"With more than 50 billion barrels of oil equivalent of existing resources in our upstream portfolio and numerous strong refining projects delivering solid downstream returns, ConocoPhillips is well positioned to address the challenges of the current business environment and sustain value creation for our shareholders," said Mulva. He noted that ConocoPhillips' 2006 total shareholder return of 26.5 percent was above the peer group average, and that the company's three-year and five-year returns led the peer group in both periods.
"We will continue to emphasize operating excellence, cost management, capital discipline and project execution across our businesses," added Mulva. "We must operate in a safe, environmentally responsible manner worldwide, while further leveraging the integration of our upstream, downstream and commercial positions to ensure profitable long-term growth."
ConocoPhillips reaffirmed its intent to fund a capital program of $13.5 billion in 2007, with a continued commitment to optimize the portfolio through selective asset dispositions and careful prioritization of project investment opportunities. The company also communicated its objective to continue improving its financial strength through consistent debt reduction, equity improvement, and achieving a target debt-to-capital ratio of 15 to 20 percent by year-end. In addition, ConocoPhillips' financial strategy is balanced by annual dividend increases and share repurchases. Earlier this year, the company declared a dividend increase of 14 percent for 2007 and announced share repurchases of $4 billion for the year.
In its Exploration and Production segment, ConocoPhillips outlined its strategic plans to advance an asset portfolio that is both opportunity and resource-rich. With leading positions in both natural gas and heavy crude oil in North America, a legacy position in the North Sea, and strong growth in the Russia and Caspian, Middle East and Asia Pacific regions, the company expects to replace reserves and sustain production growth at a rate of approximately 3 percent over the long term. New growth opportunities are anticipated as ConocoPhillips also pursues focused exploration and business development in several prospective areas globally and works to rebuild its exploration portfolio.
In Refining and Marketing, ConocoPhillips is committed to maintaining its segment-leading performance through a continued focus on safe and reliable operations. The company plans to hold operating costs flat while improving its clean products yields through further investment in its existing refineries. ConocoPhillips also plans to improve its ability to process advantaged crudes, particularly at its Wood River, Ill., and Borger, Texas, refineries through its oil-sands joint venture with EnCana Corporation. In addition, the company is engaged with foreign partners in studying opportunities to construct new refineries in the Middle East and Asia.
Updates also were provided on the company's strategic partnership with LUKOIL, the upstream and downstream ventures with EnCana Corporation, and the DCP Midstream and Chevron Phillips Chemical Company joint ventures. ConocoPhillips also outlined the expected contributions from its Commercial organization, as well as the company's plans for a more aggressive technology program.
"We were pleased with our performance in 2006, but we believe we can do more to address the challenges of the current business environment," said Mulva. "I have great confidence that by utilizing the people, technology, financial strength and portfolio opportunities we have, we are in an excellent position to add value for our shareholders."
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