Exhibit 99
ConocoPhillips Second-Quarter 2006 Interim Update
HOUSTON--(BUSINESS WIRE)--July 6, 2006--This update is intended to
give an overview of market and operating conditions experienced by
ConocoPhillips (NYSE:COP) during the second quarter of 2006. The
market indicators and company estimates may differ considerably from
the company's actual results scheduled to be reported on July 26,
2006.
Highlights - Second-Quarter 2006 vs. First-Quarter 2006
-- Exploration and Production
-- Higher crude oil prices.
-- Lower U.S. natural gas prices.
-- Higher worldwide production, reflecting the impact of
Burlington Resources and make-up volumes in Libya.
-- Refining and Marketing
-- Higher worldwide refining margins.
-- Continued pressure on worldwide marketing margins.
-- Worldwide refining capacity utilization rate in the
low-90-percent range.
-- Decreased turnaround activity and costs.
-- LUKOIL Investment
-- Ownership of approximately 18 percent at quarter end.
-- Higher estimated earnings.
-- Midstream, Chemicals and Emerging Businesses
-- Midstream results expected to be similar to the previous
quarter.
-- Results from the Chemicals and Emerging Businesses
segments anticipated to be lower than the previous
quarter.
-- Corporate
-- Higher interest expense.
-- Debt balance of approximately $29.5 billion.
Exploration and Production (E&P)
The table below provides market price indicators for crude oil and
natural gas. The company's actual crude oil and natural gas price
realizations may vary from these market indicators due to quality and
location differentials, as well as the effect of pricing lags.
Market Indicators
2Q 2006
vs.
2Q 2006 1Q 2006 1Q 2006 2Q 2005
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Dated Brent ($/bbl) $69.62 $61.75 $7.87 $51.59
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WTI ($/bbl) 70.40 63.28 7.12 53.03
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ANS USWC ($/bbl) 68.78 60.87 7.91 50.04
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Henry Hub first of month
($/mmbtu) 6.80 9.01 (2.21) 6.74
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Source: Platts
The company completed its acquisition of Burlington Resources Inc.
on March 31. The impact of the Burlington Resources assets and
operations will be reflected in second-quarter earnings and operating
statistics for the entire period. Second-quarter production on a
barrel-of-oil equivalent (BOE) per day basis, including Syncrude and
excluding LUKOIL, is expected to be approximately 30 percent higher
than the previous quarter. In addition to the inclusion of Burlington
Resources' production, the company had initial crude oil liftings from
Libya, including the make-up of a portion of the company's underlift
position, partially offset by lower production in the United Kingdom
due to planned maintenance.
Second-quarter exploration expenses are expected to be
approximately $155 million before-tax. In addition to the inclusion of
the Burlington Resources exploration program, the company is expected
to have higher geological and geophysical expenditures than the
previous quarter.
Refining and Marketing (R&M)
The table below provides market indicators for regions where the
company has significant refining operations. The Weighted U.S. 3:2:1
margin is based on the geographical location and capacity of
ConocoPhillips' U.S. refineries. Realized refining margins may differ
due to the company's specific locations, configurations, crude oil
slates or operating conditions. The company's refining configuration
generally yields somewhat higher distillate volumes and lower gasoline
volumes than those implied by the market indicators shown below. In
addition, marketing margins may differ significantly from the U.S.
wholesale gasoline marketing indicator due to the product mix,
distribution channel and location of the company's refined product
sales.
Market Indicators ($/bbl)
2Q 2006
vs.
2Q 2006 1Q 2006 1Q 2006 2Q 2005
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Refining Margins
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East Coast WTI 3:2:1 $15.21 $7.52 $7.69 $8.80
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Gulf Coast WTI 3:2:1 17.26 8.28 8.98 9.63
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Mid-Continent WTI 3:2:1 19.60 9.81 9.79 11.51
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West Coast ANS 3:2:1 32.47 18.87 13.60 22.20
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Weighted U.S. 3:2:1 20.39 10.56 9.83 12.35
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NW Europe Dated Brent
3:1:2 15.20 10.18 5.02 15.09
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WTI/Maya Differential (trading
month) 15.69 15.61 0.08 13.04
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U.S. Wholesale Gasoline
Marketing 1.83 0.71 1.12 2.05
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Source: Platts
Worldwide refining margins for the second quarter are expected to
be significantly higher than the first quarter, as indicated in the
table above. Light-heavy crude oil differentials remained strong and
turnaround activity decreased in the second quarter. Turnaround costs
are expected to be approximately $120 million before-tax.
The company's average crude oil refining capacity utilization rate
for the second quarter is expected to be in the low-90-percent range.
