ConocoPhillips · NYSE:COP
ConocoPhillips — Howard Weil Energy Conference 2013
40 slides from ConocoPhillips's conference presentation, Mar 20, 2013
Slide 1: A New Class of E&P Investment
a new class of E&P INVESTMENT Howard Weil Energy Conference – March 20, 2013 Ryan Lance, Chairman & CEO
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 or operating results. Actual outcomes and results may di
Slide 3: ConocoPhillips: A New Class of E&P Investment
ConocoPhillips: A New Class of E&P Investment We offer the marketplace a new class of E&P investment. Our goal is to consistently deliver strong, predictable returns to shareholders. 3
Slide 4: Unmatched as an Independent E&P Today
ConocoPhillips: Unmatched as an Independent E&P Today Largest independent E&P company Diverse asset base with scope and scale Multiple sources of growth Positioned in key resource trends globally Significant technical capability Strong balance sheet Commitment to shareholders 1 Product
Slide 5: Our Strategy is Aligned with Our View of the Environment
Our Strategy is Aligned with Our View of the Environment Diversification, scale and capability are a competitive advantage Disciplined investment strategy Focus on organic growth Invest in high-margin programs and projects Apply technical capability Maintain financial flexibility Rebal
Slide 6: What Will We Deliver? Our Value Proposition is Unchanged
What Will We Deliver? Our Value Proposition is Unchanged Relentless focus on safety and execution Compelling dividend 3 – 5% production growth rate 3 – 5% margin growth rate Ongoing priority to improve financial returns Production and margin reflect compound annual growth rates. 6
Slide 7: Our Priorities for Cash Flow are Unchanged
Our Priorities for Cash Flow are Unchanged Predictable returns to shareholders Dividends Enhance capital discipline Investing for margins and cash flows Capital Program Funds profitable growth Capacity to fund growth Balance Sheet Financial strength to withstand cycles Share Continue t
Slide 8: A Compelling Dividend is Key to Our Value Proposition
A Compelling Dividend is Key to Our Value Proposition Highest priority use of cash flow Enhances capital discipline Predictable portion of shareholder returns Differential compared to range of peers Target consistent increases 1 Dividend yield as of Feb. 21, 2013. Peers include: APA, APC,
Slide 9: Commitment to Capital Discipline and Growth is Unchanged
Commitment to Capital Discipline and Growth is Unchanged * Reflects production from 2012-2013 closed and announced dispositions. 9
Slide 10: Our Commitment to Margin Improvement is Unchanged
Our Commitment to Margin Improvement is Unchanged Five significant areas ramping up between 2012-2017 Incremental growth comes from high-margin investments Lower-risk geographies and geologies; diversified plays Oil Sands Europe Lower 48 Liquids Rich Malaysia APLNG Development Programs Major P
Slide 11: Margin Improvement from Strong Growth and Mix Shift
Margin Improvement from Strong Growth and Mix Shift Investment strategy drives strong organic growth Visible growth by end of 2013 High-margin growth creates ~$6 B of incremental cash flow $40-$45 per BOE average cash margin1 Liquids growth from areas with lower tax rates 1 Based on 2013 r
Slide 12: Focused on Continuously Improving Returns
Focused on Continuously Improving Returns Ongoing focus on cost structure and efficiency Asset divestitures improve portfolio returns Short-term returns impacted by capital investments in major projects High-margin growth improves long-term returns performance Companies include: APA, APC, BG
Slide 13: High-Margin Worldwide Development Program Inventory
High-Margin Worldwide Development Program Inventory Development programs will account for ~600 MBOED by 2017 >60% of production growth from high-impact Lower 48 programs Development Program Growth (2012-2017) MBOED Alaska Europe ~35 MBOED Canada ~40 MBOED ~105 MBOED Asia Pacific Lower 48 ~25 MBO
Slide 14: Permian Conventional: Decades of Legacy Field Inventory
Permian Conventional: Decades of Legacy Field Inventory Permian Basin 5-year investment: ~$3 B New Mexico Texas BORDEN Incremental F&D: ~$15/BOE DAWSON GAINES EDDY LEA ANDREWS MARTIN ~1 MM net acres; 0.8 BBOE resource HOWARD Central Platform Basin Infill drilling and waterflood expansion LOV
