ConocoPhillips Third-Quarter 2005 Interim Update

Business Wire,  Oct 3, 2005  

Tags: ConocoPhillips Co.

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HOUSTON -- This update is intended to give an overview of market and operating conditions experienced by ConocoPhillips (NYSE:COP) during the third quarter of 2005. The market indicators and company estimates may differ considerably from the company's actual results scheduled to be reported on October 26, 2005.

Highlights - Third-Quarter 2005 vs. Second-Quarter 2005

    --  Impact of Hurricanes Katrina, Rita and Dennis

        --  Approximately 20,000 barrels of oil equivalent production
            per day downtime for the quarter.

        --  Partner-operated Ursa field remains shut-in due to
            Hurricane Katrina.

        --  Company-operated Green Canyon platforms sustained damage
            during Hurricane Rita and remain shut-in, with minimal
            production impact for the quarter.

        --  Company-operated Magnolia sustained minimal damage and
            production is expected to resume shortly, contingent upon
            resumption of operations at non-operated related
            infrastructure, such as pipelines and utilities.

        --  Alliance refinery expected to begin partial operation in
            December and return to full operation in early 2006.

        --  Sweeny refinery returned to normal operations.

        --  Lake Charles refinery sustained minimal damage, and
            startup expected in mid-October.

        --  Initial estimate of the company's share of mutual
            insurance premium charges, affecting the third quarter,
            due to Hurricane Katrina is $30 million, after-tax. Total
            impact of hurricane-related charges still being evaluated.

    --  Exploration and Production

        --  Higher crude oil prices.

        --  Higher natural gas prices.

        --  Daily production slightly less than prior quarter level,
            including hurricane impacts.

    --  Refining and Marketing

        --  Higher worldwide refining margins.

        --  Significantly lower U.S. and international marketing
            margins.

        --  Lower capacity utilization rate in the mid 90-percent
            range, including hurricane impacts.

        --  Decreased turnaround activity and costs.

    --  LUKOIL Investment

        --  Ownership of 14.8 percent at quarter end.

    --  Midstream / Chemicals

        --  Midstream results expected to be similar to previous
            quarter.

        --  Chemicals results anticipated to be lower than previous
            quarter.

    --  Corporate

        --  Debt balance of approximately $13.5 billion.

Exploration and Production (E&P)

The table below provides market price indicators for crude oil and natural gas. The company's actual crude oil and natural gas price realizations may vary from these market indicators due to quality and location differentials, as well as to the effect of pricing lags.

Market Indicators

                                3Q 2005  2Q 2005  3Q vs. 2Q   3Q 2004
                                                     2005
----------------------------------------------------------------------
Dated Brent ($/bbl)              $61.54    51.59      9.95      41.54
----------------------------------------------------------------------
WTI ($/bbl)                       63.05    53.03     10.02      43.86
----------------------------------------------------------------------
ANS USWC ($/bbl)                  60.79    50.04     10.75      41.80
----------------------------------------------------------------------
Henry Hub first of month ($/mcf)   8.53     6.74      1.79       5.75
----------------------------------------------------------------------
                                                       Source: Platts

In advance of the arrival of Hurricane Katrina, production was shut-in from seven Gulf Coast fields in which ConocoPhillips has an interest. Following the hurricane, six fields restarted production. The partner-operated Ursa field remains shut-in, pending full assessment and infrastructure coming back online.

Hurricane Rita production impacts are largely expected to be short-term in nature. These production impacts primarily occurred in the Gulf of Mexico fields and the onshore Louisiana and Texas fields in which ConocoPhillips has an interest. The company-operated Magnolia field sustained minimal damage and production is expected to resume shortly, contingent upon resumption of operations at non-operated related infrastructure, such as pipelines and utilities.

Third-quarter production on a barrel-of-oil-equivalent basis, including Syncrude, is expected to be slightly lower than the previous quarter. Hurricanes Katrina, Rita and Dennis, along with unplanned downtime in Alaska and the United Kingdom, negatively impacted production during the quarter. Impacts of production-sharing contracts in Indonesia, driven by higher prices, continued to lower production volumes. These impacts result in 2005 full-year production that is expected to be similar to 2004, assuming timely start-up of Gulf Coast production, shut down as a result of Hurricane Rita. This excludes the impact of the company's equity investment in LUKOIL.