3 Year Repositioning Plan: 2010 2012 Portfolio Optimization Balance Sheet Monetize noncore assets Reduce debt Position for Upstream growth Strengthen financial flexibility Focus capital toward E&P Reduce exposure to refining…
Progress through Q2 2011 Right on Target Portfolio Optimization Balance Sheet LUKOIL interest sold for 9.5 B Debt reduced by 5.5 B 7.8 B of noncore asset sales Debt / cap of 25% E&P reserves sold 20/BOE 8.1 B of cash & shortterm…
2010 2011 Allocation of Capital On Target B 2010 Based on actuals / 2011 First Call estimates 60 CFO exceeds Capex and Dividends by 5 B Asset sale proceeds used for 15 B share repurchase plus debt reduction 50 20 39% of funds…
Remaining Initiatives through 2012 Portfolio Optimization Balance Sheet 2012 asset sales of 5 to 10 B No material change Progress major E&P projects Retire debt as it matures 100%+ reserve replacement ratio Rationalize low margin…
Good Allocators of Capital: 2010 2012 Sources of Cash Uses of Cash Cash Cash 1 B Debt 5 B Reduction 7 B LUKOIL & Asset Sales E&P Capex 2530 B 36 B Share Repurchase 2025 B CFO 56 B Dividend R&M 10 B Capex 4…
Execution of Plan: 2010 2012 Portfolio Optimization Returns Enhancement Nonstrategic assets monetized Increased ROCE from 7% to 15% 25 30 B, including LUKOIL E&P cash margin increased to 28/BOE 750 MMBOE reserves sold at premium…
Key Performance Metrics 2010 2011 2012 Key Metrics Actual Outlook Outlook E&P 5year Reserve Replacement 111% 100%+ 100%+ E&P Production MMBOED YE Exit Rate 1.7 1.625 1.65 1.5 Annual E&P Production per Share 0.43 0.45 0.45 0.47…
Positioned for Growth: 2013 2015 New ConocoPhillips a uniquely positioned E&P company Large, diversified, OECDbased portfolio Size, scale and technical capabilities to do any project globally High impact unconventional resource…
Creation of Two Leading Energy Companies Special dividend of Downstream Co shares to COP shareholders 1 share of Downstream Co per 2 shares of COP owned at record date 6 B of cash transferred to COP, majority subsequently used for COP…
Company Snapshots at Spin Date Downstream Co RM&T, Chemicals (CPChem) and Midstream (DCP) Corporate assets and liabilities split logically neither company burdened ConocoPhillips ConocoPhillips Downstream Prespin Postspin Company…
Key Plan Deliverables: 2013 2015 Downstream Co. Annual Capital Program 15 B 2.5 B Dividend 5% annual growth 5% annual growth ROCE 13% 15% Debt / Cap 25% 2530% Production / 2 MMBPD; 3 4% annual growth Refining Capacity 90%…
New Downstream Company 2010 Cash from Operations 24% 50 B asset portfolio upgraded to grow returns Significant growth in Chemicals and Midstream 59% 17% Invest in highreturn refining projects RM&T Midstream Potential to…
New Downstream Company Portfolio RM&T Chemicals Midstream 16 refineries (12 in US) N.A.s largest producer of high Largest gas gatherer and density polyethylene processor in the U.S. Nelson complexity average of 12 4th largest N.A.…
Unique Integrated Portfolio of Segment Leaders Adjusted Earnings Cash from Operations / Capital Program 4 B 4 B Chemicals CFO Midstream Capex 3 3 R&M 2 2 1 1 0 0 2009 2010 2011E 2009 2010 2011E ROCE 3% 8% 13% CROCE 6%…
3 Year Growth Plan: 2013 2015 Portfolio Optimization Balance Sheet Invest in highreturn refining projects BBB credit rating Significant growth in Midstream Significant financial capacity Significant growth in Chemicals Debt / cap of…
Capital Allocation Balanced Approach Fund 22.5 B capital program annually 1 B in sustaining capital / 250 MM toward high return, small projects 750 MM to 1.5 B on major projects No reduction in debt premised Distributions to…
Balanced Use of Cash from Operations Based on average: 2009 1H2011 Downstream Co dividend of 0.80/sh and 650 MM shares outstanding Dividends as a % of CFO Capex as a % of CFO 25% 100% 21% 20% 80% 74% 68% 65% 64% 15% 60% 10%…
Capital Allocation: 2013 2015 B Based on 2011 margin environment Significant free cash flow 20 Investments and share repurchase 18 drive growth in EPS and CFPS Financial flexibility 16 Strong dividend coverage 14 8 12 Cash…
Robust Earnings and Cash Flow Potential Based on 2011 margin environment Earnings Cash from Operations / Capital Program B Chemicals B 5 6 Dividends Midstream Capital RMT CFO 4 4 3 2 2 1 0 0 2012 20132015 2012 20132015…
Significant Investment Opportunities Refining, Marketing & Transportation Highimpact coking and desulphurization project opportunities Highreturn projects to increase distillate production and/or improve clean product yield DCP Sand…
Execution of Plan: 2013 2015 Portfolio Optimization Balance Sheet Optimized refining capacity Significant financial flexibility Increased refining capability Significant growth in Midstream Significant growth in Chemicals Returns…
