Global Oil OutlookGlobal Oil Outlook

The 2009 Forum on Global Energy, The 2009 Forum on Global Energy, Economy and SecurityEconomy and Security

Marianne KahMarianne Kah Chief EconomistChief Economist

June 26, 2009June 26, 2009

1

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 Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. You can identify our forward-looking statements by words such as “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” and similar expressions. Forward-looking statements relating to ConocoPhillips’ operations are based on management’s expectations, estimates and projections about ConocoPhillips and the petroleum industry in general on the date these presentations were given. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements.

Factors that could cause actual results or events to differ materially include, but are not limited to, crude oil and natural gas prices; refining and marketing margins; potential failure to achieve, and potential delays in achieving expected reserves or production levels from existing and future oil and gas development projects due to operating hazards, drilling risks, and the inherent uncertainties in interpreting engineering data relating to underground accumulations of oil and gas; unsuccessful exploratory drilling activities; lack of exploration success; potential disruption or unexpected technical difficulties in developing new products and manufacturing processes; potential failure of new products to achieve acceptance in the market; unexpected cost increases or technical difficulties in constructing or modifying company manufacturing or refining facilities; unexpected difficulties in manufacturing, transporting or refining synthetic crude oil; international monetary conditions and exchange controls; potential liability for remedial actions under existing or future environmental regulations; potential liability resulting from pending or future litigation; general domestic and international economic and political conditions, as well as changes in tax and other laws applicable to ConocoPhillips’ business; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets. Other factors that could cause actual results to differ materially from those described in the forward-looking statements include 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), including our Form 10-K for the year ending December 31, 2008. ConocoPhillips is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Cautionary Note to U.S. Investors – The U.S. Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We may use certain terms in this presentation such as “oil/gas resources,” “Syncrude,” and/or “Society of Petroleum Engineers (SPE) proved reserves” that the SEC’s guidelines strictly 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 for the year ended December 31, 2008.

2

Global Oil Outlook Short And Medium-Term Drivers

Global Oil Outlook Short And Medium-Term Drivers

DemandShort-term:

Losing ~2.5 – 3.0 mmbd of demand due to recession

Surplus crude & refining capacity

Financial investment in commodities

Medium-Term:Global demand growth likely to resume at weak pace in 2010

Timing and pace of global economy recoveryDemand response to prices

SupplyShort-term:

OPEC management of spare capacity

5-6 mmbd of spare capacity

High inventoriesCrude stocks up >20% Y-O-Y110 MM barrels floating storage

Medium-Term:Weaker supply growth due to period of reduced investment

Project deferrals7.6 mmbd at risk by 2014*

Lower costs are a partial offset

Supply disruption riskDemand recovery in the face of reduced supplies sets the stage

for the next price up-cycle

Weak near-term conditions: demand decline, higher OPEC

spare capacity & stocks

3

Global Oil Demand Decline and Recovery Global Oil Demand Decline and Recovery

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010 LT

Developed Emerging Net Change

Average Annual Growth / DeclineMillion Barrels per Day

Source: International Energy Agency, June 2009 ; U.S. DOE for 2010+

Consensus view is that growth will resume in 2010

Forecast

4

OPEC Spare Production CapacityOPEC Spare Production Capacity

0

2

4

6

8

10

12

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009

Million Barrels per Day

Source: PIRA Energy Group

8% ofdemand

17% of demand$21.70/bbl (09$)

1.4% ofdemand

Range in estimate of Saudi capacity plus post Khurais field

8% ofdemand

5% ofdemand

5

-1,500-1,000

-5000

5001,000

2005 2006 2007 2008 2009

OPEC NGL & Condensate Non-Conventional Conventional Crude Total

Non-OPEC and NGL Supply Growth Non-OPEC and NGL Supply Growth

Thousand Barrels per Day

350590 610 150 -270

Conventional non-OPEC crude production has peakedConventional non-OPEC crude production has peaked

Source: PIRA Energy

6

Global E&P Expenditure Growth Vs. Percent Change in Oil Price Global E&P Expenditure Growth Vs. Percent Change in Oil Price

-40

-30

-20

-10

0

10

20

30

40

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

-80

-60

-40

-20

0

20

40

60

80E&P Spending Growth, % WTI Change, %

Source: Citi, Barclay, PIRA estimates

E&P Spending is for Oil & Gas combined

7

Global Oil Outlook Long-Term Drivers

Global Oil Outlook Long-Term Drivers

Demand

Population growth

Post recovery rate of global economic growth

Subsidies in developing countries

Government policies in industrialized countries (carbon, fuel efficiency, biofuels, consumer taxes)

Pace of fuel-switching away from oil in developing countries

Technology change in automotive sector (Electrification, 2nd

generation biofuels, diesel, etc.)

