ConocoPhillips · NYSE:COP
ConocoPhillips — Investor Presentation (February 2019)
27 slides from ConocoPhillips's investor presentation, February 2019
Slide 1: 2019 Capital Budget & Operating Plan
2019 Capital Budget & Operating Plan Supplemental Information & Investor Update U P DAT E D A S O F F E B R UA RY 2 0 1 9
Slide 2: Cautionary Statement
Cautionary Statement The following presentation includes forward-looking statements. These statements relate to future events, such as anticipated revenues, earnings, business strategies, competitive position or other aspects of our operations, operating results or the industries or markets in which
Slide 3: 2019 Capital Budget & Operating Plan: 2019 Highlights
2019 Capital Budget & Operating Plan 2019 Highlights Capital (B) Production (MBOED) Pro-forma2 for • 2019 capital guidance of $6.1B Corp & Other Corp & Other announced 25 APME APME acquisitions and • 2019 production 1,300 – 1,350; Europe & dispositions APME ~5% production growth vs 2018 Europe & Nor
Slide 4: 2019 Capital Allocation Underscores Low-Risk, High-Value Portfolio
2019 Capital Allocation Underscores Low-Risk, High-Value Portfolio 2019 Capital Allocation LNG & Oil Sands 100% $40-$50 Exploration • ~70% directed toward Major Projects development programs 75% Unconventional $30-$40 • ~70% to be spent in the U.S. 50% Development • ~55% targeting Unconventionals in
Slide 5: Recommitting to Our Priorities & Portfolio
Recommitting to Our Priorities & Portfolio
Slide 6: 2018 Highlights – Delivering on Our New Order Value Proposition
2018 Highlights – Delivering on Our New Order Value Proposition Strategy Financials Operations Portfolio ► Delivered on priorities ► $5.3B adjusted earnings; ► Safely executed capital ► Completed high-value $4.54 adjusted EPS program scope acquisitions in Alaska ► Achieved 12.6% ROCE ► $12.3B CFO1;
Slide 7: “New Order” Value Proposition Is Right For the Business We’re In
“New Order” Value Proposition Is Right For the Business We’re In Today’s E&P Industry Is… Capital Intensive Mature Cyclical To Win, A Strategy Framework Must Address These Realities What portfolio do we How do we allocate How do we manage choose to have? capital? uncertainty? ► Global, diverse asset
Slide 8: Our Value Proposition Delivers Superior Returns Through Cycles
Our Value Proposition Delivers Superior Returns Through Cycles THE RIGHT PORTFOLIO CONSISTENT PRINCIPLES DISCIPLINED PRIORITIES Invest capital to sustain Low Returns Focused 1st production and pay Low Cost RETURNS PRIORITY Sustaining existing dividend of Supply Capital 2nd Annual dividend growth Str
Slide 9: Our Value Proposition Delivers Superior Returns Through Cycles
Our Value Proposition Delivers Superior Returns Through Cycles RESILIENCE, WITH UPSIDE ConocoPhillips Works ConocoPhillips Works at Lower Prices at Higher Prices ► <$40/BBL1 sustaining price ► Torque from advantaged realizations and margins ► Growing inventory of <$40/BBL1 ► Predominantly tax and ro
Slide 10: Growing Resource Base, While Lowering Cost of Supply
Growing Resource Base, While Lowering Cost of Supply Low Cost of Supply1 Resource Base YE2018 Resource Base <$40/BBL Cost of Supply1 0.5 BBOE2 16 BBOE 15 BBOE 0.5 BBOE 1 BBOE 40 <$30/BBL WTI AVERAGE CoS $40-$50 OF RESOURCE /BBL $30-$40 Cost of Supply ($/BBL WTI) /BBL 30 $30-$40 /BBL 7% INCREASE 20 I
Slide 11: Peer-Leading Sustaining Price: Key to “New Order” Value Proposition
Peer-Leading Sustaining Price: Key to “New Order” Value Proposition Cash Sources Cash Uses $3.8B/YR <$40/BBL SUSTAINING CAPITAL Dividend SUSTAINING PRICE CFO Sustaining 2019 – 2021 $3.5B at $40/BBL Capital Adjusted • Modest sustaining Operating Costs capital increase with Base Dividend + Growth high
Slide 12: 2019 Operating Plan on a Page
2019 Operating Plan on a Page ► Maintain discipline & continued focus on free cash flow generation ► $6.1B capital expenditures budget ► Deliver per-share cash flow expansion from low-CoS investments ► FY19 production 1,300 -1,350 MBOED ► Achieve total shareholder payout >30% of CFO ► $3B planned bu
Slide 13: Alaska: Significant Future Exploration & Appraisal Planned
Alaska: Significant Future Exploration & Appraisal Planned 2019 Program Focused on Existing Discoveries 2020+ Program Focused on Remaining Potential Resolve Remaining Uncertainties to Sanction Test Full Prospect Inventory N AT I O N A L P E T R O L E U M Western Greater Willow Appraisal RESERVE – AL