Opportunity for Value Creation EV implied by current share price Peer Low Peer High EV/DACF EV/DACF EV/EBITDA EBITDA PE P/E B 20 25 30 35 40 45 Opportunity to move to peer average and capture 10 B in EV Peer…
The New ConocoPhillips Unique Independent E&P Company Reserves YE 2010 Large, low cost reserve and resource position 25% Twice the production of closest E&P peer OECD Dividend yield of 5% at implied EV NonOECD Leading financial…
Diverse Asset Base with Global Scale and Scope Adjusted Earnings Cash from Operations / Capital Program 10 B 18 B 16 E&P CFO 8 14 Capex 12 6 10 8 4 6 2 4 2 0 0 2009 2010 2011E 2009 2010 2011E ROCE 8% 12% 15% CROCE…
3 Year Growth Plan: 2013 2015 Portfolio Optimization Balance Sheet 3 4% annual production growth A credit rating 100%+ reserve replacement ratio No need to further reduce debt Legacy asset exploitation Significant debt capacity…
Capital Allocation Balanced Approach Cash generated from asset sales of 5 10 B in 2012 Nonstrategic North Sea assets / additional North America rationalization Certain Midstream and nonproducing assets Selective country / major asset…
Cash from Operations Funds Growth and Dividends Based on average: 2009 1H2011 Dividends as a % of CFO Capex as a % of CFO 120% 116% 25% 23% 99% 100% 20% 20% 20% 79% 80% 77% 77% 77% 73% 15% 14% 60% 60% 10% 40% 5% 5%…
Capital Allocation: 2013 2015 B Based on forward curve pricing Brent Avg: 104/bbl 2530 Investing in strong projects 80 HHUB Avg: 5.20/mcf CFO supports capex and dividend 70 3 Annual dividend growth Asset sales & cash balance…
Delivering Earnings and Cash Flow Growth Based on forward curve pricing Earnings Cash from Operations / Capital Program B B 10 20 Dividends Capital 8 CFO 15 6 10 4 5 2 0 0 2012 20132015 2012 20132015 Average Average…
Low Commodity Price Case: 2013 2015 B Based on lower pricing case 70 2530 Commodity Price Assumptions /BOE 2013 2014 2015 60 3 Brent 80 80 75 WTI 70 70 75 50 HHUB 4.5 4.8 5.0 40 42 45 Growth plan not altered 30 Capital reduced…
Sanctioned Projects Provide Growth Asset / Production Peak Region Major Projects Startup MBOED 700 Jasmine Q4 2012 35 North Sea Ekofisk South Q4 2013 26 600 Eldfisk II Q4 2014 26 Christina L. (D/E/F/G/H) Q3 2013 2016+ 100 SAGD…
Production Growth & Cash Margin Improvement Production MMBOED Flat Price Environment 2.0 Absolute production growth starts 28/BOE Cash Margin 33/BOE in 2013 3 4% CAGR 44% Shift toward higher margin production 59% 10% CAGR in…
Cash Flow Per Share Growth 3 4% 17.50 1 2% 3 4% 3 4% 12.50 C AGR 5% 10 1 2012 CFPS Production Flat Price Margin Growth at Share 2015 CFPS Growth Margin Growth Forward Curve Repurchase 2012 CFO based on forward curve…
Execution of Plan: 2013 2015 Portfolio Optimization Balance Sheet Production growth at 3 4% annually A credit rating Reserve replacement 100%+ from No need to further reduce debt existing resource base Significant debt capacity…
Opportunity for Value Creation EV implied by current share price Peer Low Peer High EV/DACF EV/DACF EV/EBITDA EBITDA PE P/E B 50 60 70 80 90 100 110 120 130 Opportunity to move to peer average and capture 10 B…
Schedule Q4 2011 Announcement of new management teams Q4 2011 File IRS ruling request Q4 2011 File Form 10 with the SEC Q1 2012 IRS and SEC final submissions Q2 2012 Favorable IRS ruling received Q2 2012 Final COP Board…
Why Invest in ConocoPhillips New ConocoPhillips Downstream Company Capability to do any project globally Unique diversified integrated portfolio Strong, talented, driven leadership team Strong, talented, driven leadership team…
Barclays Energy Conference Repositioning to Unlock Potential Jim Mulva Chairman & Chief Executive Officer September 7, 2011 New York, NY
APPENDIX
COP Non GAAP Reconciliations The historical and projected estimated earnings for the new Downstream Company and the new post spin ConocoPhillips are presented for illustrative purposes only. These amounts are preliminary, and include…
COP Non GAAP Reconciliations Non GAAP Reconciliations for Estimated Earnings Non GAAP Reconciliations for Estimated Earnings Downstream Company Post-Spin ConocoPhillips Millions Millions 2009 2010 2009 2010 1 Earnings 1…
COP Non GAAP Reconciliations Non GAAP Reconciliations for Estimated CFO Non GAAP Reconciliations for Estimated CFO Downstream Company Post-Spin ConocoPhillips Millions Millions 2009 2010 2009 2010 Cash Flow from Operations…
COP Non GAAP Reconciliations Non GAAP Reconciliations for ROCE Non GAAP Reconciliations for ROCE Downstream Company Post-Spin ConocoPhillips 2009 2010 2009 2010 Numerator (MM) Numerator (MM) 1 1 Earnings Earnings Refining &…
COP Non GAAP Reconciliations Non GAAP Reconciliations for CROCE Non GAAP Reconciliations for CROCE Downstream Company Post-Spin ConocoPhillips 2009 2010 Numerator (MM) 2009 2010 1 Numerator (MM) Earnings 1 Refining & Marketing…
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