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On December 13, 2005, ConocoPhillips and Burlington Resources Inc. made a
joint analyst presentation concerning the proposed acquisition by
ConocoPhillips of Burlington Resources Inc. The following is a transcript
of that presentation.
FINAL TRANSCRIPT
[LOGO - Thomson StreetEvents]
COP - ConocoPhillips to Acquire Burlington Resources in $35.6 Billion
Transaction
Event Date/Time: Dec. 13. 2005 / 8:30AM ET
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[LOGO - THOMSON] www.streetevents.com Contact Us
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(C) 2005 Thomson Financial. Republished with permission. No part of this
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F I N A L T R A N S C R I P T
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Dec. 13. 2005 / 8:30AM, COP - ConocoPhillips to Acquire Burlington Resources
in $35.6 Billion Transaction
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C O R P O R A T E P A R T I C I P A N T S
JIM MULVA
Conoco-Phillips - Chairman, CEO
BOBBY SHACKOULS
Burlington Resources - CEO
JOHN LOWE
Conoco-Phillips - SVP Strategy & Development
C O N F E R E N C E C A L L P A R T I C I P A N T S
MARK FLANNERY
Credit Suisse First Boston - Analyst
KATE LUCAS
JP Morgan - Analyst
NEIL MCMAHON
Sanford C. Bernstein - Analyst
DOUG LEGGATE
Smith Barney Citigroup - Analyst
MARK GILMAN
Benchmark Capital - Analyst
JOHN HERRLIN
Merrill Lynch - Analyst
DOLORES BAMFORD
Goldman Sachs - Analyst
DAN BARCELO
Banc of America Securities - Analyst
BEN DELL
Sanford C. Bernstein - Analyst
P R E S E N T A T I O N
OPERATOR
Good morning. My name is Denise and I will be your conference facilitator
today. At this time, I would like to welcome everyone to the
Conoco-Phillips/Burlington Resources Investment Community Conference Call.
All lines have been placed on a listen-only mode. We will not be taking
questions on this call. Thank you. The conference will begin shortly.
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UNIDENTIFIED COMPANY REPRESENTATIVE
Good morning. We certainly appreciate your presence here with us this
morning, both here in this room as well as those who are participating by
webcast and by conference call.
With us this morning is Jim Mulva, Chairman and CEO of Conoco-Phillips, as
well as Bobby Shackouls, Chairman and CEO of Burlington Resources.
You'll find, on your screen, this morning the agenda. Let me call your
attention to the Q&A. While we will not be taking questions from those who
are participating by conference call, there is a media session at 1030 this
morning and you'll find the information in the press release, in terms of
the dial-in number.
Let me also call your attention to the cautionary statement that is on the
screen as well as in your booklet. While we are going through this
presentation this morning, we will be making forward-looking statements
about both companies and the combination of the two companies. These
statements represent our management's expectations, which are based on
estimates and projections at both companies, as well as some estimates and
projections in the petroleum industry as a whole. These statements are not
guarantees of future performance and they involve certain risks and
uncertainties and assumptions that are difficult to predict. Therefore,
actual outcomes and results may differ materially from what's expressed or
forecast in these presentations today.
So with that, let me introduce to you the Chairman and CEO of
Conoco-Phillips, Jim Mulva.
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JIM MULVA - Conoco-Phillips - Chairman, CEO
Gary, thank you. On behalf of Bobby Bobby Shackouls and myself, we very
much appreciate your attendance here in person, as well as those who are
participating through teleconference.
What we'd like to do is, between Bobby and myself, we're going to go
through the more formal part of our presentation and then, when we finish,
then we're going to entertain your questions and respond to each and every
one of them in the best way that we can. So, what I'd like to do is to go
through my part of the presentation; then Bobby comes up and goes through
his part, and I will finish near the end.
Last night at 900 Eastern time, essentially right at the time we announced
the transaction by which Conoco-Phillips will be acquiring Burlington
Resources, and included in that announcement -- it was indicated it was $92
per Burlington Resources share, and that's based upon a closing price of
December 9 last Friday. For each Burlington Resources share, we will
receive $46.50 in cash and 0.7214 a COP share. That puts the enterprise
value of Burlington Resources at $35.6 billion, and that includes their net
debt.
Now, the principle conditions of closing is that Burlington Resources --
their shareholder approval it is expected will be obtained in the first
quarter of 2006, and then the regulatory approvals and clearances would be
by the end of the first half of 2006. We think it's very important, with
respect to the combination of Burlington Resources and Conoco-Phillips,
that we secure the expertise and the strength of the Burlington Resources
personnel and their management team. This goes at all levels of the
organization. Two of the existing Burlington Resources directors will join
Conoco-Phillips' Board; that includes Bobby Shackouls and Mr. Bill Wade,
who is an independent member of the Board of Burlington Resources who has
extensive background in integrated oil operations.
In terms of talent-retention program, this is a very significant part of
the combination. Randy Limbacher, who serves as EVP and Chief Operating
Officer of Burlington Resources, will become an EVP of Conoco-Phillips and
he will report to myself. He will be directly responsible for North and
South America E&P. Bill Berry, currently EVP responsible for E&P within
Conoco-Phillips, will direct his efforts in oil towards Europe, Africa,
Middle East, Europe -- Russia, as well, as I said, Mid-East and Asia.
Another key point on talent-retention program -- it's very important for us
that the expertise and the employees of Burlington Resources -- we in a
very open way welcome them, we need them to help us in terms of what
they've been so successful at in Canada and the lower 48. We've already
formed the integration teams, and you have seen that in the media release.
The integration teams are going to be headed up by Randy Limbacher on
behalf of Burlington Resources and John Lowe, who serves as EVP of Strategy
and Strategic Planning and transactions for Conoco-Phillips.
The strategic rationale for the combination is, without a doubt, we are
creating a leading North American gas producer. What we like very, very
much about the position of Conoco-Phillips but certainly the position of
Burlington Resources is as you see in these subpoints -- high-quality, long
life, low-risk gas reserves and production. Burlington Resources, also in
addition to conventional, has a significant unconventional resource play.
The combination certainly enhances not only our reserve position but
production growth in being a major North American gas supplier. But it also
fits in very well in terms of reserves and production, over the short and
medium term, and complements very much what we intend to do long-term as a
major gas producer in North America with the Arctic resources that will be
coming from Canada and Alaska, as well as LNG.
We see that the second bullet point on this slide, it really enhances our
business mix with respect to -- it increases, in the portfolio, the E&P
portion -- and I have a subsequent slide to talk about that -- the E&P
proportion to the total portfolio, if not the most significant reason why
we've done this but it does result -- increase our E&P position in the
portfolio. We as a company have historically and continue long-term. We
believe very fundamentally that we would like to have a very strong
presence in reserves and production of OEC nations and in particular North
American gas. Again, in subsequent slides, you are to going to see there's
significant free cash flow, which will be utilized to accelerate debt
reduction.
