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Analyst and Investor Meeting Update – ConocoPhillips

ConocoPhillips · Feb 8, 2018 · 78 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. Analyst and Investor Meeting Update – ConocoPhillips – slide 1
    2017 Analyst & Investor Meeting U P D AT E D A S O F F E B R U A R Y 2 0 1 8
  2. Analyst and Investor Meeting Update – ConocoPhillips – slide 2
    Agenda Keeping Our Discipline, Our Sound Creating Value Financial Plan Ryan Lance Don Wallette Chairman & CEO EVP, Finance, Commercial & CFO Our Differentiated Strategy Keeping Our Discipline, Matt Fox Creating Value EVP,…
  3. Analyst and Investor Meeting Update – ConocoPhillips – slide 3
    Keeping Our Discipline, Creating Value R YA N L A N C E Chairman & CEO
  4. Analyst and Investor Meeting Update – ConocoPhillips – slide 4
    Keeping Our Discipline, Creating Value Value Proposition Our Unique Principles Disciplined Priorities Characteristics Invest capital to sustain 1st production and pay existing Low Diverse, PRIORITY Financial dividend Sustaining…
  5. Analyst and Investor Meeting Update – ConocoPhillips – slide 5
    The Market Has Taken Note of Our Accomplishments Total Shareholder Return Since 2016 Analyst & Investor Meeting S&P 500 23% 20% S&P 500 INTEGRATED OIL & GAS S&P 500 8% ENERGY 6% S&P 500 E&P XOP ETF 1% 1% Source:…
  6. Analyst and Investor Meeting Update – ConocoPhillips – slide 6
  7. Analyst and Investor Meeting Update – ConocoPhillips – slide 7
    But Were Just Getting Started COP Works COP Works at Lower Prices at Higher Prices Low capital intensity Oil-weighted portfolio Sustaining price of Predominantly tax…
  8. Analyst and Investor Meeting Update – ConocoPhillips – slide 8
    Value Creation Target: 20% CROCE by 2020 at 50/BBL Grow CROCE 2-3%/Yr 5% production CAGR Production Low 3.5B for flat production & Margin Sustaining 5% margin CAGR Expansion 15…
  9. Analyst and Investor Meeting Update – ConocoPhillips – slide 9
    Our Differentiated Strategy M AT T F O X EVP, Strategy, Exploration & Technology
  10. Analyst and Investor Meeting Update – ConocoPhillips – slide 10
    ConocoPhillips Strategy Framework Portfolio Capital Uncertainty Choices Allocation Management Rigorous high-grading Sustaining capital and Low sustaining price growing dividend Favorable product mix Low cost of supply Debt…
  11. Analyst and Investor Meeting Update – ConocoPhillips – slide 11
    Resetting Every Bar; Strategy Aligned with Shareholder Interests Estimated Sources and Uses of Cash (2018-2020) at 50/BBL 5.5B/Yr capital delivers CFO 4.5B Available Cash cash flow expansion and 50/BBL Investment for reserve…
  12. Analyst and Investor Meeting Update – ConocoPhillips – slide 12
    Activating 5th Priority Within Cash Flow Disciplined Investments Cash Flow Expansion Benefits (2018-2020) Improves financial returns due to low Investment for cost of supply investments 1.2B/Yr CFO Expansion (2B/Yr) Increases…
  13. Analyst and Investor Meeting Update – ConocoPhillips – slide 13
    Disciplined Investments Deliver Returns and Expand Cash Flows 2 0 1 8 - 2 0 2 0 TA R G E T S a t 5 0 / B B L Grow ROCE 1-2%/Yr Grow CROCE 2-3%/Yr Drive Total Production / DASh 10% CAGR Cash margin growth 5% CAGR Shareholder…
  14. Analyst and Investor Meeting Update – ConocoPhillips – slide 14
