ConocoPhillips pegs 63% of 2006 capex to E&P

ConocoPhillips has approved 2006 cash capital expenditures of approximately $10.0 billion. This, combined with about $0.5 billion of capitalized interest and minority interest, results in an authorized capital budget of $10.5 billion.

Dec 9th, 2005

Offshore staff

(International) - ConocoPhillips has approved 2006 cash capital expenditures of approximately $10.0 billion. This, combined with about $0.5 billion of capitalized interest and minority interest, results in an authorized capital budget of $10.5 billion.

"Our 2006 capital budget underscores our commitment to maintain cost and capital discipline, while aggressively reinvesting in our business to grow our capability to deliver energy to the world," says Jim Mulva, chairman and CEO.

"We have a pipeline of large projects and favorable investment opportunities on the horizon that will allow us to strengthen our position worldwide and provide long-term value for our shareholders."

Sixty-three percent of the company's 2006 cash capital budget will be allocated to its E&P segment. The refining and marketing (R&M) segment will receive 35% of the budget.

Excluding the previously announced acquisition of the Wilhelmshaven refinery, 73% of the cash capital budget would be allotted to the E&P segment, and 24% would be allotted to the R&M segment. The remaining budget will be spent in the emerging businesses and corporate segments.

E&P's 2006 cash capital expenditures budget is approximately $6.3 billion. This, combined with $0.4 billion in capitalized interest and minority interest, results in an authorized E&P capital budget of $6.7 billion.

Worldwide exploration activities account for approximately $0.6 billion, included in the regional totals below:

North Sea and West Africa -- About $1.8 billion of the E&P budget. North Sea projects include continued development of Britannia, including the Britannia satellite fields, in the UK sector; and development of the Alvheim field, as well as ongoing development of existing and new opportunities in the Ekofisk area in the Norwegian sector. In West Africa, capital funds will go toward continued work on the Brass LNG project.

Asia-Pacific -- The company anticipates that expenditures will be roughly $1.0 billion. The majority of the funding will support the continued development of Bohai Bay in China; oil and gas reserves offshore block B and onshore South Sumatra in Indonesia; and the Bayu-Undan project in the Timor Sea.

US and Latin America -- The company intends to spend about $0.9 billion of the E&P budget toward developments. The focus in these areas includes the ongoing development programs in the Lobo and San Juan fields in the US Lower 48, as well as development of the offshore Corocoro field, and the early-stage development of the Plataforma Deltana project, both in Venezuela.

Alaska -- E&P capital expenditures are expected to be approximately $0.8 billion, primarily directed toward the development of the Alpine satellites and the West Sak heavy-oil field, as well as continued development within the existing Prudhoe Bay and Kuparak areas.

Canada -- The company has allocated about $0.8 billion for its operations in Canada, with a focus on ongoing development programs in Western Canada, specifically Syncrude expansion and Surmont heavy-oil development; and continued work on the Mackenzie Delta gas pipeline.

Russia and the Caspian region -- About $0.7 billion of the E&P budget. The majority of the capital funds will support the continued development of the Kashagan field in the Caspian Sea and the Timan-Pechora joint venture in northern Russia.

Middle East and North Africa -- the company estimates it will spend nearly $0.1 billion, primarily on the development of the Qatargas 3 LNG facility in Qatar.

The company intends to spend approximately $0.2 billion in its global gas business for the ongoing development of regasification facilities in the US to meet the growing need for natural gas supplies.

The 2006 authorized capital budget for R&M is approximately $3.5 billion. About $1.8 billion will be spent in the US, and roughly $1.7 will be spent internationally.

The company has allocated $1.5 billion for US refining, of which approximately $0.4 billion will be earmarked for clean fuels projects already in progress, and about $0.7 will go toward sustaining projects related to reliability, safety, and the environment.

The company also intends to spend approximately $0.4 billion on investments designed to increase crude oil capacity, expand conversion capability, improve energy efficiency, and increase clean product yield throughout the company's US refining network.

International R&M will be allotted about $1.7 billion, with $1.4 billion allocated to fund the recently announced acquisition of the Wilhelmshaven refinery in Germany, including the initial expenditures toward a deep-conversion project and other miscellaneous capital improvements.

The remaining R&M budget will be allocated for projects in the company's domestic transportation and marketing businesses.

The capital designated for emerging businesses and corporate for 2006 is approximately $0.2 billion. The majority of the spending is earmarked for global information systems and services.

01/09/05

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