Conocophillips · NYSE:COP
Conocophillips — Investor Day (August 2018)
82 slides from Conocophillips's investor day presentation, Aug 3, 2018
Slide 1: 2017 Analyst & Investor Meeting
2017 Analyst & Investor Meeting U P D AT E D A S O F A U G U S T 2 0 1 8 08/03/2018
Slide 2: 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 3: Agenda
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, Strategy, Exploration & Technology Ryan Lance Chairman & CEO Our Portfolio is
Slide 4: Keeping Our Discipline, Creating Value
Keeping Our Discipline, Creating Value R YA N L A N C E Chairman & CEO
Slide 5: Keeping Our Discipline, Creating Value
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 Low CoS Strength Price Portfolio 2nd Annual dividend growth PRIORITY Gro
Slide 6: The Market Has Taken Note of Our Accomplishments
The Market Has Taken Note of Our Accomplishments… Total Shareholder Return Since 2016 Analyst & Investor Meeting 33% S&P 500 19% S&P 500 S&P 500 XOP ETF S&P 500 E&P ENERGY INTEGRATED OIL 10% 10% & GAS 9% 7% Source: FactSet. Includes: S&P 500/Integrated Oil & Gas-SUB, S&P 500/Energy-SEC, S&P 500/Oil
Slide 7: Delivering on Our Disciplined, Returns-Focused Value Proposition
Delivering on Our Disciplined, Returns-Focused Value Proposition 2017: Full Activation of our Plan 2018: Execute the Plan, Plus ► Portfolio reset; ~$16B dispositions; ► Strengthened through focused Portfolio strong organic RRR1 acquisitions and dispositions ► CFO2 > capital by $2.5B; improving ► Foc
Slide 8: ...But We're Just Getting Started
…But We’re Just Getting Started COP Works COP Works at Lower Prices at Higher Prices ► Low capital intensity ► Oil-weighted portfolio ► Sustaining price of ► Predominantly tax and <$40/BBL royalty regimes ► Relentless focus on ► Relentless focus on operating costs operating costs ► Extensive low cos
Slide 9: Value Creation Target: >20% CROCE by 2020 at $50/BBL
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 Capital <$40/BBL sustaining price $5.5B average capital High-Return BBOE $15B in 2018 Reduce Debt <$35/BBL average CoS
Slide 10: Our Differentiated Strategy
Our Differentiated Strategy M AT T F O X EVP, Strategy, Exploration & Technology
Slide 11: ConocoPhillips Strategy Framework
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 reduction and distributions ► Capital flexibility ► Deep inventor
Slide 12: Resetting Every Bar; Strategy Aligned with Shareholder Interests
Resetting Every Bar; Strategy Aligned with Shareholder Interests Estimated Sources and Uses of Cash (2018-2020) at $50/BBL Available Cash $5.5B/Yr capital delivers CFO @ cash flow expansion and Investment for $50/BBL CFO Expansion reserve replacement ($2B/Yr) Debt and Starting planned buybacks are f
Slide 13: Activating 5th Priority Within Cash Flow
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 cash flow per debt- adjusted share >10% • Lowers sustaining price $0
Slide 14: Disciplined Investments Deliver Returns and Expand Cash Flows
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 Returns Return cash to 20-30% of CFO shareholders annually Balance sheet
Slide 15: Predicting Price is Useless, Scenario Planning is Priceless
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 unconventional Global economic recovery and other supply supports high oil
Slide 16: Scenarios Highlight Value of Strategic Flexibility and Diversification
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 Restriction/ 50 Demand Destruction Unrelenting Unconventionals/ Demand Destruction 40 30 STR
Slide 17: ConocoPhillips is Advantaged Across Price Cycles
ConocoPhillips is Advantaged Across Price Cycles Capital Allocation Priorities • Low capital intensity and <$40/BBL PRIORITIES INFORM ACTIONS sustaining price through cycles 1st Sustaining Capital & PRIORITY Base Dividend • Extensive low cost of supply investment portfolio 2nd Dividend Growth • Bala
Slide 18: Our Strategy to Deliver Superior Returns to Shareholders Through Cycles