    Predicting Price is Useless, Scenario Planning is Priceless DRIVEN BY HIGH SUPPLY DRIVEN BY HIGH DEMAND Oil Demand & Supply vs. Oil Price UNRELENTING GREAT Resource UNCONVENTIONALS GROWTH Great Restriction Growth High pace of…
  15. Analyst and Investor Meeting Update – ConocoPhillips – slide 15
    Scenarios Highlight Value of Strategic Flexibility and Diversification Estimated Prices Through 20251 90 80 Resource Restriction/ 1 Great Growth 70 Unrelenting Unconventionals/ /BBL Great Growth 60 Resource…
  16. Analyst and Investor Meeting Update – ConocoPhillips – slide 16
    Priorities Underpin Strategic Flexibility Across a Range of Prices Capital Allocation 2018-2020 Priorities PLAN DESIGNED FOR Capture deflation to reduce 1st Sustaining Capital & 45-55/BBL sustaining price PRIORITY Base Dividend Use…
  17. Analyst and Investor Meeting Update – ConocoPhillips – slide 17
    Our Strategy to Deliver Superior Returns to Shareholders Through Cycles Low Strong Focus on Commitment to Low Cost Capital Sustaining Balance Financial Shareholder of Supply Flexibility Price Sheet Returns Distributions…
  18. Analyst and Investor Meeting Update – ConocoPhillips – slide 18
    Our Portfolio is Aligned to Strategy AL HIRSHBERG EVP, Production, Drilling & Projects
  19. Analyst and Investor Meeting Update – ConocoPhillips – slide 19
    Each Region Plays an Important Role in Our Strategy Alaska Europe & North Africa Renaissance Leveraging High-Margin Assets of a Legacy Delivering robust returns Technology-led advancements in operations and exploration Canada…
  20. Analyst and Investor Meeting Update – ConocoPhillips – slide 20
    Our Low Cost of Supply Portfolio Keeps Getting Better 2016 vs. 2017…
  21. Analyst and Investor Meeting Update – ConocoPhillips – slide 21
    Unconventional Assets: Portfolio is World-Class Unconventional Resources 1.5 BBOE resource BRITISH Montney COLUMBIA addition in Montney 15 BBOE 8 BBOE 40-50/BBL Flexible, short-cycle UNCONVENTIONAL investments 30-40/BBL…
  22. Analyst and Investor Meeting Update – ConocoPhillips – slide 22
    Conventional Assets: The Great Assets People are Now Asking About 4 BBOE RESOURCE Beaufort Sea North Sea Aasta Hansteen…
  23. Analyst and Investor Meeting Update – ConocoPhillips – slide 23
    LNG & Oil Sands: The Anti-Treadmill Assets Play an Important Role 3 BBOE RESOURCE Fort McMurray North Field Bayu-Undan…
  24. Analyst and Investor Meeting Update – ConocoPhillips – slide 24
    Low Sustaining Capital is the Key to Free Cash Flow Generation 2018-2020 Flat Production Case 3.5B/Yr Production Sustaining sustaining capital Capital 250 Unique portfolio is a significant competitive MBOED UNCO NV ENTIONA L…
  25. Analyst and Investor Meeting Update – ConocoPhillips – slide 25
    Maintaining Our Unconventional Production with 5 Rigs in the Big 3 2018-2020 Flat Production REPLACING 180 MBOED of decline 1.2B/Yr Eagle Ford, Bakken and Delaware Production UNCO NV ENTIONA L (MBOED) 30% 0.1B/Yr 2017 from…
  26. Analyst and Investor Meeting Update – ConocoPhillips – slide 26
    Offsetting Conventional Declines Around the World 2018-2020 Flat Production REPLACING 175 MBOED of decline GMT-1 AASTA HANSTEEN BOHAI 3 Production (MBOED) U N CO NV ENTIONAL CLAIR RIDGE GULF OF MEXICO OBO ALASKA 1.5B/Yr…
  27. Analyst and Investor Meeting Update – ConocoPhillips – slide 27
    Distinctive Sustaining Price No Waiting…
  28. Analyst and Investor Meeting Update – ConocoPhillips – slide 28