Supply

Private investmentResource accessFiscal terms

OPEC capacity expansionIncreased concentration

Geopolitical risk

Depletion rates

Pace of expansion for unconventional oil

Cost of supply

8

World Oil Demand Outlook Reference Case

World Oil Demand Outlook Reference Case

0

20

40

60

80

100

120

2007 2010 2015 2030

Other*Other AsiaChinaOECD

Million Barrels per Day

Source: International Energy Agency, “2008 World Energy Outlook”* Other includes other developing and international marine bunker fuel

25% increase (@$110/bbl real)

1.3% per yeargrowth

The growth is in developing countries

9

Energy Subsidies in Non-OECD CountriesEnergy Subsidies in Non-OECD Countries

0 10 20 30 40 50 60

BrazilVietnam

Chinese TaipeiNigeria

ThailandMalaysiaPakistan

KazakhstanSouth AfricaArgentinaUkraineEgypt

IndonesiaVenezuela

IndiaSaudi Arabia

ChinaRussiaIran

Billion dollars

OilGasCoalElectricity

Energy subsidies in the 20 largest non-OECD countries hit $310 billion in 2007

Year 2007

Source: IEA, 2008 World Energy Outlook

10

Million BarrelsPer Day

Source: Based on IEA World Energy Outlook 2008

0

20

40

60

80

100

120

2007 2012 2017 2022 2027

ExistingProduction

19 MMBPD21% of 2015 demand Capacity Additions

Needed

Projected global oil demand

Oil Supply ChallengeOil Supply Challenge

Significant capacity additions requiredSignificant capacity additions required

45

NGLs

Unconventional Production

11

0

20

40

60

80

100

120

1980 2000 2007 2015 20300%

10%

20%

30%

40%

50%

60%

70%

Non-ConventionalOther OPECMiddle East OPECOther Non-OPECIndustrialized

Production (MMBD)

Source: International Energy Agency, World Energy Outlook 2008Other non-OPEC includes refinery process gainNon-conventional excludes biofuels

OPEC Share

Share (%)

Non-OPECConventional Share

World Oil Production OutlookWorld Oil Production Outlook

12

1%

14%85%

73%

8%12%7%

NOC reserves (equity access)

Full IOC access

Reserves held by Russian companies

NOC reserves(no equity access)

Today

Full IOC access

1960s

SOVIET reserves

NOC reserves(no equity access)

IOC = International oil companyNOC = National oil company

World Oil and Gas Reserves Drift Toward Constrained IOC Access World Oil and Gas Reserves

Drift Toward Constrained IOC Access

Source: PFC Energy, Oil & Gas Journal, BP Statistical Review 2008Note: Excludes unconventional crude oil and bitumen reserves

Only 7% of the world’s reserves are fully accessible by IOCsOnly 7% of the world’s reserves are fully accessible by IOCs

13

Top 25 Reserves Oil, NGL and Natural Gas

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Ara

mco

(Sau

di)

NIO

C (I

ran)

INO

C (I

raq)

QP

(Qat

ar)

Gaz

prom

(Rus

sia)

KPC

(Kuw

ait)

PDV

(Ven

ezue

la)

Adn

oc (A

buD

habi

)N

NPC

(Nig

eria

)So

natr

ach

(Alg

eria

)Li

bya

NO

C

CN

PC (C

hina

)Pe

tron

as(M

alay

sia)

Exxo

n M

obil

Ros

neft

(Rus

sia) BP

Turk

men

gas

Luko

ilPe

mex

(Mex

ico)

Shel

l

Che

vron

Petr

obra

s

Con

ocoP

hilli

ps

Tota

l

Surg

utne

ftega

s

MMBOE

Source: Energy Intelligence Group, Ranking the World’s Oil Companies 2008

IOCs = International Oil Companies

IOCs

Top 25 Reserves Oil, NGL and Natural Gas Top 25 Reserves

Oil, NGL and Natural Gas

14

0

5

10

15

20

With OilSands

Without OilSands

Million Barrels per Day

UnsourcedMiddle EastCanadaLatin AmericaAfricaOtherDomestic

U.S. 2020 Crude SupplyU.S. 2020 Crude Supply

Source: Purvin & Gertz 2009 GPMO and COOSMO

MexicoVenezuela

MexicoVenezuela

Oil Sands ~20%

AdditionalMiddleEast?

