Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 12, 2005
ConocoPhillips
(Exact name of registrant as specified in its charter)
| Delaware | 001-32395 | 01-0562944 | ||
| (State or other jurisdiction of | (Commission | (I.R.S. Employer | ||
| incorporation) | File Number) | Identification No.) |
600 North Dairy Ashford
Houston, Texas 77079
(Address of principal executive offices and zip code)
Houston, Texas 77079
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (281) 293-1000
n/a
(Former name or former address, if changed since last report)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
þ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
TABLE OF CONTENTS
| Item 8.01. Other Events | ||||||||
| Item 9.01 Financial Statements and Exhibits | ||||||||
| SIGNATURES | ||||||||
| EXHIBIT INDEX | ||||||||
| Joint Press Release | ||||||||
| Joint Analyst Presentation | ||||||||
Table of Contents
Item 8.01. Other Events
On December 12, 2005, ConocoPhillips and Burlington Resources Inc. (“Burlington Resources”)
announced that they entered into an agreement for ConocoPhillips to acquire Burlington Resources. A
copy of the joint press release of ConocoPhillips and Burlington Resources is filed as Exhibit 99.1
hereto and is incorporated herein by reference. On December 13, 2005, ConocoPhillips and
Burlington Resources made an analyst presentation concerning the proposed acquisition. A copy of
the analyst presentation is attached hereto as Exhibit 99.2 and incorporated herein by reference.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING
INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for the historical and factual information contained herein, the matters set forth in
this filing, including statements as to the expected benefits of the acquisition such as
efficiencies, cost savings, market profile and financial strength, and the competitive ability and
position of the combined company, and other statements identified by words such as “estimates,
“expects,” “projects,” “plans,” and similar expressions are forward-looking statements within the
meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and uncertainties that may cause actual
results to differ materially, including required approvals by Burlington Resources shareholders and
regulatory agencies, the possibility that the anticipated benefits from the acquisition cannot be
fully realized, the possibility that costs or difficulties related to the integration of Burlington
Resources operations into ConocoPhillips will be greater than expected, the impact of competition
and other risk factors relating to our industry as detailed from time to time in each of
ConocoPhillips’ and Burlington Resources’ reports filed with the SEC. You should not place undue
reliance on these forward-looking statements, which speak only as of the date of this press
release. Unless legally required, ConocoPhillips undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information, future events or otherwise.
ConocoPhillips will file a Form S-4, Burlington Resources will file a proxy statement and both
companies will file other relevant documents concerning the proposed merger transaction with the
Securities and Exchange Commission (SEC). INVESTORS ARE URGED TO READ THE FORM S-4 AND PROXY
STATEMENT WHEN THEY BECOME AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION. You will be able to obtain the documents free of charge
at the website maintained by the SEC at www.sec.gov.
ConocoPhillips, Burlington Resources and their respective directors and executive officers,
may be deemed to be participants in the solicitation of proxies from Burlington Resources’
stockholders in connection with the merger. Information about the directors and executive officers
of ConocoPhillips and their ownership of ConocoPhillips stock will be set forth in the proxy
statement for ConocoPhillips’ 2006 Annual Shareholders Meeting. Information about the directors
and executive officers of Burlington Resources and their ownership of Burlington Resources stock
will be set forth in the proxy statement for Burlington Resources’ 2005 Annual Meeting of
Stockholders. Investors may obtain additional information regarding the interests of such
participants by reading the Form S-4 and proxy statement for the merger when they become available.
Table of Contents
Investors should read the Form S-4 and proxy statement carefully when they become available
before making any voting or investment decisions.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
99.1 — Joint Press Release, dated December 12, 2005
99.2 — Joint Analyst Presentation, dated December 13, 2005
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CONOCOPHILLIPS | ||||
| /s/ Stephen F. Gates | ||||
December 13, 2005
|
Stephen F. Gates | |||
| Senior Vice President and General Counsel |
Table of Contents
EXHIBIT INDEX
| Exhibit No. | Description | |||
| 99.1 | Joint Press Release, dated December 12, 2005 |
|||
| 99.2 | Joint Analyst Presentation, dated December 13, 2005 |
|||
Exhibit 99.1
FOR IMMEDIATE RELEASE
ConocoPhillips to Acquire Burlington Resources in $35.6 Billion Transaction
Burlington Resources’ Gas Reserves and Production Provide Excellent Strategic
Fit With ConocoPhillips’ Global Energy Portfolio
Fit With ConocoPhillips’ Global Energy Portfolio
ConocoPhillips to Become a Leading Natural Gas Producer in North America
Houston, Texas (December 12, 2005) – ConocoPhillips (NYSE: COP) and Burlington Resources Inc.
