Nov. 11, 2014 - Jefferies€¦ · Jefferies 2014 Energy Conference Jeff Sheets, EVP, Finance and...

Jef fer ies 2014 Energy Conference

Jeff Sheets, EVP, Finance and CFO Nov. 11, 2014

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.

Cautionary Statement

http://www.conocophillips.com/nongaap

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

3

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.

Unmatched Position Today

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• Diversified asset base with scope and scale

• Multiple sources of growth

• Massive positions in key resource trends

• Growing portfolio with options and choices

• Relatively low execution risk

• Ability to leverage technology

• Increasing capital flexibility

• Significant financial strength

• Culture of safety and execution excellence

8.9 BBOE Reserves – YE 2013

43 BBOE Resources – YE 2013

1,473 MBOED Production1 – 3Q14

1Production represents continuing operations, excluding Libya.

Flexible and Resilient to Lower Prices

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• Performance on track for 3 to 5 percent volume and margin growth

• Production momentum from recent investments

• Continued focus on margins and returns

• Well positioned for current environment

• Major project completions increase capital flexibility

• 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.

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Capital Allocation Drives Profitable Growth

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.

Production1 Average Capital

Committed to Shareholder Returns Dividend Yield

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Dividend yield as of Oct. 31, 2014.

1Companies include: APA, APC, BG, BP, CVX, DVN, OXY, RDS, TOT, XOM.

• Attractive dividend is appropriate and remains key to our value proposition

• Highest priority use of cash

• Enhances capital discipline

• Predictable portion of shareholder returns

• Differential to independent peers

• Dividend increased 5.8 percent in July

Integrated Peers

Independent Peers

ConocoPhillips

Size of the bubble represents 2014-2017 average capital.

Low Margins High Margins Highest Margins

The Power of Portfolio: Margins, Decline Rates and Returns

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• Short-cycle cash flow

• Avoid over capitalizing

• Increases capital intensity of portfolio

• Medium-cycle cash flow

• Differing spend characteristics

• Conventional decline rates

• Front-end loaded capital

• Robust free cash flow once producing

• Lowers capital intensity of portfolio

Montney

Bakken

Permian Barnett

Niobrara

Duvernay

Eagle Ford

Anadarko

North American Unconventionals: Unmatched Portfolio and Capabilities • Great positions in proven and emerging plays

• Eagle Ford and Bakken sweet spots

• Exceptional growth in high-margin resource base

• Decades of drilling inventory with upside

• Leveraging scale and technology

~$5.5B

Production Lowest Cost of Supply Average

Capital

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Independent Companies Integrated Companies

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

Production

~$3B

Average Capital

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12014-2017 average.

Product Mix1

Eagle Ford: Premium Value from Best Wells in the Play Highest Oil Rates per Well1

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Industry-Leading Value2

1Texas Railroad Commission, 2013. 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


~$1B

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Production Average Capital Product Mix

1

12014-2017 average.

ConocoPhillips Acreage Minerals

Montana North Dakota

Nesson Anticline

VALLEY

DAWSON

WILLIAMS MOUNTRAIL

MCKENZIE

BILLINGS DUNN

STARK GOLDEN VALLEY

ROOSEVELT

MCCONE

Bakken: Advantaged Position in the Heart of the Trend Bakken Acreage Values by Area (NPV10 per Acre)1

Gro

ss O

pera

ted

Prod

uctio

n (M

BD)

Nesson Anticline: 2013 Top Oil Producers1

1Wood Mackenzie.

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Central Platform

Basin

New Mexico

Delaware Basin

ConocoPhillips Acreage

Texas

Midland Basin

Avalon

Bone Spring

Wolfcamp Layers

Permian Unconventional: Early Appraisal Results Encouraging

• Positions in Delaware and Midland basins

• Thick column of both shale and tight rock intervals

• Four rigs running in Delaware Basin

• ~30 horizontal wells planned for 2014

• Average early rates >1,000 BOED

Permian Appraisal Strategy

Central Platform

Basin Delaware Basin Midland Basin

East

Permian Basin Stratigraphy1

1West Texas Geological Society.

