Conoco News - 2007

News summaries from company press releases and from unaffiliated news agencies are provided below. The summaries are sorted by month and are further categorized as upstream news, downstream news, and business/finance news.

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January

• Upstream news: ­

- ConocoPhillips announced preliminary proved reserve additions for 2006 of approximately 300 percent of the company's barrels-of-oil-equivalent (BOE) production. Proved reserve additions, including sales and acquisitions, are expected to be approximately 2.6 billion BOE. Production for the year is expected to be approximately 880 million BOE, including fuel gas. The company expects to end 2006 with approximately 11.1 billion BOE of proved reserves. These reserves exclude 0.3 billion barrels associated with the company's Canadian Syncrude operations. In addition, while the company announced the joint venture with EnCana in 2006, the transaction closed in early 2007. Accordingly, initial reserve additions for the EnCana joint venture are expected to occur in 2007 and are not included in 2006 reserves. Reserve additions from acquisitions are expected to be approximately 2.5 billion BOE, reflecting the acquisition of Burlington Resources and increased ownership in LUKOIL. Reserve additions from major projects and investments were largely offset by downward reserve revisions, including the impact from reservoir performance, annual field life evaluations, and country exit. The company will provide additional, final information related to its 2006 oil and gas reserves in its Annual Report on Form 10-K, expected to be filed with the U.S. Securities and Exchange Commission in late February. ­

- ConocoPhillips announced that it is reorganizing its Technology & Major Projects organization into two groups – Technology and Project Development – to further strengthen the focus and accountability of these activities. These changes will be effective February 1. The Technology group will be responsible for cultivating strategies and business development opportunities that will position ConocoPhillips in technologies that will improve current business performance and provide opportunities for future growth. This group also will provide technical support for the company’s global upstream and downstream businesses.

• Downstream news: ­

- In the first apparent test of a beefed-up "anti-flaring" law, regional air regulators said Friday they are investigating an incident at the ConocoPhillips refinery in Wilmington that sent flames shooting high into the air. The incident is one of half a dozen that have occurred this week, within days of an expanded ban on flaring by the South Coast Air Quality Management District that took effect Monday. Three ConocoPhillips smokestack flares could be seen as far north as the Century Freeway and as far south as the Palos Verdes Peninsula during the Thursday burn-off, which began about 8:30 p.m. and lasted about 45 minutes, officials said. The tougher regulations ban open burn-off of excess gases from South Bay refineries except in emergencies or during planned shutdowns, start-ups or other "essential" operations. Violators can face fines of $1,000 or more. Emissions from such events are also supposed to be cut sharply in coming years. ConocoPhillips spokesman Andy Perez said Friday that the flaring at the refinery at 1400 W. Anaheim St. was not an emergency but a safety precaution after workers noticed that a key piece of equipment that boils oil was malfunctioning. It was not clear whether the flaring was a violation. Firefighters at the scene and refinery spokesman Perez said that Thursday's heavy winds might have intensified the flames. Nearby residents have long complained of frequent flaring at the ConocoPhillips refinery, which is west of the Harbor Freeway and north of the Port of Los Angeles. A widespread September 2005 power outage forced ConocoPhillips and two other refineries to shut down operations and ignite their flare stacks. The incident exacerbated local concerns about potential pollution from such flaring. Sulfur oxide emissions from flaring contribute to fine particulate pollution, or soot, which has been linked to increased hospital admissions and premature deaths from respiratory and heart problems. Low levels of sulfur oxide can also exacerbate asthma symptoms. The tougher rules are designed to reduce sulfur oxide emissions from about 2 tons a day in 2003 to under half a ton by 2012. ­

- ConocoPhillips and Marathon Oil Corporation announced the companies have jointly filed for a 2-year extension of the Kenai Liquefied Natural Gas (LNG) facility’s export license with the U.S. Department of Energy. The current license ends March 31, 2009 and this application would extend the export license thru March 31, 2011. The Kenai LNG facility, located in Nikiski, Alaska, is the only LNG export plant in North America. The facility initiated operations in 1969 and today employs 58 people; the plant also supports another 128 jobs in the Kenai community. In addition, the operations of the plant contribute approximately $50 million in royalties and taxes to the state and local economies.

• Business/Finance news: ­

- ConocoPhillips and EnCana Corporation announced that they have closed their previously announced transaction to create an integrated North American oil business consisting of two 50/50 operating partnerships -- one Canadian upstream partnership and one U.S. downstream partnership. The upstream partnership will consist of EnCana’s Foster Creek and Christina Lake projects located in the prolific eastern flank of the Athabasca oilsands in northeast Alberta. The downstream partnership will consist of ConocoPhillips’ Wood River and Borger refineries located in Roxana, Illinois, and Borger, Texas, respectively. ­

- This update is intended to give an overview of market and operating conditions experienced by ConocoPhillips during the fourth quarter of 2006. The market indicators and company estimates may differ considerably from the company’s actual results scheduled to be reported on January 24, 2007. • Exploration and Production o Lower crude oil prices. o U.S. natural gas prices similar to third quarter. o Worldwide production similar to third quarter. o Impact of asset impairment and higher exploration expenses. • Refining and Marketing o Significantly lower worldwide refining and marketing margins. o Worldwide refining capacity utilization rate in the mid-90-percent range. o Higher turnaround costs. o Impact of held-for-sale impairment on domestic marketing assets. • LUKOIL Investment o Ownership of 20 percent at year end. • Midstream and Chemicals o Midstream and Chemicals results expected to be lower than the previous quarter. • Corporate and Other o Debt balance of approximately $27.1 billion. o Capital program spending expected to be approximately $16.5 billion for 2006. ­

- ConocoPhillips commends the governor for continuing to build out California's plan to take action on the important issue of climate change. We have not yet seen the full details but we understand that this latest element of the Governor's plan focuses on increasing the proportion of low carbon fuels in the transportation fuels pool. ConocoPhillips is supportive of and invests in technology development to produce and enable the use of low carbon fuels and recognizes that this is one component in a suite of actions necessary to reduce the concentration of CO2 in the atmosphere. Others include CO2 sequestration, energy efficiency and raised vehicle standards that achieve more miles per gallon. We welcome the opportunity to work with the governor and his team to achieve a practical implementation plan that leads to real savings of CO2 across the production and use life-cycle, supports equitable competition between fuel producers and avoids unnecessary erosion of economic value. ­