    Capital Investment for Cash Flow Expansion 1.2B/Yr 1.2B/Yr 0.8B/Yr DELIVERS 5% FUELS OUR FUTURE PRODUCTION CAGR 0.5B/Yr 0.3B/Yr SHORT -CYCLE FUTURE MAJOR E X P L O R AT I O N UNCONVENTIONAL PROJECTS UNCONVENTIONALS…
  29. Analyst and Investor Meeting Update – ConocoPhillips – slide 29
    Our Big 3 Unconventionals: Cash Flow Positive Now & Net Cash Flow Grows Production1 (MBOED) Positive Net Cash Flow1,2 (NCF) (B) 22% PRODUCTION 400 CAGR 2017-2020 6 ADDITIONAL RIGS 2B NCF 1 DELIVERS 80% MORE CUMULATIVE…
  30. Analyst and Investor Meeting Update – ConocoPhillips – slide 30
    3-Year Development Plans for the Big 3 Unconventionals Eagle Ford Delaware Bakken 245 25% CAGR 85 Production (MBOED) Production (MBOED) Production (MBOED) 60% CAGR 70 70 130 20 2017 2018 2019 2020 2017 2018 2019 2020…
  31. Analyst and Investor Meeting Update – ConocoPhillips – slide 31
    Future Major Projects: Visibility Well Into Next Decade 0.5B/Yr Beaufort Sea North Sea (2018-2020) Fiord West NEWS CONVENTIONAL GMT-2 Clair South CHINA Barossa ALASKA NORTH SLOPE Bayu-Undan LNG & OIL SANDS Eko 2/4V-D, Darwin…
  32. Analyst and Investor Meeting Update – ConocoPhillips – slide 32
    Future Major Projects: Infrastructure-Led Projects with Strong Economics Alaska Barossa GMT-2 Cost of Supply (/BBL) Cost of Supply (/BBL) 15% DECREASE Beaufort Sea 30% 50 40 DECREASE…
  33. Analyst and Investor Meeting Update – ConocoPhillips – slide 33
    Exploration: Focus on the Future; Built Around Proven Expertise Alaska 0.3B/Yr Rebirth of a Legacy Europe (2018-2020) Willow discovery Infrastructure-Led CONVENTIONAL unlocks potential Exploration UNCONVENTIONAL Exploration…
  34. Analyst and Investor Meeting Update – ConocoPhillips – slide 34
    Alaska: Western NPR-A Discovery Opens New Frontier 80% INCREASE 50% LOWER COST than conventional seismic in net acres, 2017 vs. 2016 Seismic Innovation Willow discovery with resource potential in excess of 300 MMBOE Acquired 600…
  35. Analyst and Investor Meeting Update – ConocoPhillips – slide 35
    Canada Montney: A Case Study in Low-Cost Resource Acquisition 2013 2017 Appraisal Recent Completions Outperforming Others Wells 2013-2017 2017 COP 2 BBOE RESOURCE 1st 30 Days Average Rate Appraisal Well Test quadrupled 2017…
  36. Analyst and Investor Meeting Update – ConocoPhillips – slide 36
    Our Portfolio is Aligned with Strategy 2018-2020 Production LOW SUSTAINING Able to sustain flat production PRICE…
  37. Analyst and Investor Meeting Update – ConocoPhillips – slide 37
    Our Sound Financial Plan DO N WAL L ET T E EVP, Finance, Commercial & CFO
  38. Analyst and Investor Meeting Update – ConocoPhillips – slide 38
    Our Financial Plan is Aligned with Shareholder Interests Low capital intensity portfolio fuels free cash flow generation STRONG FREE CASH Enhancing margin via investment in low-cost unconventionals FLOW GENERATION Target doubling…
  39. Analyst and Investor Meeting Update – ConocoPhillips – slide 39
    Targeting Step-Function Change in Financial Performance 2017 2020 Financial Objectives at 50/BBL Free Cash Flow Generation Strong growth in free cash flow 25% 45% FCF % of CFO Differentiated balance sheet Leverage strength 3.5x…
  40. Analyst and Investor Meeting Update – ConocoPhillips – slide 40
    Already Generating Strong Free Cash Flow Today Versus Sector COP Free Cash Flow Competitive Positioning Trailing 4 quarters Free Cash Flow % of CFO 3.9 40% of CFO 6.5 1.3 2.6 1.3 U.S. Independents CFO (ex. WC) Capital…
