ConocoPhillips (NYSE: COP) is hosting an Analyst & Investor
Meeting today to reaffirm its commitment to the disciplined,
returns-focused strategy it launched in 2016. The company will
outline the details of a 2020-2029 operating and financial plan,
and will provide region and asset reviews of its global
portfolio.
Highlights of the 10-year plan include:
- Free cash flow of approximately $50 billion based on a real
West Texas Intermediate price of $50 per barrel and annual capital
expenditures averaging less than $7 billion over the decade;
- A capital expenditures plan that reflects optimized pace of
development within each asset, low capital intensity and overall
low-declining base production;
- Currently announced and planned dispositions, as well as a
future 25 percent dilution of company-operated Alaska assets
consistent with the company’s historical practice of not funding
major-project expenditures at 100 percent;
- Resource base of approximately 15 billion barrels of oil
equivalent at less than $40 per barrel WTI average cost of
supply;
- Forecast underlying compound annual production growth averaging
over 3 percent;
- Projected ordinary dividends of approximately $20 billion,
reflecting growth in the current dividend over the plan
period;
- Projected $30 billion in share buybacks over the 10-year
period, representing almost 50 percent of current market
capitalization;
- Planned dividends and repurchases funded from free cash flow
over life of the plan, representing a combined annual shareholder
payout that exceeds our distribution target of more than 30 percent
of cash from operations;
- Expected growth in return on capital employed of 1 to 2
percentage points annually; and
- Continued balance sheet strength with an expected leverage
ratio of net debt to cash from operations of less than one.
“Over the past few years we have successfully transformed
ConocoPhillips to position the company for consistent, predictable
performance across the inevitable price cycles of our industry,”
said Ryan Lance, chairman and chief executive officer. “We believe
that we offer the market a compelling, long-term E&P investment
that provides downside protection and full exposure to the upside.
Today’s plan demonstrates sustained value creation through
significant free cash flow generation, distinctive returns of
capital and growing returns on capital.”
Lance continued, “We are committed to delivering superior
returns to shareholders. Our plan provides a powerful, multi-year
outlook that combines a robust, scenario-based strategy framework,
a diverse, low cost of supply resource base, a disciplined,
value-based investment approach and a world-class workforce. We
believe we are unique in being able to offer this formula to the
market.”
ConocoPhillips’ Analyst & Investor Meeting will begin at
8:00 a.m. Central time in Houston. A live webcast of the meeting
and the slide deck will be available on the ConocoPhillips Investor
Relations website, www.conocophillips.com/investor. The event will
be archived and available for replay later in the day, with a
transcript posted shortly afterward.
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About ConocoPhillips
Headquartered in Houston, Texas, ConocoPhillips had operations
and activities in 17 countries, $70 billion of total assets, and
approximately 10,400 employees as of Sept. 30, 2019. Production
excluding Libya averaged 1,310 MBOED for the nine months ended
Sept. 30, 2019, and proved reserves were 5.3 BBOE as of Dec. 31,
2018. 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 1995
This news release contains forward-looking statements as defined
under the federal securities laws. Forward-looking statements
relate to future events and anticipated results of operations,
business strategies, and other aspects of our operations or
operating results. Words and phrases such as "anticipate,"
"estimate," "believe," “budget,” "continue," "could," "intend,"
"may," "plan," "potential," "predict," “seek,” "should," "will,"
“would,” "expect," "objective," "projection," "forecast," "goal,"
"guidance," "outlook," "effort," "target" and other similar words
can be used to identify forward-looking statements. 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 believed to be reasonable at the time
such forward-looking statement is made based on management’s good
faith plans and objectives under the following assumptions: the
exclusion of our Australia-West assets, currently announced for
disposition, a twenty-five percent dilution of our Greater Kuparuk
and Western North Slope interests in Alaska and other contemplated
dispositions; exclusion of Libya in production and capital
forecasts, as well as associated metrics; inclusion of Libya in our
resources; and an oil price of $50/bbl West Texas Intermediate real
and gas price of $2.50/mcf real, escalating at about two percent.
