The Unconventional Reservoirs Revolution and the Rebirth of the U.S. Onshore Oil & Gas Industry

Feb. 19, 2013

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Cautionary Statement

The following presentation includes forward-looking statements. These statements relate to future events, such as anticipated revenues, earnings, business strategies, competitive position or other aspects of our operations or operating results. Actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict such as oil and gas prices; operational hazards and drilling risks; potential failure to achieve, and potential delays in achieving expected reserves or production levels from existing and future oil and gas development projects; unsuccessful exploratory activities; unexpected cost increases or technical difficulties in constructing, maintaining or modifying company facilities; international monetary conditions and exchange controls; potential liability for remedial actions under existing or future environmental regulations or 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, environmental and other laws applicable to ConocoPhillips’ business and 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).

Use of non-GAAP financial information - This presentation may include non-GAAP financial measures, which help facilitate comparison of company operating performance across periods and with peer companies. Any non-GAAP measures included herein will be accompanied by a reconciliation to the nearest corresponding GAAP measure in an appendix.

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 use the term "resource" in this presentation 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.

Discussion Topics

The Unconventional Reservoir (U.R.) Revolution

Impact of the Revolution on the Oil & Gas Industry

Implications for Artificial Lift Research & Development

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Industry Conventional Wisdom Circa 2000 and 2013

Year 2000

The U.S. is running out of natural gas

U.S. oil production peaked in 1970, has fallen ever since, and will continue to do so

Global resource scarcity

Year 2013

The U.S. has over a 100 year supply of natural gas

U.S. oil production is growing rapidly, with no end to growth in sight

Global resource abundance

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The Unconventional Reservoir Revolution has Transformed the U.S. O&G Industry

Drivers Behind the Unconventional Reservoirs Revolution

A New Paradigm

Mature, organic-rich source rocks

Traditional Target

Cartoon cross-section showing elements of a petroleum system

New

Target

New Tools and Methods

From Halliburton website

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U.S. Natural Gas Production

0

10

20

30

40

50

60

70

80

90

100

2000 2005 2010 2015 2020 2025 2030 2035 2040

BC

F p

er

Day

0

10

20

30

40

50

60

70

80

90

100Historical Forecast

Shale Gas

Alaska

Tight Gas

CBM

Associated

Offshore Non-Associated

Onshore Non-Associated

Unconventional Reservoirs Revolution

Source : U.S. Department of Energy, Energy Information Administration (EIA) 2013 Annual Energy Outlook Reference Case 6

Natural Gas Production from Shale Reservoirs

Source for Production Data: U.S. Department of Energy, EIA Website, February 2013; LCI Energy Insight gross withdrawal

estimates as of September 2012 that were converted to dry production using EIA calculated average gross to dry shrinkage factors

Gas

High yield gas/volatile oil

Horn River

Montney

Marcellus

Eagle Ford

Barnett

Liard Basin

Fayetteville

Haynesville

Super-Giant Shale Gas Plays

7

0

5

10

15

20

25

Sep-0

7

Sep-0

8

Sep-0

9

Sep-1

0

Sep-1

1

Sep-1

2

0

5

10

15

20

25

Other

Barnett

Fayetteville

Haynesville

Marcellus

Eagle Ford

U.S Shale Gas Production (bcfpd)

U.S. Natural Gas Market Transformation Post Y2K

Rapid natural gas supply growth

Supply greater than demand

Natural gas price collapse

LNG imports no longer needed

LNG exports planned

Arctic pipelines no longer needed

Gas > share of electric generation

Chemical industry rejuvenation

Nascent manufacturing comeback

Source : U.S. Department of Energy, Energy Information Administration (EIA) 8

-5

0

5

10

15

20

20

10

20

12

20

14

20

16

20

18

20

20

20

22

20

24

Daily

LN

G Im

port

s (

BC

F)

2005

2007

2008

2010

2012

U.S. Department of Energy LNG Forecasts

U.S. to become net

LNG exporter

Daily

LN

G I

mport

s (

BC

F)

Y2K View: U.S. oil production peaked in 1970

0

2,000

4,000

6,000

8,000

10,000

12,0001

90

0

19

10

19

20

19

30

19

40

19

50

19

60

19

70

19

80

19

90

20

00

0

2,000

4,000

6,000

8,000

10,000

12,000

Daily

Pro

du

ctio

n (

tho

usa

nds o

f b

arr

els

) M. King Hubbert in 1956

predicts that U.S. Peak Oil

will occur between 1965-70

Y2K View: U.S. oil production peaked in 1970 – as predicted!

