ConocoPhillips · NYSE:COP
ConocoPhillips — Investor Day (November 2004)
34 slides from ConocoPhillips's investor day presentation, Nov 17, 2004
Slide 1: Bill Berry, EVP Exploration & Production
Bill Berry EVP, Exploration & Production
Slide 2: E&P Strategy
E&P Strategy • Grow production and reserves – Build new legacy positions – Stable OECD production • Optimize legacy business – Improving cost and production efficiency Deliver competitive returns 58
Slide 3: E&P Objectives
E&P Objectives • ROCE 1 Competitive with peers • Production growth 2 ~5% near-term, 3% long-term (2004-2006) (2006 +) • Production cost 3 $5.25/BOE • 5-year F&D cost $4.75/BOE • 5-year reserve replacement 100+ % 1 Adjusted for purchase accounting. 2 Includes equity affiliates & Syncrude, adjusted fo
Slide 4: 2004 Performance
2004 Performance Outlook Outlook (excl. LUKOIL) (incl. LUKOIL)1 Production (MMBOED) 2 1.56 1.60 Production cost ($/BOE) 3 5.25 TBD 5-year F&D cost ($/BOE) 4 5.10 - 5.30 4.60 - 4.95 Annual reserves replacement (%) ~100% 5 200%+ 6 1 Assumes 8.8% equity in LUKOIL for 4Q04 and 10% equity at YE 2004. 4 P
Slide 5: Improved Production Performance
Improved Production Performance 1,620 2003 Analyst Presentation vs. 2004 Outlook 1,600 1,600 Production (MBOED)1 LUKOIL2 1,580 40 1,560 18 18 1,540 1,560 1,560 1,520 1,542 1,500 2004 - Dispositions 2004 - prior yr Performance 2004E prior yr Analyst Analyst (adj disp) 1 Includes equity affiliates & S
Slide 6: Competitive Margins
Competitive Margins Q3 YTD 2004 E&P Net Income from Continuing Ops / BOE 1 $12 $10 $8 $/BOE $6 $4 $2 $0 XOM CVX COP 2 BP 3 RD 1 Uses Petroleum Finance Company 9-month earnings and production estimates, except where noted for COP & BP. 2 Adjusted for purchase accounting, see Table 12 in appendix for
Slide 7: Competitive ROCE
Competitive ROCE Q3 YTD 2004 E&P Net Income from Continuing Ops / E&P Capital Employed 1 35% 30% 25% ROCE 20% 15% 10% 5% 0% CVX XOM COP 2 RD BP 3 1 Uses annualized Petroleum Finance Company 9-month earnings estimates, except where noted for COP & BP. Capital employed estimates taken from 2003 compan
Slide 8: Knowledge Management and Technology
Knowledge Management and Technology Capital Discipline Knowledge Management & Technology Cost Production Discipline Enhancement 64
Slide 9: Maintaining Cost Discipline
Maintaining Cost Discipline Annual target 1 $5.50 Actual / forecast Production cost ($/BOE) $5.25 $5.25 Hold flat $5.00 $4.75 2003 2004 (Excludes LUKOIL) 1 Includes equity affiliates, adjusted for mid-cycle prices ($20 WTI, $3.25 HH), foreign exchange, and certain transportation costs. See Table 9 i
Slide 10: F&D - Competitive with Peers
F&D - Competitive with Peers $7.00 1999-2003 5-year avg. F&D costs 1 5-year avg. F&D costs ($/BOE) $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 RD TOT COP 2 CVX XOM BP 1 Peer data source: A.G. Edwards Upstream Matrix Performance Analysis Eighth Edition. 2 Pro forma, includes equity affiliates & acquisi
Slide 11: Growing Reserves
Growing Reserves 5 -year reserves replacement (%) 1 Excl. LUKOIL Incl. LUKOIL 250% ~225 % ~200 % LUKOIL 200% 150% Acquisitions & dispositions 3 100% 100% Without acquisitions & 50% dispositions 0% 2000 - 2004 2000 - 2004 F&D 5-year average 2 5.10 - 5.30 4.60 - 4.95 $/BOE 1 Pro forma, includes equity
Slide 12: 2004 Summary
2004 Summary Outlook Plan (excl. LUKOIL) 1 ROCE Competitive 29% 2 Production (MMBOED) 1.54 1.56 3 Production cost ($/BOE) 5.30 5.25 4 Annual reserves replacement (%) 100%+ ~100% 1 Q3 YTD, adjusted for purchase accounting, see Table 13 in appendix for non-GAAP reconciliation. 2 Includes equity affili