(NYSE: BR) announced today they have signed a definitive agreement under which ConocoPhillips will
acquire Burlington Resources in a transaction valued at $35.6 billion. The transaction, upon
approval by Burlington Resources shareholders, will provide ConocoPhillips with extensive, high
quality natural gas exploration and production assets, primarily located in North America. The
Burlington Resources portfolio provides a strong complement to ConocoPhillips’ global portfolio of
integrated exploration, production, refining and energy transportation operations, thereby
positioning the combined company for future growth.
Under the terms of the agreement, Burlington Resources shareholders will receive in the merger
$46.50 in cash and 0.7214 shares of ConocoPhillips common stock for each Burlington Resources share
they own. This represents a transaction value of $92 per share, based on the closing price of
ConocoPhillips shares on Friday, December 9, 2005, the last unaffected day of trading prior to this
announcement. The transaction preserves ConocoPhillips’ strong financial base, flexibility and
cash flow, and enables the company to continue its aggressive capital investment program, including
the funding of a substantial Exploration and Production and Refining program.
Burlington Resources is one of the world’s leading independent exploration and production
companies, and holds one of the industry’s leading positions in North American natural gas reserves
and production. At December 31, 2004, Burlington Resources had total reserves of 2,001 MMBOE
(million barrels of oil equivalent). In addition, Burlington Resources has estimated 2005
production of approximately 475 MBOE/d (thousand barrels of oil equivalent per day), and access to
significant conventional and unconventional resources.
1
Together, ConocoPhillips and Burlington Resources will have:
| § | Pro-forma reserves of 10.5 BBOE as of December 31, 2004, excluding 0.3 BBOE associated with ConocoPhillips’ Syncrude operations, of which 52 percent is in North America; and | ||
| § | Pro-forma 2005 production of 2.3 MMBOE/d, including LUKOIL and Syncrude, of which 50 percent is in North America. |
Jim Mulva, Chairman and Chief Executive Officer of ConocoPhillips, said: “We are very pleased to
have reached this agreement with Burlington Resources, and are excited about the opportunities it
provides our respective companies and shareholders. With this transaction, ConocoPhillips will
expand our portfolio of high quality, low-risk, long-lived gas reserves, and become a leading
producer of natural gas in North America. The transaction also enhances ConocoPhillips production
growth and North American gas supply position both in the near-term, through projects involving
conventional and unconventional resources, and in the long-term through LNG (liquefied natural gas)
and Arctic gas projects. In addition, the broader Burlington Resources portfolio is an excellent
complement to our integrated oil and gas portfolio, and significantly increases our weighting in
OECD (Organization for Economic Co-operation and Development) country assets. The transaction will
not only provide Burlington Resources shareholders with a meaningful immediate premium to the value
of their shares, but also enables them to continue to benefit as investors in the future growth of
ConocoPhillips. We will continue to invest in our growth for the benefit of our current and future
investors. Burlington Resources is an efficient, well-run exploration and production organization,
and we look forward to an exciting future of growth together.”
Bobby S. Shackouls, Chairman, President and Chief Executive Officer of Burlington Resources, said,
“The combination of ConocoPhillips and Burlington Resources recognizes the substantial value we
have created and acknowledges the success of our employees in building a great company with a
strong asset base. Of equal importance, this transaction allows our shareholders, customers and
employees to participate in the future growth of ConocoPhillips, a company that has the scale and
scope to supply consumers from every facet of the oil and gas industry more efficiently.”
Based on the closing market prices for the shares of both companies December 9, and their debt
levels as of September 30, 2005, the combination of ConocoPhillips and Burlington Resources would
have an enterprise value of $135 billion ($106 billion of equity; $29 billion of net debt and
preferred securities). Existing ConocoPhillips shareholders will own about 83 percent of
ConocoPhillips following the transaction, and Burlington Resources shareholders will own
approximately 17 percent.