  41. Analyst and Investor Meeting Update – ConocoPhillips – slide 41
    Generating Free Cash Flow Today; Doubling in 2020 Free Cash Flow at 50/BBL (B) CFO comfortably exceeding capital in 2017 60/BBL Disciplined investments drive production growth and fuel cash Free Cash Flow margin enhancement…
  42. Analyst and Investor Meeting Update – ConocoPhillips – slide 42
    2017 Portfolio Actions Reset Margins; Cash Margins Expand Further 2017 Dispositions Expand Margins Continued Cash Margin Expansion Through 2020 (/BOE) LNG & Oil Sands 12% N.A. Gas N.A. Gas 8% LNG & Oil Sands 19% Bitumen 5% NGL 7%…
  43. Analyst and Investor Meeting Update – ConocoPhillips – slide 43
    Balance Sheet Strength Restored; Competitive Advantage Through Cycles DELEVERAGING Further debt reductions fully funded by on track cash balances 15B DEBT TARGET Credit ratings upgraded 27B 5B reduction expected Cash in 2018/2019…
  44. Analyst and Investor Meeting Update – ConocoPhillips – slide 44
    Top-Tier Payout to Shareholders 2017E CFO Payout % Exceeding high end of our shareholder payout range ConocoPhillips dividend Integrated cash dividend Highly competitive payout Integrated scrip dividend U.S. Independent dividend…
  45. Analyst and Investor Meeting Update – ConocoPhillips – slide 45
    Its All About Returns Absolute Improvement in ROCE Drivers of ROCE Improvement Consensus 2017 to 2018 Production growth in low-cost unconventionals Growing earnings margin through lower production cost and DD&A per barrel…
  46. Analyst and Investor Meeting Update – ConocoPhillips – slide 46
    Adding It All Up: Plan Targets 20 by 20 CROCE % 2017 2020 at 50/BBL Growing high-return TARGET CROCE GROWTH OF production 2-3% PER YEAR TO 20% by 2020 Portfolio shift to low-cost 20% unconventionals drives cash margin…
  47. Analyst and Investor Meeting Update – ConocoPhillips – slide 47
    Our Financial Plan Targets Superior Returns to Shareholders STRONG FREE CASH 25% 45% FLOW GENERATION FCF % of CFO MAINTAIN A STRONG 3.5x 1.0x BALANCE SHEET Debt/CFO GROWING DISTRIBUTIONS 0 16 Cumulative Distributions,…
  48. Analyst and Investor Meeting Update – ConocoPhillips – slide 48
    Keeping Our Discipline, Creating Value R YA N L A N C E Chairman & CEO
  49. Analyst and Investor Meeting Update – ConocoPhillips – slide 49
    Keeping Our Discipline, Creating Value Value Proposition Our Unique Principles Disciplined Priorities Characteristics Invest capital to sustain 1st production and pay existing Low Diverse, PRIORITY Financial dividend Sustaining…
  50. Analyst and Investor Meeting Update – ConocoPhillips – slide 50
    Appendix: G U I D A N C E M AT E R I A L
  51. Analyst and Investor Meeting Update – ConocoPhillips – slide 51
    2018 Capital and Production Guidance Capital Production 1,356 13% 5.5B PRODUCTION PER DEBT- ADJUSTED Europe SHARE 4.5B 191 1,195 - 1,235 GROWTH2 Dispositions1 Europe Alaska 7% PRODUCTION Alaska APME PER-SHARE GROWTH3 APME…
  52. Analyst and Investor Meeting Update – ConocoPhillips – slide 52
    Full-Year 2018 Guidance Full-year 2018 production: 1,195 1,235 MBOED 1Q18 production: 1,180 1,220 MBOED Adjusted operating costs: 5.7B Capital expenditures: 5.5B DD&A: 5.8B Adjusted corporate segment net loss: 1.0B…
  53. Analyst and Investor Meeting Update – ConocoPhillips – slide 53
