CONOCOPHILLIPS

ConocoPhillips



ConocoPhillips

Introduction

ConocoPhillips (or the company) is the third-largest integrated energy company in the US and the second-largest refiner in the country. The company is engaged in the exploration and production of petroleum, natural gas, chemicals, and polymers businesses. It has operations in over 40 countries.

ConocoPhillips is headquartered in Houston, Texas and employed 29,800 people as on December 31, 2011. The company recorded sales and other operating revenues of $244,813 million during the financial year ended December 2011 (FY2011), an increase of 29.2% over FY2010. The operating profit of the company was $23,001 million during FY2011, an increase of 16.5% over FY2010. The net profit was $12,436 million in FY2011, an increase of 9.5% over FY2010. ConocoPhillips is an international, integrated energy company. It operates worldwide with assets and businesses in over 40 countries (Zaneldin, 2006).

ConocoPhillips operates through five segments: exploration and production (E&P); midstream; refining and marketing (R&M); chemicals; and emerging businesses.

The E&P segment primarily explores for, produces, transports, and markets crude oil, natural gas, and natural gas liquids on a worldwide basis. It also mines deposits of oil sands in Canada to extract bitumen and upgrade it into synthetic crude oil. Operations to liquefy natural gas and transport the resulting liquefied natural gas (LNG) are also included in the E&P segment. Proved net reserves for ConocoPhillips at year end 2011 were 8,387 million barrels of oil equivalent (MBOE). The company conducts its E&P operations in the US, Norway, the UK, Canada, Australia, offshore Timor-Leste in the Timor Sea, Indonesia, China, Vietnam, Libya, Nigeria, Algeria, Qatar, and Russia.

In FY2011, E&P's worldwide production, including its share of equity affiliates' production, averaged about 1,619,000 barrels-of-oil-equivalent per day (BOED). During FY2011, 653,000 BOED were produced in the US and production from its international E&P operations averaged 966,000 BOED.

Literature Review

The company conducts its midstream business through its 50% equity investment in DCP Midstream, a joint venture with Spectra Energy (a North American natural gas infrastructure company). The midstream business purchases raw natural gas from producers and gathers natural gas through extensive pipeline gathering systems. The gathered natural gas is then processed to extract natural gas liquids. The remaining residue gas is marketed to electrical utilities, industrial users, and gas marketing companies. Most of the natural gas liquids are fractionated and separated into individual components like ethane, butane, and propane, and marketed as chemical feedstock, fuel, or blend stock. The total natural gas liquids extracted in FY2011, including ConocoPhillips' share of DCP Midstream, was 200,000 barrels per day.

As on December 31, 2011, DCP Midstream owned or operated 61 natural gas liquids extraction plants, 12 natural gas liquids fractionation plants, and its gathering and transmission systems included approximately 62,000 miles of pipeline. In FY2011, its raw natural gas throughput averaged 6.1 billion cubic feet per day, and natural gas liquids extraction averaged 383,000 barrels per day. DCP midstream's assets are primarily located in the following producing regions of the US: Rocky Mountains, Midcontinent, Permian, East Texas/North Louisiana, South Texas, Central Texas, and Gulf ...