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ConocoPhillips Board Approves 2004 Capital Budget;
Disciplined capital spending supports strategy to improve ROCE

December 16, 2003 4:30pm

Business Wire

HOUSTON--(BUSINESS WIRE)--Dec. 16, 2003--The board of directors of ConocoPhillips (NYSE:COP) has approved a 2004 capital budget of approximately $6.9 billion. This total includes approximately $0.5 billion in capitalized interest and $0.4 billion in minority interest. Excluding these items, 2004 cash capital expenditures is approximately $6 billion.

"Maintaining a 2004 cash capital budget essentially equal to 2003 is part of our disciplined approach toward improving returns on capital employed," said Jim Mulva, president and chief executive officer. "This capital program will enable us to maintain safe and reliable operations, develop our existing legacy projects, and provide growth opportunities for the future."

The company will allocate approximately 78 percent of its 2004 capital budget to Exploration and Production. Refining and Marketing will receive about 19 percent of the budget. The remaining budget will be allocated to Emerging Businesses and Corporate.

Exploration and Production (E&P)

E&P's 2004 capital budget is approximately $4.5 billion, excluding capitalized interest and minority interest related to the Bayu-Undan project in the Timor Sea. The approximately $0.5 billion budgeted for worldwide exploration activities is included in the regional totals below.

E&P anticipates spending approximately $1.3 billion in the development of projects in the Asia-Pacific region. The majority of these funds will go toward continued development of the Bayu-Undan liquids and gas recycling project in the Timor Sea, oil and gas reserves in the offshore Block B and onshore South Sumatra blocks in Indonesia, and the second phase of Bohai Bay in China.

Approximately $1 billion of the E&P budget is allocated toward projects in Europe and Africa. Projects include expansion of the company's legacy positions in both the U.K. and Norwegian sectors of the North Sea.

The company has allocated roughly $0.9 billion of the E&P budget to develop projects in the U.S. Lower 48 and Latin America. The focus in these regions will be on the continued development of the Magnolia field in the deepwater Gulf of Mexico, completion of the heavy-oil upgrader associated with the Hamaca project in Venezuela, and development of the Corocoro field offshore Venezuela.

The company intends to spend approximately $0.6 billion of the E&P budget for its Alaska operations. A majority of the capital spending will fund Prudhoe Bay, Kuparuk and western North Slope operations, as well as construction of Endeavour Class tankers to transport Alaska North Slope crude oil.

In Canada, E&P capital expenditures are expected to be about $0.4 billion with a focus on Syncrude expansion, Surmont heavy oil development and Mackenzie Delta gas development.

E&P estimates it will spend approximately $0.4 billion on projects in the Middle East, Russia and the Caspian region. Projects include the Kashagan field and the Baku-Tbilisi-Ceyhan pipeline in the Caspian region, and the Qatargas 3 liquefied natural gas facility in Qatar.

Refining and Marketing (R&M)

The 2004 budget for R&M is about $1.3 billion. The company plans to spend about $0.9 billion in U.S. refining, primarily to fund clean fuels projects in order to comply with new Environmental Protection Agency standards for refined products. Worldwide, clean fuels spending for ConocoPhillips' R&M business will be approximately $0.6 billion, or 55 percent of the total refining budget. International marketing will spend about $0.1 billion, with the remaining budget primarily funding projects in the company's U.S. marketing and transportation businesses.

Emerging Businesses and Corporate

Emerging Businesses' capital budget for 2004 is approximately $0.1 billion, almost all dedicated to the completion of a cogeneration power project adjacent to the company's Humber refinery in the United Kingdom. Corporate segment expenditures are expected to be approximately $0.2 billion in 2004, with a majority related to global information systems and services.

ConocoPhillips index on OilWeb

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This release contains forward-looking statements about ConocoPhillips' 2004 capital budget. These statements are not guarantees of future performance, involve certain risks, uncertainties, and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed herein. In any forward-looking statement in which 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, but there can be no assurance that the statement or expectation or belief will result or be achieved or accomplished. Additional information on such matters can be found in the company's publicly available filings with the Securities and Exchange Commission. Copies of the company's filings with the SEC are available free by calling ConocoPhillips at 918-661-3700. These reports are also available on the company's Web site at www.conocophillips.com.

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