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INVESTOR UPDATE – ConocoPhillips

ConocoPhillips · Mar 5, 2012 · 45 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 UPDATE – ConocoPhillips – slide 1
    Investor Update Jim Mulva Chairman & Chief Execu1ve Ocer March 5, 2012 New York, NY CAUTIONARY STATEMENT The following presenta1on includes forward-looking statements. These statements relate to future events, such…
  2. INVESTOR UPDATE – ConocoPhillips – slide 2
    Introduc:on Update on Company o Strong opera:onal and nancial performance o On target to execute reposi:oning o No change in strategy or direc:on Update on reposi:oning o Crea:ng two leading energy companies o Spin…
  3. INVESTOR UPDATE – ConocoPhillips – slide 3
    ConocoPhillips Today Cash from Opera:ons (2011) Strong OECD-based cash ow 19% Improving margins and returns OECD 81% Growth per share Non-OECD 90 B Capital Employed (2011) Shareholder focus 5% Con:nued non-core asset…
  4. INVESTOR UPDATE – ConocoPhillips – slide 4
    Reposi:oning Ra:onale 2009 Align porVolio with view of opportuni:es Rapid response to change in economic circumstances o Financial crisis / share price undervalued U:lize cash from asset sales to bring debt down and aggressively…
  5. INVESTOR UPDATE – ConocoPhillips – slide 5
    3 Year Reposi:oning Plan: 2010 2012 PorVolio Op:miza:on Balance Sheet n Mone:ze non-core assets n Reduce debt n Posi:on for organic growth n Strengthen nancial exibility n Focus capital toward E&P n Increase liquidity n Reduce…
  6. INVESTOR UPDATE – ConocoPhillips – slide 6
    Progress through 2011 Right on Target PorVolio Op:miza:on Balance Sheet n LUKOIL interest sold for 9.5 B n Debt reduced by 6 B n 10 B of non-core asset sales n Debt / cap of 26% n 129% average organic RRR1 2010 / 2011 n Liquidity2…
  7. INVESTOR UPDATE – ConocoPhillips – slide 7
    2010 2011 Alloca:on of Capital B 70 CFO exceeds Capex and Dividends by 5 B Asset sale proceeds plus LUKOIL used for 60 1 15 B share repurchase plus debt reduc1on 39% of CFO & proceeds returned to shareholders 50 20 25 68%…
  8. INVESTOR UPDATE – ConocoPhillips – slide 8
    Shiing Capital to Higher Returns % of Total Capital Program 100% 90% 80% 70% 71% 60% 79% Liquids, Interna:onal 86% Gas and Other 50% 40% 30% 12% 20% 10% 10% 7% L48 Gas / Canada Gas 17% 11% 7% R&M 0%…
  9. INVESTOR UPDATE – ConocoPhillips – slide 9
    Enhancing Returns Capital Eciency Reduced rening and N. A. gas 25% ROCE CROCE Con:nued capital discipline 20% Improved cash margins 15% Share repurchase accelerates 10% improvement 5% 0% 2009 2010 2011 2009…
  10. INVESTOR UPDATE – ConocoPhillips – slide 10
    Leading Returns Improvement Peer-leading improvement in ROCE from 2010 to 2011 Percent Change 2011 vs 2010 ROCE CROCE 35% 26% 25% 13% 9% 5% 6% 1% -2% -7% -6% -9% COP RDS CVX XOM TOT BP *All companies…
  11. INVESTOR UPDATE – ConocoPhillips – slide 11
    Strong Financial Flexibility Year-End Debt Debt-to-Capital Ra:o ( B) (%) 35 35 31 30 29 30 26 24 23 25 25 25 20 20 15 15 10 10 5 5 0 0 2009 2010 2011 2009 2010 2011 Reduced debt and increased nancial exibility 11
  12. INVESTOR UPDATE – ConocoPhillips – slide 12
    Delivering Asset Sales Program LUKOIL proceeds of 9.5 B Announced 10 B program for 2010/11 2010 / 2011 disposi:on results o Proceeds of 7 B in 2010 / 3 B in 2011 113,000/BOED produc:on Expect 2012 asset sales of 10 B 20/BOE…
  13. INVESTOR UPDATE – ConocoPhillips – slide 13
    Share Repurchase Program Cumula:ve Share Repurchases ( B) 16 15 B share repurchases 14 Reduced outstanding shares 15% 12 Purchased reserves 10/BOE 10 Funded with proceeds from asset 8 sales and LUKOIL share sale 6 10 B…
  14. INVESTOR UPDATE – ConocoPhillips – slide 14
    Produc:on per Share Growth BOE Produc:on / Share 2010 2012 asset sales program 0.60 decreased produc:on 0.56 25 B share repurchase program 0.52 during 2010 2012 increasing 0.48 produc:on per share 0.44 Absolute…
  15. INVESTOR UPDATE – ConocoPhillips – slide 15
    Annual Dividend Increases COP Quarterly Dividend Growth (cents/share) 66 230% increase / 14% CAGR 55 50 Nine consecu:ve annual 47 increases 41 36 Current yield = 3.5% 31 25 20% of opera:ng cash ow 22 20…
