Company Overview Updated Nov. 19, 2014.
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]
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