1970: U.S. Peak Oil

Sources: BP statistical review of world energy 2012 and U.S. EIA; oil production numbers include condensate and NGLs 9

Y2K View: World peak oil is a very real possibility!

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Eagle Ford

22-30 BBOE

Permian Basin

10-30 BBOE

Bakken

4-24 BBOE

= Oil Wells= Oil Wells = Gas Wells= Gas Wells = Cond. Wells= Cond. Wells = Dry Holes= Dry Holes

U.S. Oil Production Growth: Driven by the "Big Three" U.R. Oil Plays

From a low of 6.5 million bopd in 2008, U.S. production is rising rapidly

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

19

60

19

70

19

80

19

90

20

00

20

10

20

20

20

30

History Forecast

U.S. Oil Production (thousands of barrels per day)

1970: U.S. Peak Oil

Sources: Historical U.S. production data from BP statistical review of world energy 2012 and U.S. EIA; oil production numbers

include condensate and NGLs; Production prediction from PIRA Energy; EUR numbers from government & industry reports 11

U.S. Production Trends in the Top Four Oil Producing States

Unconventional reservoir development is driving U.S. production growth

Source : U.S. Department of Energy, Energy Information Administration (EIA) website 12

0

500

1,000

1,500

2,000

2,500

3,000

Nov-08 Nov-09 Nov-10 Nov-11 Nov-12

Th

ou

sa

nd

bo

pd

0

500

1,000

1,500

2,000

2,500

3,000

Nov-08 Nov-09 Nov-10 Nov-11 Nov-12

Th

ou

sa

nd

bo

pd

Texas

North Dakota

California

Alaska

1,357 1,313

2,870

1,086

Benefits from the Unconventional Reservoirs Revolution

Economic

Energy Security Environmental

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Environmental Benefits of Natural Gas Utilization

About half the CO2 emissions of coal-fired power generation

Clean-burning (low or no SO2, NOX, PM, VOC)

Small water usage footprint

No solid waste

Enables wind & solar power

Enables low CO2 electrification of transportation

Potential transportation fuel

Power Source Pounds of CO2 per

MWh of Power

Biomass 2,988

Coal 2,249

Oil 1,672

Natural Gas 1,135

U.S. CO2 Emissions Chart from U.S. Department of Energy, Energy Information Administration (EIA) website

Source for “Pounds of CO2…” data: California State Polytechnic University 14

Discussion Topics

The Unconventional Reservoir Revolution

Impact of the Revolution on the Oil & Gas Industry

Implications for Artificial Lift Research & Development

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Oil & Gas Industry Changes Driven by the U.R. Revolution

Rig Count Hydrocarbon Type

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

Jan-0

0

Jan-0

1

Jan-0

2

Jan-0

3

Jan-0

4

Jan-0

5

Jan-0

6

Jan-0

7

Jan-0

8

Jan-0

9

Jan-1

0

Jan-1

1

Jan-1

2

Jan-1

3

U.S

. D

rill

ing

Rig

Co

un

t

Gas Wells

Oil Wells

Gas Wells

Oil Wells

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Ja

n-0

0

Ja

n-0

1

Ja

n-0

2

Ja

n-0

3

Ja

n-0

4

Ja

n-0

5

Ja

n-0

6

Ja

n-0

7

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Perc

en

tag

e o

f T

ota

l R

igs (

%)

