ConocoPhillips · NYSE:COP
ConocoPhillips — Investor Day (July 2018)
32 slides from ConocoPhillips's investor day presentation, Jul 16, 2018
Slide 1: Alaska Analyst & Investor Update
Alaska Analyst & Investor Update J U LY 1 6 , 2 0 1 8
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: Opening Comments
Opening Comments R YA N L A N C E Chairman & CEO
Slide 4: Strategy Hitting on All Cylinders
Strategy Hitting on All Cylinders Value Proposition Our Unique Principles Disciplined Priorities Characteristics Invest capital to sustain 1st production and pay existing Low Diverse, Financial PRIORITY dividend Sustaining Low CoS Strength Price Portfolio 2nd Annual dividend growth PRIORITY Growing
Slide 5: ConocoPhillips' Peer-Leading Position in Alaska
ConocoPhillips’ Peer-Leading Position in Alaska Largest Producer1 Most Reserves2 Largest Acreage Holder3 300 1,800 1,800 1,600 1,600 250 1,400 1,400 200 1,200 1,200 Thousand Net Acres 1,000 MMBOE 1,000 MBOED 150 800 800 100 600 600 400 400 50 200 200 0 0 0 Peers include: BP, Caelus, ENI, Hilcorp and
Slide 6: 2013 Alaska Outlook: Facing Headwinds
2013 Alaska Outlook: Facing Headwinds ConocoPhillips’ Alaska Outlook 2013 300 2013 Outlook for Asset • Uncompetitive tax structure Production (MBOED) • Declining production profile 200 • High cost of supply • Limited investment 100 • Focus on Lower 48 unconventionals 0 2019 2020 2021 2022 2023 2024
Slide 7: Current Outlook: Strong Future Spurred by Tax Changes & CoS Focus
Current Outlook: Strong Future Spurred by Tax Changes & CoS Focus ConocoPhillips’ Alaska Outlook1 2013 vs. Current (excluding (including 2018 acquisitions) Drivers of Transformation • Senate Bill 21 improved fiscal framework 300 • Technological advancements and innovations target new and bypassed re
Slide 8: Our Alaska Plan is Good for All Stakeholders
Our Alaska Plan is Good for All Stakeholders Aligns with Supports Creates Value for ConocoPhillips’ Strategy Alaska’s Economy Shareholders ► Drives peer-leading low ► ConocoPhillips provided ► Realized price similar to sustaining price 35% of State of Alaska’s Brent petroleum revenue ‛13-‛17 ► Provi
Slide 9: Today's Agenda
Today’s Agenda Al Hirshberg • Low cost of supply, low-decline base production Our Legacy in Alaska • Robust inventory of future projects to drive growth • Future upside from applied technology and innovation • ~$1B/yr capital delivers 225+ MBOED for a decade Matt Fox • 0.5-1.1 BBOE1 of discovered re
Slide 10: Our Legacy in Alaska
Our Legacy in Alaska AL HIRSHBERG EVP, Production, Drilling & Projects
Slide 11: Conventional Assets Play Important & Unique Role in Our Portfolio
Conventional Assets Play Important & Unique Role in Our Portfolio 1.6 BBOE 0.4 BBOE 2.0 BBOE1 25% UNDERLYING IMPROVEMENT Conventional Added Through Total Net Captured Resource in AK 2018 Acquisitions Resource <$40/BBL CoS 2018E vs. 2015 <$50/BBL Cost of Supply2 Resource ANS Cash-Balanced Price3 ($/B
Slide 12: Legacy Position Sets Foundation for Future Growth
Legacy Position Sets Foundation for Future Growth Western Kuparuk Prudhoe Bay Miles N AT I O N A L P E T R O L E U M North Slope (WI=~95%) Non-Operated 0 5 10 15 (WI=100%) (WI=36%) RESERVE – ALASKA Alpine CPF3 Willow Area GMT-1 CD5 CPF1 CPF2 GMT-2 ConocoPhillips Acreage Trans Alaska Pipeline Central
Slide 13: Compelling Plan Creates Significant Value for 10+ Years
Compelling Plan Creates Significant Value for 10+ Years ConocoPhillips' Alaska Outlook1 EXPLORATION PROJECT INVENTORY • CD5 led westward expansion to new sites • Near-term contribution from GMT & NEWS 300 • GMT-1 first oil 2018; GMT-2 first oil 2021 • Eastern NEWS first oil estimated 2023 • Addition
Slide 14: Base Production: Significant Progress on Lowering Decline Rate
Base Production: Significant Progress on Lowering Decline Rate • Extensive enhanced oil recovery expertise with MWAG INJECTOR waterflood and miscible water alternating gas (MWAG) PRODUCER recovery • Ongoing gas lift optimization throughout operations • Leveraging data analytics to drive MWAG sweep e
Slide 15: Base Production: Sustainable Reductions in Cost of Supply
Base Production: Sustainable Reductions in Cost of Supply Lower Intervention Costs Achieving Personnel-Driven Lowered Maintenance Cost & & Increased Efficiency Productivity Improvements1 Increased Facility Uptime 50% REDUCTION >50% REDUCTION IN COST IN COST 250 100% 200 HISTORIC HIGH 100% 2015 2018
Slide 16: Coiled Tubing Drilling: Targets Extensive Inventory of Bypassed Oil
Coiled Tubing Drilling: Targets Extensive Inventory of Bypassed Oil Example: Kuparuk Octa-Lateral ~20% OF CONOCOPHILLIPS ALASKA PRODUCTION developed with coiled tubing drilling • Driven by 4D seismic and high-resolution simulation 6350 • Attractive 10-year portfolio with average cost of supply of ~$
Slide 17: Drilling Technology Advancements: Higher Recovery, Lower CoS
