Management Team

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68.93   0.04 (0.06)
FELIX POPESCU ANDRIS ROZE ADAM BRINGARDNER
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Top Business Segments

• 1--Petroleum exploration and production
• 2--Petroleum refining, marketing, supply and
  transportation.
• 3--Chemicals and plastics production

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Key Facts

• Worlds 7th largest integrated energy company
• Symbol COP on NYSE
• Last trade 67.37
• 52 week range54.90 - 72.50
• P/E 6.48
• EPS10.39

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• Since 1985

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• Last 5 years

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Leaders in Market Capitalization

• EXXON MOBIL CP XOM 448.0 B
• TOTAL S.A. TOT 325.2 B
• PETROCHINA CO ADS PTR 229.3 B
• BP PLC BP 224.7 B
• CHEVRON CORP CVX 157.7 B
• CONOCOPHILLIPS COP 110.8 B

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The COP Brands
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Key Investments

• March 2006 Acquisition of Burlington
• Resources Inc.

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Management Team

• James J. Mulva- Chairman and CEO
• Mulva served as president and chief executive
  officer of ConocoPhillips from 2002 to 2004.
  Prior to that, he served as chairman and chief
  executive officer of Phillips Petroleum Company
  from 1999 to 2002. He had served as Phillips
  president and chief operating officer since May
  1994 and executive vice president since January
  1994. He had been senior vice president in 1993
  and chief financial officer since 1990, at which
  time he joined the company's management
  committee.
• John A. Carrig- CFO, Executive Vice President-
  Finance
• Carrig joined the company in London in 1978 as a
  tax attorney. In 1981he was associated with the
  corporate tax staff until 1993 when he joined the
  treasury group as finance manager. He was then
  named assistant treasurer of finance, and in 1995
  he accepted the position of treasurer. He was
  vice president and treasurer from 1996 to 2000
  when he was named senior vice president and
  treasurer. He was elected by the board of
  directors to senior vice president and chief
  financial officer for Phillips in 2001, a
  position he held until the ConocoPhillips merger
  in 2002.
• Executive Vice Presidents
• Gene L. Batchelder- Services (Chief Information
  Officer)
• Batchelder joined Phillips Petroleum Company in
  1972. In 1978, he was promoted to manager of
  finance and administration for Chemicals Latin
  America division based in Houston. He advanced to
  project analysis director in 1980, returning to
  Bartlesville. In 1981, he was division controller
  in Petrochemicals, moving in 1985 to manager of
  operations analysis and control and management
  information systems for the Phillips 66 Company.
  In 1989, he was named manager of communications
  networks and computer services for Phillips.
  After serving as general sales manager of
  wholesale marketing for Phillips 66 Company in
  1990, he was named president of Phillips
  Driscopipe, Inc., a subsidiary of Phillips. In
  1994, he became finance manager of GPM Gas Co.,
  Phillips Houston-based gas gathering and
  processing subsidiary. He served as vice
  president and chief information officer for
  Phillips from 1999 to 2002, when he was named to
  his current position.

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• Philip L. Frederickson- Planning, Strategy and
  Corporate Affairs
• James L. Gallogly- Refining, Marketing,
  Transportation
• Randy L. Limbacher- Exploration and Production
  (Americas)
• John E. Lowe- Commercial
• William B. Berry- Europe, Asia, Africa and the
  Middle East
• Stephen F. Gates- Legal General Counsel
• Ryan M. Lance- Technology and Major Products
• Vice Presidents
• Carin S. Knickel-Human Resources
• Robert A Ridge- Health, Saftey and Environment

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Worldwide Operations

• Exploration and Production
• Refining and Marketing
• Midstream
• Chemicals
• Emerging Businesses

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Exploration and Production

• ConocoPhillips explores for and produces crude
  oil, natural gas and natural gas liquids on a
  worldwide basis. The company also mines oil sands
  to produce Syncrude. A key strategy is the
  development of legacy assets very large oil and
  gas developments that can provide strong
  financial returns over long periods of time
  through exploration, exploitation, redevelopments
  and acquisitions.
• At year-end 2005, ConocoPhillips held a combined
  41.2 million net developed and undeveloped acres
  in 23 countries and produced hydrocarbons in 13,
  with proved reserves in three additional
  countries. Crude oil production in 2005 averaged
  907,000 barrels per day (BD), gas production
  averaged 3.3 billion cubic feet per day, and NGL
  production averaged 91,000 BD.
• Key regional focus areas include the North Slope
  of Alaska the Asia Pacific region, including
  Australia, offshore China and the Timor Sea
  Canada the Caspian Sea the Middle East
  Nigeria the North Sea Russia the Lower 48
  United States, including the Gulf of Mexico and
  Venezuela.

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Refining and Marketing

• RM refines crude oil and markets and transports
  petroleum products. ConocoPhillips is the
  second-largest refiner in the United States and,
  of nongovernment-controlled companies, is the
  fourth-largest refiner in the world.
• ConocoPhillips owns 12 U.S. refineries, owns or
  has an interest in six European refineries and
  has an interest in one refinery in Malaysia. At
  year-end 2005, ConocoPhillips refineries had a
  combined net crude oil refining capacity of 2.61
  million barrels of oil per day.
• ConocoPhillips gasoline and distillates are sold
  through approximately 13,600 branded outlets in
  the United States, Europe and the Asia Pacific
  region. In the United States, products are
  marketed primarily under the Phillips 66, Conoco
  and 76 brands. In Europe and the Asia Pacific
  region, the company markets primarily under the
  JET and ProJET brands. ConocoPhillips also
  markets lubricants, commercial fuels, aviation
  fuels and liquid petroleum gas. The companys
  refined products sales were 3.3 million barrels
  per day in 2005.