- Hugo Chavez spoke, and investors smelled sulfur. Stocks fell sharply in his own country and across Latin America as markets felt the effects of the Venezuelan president's nationalization plans for three key industries. Chavez announced his intent to take control of businesses in telecommunications, electricity and oil that have sizable U.S. investments. The IBC index of the Caracas Stock Exchange plunged 18.7% on Tuesday. Trading in shares of the nation's largest telephone company, popularly known as CANTV, was suspended for two days after they fell 30% in Tuesday morning trading. EDC, the electric power company serving Caracas, the capital, fell 20%. The Caracas exchange, which soared 156% last year, had hit an all-time high before Chavez's announcement. In the U.S., companies with stakes in the affected sectors declined to comment, given the lack of specifics from Chavez, who will be sworn in for a third term and is expected to elaborate on his proposals. CANTV is 28.5% owned by Verizon Communications Inc. of New York, and EDC is 86% controlled by AES Corp. of Arlington, Va. Also in the dark are energy companies Chevron Corp. of San Ramon, Calif., and Texas giants Exxon Mobil Corp. and ConocoPhillips, which have invested billions of dollars in the so-called Orinoco belt, a massive oil field in eastern Venezuela. Venezuela accounts for about 2% of worldwide oil production for Chevron and 5% for ConocoPhillips. Analysts generally expressed caution as they too awaited more information. But Morgan Harting, a senior director at Fitch Ratings in New York, saw reason for longer-term concern, citing the pressures of Venezuela's 50% growth in public spending last year and the prospect of falling oil prices. Markets also were jolted by Chavez's announcement that he would seek to end the autonomy of Venezuela's central bank and that he would ask the congress for special powers giving presidential decrees the force of law. With 100% control of the National Assembly, whose approval he needs, there is little doubt Chavez will prevail. Chavez is a nemesis of the U.S. and of President Bush. He likened Bush to the devil in a speech at the United Nations in September, saying he had left a lingering smell of sulfur at the podium the day before. CANTV, Venezuela's largest privately held company, issued a statement Tuesday asking Chavez to offer details and saying it had received no formal notice of the government's intentions. The nationalizations would seem to quash Verizon's pending deal, signed last year, to sell its controlling stake in CANTV to AmericaMovil and Telmex, companies owned by Mexican billionaire Carlos Slim Helu. The news dragged Mexico's main stock market index down 1.9% on Tuesday. Elsewhere in Latin America, Colombia's market plunged 4.8%, the Argentine market slid 2.7% and Brazil's main index dropped 1.9%. Venezuelan bonds also fell in value, although analysts seemed to believe there was little chance that Chavez in the near term would default on the nation's $27 billion in outstanding foreign debt. They said the country was flush with an estimated $45 billion in reserves from oil sales and that Chavez had an excellent debt payment record, even during the attempted coup and general strike in 2002 and 2003, which crippled the economy. Longer term, the picture is murkier. ­

- ConocoPhillips announced plans to repurchase up to $1 billion of the company's common stock. ConocoPhillips expects first quarter 2007 purchases to be approximately $750 million. Prior to the conclusion of the first quarter of 2007, the company anticipates announcing its expected total share repurchase plan for 2007. Acquisitions for share repurchase programs are made at management's discretion at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors. Purchases may be increased, decreased or discontinued at any time without prior notice. Shares of stock repurchased under the plans are held as treasury shares. ­

- ConocoPhillips, the oil company, said it planned to repurchase as much as $1 billion of its stock after it tightened capital expenditures in the wake of falling oil prices. About $750 million of stock will be bought in the current quarter, the company said. In December, ConocoPhillips cut its 2007 capital spending plan by 25 percent, to $12.3 billion, after last year's purchase of a stake in Lukoil of Russia. ConocoPhillips issued stock last year to help pay for its $35 billion acquisition of Burlington Resources in March, sending the diluted shares outstanding up 19 percent. ­

- ConocoPhillips will release its fourth-quarter earnings on Wednesday, Jan. 24, at 8:30 a.m. Eastern. The news release will be issued through Business Wire. ­

- Shares in Venezuela's largest telephone company plunged after President Hugo Chavez said the government would take control of it before compensating private owners, including Verizon Communications Inc., for the hundreds of millions of dollars they have invested in the enterprise. Chavez announced this month that his government would nationalize Compania Anonima Nacional Telefonos de Venezuela, or CANTV, and Electricidad de Caracas, the Venezuelan capital's largest power provider, which is controlled by AES Corp. of Virginia. It was unclear from Chavez's statement, made during "Alo Presidente" ("Hello President"), his Sunday-afternoon television talk show, whether the takeover would happen before or after the expiration in May of the license held by its owners. The management of CANTV, which was privatized in 1991, says it has not been served with official notice of a takeover. Shares of the company fell 11% on Monday on the Caracas Stock Exchange. New York-based Verizon, which owns 28.5% of CANTV, had agreed to sell its interest in the utility to Mexican billionaire Carlos Slim Helu for $667 million in a deal announced in 2005. The status of that sale remained unclear. Chavez also announced this month that the government would assume control of four major oil projects in eastern Venezuela. ConocoPhillips, Exxon Mobil Corp. and Chevron Corp. of the United States, Total of France and Statoil of Norway have invested billions in the so-called heavy-oil projects. The president also announced Sunday that he would raise the price of gasoline, which is heavily subsidized, from 18 cents a gallon, but he did not say when or by how much. The gasoline price hike would be the first since 1997; in his successful presidential campaign in 1998, Chavez promised not to raise gasoline prices. Chavez also said he would seek to raise taxes to finance economic development projects directed by community councils. The grass-roots governing bodies, which work hand in hand with a new generation of worker-owned cooperatives, are a key element in his "socialism for the 21st century." Chavez is transferring ownership of thousands of state-owned assets — as diverse as steel factories, repossessed hotels and toll roads — to the cooperatives. His announcements came as falling crude oil prices could be cramping lavish public spending programs designed to redistribute the nation's energy wealth to benefit the poor. In addition to spending hundreds of millions of dollars for subsidized retail goods through the Mercal retail chain and capitalizing the worker-owned cooperatives, Chavez has promised to build or help build five foreign refineries, costing billions each. The tax increases would apply to wealthy individuals, banks, property owners and companies. Luxury taxes would be applied to second homes, yachts, airplanes and artwork. ­

