Conocophillips · NYSE:COP
Conocophillips — Investor Day (November 2016)
77 slides from Conocophillips's investor day presentation, Nov 10, 2016
Slide 1: 2016 Analyst & Investor Meeting
2016 Analyst & Investor Meeting NOVEMBER 10, 2016
Slide 2: Agenda
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 EVP, Finance, Commercial & CFO Chairman & CEO Portfolio Choices Question & An
Slide 3: Cautionary Statement
Cautionary Statement The following presentation includes forward-looking statements. These statements relate to future events, such as anticipated revenues, earnings, business strategies, competitive position or other aspects of our operations, operating results or the industries or markets in which
Slide 4: Value Proposition for a Disciplined, Returns-Focused E&P
Value Proposition for a Disciplined, Returns-Focused E&P Ryan Lance Chairman & CEO
Slide 5: The Question We're Going To Address Today
The Question We’re 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 lower and more 120 volatile 100 Then • Requires positioning the busi
Slide 6: Value Proposition on a Page – Clear Priorities, No Waiting
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 authorization Growing PRIORITY Balance dividend Dividend Sheet • $5-8B asse
Slide 7: Strategy on a Page – Disciplined and Resilient, Yet Flexible
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 between distributions and double-digit total Brent organic gr
Slide 8: The Case For ConocoPhillips
The Case For ConocoPhillips Transformation Acceleration Differentiation • Reduced breakeven price • $5-8B asset sale program • Focused on free cash flow from >$75/BBL to <$50/BBL funds debt reduction and generation and returns, not buybacks absolute growth • Lowered capital intensity to stay-flat ca
Slide 9: What You'll Hear Today
What You’ll 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 buybacks Al Hirshberg • Highly focused investment portfolio aligne
Slide 10: Financial Priorities
Financial Priorities Don Wallette EVP, Finance, Commercial & CFO
Slide 11: Disciplined, Returns-Focused Strategy Tied to Financial Priorities
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 strong balance sheet • Balance sheet a competitive advantage through t
Slide 12: In a Commodity Business, a Low Breakeven Price Wins
In a Commodity Business, a Low Breakeven Price Wins Generate <$50/BBL BRENT Free ~$30B BREAKEVEN PRICE 2017+ Cash Flow Dividend $3.5B ~60% REDUCTION Adjusted Maintain Operating a Strong Costs Balance $9.7B Sheet ~$12B Dividend ~$1.3B Return Capital Adjusted Cash to $17.1B Operating Costs Shareholder
Slide 13: Low Capital Intensity is a CFO's Best Friend
Low Capital Intensity is a CFO’s Best Friend Replacing Base Decline Relative Capital Intensity Generate Free Cash Flow ADVANTAGE FROM LOW CAPITAL INTENSITY <$4B Capital/Yr TO REPLACE Maintain BASE DECLINE 2017 Capital for Flat Production/ a Strong Balance Available Cash Flow1 Sheet Production Return
Slide 14: You Call It Torque; We Call It Peer-Leading Upside
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 PER-SHARE PRODUCTION Absolute ROCE Improvement 8% 2017E CFO / 2016E CFO
Slide 15: A Strong Balance Sheet is NOT Optional
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 Maintain a Strong • Continuous low-cost access to capital market
Slide 16: We Have a Sensible, Executable Plan to Achieve Debt Target
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 Repayment Term loan ~$27B Sheet of Term Loan Fixed bond maturities $1.6 $20
Slide 17: Our Dividend is Set at a Competitive Level That Can Grow
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 growth in per-share a Strong Balance dividend rate Sheet • Dividend comp
Slide 18: Buybacks Reinforce Discipline and Boost Payout
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 Strong by ~80% Disciplined Growth Capital Balance Accelerating Disposi
Slide 19: Returns Matter. A Lot.