Source: Baker Hughes’ website 16

Oil & Gas Industry Changes Driven by the U.R. Revolution

Well Trajectory

0%

20%

40%

60%

80%

100%Jan

-00

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Pe

rce

nta

ge

of

wo

rkin

g r

igs

Horizontal

Directional

Vertical

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

Jan-0

0

Jan-0

1

Jan-0

2

Jan-0

3

Jan-0

4

Jan-0

5

Jan-0

6

Jan-0

7

Jan-0

8

Jan-0

9

Jan-1

0

Jan-1

1

Jan-1

2

Jan-1

3

Rig

Co

un

t

Horizontal

Recent Rig Count Changes

Source: Baker Hughes’ website 17

Total

Oil & Gas Industry Changes Driven by the U.R. Revolution

Eagle Ford Competitors

ConocoP

hill

ips

year-on-year

improvement

Bars = 2012 performance benchmarking; dashes -= 2011; Source: IHS Enerdeq, November 2012 and 2011

Horizontal Drilling Performance

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Discussion Topics

The Unconventional Reservoir Revolution

Impact of Revolution on the Oil & Gas Industry

Implications for Artificial Lift Research & Development

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ConocoPhillips North American Unconventional Plays

Big position in big three liquid rich plays (Eagle Ford, Bakken and Permian Basin)

Also have acreage in the Barnett, Canol Niobrara, Duvernay and other plays

Have already drilled 100’s of U.R. wells; 1,000’s to 10,000’s yet to be drilled

Over 21 million acres in U.S. and Canada

Continuing to acquire leases in North America and around the world

Oil

Gas

High yield gas/volatile oil

Horn River

Montney

Bakken

Permian

Eagle Ford

Barnett

Niobrara

Duvernay

Canol

Artificial Lift in Horizontal U.R. Wells is Important to ConocoPhillips

Horizontal Offset

TV

D

Typical Bakken Well Profiles

2,000'

50'

Toe-up

Toe-down

Cross-section view

Bakken well profile diagram based upon figure in Dec. 2012 SPE JPT article titled: "Coiled Tubing Advances Improve Extended Reach Drilling Operations"

Artificial Lift of Horizontal Unconventional Reservoir Wells

Goal = Determine optimal combination of well design and artificial lift strategy

Well Design: Lateral length

Toe up or down

Dogleg severity

Casing size

Frac design and execution

Artificial Lift Selection: Plethora of lift options; but well design

and reservoir properties narrow choice

Single lift type over well life?

Understanding IPR curve

Monitoring & control systems

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COP Eagle Ford Acreage

Rock & Fluid Variations: Importance of Cross-Functional Collaboration

Rock properties can vary rapidly laterally and vertically

Fluid properties can change appreciably over short distances

Fluid properties can change over a well’s productive life

Frac fluids may or may not be produced back

Frac fluids can alter rock and/or reservoir fluid properties

Eagle Ford Outcrop Photo Eagle Ford Outcrop Photo

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Data Gathering: New Technologies and Best Practices

Having the right data can improve: Selection of the optimal artificial lift

method for horizontal wells

Understanding of flow regimes and IPR curve

Wellbore trajectory design criteria

Data gathered during drilling and fracturing can help define well performance expectations

Some data gathering technologies will be deployable on all wells

Other technologies might be used on only a few wells given cost

Our industry will continue to learn, innovate and improve!

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Hot Cold

U.R. Artificial Lift Research & Development Wish List

Improved lift efficiency

Longer effective life

Tools that send back data

Self-optimizing as conditions change

Lower installed cost

Able to go through doglegs

Easy to repair or replace

Low operating cost

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Joint Industry Efforts to Advance U.R. Artificial Lift Capabilities

Oil & Gas Operators

Service Companies

Academic Institutions

Professional Societies

Government Labs Horizontal Well Artificial

Lift Projects (TUHWALP)

Horizontal Well Artificial

Lift Projects (TUHWALP)

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Looking to the Future

The unconventional reservoirs revolution is the "biggest energy story of the 21st century"

It has changed perceptions about energy abundance, and is providing environmental, economic and energy security benefits

North America is currently the focal point

With time, unconventional reservoir E&P will become a global phenomenon

There is considerable opportunity for artificial lift research and development to add value

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The Unconventional Reservoirs Revolution and the Rebirth of the U.S. Onshore Oil & Gas Industry

Feb. 19, 2013