ConocoPhillips will fund its acquisition of Burlington Resources through existing cash on hand,
existing credit facilities, and new additional bank and bond debt. The company plans to use cash
from operations in the years ahead to reduce its outstanding debt.
2
The transaction, based on 2006 First Call estimates, is expected to be accretive to near-term
production growth and cash flow per share, and slightly dilutive to ConocoPhillips near-term
earnings per share. ConocoPhillips expects to achieve synergies and pre-tax cost savings of
approximately $375 million annually after the operations of the two companies are fully integrated.
These savings will result largely from reducing corporate expenses, optimizing the company’s
exploration portfolio, and reducing operating expenses.
Upon completion of the merger, Mr. Shackouls and Steven J. Shapiro, Executive Vice President,
Finance and Corporate Development, will retire, and Randy L. Limbacher, currently Burlington
Resources Executive Vice President and Chief Operating Officer, will become Executive Vice
President responsible for North and South America, reporting to Mr. Mulva. William B. Berry,
presently ConocoPhillips’ Executive Vice President-Exploration and Production, will become
Executive Vice President responsible for Europe, Asia, Africa and the Middle East, also reporting
to Mr. Mulva. Mr. Shackouls and William E. Wade, currently an independent director of Burlington
Resources, will join ConocoPhillips’s Board of Directors. A transition team has been formed and
will be led by Mr. Limbacher of Burlington Resources, and John E. Lowe, ConocoPhillips’ Executive
Vice President-Planning, Strategy and Corporate Affairs.
The acquisition is conditioned upon, among other things, the approval of Burlington Resources
shareholders and customary regulatory approvals. The transaction is expected to be completed in
the first half of 2006.
Goldman, Sachs & Co. and Citigroup Global Markets Inc. acted as financial advisors, and Wachtell,
Lipton, Rosen & Katz acted as legal counsel to ConocoPhillips. Morgan Stanley and J.P. Morgan
Securities Inc. acted as financial advisors, and Fried, Frank, Harris, Shriver & Jacobson LLP acted
as legal counsel to Burlington Resources.
ADDITIONAL INFORMATION
NOTE TO INVESTMENT COMMUNITY: There will be an investment community presentation tomorrow,
Tuesday, December 13 at 8:30 a.m. EST. A webcast of the presentation with slides will be available
in a listen-only mode to individual investors, media and other interested parties on the Internet
at www.ConocoPhillips.com and www.br-inc.com.
NOTE TO NEWS MEDIA: There will be a telephonic Media Q&A at 10:30 am -11:00 a.m. EST.
Those wishing to participate should dial 877-707-9631 (North America) or 785-832-0201
(International) approximately 5 minutes before the call.
Today’s news release, along with other information about ConocoPhillips and Burlington Resources,
is also available on the Internet at www.ConocoPhillips.com and www.br-inc.com.
3
About Burlington Resources
Burlington Resources ranks among the world’s largest independent oil and gas companies, and holds
one of the industry’s leading positions in North American natural gas reserves and production.
Headquartered in Houston, Texas, the company conducts exploration, production and development
operations in the U.S., Canada, the United Kingdom, Africa, China and South America. For additional
information see the Burlington Resources Web site at www.br-inc.com.
FORWARD-LOOKING STATEMENTS
This press release may contain projections and other forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934, as amended. Any such projections or
statements reflect the company’s current views with respect to future events and financial
performance. No assurances can be given, however, that these events will occur or that such
projections will be achieved and actual results could differ materially from those projected. A
discussion of important factors that could cause actual results to differ materially from those
projected is included in the company’s periodic reports filed with the Securities and Exchange
Commission.
About ConocoPhillips
ConocoPhillips is an integrated petroleum company with interests around the world. For more
information, go to www.conocophillips.com.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR”
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for the historical and factual information contained herein, the matters set forth in this
press release, including statements as to the expected benefits of the acquisition such as
efficiencies, cost savings, market profile and financial strength, and the competitive ability and
position of the combined company, and other statements identified by words such as “estimates,
“expects,” “projects,” “plans,” and similar expressions are forward-looking statements within the
meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and uncertainties that may cause actual
results to differ materially, including required approvals by Burlington Resources shareholders and
regulatory agencies, the possibility that the anticipated benefits from the acquisition cannot be
fully realized, the possibility that costs or difficulties related to the integration of Burlington
Resources operations into ConocoPhillips will be greater than expected, the impact of competition
and other risk factors relating to our industry as detailed from time to time in each of
ConocoPhillips’ and Burlington Resources’ reports filed with the SEC. You should not place undue
reliance on these forward-looking statements, which speak only as of the date of this press
release. Unless legally required, ConocoPhillips
4
undertakes no obligation to update publicly any forward-looking statements, whether as a result of
new information, future events or otherwise.
