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Goldman Sachs Energy Conference – ConocoPhillips

ConocoPhillips · Jan 5, 2017 · 74 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Goldman Sachs Energy Conference – ConocoPhillips – slide 1
    Goldman Sachs Energy Conference JAN. 5, 2017
  2. Goldman Sachs Energy Conference – ConocoPhillips – slide 2
    Agenda Value Proposition for a Disciplined, Strategic Flexibility Returns-Focused E&P Matt Fox Ryan Lance EVP, Strategy, Exploration & Technology Chairman & CEO Financial Priorities Closing Comments Don Wallette Ryan Lance…
  3. Goldman Sachs Energy Conference – ConocoPhillips – slide 3
    Value Proposition for a Disciplined, Returns-Focused E&P Ryan Lance Chairman & CEO
  4. Goldman Sachs Energy Conference – ConocoPhillips – slide 4
    The Question Were Going To Address Today Can an E&P company create value through price cycles with a disciplined, returns-focused value proposition 140 Brent Price (/BBL) Our Answer, Yes. Starts with a view that prices will be…
  5. Goldman Sachs Energy Conference – ConocoPhillips – slide 5
    Value Proposition on a Page Clear Priorities, No Waiting Value Proposition Principles Cash Allocation Priorities Acceleration Actions Invest capital to maintain 3B share repurchase Strong 1st production and pay existing…
  6. Goldman Sachs Energy Conference – ConocoPhillips – slide 6
    Strategy on a Page Disciplined and Resilient, Yet Flexible 60/BBL Value-based cash flow allocation Maintain discipline on costs and capital Strong balance sheet Our goal is to deliver 50-60/BBL Cash flow allocations balanced…
  7. Goldman Sachs Energy Conference – ConocoPhillips – slide 7
    The Case For ConocoPhillips Transformation Acceleration Differentiation Reduced breakeven price 5-8B asset sale program Focused on free cash flow from 75/BBL…
  8. Goldman Sachs Energy Conference – ConocoPhillips – slide 8
    What Youll Hear Today Don Wallette Low breakeven price drives free cash flow generation Advantaged capital intensity versus peers Financial Priorities Viable plan for debt reduction Priority on distributions via dividend and…
  9. Goldman Sachs Energy Conference – ConocoPhillips – slide 9
    Financial Priorities Don Wallette EVP, Finance, Commercial & CFO
  10. Goldman Sachs Energy Conference – ConocoPhillips – slide 10
    Disciplined, Returns-Focused Strategy Tied to Financial Priorities Generate Generate free cash flow Low breakeven price Free Cash Flow Low capital intensity Differential upside as prices recover Maintain a Strong Maintain a…
  11. Goldman Sachs Energy Conference – ConocoPhillips – slide 11
    In a Commodity Business, a Low Breakeven Price Wins…
  12. Goldman Sachs Energy Conference – ConocoPhillips – slide 12
    Low Capital Intensity is a CFOs Best Friend Replacing Base Decline Relative Capital Intensity Generate Free Cash Flow ADVANTAGE FROM LOW CAPITAL…
  13. Goldman Sachs Energy Conference – ConocoPhillips – slide 13
    You Call It Torque; We Call It Peer-Leading Upside Generate Free 2016E CFO vs. 2017E CFO Consensus 2016E vs. 2017E Consensus Cash Flow 200% 10% GREATEST UPSIDE TOP-TIER IMPROVEMENT 180% TO PRICE RECOVERY ROCE & DEBT-ADJUSTED…
  14. Goldman Sachs Energy Conference – ConocoPhillips – slide 14
    A Strong Balance Sheet is NOT Optional Generate Free Strong balance sheet is a competitive advantage in a cyclical Cash Flow business Target A credit rating provides sufficient debt capacity for delivering strategy through cycles…
  15. Goldman Sachs Energy Conference – ConocoPhillips – slide 15
    We Have a Sensible, Executable Plan to Achieve Debt Target 5-Year Maturity Schedule Total Balance Sheet Debt Generate Free 7B Cash Flow 5 TARGET ACHIEVED DEBT REDUCTION WITHIN 3 YEARS Maintain 4 a Strong Flexible Balance…