Slide 14: Montney Appraisal: Expanded Liquids-Rich Resource Base
2019 Montney Appraisal: Expanded Liquids-Rich Resource Base 2013 COP acreage 2013-2017 acquisitions 2018 acquisitions • 14-well pad to be drilled and completed in 2019; 2017 appraisal wells testing well spacing and stacking 14-well pad Calgary • >2 BBOE of <$40/BBL cost of supply resource across ~14
Slide 15: Lower 48 Big 3 Unconventionals: Maximizing Value
2019 Lower 48 Big 3 Unconventionals: Maximizing Value Big 3 Production1 (MBOED) ~350 >25% CAGR BIG 3 PRODUCTION 2017 to 2019 298 • Significant outperformance in 2018 vs 217 2017 AIM • Expect to run 10-11 operated rigs • Willing to shift capital among the Big 3 to maximize value • Multi-well pilots o
Slide 16: Continuous Learning & Optimization of Completions Drives Value
Continuous Learning & Optimization of Completions Drives Value Evolution of ConocoPhillips Eagle Ford Completion Design Eagle Ford Cumulative Production1 Vintage 1 Vintage 2 Vintage 3 Vintage 4 2012 2014 2016 2017+ 400 Vintage 4 Customized to Vintage 2 3.8 MMlbs 7.5 MMlbs 10.5 MMlbs Specific Area Vi
Slide 17: Louisiana Austin Chalk: Emerging Liquids Play
Louisiana Austin Chalk: Emerging Liquids Play • Currently hold ~225 M net acres; acquired MS TEXAS LA at <$1,000 per acre • Acreage acquisition focused on liquids MISSISSIPPI • First well in 2018; additional 3 wells LOUISIANA planned in 2019 • Leveraging learnings from Lower 48 unconventional plays,
Slide 18: 2019 Cash Sources & Uses
2019 Cash Sources & Uses at $50/BBL WTI
Slide 19: Plan at $50/BBL: Commitment to Shareholder Payout
2019 Plan at $50/BBL: Commitment to Shareholder Payout Estimated Sources and Uses of Cash (2019) at $50/BBL WTI ~50% Starting Cash1 & ~$4B Available Cash Proceeds2 CFO return to shareholders Investment for CFO Expansion (~$2.3B) CFO @ $50/BBL $3B <$40/BBL CFO at sustaining $40/BBL $3.8B price Source
Slide 20: Production & Margin Growth Drive Cash Flow Expansion
Production & Margin Growth Drive Cash Flow Expansion Cash Flow Sensitivities for $1/BBL Change ~$265MM WCS Cash flow price sensitivity ~$235MM ~5% NA Gas L48 NGL increased $30MM per WCS NA Gas ~7% Margin WTI $1/BBL change driven by: L48 NGL Production Growth WTI International Gas Growth • ~7% increa
Slide 21: Appendix
ConocoPhillips Appendix
Slide 22: 2019 Guidance
2019 Guidance Full-Year 2019 Production 1,300 – 1,350 MBOED 1Q 2019 Production 1,290 – 1,330 MBOED Full-Year 2019 Adjusted Operating Costs $6.1B Full-Year 2019 Capital Expenditures $6.1B Full-Year 2019 DD&A $6.3B Full-Year 2019 Adjusted Corporate Segment Net Loss $1.0B Full-Year 2019 Exploration Dry
Slide 23: 2019 Annualized Net Income Sensitivities
2019 Annualized Net Income Sensitivities • Crude: • Brent/ANS: ~$155-175MM for $1/BBL change • WTI: ~$30-40MM for $1/BBL change • WCS: ~$10-15MM for $1/BBL change • Does not incorporate contingent payment of CA$6MM quarterly for every CA$1 WCS price above CA$52/BBL $45-$75/BBL • North American NGL W
Slide 24: 2019 Annualized Cash Flow Sensitivities
2019 Annualized Cash Flow Sensitivities Consolidated Operations Equity Affiliates1 ($45-$75/BBL WTI) ($45-$75/BBL Brent) • Crude • Expect distributions from all equity affiliates at • Brent/ANS: ~$155-165MM for $1/BBL change >$45/BBL Brent • WTI: ~$40-50MM for $1/BBL change • Brent: ~$30-40MM for $1
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation Reconciliation of Capital Expenditures and Investments to Sustaining Capital ($ Billions) 2019 Guidance Capital Expenditures and Investments 6.1 Growth Capital (Future Major Projects, Exploration and Short-cycle Unconventional Growth) 2.3 Sustaining Capital 3.8 Sustaining cap
Slide 26: ConocoPhillips Definitions
ConocoPhillips Definitions Cash from operations (CFO): Cash provided by operating activities less the impact from operating working capital. Estimated CFO based on sensitivities assumes no operating working capital changes, and therefore CFO equals cash provided by operating activities. Cost of supp
Slide 27: ConocoPhillips Abbreviations
ConocoPhillips Abbreviations B: billion BBL: barrel BBOE: billions of barrels of oil equivalent BOE: barrels of oil equivalent BOED: barrels of oil equivalent per day CAGR: compound annual growth rate CFO: cash provided by operations CoS: cost of supply DASh: debt-adjusted share FID: Final Investmen
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