ConocoPhillips - College of Charleston

School of BusinessInvestment Program

September 18, 2018

Mark Wold Portfolio AnalyticsCaleb Garrity Private Equity Analyst

ConocoPhillips

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Table of ContentsConocoPhillips

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Investment Thesis

Company Overview and History

Leadership Sector Overview

Competitive Landscape

Strategy

Recommendation

Valuation/Models

Financial Highlights

SWOT Analysis


Investment ThesisConocoPhillips

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Strong balance sheet

Price cycle management

Low Cost of Supply Portfolio <$35/bbl

Shareholder friendly value proposition


Company OverviewConocoPhillips

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Explore

- Geophysics- Reservoir

Engineering- Seismic Imaging

Technology

Produce

Oil & Gas- Hydraulic Fracturing- Horizontal Drilling

Oil Sands- Surface mining- Steam-assisted

gravity drainage

Transport

- Tankers- Pipelines- Trucks- Rail


Company HistoryConocoPhillips

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LeadershipConocoPhillips

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Ryan Lance - Chairman and CEO of

ConocoPhillips- Petroleum engineer with 33

years of oil and natural gas industry experience.

Don Wallette, Jr,- CFO and EVP of Finance

and Commercial functions- More than 30 years in

technical, commercial, and international leadership.

- Joined Phillips in 1981 as staff drilling engineer in Houston.

Matt Fox- EVP of Strategy,

Exploration and Technology- Over 30 years of oil and

natural gas industry experience.

- Began career with Conoco in 1983 as a reservoir engineer in London U.K.


StrategyConocoPhillips

Source: ConocoPhillips


StrategyConocoPhillips



- Integrated Oil and gas company.

- Large number of patented technologies that will position Exxon to be a leader in the Oil and Gas industry far into the future.

- Large global presence gives them a diversified portfolio.

Competitive LandscapeConocoPhillips

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- Large integrated oil and gas company.

- Large stake in the Gorgon LNG project in Australia.

- Permian’s largest net acreage holders with 2.2 million net acres.

- A leading independent oil and natural gas exploration and production company.

- Only operate in North America.

- Total company net acreage of 4.2B.



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Growing Oil Prices(increases COP revenue by over $100MM per $1)

Oil & Gas Exploration(most growth from tax incentives)



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Stable Oil Prices above $60/BBL


ConocoPhillips

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SWOT Analysis

Strengths- Strong balance sheet- Low cost-of-supply portfolio- Low sustaining price <$40 bbl- Strong free cash flow generation

Threats- Environmental regulations- Ongoing trade war- Weakening emerging markets

Opportunities- New low cost-of-supply assets- Investments in new technology ventures- Commodity pricing- Asian LNG demand

Weaknesses- Dependent on commodity prices- Heavily reliant on steel- Bottlenecked in the Permian Basin



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Valuation Overview

Two Year Price Target (with tax incentive)

5 Year Price Target(without tax incentive but continued growth)


Valuation Overview


Ratio Analysis

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Low Cost of Production

Higher Revenue Worldwide

Reduced Overall Acreage


Mean Price $94.22 Median Price $87.66

Monte Carlo Simulation

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Portfolio VaR

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Recommendation

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Thank You!

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Appendix

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Resources by Cost of SupplyConocoPhillips


Documents

ConocoPhillips - College of Charleston