The synergies another slide will have is $375 million, and between the two
companies, we have a very strong technical resource base by which to
accomplish the strategic plan.
So, I'm going to step down for a moment and Bobby is going to come up and
go through the rationale for the transaction from Burlington Resources'
point of view, but first he will go over the overview of the strength of
position of Burlington Resources. Bobby?
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BOBBY SHACKOULS - Burlington Resources - CEO
Thank you, Jim, and I thank all of you for being here this morning. It's a
real pleasure to be able to share the rationale for this transaction with
you. I see many, many familiar faces out there and I know you know the
Burlington story probably as well as I do, but I'd like to share with you a
brief overview of our company and why we think this transaction makes so
much sense.
First of all, BR is definitely a North American-focused company, as you can
see on this slide, and we are also heavily weighted toward North American
natural gas. If you look at our reserve mix, 85% of our reserves consist of
natural gas or natural gas liquids and 90% of that resides in North
America. So, I won't spend a lot of time talking about the international
assets, because I think that Conoco-Phillips brings the international piece
of the puzzle to the table so much more emphatically than we do. But you
can see the spots on the map there where we are located internationally.
What I'd really like to focus on is North America. In the San Juan Basin,
which is the cornerstone of Burlington Resources and has been ever since
its formation really, our position there and Conoco's position -- we are
the number one and number two operators in the San Juan Basin, which is of
course the largest gas field in our country, a major gas supplier to the
state of California, and back into the Midwest and points east of there.
Together, we will produce about 1.3 billion cubic feet a day out of the San
Juan Basin. We are already an extremely efficient operator in San Juan, and
by the time we get through combining our operations there, it's my firm
belief that we will be even more efficient.
Our plans in San Juan as a stand-alone company has been to increase our
activity levels there. In fact, we plan, by the end of this decade, to be
drilling 300 wells a year. We're currently struggling to drill 200 wells a
year. But we're having new rigs built, and I think once we get the two
operations integrated, we will be able to increase our activity levels even
more. So this is a very, very exciting area for us. I think that San Juan
is a low-cost area of production. This is where we've really perfected the
business model that we refer to as " basin excellence" and I think it's a
business model that Jim and his team has very much embraced. We've now
redeployed that business model of high-concentration, very cost-effective
operations, institutional knowledge of the assets. We've translated that
and transferred it into many other areas of our operations. So, I don't
mean to spend too much time on just one area, but this is a very, very
important area for both of our companies.
Then, if you look -- and Jim mentioned unconventional resource plays. I
will talk just a moment here about several of them. Clearly, we are in the
Barnett Shale, which is a very hot play in Texas. We've been there for
several years, have grown production there, expect to continue growing
production for a number of years into the future. One of the most exciting
things going on right now at Burlington Resources is that we have made a
significant new discovery in an unconventional resource area the Bossier
Trend in northeast Texas. This is an over-pressured Bossier shelf play
where we're dealing with very, very high pressured gas-charged rocks. We're
seeing wells that produce 20 to 30 million a day. This time last year, we
were producing about 10 million a day from this asset. Today, we're up over
200 million a day. We've announced several transactions. When they are all
closed, we will have over 200,000 acres in the Bossier, so a very, very
exciting growth effort for us.
I will talk about one other area, the Cedar Creek anticline, where we have
a horizontal waterflood project, to our knowledge the largest in the world,
underway and we've seen tremendous response as we've implemented that and
down-space the field down to an 80-acre spacing. We expect to continue this
down-spacing effort and continue ramping up production there for the next
several years. We're looking at tertiary recovery options like CO2
injection or possibly even polymer surfactant flooding to increase the
recovery for several more years into the future.
Finally, in western Canada, when we combine the assets of Burlington
Resources, which of course you all know came about as a result of two major
acquisitions, Poco in 1999 and Canadian Hunter in 2001, with Gulf Canada,
which Conoco acquired, we will be a significant operator in western Canada.
You see some of the major areas there. I will focus on just a couple. In
the Deep basin, where we are the largest operator there, we believe that
the Deep basin is a slam-dunk look alike to the San Juan Basin. It's a
series of gas-charged type sandstone reservoirs that are -- I think there's
21 or 22 of them that sit on top of one another. But if you really think
about the Deep basin, that's probably 20 to 25 years behind the San Juan
Basin in its development. It has not even been drilled on 640-acre spacing
throughout the whole area yet. So, we are very early in our resource
assessments of the Deep basin, and we expect this to continue generating
lots and lots of reserve additions and growth opportunities for many, many
years to come.
You see some of the other areas here where we have overlapping operations.
I won't go into great detail about all of them, but again, we believe that
the ability to combine our companies and our operations in western Canada
is going to create tremendous deficiencies and that, as we move forward
together, we will be able to generate significant value for our
shareholders in western Canada.
I will conclude -- I'm going to soon have to put the hat on of both
companies, but I will end by explaining to our shareholders why we think
this transaction is so compelling to our shareholders. You can see the
points on the slide. We've expanded our position in a global energy
picture. Obviously from my very first slide, you saw that we are very much
a North American company. We're going to provide our shareholders exposure
to a much wider global net than we've been able to in the past. Obviously,
this transaction is extremely attractive to our shareholders; it offers a
very nice premium, and the cash component of the deal I think secures
tremendous value for our shareholders.
Then I think that there is a lot of value to be recognized by BR
shareholders by being exposed to a global, integrated company. Obviously,
the refining and marketing business has become extremely profitable, and as
an independent, we had no exposure to that. Our shareholders will now have
that exposure. We create tremendous long-term growth options. We can see,
from our company's standpoint, we can see our growth very clearly for the
next several years, but if you look and combine that with Conoco-Phillips'
large impact, long-term projects that will come on late in the decade and
early next decade, we can envision that the growth element of the combined
companies to be quite strong.
Then finally -- and Jim has alluded to this -- the technical strengths that
we as a company have built over the years -- I mentioned that basin
excellence model, when it is blended with the technical prowess of
Conoco-Phillips, I believe that the combined companies will be first in
class. So we are very, very excited about the opportunity to join this
great company.
With that, I will turn it back over to Jim.
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JIM MULVA - Conoco-Phillips - Chairman, CEO
Thank you, Bobby.