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 Resilience to downside, Superior returns to cash flow expansion & shareholders t
Slide 19: Our Portfolio is Aligned to Strategy
Our Portfolio is Aligned to Strategy AL HIRSHBERG EVP, Production, Drilling & Projects
Slide 20: Each Region Plays an Important Role in Our Strategy
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 Focused, Resource- Lower 48 Rich Asset Base Growing Unconventionals Emergi
Slide 21: Our Low Cost of Supply Portfolio Keeps Getting Better
Our Low Cost of Supply Portfolio Keeps Getting Better 2016 vs. 2017 Resources <$50/BBL Cost of Supply <$50/BBL Cost of Supply Resource 18 BBOE 50 $40-$50 15 BBOE <$35/BBL AVERAGE CoS $40-$50 <$30/BBL $40-$50 OF RESOURCE /BBL /BBL 40 Cost of Supply ($/BBL) $30-$40 30 /BBL $30-$40 /BBL ~30% INCREASE 2
Slide 22: Unconventional Assets: Portfolio is World-Class
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 • High-margin production expands cash flow MONTANA Bakken NORTH CONVENTIO
Slide 23: Conventional Assets: The Great Assets People are Now Asking About
Conventional Assets: The Great Assets People are Now Asking About ~4 BBOE RESOURCE Beaufort Sea North Sea Aasta Hansteen Kuparuk <$30/BBL average cost of supply CD5 Fiord West Heidrun Alpine NEWS Prudhoe Conventional Resources GMT-1 DS-2S CHINA Greater Clair Troll 15 BBOE ~4 BBOE ALASKA NORTH SLOPE
Slide 24: LNG & Oil Sands: The Anti-Treadmill Assets Play an Important Role
LNG & Oil Sands: The Anti-Treadmill Assets Play an Important Role ~3 BBOE RESOURCE Fort McMurray North Field Bayu-Undan Barossa <$35/BBL average cost of supply Surmont Qatargas 3 LNG Darwin LNG APLNG Ras Laffan LNG & Oil Sands Resources QATAR Gladstone Persian ALBERTA AUSTRALIA Gulf 15 BBOE ~3 BBOE
Slide 25: Low Sustaining Capital is the Key to Free Cash Flow Generation
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 $1.3B/Yr advantage • Unconventional production stays flat at 2017 level
Slide 26: Maintaining Our Unconventional Production with Rigs in the Big 3
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 2017 Average 3-Year CAGR 20% 5 RIGS Production 2016 CO NV ENTIONA L 10% to
Slide 27: Offsetting Conventional Declines Around the World
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 Production APME ONGOING LEGACY CO NV ENTIONA L DRILLING PROGRAMS EUROPE $0.4B/Y
Slide 28: Distinctive Sustaining Price – No Waiting Necessary
Distinctive Sustaining Price – No Waiting Necessary <$40/BBL Cash Sources Cash Uses sustaining price Dividend Sustaining $3.5B CFO Capital at $40/BBL • Cash flow Adjusted exceeds sustaining capital and Operating Costs Dividend dividend over plan period $9.7B 2018 – 2020 Average • Leading low-capital
Slide 29: Capital Investment for Cash Flow Expansion
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 $0.3B/Yr SHORT -CYCLE FUTURE MAJOR E X P L O R AT I O N UNCONVENTIONAL PROJECTS UNCONVENTIONALS Production High-margin investments Mix of investments across Finding the in Eag
Slide 30: Our Big Unconventionals: Cash Flow Positive Now & Net Cash Flow Grows
Our Big 3 Unconventionals: Cash Flow Positive Now & Net Cash Flow Grows Production1 (MBOED) Positive Net Cash Flow1,2 (NCF) ($B) 22% PRODUCTION 400 CAGR 2017-2020 6 ADDITIONAL RIGS >$2B NCF >1 DELIVERS 80% MORE CUMULATIVE PRODUCTION IN 3 YEARS 220 5TO RIGS STAY FLAT 2017 2018 2019 2020 2017 2018 201
Slide 31: 3-Year Development Plans for the Big Unconventionals
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 2017 2018 2019 2020 Sustaining production Growth production Sustaining production
Slide 32: Future Major Projects: Visibility Well Into Next Decade
Future Major Projects: Visibility Well Into Next Decade $0.5B/Yr Beaufort Sea North Sea (2018-2020) Fiord West NEWS CONVENTIONAL GMT-2 Clair South CHINA Barossa ALASKA NORTH SLOPE Bayu-Undan LNG & OIL SANDS Eko 2/4V-D, Darwin Eldfisk North, Bohai LNG Future Major Tor II Phase 4 AUSTRALIA Projects AD
Slide 33: Future Major Projects: Infrastructure-Led Projects with Strong Economics