- ConocoPhillips reported fourth-quarter net income of $3,197 million, or $1.91 per share, which includes a $0.17 per share reduction due to previously disclosed impairments. This compares with $3,679 million, or $2.61 per share, for the same quarter in 2005. Revenues were $41.5 billion, versus $51.3 billion a year ago. Fourth-quarter net income was negatively impacted $0.17 per share by two previously disclosed impairments. Refining and Marketing results were impacted by an after-tax impairment of $192 million related to certain domestic marketing assets held for sale. Exploration and Production results included an after-tax asset impairment of $93 million due to declining well performance and drilling results in the Canadian Rockies Foothills area. For the twelve months of 2006, net income was $15,550 million, or $9.66 per share, versus $13,529 million, or $9.55 per share, for 2005. Revenues were $183.7 billion, versus $179.4 billion a year ago. The results for ConocoPhillips’ business segments follow. * Exploration and Production (E&P) : Fourth-quarter financial results: E&P net income was $2,087 million, up from $1,904 million in the third quarter of 2006 and down from $2,426 million in the fourth quarter of 2005. The increase from the previous quarter primarily was due to the negative impact of tax legislation on third-quarter results, higher crude oil sales volumes, and lower depreciation, depletion and amortization (DD&A) expense in the fourth quarter. This increase was partially offset by lower crude oil prices, increased exploration expense, and the Canadian asset impairment. The decrease from the fourth quarter of 2005 primarily was due to lower realized natural gas prices, increased exploration expense, and the Canadian asset impairment. The decrease from the fourth quarter of 2005 was partially offset by the inclusion of Burlington Resources’ results and higher realized crude oil prices. Daily production from the E&P segment, including Canadian Syncrude and excluding the LUKOIL Investment segment, averaged 2.05 million barrels of oil equivalent (BOE) per day, which was similar to the average production in the previous quarter and up from 1.59 million BOE per day in the fourth quarter of 2005. The increase from the fourth quarter of 2005 primarily was due to the addition of 487,000 BOE per day from the Burlington Resources assets, which reflects downtime of 13,000 BOE per day in the Irish Sea. Other increases of 81,000 BOE per day related to Libya and the Timor Sea. These increases were partially offset by a decrease of 111,000 BOE per day, primarily from Alaska (45,000 BOE per day), the United Kingdom (34,000 BOE per day) and Vietnam (14,000 BOE per day). Before-tax exploration expenses were $391 million in the fourth quarter of 2006, versus $197 million in the previous quarter and $229 million in the fourth quarter of 2005. Twelve-months financial results: E&P net income for 2006 was $9,848 million, up from $8,430 million in 2005, primarily due to higher realized crude oil prices and the inclusion of Burlington Resources’ results. This increase was partially offset by lower realized natural gas prices, tax legislation impacts, higher DD&A and operating expenses, asset impairments, and higher exploration expense. * Midstream Fourth-quarter financial results: The Midstream segment includes the company’s 50 percent interest in Duke Energy Field Services, LLC (DEFS), which effective January 1, 2007, changed its name to DCP Midstream, LLC. Midstream fourth-quarter net income was $89 million, down from $169 million in the previous quarter and $147 million in the fourth quarter of 2005. The decrease from the previous quarter primarily was due to lower natural gas liquids prices and the impact of a third-quarter 2006 tax adjustment for assets sold in 2005. The decrease from the fourth quarter of 2005 primarily was due to lower natural gas liquids prices. Twelve-months financial results: Midstream net income for 2006 decreased to $476 million, from $688 million in 2005. The decrease primarily was due to the 2005 restructuring of ConocoPhillips’ ownership in DEFS, partially offset by higher 2006 natural gas liquids prices. * Refining and Marketing (R&M) Fourth-quarter financial results: R&M net income was $919 million in the fourth quarter, down from $1,464 million in the previous quarter and $973 million in the fourth quarter of 2005. The decrease from the third quarter of 2006 primarily was due to lower worldwide refining and marketing margins, partially offset by $57 million in lower impairments on assets held for sale. In addition, third-quarter results included a $111 million benefit related to business interruption insurance. The decrease from the fourth quarter of 2005 primarily was due to lower worldwide refining and domestic marketing margins and the fourth-quarter 2006 impairment, partially offset by higher domestic refining volumes reflecting fourth-quarter 2005 hurricane impacts, lower utility costs, and a lower effective tax rate in the fourth quarter of 2006. Net income in the fourth quarter of 2005 also included a charge related to the cumulative effect of a change in accounting principle. The domestic refining crude oil capacity utilization rate for the fourth quarter remained at 96 percent. The international crude oil capacity utilization rate was 87 percent, compared with 89 percent in the previous quarter. The decrease primarily was due to planned downtime at the Wilhelmshaven, Germany, refinery. Worldwide, R&M’s refining crude oil capacity utilization rate averaged 94 percent, compared with 95 percent in the previous quarter and up from 88 percent in the fourth quarter of 2005. Before-tax turnaround costs were $94 million in the fourth quarter of 2006, versus $42 million in the previous quarter and $86 million in the fourth quarter of 2005. Twelve-months financial results: R&M net income during 2006 was $4,481 million, compared with $4,173 million in 2005. The increase was due to higher domestic refining and marketing margins and domestic refining volumes, the business interruption insurance benefit, and the fourth-quarter 2005 charge related to the cumulative effect of a change in accounting principle. The increase was partially offset by $441 million after-tax in impairments on assets held for sale recognized in the third and fourth quarters of 2006, and higher depreciation expense. * LUKOIL Investment Fourth-quarter financial results: LUKOIL Investment segment net income was $302 million, down from $487 million in the previous quarter and up from $189 million in the fourth quarter of 2005. The results include ConocoPhillips’ estimated weighted-average equity share of OAO LUKOIL’s (LUKOIL) income for the fourth quarter based on market indicators and historical production trends for LUKOIL. The company’s equity ownership interest in LUKOIL at the end of the fourth quarter was 20 percent of LUKOIL’s 851 million authorized and issued shares and 20.6 percent based on an estimated 826 million shares outstanding. The decrease in net income from the previous quarter primarily was due to lower estimated commodity prices, partially offset by a net benefit from alignment of the company’s estimate of net income to LUKOIL’s reported results. The increase from the fourth quarter of 2005 primarily was due to ConocoPhillips’ increased equity ownership, higher estimated volumes, and a net benefit from alignment of the company’s estimate of net income to LUKOIL’s reported results. For the fourth quarter of 2006, ConocoPhillips estimated its equity share of LUKOIL production was 438,000 BOE per day and its share of LUKOIL daily refining crude oil throughput was 220,000 barrels per day. Twelve-months financial results: Net income for 2006 increased to $1,425 million, from $714 million in 2005. The increase primarily was due to ConocoPhillips’ increased equity ownership, higher estimated prices and volumes, and a net benefit from alignment of the company’s estimate of net income to LUKOIL’s reported results. * Chemicals Fourth-quarter financial results: The Chemicals segment, which includes the company’s 50 percent interest in Chevron Phillips Chemical Company LLC, reported net income of $98 million, compared with $142 million in the third quarter of 2006 and $114 million in the fourth quarter of 2005. The decrease from the third quarter primarily was attributed to lower olefins and polyolefins margins and volumes and a $16 million asset retirement, partially offset by an increased business interruption insurance benefit. The decrease from the fourth quarter of 2005 was largely due to lower olefins and polyolefins margins and the asset retirement, partially offset by lower utility costs and a business interruption insurance benefit. Twelve-months financial results: Chemicals 2006 net income increased to $492 million, compared with $323 million in 2005. The increase primarily was due to higher olefins and polyolefins margins and volumes, lower utility costs, and business interruption insurance benefits. * Emerging Businesses The Emerging Businesses segment had net income of $8 million in the fourth quarter of 2006, compared with $11 million in the third quarter of 2006 and a net loss of $5 million in the fourth quarter of 2005. * Corporate and Other Fourth-quarter Corporate expenses, after tax, were $306 million, compared with $301 million in the previous quarter and up from $165 million in the fourth quarter of 2005. The increase from the fourth quarter of 2005 was largely attributed to higher interest expense due to higher debt, partially offset by favorable foreign exchange impacts. Total debt at the end of the fourth quarter was $27.1 billion, a reduction of $700 million from the end of the third quarter. The company’s debt-to-capital ratio was 24 percent, compared to 25 percent at the end of the third quarter. The company’s fourth-quarter tax provision was 46.0 percent. This is compared with 46.1 percent in the third quarter, excluding the one-time impact of U.K. tax legislation enacted in the same period, and 51.2 percent including this item. ­

- Lower natural gas prices and reduced margins from refining contributed to a 13% decline in fourth-quarter profit for ConocoPhillips, but the results still helped the nation's third-largest oil company post its most profitable year. The Houston-based company — the first of the major oil players to report fourth-quarter and full-year earnings — also said Wednesday that it expected oil and gas production to be down slightly in the first quarter from the October-December 2006 period. Net income in the most recent quarter dropped to $3.2 billion, or $1.91 a share, from $3.68 billion, or $2.61 a share, a year earlier, when oil and gas prices soared amid supply fears after hurricanes Katrina and Rita. The recent quarter includes impairment charges of 17 cents a share. Revenue declined 19% to $42.54 billion. On average, analysts polled by Thomson Financial forecast earnings of $1.95 a share. Full-year earnings rose to $15.55 billion, or $9.66 a share, from its previous-best result of $13.53 billion, or $9.55 a share, in 2005. Phillips Petroleum Co. and Conoco Inc. combined in 2002. Last year's revenue grew to $188.52 billion from $183.36 billion in 2005. Because oil and gas prices were so high at the end of 2005, the year-over-year decline in income for ConocoPhillips was not unexpected. Financial services company UBS predicts fourth-quarter earnings for the major oil companies to fall by an average of 20% from the year-earlier period and 25% from the third quarter of 2006. ConocoPhillips shares rose 65 cents to $65.62. The company said it expected first-quarter production to be off about 30,000 barrels from the most recent quarter for a variety of reasons, including the sale of some U.S. and Canadian assets and the effect of quota reductions by the Organization of the Petroleum Exporting Countries on operations in Venezuela and Libya. ­

- ConocoPhillips posted its first profit decline in four years after fuel prices dropped. Fourth-quarter net income slid 13 percent, to $3.2 billion, or $1.91 a share, from $3.68 billion, or $2.61 a share, a year earlier, the company said in a statement. ­

- Houston-based ConocoPhillips became the first of the major oil companies to report fourth-quarter results, posting a 14% drop in earnings. Although analysts expect another round of earnings records for 2006, oil's sharp decline from the July high of $77.03 a barrel, combined with cheaper natural gas and gasoline, will cause most companies to report lower quarterly results.