As you see in this next slide, I'm going through the portfolio impact to
Conoco-Phillips as a result of this acquisition. I'm sending a signal back
to get this slide; there it goes. What you see is what we've been talking
about here for the last several moments, so the strengthening of our North
American gas position. You can see the overlap in terms of where we have
presence, both in Conoco-Phillips and Burlington Resources, from western
Canada to the lower 48, the Rockies, the San Juan Basin, Permian,
Panhandle, global trend, East Texas and Louisiana -- a very strong position
where we expect that we can be adding reserves and growing production. That
fits very nicely as we go into the next decade, because we can see here
recently there's quite a bit of progress with respect to the advancement of
the MacKenzie Delta, the Canadian gas pipeline in development, as well as
we're making good progress in the state of Alaska with negotiation to
moving into the next step with respect to the development of the Alaska gas
pipeline. So you look out the rest of this decade and the next decade,
we're going to be a major participant leader with respect to gas production
in North America.
As you can see in this next slide, as a result of the combination of our
two companies and the growth and developments we have in mind just
immediately at this point in time, we are a leading North America gas
producer. We think this is quite distinguishing and not only today but in
the future years, we will create a lot of value and recognition for our
shareholders.
In terms of a major gas supplier, I commented just briefly on this, but
this slide really shows what I've been really talking about. If you look at
the lower 48, the ability of our strong production of gas and ability to
serve the various markets both in the mid-continent, the West Coast and
East Coast. Then that's supplemented over time as we bring LNG resources to
North America and then the Arctic gas coming from the north. So, in a
strategic way and a tactical way, we are participating in the major markets
in terms of -- in North America as a leading gas producer. You can see
(indiscernible) a little slide up in the top of it, a strong gas producer;
we also, as you know, are a very major participant in the midstream part of
the business, the largest NGL producer in the United States through our 50%
ownership in Midstream with Duke, and we are a very large gas marketer. So
we feel we've got the integrated side of exploration and production in
Midstream and the marketing shows us to be a major player with respect to
gas in North America for decades to come.
What does this do with respect to the portfolio of the combined company? As
you can see here, these slides show Conoco-Phillips before and then pro
forma as a combination of the two companies. In terms of our capital
employed in the business, we currently are about a little more than 60% in
E&P and around a little more than 30% refining and marketing. But then
through the combination, our portfolio becomes about 74% E&P and a little
more than 20% refining and marketing. It's not so important that we have to
be at 70% or more than 70% as the result, though, of the investments and
these transactions, but I suspect, going forward, you're going to see our
portfolio be about 70% E&P and maybe a little bit more than 20%, more
towards 25% refining and marketing.
As I said earlier, we feel historically we've always had a strong OECD
presence in North America and the North Sea in Europe. What you can see is
that, through this transaction, we've further strengthened our OECD
presence in terms of nearly 70% and non-OECD about 30%.
Then with respect to the mix of oil and gas, it's important. We would like
to see more gas in our portfolio, but it doesn't mean that we would ever
forego any exploration or development opportunities in oil. But what you
can see is, through the combination, we're probably one of the leading
integrated companies in terms of presence and proportion of gas. By the
way, we take natural gas liquids and include that on the oil side. If you
took a view of gas and natural gas liquids, we would be quite a bit more
than 41%, a couple of percent more than 41%.
In terms of the pro forma operating impact, what you can see is, after we
do the transaction and combine our reserve position, it goes out by about 2
billion barrels, up near about 11 billion barrels and you can see then the
result of this, how we compare with respect to the other large, publicly
traded companies in the industry. Then on the bottom part of the slide,
with respect to production, we'll be moving up towards about 2.3 billion
barrels oil equivalent and you can see, in terms of our size and our
production as we compare with the other large publicly traded companies.
In terms of our production profile going forward, we said at our analyst
meeting back in mid November that, for Conoco-Phillips, we would be at
about 3% going forward over the number of years, and that hasn't changed,
by the way, as a result of the transaction. So -- but we see ourselves as,
again, confirming that we're going to be about 3% up as we go forward.
Now, as I said at the November analyst meeting, for the existing or the old
Conoco-Phillips, it's around 3% going forward. LUKOIL certainly believes
they are going to be well north of 3% growth, and Burlington Resources on
their own are north of 3%. So individually and collectively, we stay right
with what we set, growth about 3% a year going forward.
In terms of synergy estimates -- $375 million pretax. We feel quite certain
that we can accomplish these synergies that we would be looking forward to
doing even better. You can see how it's broken out; it's made up of general
and administrative on the corporate side, it's doing away with redundancies
and savings, consolidation of regional offices. We feel quite certain that
we can certainly become more efficient, lower our costs, optimize our
exploration program, other operating expense reductions. Then through our
production and all, we see that there may be opportunities for enhancements
on the revenue side. So the bottom line is we feel pretty confident that we
can do $375 million in pretax synergies.
In terms of the financial side of the transaction, as we said, we see that
it's certainly accretive to cash flow per share and I have a subsequent
slide here, so I will show you that. It's somewhat dilutive to earnings per
share in 2006 when you use First Call estimates, but it's accretive if you
look at strip pricing the 2006. It's dilutive to GAAP, return on capital
employed, but if you adjust as if it were a pooling versus a purchase, then
it's accretive.
As a result of a low-cost barrel oil equivalent of operating costs for
Burlington Resources, the combined company operating cost of our production
reduces somewhat, and you'll see here in another slide there is a
significant excess cash flow that we see will be applied very quickly to
reduce the debt that's associated with respect to this transaction.
Now, a little bit more with respect to accretion and dilution -- in terms
of First Call, if you use First Call earnings, then this transaction, in
terms of earnings per share, is dilutive about 2% in 2006 and a little bit
near 4% in 2007. On the other hand, if you use strip pricing, then it's
somewhat accretive, in the neighborhood of about 2 to 3%.
Now, with respect to cash flow per share, at First Call, you can see it's
6% in '06, 4% in '07. If you look to strip, it's around 10% accretive cash
flow per share.
I'm going to go through a number of slides to demonstrate the power of.
This transaction with respect to cash flow. As you see at the top of -- the
slides are out of order can you go back one slide? Okay. In terms of
discretionary cash flow, look at the top of the slide, the subpoint there;
it says First Call prices. So for the next two slides, I'm using First Call
assumptions. Then when you take that, the net income of the combined
companies, at 2006, it's 14.9 million, 13.6 million in '07. The cash flow
is 23 million and 22.8 million. Our capital expenditures, when you combine
what was just recently announced by Conoco-Phillips, Burlington Resources,
and giving consideration also to the acquisition that we just announced
Conoco-Phillips (indiscernible) refinery in Germany, as well as increasing
our investments to ultimately own 20% of LUKOIL, that's all factored into
this capital spending of 17.2 and 15.4 in '06 and '07.
