1. Johnny Bradberry ConocoPhillips October 27, 2003 Gas Supply Outlook for the Gulf of Mexico

6.  Fundamentals/Current Situation  Supply Sources  Hurdles/Challenges  Perspectives Outline

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8. Source: MMS 2003 GOM Field Discoveries Discovered 1947-1959 1960-1969 1970-1979 1980-1989 1990-2000

9. Source: MMS GOM Gas Reserves & Production Reserves Additions by Discovery Year Annual Gas Production 194519501955196019651970197519801985199019952000 0.0 2.0 4.0 6.0 8.0 0.0 2.0 4.0 6.0 8.0 Annual Gas Production (TCF) Annual Reserves Additions (TCF) Annual Gas Production (TCF) Proved Gas Reserves (TCF)

10. 50 100 150 200 250 300 350 400 0 20 40 60 80 100 120 140 160 While Number of GOM Shelf Discoveries Has Increased, Field Size Has Dropped 0 1950-19591960-19691970-1979 Number of New Field Discoveries Average Reserves Per Field (MMBOE) Number of New FieldsAverage Field Size # New fields 1980-2003 Avg. field size Source: MMS/PFC Energy Consultants

11. Discoveries & Reserves – GOM Deepwater 1950-19591960-19691970-19791980-19891990-19992000-2002 Number of New Field Discoveries 0 30 60 90 120 Average Reserves per Field (mmboe) Number of New FieldsAverage Field Size (Right Axis) Number New Fields (Left Axis) Number Of Fields Discovered & Average Reserves per Field By Decade Deepwater (Water Depths At Least 1,000 Feet) Includes Proved & Probable Reserves 10 20 30 40 50 60 70 0 Source: MMS/PFC Energy Consultants

12. TotalShallow Water Portion (< 1000')Deepwater Portion (> 1, 000 ft) Gas Production from the Shelf is Declining While Deepwater Gas Production is Rising Gulf of Mexico Gas Production Total vs. Shelf and Deepwater 278 381 560 846 999 1,180 1,269 4,955 5,015 4,624 5,078 5,145 5,041 5,057 3,355 3,835 3,946 4,205 4,481 4,800 4,764 0 1,000 2,000 3,000 4,000 5,000 6,000 BCF / Year 1996199820002002 (est.) 199719992001

13. Source: NPC 2003 U. S. and Canadian Natural Gas Supply

14. Sources of Incremental Natural Gas Supply, 2000-2025 (trillion cubic feet) Gulf Slope Source: NPC 2003 Mountain Alaska Other Lower 48

15. Source: MMS GOM Areas Western Gulf Central Gulf Eastern Gulf Florida

16. GOM Shelf Very mature 70% of current GOM supply Rapid decline Current reserves Drilling pace/success Rig availability New discoveries small in size Some shallow undiscovered reserves and deep shelf potential  >50 TCF (MMS 2000) Difficult drilling Aging infrastructure Rig availability for deep Acreage position Most majors have substantially decreased position Independents dominate Status: Prize: Challenges: Who:

17. Deepwater 30% of current supply Current reserves Projects under development Discovery pace Predominantly an oil play - associated gas >135 TCF potential (MMS 2000) Large reservoirs Leverage existing discoveries High cost per well/development Technology not here yet for ultra deep Project cycle time Predominantly majors but independents aggressively moving in Status: Prize: Challenges: Who:

19. Target Size Differences: Grand Isle 41\43\47vs. URSA URSA: Appx 400 MMBOE10-50 MBOEPD/well Single structureUp to 11 wells 15 years to recover. Grand Isle 41/43/47 Appx 830 MMBOE.5-5 MBOEPD/ well 54 platforms+500 wells/+180 active - 60-70 years to recover Recovery/well: 1.7MMBOE/well Rec./well:10-40 MMBOE/compl

20. Technological Advances - Drilling Sea bed is 1-2 miles below the rig: Requires the latest in: Marine Riser Technology BOP Control Technology Casing & Mud Program Design Dual Gradient Drilling AHC (Active Heave Compensated) Vessel Positioning

21. FPSO and Shuttling Subsea Processing & Metering Seabed Storage Multiphase Flow Deepwater Pipeline Expandable Casing Dual Gradient Drilling Technological Advances - Production

22. High Tech……High Cost What’s the most notable difference between deepwater and shallower operations? The answer is resoundingly….. Costs! DW dev. well cost: $25MM-$40MM –Shelf, avg dev. well : $5MM-10MM DW drilling costs: $250M-$400M/day –on shelf : $100M-$140M/day –with rig rates on shelf being only $30-40M/day compared to DW rates of $120-$220M/day

23. Deepwater - The Industry Responsibility Safe, Environmentally Sensitive, Cost Effective Innovation

25. Eastern Gulf of Mexico Currently off limits 25 TCF potential (NPC 2003) Can leverage existing infrastructure Gaining access Time to drill ready/total cycle time Restrictions/permitting Drilling Mixture of majors and independents Status: Prize: Challenges: Who:

26. Supply Dichotomy?

27. We Can’t Wait Too Long!!! It’s part of my long- range escape plan. I’ve been considering living on the ground, becoming a carnivore and developing a civilization…what do you think? It’s part of my long-range escape plan.

28. Delivering Supply Won’t Be Easy Shelf Deepwater EGOM Cycle time Technology Geology/ Drilling Permitting Cycle time Aging infrastructure /cost Gaining Access Cost Mature

29. Delivering Supply Won’t Be Easy Shelf Deepwater EGOM Cycle time Technology Geology/ Drilling Permitting Cycle time Gaining Access Cost Mature Aging infrastructure/ cost ConocoPhillips Position Not a Dominant Position $ ?

30. Discovered 46 TCF Potential >210 TCF Supply Source Overview >50 TCF Shallow and Deep Potential 35 TCF Discovered 11 TCF Discovered 25 TCF Potential >135 TCF Potential Shelf Deepwater EGOM GOM/Supply Source: MMS

31.  Shelf  Production declining rapidly. Aggressive shallow drilling essential to help offset base decline. Deep gas is critical to filling supply expectation in the near term.  Look for Independents to pick up pace – particularly deep drilling.  Majors could re-enter - deep potential and improved incentives.  Deepwater  Gas production important in filling void created by shelf decline.  Majors likely to stay primarily deepwater focused.  Once EGOM moratorium is lifted, it will take time to supply gas. Perspectives to Leave You With

32.  New technology an important part of the supply formula.  Resource availability still a critical issue.  Need improved regulatory permitting/approval process.  Despite hurdles, outlook for GOM supply to satisfy forecasted demand is optimistic. Perspectives to Leave You With

33. BACKUP

34. Current Rig Count = 747 U.S. Rig Count and Production *Avg. consultants estimate for 2003 U.S. Production

35. Natural gas well production rates have been declining steadily Rapid decline of productive capacity requires drilling more and more wells to maintain a given level of gas production Source: EIA US well production half-life* * Months to reach 50% of initial production rate Months

36. Source: Salomon Smith Barney, Aug 16, 2002 U.S. gas production additions per rig Avg. MMCF/d added per active rig * Estimate

37. US gas production remained flat between 1995 and 2001 However, it took a massive drilling effort to maintain the production flat Source: EIA Drilling has failed to increase production Gas Production, Tcf/yearWell Completions, ‘000/year

38. Rig Counts Slow to Respond NYMEX Gas Price, $/MMBtuUS Gas Rig Count