February

• Upstream news:

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- Venezuelan President Hugo Chavez set a May 1 deadline for the world's biggest oil companies to surrender control of multibillion-dollar crude oil projects, accelerating his raft of nationalizations. Oil Minister Rafael Ramirez said the state would seize the Orinico Belt fields if the deadline was missed, threatening U.S. companies such as Chevron Corp., Exxon Mobil Corp. and ConocoPhillips, British firm BP and Norway's Statoil. In Washington, the White House said it hoped that U.S. companies would be treated in accordance with international regulations.

• Downstream news:

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- The latest state-of-the-art, Endeavour Class double-hulled tanker, the Polar Enterprise, sailed into the Port of Valdez, Alaska, Feb. 4 where it loaded its first cargo of Alaska North Slope crude oil. The vessel is operated by Polar Tankers, Inc., a wholly owned subsidiary of ConocoPhillips. Classed by the American Bureau of Shipping, Polar Enterprise is the fifth and final Endeavour Class tanker in Polar Tankers’ U.S. flag fleet. The tankers were designed specifically for the transport of crude oil from Valdez to the West Coast of the United States and Hawaii. The vessel's sister ships, Polar Endeavour, Polar Resolution, Polar Discovery and Polar Adventure, were commissioned in 2001, 2002, 2003, and 2004 respectively. Later this year Polar Tankers’ entire Alaska fleet will consist of double-hulled ships. The Endeavour Class tankers were built to meet and/or exceed existing environmental regulations and have set new standards for innovation and environmental protection. The tankers are built with double hulls, which exceed regulatory requirements, as well as two independent engine rooms, twin propellers and twin rudders. Cargo, fuel and lubricating oils are isolated from the ship's outer hull by ballast tanks or void spaces. The tankers were constructed at Northrop Grumman Litton Avondale Industries in New Orleans, La.

• Business/Finance news: ­

- ConocoPhillips announced changes in its Exploration and Production organization’s senior management, all effective March 1. Bill Bullock, currently president and general manager of ConocoPhillips Indonesia, has been named president, Middle East and North Africa. Bullock will report to Bill Berry, executive vice president, exploration and production—Europe, Asia, Africa and the Middle East and relocate to Doha, Qatar. Trond-Erik Johansen, currently managing director Norway, has been named president and general manager of ConocoPhillips Indonesia, replacing Bullock. He will report to Jim McColgin, exploration and production president for Asia Pacific, and relocate to Jakarta. Steinar Vaage, currently general manager Petrolera Ameriven, operator for the Hamaca heavy oil project in Venezuela, has been named managing director Norway, replacing Johansen. He will report to Paul Warwick, exploration and production president for Europe and West Africa, and relocate to Stavanger. Joe Marushack, currently vice president, Alaska North Slope (ANS) gas development, has been named president, Australia, replacing Laura Sugg, who will repatriate to Houston. He will also report to McColgin and relocate to Perth. ­

- ConocoPhillips announced a quarterly dividend of 41 cents per share. The dividend is payable March 1, 2007, to stockholders of record at the close of business February 20, 2007. This represents a 14 percent increase in the dividend rate for the company's common stock over the previous quarter's rate of 36 cents per share. ConocoPhillips also announced plans to repurchase up to a total of $4 billion of the company's common stock in 2007, including the $1 billion previously announced on January 12, 2007. ConocoPhillips expects first quarter 2007 purchases to be approximately $1 billion. The company anticipates communicating its plans for additional share repurchases in conjunction with the announcement of its 2008 capital program. ­

- Over 7,000 participants took part in the milestone 20th annual ConocoPhillips Rodeo Run, raising $160,000 for the Houston Livestock Show and Rodeo™ Educational Fund, setting a new record. Since the race began in 1988, the company has donated more than $1.8 million toward college scholarships for Texas youth. ­

- With dwindling oil supplies, pollution concerns and the ever-present threat of gas prices soaring again, talk of new and better ways to fuel our cars, heat and cool our homes and power our factories has never been greater. What's more, the conversation is emanating increasingly from a source that's been surprisingly quiet until recently — the oil companies themselves. When some of the industry's top executives gather in Houston this week to discuss global energy challenges, finding new and more effective ways to produce oil and gas — as well as alternatives to fossil fuels — will dominate the discussion. And, as the year progresses, expect to see industry leaders speaking in cities across America in an unprecedented campaign to educate the public on energy-related issues and discuss such topics as ethanol and renewable fuels. It's also an opportunity for the companies to polish their images. Why now? The reasons are varied, but increased public and congressional scrutiny of oil companies because of up-and-down gasoline prices and record profits certainly is a factor. The companies' own bottom lines also play a key role: The cost of finding and tapping new oil and gas reserves is on the rise while the worldwide appetite for energy is only getting bigger. At CERA's annual weeklong conference that begins today, dozens of the industry's heaviest hitters — including the chairmen of Exxon Mobil Corp. and Chevron Corp. and a top official of the Organization of the Petroleum Exporting Countries — will discuss topics such as supply and demand and initiatives to develop new sources of energy. Already, the discourse is in full swing across the country, led by some unlikely figures. John Hofmeister, head of Royal Dutch Shell's U.S. arm, and James Mulva, ConocoPhillips' chairman and CEO, are taking part in separate speaking tours with other representatives of their companies, talking and listening at town hall meetings in such places as Edwardsville, Ill., and Little Rock, Ark. Outlining his company's 35-city tour recently, Mulva acknowledged that he and others have traditionally done a poor job of conveying to the public how their businesses operate, the challenges they face and the advances they're making. Often, the public's main connection with oil companies comes from filling up cars at the gas station or, recently, reading headlines of record profits. For example, Exxon Mobil this month shattered its own record for the largest annual profit by any public company, bringing in $39.5 billion. And ConocoPhillips reported its best-ever full-year earnings, $15.5 billion for 2006. But what is generally unknown, Mulva said, is that U.S. oil companies have invested $11 billion in North America on renewable and other forms of energy in the last five years. The task of weaning Americans and the rest of the world off fossil fuels will be monumental and lengthy. Renewable energy sources such as wind and solar supply only about 6% of the U.S.' energy needs, according to the U.S. Energy Information Administration. That figure is expected to grow only to about 7% in the next 20 years, the agency forecasts, meaning fossil fuels will still carry the bulk of the load. Mulva said all types of efficient energy sources are needed, but market forces and consumer preferences, not federal mandates, should determine how they're used. He called President Bush's proposal for expanding ethanol use to reduce gas consumption "very well motivated" but said industry leaders "want a seat at the table" when government officials set standards for the use and development of alternative energy sources. Oil companies already are investing heavily in alternatives and new ways to get oil and gas out of the ground. BP, which earned $22 billion in 2006, plans to spend $8 billion over the next decade developing alternative energy using wind, hydrogen and other means. Shell is testing technology that involves drilling holes in fields and inserting electric heaters to gradually heat rock, causing the trapped organic matter — kerogen, in this case — to be released as oil and gas. Yergin said another clear indication of the rising interest in cleaner and more efficient energy is growing investment by venture capitalists. Last year, venture capital investments in industrial and energy deals more than doubled from the year before to $1.8 billion, according to data from Thomson Financial, the National Venture Capital Assn. and PricewaterhouseCoopers. About 40% of that money was earmarked for alternative energy.