Future Major Projects: Infrastructure-Led Projects with Strong Economics Alaska Barossa GMT-2 Cost of Supply ($/BBL) Cost of Supply ($/BBL) ~15% DECREASE Beaufort Sea ~30% ~50 40 DECREASE ~25% <40 CD5 34 DECREASE GMT-1 GMT-2 ALASKA NORTH 2016 2017E New Build Backfill 2016 Pre-FEED 2017 SLOPE LNG DLN
Slide 34: Exploration: Focus on the Future; Built Around Proven Expertise
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 Canada Liquids-Rich • ~10 BBOE1 <$50/BBL cost of Unconventional Focus suppl
Slide 35: Alaska: Western NPR-A Discovery Opens New Frontier
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 of 400- 750 MMBOE • Acquired ~600 M net acres for ~$30/acre in 2017 • 6 exploration and appraisal wells
Slide 36: Canada Montney: A Case Study in Low-Cost Resource Acquisition
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 quadrupled 2017 vs. 2016 (BOED) Results • Acquired additional acreage in best pa
Slide 37: Our Portfolio is Aligned with Strategy
Our Portfolio is Aligned with Strategy 2018-2020 Production LOW SUSTAINING Able to sustain flat production PRICE at <$40/BBL UNCONVENTIONAL FLEXIBLE, 15 BBOE portfolio of <$35/BBL average LOW CoS cost of supply resource Production CONVENTIONAL CASH FLOW Disciplined investments drive ~5% GROWTH produ
Slide 38: Our Sound Financial Plan
Our Sound Financial Plan DO N WAL L ET T E EVP, Finance, Commercial & CFO
Slide 39: Our Financial Plan is Aligned with Shareholder Interests
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 free cash flow in 2020 • Financial strength restored MAINTAIN A
Slide 40: Targeting Step-Function Change in Financial Performance
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 1.0x Debt / CFO • Compelling payout to shareholders Shareholder D
Slide 41: Generating Free Cash Flow Today; Doubling in 2020
Generating Free Cash Flow Today; Doubling in 2020 Free Cash Flow at $50/BBL ($B) • CFO comfortably exceeding capital in 2017 $60/BBL • Disciplined investments drive production growth and fuel cash Free Cash Flow margin enhancement Free Cash Flow • Target doubling of free cash flow in 2020, with sign
Slide 42: 2017 Portfolio Actions Reset Margins; Cash Margins Expand Further
2017 Portfolio Actions Reset Margins; Cash Margins Expand Further Higher-Margin Product Mix Continued Cash Margin Expansion1 Through 2020 ($/BOE) LNG & Oil Sands 12% LNG & Oil Sands N.A. Gas 8% 14% N.A. Gas 17% Bitumen 5% NGL 8% >5% CAGR Conventional Bitumen 14% 53% CASH FLOW NGL 8% Intl Gas 29% PER
Slide 43: Balance Sheet Strength Restored; Competitive Advantage Through Cycles
Balance Sheet Strength Restored; Competitive Advantage Through Cycles DELEVERAGING ✓ Further debt reductions fully funded by achieved cash balances $15B DEBT TARGET ✓ Credit ratings upgraded $27B Cash ✓ Strong financial position: <$20B • Liquidity in excess of $15B NET DEBT $15B • No financial coven
Slide 44: Top-Tier Payout to Shareholders
Top-Tier Payout to Shareholders 2017 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 Share buybacks • Dividend to grow annually • Continued buybacks an i
Slide 45: It's All About Returns
It’s 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 • Lowering capital employed through debt reduction and buybacks Targeted
Slide 46: Adding It All Up: Plan Targets "20 by 20"
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 improvement • Strengthening balance sheet ~35% REDUCTION and continued
Slide 47: Our Financial Plan Targets Superior Returns to Shareholders
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, $B FOCUS ON 0% 30% FINANCIAL RETURNS CROCE 2017 2020E As Shown in November 2017 In
Slide 48: Keeping Our Discipline, Creating Value
Keeping Our Discipline, Creating Value R YA N L A N C E Chairman & CEO
Slide 49: Keeping Our Discipline, Creating Value
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 Low CoS Strength Price Portfolio 2nd Annual dividend growth PRIORITY Gro
Slide 50: Appendix: Guidance Material
Appendix: G U I D A N C E M AT E R I A L