Slide 13: Delivering Production Commitments
Delivering Production Commitments (Excludes LUKOIL) 1.8 5% 5% Production (MMBOED) 1 5% 4% 1% 1.6 0% ‘03 Analyst Presentation 2 1.4 1.70 1.70 1.62 1.62 ‘04 Analyst 1.54 1.56 Presentation 1.2 1.0 2004 2005 2006 1 Includes equity affiliates & Syncrude. 2 Adjusted for dispositions. 69
Slide 14: North America
North America Selective investment in existing core Alaska Alaska - West Sak • Operator, WI 52.2% Canada • First oil 2004 • 6 MBOED (net) in 2005 • 13 MBOED (net) in 2006 1,000 Lower 48 Lower 48 - Magnolia Production (MBOED) 1 • Operator, WI 75.0% 800 • First oil November 2004 600 • 35 MBOED (net) i
Slide 15: North Sea
North Sea Selective investment in existing core Clair UK - Clair Greater Britannia Greater Ekofisk • First oil December 2004, WI 24.0% • 8 MBOED (net) in 2005 SNS • 14 MBOED (net) in 2006 600 UK - Britannia Satellites Production (MBOED) • First oil 2007. Operator, WI 79.0% 1 400 • Gov’t sanction rec
Slide 16: Stable OECD Base
Stable OECD Base 1,500 Production flat 2003 NCF ~$5 Billion 3 Production (MBOED) 1 Canada 1,000 UK Norway Lower 48 500 Alaska 0 OECD legacy business 2004 2005 2006 78% 75% 72% OECD % of E&P Production 2 1 Includes equity affiliate & Syncrude. 2 Excludes LUKOIL. 3 Excludes proceeds of asset dispositi
Slide 17: Venezuela
Venezuela Legacy resource base, close to market Petrozuata • WI 50.1% • 60 MBOED (net) in 2005 and 2006 #1 US Refiner Corocoro • Reduced turnaround frequency • 93% uptime in non-turnaround years Hamaca 200 Petrozuata Plataforma Deltana Production (MBOED) 1 Hamaca • Upgrader online 2004, WI 40.0% • 7
Slide 18: Asia Pacific
Asia Pacific Grow to new core area Australia - Bayu-Undan China • Operator, WI 56.7% Vietnam • 17-year LNG contract, first cargo 2006 Malaysia • 46 MBOED (net) in 2005 Indonesia • Ramping up to 90 MBOED net in 2009 Australia Indonesia - Belanak 300 • Operator, WI 40.0% • Online December 2004, ahead
Slide 19: Near-term Growth
Near-term Growth ~5% CAGR 2.0 1.70 1.62 Production (MMBOED) 1 1.56 Rest of World 1.5 Growth Asia Pacific Venezuela Canada 1.0 UK Legacy OECD Norway 0.5 Lower 48 Alaska 0.0 2004 2005 2006 1 Includes equity affiliates & Syncrude, excludes LUKOIL. 75
Slide 20: Russia & Caspian
Russia & Caspian Growing in resource-rich areas Caspian - Kashagan • Gross resources 9-13 BBOE Russia • WI 8.3% • Gross peak production of 1.2 MMBOED Caspian • Additional satellite discoveries Russia - Timan-Pechora • Largely undeveloped basin with significant discoveries • WI 30.0% 1 • YK field sta
Slide 21: Northern Timan-Pechora Joint Venture
Northern Timan-Pechora JV Northern Timan-Pechora Joint Venture • Significant resource potential Existing ConocoPhillips Joint Venture (Polar Lights) – SPE reserve 1.2 BBO gross 1 Varandey – Over 4 MM acres 160 km • JV production 60 MBOED YK net 2 2008 Development Area – YK production expected in 200
Slide 22: Middle East
Middle East Growing in resource-rich areas Qatar LNG & GTL • LNG HOA signed 2003 – WI 30.0%, North field Iraq – ~1 BCFD gross sales Libya Dubai Qatar • GTL SOI signed 2003 Libya • Negotiating Waha concession • Potential follow-on opportunities Iraq West Qurna-2 potential • Working with LUKOIL 78
Slide 23: Global Gas Supplier
Global Gas Supplier Existing LNG LNG opportunity Arctic gas Arctic gas Existing pipeline gas North Sea Canada Cook Inlet Lower 48 Qatar Plataforma Regas Deltana • Freeport S.E. Asia • Compass Port Brass Bayu-Undan • Long Beach Sunrise 79
Slide 24: Global Gas Supplier