ADDITIONAL INFORMATION
ConocoPhillips will file a Form S-4, Burlington Resources will file a proxy statement and both
companies will file other relevant documents concerning the proposed merger transaction with the
Securities and Exchange Commission (SEC). INVESTORS ARE URGED TO READ THE FORM S-4 AND PROXY
STATEMENT WHEN THEY BECOME AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION. You will be able to obtain the documents free of charge at
the website maintained by the SEC at www.sec.gov.
ConocoPhillips, Burlington Resources, and their respective directors and executive officers, may be
deemed to be participants in the solicitation of proxies from Burlington Resources’ stockholders in
connection with the merger. Information about the directors and executive officers of
ConocoPhillips and their ownership of ConocoPhillips stock will be set forth in the proxy statement
for ConocoPhillips’ 2006 Annual Meeting of Stockholders. Information about the directors and
executive officers of Burlington Resources and their ownership of Burlington Resources stock will
be set forth in the proxy statement for Burlington Resources’ 2006 Annual Meeting of Stockholders.
Investors may obtain additional information regarding the interests of such participants by reading
the Form S-4 and proxy statement for the merger when they become available.
Investors should read the Form S-4 and proxy statement carefully when they become available before
making any voting or investment decisions.
# # #
Contacts: |
||
For ConocoPhillips
|
For Burlington Resources | |
Investors:
|
Investors: | |
Gary Russell
|
Lee Ahlstrom | |
212-207-1996
|
(713) 624-9548 | |
Media: |
||
Sam Falcona
|
James Bartlett | |
281-293-5966
|
(713) 624-9354 |
5
Exhibit 99.2
| Jim Mulva Chairman & CEO ConocoPhillips Bobby Shackouls Chairman & CEO Burlington Resources December 13, 2005 Creating a Leading North American Gas Supplier |
| Agenda Introduction Gary Russell Transaction Overview & Jim Mulva Strategic Rationale Burlington Resources Overview Bobby Shackouls Portfolio Impact Jim Mulva Financial Impact Jim Mulva |
| CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 The following presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. You can identify our forward-looking statements by words such as "anticipates," "expects," "intends," "plans," "projects," "believes," "estimates," and similar expressions. Forward-looking statements relating to ConocoPhillips' operations are based on management's expectations, estimates and projections about ConocoPhillips and the petroleum industry in general on the date the presentations are given. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially include, but are not limited to, the failure to receive required approvals by Burlington Resources shareholders and regulatory agencies, the possibility that the anticipated benefits from the acquisition cannot be fully realized, the possibility that costs or difficulties related to the integration of Burlington Resources' operations into ConocoPhillips will be greater than expected; crude oil and natural gas prices; refining and marketing margins; potential failure to achieve, and potential delays in achieving expected reserves or production levels from existing and future oil and gas development projects due to operating hazards, drilling risks, and the inherent uncertainties in interpreting engineering data relating to underground accumulations of oil and gas; unsuccessful exploratory drilling activities; lack of exploration success; potential disruption or unexpected technical difficulties in developing new products and manufacturing processes; potential failure of new products to achieve acceptance in the market; unexpected cost increases or technical difficulties in constructing or modifying company manufacturing or refining facilities; unexpected difficulties in manufacturing, transporting or refining synthetic crude oil; international monetary conditions and