C o m p a ny O ve r v i e w
Updated Nov. 19, 2014.
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 or the industries or markets in which we operate or
participate in general. Actual outcomes and results may differ materially from what is expressed or
forecast in such forward-looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions that may prove to be
incorrect and are difficult to predict such as oil and gas prices; operational hazards and drilling
risks; potential failure to achieve, and potential delays in achieving expected reserves or
production levels from existing and future oil and gas development projects; unsuccessful
exploratory activities; unexpected cost increases or technical difficulties in constructing,
maintaining or modifying company facilities; international monetary conditions and exchange
controls; potential liability for remedial actions under existing or future environmental regulations
or from pending or future litigation; limited access to capital or significantly higher cost of capital
related to illiquidity or uncertainty in the domestic or international financial markets; general
domestic and international economic and political conditions, as well as changes in tax,
environmental and other laws applicable to ConocoPhillips’ business and other economic,
business, competitive and/or regulatory factors affecting ConocoPhillips’ business generally as set
forth in ConocoPhillips’ filings with the Securities and Exchange Commission (SEC). We caution you
not to place undue reliance on our forward-looking statements, which are only as of the date of
this presentation or as otherwise indicated, and we expressly disclaim any responsibility for
updating such information.
Use of non-GAAP financial information – This presentation includes non-GAAP financial measures,
which are included to help facilitate comparison of company operating performance across periods
and with peer companies. A reconciliation of these non-GAAP measures to the nearest
corresponding GAAP measure is available at www.conocophillips.com/nongaap.
Cautionary Note to U.S. Investors – The SEC permits oil and gas companies, in their filings with the
SEC, to disclose only proved, probable and possible reserves. We use the term "resource" in this
presentation that the SEC’s guidelines prohibit us from including in filings with the SEC. U.S.
investors are urged to consider closely the oil and gas disclosures in our Form 10-K and other
reports and filings with the SEC. Copies are available from the SEC and from the ConocoPhillips
website.
Our Value Proposition is Unchanged
• 3 – 5% production growth rate
• 3 – 5% margin growth rate
• Competitive dividend
• Ongoing priority to improve financial
returns
• Relentless focus on safety and
execution
Production and cash margin reflect compound annual growth rates.
Unless otherwise noted, this deck is based on 2014 real prices of $100 Brent / $90 WTI / $70 WCS / $4 Henry Hub.
3
Unmatched Position Today
1,473 MBOED Production1 – 3Q14
Liquids
North
American 25%
Gas
LNG +
International 18%
Gas
• Multiple sources of growth
57%
8.9 BBOE Reserves – YE 2013
Non-OECD
• Diversified asset base with scope and scale
OECD
17%
• Massive positions in key resource trends
• Growing portfolio with options and choices
• Relatively low execution risk
• Ability to leverage technology
83%
43 BBOE Resources – YE 2013
Gas
Liquids
27%
LNG
1Production
4
5%
68%
represents continuing operations, excluding Libya.
• Increasing capital flexibility
• Significant financial strength
• Culture of safety and execution excellence
Flexible and Resilient to Lower Prices
Foster Creek
• Performance on track for 3 to 5 percent volume and margin growth
• Production momentum from recent investments
• Continued focus on margins and returns
Exploration &
Appraisal
• Well positioned for current environment
• Major project completions increase capital flexibility
Exploration &
Appraisal
Major Projects
Major Projects
• Attractive dividend is appropriate
• On track for cash flow neutrality by 2017
• Significant balance sheet strength
Volume represents production from continuing operations, excluding Libya. Margin represents price normalized cash margins.
5
Development
Programs
Development
Programs
Base Maintenance
Base Maintenance
2013
2017
Capital Allocation Drives Profitable Growth
Production1
Average Capital
2.0
100%
1.8
90%
80%
Highest
Margin
45% of Capital
1.6
North American
Unconventional
1.4
70%
Oil Sands
1.0
International
Oil & Gas
0.8
50%
40%
High Margin
30%
50%
of Capital
20%
0.6
0.4
North American
Conventional Oil
0.2
10%
Low Margin
5%0%of Capital
MMBOED
60%
1.2
LNG
North American Gas
2014-2017
2013
2014
2015
2016
2017
-
Margin categories shown based on average cash margin (2014-2017) for the overall category. Assets categorized based on primary product stream. Equity affiliates shown based on proportional consolidation.
1Excludes Libya.
6
Committed to Shareholder Returns
Dividend Yield
• Attractive dividend is appropriate and remains
key to our value proposition
• Highest priority use of cash
3.9%
• Enhances capital discipline
• Predictable portion of shareholder returns
• Differential to independent peers
Integrated Peers
Independent Peers
ConocoPhillips
Dividend yield as of Oct. 31, 2014.