Global Gas Supplier Existing LNG Regasification Arctic gas LNG opportunity Freeport Cook Arctic gas Onshore, Texas Inlet Canada North Sea Existing pipeline gas Lower 48 Deepwater port Regas Plataforma Qatar 1.5 BCFD (1.0 BCFD COP) Deltana • Freeport FERC approval June ‘04 • Compass Port S.E. Asia 1s
Slide 25: North America - Arctic Gas
North America - Arctic Gas Growing in resource-rich areas ANS Canada - Northern Gas Mackenzie Delta • Mackenzie Delta - net resources of 1.7 TCF • Initial net production of 225 MMCFD • Startup 2009-2010 • 2004 declaration of commerciality • Additional upside potential Alaska - ANS Gas • Largest leas
Slide 26: E&P Capital
E&P Capital 6 $0.3B $5.1B 5 $0.1B $0.2B $4.5B 4 $ Billions 3 2 1 0 2004 1 Exchange Cost New 2005E outlook rate increase opportunities 1 Cash capital expenditure, excludes capitalized interest, minority interest and acquisitions. See Table 15 in appendix for non-GAAP reconciliation. 82
Slide 27: Capital Allocation
Capital Allocation1 2005E - $5.1B 2006E - $5.2B Exploration Alaska Exploration Alaska Rest of World L48 Rest of World Russia L48 Russia Norway Asia Pacific Norway Venezuela Asia Pacific UK Canada UK Venezuela Canada Legacy OECD New growth Exploration 1 Cash capital expenditure, excludes capitalized
Slide 28: Technical Competencies Enable Growth
Technical Competencies Enable Growth 1 1 Production Production today Arctic in 10 years Knowledge Transfer Arctic Alaska - Russia Arctic Conventional Conventional Gas 20% Gas 23% 16% 29% Heavy Oil Heavy Oil Knowledge Transfer 9% Heavy Oil 4% Venezuela - Canada as lG 13% Conventional Oil g Ha u Lon 3
Slide 29: Growing in Resource-rich Areas
Growing in Resource-rich Areas Future growth 2,000 LUKOIL1 Production (MBOED) 2 1,500 Near-term growth areas 1,000 Legacy OECD production 500 0 2004 2005 2006 2007 1 ConocoPhillips share of LUKOIL production assumes 8.8% equity interest in 4Q04, and full year of 10% for 2005 and out years. 2 Include
Slide 30: Exploration & Business Development
Exploration & Business Development 1 1.7 Billion BOE Resource Capture 2003 & 2004 NPRA Mackenzie Delta Surmont Extension Aktote, Kairan Canada Foothills & SW Kashagan Plataforma Resource Deltana Su Tu Trang distribution Gumusut, Malikai Brass LNG Kebabangan Asia Africa Pacific Caspian Venezuela Expl
Slide 31: Malaysia Exploration Success
Malaysia Exploration Success Malaysia: Sabah Deepwater Kebabangan Malikai • Two discoveries and one acquisition * – Gumusut (2003) – Malikai (2004), *Kebabangan (2004) i / EE Z e ia un ys Gumusut • Successful Gumusut appraisal r B ala M 2004 • Significant remaining drilling Sabah potential Bandar •
Slide 32: 2005 Exploration Drilling
2005 Exploration Drilling Alaska 2 wildcat 2 appraisal North Sea Canada 3 wildcat 4 wildcat 6 near-field 2 appraisal 5 appraisal Kazakhstan China 1 appraisal 1 appraisal GOM 1 wildcat Nigeria Qatar Vietnam 2 DW wildcat 2 appraisal 2 wildcat Venezuela 3 OML wells 3 appraisal 1-2 appraisals Indonesia
Slide 33: Growth Pipeline
Growth Pipeline Sunrise Global Gas ANS Gas Qatar GTL Brass LNG Qatargas 3 LNG Suban II Mackenzie Delta Belanak Plataforma-Deltana Kashagan II Other International Bayu-Undan Kashagan I Kashagan Sat’s Su Tu Trang Hamaca III Corocoro I Timan-Pechora Corocoro II & III Hamaca Suban III LUKOIL JV Bohai Ph
Slide 34: Sustainable Growth
Sustainable Growth • 2004 objectives met • On track to deliver growth ‘05 & ’06 • Strong legacy portfolio • Well-defined growth projects • Increased access to resource-rich areas Investing for competitive returns 90