ConocoPhillips Board Approves 2006 Capital Budget

The board of directors of ConocoPhillips approved 2006 cash capital expenditures of approximately $10.0 billion. This, combined with about $0.5 billion of capitalized interest and minority interest, results in an authorized capital budget of $10.5 billion.

"Our 2006 capital budget underscores our commitment to maintain cost and capital discipline, while aggressively reinvesting in our business to grow our capability to deliver energy to the world," said Jim Mulva, chairman and chief executive officer. “We have a pipeline of large projects and favorable investment opportunities on the horizon that will allow us to strengthen our position worldwide and provide long-term value for our shareholders."

Sixty-three percent of the company's 2006 cash capital budget will be allocated to its Exploration and Production segment. The Refining and Marketing segment will receive 35 percent of the budget. Excluding the previously announced acquisition of the Wilhelmshaven refinery, 73 percent of the cash capital budget would be allotted to the E&P segment and 24 percent would be allotted to the R&M segment. The remaining budget will be spent in the Emerging Businesses and Corporate segments.

Exploration and Production (E&P)
E&P’s 2006 cash capital expenditures budget is approximately $6.3 billion. This, combined with $0.4 billion in capitalized interest and minority interest, results in an authorized E&P capital budget of $6.7 billion. Worldwide exploration activities account for approximately $0.6 billion, included in the regional totals below.

About $1.8 billion of the E&P budget will fund projects in the North Sea and West Africa. North Sea projects include continued development of Britannia, including the Britannia satellite fields, in the U.K. sector; and development of the Alvheim field, as well as ongoing development of existing and new opportunities in the Ekofisk area in the Norwegian sector. In West Africa, capital funds will go toward continued work on the Brass liquefied natural gas (LNG) project.

In the Asia Pacific region, the company anticipates that expenditures will be roughly $1.0 billion. The majority of the funding will support the continued development of Bohai Bay in China; oil and gas reserves offshore Block B and onshore South Sumatra in Indonesia; and the Bayu-Undan project in the Timor Sea.

The company intends to spend about $0.9 billion of the E&P budget toward developments in the U.S. Lower 48 and Latin America. The focus in these areas includes the ongoing development programs in the Lobo and San Juan fields in the U.S. Lower 48, as well as development of the offshore Corocoro field and the early-stage development of the Plataforma Deltana project, both in Venezuela.

In Alaska, E&P capital expenditures are expected to be approximately $0.8 billion, primarily directed toward the development of the Alpine satellites and the West Sak heavy-oil field, as well as continued development within the existing Prudhoe Bay and Kuparak areas.

The company has allocated about $0.8 billion for its operations in Canada, with a focus on ongoing development programs in Western Canada, specifically Syncrude expansion and Surmont heavy-oil development; and continued work on the Mackenzie Delta gas pipeline.

Russia and the Caspian region will receive roughly $0.7 billion of the E&P budget. The majority of the capital funds will support the continued development of the Kashagan field in the Caspian Sea and the Timan-Pechora joint venture in northern Russia.

In the Middle East and North Africa, the company estimates it will spend nearly $0.1 billion, primarily on the development of the Qatargas 3 LNG facility in Qatar.

The company intends to spend approximately $0.2 billion in its Global Gas business for the ongoing development of regasification facilities in the United States to meet the growing need for natural gas supplies.

Refining and Marketing (R&M)
The 2006 authorized capital budget for R&M is approximately $3.5 billion. About $1.8 billion will be spent in the United States, and roughly $1.7 will be spent internationally.

The company has allocated $1.5 billion for U.S. refining. Approximately $0.4 billion of this budget will be earmarked for clean fuels projects already in progress and about $0.7 will go toward sustaining projects related to reliability, safety and the environment.

The company also intends to spend approximately $0.4 billion on investments designed to increase crude oil capacity, expand conversion capability, improve energy efficiency and increase clean product yield throughout the company’s U.S. refining network. Multi-year expansion and upgrade projects are planned at nine of the 12 domestic refineries: the Alliance refinery in Belle Chasse, La.; the Bayway refinery in Linden, N.J.; the Billings, Mont., refinery; the Borger, Texas, refinery; the Ferndale, Wash., refinery; the Los Angeles refinery in Wilmington, Calif.; the San Francisco refinery in Rodeo, Calif.; the Sweeny refinery in Old Ocean, Texas; and the Wood River refinery in Roxana, Il.

International R&M will be allotted about $1.7 billion, with $1.4 billion of the capital budget allocated to fund the recently announced acquisition of the Wilhelmshaven refinery in Germany, including the initial expenditures towards a deep-conversion project and other miscellaneous capital improvements.

The remaining R&M budget will be allocated for projects in the company's domestic transportation and marketing businesses.

Emerging Businesses and Corporate
The capital designated for Emerging Businesses and Corporate for 2006 is approximately $0.2 billion. The majority of the spending is earmarked for global information systems and services.

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