Slide 15: Bakken: Growth from Development in Heart of Trend
Bakken: Growth from Development in Heart of Trend Bakken 5-year investment: ~$4 B Montana North Dakota Incremental F&D: ~$20/BOE WILLIAMS MOUNTRAIL Nesson WARD 626 M net acres1; 0.6 BBOE resource ROOSEVELT Anticline RICHLAND >1,400 identified drilling locations MCKENZIE Top-quartile initia
Slide 16: Eagle Ford: Nearing Full Field Development Phase
Eagle Ford: Nearing Full Field Development Phase Eagle Ford 5-year investment: ~$8 B GUADALUPE BEXAR GONZALES Incremental F&D: ~$20/BOE 227 M net acres; 1.8 BBOE resource WILSON DE WITT Highest-quality position in sweet spot, acquired ATASCOSA at $300/acre KARNES GOLIAD >2,000 identified d
Slide 17: Unconventional Reservoirs: Technology Leadership
Unconventional Reservoirs: Technology Leadership Proven ability to identify, secure and develop highest-value unconventional acreage Sweet spot identification Development plan optimization Efficient drilling and completions Operations excellence 1 Source: Wood Mackenzie. 17
Slide 18: Unconventional Reservoirs: Sweet Spot Identification
Unconventional Reservoirs: Sweet Spot Identification Early mover in best parts of plays yields best-in-class results Multi-disciplinary approach Eagle Ford, Bakken and Permian successful outcomes Securing additional liquids-rich sweet spots 1 Source: IHS Enerdeq. 18
Slide 19: High-Margin Major Growth Projects in Execution
High-Margin Major Growth Projects in Execution Major projects will account for ~400 MBOED by 2017 Lower-risk geographies and geologies; diversified market exposure Major Projects Growth (2012-2017) MBOED Oil Sands Norway ~100 MBOED1 ~60 MBOED United Other Major Kingdom Projects ~55 MBOED ~55 MBO
Slide 20: Oil Sands: Significant Growth from Projects in Execution
Oil Sands: Significant Growth from Projects in Execution Christina Lake 5-year investment: ~$5 B1 Full-cycle F&D: ~$15/BOE Surmont Phase 2 first steam in 2015 FCCL: Executing projects at Foster Creek, Christina Lake and Narrows Lake Employing new technologies to improve efficiency and cost
Slide 21: United Kingdom: Strong Production Growth from Projects
United Kingdom: Strong Production Growth from Projects Jasmine 5-year investment: ~$2.5 B Full-cycle F&D: ~$20/BOE Jasmine: Largest recent discovery in U.K. sector; on track for late-2013 startup High-value exploration opportunities can be tested from Jasmine platform Additional projects i
Slide 22: Norway: Major Projects Drive Another 40 Years of Production
Norway: Major Projects Drive Another 40 Years of Production Ekofisk South 5-year investment: ~$4 B Full-cycle F&D: ~$25/BOE Ekofisk South and Eldfisk II will continue to improve oil recovery from the Greater Ekofisk Area Additional projects include: Tor Redevelopment, Tommeliten Alpha and Aa
Slide 23: Malaysia: Projects Ramping Up, with Upside
Malaysia: Projects Ramping Up, with Upside Malaysia 5-year investment: ~$2.5 B South China Sea Full-cycle F&D: ~$15/BOE KBBC PSC Ubah KME 4 developments in execution: Gumusut, SNP, G KBB G KBB and Malikai SB-311 Pisagan SNP G Malikai Gumusut full field and SNP first oil in late 2013 J Limbay
Slide 24: APLNG: Project Progressing On Schedule
APLNG: Project Progressing On Schedule APLNG 5-year investment: ~$2.5 B1 Full-cycle F&D: ~$25/BOE Initial focus on two 4.5 MTPA LNG trains Project on schedule for first cargo mid-2015 Permitted for two additional trains Phase 1 capital ~7% increase on AUD basis 2017 Cash Margin – $/BOE2
Slide 25: Diverse Unconventional and Conventional Exploration Portfolio
Diverse Unconventional and Conventional Exploration Portfolio West Chukchi Sea Duvernay, Greenland Barents Sea Muskwa, & North Sea Montney & Canol Poland Wolfcamp, Sichuan Niobrara & Gulf of Avalon Mexico Azerbaijan Bangladesh Colombia Indonesia Malaysia Angola Browse & Bonaparte Canning 25
Slide 26: Permian Unconventional: Emerging Growth
Permian Unconventional: Emerging Growth Active exploration across Permian Basin that leverages existing ~1 MM net acre position High-grading positions around and within core legacy producing area Measured approach as infrastructure is developed Encouraging results consistent with expectation