1Companies include: APA, APC, BG, BP, CVX, DVN, OXY, RDS, TOT, XOM.
7
• Dividend increased 5.8 percent in July
The Power of Portfolio: Margins, Decline Rates and Returns
Low Margins
High Margins
High
North American
Unconventionals
Medium
North American
Conventional Oil
• Short-cycle cash flow
• Avoid over capitalizing
• Increases capital intensity of portfolio
• Medium-cycle cash flow
International
Oil & Gas
• Differing spend characteristics
North American Gas
Oil Sands
Low
Full-Cycle Project Returns
Highest Margins
LNG
• Conventional decline rates
• Front-end loaded capital
• Robust free cash flow once producing
• Lowers capital intensity of portfolio
Lower Decline Rate
Size of the bubble represents 2014-2017 average capital.
8
Higher Decline Rate
North American Unconventionals: Unmatched Portfolio and Capabilities
Montney
• Great positions in proven and emerging plays
Duvernay
• Eagle Ford and Bakken sweet spots
Bakken
• Exceptional growth in high-margin resource base
Niobrara
Anadarko
Permian
• Decades of drilling inventory with upside
Barnett
Eagle Ford
Average
Capital
Average Wellhead Breakeven Price
($/BBL)
Production
400
~$5.5B
350
300
MBOED
250
200
150
100
50
0
2014-2017
9
1
• Leveraging scale and technology
2013
2017
70
65
Lowest Cost of Supply
Independent Companies
Integrated Companies
60
55
50
45
40
35
30
25
1Rystad
North American Shale Report 4Q 2013.
Eagle Ford: Significant Resource Increase
• ~220 M net acres; acreage capture complete
• 96% average operated working interest
• 1.8 BBOE to 2.5 BBOE net EUR increase
• >3,000 identified drilling locations
• Outlook based on 12-rig program
• $20-25/BOE full-cycle F&D cost
100%
Average
Capital
Production
Product Mix
250
90%
Gas
21%
80%
200
70%
MBOED
60%
50%
40%
~$3B
30%
150
100
Development Program
50
20%
1
NGL
20%
Oil
59%
10%
0
0%
2014-2017
10
2013
2017
12014-2017
average.
Eagle Ford: Premium Value from Best Wells in the Play
250
Highest Oil Rates per Well1
60
50
NPV10 per Acre ($M)
Gross Operated Production (BPD)
200
150
100
50
0
1Texas
11
Railroad Commission, 2013.
Industry-Leading Value2
40
30
20
10
Competitors
0
Competitors
2Wood
Mackenzie.
Bakken: High-Margin Growth
• ~620 M net acres; mostly HBP or mineral fee
• 45% average operated working interest
• 600 MMBOE net EUR
• >1,800 identified gross drilling locations
• Outlook based on average 10-rig program
• $20-25/BOE full-cycle F&D cost
100%
Average
Capital
Production
75
90%
80%
NGL
6%
70%
~$1B
MBOED
60%
50%
40%
30%
50
Gas
11%
25
Oil
83%
20%
10%
0
0%
2014-2017
12
Product Mix
1
2013
2017
12014-2017
average.
Bakken: Advantaged Position in the Heart of the Trend
Bakken Acreage Values by Area (NPV10 per
Nesson Anticline
Anticline
Parshall-Sanish
Fort Berthold
Williams Core
West Nesson
Northern Mountrail
Elm Coulee
Dunn County
Williams Perimeter
West McKenzie
North Williston
Southern Fringe
Gross Operated Production
(MBD)
WILLIAMS
ROOSEVELT
MOUNTRAIL
Nesson
Anticline
DAWSON
BILLINGS
Bakken
Three Forks
5,000
10,000
15,000
20,000
25,000
30,000
35,000
GOLDEN
VALLEY
40,000
ConocoPhillips Acreage
Nesson Anticline: 2013 Top Oil Producers1
15
10
Mackenzie.
North Dakota
MCKENZIE
20
5
0
13
VALLEY
MCCONE
0
1Wood
Montana
Acre)1
Newfield
Murex
SM Energy
EOG Resources
Continental
XTO Energy
Competitors
Resources
Petro-Hunt
QEP Energy
ConocoPhillips
Hess
Minerals
DUNN
STARK
Permian Unconventional: Early Appraisal Results Encouraging
New Mexico
Texas
• Positions in Delaware and Midland basins
Central
Platform
Basin
Delaware
Basin
• Thick column of both shale and tight rock intervals
Midland Basin
• Four rigs running in Delaware Basin
• ~30 horizontal wells planned for 2014
• Average early rates >1,000 BOED
ConocoPhillips Acreage
Permian Basin Stratigraphy1
West
Permian Appraisal Strategy
East
Avalon
Bone Spring
Wolfcamp Layers
Delaware Basin
1West
14
Texas Geological Society.
