ConocoPhillips · NYSE:COP
ConocoPhillips — Analyst meeting 2004
21 slides from ConocoPhillips's conference presentation, November 2004
Slide 1: John Carrig, EVP, Finance & CFO
John Carrig EVP, Finance & CFO
Slide 2: Financial Strategy
Financial Strategy • Balance sheet improvement – Modest debt reduction – Equity improvement – Target debt/capital ratio of 20-25% • A / AA credit rating • Annual dividend increases • Share repurchase to offset dilution 127
Slide 3: 2004 Earnings
2004 Earnings Income from Continuing Operations 2,013 2,011 1,603 59 92 72 818 708 $ Millions 464 1,257 1,354 1420 (190) (218) (209) 1Q04 2Q04 3Q04 EPS $2.31 $2.88 $2.87 E&P R&M Other Corporate 128
Slide 4: Total Company Cash Flow: Nine Months 2004
Total Company Cash Flow Nine Months 2004 1,427 Petrovera 4,380 Midstream $ Millions Mid-Atlantic Marketing 742 8,762 Other Marketing 2,294 2,773 Cash from Asset sales Capex 1 Dividends Debt Cash build operations and other reduction 1 Net of minority interest. 129
Slide 5: Total Company Cash Flow 2004
Total Company Cash Flow 2004 * First Call consensus as of November 4, 2004 15 Debt at 12/31/03: $17.8B Debt at 12/31/04: $15.0B 1.5 Petrovera 10 Midstream 6.6 $ Billions Mid-Atlantic Marketing Other Marketing 12.0 2.6 5 1.5 2.8 0 1 Cash from Asset sales Capex LUKOIL Dividends Debt operations* and ot
Slide 6: 2005 Cash Availability
2005 Cash Availability $ Billions 2005 First Call net income 1 6.5 First Call cash from operations 1 10.8 Asset sales 0.3 Dividends (1.4) Available cash 9.7 1 As of November 4, 2004. 131
Slide 7: Capital Discipline: 2005 Capex Projection
Capital Discipline 2005 Capex Projection Excluding LUKOIL investments Other 3% 10 R&M 22% 0.4 0.1 $ Billions 5 E&P 6.9 7.3 75% 7.4 0 Cash Cap. Net Minority Gross capex interest capex interest capex 132
Slide 8: Total Company Cash Flow 2005
Total Company Cash Flow 2005 * First Call consensus as of November 4, 2004 15 Debt at 12/31/04: $15.0B Debt at 12/31/05: $14.5B 0.3 10 $ Billions 7.3 5 10.8 1.5 1.4 0.5 0.4 0 Cash from Asset sales Capex 1 LUKOIL / Dividends Debt Other operations* Russia reduction available cash 1 Net of minority int
Slide 9: Net Share Repurchase Required to Offset Dilution
Net Share Repurchase Required to Offset Dilution 6 Annual share dilution (Millions) Options Benefit plans 4 2 0 2005 2006 2007 2008 2009 Net cash to fund share repurchase 400 400 350 350 350 $ Millions Assumes year end share price of $85 for 2004 and 10% growth thereafter. 134
Slide 10: Debt Ratio Improvement
Debt Ratio Improvement *Based on First Call earnings and cash flow consensus as of November 4, 2004 60 60 60 51 50 46 50 50 41 40 40 40 35 34 30 30 30 27 24 21 20 20 17.8 20 15.0 14.5 14.0 10 10 10 0 0 0 2003 2004 2005 2006 2003 2004 2005 2006 2003 2004 2005 2006 Equity* $B Balance sheet Debt to cap
Slide 11: Price Sensitivities
Price Sensitivities $MM EPS $1/BBL $1/BBL Crude Crude –– Worldwide Worldwide E&P E&P 180 180 $0.26 $0.26 $0.10/MCF $0.10/MCF Natural Natural Gas Gas –– Worldwide Worldwide E&P E&P 50 50 $0.07 $0.07 $0.25/BBL $0.25/BBL Refining Refining Margins Margins (( 93% 93% Capacity Capacity Utilization) Utiliz
Slide 12: Cash Scenarios - 2005 Share repurchase
Cash Scenarios - 2005 14 Share Cash requirements ($ Billions) repurchase 12 Total $11.1 B (0.4B) Debt 10 repayment (0.5B) 8 LUKOIL (1.5B) 6 Capital budget 1 (7.3B) 4 2 Dividend (1.4B) 0 1 Net of minority interest. 137
Slide 13: Cash Scenarios - 2005 Share repurchase
Cash Scenarios - 2005 14 Share CFOA + asset sales ($ Billions) repurchase 12 (0.4B) Debt 10 $12.6 B repayment (0.5B) 8 $11.0 B $11.1 B LUKOIL (1.5B) $8.7 B 6 $7.5 B Capital budget 1 4 (7.3B) 2 Dividend (1.4B) 0 Debt/cap Capex + dividend First Call 2004 YTD Q3 breakeven breakeven 2005 prices Crude -
Slide 14: Other Drivers
Other Drivers Selected Items Pre-Tax Annual Estimates • Corporate - $720 MM (after-tax) • Turnaround - $350MM • Pension funding - $475MM • Exploration - $600MM – US $350MM • DD&A - $4,400MM – Int’l $125MM • Inventory - $21.50 / BBL break-even • Effective tax rate - 45-50% • LUKOIL accounting 139
Slide 15: DD&A Forecast
DD&A Forecast 5 Rest of E&P R&M/Power 4.41 Magnolia 4 3.73 $ Billions 3 2 1 0 2004 2005 E&P R&M Other 140
Slide 16: DD&A Forecast
DD&A Forecast 5 4.79 4.95 4.77 4.41 4 $ Billions 3 2 1 0 2005 2006 2007 2008 E&P R&M Other 141
Slide 17: Debt Maturity
Debt Maturity •• Avg. Avg. ’05 ’05 a-t a-t cost cost of of debt debt 4.6% 4.6% •• Fixed Fixed vs vs floating floating 81% 81% // 19% 19% 3.0 •• Revolving Revolving credit credit facilities facilities $5.0 $5.0 B B 2.5 •• Comm. Comm. paper paper outstanding outstanding $0.5 $0.5 B B 2.0 •• Shelf Shel
Slide 18: Change in Off Balance Sheet Debt
Change in Off Balance Sheet Debt $3.9 B $3.4 B Other Other Hamaca 0.3 Operating leases Hamaca 0.2 Operating 0.4 leases 0.4 1.6 1.8 1.2 1.4 Receivables Receivables monetization monetization & factoring Projected 12/31/03 12/31/04 $0.5B off balance sheet debt reduction 143
Slide 19: Total Debt Maturity
Total Debt Maturity 5 Receivables monetization 4 Off balance sheet debt Balance sheet debt 3 $ Billions 2 1 0 2005 2006 2007 2008 2009 2010 144
Slide 20: Annual Dividend Increases
Annual Dividend Increases 60 Quarterly dividend (cents/share) 50 50 40 43 40 36 30 20 10 2001 2002 2003 2004 11.6% CAGR 145
Slide 21: Uniquely Positioned
Uniquely Positioned • Balanced E&P / R&M integrated portfolio • Well-defined, sustainable growth plan • Access to resource-rich opportunities • Strong financial position Setting Delivering Raising Objectives Performance Expectations 2003 2004 2005+ Continuous improvement Æ Shareholder value creation