Conocophillips · NYSE:COP
Conocophillips — Merger or Acquisition (October 2006)
27 slides from Conocophillips's merger presentation, Oct 5, 2006
Slide 1: Creating an Integrated North American Heavy Oil Business
October 5, 2006 Creating an Integrated North American Heavy Oil Business
Slide 2: Cautionary Statement for Safe Harbor Provisions
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 The following presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities E
Slide 3: Transaction Summary
Transaction Summary Venture comprised of two 50/50 Partnerships: Upstream Partnership EnCana's Foster Creek and Christina Lake projects Downstream Partnership ConocoPhillips' Wood River and Borger refineries Partnerships of equivalent value Planned effective date: January 2, 2007 EnCana and ConocoPh
Slide 4: Transaction Highlights
Transaction Highlights EnCana contributes 100% of their working interest in Foster Creek and Christina Lake oilsands projects Independent estimated recoverable bitumen of >6.5 billion bbls* Planned increase in current bitumen production from 50,000 bpd to 400,000 bpd by 2015 Markets bitumen blend at
Slide 5: Strategic Rationale
Strategic Rationale Maximizes oilsands value creation and recognition: Partners with leading refiner with top tier assets Demonstrates commitment to oilsands growth strategy Enhances visibility of development plans Eliminates exposure to light/heavy differentials Reduces project execution risk Accel
Slide 6: Benefits of Integration
Benefits of Integration Leader in oilsands development and SAGD technology Leader in heavy oil refining and coking technology Enhances certainty of integrated margin on investments Reduces cash-flow volatility due to swings in light/heavy differentials Facilitates significant expansion of oilsands p
Slide 7: Transaction Structure
Transaction Structure Downstream Partnership Upstream Partnership COP US (OPERATOR) ECA US 50% interest* 50% interest* 100% Wood River Borger Downstream Partnership *Subject to Borger 2 year Disproportionate interest 100% Foster Creek Christina Lake ECA Canada (OPERATOR) COP Canada 50% interest Upst
Slide 8: Corporate and Operating Governance
Corporate and Operating Governance 50/50 upstream and downstream partnerships Management committee for each partnership Equal number of representatives 50/50 voting rights Unanimity required for strategic/major decisions Supported by multi-disciplined Operating sub-committee Upstream partnership EnC
Slide 9: Historical Differential Volatility
Historical Differential Volatility 1/31/2000 2/29/2000 3/31/2000 4/28/2000 5/31/2000 6/30/2000 7/31/2000 8/31/2000 9/29/2000 10/31/2000 11/30/2000 12/29/2000 1/31/2001 2/28/2001 3/30/2001 4/30/2001 5/31/2001 6/29/2001 7/31/2001 8/31/2001 9/28/2001 10/31/2001 11/30/2001 12/31/2001 1/31/2002 2/28/2002
Slide 10: Illustrative Integrated Cost / Margin Analysis
Illustrative Integrated Cost / Margin Analysis* Heavy Oil (synbit) Synthetic (assumed diluent) Bitumen 0.55 BBL 0.45 BBL Refinery Gas cost Op. Cost Transport cost ~$3/bbl Cost of Synthetic (~WTI) Op. Cost $4/bbl Upstream Partnership Downstream Partnership ~$9/bbl = ~$5 for .55 bbl 1 BBL Value of Pro
Slide 11: Illustrative Integrated Margin
*Note: Based on information after all project completions; 2006 $ terms; EBITDA Margin defined as: Revenues - Opex - Gas cost/Feedstock cost - Transport. Illustrative Integrated Margin $40/bbl WTI $50/bbl WTI $60/bbl WTI Cost of bitumen blend Upstream 4.37 5.78 7.18 Value shift2 1.61 2.1 2.51 Dowstr
Slide 12: Industry Transportation Initiatives Expanding Market Access
Industry Transportation Initiatives Expanding Market Access
Slide 13: EnCana's Leading SAGD Position
EnCana's Leading SAGD Position Partnership Resource Opportunity ~900,000 net acres contributed (leased or option to lease) Estimated 44.5 billion bbls bitumen in place* Estimated >6.5 billion bbls recoverable bitumen* Estimated 400,000 bpd by 2015 Premium SAGD reservoirs Low SOR High gravity Advanta
Slide 14: COP's Expanding Refining Capacity