Slide 51: 2018 Production Guidance (MBOED)
2018 Production Guidance (MBOED) 1,215 - 1,255 ~27% 1,356 ~20% PRODUCTION PRODUCTION 1,202 PER DEBT- PER DEBT- ADJUSTED ADJUSTED 52 SHARE 181 1,225 - 1,255 SHARE GROWTH2 Dispositions1 GROWTH2 Dispositions1 ~12% ~9% PRODUCTION PRODUCTION PER-SHARE PER-SHARE GROWTH3 GROWTH3 1,150 ~7% 1,175 ~6% UNDERLY
Slide 52: Full-Year 2018 Guidance
Full-Year 2018 Guidance • Full-year 2018 production: 1,225 – 1,255 MBOED • 3Q18 production: 1,215 – 1,255 MBOED • Adjusted operating costs: $5.7B • Capital expenditures: $6B; excludes announced acquisitions of $0.4B Alaska Western North Slope bolt- on transaction and $0.1B Montney acreage • DD&A: $5
Slide 53: 2018 Annualized Net Income Sensitivities
2018 Annualized Net Income Sensitivities Crude • Brent/ANS: $105-125MM for $1/BBL change • WTI: $45-55MM for $1/BBL change • WCS¹: $10-15MM for $1/BBL change • Does not incorporate contingent payment of CA$6MM quarterly for every CA$1 WCS price above CA$52/BBL $45-$75/BBL North American NGL WTI • Re
Slide 54: 2018 Annualized Cash Flow Sensitivities
2018 Annualized Cash Flow Sensitivities Consolidated Operations Equity Affiliates1 ($45-$75/BBL WTI) ($50-$75/BBL WTI) Crude: • Expect distributions from equity affiliates at >$50/BBL • Brent/ANS: ~$100-110MM for $1/BBL change • $1/BBL movement in Brent: ~$30-40MM • WTI: ~$55-65MM for $1/BBL change
Slide 55: Non-GAAP Reconciliation
Non-GAAP Reconciliation Reconciliation of Capital Expenditures and Investments to Sustaining Capital ($ Billions) 2018 Guidance1 Capital Expenditures and Investments 5.5 Short-Cycle Unconventionals 1.2 Future Major Project Capital Spend 0.5 Exploration Capital Spend 0.3 Sustaining Capital 3.5 1Updat
Slide 56: ConocoPhillips Definitions
ConocoPhillips Definitions Adjusted operating costs: The sum of production and operation expenses, selling, general and administrative (SG&A) expenses, and exploration G&A expenses, geological and geophysical and lease rental and other expenses further adjusted to exclude expenses that are applicabl
Slide 57: ConocoPhillips Definitions Continued
ConocoPhillips Definitions Continued Operating and overhead costs: Includes Production & Operating Expenses, SG&A, Exploration Expense, Taxes Other Than Income, Income Taxes, and certain other Cash From Operations line items. Production / DASh: Calculated as production per ending period debt divided
Slide 58: ConocoPhillips Abbreviations
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 oil equivalent MBOED: thousands of barrels of oil equivalent p
Slide 59: Appendix: Environmental, Social & Governance Material
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
Slide 60: Focus on Safety and Execution Delivers Record Results
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 safety, human performance, environmental footprint and driv
Slide 61: Strong Sustainable Development Governance and Oversight
Strong Sustainable Development Governance and Oversight 61
Slide 62: Leadership in Environmental, Social and Governance Programs
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 on economic, environmental and social dimensions of 66 sustainability
Slide 63: Appendix: Supplemental Portfolio Material
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
Slide 64: Eagle Ford: Still In Its Prime
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 X A S GONZALES • Maintaining <$2/BOE lifting cost, while increas
Slide 65: Eagle Ford: Our Position Leads Competitors on Key Metrics
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) $60 100 $50 $50 NPV10 per Acre ($M) 80 $40 $40 60 $30 $30 40 $20 $20 20 $10 $
Slide 66: Eagle Ford: Years of Running Room at Measured Pace
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 Customized 70 Clusters 100 Clusters 300 Clusters 300+ Clusters ConocoPhillips Acreage
Slide 67: Leveraging Data Analytics Globally, Realizing Local Improvements
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 Warehouse Advanced Analytic Tools NEW 100s of proprietary applications Da