Slide 27: Niobrara: Early Mover in the New Sweet Spot
Niobrara: Early Mover in the New Sweet Spot Niobrara 130 M consolidated net acres over Colorado newly identified sweet spot Drilled 4 horizontal wells in 2012 ADAMS Rock properties and early production rates in line with expectations Higher liquid yield than Wattenburg ARAPAHOE 32 wells pl
Slide 28: International Conventionals: Deepwater Angola
International Conventionals: Deepwater Angola Angola Play identified as a probable analog to Brazil pre- salt play ANGOLA Recent discoveries de-risk play concept in Kwanza Basin Luanda ConocoPhillips-operated 2.5 MM acre position Atlantic 36 2012-2013: 3-D seismic acquisition confirms Ocean
Slide 29: Top 5 Leaseholder in Deepwater – Ramp Up of GOM Activity
Top 5 Leaseholder in Deepwater – Ramp Up of GOM Activity Deepwater GOM 2013 Drilling Plan Louisiana 5 wells planned; up to 3 additional wells possible Ardennes WI: 30% Target: Paleocene/Eocene Tiber Non Operated WI: 18% Target: Paleocene/Eocene Non Operated Thorn WI: 65% Target: Pliocene/Miocene Ope
Slide 30: Shenandoah and Coronado: Encouraging Results with Running Room
Shenandoah and Coronado: Encouraging Results with Running Room Shenandoah and Coronado Shenandoah appraisal 2009 discovery with >300’ net pay in Garden Banks Area Lower Tertiary Appraisal well results encouraging Coronado wildcat Encouraging results Green Canyon Expect further appraisal
Slide 31: What Will We Deliver? Our Value Proposition is Unchanged
What Will We Deliver? Our Value Proposition is Unchanged Relentless focus on safety and execution Compelling dividend 3 – 5% production growth rate 3 – 5% margin growth rate Ongoing priority to improve financial returns Production and margin reflect compound annual growth rates. 31
Slide 32: Appendix
ConocoPhillips Appendix
Slide 33: 2013 Guidance
2013 Guidance Production from continuing operations Annual average of 1,475-1,525 MBOED 1Q and 4Q ~50 MBOED above annual average 2Q and 3Q ~50 MBOED below annual average due to seasonality, maintenance and project tie-ins Strong year-end exit rate 1,475 - Production from discontinued ope
Slide 34: Annualized Net Income Sensitivities
Annualized Net Income Sensitivities Crude Brent/ANS: $75-85 MM change for $1/BBL change WTI: $30-40 MM change for $1/BBL change WCS: $20-25 MM change for $1/BBL change North American NGL Representative blend: $10-15 MM change for $1/BBL change Natural Gas HH: $115-125 MM change for $
Slide 35: Substantial Progress on Portfolio High-Grading
Substantial Progress on Portfolio High-Grading Announced Announced Asset sale criteria Transactions Proceeds – $B Nonstrategic Mature, limited growth potential Kashagan 5.0 Ability to achieve fair value Tax-efficient transactions Algeria 1.8 2012 impact Nigeria 1.8 64 MBOED production
Slide 36: Segment Production (MBOED)
Segment Production (MBOED) * Reflects production from 2012-2013 closed and announced dispositions. 36
Slide 37: A Diverse Portfolio Delivering Production and Margin Growth
A Diverse Portfolio Delivering Production and Margin Growth Diverse, resource-rich global portfolio High-quality legacy base Profitable worldwide development programs Major projects in execution Compelling exploration opportunities Positioned to deliver high-margin organic growth and res
Slide 38: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2012 Return on Capital Employed Numerator ($MM) Net Income Attributable to ConocoPhillips $ 8,428 Adjustment to exclude special items (1,694) Net income attributable to noncontrolling interests 70 After-tax interest expense 461 ROCE Earnings $ 7,265 Denominator ($MM) Average
Slide 39: Abbreviations and Glossary
Abbreviations and Glossary 3-D: three dimensional Liquid Yield: liquid-to-gas ratio 4-D: four dimensional LNG: liquefied natural gas ANS: Alaska North Slope M: thousand B: billion MM: million Base Production: production from existing infrastructure MBOED: thousands of barrels of
Slide 40: Investor Information
Investor Information Stock Ticker: NYSE: COP Headquarters: ConocoPhillips 600 N. Dairy Ashford Road Houston, Texas 77079 www.conocophillips.com/investor Investor Relations: Telephone: +1 212-207-1996 Ellen DeSanctis: ellen.r.desanctis@conocophillips.com Vladimir R. dela Cruz: v.r.delacru