Then, you see the net cash flow at First Call prices. It was nearly $6
billion in '06 and $7 billion in '07. So if we take that net cash flow and
apply it to debt reduction, you can see, in this next slide, what the
balance sheet looks like. Well, the debt grows over the next -- or not the
debt but the equity grows over the next several years up near 90 and $100
million. At the end of -- using First Call, at the end of '06, the absolute
level of debt of the combined company at the end of '06 is $25 billion. You
can see how it comes down to 19 and 17. The debt ratio at the time of the
combination is nearly 30%. But at the end of '06, it's 23%, and you can see
how rapidly it comes down. So, as far as the balance sheet goes, we've
moved very quickly right back towards our long-term objective of being 15
to 20% debt ratio.
Now I go to the next slide, and the same two slides, only at the top, you
can see it's using strip prices. If you believe strip prices will continue
for '06 and '07 as we know them today or actually not today but two or
three days ago, you can see the net income for '06 is $20 billion, 19
billion in '07. You see the strength of the cash flow of the combined
company -- nearly $30 billion. Then you see capital spending, 17 and 15.
The net cash flow, if you are looking at strip, is $11 billion in '06 and
13 billion in '07. By the way, I want to indicate to you that we do not
premise any asset sales in terms of accomplishing the financial plan that
you see. We like the assets that we have in Conoco-Phillips and we like the
assets in Burlington resources, so we continue on with our organic growth;
it's no premise of asset dispositions.
So if you take this cash flow and apply it towards debt reduction -- we go
to the next slide -- then you can see the growth of the book equity up to
100 and more than $100 billion. Then at the end of '06, the debt comes down
from nearly $30 billion within 12 months down to $19 billion. The debt
ratio is well below the target, so what we would see ourselves actually in
this scenario going forward, as we bring the debt down probably very
quickly towards $15 billion, ultimately maybe 10 to $15 billion, we like
the debt ratio at 15 to 20%. Through all of this, by the way, we feel very
strongly about the discipline of annual dividend increases, so that would
be factored into our financial plan. If this is the scenario we look at
then, we would be looking at some pretty aggressive share repurchases, even
within a year or two.
I think what we're really trying to say is what's so unique about this
transaction is that, within two or three years of the different assumptions
in terms of pricing, we pay back all of the debt associated with the
transaction, so effectively what we end at that point in time -- and that's
before repurchase of shares -- we effectively, after two or three years,
have paid back half of the transaction. We still have at least 2 billion
barrels oil equivalent, hopefully more as a result of the growth program
adding reserves, and we still have the same amount of production and
hopefully as we grow production, more than the production we currently have
today. That's the compelling part of this transaction, is how quickly the
cash you pay back for half of the transaction and you end up even at that
point in time before you start buying shares back, in this kind of a
pricing environment, if you have the same reserve base and conservatively
the same reserve base and the same production.
In terms of what I said earlier on return on capital employed in this next
slide, if you use First Call estimates, you can see that whether you use
normal GAAP or adjusted, on normal GAAP, the adverse impact to return on
capital employed is 5%. If adjusted, it's about the same. If you use strip,
it's still about 5%; adjusted, it's actually just a little bit up.
Going really to the last slide that I have and then Bobby and myself will
respond to questions that you have -- from a Conoco-Phillips perspective, a
very unique opportunity for our company to essentially acquire a very
high-quality, long-life, low-risk North American reserves. As we've
indicated in the presentation, it enhances the growth of our reserve base
and our production; it lowers our operating cost. We have a real asset --
significant access to unconventional resource plays in North America -- not
that we feel that we have to rebalance the portfolio but it does move it
more towards E&P than downstream, up towards 70, a bit north of 70% in
upstream versus downstream. We like the emphasis on growing our position in
OECD, in particularly North American gas.
The long-term financial strength of the Company is intact; it's further
enhanced. As you saw from my earlier comments, we see ourselves paying back
all the debt associated with the transaction within two or three years. We
find ourselves effectively with half the capital invested, with the same
reserve base, the same production, and the upside that comes from additions
to reserve and production. So we feel very, very strong about this.
The last point that I will make -- I know it's always when you step forth
to making sizable investments and transaction like this, I think our
company -- we have a pretty good track record in terms of what we've
accomplished in prior transactions with respect to acquisition of Arco
Alaska. We've just done very well with respect to production profile,
realizing synergies and value for the shareholder. We did the same thing
with respect to the Tosco acquisition. Obviously, we were helped by the
marketplace and crack spreads, but the synergies and the ability of what we
could do with the Tosco transaction in developing really a very strong
refining and marketing organization in North America as well as around the
world. I think we've demonstrated that we know how to do that. We've
stepped out pretty aggressively in realizing the benefits of the LUKOIL
transaction, and now we have another very significant new, large
transaction. We feel very confident that, with respect to our expectations,
that we certainly can deliver with respect to what we say we're going to
do. This will all translate over time to shareholder value-creation.
So I think I will stop at this point in time. Bobby and myself will
entertain questions that you might have.
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Q U E S T I O N S A N D A N S W E R S
MODERATOR
Okay, thanks, Jim and Bobby. If you would like to ask a question, we will
get a mic to you, and if you would stand to ask your question and state
your name and who you represent, that would be very helpful.
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MARK FLANNERY - Credit Suisse First Boston - Analyst
It's Mark Flannery at CSFB. Jim, there's been a lot of talk about NYMEX
pricing today and some of these financial figures have been quoted using
the strip pricing. Are you considering hedging any of the BR production? If
not, why not?
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JIM MULVA - Conoco-Phillips - Chairman, CEO
Well, our history, as you know, is that we do not hedge in terms of prices.
That's probably what we will likely do, but I will say, given the
marketplace and the size of the transaction, we're going to take a good
hard look at that.
I'd like to also say, though, that when we looked at doing the transaction,
although our slides indicated looking at consensus view of earnings and
prices, as well as the strip -- when we look at the transaction and to
justify and look at it and making sure that we're satisfied with this
transaction, the combination in our portfolio, we look at gas prices that
are significantly less than we see in the marketplace today -- quite a bit
less than what we see.
So, you make a good point, Mark. Historically, we don't hedge but we're
going to take a good, hard look at that to see whether it's appropriate for
us to do that for some amount of it, at least in the short-term.
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OPERATOR
Kate Lucas (ph) with JP Morgan.
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KATE LUCAS - JP Morgan - Analyst
What long-term natural gas price did you use to (inaudible) the transaction?
------------------------------------------------------------------------------
JIM MULVA - Conoco-Phillips - Chairman, CEO
Well, for our company, the long-term national gas prices are higher than
what we've seen in the last five or ten years, but for us, I think
long-term natural gas prices are more in the neighborhood of maybe 7 or $8
per Mcf. I don't know John, or John, do you -- I mean we look at that
medium-term. We also do a stress test, though. I think that's what John is
indicating -- a stress test -- that we look at prices more in the
neighborhood of $5 per Mcf. I'm making sure that we're satisfied what it
would look like in our portfolio. But I think, realistically, we look out
for probably 7 or $8 over the next several years. Not that we say it's
going to be 7 or $8; we don't premise the acquisition and the financial
results necessarily to be prices that we see today.