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Midstream

• Midstream consists of ConocoPhillips 50 percent
  interest in Duke Energy Field Services, as well
  as certain ConocoPhillips assets predominately
  located in North America. Midstream gathers
  natural gas, extracts and sells the natural gas
  liquids (NGL) and sells the remaining (residue)
  gas to electrical utilities, industrial users and
  gas marketing companies.
• Headquartered in Denver, Colorado, DEFS is one of
  the largest natural gas and gas liquids
  gathering, processing and marketing companies in
  the United States.
• At year-end 2005, DEFS gathering and
  transmission systems included nearly 56,000 miles
  of pipelines, mainly in six of the major U.S. gas
  regions. DEFS also owned and operated 54 NGL
  extraction plants. Raw natural gas throughput
  averaged 5.9 billion cubic feet per day, and NGL
  extraction averaged 353,000 BPD in 2005. In
  addition to its interest in DEFS, ConocoPhillips
  owned or had an interest in four gas processing
  plants and four NGL fractionators at year-end
  2005.
• DEFS' customers are primarily major and
  independent natural gas producers, local gas
  distribution companies, electrical utilities,
  industrial users and marketing companies. Among
  DEFS customers for NGL are Chevron Phillips
  Chemical Company and ConocoPhillips Refining and
  Marketing business.

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Chemicals

• ConocoPhillips participates in the chemicals
  sector through its 50 percent ownership of
  Chevron Phillips Chemical Company, a
  joint-venture with Chevron. Headquartered in The
  Woodlands, Texas, its major product lines
  include olefins and polyolefins, including
  ethylene, polyethylene, normal alpha olefins and
  plastic pipe aromatics and styrenics, including
  styrene, polystyrene, benzene, cyclohexane,
  paraxylene and K-Resin styrene-butadiene
  copolymer and specialty chemicals and
  proprietary plastics.
• At year-end 2005, CPChems 11 facilities in the
  United States were located in Louisiana,
  Mississippi, Ohio and Texas. The company also had
  nine polyethylene pipe, conduit and pipe fittings
  plants in eight states, and a petrochemical
  complex in Puerto Rico. Major international
  facilities are in Belgium, China, Saudi Arabia,
  Singapore, South Korea and Qatar. CPChem also has
  a plastic pipe plant in Mexico.
• CPChem's customers are primarily companies that
  produce industrial products and consumer goods.

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Emerging Businesses

• ConocoPhillips invests in several emerging
  businesses technology solutions,
  gas-to-liquids, power generation and emerging
  technologies that are closely tied to the
  companys core operations and provide current and
  future growth opportunities.
• Technology Solutions S Zorb is ConocoPhillips
  proprietary technology for removing sulfur from
  gasoline during refining. The technology is
  proven to reduce sulfur content in fuels to
  levels well below allowable limits proposed by
  regulators in the United States and Europe. The
  technology has been licensed to five refiners
  worldwide, and ConocoPhillips plans to install
  the technology at several of its U.S. refineries.
• Gas-to-Liquids The GTL process refines natural
  gas into a wide range of high-quality fuels,
  lubricants and petrochemical feedstocks. GTL
  products can be readily sold into large existing
  markets with conventional ships and
  infrastructure.
• Power Generation ConocoPhillips is using
  creativity and innovation to access new
  high-growth markets for natural gas and
  electricity. By integrating power generation with
  ConocoPhillips Exploration and Production (EP)
  and Refining and Marketing (RM) businesses, the
  company is able to structure power projects
  such as cogeneration to provide maximum value
  for both ConocoPhillips and its customers.
• Emerging Technologies The emerging technologies
  portfolio includes a variety of business ventures
  and technical programs that are pioneering the
  future energy landscape, including renewable
  energy, advanced hydrocarbon processes, energy
  conversion technologies and hydrocarbon upgrading
  opportunities.
• ConocoPhillips maintains two Oklahoma-based
  technology centers. These centers focus on
  research and development, as well as engineering
  and project management support to improve
  ConocoPhillips businesses. This includes
  evaluations of emerging energy sources and the
  search for competitive opportunities that align
  with the companys business strategy.
• The company licenses its proprietary technologies
  both internally and externally.

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Pros

• Beat earnings estimates by 30 cents a share.
• Return on capital increased from 23.3 to 32.1.
• Lowest P/E ratio in the industry 6.0
• Increased income in chemical and midstream
  businesses.
• Paid 600 million in dividends past year.
• Lowered debt by 1.7 billion, which in turn
  lowered net interest expense by 25 million.
• On track to complete 1 billion share buyback by
  the end of 06.
• Refining capacity utilization of 95.
• Higher seasonality during the 4th quarter.

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DCF Valuation

• Stock is selling at a discount of 26.1

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Cons

• Current oil inventories are adequate record gas
  volumes in storage.
• Debt/Total Capital 30
• .918 current ratio.
• -1.7 billion working capital.
• An unseen Industry downturn will cause difficulty
  in paying back current liabilities.
• Limited borrowing capacity due to high debt.
• Reduction of 30 million barrels per day due to
  contract agreements in the Timor Sea.
• Decreased volumes from Alaska, UK, and Venezuela.
• Natural gas highs after the hurricanes resulting
  drop in natural gas and refining margins as well
  as increased operating expenses contributed to
  poor stock performance.
• Undisclosed environmental contingent liabilities

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Stock Performance

• Shares trading 18 off 12 month highs.
• Stock has gained 34, 32, and 35 percent in last 3
  years respectively, but has gained only 3 year
  to date compared to industry group average of 12
  and 10 for the SP 500.
• Deteriorating industry fundamentals lead
  conservative investors to seek high market cap
  companies with low debt ratios.

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Rating
BUY