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ConocoPhillips Approves 2010 Capital Program

Capital Program Consistent with Renewed Focus on Enhancing Returns

HOUSTON--(BUSINESS WIRE)--ConocoPhillips (NYSE:COP) on Dec. 2 approved a 2010 capital program of $11.2 billion, representing a 10 percent decrease from estimated 2009 expenditures. Approximately 86 percent of the capital program will be in support of the company's Exploration and Production (E&P) segment, while the Refining and Marketing (R&M) segment represents about 12 percent of the program. The 2010 program is consistent with the company's recently announced plan to improve returns through increased capital discipline, asset sales and continued growth in shareholder distributions.

"Our planned 2010 capital program will advance existing exploration and production projects, while preserving the potential to develop the company's large resource position in the future," said Jim Mulva, chairman and chief executive officer. "We intend to achieve our objectives of organically replacing reserves and increasing our upstream production from a reduced, more strategic asset base, consistent with our recently announced portfolio optimization plan.

"We look forward to discussing our 2010 capital, operating and financial plans in greater detail when we meet with the investment community next year."

Exploration and Production

The 2010 capital program for E&P is approximately $9.7 billion, including capitalized interest of $0.5 billion and $0.7 billion for the company's contributions to the FCCL business venture and loans to other affiliates. This program also includes about $1.4 billion for worldwide exploration.

In North America, the capital program is expected to total approximately $4.1 billion. Spending in North America is reduced, compared with prior years, with emphasis on the highest-graded production basins and opportunities.

  • In the U.S. Lower 48, capital funding will be prioritized on oil and certain natural gas assets that offer the highest potential returns, including ongoing development in the San Juan and Permian basins and the Bakken, Lobo and Barnett trends.
  • Spending in Canada will focus on existing oil sands projects and selective programs in the Western Canada gas basins, primarily on high-graded resource plays and on maintaining a substantial lease position for future development.
  • Spending in Alaska is expected to be directed toward development of the existing Prudhoe Bay and Kuparuk fields, as well as the Alpine field and satellites on the Western North Slope.
In Europe, Asia, Africa and the Middle East, the E&P capital program is expected to total about $5.6 billion.

  • Within the Asia Pacific region, funds will be used for further development of coalbed methane projects associated with the APLNG joint venture, as well as for the continued development of Bohai Bay in China, new fields offshore Malaysia, offshore Block B and onshore South Sumatra in Indonesia, and offshore Vietnam.
  • In the North Sea region, spending is planned for existing and new opportunities in the Greater Ekofisk Area, the Greater Britannia fields, various Southern North Sea assets, and development of the Jasmine discovery in the J Block and the Clair Ridge project.
  • Capital for the Middle East and Africa region is expected to be primarily directed toward completion of the Qatargas 3 project in Qatar, with remaining funds supporting onshore developments in Nigeria, Algeria and Libya.
  • Spending in the Russia and Caspian Sea region will primarily support continued development of the Kashagan field in the Caspian Sea.
Exploration will be focused on finding significant resources, advancing high-potential opportunities and appraisal of recent discoveries. Spending on wildcat wells will be directed to the Deepwater Gulf of Mexico, Australia's Browse Basin, Kazakhstan's Block N, Canada's East Coast, offshore Indonesia and the North Sea. The company also plans to progress exploration drilling in the Eagle Ford shale position in the U.S. Lower 48, a coal seam gas play in China, and a shale gas play in Poland.

Refining and Marketing

The 2010 capital program for R&M is approximately $1.3 billion, with about $0.9 billion for its U.S. downstream businesses and $0.4 billion for International R&M. These funds will be used for projects related to sustaining and improving the existing business with a focus on safety, regulatory compliance, and reliability. As previously announced, the refinery upgrade project in Wilhelmshaven has been delayed.

Emerging Businesses and Corporate

The 2010 capital program for Emerging Businesses and Corporate is approximately $0.2 billion. The majority of the Emerging Businesses funding is for completion of the second phase of an expansion project at the company's Immingham Combined Heat and Power plant in the United Kingdom, as well as for other Technology Research and Development spending.

In Corporate, capital expenditures are expected to be primarily for global information systems and services projects and corporate facilities.

ConocoPhillips is an international, integrated energy company with interests around the world. 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 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 "will," "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 these presentations were 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, 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; 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, 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-K for the year ending December 31, 2008. 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.

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