  16. Goldman Sachs Energy Conference – ConocoPhillips – slide 16
    Our Dividend is Set at a Competitive Level That Can Grow Generate Yield of Dividend-Paying U.S. E&Ps Free Cash Flow Current dividend can withstand low prices, with room for annual increases S&P 500 Maintain Targeting annual…
  17. Goldman Sachs Energy Conference – ConocoPhillips – slide 17
    Buybacks Reinforce Discipline and Boost Payout Generate 2017-2019 Cash Sources and Uses Free Cash Flow Demonstrates a commitment to distinctive distributions CFO 50/BBL Choices Brent Boosts current distribution Maintain a…
  18. Goldman Sachs Energy Conference – ConocoPhillips – slide 18
    Returns Matter. A Lot. Generate Absolute Improvement in ROCE Free Consensus 2016 to 2017 Cash Flow Differential improvement in returns 7% as prices recover 7% Maintain 6% Significant, sustainable cost a Strong Balance 5%…
  19. Goldman Sachs Energy Conference – ConocoPhillips – slide 19
    Financial Priorities Make ConocoPhillips Truly Distinctive Managing the business to generate free cash flow Low breakeven price Low capital intensity Significant upside as prices recover Viable plan to strengthen balance sheet…
  20. Goldman Sachs Energy Conference – ConocoPhillips – slide 20
    Portfolio Choices Al Hirshberg EVP, Production, Drilling & Projects
  21. Goldman Sachs Energy Conference – ConocoPhillips – slide 21
    Not That Long Ago We Were in 28 Places Canadian Arctic Greenland Chukchi Beaufort Alaska Russia Norway U.K. Canada Newfoundland Kazakhstan Poland Nova Scotia U.S. Lower 48 Libya Algeria China Gulf of Mexico Qatar…
  22. Goldman Sachs Energy Conference – ConocoPhillips – slide 22
    Now We Are in About Half the Places Alaska Norway U.K. Canada U.S. Lower 48 Libya 16B IN Gulf of Mexico Qatar China PROCEEDS FROM 2012-2016 ASSET SALES Malaysia Brunei Colombia 50% Indonesia REDUCTION Timor-Leste…
  23. Goldman Sachs Energy Conference – ConocoPhillips – slide 23
    Asset Sale Program is Focused on Improving Mix and Margins Portfolio Product Mix Accelerating annual 1-2B of asset sales NA Gas NA Gas NA Gas Strategic decision to drive returns improvement through product mix shift Intl Gas…
  24. Goldman Sachs Energy Conference – ConocoPhillips – slide 24
    Growing Where Were Planted More Low Cost of Supply…
  25. Goldman Sachs Energy Conference – ConocoPhillips – slide 25
    Fully Burdened Cost of Supply: Everything Including the Kitchen Sink Fully Burdened Cost of Supply by Component (/BBL) Cost of supply represents the flat, real commodity price that yields an after-tax return of 10% on a point-…
  26. Goldman Sachs Energy Conference – ConocoPhillips – slide 26
    Match This: 18 BBOE…
  27. Goldman Sachs Energy Conference – ConocoPhillips – slide 27
    Power of Diversification: Three Asset Classes, Each Serves a Role Stay-Flat Capital 18 BBOE Resources Per Year Production Over…
  28. Goldman Sachs Energy Conference – ConocoPhillips – slide 28
    LNG and Oil Sands: Big and Stable with Price and Technology Upside Greater Sunrise Barossa Fort Caldita McMurray Bayu-Undan North Field Poseidon Darwin Surmont LNG GladstoneAPLNG Qatargas 3 LNG Ras Laffan Australia Christina…
  29. Goldman Sachs Energy Conference – ConocoPhillips – slide 29
    APLNG: Project Exceeding Expectations; All Aboard Train 2 APLNG APLNG Net Production Train 1 performance exceeding design (MBOED) nameplate capacity Australia 100 Train 2 first production achieved in 80 September 2016 60 20-year…
  30. Goldman Sachs Energy Conference – ConocoPhillips – slide 30