~40%

~20%

15

GHG Intensity of Oil Sands Vs. Other Sources of Crude

GHG Intensity of Oil Sands Vs. Other Sources of Crude

0 100 200 300 400 500 600 700

Canadian Oil Sands SAGD SCO

Middle East Heavy Oil

Nigerian Country Average

Canadian Oil Sands SAGD DilbitCalifornia Heavy

Venzuela Partial Upgrader*

Angola

Canadian Oil Sands Mining SCOVenezuela

Mexico

Avg. U.S. Barrel Consumed

Saudi Light

Fuel Combustion Well-to-Retail Pump

Source: IHS CERA, 2009*McCann, 2007SCO = synthetic crude oil; Dilbit = bitumen blended with condensateSAGD = steam-assisted gravity drainage

Kg CO2 Equivalent per Barrel of Crude

Life-Cycle GHG Emissions for Various Source of Crude Oil

16

0

5

10

15

20

25

30

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

E

2009

E

OPEX DD&A Exploration

Global Finding, Development and Production Costs

Global Finding, Development and Production Costs

Source: Credit Suisse

USD/BBL

*Operating Costs include royalties

17

Current Oil Reserve Replacement Cost Curve Current Oil Reserve Replacement Cost Curve

0

10

20

30

40

50

60

70

80

90

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90

World Oil Supply, 2009, MMB/D

Rep

lace

men

t Cos

t

Low Cost Middle East

Medium Cost ConventionalUS GOM, Alaska, North Sea,

Caspian, most Latin America, Africa, Far East,

High Cost Conventional, EOR, Oil Sands, Orinoco, CTL Russia, U.S. Stripper Wells

Non-Mandated Biofuels

Dollars per Barrel

Man- dated Bio- fuels, shown as zero cost

Source: PIRA Energy

18

WTI Price Pause in the Trend or Return to Previous?

WTI Price Pause in the Trend or Return to Previous?

0

20

40

60

80

100

120

140

160

Jan-

03

Apr

-03

Jul-0

3

Oct

-03

Jan-

04

Apr

-04

Jul-0

4

Oct

-04

Jan-

05

Apr

-05

Jul-0

5

Oct

-05

Jan-

06

Apr

-06

Jul-0

6

Oct

-06

Jan-

07

Apr

-07

Jul-0

7

Oct

-07

Jan-

08

Apr

-08

Jul-0

8

Oct

-08

Jan-

09

Apr

-09

Prompt 5-Year Deferred* Return to Previous Linear (Prompt)

Dollars per Barrel

Source: NYMEX* Futures price 5-years out

Trend

Return to Previous

19

Observations on Oil OutlookObservations on Oil Outlook

Outlook

Weak near-term fundamentals with oil demand decline, high inventory levels and increase in OPEC spare capacity

Reduced supplies as demand growth resumes sets the stage for the next price up-cycle

The oil balance is likely to tighten long-term despite weak demand growth in industrialized countries

Strong demand growth in developing countriesRising depletion rates for existing productionConstrained resource access & investment in new suppliesShift to higher cost prospects

U.S. Oil Policy

Promote efficiency of use

Diversify supply sourcesNeed all sources, including alternativesStill need investment in conventional and unconventional Refrain from discouraging imports

Promote technology innovation

Don’t pick technology winners

Joint strategy for energy security & climate change

20

Sharp Rise in U.S. Natural Gas Resource Estimates

Sharp Rise in U.S. Natural Gas Resource Estimates

Source: USGS 2005 National Oil and Gas Assessment, Navigant Consulting North American Natural Gas Supply Assessment 2008, DOE Assumptions to the AEO 2009, ICF Feb. 2009, Reserve information from DOE (various years); 2008 *Potential Gas Committee – info. currently available puts unconventional other than CBM and shale in conventional suppliesAlaska resources include conventional and unconventional resources

0

500

1000

1500

2000

2500

USGS2005

Navigant DOE PGC* ICF

Trillion Cubic Feet

Proven reserves

Technically RecoverableResources

Alaska

Unconventional Lower 48

Conventional Lower 48

21

Natural Gas is An Ideal Transition Fuel to a Low Carbon Economy

Natural Gas is An Ideal Transition Fuel to a Low Carbon Economy

Benefits of GasAttractive environmental properties

Half the carbon content of coal-fired powerClean-burning / small acreage footprintEnables low carbon electrification of transportation Enables intermittent renewable power by following load

Abundant suppliesDomestic & Canadian unconventional gas renaissance Large supply potential from Arctic (Alaska, Mackenzie Delta)Large LNG import potential

Secure suppliesU.S. is 2nd largest gas producerHistorically supplied ~85% of needs

Attractive economics of gas-fired power plants

Low capital cost & short build timeHigh efficiency of combined cycle

Supportive U.S. Policy Needed

Positive business climate for investmentRealistic tax policyEnsure benefits of regulation exceed cost

Improve resource accessAvoid “Use It or Lose It”

Encourage fuel neutral transition to a low carbon economy

Provide carbon price signalAvoid picking technology winner

Broaden renewable electricity standardLevel playing field in cap and trade for free allowances to different types of power plants

Proposed policies will marginalize gas