March

• Upstream news:

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- All foreign companies operating huge crude projects in Venezuela's Orinoco reserve have agreed to cede operational control to the state, Venezuela's oil company said, another step in President Hugo Chavez's nationalization push. State oil company Petroleos de Venezuela said Thursday that U.S. companies Chevron Corp. and ConocoPhillips agreed to meet a May 1 deadline decreed by Chavez to hand over operations to PDVSA in two of the four targeted projects. Norway's Statoil quickly followed suit, saying the project that it operates with France's Total would pass to PDVSA too. The companies will form transition committees to oversee the handover of their multibillion-dollar projects' operations in the OPEC nation. Exxon Mobil Corp., the only other foreign company involved in the projects, agreed Monday to form such a body. Spokesmen for Chevron of San Ramon, Calif., and ConocoPhillips of Houston didn't return calls seeking comment. The Orinoco projects turn tar-like oil into synthetic crude.

• Downstream news: ­

- ConocoPhillips announced that it successfully achieved first gas delivery from the newly constructed Suban Phase 2 gas processing plant on December 23, 2006. In the first of a series of planned development wells in support of the Suban Phase 2 Project, the Suban-10 development well was drilled, completed and currently producing at a constrained rate of 150 million standard cubic feet per day (MMSCFD). The Suban Phase 2 Project supports the development of the Suban natural gas field to supply approximately 2.2 trillion gross cubic feet of gas (TCF) to Perusahaan Gas Negara via the South Sumatra – West Java Pipeline under a 17-year gas sales agreement. Gas sales are expected to commence in 2007. The Suban gas field is located in the Corridor Block Production Sharing Contract (PSC) in South Sumatra, where ConocoPhillips is the operator with a 54 percent interest. Co-venturers in the Corridor Block PSC are Talisman Energy, Inc. (36%) and PT. Pertamina (10%).

­- Colorado continues to march towards becoming the renewable energy capital of the world with today’s announcement of the new Colorado Center for Biorefining and Biofuels (C2B2). The Center is a research venture between large and small businesses and the newly formed Colorado Renewable Energy Collaboratory, the association of four of Colorado’s premier research institutions, the University of Colorado at Boulder (CU-Boulder), the Colorado School of Mines (CSM), Colorado State University (CSU) and the National Renewable Energy Laboratory (NREL). C2B2 will perform world class research to develop new biofuels and biorefining technologies and transfer these advances as rapidly as possible to the private sector.

• Business/Finance news: ­

- ConocoPhillips will hold its annual analyst meeting Wednesday, March 14, 2007, from 8:30 a.m. to 12 p.m. Eastern in New York City. The meeting will feature presentations by ConocoPhillips executives, including Chairman and Chief Executive Officer Jim Mulva.

­- ConocoPhillips held its annual analyst meeting in New York. The company’s Chairman and Chief Executive Officer Jim Mulva outlined ConocoPhillips’ strategic objectives and operating plans for 2007, and he described the way in which the company’s portfolio has been shaped by value-driven investments. ConocoPhillips reaffirmed its intent to fund a capital program of $13.5 billion in 2007, with a continued commitment to optimize the portfolio through selective asset dispositions and careful prioritization of project investment opportunities. The company also communicated its objective to continue improving its financial strength through consistent debt reduction, equity improvement, and achieving a target debt-to-capital ratio of 15 to 20 percent by year-end. In addition, ConocoPhillips’ financial strategy is balanced by annual dividend increases and share repurchases. Earlier this year, the company declared a dividend increase of 14 percent for 2007 and announced share repurchases of $4 billion for the year. In its Exploration and Production segment, ConocoPhillips outlined its strategic plans to advance an asset portfolio that is both opportunity and resource-rich. With leading positions in both natural gas and heavy crude oil in North America, a legacy position in the North Sea, and strong growth in the Russia and Caspian, Middle East and Asia Pacific regions, the company expects to replace reserves and sustain production growth at a rate of approximately 3 percent over the long term. New growth opportunities are anticipated as ConocoPhillips also pursues focused exploration and business development in several prospective areas globally and works to rebuild its exploration portfolio. In Refining and Marketing, ConocoPhillips is committed to maintaining its segment-leading performance through a continued focus on safe and reliable operations. The company plans to hold operating costs flat while improving its clean products yields through further investment in its existing refineries. ConocoPhillips also plans to improve its ability to process advantaged crudes, particularly at its Wood River, Ill., and Borger, Texas, refineries through its oil-sands joint venture with EnCana Corporation. In addition, the company is engaged with foreign partners in studying opportunities to construct new refineries in the Middle East and Asia. Updates also were provided on the company’s strategic partnership with LUKOIL, the upstream and downstream ventures with EnCana Corporation, and the DCP Midstream and Chevron Phillips Chemical Company joint ventures. ConocoPhillips also outlined the expected contributions from its Commercial organization, as well as the company’s plans for a more aggressive technology program.

­ - The University of Oklahoma’s School of Geology and Geophysics – the first in the United States to offer a petroleum geology degree – is receiving one of the largest single corporate gifts ever made to OU, a $6 million contribution from longtime supporter ConocoPhillips. The gift is the largest in the history of the tradition-rich School, which was founded in 1900 and has graduated more than 5,000 students. ­

- ConocoPhillips announced its contribution of $1 million to Memorial Hermann Life Flight to help with the purchase of six new helicopters that will provide enhanced emergency care to the community.

April

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­- ConocoPhillips will establish an eight-year, $22.5 million research program at Iowa State University dedicated to developing technologies that produce biorenewable fuels. The grant is part of ConocoPhillips’ plan to create joint research programs with major universities to produce viable solutions to diversify America’s energy sources. ConocoPhillips will make an initial $1.5 million grant in 2007 to support Iowa State researchers, with additional grants of $3 million per year for seven years. Biorenewable fuels are produced from organic materials and help reduce pollution and greenhouse gas emissions while diversifying the energy supply. Conventional biorenewable fuels include ethanol from corn starch and biodiesel from soybean oil. Advanced biofuels are expected to be made from fibrous biomass such as the stalks and leaves from corn plants and switchgrass. ­

- A petroleum refinery operated by ConocoPhillips in Billings, Montana is the first in the nation to earn the ENERGY STAR for superior energy performance. The refinery's design, operations and maintenance practices place the refinery in the top 25 percent of refineries nationwide in terms of energy efficiency. ­

- ConocoPhillips [NYSE:COP] and Tyson Foods, Inc. [NYSE:TSN] will announce a strategic alliance to produce and market the next generation of renewable diesel fuel, which will help supplement the traditional petroleum-based diesel fuel supply. The alliance plans to use beef, pork and poultry by-product fat to create a transportation fuel. This fuel will contribute to America’s energy security and help to address climate change concerns. Over the last year, the companies have been collaborating on ways to leverage Tyson’s advanced knowledge in protein chemistry and production with ConocoPhillips’ processing and marketing expertise to introduce a renewable diesel to the United States. Tyson will make capital improvements this summer in order to begin pre-processing animal fat from some of its North American rendering facilities later in the year. ConocoPhillips also will begin the necessary capital expenditures to enable it to produce the fuel in several of its refineries. The finished product will be renewable diesel fuel mixtures that meet all federal standards for ultra-low-sulfur diesel. Production is expected to ramp up over time to as much as 175 million gallons per year of renewable diesel.

