4Q17 Earnings Conference Call FEBRUARY 1, 2018

Transcription

1 4Q7 Earnings Conference Call FEBRUARY, 208

2 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 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 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; difficulties in developing new products and manufacturing processes; unexpected cost increases or technical difficulties in constructing, maintaining or modifying company facilities; international monetary conditions and exchange rate fluctuations; our ability to complete the sale of our announced dispositions on the timeline currently anticipated, if at all; the possibility that regulatory approvals for our announced dispositions will not be received on a timely basis, if at all, or that such approvals may require modification to the terms of our announced dispositions or our remaining business; business disruptions during or following our announced dispositions, including the diversion of management time and attention; our ability to liquidate the common stock issued to us by Cenovus Energy Inc. at prices we deem acceptable, or at all; the ability to deploy net proceeds from our announced dispositions in the manner and timeframe we currently anticipate, if at all; 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, and 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 may include non-gaap financial measures, which help facilitate comparison of company operating performance across periods and with peer companies. Any non-gaap measures included herein will be accompanied by a reconciliation to the nearest corresponding GAAP measure either within the presentation or on our website at 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 0-K and other reports and filings with the SEC. Copies are available from the SEC and from the ConocoPhillips website. 2

3 RYAN LANCE Chairman & CEO

4 Delivering on Our Disciplined, Returns-Focused Value Proposition 207: Full Activation of our Plan 208: Execute the Plan, Plus Portfolio reset; ~$6B dispositions; strong organic RRR Portfolio Maintain capital scope; bolt-on transaction in Alaska CFO 2 > capital by $2.5B; improving CROCE/ROCE Free cash flow Focus on free cash flow generation; strong price upside Reduced debt by ~30% to <$20B; improved credit rating Balance sheet Debt reduced by $2.25B in January Returned 6% of CFO 2 to shareholders Shareholder distributions Increased dividend by ~7.5% and 208 planned share buybacks by 33% Production of,356 MBOED; delivered 9% underlying growth per DASh 3 Growth per DASh 3 Expect 3% growth per DASh 3 ; activate Lower 48 growth engine Strong safety performance; announced GHG reduction target ESG Leadership Continued focus on ESG excellence Organic RRR (reserve replacement ratio) excludes the reserve impact of 207 asset dispositions and production includes Libya and fuel gas. 2 CFO is $7.B and cash provided by operating activities excluding working capital is $7.B, as operating working capital had a minimal change. Dividends paid of $.3B and share repurchases of $3.0B. 3 Production per debt-adjusted share (DASh) growth is calculated on an underlying production basis using ending period debt divided by ending share price plus ending shares outstanding. Underlying production excludes the full impact from closed and planned asset dispositions. 208 assumes $2B of share repurchases, representing 33 million of shares using the closing price of $60.49 per-share on 0/24/8 and assuming no other changes in common shares outstanding. Free Cash Flow is defined as when cash provided by operating activities (CFO) excluding operating working capital covers capital expenditures & investments. Free Cash Flow is a non-gaap term. A non-gaap definition is available on our website. Production excludes Libya. CROCE and ROCE are non-gaap terms. A non-gaap definition of each is available on our website. 4

5 DON WALLETTE EVP, Finance, Commercial & CFO

6 Strong Momentum on Improving Profitability Adjusted Earnings ($MM) Highlights Full-year 207 adjusted earnings of $0.7B 4Q7 adjusted earnings benefited from improved realized prices, higher underlying production, and lower depreciation expense Focused on increasing returns Adjusted EPS ($) Average Realized Price ($/BOE) (38) 4Q6 3Q7 4Q7 ($0.26) $0.6 $0.45 $32.93 $39.49 $46.0 4Q7 Adjusted Earnings ($MM) Lower 48 $4 Canada ($38) Alaska $283 Europe & North Africa $62 Asia Pacific & Middle East $368 Other International ($3) Corporate & Other ($28) Total $540 Underlying production growth excludes the full impact from closed and planned asset dispositions. Profitability is based on adjusted earnings. Adjusted earnings (loss) and adjusted EPS (loss) are non-gaap measures. A non-gaap reconciliation is available on our website. 6

