a strong future in alaska - southeast conference · 9/13/2018 · • 2018 willow appraisal...
TRANSCRIPT
AStrongFutureinAlaska JOE MARUSHACK
PRESIDENT, CONOCOPHILLIPS ALASKA
SEPTEMBER 13, 2018
Cau2onaryStatement
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 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; the stability and competitiveness of our fiscal framework; 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 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.
NorthSlopeStateandFederalUnits
WesternNorthSlope(WNS)COPOperated
100%WI
PrudhoeBay36%WI
KuparukRiverCOPOperated52-55%WI
~95%WIPostBPacquisiJon
Non-COPUnits
2013AlaskaOutlook:FacingHeadwinds
• Uncompe22vetaxstructure
• Decliningproduc2onprofile• Highcostofsupply• Limitedinvestment
• FocusonLower48unconven2onals
2013OutlookforAsset
ConocoPhillips’AlaskaOutlook
2013
2013Outlook
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
CurrentOutlook:StrongFutureSpurredbyTaxChanges&CoSFocus
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
1Assumesastableandcompe22vefiscalframework,excludes2018acquisi2ons,assumesnochangetocurrentworkinginterestandexcludesAlaskaNorthSlopegassales.
CurrentOutlook2013Outlook
• SenateBill21improvedfiscalframework
• Technologicaladvancementsandinnova2onstargetnewandbypassedresources
• Comprehensiveefforttocapturevaluefromlegacyfieldsandinfrastructure
• Renewedfocusonexplora2onyieldsearlysuccess• Company-widefocusonloweringcostofsupplyhasmadeAlaskacompe22vewithinthepor[olio
DriversofTransforma2on
ConocoPhillips’AlaskaOutlook1
2013vs.Current(excluding2018acquisi2ons)
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
ConocoPhillips’AlaskaOutlook1
2013vs.Current(including2018acquisi2ons)
1Assumesastableandcompe22vefiscalframework,includesimpactof2018acquisi2onsatworkinginterestsof:WesternNorthSlope=100%/Kuparuk=~95%,andexcludesAlaskaNorthSlopegas
supportedbyrecentstrategictransac2ons
STRENGTHENEDOUTLOOK
MinimizingFootprintThroughTechnology
1Source:TheRoleoftheOilandGasIndustryinAlaska’sEconomy;TheMcDowellGroup;May2017.
65AcreGravelPad(1970)**
12AcreGravelPad(2016)**
12AcreGravelPad
(FutureERD)**
AlaskaNorthSlopeReducedFootprint*
DrillingAreaAccessiblefromPads
~3sq.miles~55sq.miles
~154sq.miles*Assumessimilarreservoirdepth**1970drillingradius~5,000k2016drillingradius~22,000kFutureExtendedReachDrilling(ERD)~37,000k
PipelineofProjectsontheWesternNorthSlopeGMT1
• ~25,000-30,000BOPD*• Firstoilplannedlate2018• ~700construc2onjobs• ~$1billiongross
GMT2• ~38,000BOPD*• Firstoilplannedlate2021• ~700construc2onjobs• ~$1.5billiongross
FiordWest• 20,000BOPD*• FirstoilplannedAug2020
WillowDiscovery• Nominally100,000BOPD*• Firstoil2024-2025• Mul2-billiondollarinvestment• Poten2alforhundredsofdirectjobs,
thousandsofconstruc2onjobs
*Es2matedpeakgrossproduc2on.UpdatedforincreasedGMT2es2mate.
BearTooth
GreaterMoosesTooth
ColvilleRiver
GMT1
GMT2
CD5 CD2
CD1
CD4
FiordWest
WillowDiscovery
NPR-ADiscoveriesOpenNewWestwardFron2er
Pre-2015 2015 2016 2017 2018 2019+Pre-2015 2015 2016 2017 2018 2019+Pre-2015 2015 2016 2017 2018 2019+
• IndustrychasesdeeperJurassictargets• ConocoPhillipsevaluatesNPR-ABrookianpoten2al
Kuparuk
GMT-2
GMT-1 CPF1CPF2
N AT I O N A L P E T R O L E UM R E S E R V E – A L A S K A
WesternNorthSlope
Alpine CPF3
PrudhoeBay
TransAlaskaPipelineSystem(TAPS) Projects
CentralProcessingFacility(CPF)ConocoPhillipsAcreage
CD5
Willow
Discoveries
• Willowdiscoverywithiden2fiedupside• Acquirednew3DCSIseismic
Kuparuk
GMT-2
GMT-1 CPF1CPF2
N AT I O N A L P E T R O L E UM R E S E R V E – A L A S K A
WesternNorthSlope
Alpine CPF3
Willow
PrudhoeBay
TransAlaskaPipelineSystem(TAPS) Projects
Discoveries
CentralProcessingFacility(CPF)ConocoPhillipsAcreage
CD5
