 28% Debt-to-Capital 23% Adjusted ROCE* Debt Balance $15.5 B * GAAP ROCE 15%, see table 1 for non-GAAP reconciliation Page 3
Slide 4: Contribution & Capital Employed
Contribution & Capital Employed 3Q04 by Segment Chemicals Other Midstream 2% 4% Midstream/Chemicals 4% 5% R&M 31% R&M E&P 30% E&P 63% 61% Income from Continuing Operations Capital Employed Emerging Businesses and Corporate income from continuing operations pro-rated over other segments Page 4
Slide 5: Total Company Net Income
Total Company Net Income 3Q04 vs. 2Q04 $MM 10 56 31 63 46 5 2,013 2,011 2,006 2Q04 ICO Prices & Sales Inventory Canada Tax Other 3Q04 ICO 3Q04 Disc 3Q04 NI Margins Volumes Ops Page 5
Slide 6: Total Company Cash Flow
Total Company Cash Flow 3Q04 $MM 1,594 296 133 69 4,413 2,459 CFOA Capex Dividends Debt Other Cash Build Reduction Page 6
Slide 7: Total Company Cash Flow
Total Company Cash Flow YTD04 $MM Dividends & Other Asset 463 Sales 1,427 Cash build Capex 2,773 4,659 CFOA Debt 8,762 Reduction 2,294 Total Sources of Cash Uses of Cash 10,189 Page 7
Slide 8: Debt Ratio Improvement
Debt Ratio Improvement 40 40.8 40 40 38.9 36.8 30 30 32 30 29 28 Cash at 09/30/04: $3.3B 20 20 20 17.1 15.6 15.5 10 10 10 1Q04 2Q04 3Q04 1Q04 2Q04 3Q04 1Q04 2Q04 3Q04 Equity * $B Balance Sheet Debt-to-Capital Debt $B Ratio % * Includes minority interest Page 8
Slide 9: Exploration & Production
Exploration & Production 3Q04 vs. 2Q04 • Stronger oil prices • Lower production - Sales exceeded production - Bayu-Undan ramp-up - Planned downtime Page 9
Slide 10: E&P Production
E&P Production 3Q04 vs. 2Q04 MBOED 1,600 1,575 1,550 56 1,525 1,500 29 1,475 1,563 19 25 1,450 1,484 1,425 1,400 2Q04 Alaska Norway UK Timor Sea 3Q04 Page 10
Slide 11: E&P Net Income
E&P Net Income 3Q04 vs. 2Q04 $MM 1,600 49 31 42 188 1,200 800 1,354 1,420 400 0 2Q04 NI Price Sales Volumes Canada Tax Other 3Q04 NI Page 11
Slide 12: Refining and Marketing
Refining and Marketing 3Q04 vs. 2Q04 • Lower U.S. refining margins • Improved international refining utilization • U.S. utilization 93% • Contingencies and impairment charges • Inventory gains Page 12
Slide 13: R&M Net Income
R&M Net Income 3Q04 vs. 2Q04 $MM 65 40 16 177 26 818 708 2Q04 NI Prices & Volumes Inventory Accruals & Other 3Q04 NI Margins Impairments Page 13
Slide 14: Worldwide R&M Earnings
Worldwide R&M Earnings 100% 80% 60% 3Q04 2004 YTD 40% 20% 0% US Refining US Marketing Int'l Refining Int'l Marketing -20% Page 14
Slide 15: Midstream, Chemicals and Emerging Businesses
Midstream, Chemicals and Emerging Businesses 3Q04 vs. 2Q04 • Midstream - Higher prices and volumes - DEFS impairments/loss on sale • Chemicals - Higher margins - Improved international results • Emerging Businesses - Immingham operations Page 15
Slide 16: Corporate
Corporate 3Q04 vs. 2Q04 • Early debt retirement • Higher foreign currency gains • Lower orphan site accruals Page 16
Slide 17: Corporate Net Income
Corporate Net Income 3Q04 $MM (180) (209) (214) 43 14 (5) Base Early Debt Other Actual 3Q04 ICO Disc Ops Actual 3Q04 NI Retirement Page 17
Slide 18: Return on Capital Employed
Return on Capital Employed 30% Adjusted for Purchase Accounting 25% Peers actual range 20% Peers actual range 15% 22% 23% 10% 16% 5% 0% 2003 1H04 Annualized 3Q04 Annualized GAAP ROCE 10% 14% 15% Adjusted ROCE 16% 22% 23% See Table 1 for non-GAAP reconciliation Page 18
Slide 19: LUKOIL Transaction Overview
LUKOIL Transaction Overview • ConocoPhillips and LUKOIL formed a strategic alliance - ConocoPhillips acquired 7.6% of LUKOIL equity capital through government privatization process • Additional 2.4% by tender or open market purchases • Equity accounting treatment assumed • Joint development of world
Slide 20: Wrap-up
Wrap-up • Full year BOE production 1.56 MMBOED • Increased full-year exploration expense • Legacy asset development • Clean fuels investment • Higher U.S. turnaround activity • November 17th analyst meeting Page 20
Slide 21: Appendix
ConocoPhillips Appendix
Slide 22: Table 1: Adjusted Return on Capital Employed
Table 1 Adjusted Return on Capital Employed 2003 1H 2004 3Q 2004 Adjusted for Adjusted for Adjusted for Purchase Purchase Purchase GAAP ROCE Accounting GAAP ROCE Accounting GAAP ROCE Accounting Net Income from Continuing Operations 4,593 4,593 3,616 3,616 2,011 2,011 Add: Interest Expense 844 844 30
Slide 23: Table 2: Adjusted Return on Capital Employed
Table 2 Adjusted Return on Capital Employed 3Q 2004 3Q 2004 by Segment Adjusted for Emerging Midstream, GAAP ROCE Purchase E&P R&M Businesses, Total Chemicals Accounting Corporate Income from Continuing Operations 2,011 2,011 1,420 708 119 (236) 2,011 Add: Interest Expense 101 101 101 101 Minority I