ConocoPhillips · NYSE:COP
ConocoPhillips — Investor Day (March 2008)
23 slides from ConocoPhillips's investor day presentation, Mar 12, 2008
Slide 1: 2008 Analyst Meeting
Jim Mulva Chairman & CEO 2008 Analyst Meeting March 12, 2008
Slide 2: Cautionary Statement
CAUTIONARY CAUTIONARY STATEMENT 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, as amended and Section 21
Slide 3: Business Environment
Business Business Environment Environment Shifts in energy demand Strong growth in developing regions Moderating growth in industrialized economies Heightened resource nationalism / competition Access constrained by NOC* participation / ownership Increased government take Intense competition for acc
Slide 4: Oil Supply Challenge
Oil Oil Supply Supply Challenge Challenge MMBPD 140 120 Projected global oil demand 100 Required capacity addition 19 MMBPD 80 22% of 2010 demand 59 MMBPD 57% of 2020 demand 88 60 Observed decline 40 Natural decline 20 Existing production 0 2005 2010 2015 2020 2025 2030 Significant capacity addition
Slide 5: Cost of New Supply Drives Higher Prices
Cost Cost of of New New Supply Supply Drives Drives Higher Higher Prices Prices Transportation Fuels Supply Curve – 2020 130 120 Biofuels US (Corn Based) 110 100 Renewable Total Production - $/BBL 90 Power Oil 80 Sands Conventional (Mining) Power 70 Arctic 60 CtL Venezuelan GtL 50 Heavy Oil EOR Oil
Slide 6: U.S. Natural Gas Supply Challenge
U.S. U.S. Natural Natural Gas Gas Supply Supply Challenge Challenge 26 71.2 24 65.8 2 BCFD Alaskan production 3% of 2010 demand 22 LNG imports 60.3 BCFD TCF 12 BCFD Net pipeline imports 18% of 2030 demand 20 54.8 Non-associated unconventional Underlying 18 supply 49.3 Base production (all sources) 1
Slide 7: Global Refining Capacity Utilization
Global Global Refining Refining Capacity Capacity Utilization Utilization 100% 95% 90% Total capacity 85% % Utilization 80% 75% Distillation capacity 70% 65% 60% 1970 1975 1980 1985 1990 1995 2000 2005 2010E Refining utilization remains high Source: Morgan Stanley Research, Refining & Marketing; Feb
Slide 8: Positioned to Create Shareholder Value
Positioned Positioned to to Create Create Shareholder Shareholder Value Value >50 BBOE captured resources* in portfolio Leading integrated position in North America Second largest natural gas producer Second largest refiner Largest position in Canadian oil sands Largest oil and gas producer in Alask
Slide 9: Strategic Objectives
Strategic Strategic Objectives Objectives Target Cash and Income per BOE Competitive with peers ROCE Improve relative position Debt ratio 20% - 25% 65 - 70% E&P 20 - 25% R&M Portfolio balance1 5% in Midstream, Chemicals, Alternatives and Renewables Production2 ~2% long-term growth 5-year reserve rep
Slide 10: 2008 Total Company Cash Flow
2008 2008 Total Total Company Company Cash Cash Flow Flow Sources of Cash $28.2 B total cash Asset Sales Disciplined capital program $3.8 B Competitive shareholder returns CFOA* $24.4 B 3% 18% Uses of Cash 79% Share Repurchases $10.0 B Capital Program $15.3 B Dividends $2.9 B 2008 E&P R&M Other *Est
Slide 11: Exploration & Production
Exploration Exploration & & Production Production Safe, reliable, and environmentally responsible operations Sustainable OECD base Strong project portfolio / global growth opportunities Disciplined capital program Long-term production growth E&P Assets and Operations Improved exploration portfolio G
Slide 12: Refining & Marketing
Refining Refining & & Marketing Marketing Safe, reliable, and environmentally responsible operations Strong North American assets Enhanced E&P integration Investment in conversion capability / margin expansion R&M Assets and Operations Continued delivery on operational excellence and cost management