    Darwin LNG: Strong Performance and Bright Future Multiyear improvement in production capacity through optimization and minor debottlenecking DARWIN LNG Improved uptime with no additional capital expense BACKFILL Maximizing capacity…
  31. Goldman Sachs Energy Conference – ConocoPhillips – slide 31
    Surmont: Tomorrows Legacy Asset is Now Ramping Up Megaproject Complete Ramping Up Production Flow Control Devices (FCD) Accelerating Production 80 0.3 Cum. Production (MMBOE) Net Production (MBOED) 100% INCREASE 60 CUM. OIL…
  32. Goldman Sachs Energy Conference – ConocoPhillips – slide 32
    Surmont: Picture This Reducing Footprint & Cost 33
  33. Goldman Sachs Energy Conference – ConocoPhillips – slide 33
    Oil Sands Technology: Unlocking 13 BBOE Resource with 50/BBL CoS 2016 - 2017 Non-Condensable Gas (NCG) Co-Injection Pilot Efficient Steam Generation and Distribution Non-Reservoir Reduce heat losses Overburden to overburden Steam…
  34. Goldman Sachs Energy Conference – ConocoPhillips – slide 34
    Power of Diversification: Predictable LNG and Oil Sands Portfolio 18 BBOE Resources Production Over…
  35. Goldman Sachs Energy Conference – ConocoPhillips – slide 35
    Conventional: The Good Great Stuff No One Asks About Conventional Resources 50 6 BBOE…
  36. Goldman Sachs Energy Conference – ConocoPhillips – slide 36
    New Conventional Projects: Low-Risk, High-Value, Weve Got It Alaska CD5 / DS-2S 1H NEWS / GMT1 GMT2 Europe Ekofisk South Clair Ridge Aasta Hansteen Tor II 130 MBOED INCREMENTAL PRODUCTION APME Bohai / Gumusut Malikai Bohai 3 Suban…
  37. Goldman Sachs Energy Conference – ConocoPhillips – slide 37
    Alaska: 40% Cost of Supply Reduction Spurs New Activity CD5 Project Cost of Supply1 (/BBL) Shifting to performance-based contracts Improving operating efficiency through integrated planning and execution 66 Collaborating with…
  38. Goldman Sachs Energy Conference – ConocoPhillips – slide 38
    Norway: 50% Cost of Supply Reduction on Future Projects Future Projects Cost of Supply1 (/BBL) Minimum facility concept significantly reduces cost 50% and improves project economics DECREASE IN FULL-CYCLE COST OF SUPPLY1…
  39. Goldman Sachs Energy Conference – ConocoPhillips – slide 39
    China: 50% Cost of Supply Reduction Through Continuous Improvement Bohai WHP-J Project Cost of Supply1 (/BBL) 50% DECREASE Capturing structural and cyclical cost savings IN FULL-CYCLE COST OF SUPPLY1 Fit-for-purpose project…
  40. Goldman Sachs Energy Conference – ConocoPhillips – slide 40
    Power of Diversification: Low-Risk Conventional Portfolio Production Over Time 18 BBOE…
  41. Goldman Sachs Energy Conference – ConocoPhillips – slide 41
    Unconventional: Top-Tier Resource Base and Growing Unconventional Resources 50 Cost of Supply /BBL 40 Montney 30 Falher- Wilrich 20 10 Bakken 0 00 5 5000 10 10000 15 15000 BBOE Resource Unconventional LNG, Oil Sands…
  42. Goldman Sachs Energy Conference – ConocoPhillips – slide 42
    Unconventional: This Will Surprise You NPV of Unconventional Plays vs. Competitors1 Montney ConocoPhillips Falher- Wilrich Anadarko EOG Resources Bakken Devon Energy ExxonMobil Pioneer Natural Resources Niobrara Chevron…
  43. Goldman Sachs Energy Conference – ConocoPhillips – slide 43
    Eagle Ford: Match and Raise Our Eagle Ford is Best in Class Significant Remaining Resource with Low Cost of Supply ConocoPhillips Eagle Ford Acreage Position Optimal Optimal 3 BBOE T TeE xX AaS s Gonzales Spacing & Completions…
  44. Goldman Sachs Energy Conference – ConocoPhillips – slide 44
    Eagle Ford: Structural, Not Cyclical, Cost Reductions Integrated Operations Faster Drilling with Advanced Analytics Increasing workforce productivity with technology integration 50% REDUCTION DRILLING DAYS Smart field enables…