West

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APLNG

Qatar

AKLNG

Darwin LNG

Kenai

LNG: Positioned in High-Margin Markets

• Oil-linked contracts; robust cash flows

• Darwin and Qatar: High-liquids yield; premium markets

• Kenai: Completed six cargoes in 2014

• AKLNG: Pre-file request approved by FERC

• APLNG: Project on schedule

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Production Average Capital

~$1.5B

Planned First Production Dates

~$0.8B

Saleski

Surmont

Fort McMurray

Thornbury

Crow Lake

Narrows Lake

McMillian Lake

Foster Creek

Christina Lake

Oil Sands: Significant Growth from World Class SAGD Portfolio

• Second largest net SAGD producer

• Top quartile steam-to-oil ratio

• Executing 7 major projects and 2 optimization projects

• 2017+ net cash flow >$1 billion per year1

• Upside from 15 BBOE resource


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1Based on 2014 real prices of $100 Brent / $90 WTI / $70 WCS / $4 Henry Hub.

~$4B

Product Mix1

International Oil & Gas: Major Projects Driving Growth • Strong legacy positions

• 130 MBOED major projects growth expected by 2017

• 2013: Ekofisk South and Jasmine started on schedule

• 2014: Major project startups in Europe and Malaysia

• 2015-2017: 7 projects expected to come online


Libya

China

Malaysia

Indonesia

U.K. Norway

12014-2017 average.

17 Libya volumes excluded; ~50 MBOED upon resumption.


North American Conventional Oil: Protecting and Growing the Base • Development drilling and major projects in Alaska

• Infill drilling and waterflood expansion in the Permian

• Drilling and expanded waterflood recovery at Ursa

• Liquids-focused drilling in the Anadarko Basin

• Technology and EOR mitigate base decline

~$3.5B

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Product Mix1

ALASKA

12014-2017 average.


~$0.8B

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

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Oil 4% Production Average

Capital Product Mix1

12014-2017 average.

2014: Testing Global Portfolio

Angola Kwanza

Senegal

Australia

Gulf of Mexico

Greenland

Bangladesh

Malaysia

Azerbaijan

China Sichuan

Indonesia

Poland Baltic Basin

Colombia Middle

Magdalena

Norway Barents

Niobrara

Canol

UK & Norway

China Bohai

Delaware & Midland

Browse Bonaparte

Montney, Duvernay

Myanmar1

Chukchi

NPR-A

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Unconventional Deepwater

Other Conventional

2014 Drilling Activity

1Based on high bid award on Block AD-10.

Nova Scotia


Gila Tiber

TEXAS LOUISIANA

Appraising Gulf of Mexico Discoveries

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

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Shenandoah

Tiber • 18% working interest


• Multiple reservoir intervals

• Appraisal commenced in 2013; continues in 2014

Shenandoah • 30% working interest


• First appraisal well in 2013; >1,000 feet net pay

• Currently drilling appraisal well

West East

Senegal: Deepwater Exploration • 35% working interest

• FAN-1 discovered oil • Additional appraisal required to determine

commerciality

• Cretaceous pinch-out play

• Similar age as the recent Mauritanian discovery approximately 360 miles north-east

• SNE-1 well spud in 2Q 2014 and drilling recommenced in 4Q 2014

• Unconformity truncation play

• Additional stacked fan complexes on acreage provide upside potential

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The Gambia

Atlantic Ocean

SENEGAL

GUINEA-BISSAU GUINEA

Sangomar Deep

Sangomar

Rufisque

AFRICA


Key Messages

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• 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.

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Q&A

Nov. 11, 2014 - Jefferies€¦ · Jefferies 2014 Energy Conference Jeff Sheets, EVP, Finance and...

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