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Investor Meeting May 2018 Update – ConocoPhillips

ConocoPhillips · May 3, 2018 · 77 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. Investor Meeting May 2018 Update – ConocoPhillips – slide 1
    2017 Analyst & Investor Meeting U P D AT E D A S O F M AY 2 0 1 8
  2. Investor Meeting May 2018 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. Investor Meeting May 2018 Update – ConocoPhillips – slide 3
    Keeping Our Discipline, Creating Value R YA N L A N C E Chairman & CEO
  4. Investor Meeting May 2018 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. Investor Meeting May 2018 Update – ConocoPhillips – slide 5
    The Market Has Taken Note of Our Accomplishments Total Shareholder Return Since 2016 Analyst & Investor Meeting 32% S&P 500 17% S&P 500 S&P 500 S&P 500 INTEGRATED OIL ENERGY E&P & GAS XOP ETF 6% 6% 6% 5% Source:…
  6. Investor Meeting May 2018 Update – ConocoPhillips – slide 6
    Delivering on Our Disciplined, Returns-Focused Value Proposition 2017: Full Activation of our Plan 2018: Execute the Plan, Plus Portfolio reset; 16B dispositions; Maintain capital scope; bolt-on Portfolio strong organic RRR1…
  7. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 Update – ConocoPhillips – slide 9
    Our Differentiated Strategy M AT T F O X EVP, Strategy, Exploration & Technology
  10. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 Update – ConocoPhillips – slide 18
    Our Portfolio is Aligned to Strategy AL HIRSHBERG EVP, Production, Drilling & Projects
  19. Investor Meeting May 2018 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. Investor Meeting May 2018 Update – ConocoPhillips – slide 20
    Our Low Cost of Supply Portfolio Keeps Getting Better 2016 vs. 2017…
  21. Investor Meeting May 2018 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. Investor Meeting May 2018 Update – ConocoPhillips – slide 22
    Conventional Assets: The Great Assets People are Now Asking About 4 BBOE RESOURCE Beaufort Sea North Sea Aasta Hansteen…
  23. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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 U N CO NV ENTIONAL (MBOED) 30% 0.1B/Yr 2017 from…
  26. Investor Meeting May 2018 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) UNCO NV ENTIONA L CLAIR RIDGE GULF OF MEXICO OBO ALASKA 1.5B/Yr…
  27. Investor Meeting May 2018 Update – ConocoPhillips – slide 27
    Distinctive Sustaining Price No Waiting…
  28. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 Update – ConocoPhillips – slide 35
    Canada Montney: A Case Study in Low-Cost Resource Acquisition 2013 2017 Appraisal Wells Recent Completions Outperforming Others 2013-2017 14-well pad 2017 COP 2 BBOE RESOURCE 1st 30 Days Average Rate Appraisal Well Test…
  36. Investor Meeting May 2018 Update – ConocoPhillips – slide 36
    Our Portfolio is Aligned with Strategy 2018-2020 Production LOW SUSTAINING Able to sustain flat production PRICE…
  37. Investor Meeting May 2018 Update – ConocoPhillips – slide 37
    Our Sound Financial Plan DO N WAL L ET T E EVP, Finance, Commercial & CFO
  38. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 Update – ConocoPhillips – slide 42
    2017 Portfolio Actions Reset Margins; Cash Margins Expand Further Higher-Margin Product Mix Continued Cash Margin Expansion Through 2020 (/BOE) LNG & Oil Sands 12% LNG & Oil Sands N.A. Gas 8% 14% N.A. Gas 17% Bitumen 5% NGL 8% 5%…
  43. Investor Meeting May 2018 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…
  44. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 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. Investor Meeting May 2018 Update – ConocoPhillips – slide 48
    Keeping Our Discipline, Creating Value R YA N L A N C E Chairman & CEO
  49. Investor Meeting May 2018 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. Investor Meeting May 2018 Update – ConocoPhillips – slide 50
    Appendix: G U I D A N C E M AT E R I A L
  51. Investor Meeting May 2018 Update – ConocoPhillips – slide 51
    2018 Capital and Production Guidance Capital Production 1,356 16% 5.5B PRODUCTION PER DEBT- ADJUSTED Europe SHARE 4.5B 181 1,200 - 1,240 GROWTH2 Dispositions 1 1 Dispositions Europe Alaska 7% PRODUCTION Alaska APME…
  52. Investor Meeting May 2018 Update – ConocoPhillips – slide 52
    Full-Year 2018 Guidance Full-year 2018 production: 1,200 1,240 MBOED 2Q18 production: 1,170 1,210 MBOED Adjusted operating costs: 5.7B Capital expenditures: 5.5B; excludes announced acquisitions of 0.4B Alaska bolt-on…
  53. Investor Meeting May 2018 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. Investor Meeting May 2018 Update – ConocoPhillips – slide 54
    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…
  55. Investor Meeting May 2018 Update – ConocoPhillips – slide 55
    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…
  56. Investor Meeting May 2018 Update – ConocoPhillips – slide 56
    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
  57. Investor Meeting May 2018 Update – ConocoPhillips – slide 57
    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…
  58. Investor Meeting May 2018 Update – ConocoPhillips – slide 58
    Strong Sustainable Development Governance and Oversight 61
  59. Investor Meeting May 2018 Update – ConocoPhillips – slide 59
    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…
  60. Investor Meeting May 2018 Update – ConocoPhillips – slide 60
    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
  61. Investor Meeting May 2018 Update – ConocoPhillips – slide 61
    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…
  62. Investor Meeting May 2018 Update – ConocoPhillips – slide 62
    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…
  63. Investor Meeting May 2018 Update – ConocoPhillips – slide 63
    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…
  64. Investor Meeting May 2018 Update – ConocoPhillips – slide 64
    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…
  65. Investor Meeting May 2018 Update – ConocoPhillips – slide 65
    Delaware: Prudent Development Begins NEW MEXICO 1.9 BBOE…
  66. Investor Meeting May 2018 Update – ConocoPhillips – slide 66
    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…
  67. Investor Meeting May 2018 Update – ConocoPhillips – slide 67
    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…
  68. Investor Meeting May 2018 Update – ConocoPhillips – slide 68
    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…
  69. Investor Meeting May 2018 Update – ConocoPhillips – slide 69
    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…
  70. Investor Meeting May 2018 Update – ConocoPhillips – slide 70
    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…
  71. Investor Meeting May 2018 Update – ConocoPhillips – slide 71
    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…
  72. Investor Meeting May 2018 Update – ConocoPhillips – slide 72
    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…
  73. Investor Meeting May 2018 Update – ConocoPhillips – slide 73
    Europe: Leveraging Legacy…
  74. Investor Meeting May 2018 Update – ConocoPhillips – slide 74
    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…
  75. Investor Meeting May 2018 Update – ConocoPhillips – slide 75
    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…
  76. Investor Meeting May 2018 Update – ConocoPhillips – slide 76
    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…
  77. Investor Meeting May 2018 Update – ConocoPhillips – slide 77
    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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