  45. Goldman Sachs Energy Conference – ConocoPhillips – slide 45
    Eagle Ford: Advanced Technical Analysis Increases EUR and Returns Pilot Stimulated Rock Volume (SRV) Time-Lapse Geochemistry What We Utilized cores, image logs, in-well and cross- Gathered extensive database of oil samples over past…
  46. Goldman Sachs Energy Conference – ConocoPhillips – slide 46
    Eagle Ford: NPV of Learning Curve NPV of Acceleration Customized Spacing and Stacking to Geology 2014 vs. 2016 Completion Design Testing the Austin Chalk 7.5 MMlbs 15.5 MMlbs Upper Eagle Ford Lower Eagle Ford 100 Clusters 300…
  47. Goldman Sachs Energy Conference – ConocoPhillips – slide 47
    Eagle Ford: Measured Pace Pays Off Texas Gonzales Bexar Medina TEXAS Wilson De Witt Eagle Ford Frio Atascosa Karnes Goliad Bee La Salle McMullen Live Oak ConocoPhillips Acreage 3,500 REMAINING…
  48. Goldman Sachs Energy Conference – ConocoPhillips – slide 48
    Eagle Ford: ConocoPhillips is Perennial Champ Lowest Cost of Supply Highest Liquid Rates per Well Highest NPV per Acre 45 140 70 Gross Operated Liquids Production per Well (BPD) 40 120 60 35 Average Breakeven Price…
  49. Goldman Sachs Energy Conference – ConocoPhillips – slide 49
    Permian: We Have a Shiny Object, Too Competitive Permian Basin Position with 1 MM Acres NW Shelf and Midland Basin Central Basin Platform Midland 163 M net acres; 9 MBOED net production2 Basin Legacy conventional position and…
  50. Goldman Sachs Energy Conference – ConocoPhillips – slide 50
    Delaware: 1.8 BBOE Resource and Just Getting Started Wolfcamp 1 -- 6 Month Cum. (MBOE) ConocoPhillips Focus Areas Coring Up Multi- 1.8 BBOE 80% Acreage for Zone Net Resource INCREASE IN 10,000 laterals…
  51. Goldman Sachs Energy Conference – ConocoPhillips – slide 51
    Bakken: Increasing EUR While Driving Down Costs Lowest Well Cost/BOE1 Middle Bakken 300 2014-2015 Completion Optimization 40% Well Cost (/BOE) Cumulative Oil 200 INCREASE (MBO) 100 0 0 100 200 300 400 Days Online…
  52. Goldman Sachs Energy Conference – ConocoPhillips – slide 52
    Western Canada: 1 BBOE Today, But Watch This Resource Grow 1 BBOE unconventional…
  53. Goldman Sachs Energy Conference – ConocoPhillips – slide 53
    Future Unconventionals: Pipeline of Low Cost of Supply Possibilities Niobrara Cumulative Production vs. Time 100 M net acres Mid & Long Confirmed Cemented 2x Improvement (MBOE) Sustained performance from longer laterals Short…
  54. Goldman Sachs Energy Conference – ConocoPhillips – slide 54
    Unconventionals: Massive Flexible Growth Resource Remaining 7 BBOE Eagle Ford, Delaware…
  55. Goldman Sachs Energy Conference – ConocoPhillips – slide 55
    Power of Diversification: Low-Risk Unconventional Portfolio 18 BBOE Resource Production Over…
  56. Goldman Sachs Energy Conference – ConocoPhillips – slide 56
    Match This: 18 BBOE…
  57. Goldman Sachs Energy Conference – ConocoPhillips – slide 57
    Strategic Flexibility Matt Fox EVP, Strategy, Exploration & Technology
  58. Goldman Sachs Energy Conference – ConocoPhillips – slide 58
    Low Cost of Supply Portfolio = High-Return Investment…
  59. Goldman Sachs Energy Conference – ConocoPhillips – slide 59
    Our Portfolio is Designed to Create Strategic Flexibility Production Over Time 5-Year Capital Flexibility 100% Exploration Unconventionals 40-50/BBL Flexible Development Multi-Year Conventionals Drilling Contracts…
  60. Goldman Sachs Energy Conference – ConocoPhillips – slide 60
    Because Flexibility is Essential in an Uncertain World Potential Scenarios Scenarios describe broad sector environments Unrelenting Robust Unconventionals Recovery Each scenario embeds key drivers of supply and demand fundamentals…