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NEIL MCMAHON - Sanford C. Bernstein - Analyst
Neil McMahon, Sanford Bernstein. I've got a number of questions. The first
is we're just about to go into winter; we are sort of harboring (ph) in
there at the minute. We've got $15 natural gas prices or there about. Is it
not a strange thing to do, a big deal such as this, given the commodity
price environment? Are you considering the fact that $15 of where we are at
today into next year is pretty much the average price we're going to get?
It seems a bit odd. Why wouldn't you do this in, say, March, since you
weren't in a competitive environment for the deal? I've got a follow-up as
well.
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JIM MULVA - Conoco-Phillips - Chairman, CEO
Well, I think both of us could comment in terms to your -- I think your
first question really was is this a strange time to do this transaction?
One of the things that happens, when you look at a very large, significant
transaction like this, you have to have both a willing -- two parties
participating in it. We've worked and thought, talked about this for a
number of years, a number of months, and it has just come, at this point in
time, that it's opportune for both companies to do at this point in time.
So, we can't set the timescale exactly to where we might have wanted it,
nor necessarily could Burlington, but it just has come at this point in
time that we could do it.
I think you had another question in terms of continuation of the price?
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NEIL MCMAHON - Sanford C. Bernstein - Analyst
The second question was basically you basically have to hold onto the
employees so you made a point in Burlington. Maybe it's just worth going
through what packages you're offering Burlington employees that will be
transitioned over to Conoco-Phillips. When you look at the environment out
there, given the lack of new employees coming onto the marketplace, what's
to stop them walking under across the road in Houston and going to pretty
much any other shop, given the prices that are floating around? How big a
risk do you see this in the deal losing that skill base?
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JIM MULVA - Conoco-Phillips - Chairman, CEO
Well, we recognize what you're saying and we're going to certainly --
ourselves and working together with Bobby and Randy Limbacher and the
management team of Burlington Resources -- have the packages in place to
make sure that we maintain the retention of the people that we need and
want and welcome them to Conoco Phillips.
But with respect to the timing of the transaction and that second question,
maybe Bobby could give some further comment.
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BOBBY SHACKOULS - Burlington Resources - CEO
I will be happy to. We are, as we speak, forming integration teams to
address the issue that you're talking about. We have very good retentive
plans in place for our employees and Conoco Phillips has committed to put
further retention vehicles in place. In the very short future here, we will
be rolling those out to our employees.
The way this deal works is we have an independent business to run between
now and the time the deal closes. I am absolutely confident that our
employees will be the professional people that they truly are, and will
conduct themselves in that matter and execute on the business plan, the
very successful business plan that we have. Then, Jim has made it quite
clear that one of the things that has attracted Conoco Phillips to BR is
that team and the ability to execute on the base in excellence model. So
constantly, I believe that, by the time we get there, that our folks will
feel very, very welcome and will be an integral part of the Conoco-Phillips
team.
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DOUG LEGGATE - Smith Barney Citigroup - Analyst
It's Doug Leggate from Citigroup.
I also have a few questions. Bobby, if I could ask you first of all to
maybe respond to your shareholders. If Conoco is taking out a little more
aggressive view perhaps, on long-term natural gas prices, what level do you
think the sale price of Burlington represents in terms of the long-term
natural gas price outlook? Is there a gap between your perception of what
you think is sustainable and what Conoco believes is sustainable, in terms
of how they can create value? And I have a follow-up.
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BOBBY SHACKOULS - Burlington Resources - CEO
Well, like Steve Shapiro likes to say, you never know where you are in a
cycle until it's over with. But what I would tell you is that, clearly, gas
prices are at record levels right now, but if you look at the curve, it's
very backwardated. In FOUR years, it's back in the 7 to $8 range. I think
that the median pricing levels for natural gas has clearly changed from
what it was three, four, five years ago. Exactly what number that discounts
into our stock price I can't tell you that. But clearly, from our
perspective, we felt like this was a fully valued but fair transaction and
thoroughly endorse it.
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DOUG LEGGATE - Smith Barney Citigroup - Analyst
Thank you. I guess my follow-up then to Jim is, well, if this is a
fair-value transaction, how aggressive do you have to be in your outlook
for long-term natural gas prices to see value creation as opposed to
looking at this on an earnings basis? I guess could you give us some color
on how you see on a (inaudible) reserves in terms of the acquisition price?
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JIM MULVA - Conoco-Phillips - Chairman, CEO
Well, hopefully I've responded to that earlier; we don't see necessarily a
continuation of gas prices that we've seen here recently going out during
the long-term. What we really look at is prices more in the 7 or $8, not
different from what Bobby has said, and if they are north of that, it's all
better with respect to the transaction. We test it also at $5 per Mcf the
numbers don't look particularly good at $5 per Mcf but on the other hand,
we can live with it in terms of its presence in the portfolio. We don't
think we're going to see $5 per Mcf gas prices. Quite likely, we will see 7
or $8 and a pretty strong belief that we will see double-digit gas prices
as we go out over the next year or two, or three years.
What's compelling to us, though, is that we take the cash flow and over a
two or three-year period of time, we pay off all the debt associated, which
is half of the transaction -- in two or three years. What we end up with is
so compelling to our shareholders, we end up with at least 2 billion
barrels oil equivalent, primarily gas resources in North America, with a
production profile the same as we see today or higher, going forward. To
us, that's kind of hard to replicate -- the quality and strength of the
resource base and the growth profile. What you see in North America was
such a pure-play of all these assets of Burlington Resources. So, although,
as I said earlier, we can't control -- just ourselves -- the timing of a
transaction like this, it takes two companies and two parties to make that
happen, we still see it as a unique opportunity. In two or three years, we
know how to manage debt quickly, pay it off quickly, and what we end up
with is the strength of a portfolio base and a positioning of more gas,
more North America, more OECD, more of a portfolio of E&P about 70%. That's
the compelling side.
This transaction is not done because gas prices are at $14 per Mcf. It's
done with the idea of the medium in the long-term, positioning ourselves,
growing our portfolio, our reserves and production in a way that we quickly
pay off. It goes back to Mark's question, are you going to take a look at
potentially hedging a piece of the price risk as you go out over the two or
three years and make sure you get in the position you want to be in two or
three years.
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MARK GILMAN - Benchmark Capital - Analyst
It's Mark Gilman from Benchmark Company. Two questions, if I could? First,
to borrow a phrase from another large North American natural gas producer,
I wonder if both Jim and Bobby as well could comment on the unbook resource
potential as you see it and give us a sense how tightly engineered a number
that is, the way you look at it.