    2018 Annualized Net Income Sensitivities Crude Brent/ANS: 105-125MM for 1/BBL change WTI: 45-55MM for 1/BBL change WCS: 10-15MM for 1/BBL change Does not incorporate contingent payment of CA6MM quarterly for every CA1 WCS price…
  54. Analyst and Investor Meeting Update – ConocoPhillips – slide 54
    2018 Annualized Cash Flow Sensitivities Consolidated Operations Equity Affiliates1 (45-65/BBL WTI) (50-65/BBL WTI) Crude: Expect distributions from all equity affiliates at 50/BBL Brent/ANS: 100-110MM for 1/BBL change 1/BBL…
  55. Analyst and Investor Meeting Update – ConocoPhillips – slide 55
    Non-GAAP Reconciliation Reconciliation of Capital Expenditures and Investments to Sustaining Capital ( Billions) 2018 Guidance Capital Expenditures and Investments 5.5 Short-Cycle Unconventionals 1.2 Future Major Project Capital…
  56. Analyst and Investor Meeting Update – ConocoPhillips – slide 56
    ConocoPhillips Abbreviations ANS: Alaska North Slope M: thousand B: billion MM: million BBL: barrel MBO: thousands of barrels of oil BBOE: billions of barrels of oil equivalent MBOE: thousands of barrels of oil equivalent BOE: barrels of…
  57. Analyst and Investor Meeting Update – ConocoPhillips – slide 57
    Appendix: E N V I R O N M E N TA L , S O C I A L & G O V E R N A N C E M AT E R I A L
  58. Analyst and Investor Meeting Update – ConocoPhillips – slide 58
    Focus on Safety and Execution Delivers Record Results Record personal safety performance Reduced occurrence of Serious Events and Process Safety Events Life Saving Rules compliance improves HSE performance Continued focus on process…
  59. Analyst and Investor Meeting Update – ConocoPhillips – slide 59
    Strong Sustainable Development Governance and Oversight 62
  60. Analyst and Investor Meeting Update – ConocoPhillips – slide 60
    Leadership in Environmental, Social and Governance Programs Dow Jones Sustainability Index Ranking 2017 (Total Percentile Ranking) 95 TOP 20% of N.A. O&G companies, 11th consecutive year 90 83 81 Index includes 600 indicators…
  61. Analyst and Investor Meeting Update – ConocoPhillips – slide 61
    Appendix: S U P P L E M E N TA L P O R T F O L I O M AT E R I A L
  62. Analyst and Investor Meeting Update – ConocoPhillips – slide 62
    Eagle Ford: Still In Its Prime Large acreage position in recognized sweet spot of the play ConocoPhillips Eagle Ford Acreage Position Integrated operations and applied technology driving significant improvements across the play T E…
  63. Analyst and Investor Meeting Update – ConocoPhillips – slide 63
    Eagle Ford: Our Position Leads Competitors on Key Metrics Lowest Cost of Supply Highest Oil Rates per Well Highest NPV per Acre 70 120 60 Gross Operated Oil Production per Well (BPD) Average Breakeven Price (/BBL Brent) 60…
  64. Analyst and Investor Meeting Update – ConocoPhillips – slide 64
    Eagle Ford: Years of Running Room at Measured Pace Optimized by Geologic Area LEARNING MAXIMIZES VALUE 2012 2017+ Austin Chalk Upper Eagle Ford Lower Eagle Ford Completions 2012 2017+ 3.5 MMlbs 7.5 MMlbs 15.5 MMlbs…
  65. Analyst and Investor Meeting Update – ConocoPhillips – slide 65
    Leveraging Data Analytics Globally, Realizing Local Improvements Eagle Ford Data Analytics Global Implementation Data Data DATA-DRIVEN of Data Analytics DECISIONS Integrated Data Data Visualization & 4,000 analytic tool users…