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% reductions mitigate impact of lower Sheet prices 3% 3% • Returns grow even
Slide 20: Financial Priorities Make ConocoPhillips Truly Distinctive
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 • Achieve target debt of $20B by year-end 2019 • Top-tier payou
Slide 21: Portfolio Choices
Portfolio Choices Al Hirshberg EVP, Production, Drilling & Projects
Slide 22: Not That Long Ago We Were in 28 Places
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 Bangladesh Malaysia Brunei Nigeria Indonesia Peru Angola Timor-Leste Australia 22
Slide 23: Now We Are in About Half the Places
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 Australia IN GLOBAL FOOTPRINT Chile Countries represent current focus areas. 23
Slide 24: Asset Sale Program is Focused on Improving Mix and Margins
Asset Sale Program is Focused on Improving Mix and Margins Portfolio Product Mix NA Gas • Accelerating annual $1-2B of asset sales NA Gas NA Gas • Strategic decision to drive returns Int’l Gas improvement through product mix shift Int’l Gas Int’l Gas NGL • Targeting areas with active A&D markets NGL
Slide 25: Growing Where We're Planted – More Low Cost of Supply Resource
Growing Where We’re Planted – More Low Cost of Supply Resource <$40/BBL 2015 vs. 2016 Resources <$50/BBL Brent AVERAGE CoS 18 BBOE OF RESOURCE 18 BBOE 6 BBOE Since 2015 13 BBOE $40-$50/BBL $40-$50/BBL $30-$40/BBL <$30/BBL <$40/BBL Cost of Supply Production Cost Reduction, Appraisal & Fully Burdened
Slide 26: Fully Burdened Cost of Supply: Everything Including the Kitchen Sink
Fully Burdened Cost of Supply: Everything Including the Kitchen Sink Fully Burdened Cost of Supply by Component ($/BBL) • Cost of supply represents the flat, real commodity price that yields an after-tax return of 10% on a point- forward and fully burdened basis • A fully burdened cost of supply inc
Slide 27: Match This: 18 BBOE Resource, <$40/BBL Average CoS
Match This: 18 BBOE Resource, <$40/BBL Brent Average CoS <$50/BBL Cost of Supply Resource (Fully Burdened) Burden1 50 DIVERSE & FLEXIBLE 40 LOW COST OF SUPPLY PORTFOLIO Cost of Supply ($/BBL) 30 20 10 0 00 3000 5 5000 6000 9000 10 10000 12000 15 15000 18000 Net Resources (BBOE) LNG & Oil Sands Conve
Slide 28: Power of Diversification: Three Asset Classes, Each Serves a Role
Power of Diversification: Three Asset Classes, Each Serves a Role Stay-Flat Capital 18 BBOE Resources Per Year Production Over Time <$40/BBL Average ~$4.5B Cost of Supply CAPITAL FOR FLAT TOTAL PRODUCTION • Large/flexible source of short-cycle growth • Low execution risk ~$1B Unconventional ~7 BBOE
Slide 29: LNG and Oil Sands: Big and Stable with Price and Technology Upside
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 Lake Qatar Foster Creek ConocoPhillips Producing Acreage ConocoPhillips Acr
Slide 30: APLNG: Project Exceeding Expectations; All Aboard Train 2
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 LNG offtake contracts for 8.6 MTPA 40 • >1 BBOE net resource 20 0
Slide 31: Darwin LNG: Strong Performance and Bright Future
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 utilization by drilling 3 Bayu-Undan infill wells in 2017 MULT
Slide 32: Surmont: Tomorrow's Legacy Asset is Now Ramping Up
Surmont: Tomorrow’s 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 OVER 12 MONTHS 0.2 Average FCD Wells 40 0.1 20 Average Traditional Wells
Slide 33: Surmont: Picture This
Surmont: Picture This Reducing Footprint & Cost 33
Slide 34: Oil Sands Technology: Unlocking 13 BBOE Resource with >$50/BBL CoS
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 generation optimization Bitumen • Flow control device Reservoir Re
Slide 35: Power of Diversification: Predictable LNG and Oil Sands Portfolio
Power of Diversification: Predictable LNG and Oil Sands Portfolio 18 BBOE Resources Production Over Time <$40/BBL Average Cost of Supply • Flat production for decades with low sustaining capex Unconventional ~7 BBOE • Megaproject investment phase complete • Near-term focus on fully leveraging instal
Slide 36: Conventional: The Good Stuff No One Asks About
Conventional: The Good Great Stuff No One Asks About Conventional Resources 50 ~6 BBOE RESOURCE <$35/BBL AVERAGE COST OF SUPPLY Cost of Supply $/BBL 40 • Continuing to lower costs; ~40% decrease since 30 2014 20 • Conventional drilling expected to add ~150 MBOED 10 over next 5 years 0 00 5 5000 10 1
Slide 37: New Conventional Projects: Low-Risk, High-Value
New Conventional Projects: Low-Risk, High-Value, We’ve Got It Alaska CD5 / DS-2S 1H NEWS / GMT1 GMT2 Europe Ekofisk South Clair Ridge Aasta Hansteen Tor II ~130 MBOED INCREMENTAL PRODUCTION APME Bohai / Gumusut Malikai Bohai 3 Suban Bohai 4 BY 2021 Previous 2017 2018 2019 2020 2021 5-Year Convention