The second question, a little more specifically, headcount reductions --
Jim, what goes into your synergy numbers in terms of the assumed benefits
of regional office closings as well as corporate reductions?
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JIM MULVA - Conoco-Phillips - Chairman, CEO
Okay, Bobby, do you want to take the first one?
------------------------------------------------------------------------------
BOBBY SHACKOULS - Burlington Resources - CEO
Yes, I will be happy to talk about unbooked reserves. It's clearly been one
of the most important parts of our story, which is what we call inventory
assessments. At the end of last year -- and this is an annual process, so
it's ongoing right now -- we had 7 trillion cubic feet equivalent of
inventory drilling opportunity. That represented over 9000 projects, and
about half of that is booked as proved undeveloped reserves, so that left
another 3.5 trillion cubic feet that would represent projects that don't
qualify for booking under SEC guidelines but that definitely will be
drilled in our business plan over the next three, four, five years.
I won't give you a number but I will tell you that, as we've gone through
this year and we have concluded resource assessment studies throughout our
operations, that number will definitely increase as we finish the booking
process at year-end. So, that is an area that we hold very dear to our
hearts, because we think our inventory development and the assessment of
that inventory is differential to many others when they talk about what
kind of inventory they have. Ours is risk; it is economic at $5; it is
netted for our interest and it is all stuff that we definitely plan to do
and have in our business plans going forward.
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JIM MULVA - Conoco-Phillips - Chairman, CEO
Okay, with respect to headcount, I think Burlington Resources has about
2400 employees. Obviously, you don't need to duplicate corporate
headquarters; you don't have to have two CEOs, executive -- (LAUGHTER) --
executive members on a staff, and also there's some pretty significant
reduction with respect to that. You don't have the same thing in terms of
SEC filings (indiscernible) all of that, so on the corporate side, you're
going to have savings but not necessarily a lot of people associated with
those savings.
The staff side, the staff side supporting -- I'm saying the IT side, the
financial and accounting side, all of that, there's probably going to be
some pretty significant reductions as we put the companies together.
On the operating side of the company, you're going to see probably some
consolidation of offices or whatever, but as a combined company, as I said,
first of all, we really need and want the Burlington Resources personnel
and operating side with their base and model of excellence, and we think we
can roll that into our company and really learn a lot and create a lot of
value for the shareholders. So, with 2400 employees, there's not going to
be a lot of reduction. It's going to be on the corporate side and the staff
support side, and to the extent of the operating side, we think that we
certainly could be putting together the best teams that we can. But then we
also see that there would be a lot of opportunities for the operating side
of the company, (inaudible) both companies if it doesn't fit North
America/Canada, it will have a lot of opportunities in other parts of our
portfolio on the E&P side of the Company.
So, reduction in headcount -- we don't have a specific number but when you
start off with 2400 employees, it's going to primarily be on the corporate
side and the staff support side.
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UNIDENTIFIED AUDIENCE PARTICIPANT
(Inaudible question--microphone inaccessible) -- and what Bobby had suggested?
------------------------------------------------------------------------------
BOBBY SHACKOULS - Burlington Resources - CEO
No, we are not looking for something more. We don't have different views
than what Bobby has indicated but we do feel, as he indicated, that it's a
good opportunity to add in reserves as we go forward, just as you've
indicated.
------------------------------------------------------------------------------
JIM MULVA - Conoco-Phillips - Chairman, CEO
No, we are not taking -- we are not taking a more aggressive approach than
what Bobby has indicated in his plan for Burlington Resources that he
shared with the financial community in the past.
------------------------------------------------------------------------------
UNIDENTIFIED AUDIENCE PARTICIPANT
But you are comfortable with his number as -- (multiple speakers)?
------------------------------------------------------------------------------
JIM MULVA - Conoco-Phillips - Chairman, CEO
Very comfortable, yes. Very comfortable with his number and we've done the
due diligence.
------------------------------------------------------------------------------
JOHN HERRLIN - Merrill Lynch - Analyst
John Herrlin, Merrill Lynch.
Can you address, Jim, your cost allocation for the purchase? It says here
you have about 11 billion in goodwill. I was wondering about unamortized
properties, what you have associated with that.
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JIM MULVA - Conoco-Phillips - Chairman, CEO
Okay, with respect to cost allocation, I don't -- John or, John do you want
or see if you can respond to that? (indiscernible)
------------------------------------------------------------------------------
JOHN LOWE - Conoco-Phillips - SVP Strategy & Development
You see, in the appendix, that what we've done is just looked at
(indiscernible) valuation and put the (indiscernible) -- made an assessment
of goodwill based on that. It will actually be -- the final number we will
actually be making on a third party appraisal, so what we're saying is that
the number is the 11 to true (ph) goodwill and I think it's -- I forget --
some deferred tax (indiscernible) to that (indiscernible) and so and then
you have the DD&A, but it's all -- the allocations are all in the appendix.
In terms of a breakdown between proved, and proved producing and proved
unproducing, we didn't -- it's largely been allocated -- to come up with
the DD&A, it's largely been allocated to the producing properties. We
didn't get that specific at this point.
------------------------------------------------------------------------------
DOLORES BAMFORD - Goldman Sachs - Analyst
Dolores Bamford from Goldman Sachs Asset Management. We just had a question
on how this transaction, the impact to your long-term strategy for the
upstream in terms of greater interest in maybe being consolidated in the
North American natural gas market, or in -- looking differently in terms of
your growth rates around the world in your various basins and in terms of
what you see long-term in terms of normalized F&D costs for the upstream.
------------------------------------------------------------------------------
JIM MULVA - Conoco-Phillips - Chairman, CEO
If I understood the first part of the question is how does this transaction
impact the long-term direction and strategy of Conoco-Phillips? Well,
everything that we've announced has historically over the years at our
financial analyst meeting in November, we will continue straight-on doing
in terms of growth and internationally -- Asia, maybe Russia, Caspian,
North America, and so this transaction is really an addition that
complements and it supports. We won't change our strategy at all; we just
complement and add to it and we think it further strengthens, particular
further strengthens our position in North America.
In terms of operating costs, we said we -- combined we will result in lower
combination of operating costs in terms of finding and development costs. I
think it is going to help us with respect to being even more competitive
than the existing Conoco-Phillips portfolio. But I think I'll ask Bobby to
comment on in terms of what he foresees going forward, in terms of
Burlington Resources compared to the past and going forward -- his view in
terms of finding and development costs.
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BOBBY SHACKOULS - Burlington Resources - CEO
Well, clearly there's pressures on the whole industry that will impact
finding and development costs in their own rise (ph) but I think that if
you look -- of course, our comparator group will now change, but if you
look at BR versus its peers, we've actually been one of the lowest-cost
operators in terms of Finding & Development costs. I believe our Finding &
Development costs last year was about $1.27, and our three-year average was
something like $1.23 or something like that.
