Download Report

Investor Update
Updated as of Jan. 7, 2015.
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 or operating results or the industries or markets in which we operate or
participate in general. Actual outcomes and results may differ materially from what is expressed or
forecast in such forward-looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions that may prove to be
incorrect and are difficult to predict such as oil and gas prices; operational hazards and drilling
risks; potential failure to achieve, and potential delays in achieving expected reserves or
production levels from existing and future oil and gas development projects; unsuccessful
exploratory activities; unexpected cost increases or technical difficulties in constructing,
maintaining or modifying company facilities; international monetary conditions and exchange
controls; potential liability for remedial actions under existing or future environmental regulations
or from pending or future litigation; limited access to capital or significantly higher cost of capital
related to illiquidity or uncertainty in the domestic or international financial markets; general
domestic and international economic and political conditions, as well as changes in tax,
environmental and other laws applicable to ConocoPhillips’ business and other economic,
business, competitive and/or regulatory factors affecting ConocoPhillips’ business generally as set
forth in ConocoPhillips’ filings with the Securities and Exchange Commission (SEC). We caution you
not to place undue reliance on our forward-looking statements, which are only as of the date of
this presentation or as otherwise indicated, and we expressly disclaim any responsibility for
updating such information.
Use of non-GAAP financial information – This presentation includes non-GAAP financial measures,
which are included to help facilitate comparison of company operating performance across periods
and with peer companies. A reconciliation of these non-GAAP measures to the nearest
corresponding GAAP measure is available at www.conocophillips.com/nongaap.
Cautionary Note to U.S. Investors – The SEC permits oil and gas companies, in their filings with the
SEC, to disclose only proved, probable and possible reserves. We use the term "resource" in this
presentation that the SEC’s guidelines prohibit us from including in filings with the SEC. U.S.
investors are urged to consider closely the oil and gas disclosures in our Form 10-K and other
reports and filings with the SEC. Copies are available from the SEC and from the ConocoPhillips
website.
Resilient Value Proposition
Foster Creek
• Growth and returns with a competitive dividend
• Well positioned for current environment
• Announced 2015 capital budget of $13.5 B
Exploration &
Appraisal
Exploration &
Appraisal
• Major project capital rolling off
• Significant flexibility in development programs
• Priorities:
Major Projects
Major Projects
• Competitive dividend
• Maintain financial strength
• Focus on cash flow neutrality
Development
Programs
Development
Programs
• ~3% production1 growth in 2015
1Production
3
represents continuing operations, excluding Libya.
Base Maintenance
Base Maintenance
2013
2017
Chart based on 2014 Analyst Meeting.
Unmatched Position Today
1,473 MBOED Production1 – 3Q14
Liquids
North
American 25%
Gas
LNG +
International 18%
Gas
• Multiple sources of growth
57%
8.9 BBOE Reserves – YE 2013
Non-OECD
• Diversified asset base with scope and scale
OECD
17%
• Massive positions in key resource trends
• Growing portfolio with options and choices
• Relatively low execution risk
• Increasing capital flexibility
83%
43 BBOE Resources – YE 2013
Gas
Liquids
27%
LNG
1Production
4
5%
68%
represents continuing operations, excluding Libya.
• Significant financial strength
• Ability to leverage technology
• Culture of safety and execution excellence
Committed to Shareholder Returns
Dividend Yield
• Competitive dividend is appropriate and remains
key to our value proposition
• Highest priority use of cash
4.2%
• Enhances capital discipline
• Predictable portion of shareholder returns
• Differential to independent peers
Integrated Peers
Independent Peers
ConocoPhillips
Dividend yield as of Dec. 5, 2014.
1Companies include: APA, APC, BG, BP, CVX, DVN, OXY, RDS, TOT, XOM.