  66. Analyst and Investor Meeting Update – ConocoPhillips – slide 66
    Delaware: Prudent Development Begins NEW MEXICO 1.9 BBOE…
  67. Analyst and Investor Meeting Update – ConocoPhillips – slide 67
    Permian: Focus on Core of Delaware Basin NEW Delaware Acreage Core Up Cored up acreage to enable long-lateral development MEXICO TEXAS NEW MEXICO Infrastructure and hub facility strategy in place with offtake agreements TEXAS…
  68. Analyst and Investor Meeting Update – ConocoPhillips – slide 68
    Permian: Focus on Core of Delaware Basin Cost of Supply Improvement Line of sight to future cost of supply 20% improvements: REDUCTION Infrastructure plan has enabled produced water recycling, additional 1-2/BBL savings 42 34…
  69. Analyst and Investor Meeting Update – ConocoPhillips – slide 69
    Bakken: A Smart Plan to Deliver Sustained Performance ConocoPhillips Acreage Minerals MOUNTRAIL 3-Year Development Plan WILLIAMS (2018-2020) Production (MBOED) 70 70 0.7 BBOE…
  70. Analyst and Investor Meeting Update – ConocoPhillips – slide 70
    Bakken: Optimizing Across Every Aspect of the Play Low Cost Leader with a Prime Acreage Position 2017 Improvement Drivers 15 Continuing significant reductions in drilling time CWC/EUR (/BOE) 10 Doubled completion size and…
  71. Analyst and Investor Meeting Update – ConocoPhillips – slide 71
    Niobrara: Unlocking Value by Lowering Cost of Supply Well Cost/Liquids EUR1 Innovating to Lower Cost of Supply Well Cost/Liquids EUR (/BOE) 20 Competitive position in a liquids-rich play 15 Recent improvements in drilling time…
  72. Analyst and Investor Meeting Update – ConocoPhillips – slide 72
    Two Case Studies of Lowering Cost of Supply to Grow Legacy Assets Cost of Supply (/BBL) Cost of Supply (/BBL) 5 16 35% 10% REDUCTION 42 REDUCTION 43 37 27 2016 Improvement 2017 2016 Improvement 2017 Bohai Phase 3 Alaska…
  73. Analyst and Investor Meeting Update – ConocoPhillips – slide 73
    Alaska: A Case Study in How Innovative Drilling Increases Oil Recovery Kuparuk Shark Tooth Project Smaller Footprint, More Reserves per Well Setting Records & Lower Cost of Supply Managed Pressure Drilling (MPD) allows drilling of…
  74. Analyst and Investor Meeting Update – ConocoPhillips – slide 74
    Europe: Leveraging Legacy…
  75. Analyst and Investor Meeting Update – ConocoPhillips – slide 75
    Europe: Driving Value in Every Phase of Asset Life Cycle Norway continues to lower cost of supply through Industry Leading P&A Technology Development drilling and operations efficiencies 50% COST UK delivered top-quartile operating…
  76. Analyst and Investor Meeting Update – ConocoPhillips – slide 76
    Surmont: All-Out Effort to Lower Cost of Supply and Increase Margins Alternative Diluent Strategy Underway Successful Non-Condensable Gas (NCG) Pilot Modifying facilities to create Synbit/Dilbit flexibility 3-well pair pilot testing…
  77. Analyst and Investor Meeting Update – ConocoPhillips – slide 77
    LNG: Decades of Stable Production APLNG Barossa Greater Sunrise Caldita Successful first year of operations Performance exceeding original design Bayu-Undan by 10% Timor Sea Darwin 98% uptime achieved over an ConocoPhillips…
  78. Analyst and Investor Meeting Update – ConocoPhillips – slide 78
    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 Headquarters Andy OBrien ConocoPhillips…

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