Slide 68: Delaware: Prudent Development Begins
Delaware: Prudent Development Begins NEW MEXICO • 1.9 BBOE of <$40/BBL cost of supply resource across 75 M net acre position TEXAS • Moving to prudent development mode using integrated project approach LEA • Program plan driven by infrastructure, service costs and pace of learning • Completing 80 ac
Slide 69: Permian: Focus on Core of Delaware Basin
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 • Measured pace allows optimized development and efficient ConocoPhill
Slide 70: Permian: Focus on Core of Delaware Basin
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 • Additional drilling and completion optimizations 2016 CoS Developmen
Slide 71: Bakken: A Smart Plan to Deliver Sustained Performance
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 resource <$50/BBL cost of supply MCKENZIE 2017 2018 2019 2020 Nesson Sustaining Production Anticline • Efficiency gains enabl
Slide 72: Bakken: Optimizing Across Every Aspect of the Play
Bakken: Optimizing Across Every Aspect of the Play Low Cost Leader with a Prime Acreage Position 2017 Improvement Drivers 15 • Continuing significant reductions in drilling time CWC/EUR ($/BOE) 10 • Doubled completion size and reduced cluster spacing 5 • Machine learning is informing complex technic
Slide 73: Niobrara: Unlocking Value by Lowering Cost of Supply
Niobrara: Unlocking Value by Lowering Cost of Supply Well Cost/Liquids EUR1 Innovating to Lower Cost of Supply Well Cost/Liquids EUR ($/BOE) 20 • Competitive position in a liquids-rich play 15 • Recent improvements in drilling time and completion costs 10 • Drilling multi-lateral pilot in 4Q 2017 5
Slide 74: Two Case Studies of Lowering Cost of Supply to Grow Legacy Assets
Two Case Studies of Lowering Cost of Supply to Grow Legacy Assets Cost of Supply ($/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 GMT-1 • Successfully negotiated lower contract prices • On track for first o
Slide 75: Alaska: A Case Study in How Innovative Drilling Increases Oil Recovery
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 extended reach laterals through unstable rock formations • Develo
Slide 76: 2018 Exploration Program Confirms Stand-Alone Hub at Willow
2018 Exploration Program Confirms Stand-Alone Hub at Willow Greater Willow Area Preliminary Discovered Resource Range Increased 400 – 750 MMBOE1 T9 current discovered resource West Willow 1 T6 • 2018 Willow appraisal activities and analysis: T7 • Confirmed oil-filled reservoir with 3 new appraisal w
Slide 77: Willow Development: Optimize Based on Cost of Supply
Willow Development: Optimize Based on Cost of Supply Large Module Offload Location Innovative Approach to Lower Cost & Risk Cost of Supply, $/BBL Under- Over- Capitalize Capitalize Facility & Drill Site Design Optimize Facility Sizing & Installation Sweet Spot Gravel Sourcing Locating New Constructi
Slide 78: Europe: Leveraging Legacy Infrastructure
Europe: Leveraging Legacy Infrastructure <$25/BBL COST OF SUPPLY 20-well 2018 drilling plan • Development well programs advantaged from legacy infrastructure and efficient operations in Ekofisk, Judy and Britannia • New Greater Ekofisk Area rig contract secures low day rates • 4-D seismic at Ekofisk
Slide 79: Europe: Driving Value in Every Phase of Asset Life Cycle
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 costs in 20161 REDUCTION • Norway and UK successfully developin
Slide 80: Surmont: All-Out Effort to Lower Cost of Supply and Increase Margins
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 NCG injection in 2016/2017 • Optionality expected to improve ne
Slide 81: LNG: Decades of Stable Production
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 Acreage LNG extended period Pipeline AUSTRALIA Qatargas 3 Bayu-Undan
Slide 82: 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] Headquarters Mark Keener ConocoPhillips [email protected] 600 N. Dairy Ashford Road Renee Om