7 Strong Financial Position Entering Q7 $B Q7 Marker Prices Brent $6.39/BBL WTI $55.35/BBL Henry Hub $2.93/MMBTU 9.6 Includes $0.3B from Ecuador settlement Includes $0.2B from L48 acreage acquisitions Q7 Beginning Cash & Short- Term Investments¹ CFO Excluding Operating Working Capital Total Working Capital² Disposition Proceeds Debt Capital Expenditures & Investments Dividends Repurchase of Company Common Stock 4Q7 Ending Cash & Short- Term Investments¹ Beginning cash and short-term investments include cash and cash equivalents of $6.9B and short-term investments of $2.7B. Ending cash and short-term investments include cash and cash equivalents of $6.3B and short-term investments of $.9B. 2 Total working capital includes ($0.05B) and $0.5B of working capital changes associated with operating activities and investing activities, respectively. 7

8 Focused on Free Cash Flow Generation and Delivering Priorities $2.5B FREE CASH FLOW $B Buybacks 207 Marker Prices Brent $54.27/BBL WTI $50.90/BBL Henry Hub $3./MMBTU CFO exceeded capital expenditures and investments by $2.5B Debt Generated cash proceeds from asset sales of $3.9B Paid $7.9B to reduce debt; year-end debt <$20B Funded $3B of share repurchases Increased planned 208 buyback to $2B CFO Excluding Operating Working Capital¹ 207 Capital Expenditures & Investments 207 Cash Disposition Proceeds² 207 Debt Reduction and Repurchase of Company Common Stock³ 208 ongoing focus on free cash flow generation; strong price upside Free Cash Flow is defined as when cash provided by operating activities (CFO) excluding operating working capital covers capital expenditures & investments. Free Cash Flow is a non-gaap term. A non-gaap definition is available on our website. CFO is $7.B and cash provided by operating activities excluding operating working capital is $7.B, as operating working capital had a minimal change. 2 Cash Dispositions Proceeds excludes $2.0B of Cenovus Equity. 3 Debt reduction and repurchase of company common stock include $7.9B of debt repayment and $3.0B of repurchased company common stock. 4 Increase to 208 share buybacks is part of the $6B share repurchase program, $3B which is remaining, $2B now scheduled for

9 AL HIRSHBERG EVP, Production, Drilling & Projects

10 207 Preliminary Reserve Replacement 200% (,904) organic reserve replacement ratio 7% (68%) Total RRR 6,424 replacement from net additions 43 Canada 67% Lower 48 33% 4, ,038 YE 206 Reserves Dispositions YE 206 Excluding Dispositions 207 Production¹ Net Additions Market Factors YE 207 Reserves RRR repre.sents reserve replacement ratio All reserves are in MMBOE. Production includes Libya, fuel gas, and 72 MMBOE from closed and planned dispositions. 0

11 207 Operating Highlights Strong operational and safety performance Delivered 3% underlying production growth for $4.6B of capital; 9% growth on a per debt-adjusted share basis Successfully activated Lower 48 Big 3 growth engine 236 MBOED in 4Q7 vs 24 MBOED in 4Q6; 0% growth $0.2B Lower 48 unconventional acreage acquisitions in 4Q7 Progressed projects across the portfolio Advanced exploration opportunities in Alaska and Canada Announced target to reduce GHG emissions intensity by 5-5% by 2030 Delaware Underlying production growth excludes the full impact from closed and planned asset dispositions. Production excludes Libya. Big 3 unconventionals includes Eagle Ford, Bakken and Delaware.

12 What to Watch For in 208 Deliver with Discipline $5.5B capital plan unchanged Expect 208 full-year underlying production per debt-adjusted share growth 2 of ~3% vs. 207 Q8 production guidance of,80 to,220 MBOED 208 production guidance of,95 to,235 MBOED Turnarounds scheduled in APME, Europe and Alaska in 2Q and 3Q Lower 48 Big 3 ramping through the year to >20% growth Expect first production at Bohai Phase 3, Clair Ridge, Aasta Hansteen and GMT- Production (MBOED),356 9 Dispositions,65,95 -,235 ~3% PRODUCTION PER DEBT- ADJUSTED SHARE GROWTH 2 ~7% PRODUCTION PER-SHARE GROWTH 3 ~5% UNDERLYING PRODUCTION GROWTH Enter FEED on Darwin LNG backfill Significant exploration programs in Alaska, Montney, and Lower 48 FY7 FY8E Underlying production excludes the full impact from closed or planned asset dispositions. 2 Production per debt-adjusted share growth is calculated on an underlying production basis using ending period debt divided by ending share price plus ending shares outstanding. 208 assumes $2B of share repurchases, representing 33 million of shares using the closing price of $60.49 per-share on 0/24/8 and assuming no other changes in common shares outstanding. 3 Production per-share growth is defined as underlying production, divided by ending common shares outstanding. Year-end 207 common shares outstanding were,77 million shares. 208 assumes $2B of share repurchases, representing 33 million of shares using the closing price of $60.49 per-share on 0/24/8 and assuming no other changes in common shares outstanding. Production excludes Libya. Adjusted operating cost is a non-gaap measure. A non-gaap reconciliation is available on our website. 2