exchange controls; potential liability for remedial actions under existing or future environmental regulations; potential liability resulting from pending or future litigation; general domestic and international economic and political conditions, as well as changes in tax and other laws applicable to ConocoPhillips' business. Other factors that could cause actual results to differ materially from those described in the forward-looking statements include other economic, business, competitive and/or regulatory factors affecting ConocoPhillips' business generally as set forth in ConocoPhillips' filings with the Securities and Exchange Commission (SEC), including our Form 10-Q for the quarter ending September 30, 2005. Unless legally required, ConocoPhillips is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. Cautionary Note to U.S. Investors - The U.S. Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation such as "oil/gas resources," "Syncrude," and/or "Society of Petroleum Engineers (SPE) proved reserves" that the SEC's guidelines strictly 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 for the year ended December 31, 2004. This presentation includes certain non-GAAP financial measures, as indicated. Such non-GAAP measures are intended to supplement, not substitute for, comparable GAAP measures. Investors are urged to consider closely the GAAP reconciliation tables provided in the presentation Appendix. |
| Transaction Overview $92 per BR share based on COP closing price on December 9, 2005 For each BR share: $46.50 cash 0.7214 COP shares Enterprise value: $35.6B Including net debt Principal conditions to closing BR shareholder approval - Q1 2006 Regulatory clearances - 1H 2006 |
| Securing Management Strengths Two BR directors to join COP Board Bobby Shackouls Bill Wade Talent retention plan Randy Limbacher to become EVP Responsible for North and South America E&P Key technical / operational talent Integration planning teams formed |
| Strategic Rationale Creates leading North American gas position High-quality, long-lived, low-risk gas reserves Significant unconventional resource plays Enhances production growth / N.A. gas supply Near-term conventional / unconventional Long-term LNG and Arctic gas Enhances business mix Increases E&P, OECD, and North American gas Significant free cash flow Synergies of $375 MM Access to technical capabilities |
| Burlington Resources Overview |
| BR - A Premier N.A. Gas Company Gas Oil NGL 69 15 16 Note: Reserves are YE 2004 numbers, with NGLs converted to Gas, per BR convention Production is FY 2005 (E), based on Q3 actuals Reserves Oil Gas Reserves Production United States 1329 MMBOE 249 MBOE/d Canada 460 MMBOE 164 MBOE/d Rest of World 212 MMBOE 62 MBOE/d TOTAL 2001 MMBOE 475 MBOE/d NGL NA ROW ROW 89 11 16 Reserves North America ROW |
| San Juan High quality, long-lived gas reserves BR COP Total Reserves (TCFE) 5.1 2.4 7.5 Production (MMCFED) 744 564 1308 Acreage (M acres) 840 770 1610 BR COP Significant synergy potential Production enhancement Operating and admin expenses Lower gathering & transportation costs Better utilization of COP 50% owned Blanco Gas Processing Plant Colorado New Mexico |
| BR - High Impact Resource Plays South Louisiana Deep Bossier Barnett Shale 35,000 net acres 13 - 14,000' targeted depths Similar to Barnett Shale Woodford Shale 28,000 net core acres 92,000 net non-core acres 70,000 acres Parker, Hood, Johnson Counties Seismic covering 65% of acreage position 215 risked locations 200,000 net acres Franklin Block tested at 640 acre spacing 200 Mmcfd gross (115 Mmcfd net) Savell field development Five rigs deployed 660,000 net acres fee land Pine Prairie Redell Four Isle Dome Bakken Shale 67,000 net acres Unconventional oil exploration Ramping up drilling program 6 Mpd net of production Additional EOR Options Production expected to grow from 25 MBOPD to over 35 MBOPD in 2007 Cedar Creek Anticline Conventional Unconventional |