Drilling Technology Advancements: Higher Recovery, Lower CoS Extending Our Reach Threading the Needle Achieving Cost & Time Savings ~30% with Managed Pressure Drilling with Geo-Steering DECREASE 14K ft 30K ft 30K ft 5 ft sands Old Technology New Technology Accessing More Reservoir Drill & Case in On
Slide 18: Successful CD5 Execution: Leading the Way to NPR-A
Successful CD5 Execution: Leading the Way to NPR-A 55% Reduction in CD5 Cost of Supply ($/BBL) • Completed on budget, ahead of schedule and 10 achieved higher initial and overall production rates 14 6 • Accessed reservoir extending beyond seismic 66 6 resolution 36 30 • North American record-setting
Slide 19: Extended-Reach Drilling: Maximize Recovery, Minimize Footprint
Extended-Reach Drilling: Maximize Recovery, Minimize Footprint Alaska North Slope Reduced Footprint* 30% Reduction in Cost of Supply ($/BBL) >100 MMBOE 65-Acre 5 resource to be developed with ERD Gravel Pad 12-Acre 12-Acre (1970)** Gravel Pad Gravel Pad (2016)** (Future ERD)** 5 44 Drilling Area 3 A
Slide 20: Identified Future Inventory: Low-Risk, Multi-Year Opportunities
Identified Future Inventory: Low-Risk, Multi-Year Opportunities • Extensive inventory driven by fiscal framework improvement, cost of supply reductions, technology and innovation • Large portfolio of development programs and projects ~0.8 BBOE1 RESOURCE DEVELOPED • Significant reduction in minimum e
Slide 21: Upside Potential: Technology & Innovation is Still in Early Innings
Upside Potential: Technology & Innovation is Still in Early Innings ConocoPhillips’ Alaska Outlook1 Numerous Technology & Innovation Applications Can Drive Additional Upside Above Outlook ~$1B/YEAR CAPITAL Longer Laterals to deliver 225+ MBOED Enhanced 300 Recovery Production Technologies Thin-Bed R
Slide 22: Upside Potential: Exploration is a Whole New Ballgame
Upside Potential: Exploration is a Whole New Ballgame ConocoPhillips’ Alaska Outlook1 Numerous Technology & Innovation Applications Can Drive Additional Upside Above Outlook 500 MMBOE – 1.1 BBOE2 Longer Laterals discovered resource Enhanced 300 Recovery Production Technologies Thin-Bed Reservoirs Pr
Slide 23: Our Future in Alaska
Our Future in Alaska M AT T F O X EVP, Strategy, Exploration & Technology
Slide 24: NPR-A Discoveries Open New Westward Frontier
NPR-A Discoveries Open New Westward Frontier Western Kuparuk Prudhoe Bay Miles N AT I O N A L P E T R O L E U M North Slope 0 5 10 15 RESERVE – ALASKA Alpine CPF3 West Willow GMT-1 CD5 CPF1 CPF2 Willow North Slope GMT-2 NPR-A ALASKA Undrilled Prospects Anchorage Discoveries Valdez ConocoPhillips Acr
Slide 25: Testing the Brookian Topset Play
Testing the Brookian Topset Play North River Beach Sands Sands Delta Sands Sandy Basin Floor Turbidite Fan 3,000 Vertical Depth (feet) 5,000 West Willow Willow Narwhal 7,000 GMT-2 GMT-1 Alpine 9,000 ConocoPhillips Proprietary Seismic Data Brookian Discovery Exploration Target Existing Jurassic Field
Slide 26: Arctic Expertise Enabled Efficient, Successful '18 Exploration Program
Arctic Expertise Enabled Efficient, Successful ‘18 Exploration Program • Unique arctic expertise enabled successful Greater Willow Exploration & Appraisal program completion in winter operations • 4 wells, 3 well tests window • 16,100 ft. drilled & 148 ft. cored Alpine • Shallow targets (~4,000 ft)
Slide 27: 2018 Exploration Program Confirms Stand-Alone Hub at Willow
2018 Exploration Program Confirms Stand-Alone Hub at Willow Greater Willow Area Preliminary Discovered Resource Range Increased 400 – 750 MMBOE1 T9 current discovered resource West T6 Willow 1 • 2018 Willow appraisal activities and analysis: T7 • Confirmed oil-filled reservoir with 3 new appraisal w
Slide 28: Willow Development: Optimize Based on Cost of Supply
Willow Development: Optimize Based on Cost of Supply Large Module Offload Location Innovative Approach to Lower Cost & Risk Cost of Supply, $/BBL Under- Over- Capitalize Capitalize Facility & Drill Site Design Optimize Facility Sizing & Installation Sweet Spot Gravel Sourcing Locating New Constructi
Slide 29: Narwhal Trend: Promising Discoveries with Access to Infrastructure
Narwhal Trend: Promising Discoveries with Access to Infrastructure Narwhal Trend Putu Seismic Amplitude Alpine Putu 2A 100 – 350 MMBOE1 current discovered resource CD5 GMT-1 Putu 2/2A GMT-2 • Putu and Stony Hill wells were drilled, cored and flow tested on the Stony Hill Narwhal trend in 2018 • Pros
Slide 30: Significant Future Exploration & Appraisal Planned
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 – ALASKA Nor
Slide 31: Compelling Alaska Plan Creates Significant Value for 10+ Years
Compelling Alaska Plan Creates Significant Value for 10+ Years ConocoPhillips’ Alaska Outlook1 • High-quality, low cost of supply source of growth for ConocoPhillips • Realized price similar to Brent 300 • Experienced operator with differential arctic capability • Existing infrastructure within a wo
Slide 32: Question & Answer Session
ConocoPhillips Question & Answer Session