13 Question & Answer Session

14 Appendix

15 207 Performance Company Cash Flow 3.9 $B 207 Marker Prices Brent $54.27/BBL WTI $50.90/BBL Henry Hub $3./MMBTU Beginning Cash & Short- Term Investments¹ CFO Excluding Operating Working Capital Total Working Capital² Disposition Proceeds Debt Capital Expenditures & Investments Dividends Repurchase of Company Common Stock Other 207 Ending Cash & Short- Term Investments¹ Beginning cash and short-term investments include cash and cash equivalents of $3.6B and short-term investments of $0.B. Ending cash and short-term investments include cash and cash equivalents of $6.3B and short-term investments of $.9B. 2 Total working capital includes $0.02B and $0.B of working capital changes associated with operating activities and investing activities, respectively. 5

16 208 Production Guidance Analyst and Investor Meeting 208 Guidance,355, Guidance 85,80,220 Dispositions 9 3,95,235 20,50, E AIM Production (MBOED) E Production (MBOED) 207 Dispositions Dispositions in Progress Underlying Production Closed and Planned Dispositions Underlying production excludes the full impact from closed and planned asset dispositions. Production excludes Libya. 6

17 Full-Year 208 Guidance Full-year 208 production:,95,235 MBOED Q8 production:,80,220 MBOED Adjusted operating costs: $5.7B Capital expenditures: $5.5B DD&A: $5.8B Adjusted corporate segment net loss: $.0B Exploration dry hole and leasehold impairment expense: $0.2B Bakken Adjusted operating cost, adjusted corporate segment net loss, and exploration dry hole and leasehold impairment expense are non-gaap measures. A non-gaap reconciliation is available on our website. Guidance excludes special items. Production excludes Libya. 7

18 208 Annualized Net Income Sensitivities Crude Brent/ANS: $05-25MM for $/BBL change WTI: $45-55MM for $/BBL change WCS¹: $0-5MM for $/BBL change Does not incorporate contingent payment of CA$6MM quarterly for every CA$ WCS price above CA$52/BBL $45-$65/BBL WTI North American NGL Representative blend: $5-0MM for $/BBL change Natural Gas Henry Hub: $25-35MM for $0.25/MCF change Does not incorporate contingent payment of $7MM monthly if average Henry Hub price is at or above $3.20/MMBTU (capped at $300MM) International gas: $0-5MM for $0.25/MCF change WCS 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 a range of commodity price fluctuations as of Feb., 208, but may not apply to significant and unexpected increases or decreases. 8

19 208 Annualized Cash Flow Sensitivities Crude: Consolidated Operations ($45-$65/BBL WTI) Brent/ANS: ~$00-0MM for $/BBL change WTI: ~$55-65MM for $/BBL change WCS: ~$5-20MM for $/BBL change Equity Affiliates ($50-$65/BBL WTI) Expect distributions from all equity affiliates at >$50/BBL $/BBL movement in Brent: ~$30-40MM Lower 48 NGL Representative Blend: ~$0-5MM for $/BBL change Natural Gas Henry Hub: ~$35-45MM for $0.25/MCF change Int l Gas: ~$0-5MM for $0.25/MCF change Net Cash Flow from Contingent Payment CA $6MM quarterly for every CA$ WCS price above CA$52/BBL $7MM monthly if average Henry Hub price is at or above $3.20/MMBTU (capped at $300MM) Representative of CFO within Equity Affiliates, may not all be distributed. Assumes WCS moves proportionally to WTI. Contracted LNG within equity affiliates is subject to a 3-month pricing lag. 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 a range of commodity price fluctuations as of Feb., 208, but may not apply to significant and unexpected increases or decreases. 9