These statements are not guarantees of future performance and
involve certain risks and uncertainties and are subject to change
as management is continually assessing factors beyond our control
that may or may not be currently known. Given the foregoing and the
extended time horizon of the forward-looking statements, actual
outcomes and results will likely differ from what is expressed or
forecast in the forward-looking statements, and such differences
may be material. Factors that could cause actual results or events
to differ materially from what is presented include changes in
commodity prices; changes in expected levels of oil and gas
reserves or production; operating hazards, drilling risks,
unsuccessful exploratory activities; unexpected cost increases or
technical difficulties in constructing, maintaining, or modifying
company facilities; legislative and regulatory initiatives
addressing global climate change or other environmental concerns;
investment in and development of competing or alternative energy
sources; disruptions or interruptions impacting the transportation
for our oil and gas production; international monetary conditions
and exchange rate fluctuations; changes in international trade
relationships, including the imposition of trade restrictions or
tariffs on any materials or products (such as aluminum and steel)
used in the operation of our business; our ability to collect
payments when due under our settlement agreement with PDVSA; our
ability to collect payments from the government of Venezuela as
ordered by the ICSID; our ability to liquidate the common stock
issued to us by Cenovus Energy Inc. at prices we deem acceptable,
or at all; our ability to complete our announced dispositions or
acquisitions on the timeline currently anticipated, if at all; the
possibility that regulatory approvals for our announced
dispositions or acquisitions will not be received on a timely
basis, if at all, or that such approvals may require modification
to the terms of our announced dispositions, acquisitions or our
remaining business; business disruptions during or following our
announced dispositions or acquisitions, including the diversion of
management time and attention; the ability to deploy net proceeds
from our announced dispositions in the manner and timeframe we
currently anticipate, if at all; potential liability for remedial
actions under existing or future environmental regulations;
potential liability resulting from pending or future litigation;
the impact of competition and consolidation in the oil and gas
industry; limited access to capital or significantly higher cost of
capital related to illiquidity or uncertainty in the domestic or
international financial markets; general domestic and international
economic and political conditions; changes in fiscal regime or tax,
environmental and other laws applicable to our business; and
disruptions resulting from extraordinary weather events, civil
unrest, war, terrorism or a cyber attack; and other economic,
business, competitive and/or regulatory factors affecting our
business generally as set forth in our filings with the Securities
and Exchange Commission (SEC). Unless legally required,
ConocoPhillips expressly disclaims any obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise and neither the future distribution of
this material nor the continued availability of this press release
in archive form on our website shall be deemed to constitute an
update or re-affirmation of the statements made in this press
release as of any future date. Any future update of the statements
made in this press release will be provided only through a public
disclosure indicating that fact.
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 may use the term
"resource" in this news release 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.
Use of Non-GAAP Financial Information – 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 cash from
operations, free cash flow, return on capital employed and net
debt.
The company believes that the non-GAAP measure cash from
operations is useful to investors to help understand changes in
cash provided by operating activities excluding the impact of
operating working capital changes across periods on a consistent
basis and with the performance of peer companies. The company also
believes that free cash flow is useful to investors as it provides
a measure to compare cash from operations after deduction of
capital expenditures and investments across periods on a consistent
basis. 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 measure. The company believes that return on
capital employed (ROCE) is a good indicator of long-term company
and management performance. ROCE is a measure of the profitability
of ConocoPhillips' capital employed in its business. ConocoPhillips
calculates ROCE as a ratio, the numerator of which is net income
adjusted for special non-reoccurring items, plus after-tax interest
expense and excluding after-tax interest income, and the
denominator of which is average total equity plus average total
debt excluding average cash, cash equivalents, restricted cash and
short-term investments. Net debt includes total balance sheet debt
less cash, cash equivalents and short-term investments. The company
believes net debt is useful to investors as it provides a measure
to compare debt net of cash, cash equivalents and short-term
investments across periods on a consistent basis. The company’s
Board of Directors and management also use these non-GAAP measures
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 and the accompanying supplemental
financial information from time to time in light of its then
existing operations to include other adjustments that may impact
its operations.
The non-GAAP measures presented in this news release are all
forward-looking. For forward-looking non-GAAP measures, we are
unable to provide a reconciliation to the most comparable GAAP
financial measures because the information needed to reconcile
these measures is dependent on future events, many of which are
outside management’s control as described above. Additionally,
estimating such GAAP measures and providing a meaningful
reconciliation consistent with our accounting policies for future
periods is extremely difficult and requires a level of precision
that is unavailable for these future periods and cannot be
accomplished without unreasonable effort. Forward-looking non-GAAP
measures are estimated consistent with the relevant definitions and
assumptions.
Other Terms – The release also contains the terms underlying
production. Underlying production excludes Libya and closed
dispositions.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191119005232/en/
Daren Beaudo (media) 281-293-2073
daren.beaudo@conocophillips.com
Investor Relations 281-293-5000
investor.relations@conocophillips.com
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