• Business/Finance news:

­- ConocoPhillips [NYSE:COP] announced its support for a mandatory national framework to address greenhouse gas emissions and has joined the U.S. Climate Action Partnership (USCAP), a business-environmental leadership group dedicated to the quick enactment of strong national legislation to require significant reductions of greenhouse gas emissions. ­

- ConocoPhillips [NYSE:COP] will release its first-quarter earnings on Wednesday, April 25, at 8:30 a.m. Eastern. The news release will be issued through Business Wire. ­

- ConocoPhillips [NYSE:COP] reported first-quarter net income of $3,546 million, or $2.12 per share. This compares with $3,291 million, or $2.34 per share, for the same quarter in 2006. Revenues were $41.3 billion, versus $46.9 billion a year ago. ­

- ConocoPhillips said that its first-quarter profit rose 7.7 percent as income from asset sales helped offset lower commodity prices and higher operating costs. Net income rose to $3.55 billion, or $2.12 a share, for the January-to-March period, from $3.29 billion, or $2.34 a share, a year ago.

May

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­ - ConocoPhillips believes the key to a secure energy future is the efficient and effective use of a variety of energy sources. Ethanol is one energy option which includes other renewable and alternative fuel sources, as well as traditional energy sources like crude oil and natural gas. ConocoPhillips is expanding the accessibility and potential use of E-85 by allowing marketers to offer this product under the branded canopy in the states of Iowa, Illinois, Nebraska, and Colorado. This is in response to requests from some of our marketers in these states that would like to sell an unbranded E-85 product under the branded canopy. The pilot program is available to about 1,300 sites in these states. The states were selected because of marketer requests as well as the availability of ethanol supply.

• Business/Finance news: ­

- ConocoPhillips [NYSE:COP] will webcast its annual meeting of stockholders on Wednesday, May 9, at 11:30 a.m. Eastern. ­

- ConocoPhillips [NYSE:COP] held its Annual Stockholders’ Meeting, where owners of the company’s stock voted on the election of board members, the appointment of an independent registered public accounting firm, and five additional proposals. The preliminary results, reported by the Inspector of Elections, were as follows: Approximately 99.7 percent of stockholders who cast votes elected six directors: James E. Copeland, Jr., Kenneth M. Duberstein, Ruth R. Harkin, William R. Rhodes, J. Stapleton Roy, and William E. Wade, Jr. In addition, stockholders ratified the appointment of Ernst & Young LLP as the company’s independent registered public accounting firm for 2007, with 99.0 percent of votes cast. ­

- ConocoPhillips [NYSE:COP] announced a quarterly dividend of 41 cents per share, payable June 1, 2007 to stockholders of record at the close of business May 21, 2007. ­

- ConocoPhillips, the third-largest integrated energy company in the United States, has pledged $1 million to support an industry-university collaboration working to develop policies that address global climate change, Duke University President Richard H. Brodhead announced. The Climate Change Policy Partnership (CCPP) is a four-year initiative launched last year by Duke University and Duke Energy to pool the expertise of the university’s Nicholas Institute for Environmental Policy Solutions, Nicholas School of the Environment and Earth Sciences, and Center on Global Change with other concerned partners in the corporate and academic worlds. ­

- ConocoPhillips [NYSE:COP] announced that Jim Mulva, chairman and chief executive officer, will speak to investors and securities analysts at the Sanford C. Bernstein 23rd Annual Strategic Decisions Conference on Wednesday, May 30, 2007, at 8 a.m. (Eastern Time). The event will be held at The Waldorf Astoria, New York, N.Y.

June

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­ - ConocoPhillips and the Venezuelan government were unable to reach agreement regarding ConocoPhillips’ migration to an Empresa Mixta structure mandated by Venezuela decree law 5.200. Therefore, pursuant to the decree, Petróleos de Venezuela S.A. (PDVSA) or its affiliates will directly assume the activities associated with ConocoPhillips’ interests in the Petrozuata and Hamaca heavy-oil ventures and the offshore Corocoro development project. While negotiations are continuing between ConocoPhillips and Venezuelan authorities concerning appropriate compensation for the company’s interests, the company expects to record a complete impairment of its entire interest in its oil projects in Venezuela of approximately $4.5 billion, before- and after-tax, in its second-quarter financial results. Although the company is hopeful that the negotiations will be successful, it has preserved all legal rights including international arbitration. ­

- ConocoPhillips and Exxon Mobil refuse to meet Venezuela's deadline to reach agreement on ceding control of their major oil production ventures, in what could be their imminent separation from billions of dollars in investments; possible rupture with two companies is viewed by oil analysts as sign that Pres Hugo Chavez is pressing ahead with efforts to assert greater authority over some of most coveted oil reserves in Western Hemisphere; possible exit of two major American oil companies from Venezuela may not have immediate impact on American energy supplies, but any increase in oil prices that does result will only help Chavez finance his broadening government social policies; possible vacuum in expertise could eventually be filled by Chinese, Iranian or other state oil companies; Venezuelan Energy Min Rafael Ramirez comments; investments at stake are large, with values ranging from $2.5 billion to $4.5 billion for Conoco if Venezuela takes ownership of its heavy oil projects; Exxon stands to lose about $800 million. ­

- Exxon Mobil and ConocoPhillips rejected a deal to stay in multibillion-dollar projects that Venezuela is nationalizing, increasing the chances that two of the world's top oil companies will leave the OPEC nation, two sources close to the talks said. Four other companies — Chevron Corp., Norway's Statoil, Britain's BP and France's Total — plan to sign an accord that will keep them in the massive Orinoco oil reserve projects, a government official said. The sources — one from the oil industry and the other from the government — asked not to be named because the state oil company PDVSA planned to announce the negotiations' results. They also noted negotiations with Exxon and ConocoPhillips could be revived at the eleventh hour. A person close to ConocoPhillips said the company had decided to leave Venezuela entirely, walking out on its stakes in two Orinoco projects as well as its interest in the Corocoro field in the Gulf of Paria. The source said the dispute probably would head to arbitration. President Hugo Chavez decreed today as a deadline for the majors to accept terms for the government to take a majority stake in four heavy-crude upgrading projects valued at more than $30 billion.

July

• Upstream news:

­­ - ConocoPhillips [NYSE:COP] announced that it will establish a global Water Sustainability Center that will examine ways of treating and using by-product water from oil production and refining operations, as well as other projects relating to industrial and municipal water sustainability. The center will be located in Qatar Science & Technology Park at Education City, Doha, Qatar. When companies produce oil and gas, water often is produced along with the oil – on average, worldwide, roughly three barrels of water for every barrel of oil, estimates ConocoPhillips. Impurities usually make the by-product water unusable without costly treatment. ConocoPhillips aims to develop more efficient and cost-effective treatment technologies at its Qatar Water Sustainability Center. Proposed uses for treated water could include crop irrigation, livestock watering, wildlife habitats, and industrial cooling, potentially leaving more fresh-water available for domestic use. ConocoPhillips plans to invest $25 million in the center over its first 5–7 years. The center will conduct research on and develop and test technologies relating to water production and management. The center will be designated as ConocoPhillips’ worldwide center for water technologies, disseminating findings to the company’s global operations as well as to local government and industry partners. ­

- Peabody Energy (NYSE: BTU) and ConocoPhillips (NYSE: COP) announced they have entered into an agreement to explore development of a commercial scale coal-to-substitute natural gas (SNG) facility using proprietary ConocoPhillips E-GAS™ technology. The project would be developed as a mine-mouth facility at a location where Peabody has access to large reserves and existing infrastructure. It would be designed to annually produce 50 billion to 70 billion cubic feet of pipeline quality SNG from more than 3.5 million tons of Midwest sourced coal. In addition, presuming there is a supportive regulatory framework in place, the project scope will provide for carbon capture and storage.