  16. INVESTOR UPDATE – ConocoPhillips – slide 16
    Remaining 2012 Ini:a:ves PorVolio Op:miza:on Balance Sheet n 2012 asset sales of 10 B n No material change n Progress major E&P projects n Re:re debt as it matures n Ra:onalize low margin reneries n Maintain signicant liquidity…
  17. INVESTOR UPDATE – ConocoPhillips – slide 17
    Execu:on of Plan: 2010 2012 PorVolio Op:miza:on Balance Sheet n Mone:zed 30 B, including LUKOIL n Debt reduced n Posi:oned E&P for future organic growth n Liquidity and nancial exibility n Reduced exposure to rening increased n…
  18. INVESTOR UPDATE – ConocoPhillips – slide 18
    Plan Execu:on Good Allocators of Capital B 2010 2012 90 Add'l B/S Cash 80 Debt Reduc:on B/S Cash Asset 70 30 B Dividends Sales Debt Reduc:on Asset 15 B 60 Sales Dividends Share 25 B 50 Share Repurchase 16 B…
  19. INVESTOR UPDATE – ConocoPhillips – slide 19
    Key Performance Metrics 2010 2011 2012 Key Metrics Actual Actual Outlook E&P Produc:on MMBOED 1.75 1.62 1.55 Annual E&P Produc:on per Share 0.44 0.45 0.50 E&P Cash Margin /BOE 21 28 281 Rening Crude Capacity MMBPD YE Exit…
  20. INVESTOR UPDATE – ConocoPhillips – slide 20
    Value Crea:on Through Reposi:oning Performance of 100 invested in October 2009 180 Total Shareholder Return COP Peers S&P 500 Annual return: 24% 160 140 14% 12% 120 100 80 2009 2010 2011 2012 Market…
  21. INVESTOR UPDATE – ConocoPhillips – slide 21
    Crea:on of Two Leading Energy Companies Special dividend of Phillips 66 shares to COP shareholders 1 share of Phillips 66 per 2 shares of COP owned at record date 6 B of cash transferred to COP, majority subsequently used for COP…
  22. INVESTOR UPDATE – ConocoPhillips – slide 22
    Spin Ecient Reposi:oning Improve returns capital alloca:on Provide pure-play investment opportunity Strengthen strategic focus Increase transparency of assets and results Enable Phillips 66 to pursue / capture new…
  23. INVESTOR UPDATE – ConocoPhillips – slide 23
    The New ConocoPhillips Large, diversied and interna:onal Reserves 8.4 BBOE (YE 2011) reserve and resource posi:on OECD 21% Non-OECD 100%+ reserve replacement Growing produc:on and margins 79% Ability to execute projects on…
  24. INVESTOR UPDATE – ConocoPhillips – slide 24
    Posi:oned to Create Dieren:al Value Cash ow growth Unique Posi:on o Produc:on CAGR of 3 5% the next 5 years 10% o Margin CAGR of 5% over the next 5 years Produc:on Growth Target (at price environment) 8% E&Ps o…
  25. INVESTOR UPDATE – ConocoPhillips – slide 25
    Con:nued Strong Reserve Replacement Reserves replacement above 100% at compe::ve F&D costs (20/BOE) 3.6 BBOE reserves addi:ons expected in 2012 2016 Reserves Addi:ons Reserves Replacement1 140% (2012E through 2016E, BBOE)…
  26. INVESTOR UPDATE – ConocoPhillips – slide 26
    Inves:ng in Growth 2012E Capital Major Projects 14 - 15 B 5-6 B Explora:on FCCL 2 B & Appraisal Surmont 2 Clair Jasmine Ekosk South Indonesia Eldsk II Malaysia Major APLNG Projects 5-6 B Asia Pacifc North Sea SAGD…
  27. INVESTOR UPDATE – ConocoPhillips – slide 27
    Growth from Major Projects 900 MBOED added from drilling and projects between 2012 and 2016 Decline aer exploita:on capital 0% By Project Type Major Projects (MMBOED) 400 Alaska 350 MBOED Future impact from 1.8 300…
  28. INVESTOR UPDATE – ConocoPhillips – slide 28
    Absolute Produc:on Growth 300 MBOED growth from 2012 to 2016, produc:on CAGR of 3-5% Liquids and LNG account for 85% of the growth MMBOED 1.8 LNG L48 liquids and interna:onal projects 1.5 drive produc:on CAGR of 4-6% for…
  29. INVESTOR UPDATE – ConocoPhillips – slide 29
    Improvement in Cash Margins Shi to high margin produc:on results in 5% cash margin CAGR By Cash Margin Growing Produc:on in Higher (MMBOED) Margin Areas 2012-2016 Produc:on Change, MBOED 2012 Flat Price Condi8ons 1.8 150…
  30. INVESTOR UPDATE – ConocoPhillips – slide 30
    Explora:on Success Enhances Growth Unconven:onal explora:on o Pilot programs in 5 new plays in North America Encouraging early results in all pilots (including Avalon and Duvernay) o Acquired signicant acreage posi:ons in liquids…