Slide 38: Alaska: 40% Cost of Supply Reduction Spurs New Activity
Alaska: 40% Cost of Supply Reduction Spurs New Activity CD5 Project Cost of Supply1 ($/BBL) • Shifting to performance-based contracts • Improving operating efficiency through integrated planning and execution 66 • Collaborating with other operators to ~40% DECREASE maximize utilization of shared res
Slide 39: Norway: 50% Cost of Supply Reduction on Future Projects
Norway: 50% Cost of Supply Reduction on Future Projects Future Projects Cost of Supply1 ($/BBL) • Minimum facility concept significantly reduces cost ~50% and improves project economics DECREASE IN FULL-CYCLE COST OF SUPPLY1 • Standardizing design and functionality 61 • Leveraging current infrastruc
Slide 40: China: 50% Cost of Supply Reduction Through Continuous Improvement
China: 50% Cost of Supply Reduction Through Continuous Improvement Bohai WHP-J Project Cost of Supply1 ($/BBL) ~50% DECREASE • Capturing structural and cyclical cost savings IN FULL-CYCLE COST OF SUPPLY1 • Fit-for-purpose project design 62 • Optimizing facility construction plans 44 32 • $150MM net
Slide 41: Power of Diversification: Low-Risk Conventional Portfolio
Power of Diversification: Low-Risk Conventional Portfolio Production Over Time 18 BBOE Resources <$40/BBL Average Cost of Supply • Short-cycle development drilling in legacy assets expected to add ~150 Unconventional ~7 BBOE MBOED over next 5 years • Low-risk, medium-cycle projects expected to add ~
Slide 42: Unconventional: Top-Tier Resource Base and Growing
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 and Conventional • Flexible, short-cycle investments with low execution risk Niobra
Slide 43: Unconventional: This Will Surprise You!
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 Marathon Oil Continental Resources HIGHEST VALUE Permian OF TOP 10 NORTH AMERIC
Slide 44: Eagle Ford: Match and Raise – Our Eagle Ford is Best in Class
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 Total EUR2 20% Stacking INCREASE Eagle Ford IN EUR3 De Witt ~40% ~30% 2
Slide 45: Eagle Ford: Structural, Not Cyclical, Cost Reductions
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 “operate by exception” Implementation • Real-time insight accelerates
Slide 46: Eagle Ford: Advanced Technical Analysis Increases EUR and Returns
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 5 Did well monitoring to gain insights on fracture years; analyzed
Slide 47: Eagle Ford: NPV of Learning Curve > NPV of Acceleration
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 Clusters 60-Acre High Low 60-Acre Triple 80-Acre Triple Thinner Thicker
Slide 48: Eagle Ford: Measured Pace Pays Off
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 LOCATIONS <$40/BBL COST OF SUPPLY • Maximizing ultimate recovery through improved understanding • Continuin
Slide 49: Eagle Ford: ConocoPhillips is Perennial Champ
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 $35 Average Breakeven Price ($/bbl) 100 $50 $30 NPV10 per Acre ($M) $25 80 $40 $20 60 $30 $15 40 $20 $10 20
Slide 50: Permian: We Have a Shiny Object, Too
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 emerging unconventional potential NW Shelf and Central Basin Platform1
Slide 51: Delaware: 1.8 BBOE Resource and Just Getting Started
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 Development <$50/BBL CoS RESOURCE SINCE 2015 Red Hills New Mexico • 75 M net unconventional ac
Slide 52: Bakken: Increasing EUR While Driving Down Costs
Bakken: Increasing EUR While Driving Down Costs Lowest Well Cost/BOE1 Middle Bakken 300 2014-2015 Completion Optimization 40% Well Cost ($/BOE) Cumulative Oil 200 INCREASE (MBO) 100 0 0 100 200 300 400 Days Online 2011-2013 Design 2014-2015 Design Competitors2 • ~620 M net acres; 0.7 BBOE resource <
Slide 53: Western Canada: 1 BBOE Today, But Watch This Resource Grow
Western Canada: 1 BBOE Today, But Watch This Resource Grow • 1 BBOE unconventional resource <$50/BBL cost of supply Blueberry 3.1 MILLION Montney NET ACRES • ~100 MBOED production expected in 2017 Albright Montney • Reduced production and operating expense per Calgary Falher/ BOE by ~30% since 2014
Slide 54: Future Unconventionals: Pipeline of Low Cost of Supply Possibilities
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 Cemented • Continue drilling and piloting in 2017 0 6 12 18 24 30 Mon
Slide 55: Unconventionals: Massive Flexible Growth
Unconventionals: Massive Flexible Growth Resource # Remaining ~7 BBOE Eagle Ford, Delaware and <$50/BBL Locations CoS (Net) Bakken Production (MBOED) Asset (BBOE) <$50 CoS $40-$50/BBL 20% 3-Year CAGR From 2017 Average CoS Eagle Ford 2.4 3,500 ~4 BBOE Delaware 1.8 1,400 $40-$50/BBL 10% CoS $30-$40/BB