We do expect to see that number go up somewhat this year because we've
spent quite a bit more money on positioning ourselves for future growth
through land acquisitions and bolt-on transactions that don't have a lot of
upfront reserves and production that have a lot and lots of drilling
opportunities to go on with them. However, having said that, we clearly
expect, because of our advantage on the cost side of the equation, to still
be sector-leading in terms of F&D costs.
Now, when you put back into the overall Conoco-Phillips scheme, it will
have the impact of lowering it. I'm not conversant enough with Jim's peer
group to really tell you how that fits, but I do think it will have a
meaningful impact in terms of lowering the overall F&D costs.
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DAN BARCELO - Banc of America Securities - Analyst
It's Dan Barcelo from Banc of America.
Quick thoughts regarding LNG -- if you could just give us a quick update on
your long-term LNG projects and compare some of the economics of those
projects to the gas acquisition you did today. Then also, now you have a
very enviable gas position in North America. Would you consider some swaps
of that to gain more share in LNG? Then I had a quick follow-up.
------------------------------------------------------------------------------
JIM MULVA - Conoco-Phillips - Chairman, CEO
In terms of the LNG projects, we're getting very close and hopefully we
will be signing up our Qatar Gas III project later this month, so going
forward, by which we bring significant gas to the Gulf Coast of the United
States -- no change in that. In other words, it's progressing just as
scheduled. We are also, as you know, on the short list (indiscernible) for
the Stockland LNG project in the Bering Sea in the North Russia who
continue to work very hard and it's very important to us, working with gas
from -- we hope to be very competitive to be listed and be a participant in
that by which we bring gas, LNG, to the U.S. market. We are also looking at
the opportunities and (indiscernible) projects in Nigeria, export to the
U.S. and possibly to Europe, and ultimately over time LNG from Venezuela.
Then we also have LNG, a nice position at the Gulf (indiscernible) and the
Timor Sea. Bayou on down (ph), which we -- our first LNG shipment from
Darwin to Tokyo (indiscernible) Tokyo Gas will take place in January of
'06, so everything in Bayou on down in gas is going right on schedule. In
fact I think we are going to have several cargoes of early gas and LNG than
we expected when we put our operating plan together several months ago.
Then, in the Timor Sea, we've made a discovery, Cal Vida. You see what's
been taking place in terms of (indiscernible) saddling some issues between
East Timor and Australia (indiscernible) opportunity at sunrise and we
think we've a very strong position in Bayou and maybe we can, over time,
enhance the duration of that project. So everything is developing like we
would see in LNG.
With respect to LNG that's coming to the United States, we obviously are
looking at putting in (indiscernible) costs that is actually equivalent or
less then the 7 or $8 per Mcf that we talked about earlier in terms of gas
prices in the U.S. But most of that gas will not start coming until
2009-2010; Russian oil comes somewhat later than that. So it's quite a
number of years between now and then in terms of as you look at this
transaction.
But in terms of cost metrics, these LNG projects are large investments.
They generally are mid-teen unlevered returns, midteen to low teen
unlevered returns, but essentially the target delay in gas in the
neighborhood of 4 to $5 per Mcf and realize those returns.
------------------------------------------------------------------------------
DAN BARCELO - Banc of America Securities - Analyst
Thank you. Just a quick follow-up related to scale again -- this
transaction really moves you up a few notches in size, essentially right
behind Totale (ph); that's very big growth compared to where you were four
or five years ago. I just wondered if you could comment globally on what
kind of pressures you face from other smaller, integrated or even nation
states as everyone is attempting to get more resources.
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JIM MULVA - Conoco-Phillips - Chairman, CEO
Well, maybe I would go back one other question that you said earlier --
swaps. Given our position, we would be interested in swapping I guess
assets and positions to do something differently. Well, that's always
possible, but we really, as I said earlier, we're not interested in selling
anything; we like the assets of Conoco-Phillips; we like the assets of
Burlington Resources. It would have to be something very unique and very
opportunistic for us to want to do that. Swaps are easy to talk about,
difficult to do.
I couldn't follow exactly your other question, but I think it had to do
with the competitive pressures that we see around the world that are
developing -- access to resources, competition from state-owned oil
companies or whoever that continue to materialize and all. We see it very
competitive, more competitive than I've ever seen it in my lifetime and
it's probably going to continue to exist and persist, so access is so
important. We have not done this transaction because we're so interested in
just getting access. We went through the fundamental reasons why we are
interested in this combination. But on the other hand, access to North
American gas resources in the way that this transaction has done is very
unique and certainly supportive of the competitive nature we find ourselves
where our company combination really goes a long way towards access -- 2
million barrels oil equivalent, 85 to 90% gas North America, essentially
very well developed with a growth profile is a pretty compelling
transaction, particularly when you can see paying half of it off and reduce
your capital employed within two or three years. It's hard to replicate in
other parts of the world.
One final question.
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BEN DELL - Sanford C. Bernstein - Analyst
Ben Dell from Sanford Bernstein. When you look at Burlington's year-on-year
numbers, they show a 18% increase in the cost base, and even if gas prices
stay flat at 7 to $8 an Mcf annualized, it implies you are buying a company
at peak returns, peak margins, given the continued cost inflation. Do you
believe that's something that you can offset -- that Burlington couldn't
offset and therefore do something differently? If not, why is this a good
time to buy Burlington, especially when you're paying $18 barrel versus
buying your own stock at $10 a barrel, or other E&Ps at $12 a barrel, or
organic exploration at $8 a barrel?
------------------------------------------------------------------------------
JIM MULVA - Conoco-Phillips - Chairman, CEO
Well, I think I go back -- I mean, I understand your question, and it goes
-- why won't you take the money and reinvest by share repurchase or enhance
dividends and all of that? What we look at fundamentally as a company, we
intend to be in this business, for the medium to long-term, for decades to
come. And so, what we see is, yes, gas prices may go back to 7 or $8 per
Mcf, but I don't think they're going to be 7 or $8 over the next two to
three years. So what's compelling is the unique opportunity that I just
said -- for us, 2 billion barrels oil equivalent, and at the end of two or
three years, capital employed is half because we paid back half of it in
the form of the cash or the debt that we used to fund the acquisition. We
end up with 2 billion barrels of oil equivalent, a growth profile in terms
of production from where we are today; we can't do that otherwise.
Now, I recognize (indiscernible) you need to buy your shares and buy your
own production, and you look at it and you say, you are buying it at a
lower price (indiscernible) do this transaction. The long-term is you look
at the growth and the development of the portfolio of the company, it's a
compelling transaction. We have the financial resources and wherewithal to
do it. That's essentially the reason that we've done it.