  31. INVESTOR UPDATE – ConocoPhillips – slide 31
    Dieren:al Value Crea:on COP Enterprise Value Implied Current Opportunity Using Range of Peer Metrics EV EV E&Ps EV/DACF EV/DACF IOCs E&P EV/ Reserves Reserves P/E PE EV, B 50 70 90 110 130 150…
  32. INVESTOR UPDATE – ConocoPhillips – slide 32
    Phillips 66 Uniquely Integrated Downstream Capital Employed by Region (2011) Industry-leading R&M, Chemicals and Midstream Int'l businesses 19% Returns-focused U.S. Opportuni:es for growth 81% Compe::ve posi:on Net Income…
  33. INVESTOR UPDATE – ConocoPhillips – slide 33
    Leading Downstream Company R&M Midstream Chemicals n 15 reneries (11 in US) n Opera1ons managed mainly n 50/50 JV with Chevron - CPChem n Nelson complexity average of 11 through DCP Midstream, a 50/50 n North Americas largest…
  34. INVESTOR UPDATE – ConocoPhillips – slide 34
    Crea:ng Dieren:al Value Reposi:oning porVolio / improving returns o Growing investments in Midstream and Chemicals DCP and CPChem have announced mul:-billion dollar growth projects o Reduce rening exposure o Aggressively…
  35. INVESTOR UPDATE – ConocoPhillips – slide 35
    Compe::ve Posi:on Global Refining Capacity 6,000 (MBD) 5,000 ROW Segment Adjusted Earnings Asia 4,000 10,000 (2009-2011 Average, MM) Europe 3,000 N.A. 2,000 1,000 7,500 Transportation Retail XOM BP VLO PSX CVX MPC TSO…
  36. INVESTOR UPDATE – ConocoPhillips – slide 36
    Opera:onal and Financial Metrics 2011 2012 Key Metrics Outlook 2015+ Actual Advantaged Crude 54% 62% 65%+ Dis:llate Yield 40% 40% 42% Debt, B -- 8 6 Cash, B -- 2 3 Debt / Total Capitaliza:on --…
  37. INVESTOR UPDATE – ConocoPhillips – slide 37
    Dieren:al Value Crea:on PSX Enterprise Value Implied Using Current Opportunity Range of Peer Metrics EV EV EV/CF P/E EV, B 10 20 30 40 Opportunity to enhance value recogni:on of all segments Current EV based on…
  38. INVESTOR UPDATE – ConocoPhillips – slide 38
    Path Forward Update on Spin Transac:on Credit ra:ngs received by S&P and Moodys o COP maintains A & A1 / PSX receives BBB / Baa1 Phillips 66 bank nancing in place Phillips 66 intends to access debt capital markets pre-spin…
  39. INVESTOR UPDATE – ConocoPhillips – slide 39
    Complete COP Reposi:oning in 2012 ConocoPhillips Con:nued focus on shareholder distribu:ons o Progress share repurchase program of 10 B in 2012 Expect 5 B in share repurchase through June Addi:onal share repurchase dependent on…
  40. INVESTOR UPDATE – ConocoPhillips – slide 40
    History of Dieren:al Value Crea:on Performance of 100 invested in July 1999 500 Total Shareholder Return Reposi:oning COP Peers S&P 500 Annual return: 13% 400 300 9% 200 2% 100 0 1999 2000 2001 2002 2003 2004…
  41. INVESTOR UPDATE – ConocoPhillips – slide 41
    Investor Update Appendix March 5, 2012 New York, NY
  42. INVESTOR UPDATE – ConocoPhillips – slide 42
    COP Non GAAP Reconcilia:ons 2009 2010 2011 GAAP E&P Net Income1 - MM 3,604 9,198 8,242 GAAP E&P Net Income1 - / BOE 5.33 14.38 13.95 non-core earnings impacts - MM (gains) and losses on asset dispositions (55) (3,151) 113 asset…
  43. INVESTOR UPDATE – ConocoPhillips – slide 43
    COP Non GAAP Reconcilia:ons ROCE 2009 2010 2011 Numerator (MM) Net income 4,492 11,417 12,502 After-tax interest expense 838 772 632 GAAP ROCE earnings 5,330 12,189 13,134 Non-core earnings impacts 616 (2,533) (279) Adjusted…
  44. INVESTOR UPDATE – ConocoPhillips – slide 44
    COP Non GAAP Reconcilia:ons R&M - ROCE Midstream - ROCE 2011 2011 Numerator (MM) Numerator (MM) Net income 3,853 Net income 403 After-tax interest expense - After-tax interest expense - GAAP ROCE earnings 3,853 GAAP ROCE earnings…
  45. INVESTOR UPDATE – ConocoPhillips – slide 45
    COP Non GAAP Reconcilia:ons CROCE 2009 2010 2011 Numerator (MM) EBIDA1 14,624 21,248 21,068 Non-core earnings impacts 616 (2,533) (279) Adjusted EBIDA 15,240 18,715 20,789 Adustment to exclude LUKOIL (1,219) (1,252) (239)…

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