ConocoPhillips Sees 'Long-Term' Production Growth Rate of 2%

ConocoPhillips held its annual analyst meeting today in New York. The company's Chairman and Chief Executive Officer Jim Mulva outlined how ConocoPhillips' strategic objectives and operating plans will enable the company to utilize its portfolio of high-quality assets in delivering growth and enhancing value for shareholders, while overcoming a variety of challenges inherent to the current business environment.

"We have a strong portfolio of opportunities, and development plans are under way so that we can fully capitalize on their potential," Mulva said. "We are benefiting from our talented work force and ongoing focus on capital discipline and project execution, financial optimization, operating excellence, and safety and environmental stewardship. As a result, we believe ConocoPhillips is well positioned to operate successfully in the business environment we foresee for 2008 and beyond -- one that seems likely to be characterized by strong energy demand. Although we face intense competition for access to new resources and the prospect of legislation on climate change, we have taken steps to enable ConocoPhillips to operate effectively and deliver value as we manage the challenges ahead."

Mulva noted that ConocoPhillips' 2007 total shareholder return of 25.4 percent was above the peer group average, and that the company's three-, five- and 10-year returns led the peer group. He reaffirmed ConocoPhillips' intent to fund a capital program of $15.3 billion in 2008, to continue select asset sales that facilitate ongoing renewal of its portfolio, and to continue pursuing efficiency in executing its development projects, drilling programs and base operations.

In pointing out that efficiency, Mulva said, "In terms of cash contribution per barrel of oil equivalent, our performance leads our peers in both the E&P and R&M segments. This ability to generate cash enables us to enhance distributions to our shareholders, such as the recently announced 15 percent increase in our dividend, and it should enable us to complete the $10 billion in share repurchases authorized for 2008."

In its Exploration and Production (E&P) segment, the company outlined its strategic plans to advance an asset portfolio that is resource-rich, with more than 50 billion barrels of oil equivalent of existing resources, including 10.6 billion barrels of proved reserves at year-end 2007. ConocoPhillips has leading positions in both natural gas production and heavy-oil acreage in North America, a legacy asset position in the North Sea, and strong growth prospects in the Asia Pacific, Russia and Caspian, and Middle East regions. Major near- and long-term development projects are under way in all these regions. The company expects to sustain a long-term, average production growth rate of 2 percent and a five-year reserve replacement average of 100 percent or more. ConocoPhillips also anticipates new opportunities to emerge from its business development efforts and from a replenished exploration program that is increasing the company's exposure to high-potential prospects.

In addition, Mulva addressed the important role technology would play in helping ConocoPhillips achieve its plans. "We have a rich history in technological development devoted to the recovery of conventional resources, and we believe that further research is the key to unlocking the value of our non-conventional resources and advancing the development of alternative energy sources."

The company expects to spend approximately $400 million on technology in 2008, primarily to progress such technologies as reservoir imaging, steam-assisted gravity drainage, coal gasification, carbon capture and sequestration, cellulosic ethanol conversion, and refining processes ... Additionally, ConocoPhillips plans to build both a state-of-the-art global technology center and a best-in-class corporate learning center on land recently purchased in Colorado.

"Further, we are investing strongly in our people by enhancing our efforts to recruit, retain and develop a highly capable, demographically balanced and diverse work force," Mulva said. "We are making good progress, and our plans to develop both a technology center and a corporate learning center will help ensure our employees attain their maximum potential."

Discussing other issues, Mulva said that, "To ensure that our business remains sustainable over the long term, we must operate safely and with environmental care, while also helping address the key challenges facing society. For example, society clearly needs to achieve energy supply security, as well as address the challenge of climate change caused by carbon emissions. We believe these issues are interrelated and must be solved together. Therefore, ConocoPhillips supports enactment of a comprehensive U.S. energy policy, and a mandatory national framework to reduce carbon emissions. Also, we are working to conserve and recycle more of the water used in our operations, and are funding research into new techniques that could utilize the water produced in association with oil and natural gas for agricultural and industrial applications."