------------------------------------------------------------------------------
UNIDENTIFIED SPEAKER
Could I add something to that? You talked about the cost increases
year-to-date, 18%. I would like to point out that the whole industry is
being exposed to these cost pressures and through a number of efforts on
our part, we have been able to contain the cost pressures that we've been
under. If you look nine months year-to-date compared to our peer group,
we're still the lowest-cost operator in that group. So consequently, we've
been very successful at trying to combat the cost issues that the whole
industry is facing.
------------------------------------------------------------------------------
UNIDENTIFIED SPEAKER
(technical difficulty) -- I would like to make is, I mean, I understand if
you look at cost per barrel and you look at return on capital employed but
look at the cash flow accretion, cash flow accretion of 5 to 10%. That's
pretty strong and compelling, why -- and we have the wherewithal and the
resources to make this transaction and this investment. That's really
what's driving us in terms of putting the portfolio together in a company
that (indiscernible) for the very long term, and the cash accretion in
terms of for the company and accretion in terms of cash flow per share, and
reserves per share is pretty compelling to us.
------------------------------------------------------------------------------
UNIDENTIFIED AUDIENCE PARTICIPANT
(Inaudible question--microphone inaccessible).
------------------------------------------------------------------------------
JIM MULVA - Conoco-Phillips - Chairman, CEO
Well, I thought I pretty well covered that. We can talk more -- I think
Mark had a question, another question.
------------------------------------------------------------------------------
MARK GILMAN - Benchmark Capital - Analyst
Mark Gilman from the Benchmark Company again. I want to talk a little bit
about the production growth numbers. If you would, Jim, could you compare
what you've built into the slide that talked about production growth,
relative to anything that Bobby and Burlington might have previously
articulated? Also, just get a bit more specific understanding which of the
basins that Burlington is concentrated in is going to deliver the growth
and what kind of underlying decline rate assumption is being included?
------------------------------------------------------------------------------
JIM MULVA - Conoco-Phillips - Chairman, CEO
Okay, Mark, I know you were at the Conoco-Phillips mid-November analyst
meeting. So there's no change in what we've said about Conoco-Phillips. We
are not premising anything more or less than what Bobby is indicating for
Burlington Resources. What you see in the slide is a combination of what we
presented for Conoco-Phillips and what Bobby has indicated he is going to
do.
In terms of the growth of where this is coming from in Burlington
Resources, I think Bobby can cover it.
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BOBBY SHACKOULS - Burlington Resources - CEO
Sure. I think that, if you really look at our asset base, in San Juan, that
is a huge cash flow generating machine that is flat to, once we combine
that two companies, possibly even growing slightly. It's just very
difficult to grow a 1.3 billion cubic feet a day base, but nonetheless,
even if you can just keep it flat, that's a heck of an accomplishment.
Canada is the same way -- a huge resource base. Where the growth comes from
are places like the Bossier, the Barnett, the unconventional resource plays
that I showed earlier, and then in the Cedar Creek anticline of the
Williston Basin, we're continuing to see growth there. So, if you put all
of that together, we have a couple of international projects that are
coming online. Our stated growth objective over the years had been 3 to 8%.
We kind of (indiscernible) towards the middle to upper end of that range, I
believe, in '06, but when you layer that in on top of Conoco-Phillips,
because of the size, I don't know whether it's enough to move the needle or
not. I think Jim is indicating that they are sticking by their 3% growth
objective.
------------------------------------------------------------------------------
UNIDENTIFIED AUDIENCE PARTICIPANT
(Inaudible question--microphone inaccessible).
------------------------------------------------------------------------------
BOBBY SHACKOULS - Burlington Resources - CEO
Well, companywide, I can't get into it on a basin-by-basin basis, but I can
tell you that, on a companywide basis, our overall decline rate is less
than 20%. So, that is very differential to our peer group.
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MODERATOR
Okay. Let me remind everybody that, at 1030, there will be a media Q&A.
Please refer to your press release for information on that. Thank you, Jim.
Thank you, Bobby for presenting to us this morning. We thank you for our
interest. Our session is completed.
(APPLAUSE).
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OPERATOR
Thank you. This does conclude today's Conoco-Phillips/Burlington Resources
Investment Community Conference Call. You may now disconnect your lines,
and have a wonderful day.
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D I S C L A I M E R
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In the conference calls upon which Event Transcripts are based, companies
may make projections or other forward-looking statements regarding a
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that the results contemplated in the forward-looking statements will be
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THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION
OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO
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OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS.
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CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING
INFORMATION FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for the historical and factual information contained herein,
the matters set forth in this filing, including statements as to the
expected benefits of the acquisition such as efficiencies, cost savings,
market profile and financial strength, and the competitive ability and
position of the combined company, and other statements identified by words
such as "estimates, "expects," "projects," "plans," and similar expressions
are forward-looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to risks and uncertainties that may
cause actual results to differ materially, including required approvals by
Burlington Resources shareholders and regulatory agencies, the possibility
that the anticipated benefits from the acquisition cannot be fully
realized, the possibility that costs or difficulties related to the
integration of Burlington Resources operations into ConocoPhillips will be
greater than expected, the impact of competition and other risk factors
relating to our industry as detailed from time to time in each of
ConocoPhillips' and Burlington Resources' reports filed with the SEC.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their dates. Burlington Resources Inc.
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
ADDITIONAL INFORMATION
In connection with the proposed transaction, ConocoPhillips will file
a Form S-4, Burlington Resources will file a proxy statement and both
companies will file other relevant documents concerning the proposed merger
transaction with the Securities and Exchange Commission (SEC). INVESTORS
ARE URGED TO READ THE FORM S-4 AND THE PROXY STATEMENT WHEN THEY BECOME
AVAILABLE, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION REGARDING THE MERGER. Investors may
obtain a free copy of the Form S-4 and the proxy statement (when available)
and the other documents free of charge at the website maintained by the SEC
at www.sec.gov.
ConocoPhillips, Burlington Resources and their respective directors
and executive officers, may be deemed to be participants in the
solicitation of proxies from Burlington Resources' stockholders in
connection with the merger. Information about the directors and executive
officers of ConocoPhillips and their ownership of ConocoPhillips stock will
be set forth in the proxy statement for ConocoPhillips' 2006 Annual Meeting
of Stockholders. Information about the directors and executive officers of
Burlington Resources and their ownership of Burlington Resources stock is
set forth in Burlington Resources' proxy statement for its 2005 annual
meeting, which was filed with the SEC on March 10, 2005. Investors may
obtain additional information regarding the interests of such participants
by reading the Form S-4 and proxy statement for the merger when they become
available.
Investors should read the Form S-4 and proxy statement carefully when
they become available before making any voting or investment decision.