• Downstream news:

• Business/Finance news:

­ - Highlights – Second-Quarter 2007 vs. First-Quarter 2007:Exploration and Production: Higher crude oil prices. Higher U.S. natural gas prices. Lower worldwide production, as previously communicated. Impairment of oil projects in Venezuela, as previously disclosed. Refining and Marketing: Significantly higher worldwide refining and marketing margins. Worldwide refining capacity utilization rate similar to the first quarter.Midstream and Chemicals: Midstream results expected to be higher than the previous quarter. Chemicals results anticipated to be lower than the previous quarter.Corporate and Other: Debt balance of approximately $22.8 billion. Second-quarter net benefit associated with asset disposition program. ­

- ConocoPhillips [NYSE:COP] announced it has approved the repurchase of up to $15 billion of the company’s shares through the end of 2008. This amount includes $2 billion remaining under the $4 billion program previously announced on February 9, 2007. Based upon its current commodity price and operational outlook, ConocoPhillips expects third quarter 2007 purchases of $2 to $3 billion, and fourth quarter 2007 purchases of a similar range. ConocoPhillips also announced a quarterly dividend of 41 cents per share. The dividend is payable September 4, 2007, to stockholders of record at the close of business on July 31, 2007. ­

- ConocoPhillips approves stock buyback of as much as $15 billion through end of 2008 ­

- ConocoPhillips [NYSE:COP] will release its second-quarter earnings on Wednesday, July 25, at 8:30 a.m. Eastern. The news release will be issued through Business Wire. ­

- ConocoPhillips [NYSE:COP] reported second-quarter net income of $301 million, or $0.18 per share. This compares with $5,186 million, or $3.09 per share, for the same quarter in 2006. Revenues were $47.4 billion, versus $47.1 billion a year ago. Second-quarter net income included an after-tax impairment of $4,512 million ($2.72 per share) in the Exploration & Production segment related to expropriation of the company’s Venezuela oil projects. Earnings adjusted for the Venezuela impairment were $4,813 million, or $2.90 per share. ­

- ConocoPhillips says second-quarter profit dropped 94 percent as it incurred $4.5 billion charge related to assets in Venezuela, where it has abandoned it heavy oil projects; earned $301 million compared with $5.19 billion in period year earlier; revenue rose to $47.4 billion from $47.1 billion; daily production for quarter averaged 1.9 million barrels of oil equivalent per day, down from 2.1 million barrels per day year ago ­

- ConocoPhillips [NYSE:COP] announced actions concerning the company's senior management. These changes will be effective September 1, 2007.

August

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- ConocoPhillips [NYSE:COP] announced that John Lowe, executive vice president, Exploration & Production, will speak to investors and securities analysts at the Lehman Brothers CEO Energy/Power Conference on Wednesday, Sept. 5, 2007, at 11:05 a.m. (Eastern Time).

September

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­- ConocoPhillips [NYSE:COP] and Archer Daniels Midland Company [NYSE:ADM] announced that they have agreed to collaborate on the development of renewable transportation fuels from biomass. The alliance will research and seek to commercialize two components of a next-generation biofuel production process: The conversion of biomass from crops, wood or switchgrass into biocrude, a non-fossil substance that can be processed into fuel; and The refining of biocrude to produce transportation fuel.

• Business/Finance news:

­- ConocoPhillips [NYSE:COP] announced that Stephen R. Brand, currently vice president, exploration and business development, Exploration and Production, will become senior vice president, Technology, effective October 1, 2007. Mr. Brand will report to Jim Mulva, chairman and chief executive officer.

October

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- ConocoPhillips [NYSE:COP] and Peabody Energy [NYSE: BTU] announced they have selected Kentucky as the location to study the development of a major commercial scale coal-to-gas facility. The companies are conducting a feasibility study for a state-of-the-art “mine-mouth” gasification project, using ConocoPhillips proprietary E-GAS™ technology, which could result in the creation of more than 500 high-wage jobs and future production representing as much as 1.5 trillion cubic feet of natural gas over the life of the project. The study will review optimum project designs and specific sites, and is expected to continue into 2008.

- Rockies Express Pipeline LLC (REX) launched an open season to solicit market interest for the Northeast Express Project, a 375-mile extension of the Rockies Express natural gas pipeline project, stretching the pipeline's route from its originally planned Clarington, Ohio, endpoint to Princeton, N.J. Subject to regulatory approvals, the pipeline extension could go into service in late 2010 and transport as much as 1.5 million dekatherms per day (dth/day). The Rockies Express Pipeline partners are seeking non-binding bids from interested customers for contract terms of 10 years and longer with service beginning Jan. 1, 2011.

• Business/Finance news:

­- ConocoPhillips has pledged $2 million to help fund the Vietnam Veterans Memorial Center, an educational facility being built on the National Mall in Washington, D.C. The donation puts the Memorial Fund at around $14 million in pledges for the Center, which is estimated to cost between $75 million and $100 million. The Memorial Fund received a lead gift of $10 million from Time Warner in 2006. ­

- This update is intended to give an overview of market and operating conditions experienced by ConocoPhillips [NYSE:COP] during the third quarter of 2007. The market indicators and company estimates may differ considerably from the company’s actual results scheduled to be reported on October 24, 2007. As previously communicated, third-quarter production on a barrel-of-oil equivalent (BOE) per day basis, including Syncrude and excluding LUKOIL, is anticipated to be approximately 180,000 BOE per day lower than the previous quarter. This reduction is primarily due to expropriation of the company’s Venezuela oil projects, unplanned downtime in the United Kingdom as a result of damage and repairs on a third-party pipeline, and planned downtime in the Timor Sea and Alaska. Exploration expenses are expected to be approximately $240 million before-tax for the quarter. Worldwide refining margins for the third quarter are expected to be significantly lower than the second quarter, as indicated in the table above. The company’s average crude oil refining capacity utilization rate for the third quarter is expected to be similar to the second quarter, including the impact of the economic shutdown of the Wilhelmshaven, Germany, refinery during a portion of the third quarter. Third-quarter turnaround costs are expected to be approximately $35 million before-tax. The third-quarter results for the company’s LUKOIL Investment segment are expected to be negatively impacted by approximately $85 million after-tax, reflecting the alignment of ConocoPhillips’ estimate of second-quarter LUKOIL results to the actual results published by LUKOIL on September 12, 2007. The net third-quarter benefit from the company’s asset rationalization efforts is expected to be approximately $300 million after-tax. During the third quarter, Germany enacted legislation lowering income tax rates effective January 1, 2008. As a result, ConocoPhillips expects to recognize a third-quarter benefit of approximately $140 million in the R&M segment related to the revaluation of deferred taxes. In addition, Corporate segment results are expected to include approximately $50 million of deferred tax expense related to foreign currency impacts. The company also expects to recognize a net after-tax benefit of approximately $90 million in the E&P segment and net after-tax interest expense of $15 million in the Corporate segment related to the implementation of retroactive adjustments to compensation for crude oil quality differentials shipped in the Trans-Alaska Pipeline System. ConocoPhillips’ debt balance is expected to be approximately $21.9 billion at the end of the third quarter. The company anticipates third-quarter purchases under the share repurchase program to be approximately $2.5 billion. The number of weighted-average diluted shares outstanding during the third quarter is expected to be approximately 1,645 million. ­

- ConocoPhillips [NYSE:COP] announced that Steve Scheck, general auditor and chief ethics officer, has elected to retire after 36 years of service. Glenda Schwarz, currently general manager of downstream finance and performance analysis, will become general auditor and chief ethics officer. These changes are effective Jan. 1, 2008. ­

- ConocoPhillips [NYSE:COP] announced a quarterly dividend of 41 cents per share, payable December 3, 2007, to stockholders of record at the close of business October 31, 2007. ­