Slide 56: Power of Diversification: Low-Risk Unconventional Portfolio
Power of Diversification: Low-Risk Unconventional Portfolio 18 BBOE Resource Production Over Time <$40/BBL Average Cost of Supply • Flexible source of production growth Unconventional ~7 BBOE • Industry-leading returns • Optimizing development of our large resource base Conventional ~6 BBOE • Utiliz
Slide 57: Match This: 18 BBOE Resource, <$40/BBL Average CoS
Match This: 18 BBOE Resource, <$40/BBL Brent Average CoS <$50/BBL Cost of Supply Resource (Fully Burdened) • Large, low cost of supply resource Burden1 50 base 40 • Diverse, low-decline base production Cost of Supply ($/BBL) • Flexible, short-cycle investment 30 options 20 • Decades of drilling inve
Slide 58: Strategic Flexibility
Strategic Flexibility Matt Fox EVP, Strategy, Exploration & Technology
Slide 59: Low Cost of Supply Portfolio = High-Return Investment Options
Low Cost of Supply Portfolio = High-Return Investment Options <$50/BBL Cost of Supply Resource Returns vs. Cost of Supply (Fully Burdened) as a Function of Price ~30% RETURN 50% AT $50/BBL BRENT Burden1 50 45% Fully Burdened Point-Forward 40% Internal Rate of Return 40 $50/BBL Cost of Supply ($/BBL)
Slide 60: Our Portfolio is Designed to Create Strategic Flexibility…
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 Future $30-$40/BBL Projects Sanctioned Projects LNG & Oil Sands <$30/BBL Base 0% Co
Slide 61: …Because Flexibility is Essential in an Uncertain World
…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 High pace of unconventional Global economic development in the f
Slide 62: Price Forecasts Through 2021 Reflect Significant Uncertainty
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 range of long-term price 60 projections 50 • Examples to demonstrate viabi
Slide 63: Flexible Strategy Delivers Across a Range of Prices
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 ACCELERATION ACTIONS 2nd Priority Grow Dividend Value-Based Dec
Slide 64: Uncertainty Compounded by Cyclicality
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 2021 External Analyst Price Forecasts Example Case 64
Slide 65: Strategic Flexibility in Action: Oil Price Cycle Example
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 Debt $20B Achieved: Debt $20B 10 3rd Target ‘A’ Priority Build cash durin
Slide 66: What to Expect from 2017-2019 with Acceleration Actions
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 Starting Cash Debt Reduced $7B Reduced Portfolio CFO @ Breakeven ~$50/BBL B
Slide 67: We Have Transformed Our Strategy and Increased Strategic Flexibility
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 Broad Narrow Product Mix Gas Oil Portfolio Choices Cost of Supply ~$75/B
Slide 68: Our Strategy Is Distinctive, Interesting, Viable and Achievable
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 $5-8B of dispositions Portfolio Choices • More than 30 years of pro
Slide 69: Closing Comments
Closing Comments Ryan Lance Chairman & CEO
Slide 70: The Case For ConocoPhillips
The Case For ConocoPhillips Transformation Acceleration Differentiation 70
Slide 71: Appendix
Appendix
Slide 72: 2017 Operating Plan Guidance
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 Canada Canada Lower Lower Lower Lower 48 48 48 48 2016E 2017E 2016E 2017E 2016E
Slide 73: 2017 Annualized Cash Flow Sensitivities
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: ~$50-60MM for $1/BBL change • $1/BBL movement in Brent:
Slide 74: Current Marker Price Differentials at $50/BBL Brent
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) Henry Hub (Gas) ~30% of Brent ~35% of Brent $2.5/MMBTU $3.0/MMBTU Asia LNG
Slide 75: Abbreviations and Definitions
Abbreviations and Definitions • A&D: acquisitions and divestitures • GAAP: generally accepted accounting principles • ANS: Alaska North Slope • GHG: greenhouse gas emissions • B: billion • LNG: liquefied natural gas • BBL: barrel • M: thousand • BBOE: billions of barrels of oil equivalent • Margin G
Slide 76: Investor Information
Investor Information Stock Ticker Investor Relations Contacts: NYSE: COP Telephone: +1 281.293.5000 Website: www.conocophillips.com/investor Ellen DeSanctis: [email protected] Andy O’Brien: [email protected] Headquarters Vladimir R. dela Cruz: v.r.delacruz@conocophi
Slide 77: Cost of Supply Explanation
Cost of Supply Explanation Future price uncertainty makes it difficult to rely solely on the traditional measures of merit for investment decisions – NPV, IRR and PI – as they require an explicit price forecast. To reduce our reliance on price forecasts, ConocoPhillips’ primary capital allocation de