This represents an increase from the first quarter, which was impacted
by significant turnaround activity and unplanned downtime. The return
to normal operations during the second quarter for most of the
company's domestic refineries more than offset the impact of an
extended full plant turnaround at the Trainer, Pa., refinery and other
unplanned downtime.
LUKOIL Investment
In the second quarter of 2006, OAO LUKOIL (LUKOIL) publicly
released results for the fourth quarter of 2005 and the first quarter
of 2006. As a result, the LUKOIL Investment segment earnings for the
second quarter are expected to include a benefit of approximately $80
million due to alignment of the company's estimate of LUKOIL's net
income to actual results.
Second-quarter 2006 results also are expected to reflect higher
estimated crude oil prices and refining margins than estimated in the
first quarter of 2006 and increased ownership interest.
Corporate and Other
As expected, Corporate expenses are anticipated to be
significantly higher in the second quarter due to increased interest
expense associated with a higher average debt balance attributable to
the Burlington Resources acquisition and other related charges. In
addition, the weakening of the U.S. dollar is expected to result in
negative foreign currency impacts.
As a result of tax rate reductions recently enacted in Canada and
in the state of Texas, the company expects to record a second-quarter
earnings benefit in the range of $0.25 per share. These anticipated
benefits will primarily impact the company's E&P segment.
The company's debt balance is expected to be approximately $29.5
billion at the end of the second quarter. The number of
weighted-average diluted shares outstanding during the second quarter
is expected to be 1,678 million shares.
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This update contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended and Section
21E of the Securities Exchange Act of 1934, as amended, which are
intended to be covered by the safe harbors created thereby.
Forward-looking statements relate to future events and anticipated
results of operations, business strategies, and other aspects of our
operations or operating results. In many cases you can identify
forward-looking statements by terminology such as "anticipate,"
"estimate," "believe," "continue," "could," "intend," "may," "plan,"
"potential," "predict," "should," "will," "expect," "objective,"
"projection," "forecast," "goal," "guidance," "outlook," "effort,"
"target" and other similar words. However, the absence of these words
does not mean that the statements are not forward-looking. The
statements in this update are based on activity from operations for
the first two months of the second quarter of 2006 and include
estimated results for June and, as such, are preliminary and are
estimates. All of the forward-looking data is therefore subject to
change. Actual results, which will be reported in the company's
earnings release for the second quarter of 2006 on July 26, 2006, may
differ materially from the estimates given in this update.
Where, in any forward-looking statement, the company expresses an
expectation or belief as to future results, such expectation or belief
is expressed in good faith and believed to have a reasonable basis.
However, there can be no assurance that such expectation or belief
will result or be achieved. The actual results of operations can and
will be affected by a variety of risks and other matters including,
but not limited to, crude oil and natural gas prices; refining and
marketing margins; potential failure to achieve, and potential delays
in achieving expected reserves or production levels from existing and
future oil and gas development projects due to operating hazards,
drilling risks, and the inherent uncertainties in interpreting
engineering data relating to underground accumulations of oil and gas;
unsuccessful exploratory drilling activities; lack of exploration
success; potential disruption or unexpected technical difficulties in
developing new products and manufacturing processes; potential failure
of new products to achieve acceptance in the market; unexpected cost
increases or technical difficulties in constructing or modifying
company manufacturing or refining facilities; unexpected difficulties
in manufacturing, transporting or refining synthetic crude oil;
international monetary conditions and exchange controls; potential
liability for remedial actions under existing or future environmental
regulations; potential liability resulting from pending or future
litigation; general domestic and international economic and political
conditions, as well as changes in tax and other laws applicable to our
business. Other factors that could cause actual results to differ
materially from those described in the forward-looking statements
include other economic, business, competitive and/or regulatory
factors affecting our business generally as set forth in our filings
with the Securities and Exchange Commission (SEC). Unless legally
required, ConocoPhillips undertakes no obligation to update publicly
any forward-looking statements, whether as a result of new
information, future events or otherwise.
Cautionary Note to U.S. Investors -- The SEC permits oil and gas
companies, in their filings with the SEC, to disclose only proved
reserves that a company has demonstrated by actual production or
conclusive formation tests to be economically and legally producible
under existing economic and operating conditions. Production is
distinguished from oil and gas production because SEC regulations
define Syncrude as mining-related and not part of conventional oil and
natural gas reserves. The company uses certain terms in this release,
such as "includes Syncrude," that the SEC's guidelines strictly
prohibit us from including in filings with the SEC. U.S. investors are
urged to consider closely the disclosure in the company's periodic
filings with the SEC, available from the company at 600 North Dairy
Ashford Road, Houston, Texas 77079 and the company's Web site at
www.conocophillips.com/investor/sec. This information also can be
obtained from the SEC by calling 1-800-SEC-0330.
CONTACT: ConocoPhillips