Slide 13: Commercially-Enabled Opportunities
Commercially-Enabled Commercially-Enabled Opportunities Opportunities Employ diverse strategies to grow income Expansion of existing business Increase storage and transport capacity Maintain global reach Capture opportunity from volatile market environments Financial contribution Improves total comp
Slide 14: EnCana Business Ventures
EnCana EnCana Business Business Ventures Ventures Integrated North American heavy Foster Creek / Christina Lake oil business Wood River / Borger World-class projects in Upstream and Downstream Best-in-class bitumen assets ~44.5 B BBL total bitumen in place* ~11.5 B BBL bitumen in place exploitable t
Slide 15: LUKOIL Equity Ownership
LUKOIL LUKOIL Equity Equity Ownership Ownership COP LUKOIL Segment Net Income ($MM) 20% ownership interest $2,000 1,818 Jointly pursuing global opportunities $1,500 1,425 JV partner in Timan-Pechora / YK project $1,000 Iraq / West Qurna 714 $500 Other resource access opportunities 74 $0 2004 2005 20
Slide 16: DCP Midstream & CPChem Joint Ventures
DCP DCP Midstream Midstream & & CPChem CPChem Joint Joint Ventures Ventures 50 / 50 JV with Spectra Energy 50 / 50 JV with Chevron Leading NGL producer Middle East growth opportunities DCP Midstream Partners World-scale facilities Complements our upstream and downstream positions
Slide 17: HSE Excellence Process
HSE HSE Excellence Excellence Process Process 2.0 Contractors Employees Total Recordable Rate 1.6 1.2 0.8 0.4 0.0 2002 2003 2004 2005 2006 2007 Continued improvement in safety performance Strong emphasis on process safety Prevent safety, environmental and process incidents Pursuing OSHA VPP certific
Slide 18: Establishing Public Policy Leadership
Establishing Establishing Public Public Policy Policy Leadership Leadership Engaged in development of climate change policy Support a coherent, mandatory national framework Signal for cost of carbon Paced to match technology Equitable across sectors Leverage our skills to drive emerging technology C
Slide 19: Addressing the Human Resources Challenge
Addressing Addressing the the Human Human Resources Resources Challenge Challenge Critical Skills Age Profile Professional Hiring 30% 2500 2007 Experienced 2004 University 25% % of Total Workforce 2000 20% 1500 15% 1000 10% 5% 500 0% 0 <25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61+ 2005 2006 2007
Slide 20: Leveraging Technology to Unlock Value
Leveraging Leveraging Technology Technology to to Unlock Unlock Value Value al on ~$400M in technology expenditures ti en nv Co Produced Advancing key enabling technologies Tight gas Low Stranded Proprietary 3D reservoir imaging / ZenSeisTM l perm oil na gas ti o Heavy Steam-assisted gravity drainag
Slide 21: Continuing Financial Optimization
Continuing Continuing Financial Financial Optimization Optimization Competitive income per BOE Leading cash contribution per BOE Competitive distributions Aggressive share repurchase program Enhanced per share metrics Business environment requires complementary financial plan
Slide 22: Total Shareholder Return
Total Total Shareholder Shareholder Return Return Three-Year Annual Avg. Five-Year Annual Avg. Ten-Year Annual Avg. Jan 1, 2005 – Dec 31, 2007 Jan 1, 2003 – Dec 31, 2007 Jan 1, 1998 – Dec 31, 2007 29.4% 32.6% 16.7% 8.6% 12.8% 5.9% 0. 0% 0. 0% 0. 0% * Peer Group S&P 500 Peer Group Avg. $1,000 investe
Slide 23: Creating Shareholder Value
Creating Creating Shareholder Shareholder Value Value Capital Operating Discipline & Financial Shareholder Excellence Project Optimization Value Execution Shareholder Value Portfolio of High-Quality Assets Strong portfolio enables long-term opportunities Operational excellence creates leading perfor