| Western Canada Strong Conventional Gas Position Over 1 million net acres of land Conventional and tight gas 200 locations planned in 2005 Production 358 MMcfed Deep Basin / Foothills 820,000 net acres of land 570 square miles of 3D seismic to identify drilling opportunities Production 128 MMcfed Kaybob 728,000 net acres of land 150 gross operated wells planned in 2005 Production 210 MMcfed O'Chiese Southern Plains 1,300,000 net acres of land Includes the Viking-Kinsella property Production 182 MMcfed Northern Plains 738,000 net acres of land Significant trend extension opportunities for future growth. Production 97 MMcfed |
| Portfolio Impact |
| Compelling Transaction for BR Shareholders Expanded position in global energy Attractive premium / cash component Ongoing value by joining a major global integrated energy company Creates better long-term growth options Leveraging technical strengths to broader portfolio |
| Strengthens N.A. Gas Position Strengthens N.A. Gas Position COP COP and BR BR |
| COP plus BR XOM BP ECA CVX DVN RDS COP APC BR U.S. 1821 2214 2749 869 2350 1649 1331 1388 1363 908 Canada 1727 1093 349 2099 130 764 500 433 378 819 Total 1821 3307 3098 2968 2480 2413 1831 1821 1741 1727 1727 Note: Production figures are based on YE 2004 Filings COP volumes do not include fuel gas production. CVX pro forma for UCL North American Gas Production |
| Major U.S. Gas Supplier Delivering gas to the U.S. from various supply sources Canada Permian Basin Rockies Pacific LNG Imports Atlantic LNG Imports Atlantic LNG Imports #1 in N. A. gas production 50% owner in DEFS A leading gas marketer Developing multiple LNG projects and re-gasification capabilities Major existing positions in both Alaskan North Slope gas and Mackenzie Delta Arctic Gas Panhandle San Juan Gulf Coast |
| Enhanced Business Mix COP Pro Forma w/ BR OECD Russia Other non-OECD 2003 Year End 5690 880 2000 2004 Year End 5289 910 3199 Non-OECD 38% OECD 62% OECD Russia Other non-OECD 2004 Year End 7215 910 3274 2004 Year End Non-OECD 31% OECD 69% OECD Mix Based on Reserves Note: Capital Employed is estimated YE 2005, with LUK (at 10% equity) allocated 70% E&P, 30% R&M. Reserves are YE 2004. Oil Russia Gas 2003 Year End 5690 880 2000 2004 Year End 0.65 910 0.35 Oil Russia Gas 2003 Year End 5690 880 2000 2004 Year End 0.59 910 0.41 Gas 35% Oil 65% Oil 59% Gas 41% Oil / Gas Mix Based on Reserves E&P R&M Midstream & Chemicals Other 2003 Year End 5690 880 2000 2004 Year End 0.61 0.31 0.05 0.03 E&P R&M Midstream & Chemicals Other 2003 Year End 5690 880 2000 2004 Year End 0.74 0.21 0.03 0.02 Capital Employed By Business Segment Midstream & Chemicals R&M 31% E&P 61% Other 3% 5% E&P 74% R&M 21% Midstream & Chemicals 3% Other 2% |
| Base plus1 plus 2 UCL CVX 13 RDS 12.2 plus BR 8.9 0.4 2.001 TOT 10.8 COP 8.9 0.4 Cello 7.6 BRG+ 7810 UCL+ 7810 COP 7847 ENI 7.2 REP 4.7 Banjo 2 Reserves (Bboe)1 Production (Mmboe/d)1 Base plus 1 plus 2 OXY OEI RDS 3.6 CVX 2.8 TOT 2.5 plus BR 1.8 0.1 0.5 plus LUK 1.56 0.17 BRG+ 1.56 0.37 COP 1.8 0.1 ENI 1.5 REP 1.1 Banjo 0.5 Reserves are YE 2004 actual, excludes Syncrude for COP. CVX pro forma for UCL. COP includes the additional 4.8% LUK equity purchased through Q3 2005. Production is 2004 average except for COP and BR (both 2005 (E)). Pro Forma Operating Impact |
| 2005 (E) 2006 2007 2008 COP 1560 1650 2105 2718 2800 LUK 249 353 0 BR 0 255 535 GR Pro Forma Production Profile CAGR ~3% Note: Production is company estimates. 2006 includes 6 months of BR production. Lukoil average equity is assumed at 13% in 2005, 18% in 2006, & 20% thereafter COP includes equity affiliates and Syncrude. |
| Synergy Estimate $375 MM Pre-Tax Exploration Corporate G&A Regional G&A Operating Cdn Opex 100 100 75 100 30 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 Corporate G&A redundancies Consolidation of regional E&P offices Exploration portfolio optimization Operating expense reductions Revenue enhancements |