COP's Expanding Refining Capacity 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018+ Foster Creek 48 60 90 120 150 168 186 204 222 240 258 278 278 Christina Lake 7 10 10 40 70 100 130 190 190 220 250 280 310 Bitumen refining capacity 32.4 32.4 51.3 143 143 143 183.4 278.7 278.7 278.7
Slide 15: Bitumen Volume Match
Bitumen Volume Match Foster Creek & Christina Lake vs. Wood River & Borger Mbbls/d 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018+ Bitumen production 55 74 109 136 203 240 275 338 400 400 400 405 405 Christina Lake Total bitumen refining capacity 32.4 32.4 51.3 143 143 143 183.4 27
Slide 16: Transaction Benefits: Fully-integrated oilsands solution
Fully-integrated oilsands solution World-class projects in both Upstream and Downstream Access to capital, people, and best technologies Certainty of margin Integrated approach captures value from reservoir to refined product Certainty of project execution through integrated approach Field developme
Slide 17: Asset Appendix Upstream Assets
Asset Appendix Upstream Assets
Slide 18: Foster Creek Overview
Foster Creek Overview Overview Located in the southeastern corner of Canada's oilsands region First commercial scale SAGD project Pilot phase began in 1997 Commercial development began in 2001 Consistently among the best commercial and technical SAGD projects Cumulative production of over 30 mmbbls
Slide 19: Foster Creek Project
Foster Creek Project Project details ~200,000 + net acres leased Option to lease 500,000 net acres Estimated 29 billion barrels of bitumen in place* Estimated 2.4 billion barrels of recoverable bitumen* Estimated capital costs of $3.1 billion through 2015* Forecast production estimate of 210,000 bpd
Slide 20: Christina Lake Overview
Christina Lake Overview Overview Located in the southern portion of Canada's oilsands region Phase I was initiated in 2002 Cumulative production of over 3.5 mmbls Steam/oil ratio among lowest of all SAGD projects Current production of 7,000 bpd of bitumen from six SAGD well pairs Current expansion e
Slide 21: Christina Lake Project
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 EnCana 7000 7000 12000 26000 59000 89000 116000 151000 190000 190000 Christina Lake Project Bitumen Production (bbl/d) Capital Expenditures ($ Millions)* Project Details ~180,000+ net acres leased Estimated 15 billion barrels of bitumen in place* Est
Slide 22: EnCana's Oilsands Projects: A Performance Leader versus Industry
SOR Average Well Rate Nexen Long Lake 6.72 312.03 CNRL Primrose & Wolf Lake 5.63 109.58 Shell Peace River 4.2 149.2 IMO Cold Lake 3.51 57.27 Conoco Surmont 3.74 247.94 Suncor Firebag 3.28 1581.65 Shell Peace River 4.2 149.2 JACOS Hangingstone 3.17 561.84 PetroCan McKay 2.76 768.67 EnCana Foster Crk
Slide 23: Asset Appendix Downstream Assets
Asset Appendix Downstream Assets
Slide 24: Wood River Overview
Wood River Overview Overview Located in Roxana, Illinois Largest ConocoPhillips Refinery (10th largest in the U.S.) 306,000 bpd throughput, multiple train refinery 30,000 bpd bitumen capacity Clean product yield 77% ~2,200 acres Multiple pipeline options for receiving Canadian crude Excellent access
Slide 25: Wood River Expansion Details
Wood River Expansion Details Wood River Capacity (mbpd) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Bitumen 32.4 32.4 32.4 102.5 102.5 102.5 102.5 197.8 197.8 197.8 197.8 197.8 197.8 Other refining capacity 291.8 291.8 291.8 275.6 275.6 275.6 275.6 168.9 168.9 168.9 168.9 168.9
Slide 26: Borger Overview
Borger Overview Overview Located in Borger, Texas - - 50 miles northeast of Amarillo, TX 146,000 bpd crude; 50,000 bpd NGL capacity Nelson complexity: 13.3 Clean product yield: 90% Integrated with NGL production OSHA VPP Star site since 2002 ~2,600 acres Mid-continent, Denver and Midwest markets Exc
Slide 27: Borger Expansion Details
Phase 1 2007 completion New coker Addition of estimated 20,000 bpd bitumen capacity Estimated $0.5B capital cost Phase 2 2009 completion Debottleneck infrastructure to add incremental estimated 20,000 bpd bitumen capacity Estimated $0.3B capital cost Phase 3 2012 completion Expand Crude Rate to ~200
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