Central
Platform
Basin
Midland Basin
LNG: Positioned in High-Margin Markets
AKLNG
• Oil-linked contracts; robust cash flows
• Darwin and Qatar: High-liquids yield; premium markets
Kenai
• Kenai: Completed six cargoes in 2014
Qatar
Darwin LNG
APLNG
• AKLNG: Pre-file request approved by FERC
• APLNG: Project on schedule
Average
Capital
Production
250
2017+
2017+
200
MBOED
~$1.5B
150
100
50
0
2014-2017
15
2013
2017
Oil Sands: Significant Growth from World Class SAGD Portfolio
Saleski
Fort McMurray
• Second largest net SAGD producer
Surmont
Thornbury
Crow Lake
• Top quartile steam-to-oil ratio
Narrows
Lake
• Executing 7 major projects and 2 optimization projects
Christina
Lake
McMillian Lake
• 2017+ net cash flow >$1 billion per year1
Foster Creek
• Upside from 15 BBOE resource
ConocoPhillips Acreage
Average
Capital
Production
Planned First Production Dates
250
200
MBOED
~$0.8B
150
100
50
0
2014-2017
16
2013
2017
1Based
on 2014 real prices of $100 Brent / $90 WTI / $70 WCS / $4 Henry Hub.
International Oil & Gas: Major Projects Driving Growth
Norway
U.K.
• Strong legacy positions
• 130 MBOED major projects growth expected by 2017
Libya
China
Malaysia
• 2013: Ekofisk South and Jasmine started on schedule
• 2014: Major project startups in Europe and Malaysia
• 2015-2017: 7 projects expected to come online
Indonesia
• $20-25/BOE full-cycle F&D cost
Average
Capital
Production
Product Mix
1
400
Gas
45%
MBOED
300
~$4B
Oil
52%
200
100
0
2014-2017
Libya volumes excluded; ~50 MBOED upon resumption.
17
2013
2017
NGL
3%
12014-2017
average.
North American Conventional Oil: Protecting and Growing the Base
• Development drilling and major projects in Alaska
• Infill drilling and waterflood expansion in the Permian
ALASKA
• Drilling and expanded waterflood recovery at Ursa
• Liquids-focused drilling in the Anadarko Basin
• Technology and EOR mitigate base decline
Average
Capital
Production
Product Mix
350
Gas
20%
MBOED
300
250
NGL
8%
200
150
Oil
72%
100
~$3.5B
1
50
0
2014-2017
18
2013
2017
12014-2017
average.
North American Gas: Low-Cost Option on Significant Resource Base
• Capital program focused on liquids-rich gas
• ~$1.10/MCF lifting cost
• 6.5 BBOE total resource
• >15,000 identified well locations
• ~$1.5 billion annual cash from operations at $4/MCF gas
Average
Capital
Production
Product Mix
1
Oil 4%
400
NGL
18%
MBOED
300
200
Gas
78%
100
~$0.8B
0
2014-2017
19
2013
2017
12014-2017
average.
2014: Testing Global Portfolio
Chukchi
NPR-A
Norway
Barents
Greenland
Canol
Montney,
Duvernay
UK & Norway
Niobrara
Delaware &
Midland
Nova Scotia
China
Sichuan
Gulf of Mexico
Bangladesh
Myanmar1
Colombia
Middle
Magdalena
Angola
Kwanza
Unconventional
Deepwater
Other Conventional
1Based
20
on high bid award on Block AD-10.
China
Bohai
Azerbaijan
Senegal
2014 Drilling Activity
Poland
Baltic Basin
Malaysia
Indonesia
Bonaparte
Browse
Australia
Appraising Gulf of Mexico Discoveries
TEXAS
Tiber
• 18% working interest
• Lower Tertiary oil discovery in 2009
• Multiple reservoir intervals
• Appraisal commenced in 2013; continues in 2014
LOUISIANA
Gila Tiber
Shenandoah
ConocoPhillips Acreage
Gila
• 20% working interest in discovery well
• Lower Tertiary oil discovery in 2013
• Testing deeper, unpenetrated zones in 2014
• Adjacent to ConocoPhillips 100% working interest
acreage
21
Shenandoah
• 30% working interest
• Lower Tertiary oil discovery in 2009
• First appraisal well in 2013; >1,000 feet net pay
• Currently drilling appraisal well
Senegal: Deepwater Exploration
• 35% working interest
Rufisque
AFRICA
SENEGAL
• FAN-1 discovered oil
• Additional appraisal required to determine
commerciality
Sangomar
The Gambia
Atlantic Ocean
ConocoPhillips Acreage
West
• Cretaceous pinch-out play
Sangomar
Deep
GUINEA-BISSAU
GUINEA
East
• SNE-1 discovered oil
• Additional appraisal required to determine
commerciality
• Unconformity truncation play
• Additional stacked fan complexes on acreage
provide upside potential
• Option to become operator if the project
advances to development
22
Key Messages
• Value proposition unchanged
• Performance on track to deliver 3 to 5 percent volume and margin growth
• Well positioned for current environment; significant capital flexibility
• Strong momentum going into 2015
• Dividend is appropriate
• Cash flow neutrality is a priority
• Significant balance sheet strength
Volume represents production from continuing operations, excluding Libya. Margin represents price normalized cash margins.