| Financial Summary Accretive to CFPS Slightly dilutive to 2006 EPS (First Call estimates) Slightly accretive to 2006 EPS (Strip Pricing) Dilutive to GAAP ROCE / Accretive to Adjusted ROCE Lowers E&P unit production cost Excess cash flow quickly reduces incremental debt |
| CFPS Accretion / Dilution 2006 2007 First Call -2.1% -3.9% Strip1 3.5% 2.2% EPS 2006 2007 First Call 6.2% 4.1% Strip1 10.6% 8.6% 1 FC consensus earnings adjusted for strip pricing |
| Discretionary Cash Flow First Call Prices $ Billion 2006 2007 Net Income 14.9 13.6 Cash Flow from Operations 23.1 22.8 Capital Expenditures & other (17.2) (15.4) Net Cash Flow 5.9 7.4 Note: Capital expenditures and other includes LUK, share purchases, and loans to affiliates. Capital expenditures are from company sources |
| 2002 '03 '04 '05 '06 '07 '08 Equity 30.74 35.2 43.8 54.8 82 93 101 Debt Debt / Cap Ratio 0.39 Debt Ratio Impact First Call Prices '03 '04 '05 '06 '07 '08 Debt 17.8 15 13 25 19 17 Equity $B Balance sheet debt $B 2002 '03 '04 '05 '06 '07 '08 Debt / Cap Ratio 39 33.6 25.5 19.2 23 17 14 Debt to capital ratio % Based on 2006 & 2007 First Call Prices Equity includes minority interest. All excess cash flow applied to pay down debt. Assumes initial net debt @ closing of $29B |
| Discretionary Cash Flow NYMEX Strip Prices $ Billion 2006 2007 Net Income 20.2 19.2 Cash Flow from Operations 28.8 28.6 Capital Expenditures & other (17.2) (15.4) Net Cash Flow 11.6 13.2 Note: Capital expenditures and other includes LUK, share purchases, and loans to affiliates. Capital expenditures are from company sources |
| 2002 '03 '04 '05 '06 '07 '08 Equity 30.74 35.2 43.8 54.8 87 104 117 Debt Debt / Cap Ratio 0.39 Debt Ratio Impact NYMEX Strip Prices '03 '04 '05 '06 '07 '08 Debt 17.8 15 13 19 8 0 Equity $B Balance sheet debt $B 2002 '03 '04 '05 '06 '07 '08 Debt / Cap Ratio 39 33.6 25.5 19.2 18 7 0 Debt to capital ratio % Based on 2006 & 2007 NYMEX Strip prices Equity includes minority interest. All excess cash flow applied to pay down debt. Assumes initial net debt @ closing of $29B |
| 2006 ROCE GAAP / Adjusted 2005 GAAP Adjusted 2008 2009 LRP 7.84 3.2 2.7 2.3 7.75 COP 52.52 0.2 0.28 4.1 -0.041 Pro forma 56.76 0.15 0.29 5.6 0.063 1 FC consensus earnings adjusted for strip pricing Strip1 First Call Estimates 2005 GAAP Adjusted 2008 2009 LRP 7.84 3.2 2.7 2.3 7.75 Cello 52.52 0.25 0.34 4.1 -0.041 Pro forma 56.76 0.2 0.36 5.6 0.063 COP Pro Forma |
| Compelling Strategic Opportunity High quality, long-lived, low-risk reserves Enhances production growth and lowers unit operating cost Secures access to significant unconventional resource plays Rebalances portfolio towards E&P with significant OECD / North American gas Long-term financial strength enhanced Improved competitiveness Shareholder value creation |
| Appendix |
| $92 / BR share 2006 to 2007 First Call estimates Number of fully diluted shares, MM COP - 1406 BR - 381.1 First Call Prices 2006 - Oil - $57.50 ; Gas - $8.52 ; Crack - $8.50 2007 - Oil - $53.32 ; Gas - $7.68; Crack - $8.25 Strip Prices 2006 - Oil - $61.78 ; Gas - $11.83 ; Crack - $11.29 2007 - Oil - $62.68 ; Gas - $10.66; Crack - $9.86 Proforma includes: Incremental DD&A from purchase accounting write-up Goodwill of $19B (True - $11.2B; Deferred tax - $8.1 ) Incremental debt Synergies of $375 MM pre-tax COP's Wilhelmshaven refinery acquisition Financial Analysis - Premises |
| Accretion/Dilution Reconciliation First Call Pricing First Call Pricing First Call Pricing EPS CFPS COP FD shares 11/30/05 - 1435 million Additional shares issued - 274.8 million Stepped-up PP&E - $26.7 billion Resultant Goodwill: $11.1 billion True $8.2 billion Deferred Taxes Goodwill based on early April, 2005 JS Herolds Appraisal Report. Will ultimately be based on third party appraisal. Cash portion to be funded with cash on hand and incremental debt. |
| Accretion/Dilution Reconciliation Strip Pricing Sensitivity Strip Pricing Sensitivity Strip Pricing Sensitivity December 9 Prices - Close of Markets COP and BR Published Sensitivities |