5
• Dividend increased 5.8 percent in July
The Power of Portfolio: Margins, Decline Rates and Returns
Low Margins
High Margins
North American
Unconventionals
Higher
Full-Cycle Project Returns
Highest Margins
North American
Conventional Oil
• Short-cycle cash flow
• Avoid over capitalizing
• Increases capital intensity of portfolio
• Medium-cycle cash flow
International
Oil & Gas
• Differing spend characteristics
North American Gas
Lower
Oil Sands
• Conventional decline rates
• Front-end loaded capital
LNG
• Robust free cash flow once producing
• Lowers capital intensity of portfolio
Lower Decline Rate
Size of the bubble represents 2014-2017 average capital based on the 2014 Analyst Meeting.
6
Higher Decline Rate
North American Unconventionals: Unmatched Portfolio and Capabilities
Montney
• Great positions in proven and emerging plays
Duvernay
• Eagle Ford and Bakken sweet spots
Bakken
• Exceptional growth in high-margin resource base
Niobrara
Anadarko
Permian
• Decades of drilling inventory with upside
Barnett
Eagle Ford
Average
Capital
Average Wellhead Breakeven Price
($/BBL)
Production
400
~$5.5B
350
300
MBOED
250
200
150
100
50
2014-2017
As of 2014 Analyst Meeting.
7
1
• Leveraging scale and technology
0
2013
2017
70
65
Lowest Cost of Supply
Independent Companies
Integrated Companies
60
55
50
45
40
35
30
25
1Rystad
North American Shale Report 4Q 2013.
Eagle Ford: Acreage in Heart of the Sweet Spot
Thermal Maturity
TEXAS
A
GONZALES
WILSON
Pressure & Thickness
LAVACA
A
B
ConocoPhillips
Acreage
DE
WITT
ATASCOSA
KARNES
FRIO
LA SALLE
MCMULLEN
LIVE
OAK
BEE
B
ConocoPhillips Acreage
Dry Gas
Volatile Oil, Cond., Wet Gas
Black Oil
Maturity
Sweet Spot
Dry Gas
Volatile Oil, Cond., Wet Gas
Black Oil
Sweet Spot Identification – Critical Success Factors
Pressure
Maturity
Thickness
NE NW
Geology
SW
Clay Rich
Poor Fracability
Less Organics
Sweet Spot
Geology
Good
Quality Organics
Best
Organic
Quality
COP Acreage
8
SE
Good
Quality Organics
Eagle Ford: Premium Value from Best Wells in the Play
250
Highest Oil Rates per Well1
60
50
NPV10 per Acre ($M)
Gross Operated Production (BPD)
200
150
100
50
0
1Texas
9
Railroad Commission, 2013.
Industry-Leading Value2
40
30
20
10
Competitors
0
Competitors
2Wood
Mackenzie.
Eagle Ford: Value-Driven Approach to Well Density, Considerable Upside
2013
2014 Transition to High/Low
Lower Eagle Ford 80-acre1 Single Layer Lower Eagle Ford 80-acre1 High/Low
1.8 BBOE EUR
2.5 BBOE EUR
1660’
10
between 1-mile long wells is equivalent to 80-acre spacing. 2330’ between 1-mile long wells is equivalent to 40-acre spacing.
