ConocoPhillips Board Approves 2005 Capital Budget

The board of directors of ConocoPhillips (NYSE:COP) has approved 2005 cash capital expenditures of approximately $6.9 billion. This total excludes approximately $0.3 billion in capitalized interest and $0.2 billion in minority interest.

"The 2005 cash capital budget continues to support our strategy to maintain cost and capital discipline, while providing us the flexibility to further optimize and grow our worldwide, integrated operations," said Jim Mulva, chairman and chief executive officer. "Two-thirds of our 2005 capital program is focused on payout projects, those that will build on our strengths and advantaged positions in certain areas of the world to even further improve returns to our shareholders."

The company will allocate approximately 75 percent of its 2005 capital budget to its Exploration and Production and Midstream segments. Refining & Marketing will receive about 22 percent of the budget. The remaining budget will be allocated to Emerging Businesses and Corporate.

Exploration and Production (E&P) and Midstream

E&P's 2005 capital budget is approximately $5.1 billion, excluding capitalized interest and minority interest related to the Bayu-Undan project in the Timor Sea. Approximately $0.5 billion budgeted for worldwide exploration activities is included in the regional totals below.

Approximately $1.4 billion of the E&P budget is allocated toward projects in the North Sea and West Africa. North Sea projects include development of the Britannia satellite fields in the U.K. sector and continued growth of the Ekofisk fields in the Norwegian sector. In West Africa, capital funds will go toward continued work on the Nigeria and Brass liquefied natural gas projects.

E&P anticipates spending approximately $0.9 billion in the development of projects in the Asia Pacific region. The majority of these funds will go toward continued development of the Bayu-Undan project in the Timor Sea, oil and gas reserves in the offshore Block B and onshore South Sumatra blocks in Indonesia, and the second phase of Bohai Bay in China.

The company has allocated roughly $0.9 billion of the E&P budget to developments in the U.S. Lower 48 and Latin America. The focus in these areas will be on ongoing development programs in Lobo and San Juan in the Lower 48, as well as the development of the offshore Corocoro field and the Plataforma Deltana project, both in Venezuela.

The company intends to spend approximately $0.7 billion of the E&P budget for its Alaska operations. Projects include the development of the Alpine satellites and the West Sak heavy oil field.

In Canada, E&P capital expenditures are expected to be about $0.7 billion, with a focus on ongoing development programs in Western Canada, Syncrude expansion, Surmont heavy oil development, and continued work on the Mackenzie Delta gas pipeline.

The company has allocated roughly $0.4 billion for projects in the Russia and Caspian region, primarily for continued development of the Kashagan field in the Caspian Sea and for the Timan-Pechora joint venture in northern Russia.

E&P estimates it will spend approximately $0.1 billion in the Middle East and North Africa, primarily for development of the Qatargas 3 liquefied natural gas facility in Qatar.

Refining and Marketing (R&M)

The 2005 capital budget for R&M is approximately $1.6 billion. The company plans to spend about $1.3 billion in U.S. refining, primarily to fund clean fuels projects in order to comply with Environmental Protection Agency standards for refined products. Clean fuels spending for ConocoPhillips' R&M business will be approximately $0.8 billion, or 50 percent of the total segment budget. International refining and marketing will spend about $0.2 billion, with the remaining budget primarily funding projects in the company's domestic transportation and marketing businesses.

Emerging Businesses and Corporate

The capital allotted for Emerging Businesses and Corporate for 2005 is approximately $0.2 billion. The majority of the spending is earmarked for global information systems and services.