23
Appendix
24
Annualized Net Income Sensitivities
• Crude
• Brent/ANS: $80-90MM change for $1/BBL change
• WTI: $35-40MM change for $1/BBL change
• WCS¹: $30-40MM change for $1/BBL change
• North American NGL
• Representative blend: $10-15MM change for $1/BBL change
• Natural Gas
• Henry Hub: $100-110MM change for $0.25/MCF change
• International gas: $10-15MM change for $0.25/MCF change
¹WCS price used for the sensitivity represents a volumetric weighted average of Shorcan and Net Energy indices.
The published sensitivities above reflect annual estimates and may not apply to quarterly results due to lift timing/product sales differences, significant turnaround activity or other unforeseen
portfolio shifts in production. Additionally, the above sensitivities apply to the current range of commodity price fluctuations, but may not apply to significant and unexpected increases or decreases.
25
Meeting Our Growth Targets
~4%
Full-Year Guidance on
Track
PRODUCTION
GROWTH1
Actual
Actual
3Q14 vs. 4Q14 Drivers
Actual
• Major turnarounds
completed in 3Q14
• Major project ramp
• Value-driven ethane
rejection
Continuing Operations
(Excluding Libya)
1 Four
26
1Q14
2Q14
3Q14
4Q14
FY14
1,530
1,556
1,473
1,545 – 1,575
1,525 – 1,535
percent reflects expected year-over-year production growth from continuing operations, excluding Libya.
Margin Class Categorization
North American
Unconventionals
•
•
•
•
•
•
•
Bakken
Barnett
Canada Unconventional
Eagle Ford
Niobrara
Permian
Other
LNG
•
•
•
•
•
•
•
AKLNG
APLNG
Bayu Undan
Kenai
Poseidon
Qatar
Other
Oil Sands
• Christina Lake
• Foster Creek
• Surmont
List is representative of assets in each margin class, not all assets are listed.
27
International
Oil & Gas
•
•
•
•
•
China
Indonesia
Malaysia
Norway
U.K.
North American
Conventional Oil
•
•
•
•
•
Alaska North Slope
Anadarko
Gulf of Mexico
Permian
Other
North American
Gas
•
•
•
•
Lobo
San Juan
Western Canada
Other
Abbreviations and Glossary
• 4-D: four dimensional
• MM: million
• ANS: Alaska North Slope
• MBOED: thousands of barrels of oil equivalent per day
• Average Cash Margin (2014-2017): Average cash margin represents the
projected cash flow from operating activities, excluding working capital, divided
by estimated production. Estimated cash flow is based on $100 Brent / $90 WTI
/ $70 WCS / $4 Henry Hub
• MMBOED: millions of barrels of oil equivalent per day
• B: billion
• MTPA: millions of tonnes per annum
• BBL: barrel
• OECD: Organisation for Economic Co-operation and Development
• BBOE: billions of barrels of oil equivalent
• Organic RRR: organic reserve replacement ratio excludes the impact of purchases and
• BOE: barrels of oil equivalent
• CAGR: compound annual growth rate
• CTD: coiled tubing drilling
• EUR: estimated ultimate recovery
sales
• PSC: production sharing contract
• ROCE: return on capital employed
• R/P: reserve to production ratio
• DD&A: depreciation, depletion and amortization
• SAGD: steam-assisted gravity drainage
• F&D: finding and development
• SG&A: selling, general and administrative expenses
• GAAP: generally accepted accounting principles
• SOR: steam-to-oil ratio
• GOM: Gulf of Mexico
• TSR: total shareholder return
• HBP: held by production
• HH: Henry Hub
• LNG: liquefied natural gas
• M: thousand
28
• MMBOE: millions of barrels of oil equivalent
• WCS: Western Canada Select
• WI: working interest
• WTI: West Texas Intermediate
Investor Information
Stock Ticker
Investor Relations Contacts:
NYSE: COP
Telephone: +1 212.207.1996
Website: www.conocophillips.com/investor
Ellen DeSanctis: [email protected]
Headquarters
ConocoPhillips
600 N. Dairy Ashford Road
Houston, Texas 77079
New York Investor Relations Office
ConocoPhillips
375 Park Avenue, Suite 3702
New York, New York 10152
29
Sidney J. Bassett: [email protected]
Vladimir R. dela Cruz: [email protected]
Mary Ann Cacace: [email protected]