Evaluating Further Upside
Lower Eagle Ford 40-acre2
Upper Eagle Ford/Austin Chalk
Scientific Piloting: Accelerating Pace of Learning
Pressure Monitoring
Instrumented Wells
Logging and Coring
Stimulated Rock Volume
Producer
Post-Stimulation
Pilot Well
Cored
Section
Pre-Stimulation
Pilot Well
Map View
11
Eagle Ford: Value-Driven Approach to Fracture Stimulation Design
• Constantly enhancing fracture stimulation design
• 30% increase in EUR per well from increased proppant
• >100% production increase with current design
• Additional testing and analysis underway
EUR Increase
• Extensive pilot testing to verify stimulation models
Optimizing Proppant Density
40%
30%
20%
10%
Predicted Range
Observed Results
0%
Current Design Cluster Spacing
lbs per foot
Optimizing Proppant Density and Cluster Spacing
Original Design Cluster Spacing
Cumulative Production
Current Design
106 %
Improvement
Original Design
0
12
100
200
300
400
Days Produced
500
600
700
Bakken: Advantaged Position in the Heart of the Trend
Bakken Acreage Values by Area (NPV10 per
Nesson Anticline
Anticline
Parshall-Sanish
Fort Berthold
Williams Core
West Nesson
Northern Mountrail
Elm Coulee
Dunn County
Williams Perimeter
West McKenzie
North Williston
Southern Fringe
Gross Operated Production
(MBD)
WILLIAMS
ROOSEVELT
MOUNTRAIL
Nesson
Anticline
DAWSON
BILLINGS
Bakken
Three Forks
5,000
10,000
15,000
20,000
25,000
30,000
35,000
GOLDEN
VALLEY
40,000
ConocoPhillips Acreage
Nesson Anticline: 2013 Top Oil Producers1
15
10
Mackenzie.
North Dakota
MCKENZIE
20
5
0
13
VALLEY
MCCONE
0
1Wood
Montana
Acre)1
Newfield
Murex
SM Energy
EOG Resources
Continental
XTO Energy
Competitors
Resources
Petro-Hunt
QEP Energy
ConocoPhillips
Hess
Minerals
DUNN
STARK
Bakken: Optimal Well Spacing and Placement
Current
320-acre1 in Bakken/
Upper Three Forks
11,320’
14
Testing Tighter Spacing
160-acre2 in Bakken/
Upper Three Forks
between 2-mile long wells is equivalent to 320-acre spacing. 2660’ between 2-mile long wells is equivalent to 160-acre spacing.
Evaluating Further Upside
Additional Wells in
Middle Three Forks
Unconventional Reservoir Technology and Knowledge Sharing
Cumulative Production
Avg.
0
15
ConocoPhillips Current
Completion Design
350%
Avg.
Initial Design –
Industry Standard
90
180
270
Days
360
450
•
•
•
•
•
•
•
•
•
•
ConocoPhillips
Google
Apple
IBM
Facebook
Microsoft
Amazon
Proctor & Gamble
Fluor
Vale S.A.
2015: Testing Global Portfolio
Norway
Barents
Greenland
Chukchi
NPR-A
Muskwa
Montney
UK & Norway
North Sea
Nova Scotia
Niobrara
Delaware
Gulf of Mexico
Azerbaijan
Myanmar1
Deepwater
Onshore and Shelf Conventional
1Based
16
on high bid award on Block AD-10.
Malaysia
Indonesia
Angola
Kwanza
Unconventional
China
Bohai
Bangladesh
Senegal
Colombia
Middle
Magdalena
2015 Drilling Activity
Poland
Baltic Basin
Bonaparte
Browse
Australia
Resilient Value Proposition
Foster Creek
• Growth and returns with a competitive dividend
• Well positioned for current environment
• Announced 2015 capital budget of $13.5 B
Exploration &
Appraisal
Exploration &
Appraisal
• Major project capital rolling off
• Significant flexibility in development programs
• Priorities:
Major Projects
Major Projects
• Competitive dividend
• Maintain financial strength
• Focus on cash flow neutrality
Development
Programs
Development
Programs
• ~3% production1 growth in 2015
1Production
17
represents continuing operations, excluding Libya.
Base Maintenance
Base Maintenance
2013
2017
Chart based on 2014 Analyst Meeting.
Appendix
18
Annualized Net Income Sensitivities
• Crude
• Brent/ANS: $80-90MM change for $1/BBL change
• WTI: $35-40MM change for $1/BBL change
• WCS¹: $30-40MM change for $1/BBL change
• North American NGL
• Representative blend: $10-15MM change for $1/BBL change
• Natural Gas
• Henry Hub: $100-110MM change for $0.25/MCF change
• International gas: $10-15MM change for $0.25/MCF change
¹WCS price used for the sensitivity represents a volumetric weighted average of Shorcan and Net Energy indices.