  61. Goldman Sachs Energy Conference – ConocoPhillips – slide 61
    Price Forecasts Through 2021 Reflect Significant Uncertainty Oil Price Projections General consensus around near- 100 term price recovery 90 Absolute price and degree of cyclicality varies Nominal /BBL Brent 80 70 Wide…
  62. Goldman Sachs Energy Conference – ConocoPhillips – slide 62
    Flexible Strategy Delivers Across a Range of Prices 50/BBL 50/BBL 60/BBL 60/BBL 70/BBL Brent BrentPrice Price Brent Price Brent Price ALL PRIORITIES ACHIEVED 1st Priority Maintain Production AT 50/BBL BRENT WITH…
  63. Goldman Sachs Energy Conference – ConocoPhillips – slide 63
    Uncertainty Compounded by Cyclicality Oil Price Projections Example to demonstrate viability 100 of ConocoPhillips strategy across a price cycle 90 Nominal /BBL Brent 80 70 60 50 40 30 2016 2017 2018 2019 2020…
  64. Goldman Sachs Energy Conference – ConocoPhillips – slide 64
    Strategic Flexibility in Action: Oil Price Cycle Example Expected Performance vs. Priorities Example of Strategic Flexibility 1st Maintain through Price Cycle Achieved 15 Priority Production 2nd Grow Achieved Priority Dividend…
  65. Goldman Sachs Energy Conference – ConocoPhillips – slide 65
    What to Expect from 2017-2019 with Acceleration Actions Leverage to Upside 50/BBL Cash Allocated to Maximize Total Shareholder Returns Brent Modest Growth Expected Accelerating Dispositions 3B Authorized Value Proposition…
  66. Goldman Sachs Energy Conference – ConocoPhillips – slide 66
    We Have Transformed Our Strategy and Increased Strategic Flexibility Breakeven Price High Low Capital Intensity High Low Financial Debt 30B 20B Priorities Distribution Philosophy Dividend Dividend and Buybacks Portfolio Focus…
  67. Goldman Sachs Energy Conference – ConocoPhillips – slide 67
    Our Strategy Is Distinctive, Interesting, Viable and Achievable Free cash flow generation with strong balance sheet and low breakeven price Financial Priorities Focus on absolute and relative returns Accelerating strategy with…
  68. Goldman Sachs Energy Conference – ConocoPhillips – slide 68
    Closing Comments Ryan Lance Chairman & CEO
  69. Goldman Sachs Energy Conference – ConocoPhillips – slide 69
    The Case For ConocoPhillips Transformation Acceleration Differentiation 70
  70. Goldman Sachs Energy Conference – ConocoPhillips – slide 70
    Appendix
  71. Goldman Sachs Energy Conference – ConocoPhillips – slide 71
    2017 Operating Plan Guidance Capital Production Adjusted Operating Costs 1,540-1,570 6.6B 5.2B 1,535-1,5451 5B MBOED MBOED 6B Europe Europe Europe Europe Alaska Alaska Alaska Alaska APME APME APME APME Canada Canada…
  72. Goldman Sachs Energy Conference – ConocoPhillips – slide 72
    2017 Annualized Cash Flow Sensitivities Consolidated Operations1 Equity Affiliates2 (45-65/BBL Brent) (50-65/BBL Brent) Crude: Expect distributions from all equity affiliates at 50/BBL Brent/ANS: 105-115MM for 1/BBL change WTI:…
  73. Goldman Sachs Energy Conference – ConocoPhillips – slide 73
    Current Marker Price Differentials at 50/BBL Brent ANS (Oil) NW Europe (Gas) 100% of Brent 70% of Brent 50/BBL 5.8/MMBTU Alaska Alberta BRENT Ref Point 50/BBL WCS (Oil) Oklahoma 70% of Brent Louisiana 35/BBL AECO (Gas)…
  74. Goldman Sachs Energy Conference – ConocoPhillips – slide 74
    Investor Information Stock Ticker Investor Relations Contacts: NYSE: COP Telephone: +1 281.293.5000 Website: www.conocophillips.com/investor Ellen DeSanctis: ellen.r.desanctisconocophillips.com Andy OBrien:…

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