ROHSTOFF INTERNATIONAL

13:00 | 08.11.2017
ConocoPhillips Analyst and Investor Meeting to Outline 2018-2020 Operating Plan; Creating Value with Disciplined, Returns-Focused Strategy

ConocoPhillips (NYSE: COP) will hold an Analyst and Investor Meeting
today to outline the company’s 2018-2020 operating plan and strategy for
long-term value creation. The three-year plan averages annual capital
expenditures of $5.5 billion, based on a flat real West Texas
Intermediate (WTI) price of $50 per barrel, and targets strong
performance on several value-oriented metrics, including:

Greater than 20 percent cash return on capital employed (CROCE) by
2020;

Sustaining capital of $3.5 billion;

Less than a $40-per-barrel average sustaining price;

Greater than 30 percent payout of cash provided by operating
activities to shareholders annually, including dividends and share
buybacks;

Extending the $1.5 billion per year of share buybacks for an
additional year through 2020, resulting in total 2017-2020 share
buybacks of $7.5 billion;

Debt reduction to $15 billion in 2019;

Total share buybacks of $7.5 billion and debt reduction to $15 billion
will represent a 20 percent decrease in debt-adjusted share count by
year-end 2020;

Approximately 5 percent underlying production compound annual growth
rate (CAGR) and over 5 percent cash margin CAGR, resulting in more
than a 10 percent cash flow CAGR;

Improvement in financial returns driven by disciplined investments in
the company’s resource base of 15 billion barrels of oil equivalent
with an average cost of supply of less than $35 per barrel.

The company also announced today that, consistent with its ongoing
commitment to sustainability, it has set a target to reduce greenhouse
gas emissions intensity by 5-to-15 percent by 2030. For further
information, see GHGTarget.cop.com.

“During 2017, we significantly transformed ConocoPhillips to succeed
across a range of commodity prices,” said Ryan Lance, chairman and chief
executive officer. “Through accretive asset sales and an ongoing focus
on capital and cost efficiency, we’ve lowered the capital intensity and
sustaining price of the company, reduced the cost of supply of our
investment portfolio, substantially strengthened our balance sheet and
returned a significant portion of cash flow to our owners. We believe
we’re uniquely positioned to generate free cash flow, deliver top-tier
distributions to shareholders and improve financial returns, while
executing the business in a safe, socially and environmentally
responsible manner. We want to be the company that can attract and
retain capital to this sector by offering superior returns to
shareholders through cycles. Today we will provide a clear, measurable
plan to achieve this goal.”

ConocoPhillips’ Analyst and Investor Meeting will begin at 9 a.m. EST in
New York City. A live webcast of the meeting will be available on the
ConocoPhillips Investor Relations site, www.conocophillips.com/investor.