- ConocoPhillips [NYSE:COP] will release its third-quarter earnings on Wednesday, October 24, at 8:30 a.m. Eastern. The news release will be issued through Business Wire. A follow-up conference call with Chairman and Chief Executive Officer Jim Mulva and Investor Relations General Manager Gary Russell will be held Wednesday, October 24, at 11 a.m. Eastern. ­

- ConocoPhillips [NYSE:COP] reported third-quarter net income of $3,673 million, or $2.23 per share. This compares with $3,876 million, or $2.31 per share, for the same quarter in 2006. Revenues were $46.1 billion, versus $48.1 billion a year ago. For the first nine months of 2007, net income was $7,520 million, or $4.54 per share, including a second-quarter, after-tax impairment of $4,512 million in the Exploration and Production segment related to the expropriation of the company’s Venezuelan oil projects. Earnings for the first nine months of 2007 adjusted for the Venezuela impairment were $12,032 million, or $7.26 per share, versus net income of $12,353 million, or $7.78 per share, for the same period a year ago. Revenues were $134.8 billion, versus $142.1 billion a year ago. ­

- ConocoPhillips reported a 5.2 percent decrease in third-quarter profit yesterday, while Occidental Petroleum said its third-quarter profit rose 13 percent. ConocoPhillips, which is based in Houston, said refined fuel prices failed to keep pace with gains by crude oil, narrowing profit margins on gasoline and diesel. The company, the third-largest United States oil producer, said profit fell to $3.67 billion, or $2.23 a share, from $3.88 billion, or $2.31 a share, a year earlier. Revenue fell 4.2 percent, to $46.1 billion. ConocoPhillips has the second-largest United States refining capacity, behind Valero Energy. ConocoPhillips’s output of oil and natural gas fell on downtime at fields from Alaska to the North Sea and a decision in June to exit Venezuela. The company’s shares fell $1.57, or 1.9 percent, to $81.65. ConocoPhillips is the first of the three largest United States oil producers to report third-quarter earnings. Exxon Mobil plans to report on Nov. 1, and Chevron is scheduled for Nov. 2. ­ ­ - ConocoPhillips [NYSE:COP] announced that Randy Limbacher, president, Exploration & Production – Americas, has elected to leave the company to pursue other opportunities. This change will be effective October 31. The position held by Mr. Limbacher will not be replaced. The organization currently under this position will be moved directly under John Lowe, executive vice president, Exploration & Production.

November

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- ConocoPhillips [NYSE:COP] announced that its refinery in Billings, Montana has earned the Environmental Protection Agency’s (EPA) 2007 ENERGY STAR® for superior energy performance. In 2006, the facility became the nation’s first refinery to earn the ENERGY STAR® designation. The Billings refinery earned this award by emphasizing energy-efficient equipment design and operational excellence, placing the facility among the top 25 percent of refineries nationwide for energy efficiency. The plant is particularly efficient in capturing and recycling thermal energy, an important factor in helping to reduce greenhouse gas emissions.

- ConocoPhillips [NYSE:COP] announced that it has submitted a proposal to the governor of Alaska to advance the development of the Alaska Gas Pipeline Project. The proposed pipeline would transport approximately 4 billion cubic feet per day of natural gas from the Alaska North Slope to markets in Canada and the United States. ConocoPhillips is prepared to make significant investments, without state matching funds, to advance this project as part of this proposal. The company already has efforts underway to begin new field data acquisition to support the pipeline permit applications. During the initial phase of the project, Bechtel Oil, Gas and Chemicals, Inc. will provide engineering and technical support and other related project services.

• Business/Finance news:

- ConocoPhillips [NYSE:COP] announced that Jim Mulva, chairman and chief executive officer, will speak to investors and securities analysts at the Merrill Lynch Global Energy Conference on Thursday, Nov. 8, 2007, at 12:15 p.m. (Eastern Time). The event will be held at Merrill Lynch’s headquarters at Four World Financial Center in New York, N.Y.

- ConocoPhillips [NYSE:COP] announced that John Lowe, executive vice president, Exploration & Production, will speak to investors and securities analysts at the Bank of America 2007 Energy Conference on Thursday, Nov. 15, 2007, at 11:25 a.m. (Eastern Time). The event will be held in Key Biscayne, Fla.

December

• Upstream news:

­­ - ConocoPhillips [NYSE: COP] and Qatar Petroleum International (QPI), a wholly-owned subsidiary of Qatar’s state-owned company, Qatar Petroleum, announced that the two companies have signed a Memorandum of Understanding (MOU) to pursue and develop international energy projects outside of Qatar. The MOU was signed on behalf of QPI by His Excellency Abdullah bin Hamad Al-Attiyah, Deputy Prime Minister and Minister of Energy and Industry of Qatar, and by James J. Mulva, ConocoPhillips chairman and chief executive officer. Senior officials from both parties also attended the event, including Nasser Al-Jaidah, QPI chief executive officer, and William Bullock Jr., ConocoPhillips president, Middle East and North Africa..

• Downstream news:

• Business/Finance news:

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- ConocoPhillips [NYSE:COP] approved a 2008 capital budget of $14.3 billion, including cash capital expenditures and capitalized interest. Loans to affiliates and contributions to fund the upstream business venture with EnCana add an additional $1.0 billion, bringing the total authorized capital program to $15.3 billion. Approximately 80 percent of the company’s 2008 total authorized capital program will be allocated to its Exploration and Production segment. The Refining and Marketing segment will receive about 18 percent, with the remaining being spent in Emerging Businesses and Corporate.

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- The World Bank’s Global Gas Flaring Reduction partnership (GGFR) today welcomed ConocoPhillips’ decision to join and support the efforts of other oil producing countries and companies in minimizing the wasteful practice of burning natural gas –also known as gas flaring- and reducing greenhouse gases to mitigate the impact of climate change. By joining GGFR, ConocoPhillips will be part of a select group of 10 major international oil companies and other important national oil companies from around the world that have expressed their commitment to gas flaring reduction and are making efforts to minimize its practice by finding alternative uses for the gas associated with oil production, which is often burnt off, particularly in developing countries that lack sufficient infrastructure, have weak or non existent domestic gas markets, or have inadequate regulations that constrain the utilization of associated gas. The World Bank’s GGFR estimates that at least 150 billion cubic meters (or 5.3 trillion cubic feet) of natural gas are being flared and vented annually. That is equivalent to 25 per cent of the United States’ gas consumption or 30 per cent of the European Union’s gas consumption per year. It is also estimated that global gas flaring releases about 400 million tons of CO2 per year into the atmosphere. This is almost the same as the potential annual emission reductions from projects currently submitted under the Kyoto mechanisms. Last December, during a Global Forum on Flaring Reduction and Gas Utilization organized by GGFR in Paris, the World Bank called on oil producing countries and companies to step up efforts in reducing the burning of natural gas as a way of mitigating the impact of climate change and lowering greenhouse gas emissions. The Global Gas Flaring Reduction is a public-private partnership of governments, state-owned companies and major international oil companies committed to reducing flaring and venting worldwide. GGFR facilitates and supports national efforts to use the associated gas that comes with oil production and thus reduce flaring, by focusing on four key areas: commercialization of associated gas; regulations for associated gas; implementation of a global flaring and venting reduction standard; capacity building to obtain carbon credits for flaring and venting reduction projects. The top 20 major flaring countries in the world include: Russia, Nigeria, Iran, Iraq, Angola, Venezuela, Qatar, Algeria, the United States, Kuwait, Indonesia, Kazakhstan, Equatorial Guinea, Libya, Mexico, Azerbaijan, Brazil, Congo, the United Kingdom, and Gabon.



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