• Acquiredaddi2onal~600Mnetacresfor~$30/acre
• ConocoPhillipsincreasesworkinginterestinWesternNorthSlopeto100%
WestWillow
Kuparuk
GMT-2
GMT-1 CPF1CPF2
N AT I O N A L P E T R O L E UM R E S E R V E – A L A S K A
WesternNorthSlope
Alpine CPF3
Willow
TransAlaskaPipelineSystem(TAPS)
PrudhoeBay
Projects
Discoveries
CentralProcessingFacility(CPF)ConocoPhillipsAcreage
CD5
• ExecutedlargestE&Aprogramsince2002• AppraisedWillow;exploredforupside
Kuparuk PrudhoeBayN AT I O N A L P E T R O L E UM
R E S E R V E – A L A S K A
WesternNorthSlope
UndrilledProspects
TransAlaskaPipelineSystem(TAPS) Projects
Discoveries
CentralProcessingFacility(CPF)ConocoPhillipsAcreage
GMT-2
GMT-1 CPF1CPF2
WestWillow
Alpine CPF3
WillowNorthSlope
A L A S K A
Valdez
Anchorage
NPR-A
CD5
• 0.5–1.1BBOEgrossdiscoveredresource• 75%oftheplayremainstobeexplored
0
2018Explora2onProgramConfirmsStand-AloneHubatWillowGreaterWillowArea
• 2018Willowappraisalac2vi2esandanalysis:• Confirmedoil-filledreservoirwith3newappraisalwellsand3flowtests• APIviscosityrange:41°to44°• Facility-limitedver2caltestrate~1,000BOPD
• AppraisalresultscombinedwithCSIdataindicatemorepoten2alon-trendresourcetonorthandsouth
• Addi2onaloildiscoveryatWestWillowcreatespossibilityfor2e-backtoWillowhub
• 2019GreaterWillowAreaappraisalseasonneededtoop2mizedevelopmentplan
currentdiscoveredresource
400–750MMBOE1
2018Well 2018WellTest
PreliminaryDiscoveredResourceRangeIncreased
WestWillow1
T7
T2
T6
T9
T8
5 10 15
Miles
WillowDiscoveryWell
1GrossdiscoveredresourceinAlaskasince2016.
SignificantFutureExplora2on&AppraisalPlanned
explora2onupside
75%PORTFOLIOUNDRILLED
GreaterWillowAppraisal
• Evaluatehorizontalwellperformance
• Determinelateralreservoirconnec2vity
• AppraiseWestWillow
NarwhalAppraisal
• Verifyrecoverablevolumes
• Evaluatewellperformance
2019ProgramFocusedonExis2ngDiscoveriesResolveRemainingUncertainJestoSancJon
2020+ProgramFocusedonRemainingPoten2alTestFullProspectInventory
ProjectsDiscoveriesCentralProcessingFacilityConocoPhillipsAcreageUndrilled
Prospects
N A T I O N A L P E T R O L E U M R E S E R V E – A L A S K A
WesternNorthSlope
05
10 15
Miles
GMT-2
GMT-1WestWillow
Alpine
Willow
1GrossdiscoveredresourceinAlaskasince2016.
discoveredresource
500MMBOE–1.1BBOE1
CD5
NorthSlopeRenaissance
BTU
GMTU
CRUKRU
PBU
GMT1
GMT2
Alpine
PS1CPF2CD5
1H-NEWS
TeshekpukLake
BeaufortSea
ArcJcOcean
NATIONALPETROLEUMRESERVE-ALASKA
ANWR1002
Arc2cNa2onalWildlifeRefuge
COREFIELDSAlpine,Kuparuk&
PrudhoeBay
CD2&FiordWest
COPADevelopmentPlans:GMT1-2,CD2/FiordWest
NEW2016-2017COPALeases
NEW2017-2018COPALeases
NEW2016-2017COPALeases
ENI:explora2on
BrooksRangePetroCo.:Mustangdevelopmentandpadexpansion
Hilcorp:Libertydevelopment
OilSearch,Repsol&Armstrong:Pikkaexplora2on&Nanushuk
development
Caelus:Nuna
HundredsofThousandsofNewBOPDandmorethan~$13BillioninCapital
2018COPAExplora2on:Seismic
Acquisi2on
2018COPAExplora2on:Putu/Stony
2018COPAExplora2on:
WillowAppraisal
StandforSalmonBallotIni2a2ve-ASolu2oninSearchofaProblem
• Thisballotini2a2veisreallyaboutstoppingresourcedevelopment
• Itwilladdcost,moreregula2on,li2ga2on,andjeopardizeexis2ngprojects,withthepoten2altokillfutureprojects
• Won’tjustaffectourindustry,butalsodevelopmentofroads,mines,ports,andotherinfrastructure
• Alaskaalreadyhasworld-class,science-basedpolicies,acts,regula2onsandpermitrequirementsthatworktogethertoprotectfishhabitat
• Contribu2onstotheini2a2vearecomingfromOutsideenvironmentalinterests:• JohnChilds/NewVentureFund,Wash.DC• WildSalmonCenter,PortlandOR• WealthydonorsfromNY,CA&FL• TroutUnlimited
• RecentSupremeCourtdecisiondoesnotchangethedamagingeffectsoftheini2a2ve
• LinktoStateofAlaskaFAQ:
hvps://aws.state.ak.us/OnlinePublicNo2ces/No2ces/Avachment.aspx?id=114005
Ques2on&Answer