— # # # —
About ConocoPhillips
ConocoPhillips is the world’s largest independent E&P company based on
production and proved reserves. Headquartered in Houston, Texas,
ConocoPhillips had operations and activities in 17 countries, $75
billion of total assets, and approximately 11,600 employees as of Sept.
30, 2017. Production excluding Libya averaged 1,403 MBOED for the nine
months ended Sept. 30, 2017, and proved reserves were 6.4 billion BOE as
of Dec. 31, 2016. For more information, go to www.conocophillips.com.
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE
“SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995This news release contains forward-looking statements.
Forward-looking statements relate to future events and anticipated
results of operations, business strategies, and other aspects of our
operations or operating results. In many cases you can identify
forward-looking statements by terminology such as “anticipate,”
“estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,”
“potential,” “predict,” “should,” “will,” “expect,” “objective,”
“projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,”
“target” and other similar words. However, the absence of these words
does not mean that the statements are not forward-looking. Where, in any
forward-looking statement, the company expresses an expectation or
belief as to future results, such expectation or belief is expressed in
good faith and believed to have a reasonable basis. However, there can
be no assurance that such expectation or belief will result or be
achieved. Our actual results of operations, including our targets for
our capital program and share buybacks, can and will be affected by a
variety of risks and other matters including, but not limited to,
changes in commodity prices; changes in expected levels of oil and gas
reserves or production; operating hazards, drilling risks, unsuccessful
exploratory activities; difficulties in developing new products and
manufacturing processes; unexpected cost increases; international
monetary conditions; potential liability for remedial actions under
existing or future environmental regulations; potential liability
resulting 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; and
general domestic and international economic and political conditions; as
well as changes in tax, environmental and other laws applicable to our
business. 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 our business generally as set forth in our filings with the
Securities and Exchange Commission. Unless legally required,
ConocoPhillips undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.Use of Non-GAAP Financial Information and Other Terms – To
supplement the presentation of the Company’s financial results prepared
in accordance with U.S. generally accepted accounting principles (GAAP),
this news release contains certain financial measures that are not
prepared in accordance with GAAP, including sustaining capital.
Sustaining capital is defined as capital expenditures and investments
that sustains production over the plan period and beyond. The company
believes that the non-GAAP measure sustaining capital is useful to
investors as it specifies minimum capital required to maintain current
production and can be useful in comparison to peer companies. The
Company’s Board of Directors and management also use this non-GAAP
measure to analyze the Company’s operating performance across periods
when overseeing and managing the Company’s business.Each of the non-GAAP measures included in this news release has
limitations as an analytical tool and should not be considered in
isolation or as a substitute for an analysis of the Company’s results
calculated in accordance with GAAP. In addition, because not all
companies use identical calculations, the Company’s presentation of
non-GAAP measures in this news release and the accompanying supplemental
financial information may not be comparable to similarly titled measures
disclosed by other companies, including companies in our industry. The
Company may also change the calculation of any of the non-GAAP measures
included in this news release from time to time in light of its then
existing operations to include other adjustments that may impact its
operations.Reconciliations of each non-GAAP measure presented in this news
release to the most directly comparable financial measure calculated in
accordance with GAAP are included below.The release also contains the terms underlying production,
debt-adjusted share, free cash flow, sustaining price, cash margin, and
cash returned on capital employed. Underlying production excludes Libya
and announced and expected dispositions. Debt-adjusted share is
calculated using ending period debt divided by ending share price plus
ending shares outstanding. Free cash flow is cash provided by operating
activities in excess of capital expenditures and investments. Free cash
flow is not a measure of cash available for discretionary expenditures
since the Company has certain non-discretionary obligations such as debt
service that are not deducted from the term. Sustaining price is the WTI
price at which cash provided by operating activities covers sustaining
capital and growing dividend. Cash margin is cash provided by operating
activities per barrel. Cash returned on capital employed is defined as
net income plus after-tax interest expense plus depreciation, depletion
and amortization less the impacts of non-operational results and special
items for unusual transactions outside the normal course of business
which are over a certain threshold. The Company believes that underlying
production is useful to investors to compare production excluding Libya
and the full impact of announced and expected dispositions on a
consistent go-forward basis with peer companies. The Company believes
that the debt-adjusted share term is useful to investors as it provides
a consistent view of total equity by converting debt to equity and
allows for comparisons across peer companies. The Company believes that
the free cash flow term is useful to investors as it provides insight
into cash provided by operating activities after capital expenditures
and investments across periods on a consistent basis. The Company
believes that the sustaining price term is useful to investors as it
specifies the minimum price required to cover sustaining capital and
dividends and can be useful in comparison to peer companies. The Company
believes the cash margin term is useful to investors as it provides the
metric of cash provided by operating activities on a per barrel basis
and allows for comparisons across peer companies. The Company believes
that the non-GAAP term cash returned on capital employed is useful to
investors as it provides a ratio of profitability of the Company’s
capital employed compared with that of its peers.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.
 
ConocoPhillips
 
Reconciliation of Capital Expenditures and Investments to
Sustaining Capital
 

$ Billions, Except as Indicated

 

 

 
2018 GuidanceCapital Expenditures and Investments

5.5

 

Short-Cycle Unconventionals

1.2

Future Major Project Capital Spend

0.5

Exploration Capital Spend

 

 

0.3
Sustaining Capital

3.5
 

 

View source version on businesswire.com: http://www.businesswire.com/news/home/20171108005318/en/


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