The published sensitivities above reflect annual estimates and may not apply to quarterly results due to lift timing/product sales differences, significant turnaround activity or other unforeseen
portfolio shifts in production. Additionally, the above sensitivities apply to the current range of commodity price fluctuations, but may not apply to significant and unexpected increases or decreases.
19
Meeting Our Growth Targets
~4%
Full-Year Guidance on
Track
PRODUCTION
GROWTH1
Actual
Actual
3Q14 vs. 4Q14 Drivers
Actual
• Major turnarounds
completed in 3Q14
• Major project ramp
• Value-driven ethane
rejection
Continuing Operations
(Excluding Libya)
1 Four
20
1Q14
2Q14
3Q14
4Q14
FY14
1,530
1,556
1,473
1,545 – 1,575
1,525 – 1,535
percent reflects expected year-over-year production growth from continuing operations, excluding Libya.
Margin Class Categorization
North American
Unconventionals
•
•
•
•
•
•
•
Bakken
Barnett
Canada Unconventional
Eagle Ford
Niobrara
Permian
Other
LNG
•
•
•
•
•
•
•
AKLNG
APLNG
Bayu Undan
Kenai
Poseidon
Qatar
Other
Oil Sands
• Christina Lake
• Foster Creek
• Surmont
List is representative of assets in each margin class, not all assets are listed.
21
International
Oil & Gas
•
•
•
•
•
China
Indonesia
Malaysia
Norway
U.K.
North American
Conventional Oil
•
•
•
•
•
Alaska North Slope
Anadarko
Gulf of Mexico
Permian
Other
North American
Gas
•
•
•
•
Lobo
San Juan
Western Canada
Other
Abbreviations and Glossary
• 4-D: four dimensional
• MM: million
• ANS: Alaska North Slope
• MBOED: thousands of barrels of oil equivalent per day
• Average Cash Margin (2014-2017): Average cash margin represents the
projected cash flow from operating activities, excluding working capital, divided
by estimated production. Estimated cash flow is based on $100 Brent / $90 WTI
/ $70 WCS / $4 Henry Hub
• MMBOED: millions of barrels of oil equivalent per day
• B: billion
• MTPA: millions of tonnes per annum
• BBL: barrel
• OECD: Organisation for Economic Co-operation and Development
• BBOE: billions of barrels of oil equivalent
• Organic RRR: organic reserve replacement ratio excludes the impact of purchases and
• BOE: barrels of oil equivalent
• CAGR: compound annual growth rate
• CTD: coiled tubing drilling
• EUR: estimated ultimate recovery
sales
• PSC: production sharing contract
• ROCE: return on capital employed
• R/P: reserve to production ratio
• DD&A: depreciation, depletion and amortization
• SAGD: steam-assisted gravity drainage
• F&D: finding and development
• SG&A: selling, general and administrative expenses
• GAAP: generally accepted accounting principles
• SOR: steam-to-oil ratio
• GOM: Gulf of Mexico
• TSR: total shareholder return
• HBP: held by production
• HH: Henry Hub
• LNG: liquefied natural gas
• M: thousand
22
• MMBOE: millions of barrels of oil equivalent
• WCS: Western Canada Select
• WI: working interest
• WTI: West Texas Intermediate
Investor Information
Stock Ticker
Investor Relations Contacts:
NYSE: COP
Telephone: +1 212.207.1996
Website: www.conocophillips.com/investor
Ellen DeSanctis: ellen.r.desanctis@conocophillips.com
Headquarters
ConocoPhillips
600 N. Dairy Ashford Road
Houston, Texas 77079
New York Investor Relations Office
ConocoPhillips
375 Park Avenue, Suite 3702
New York, New York 10152
23
Sidney J. Bassett: sid.bassett@conocophillips.com
Vladimir R. dela Cruz: v.r.delacruz@conocophillips.com
Mary Ann Cacace: maryann.f.cacace@conocophillips.com