United States‐Indonesia 

Energy Investment Roundtable

Natural Gas Pricing and Policy

February 6, 2012

Jim Taylor

President IPA / ConocoPhillips Indonesia

The following presentation includes 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. You can identify our forward-looking statements by words such as “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” and similar expressions. Forward-looking statements relating to ConocoPhillips’ operations are based on management’s expectations, estimates and projections about ConocoPhillips and the petroleum industry in general on the date these presentations were given. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements.

Factors that could cause actual results or events to differ materially include, but are 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 ConocoPhillips’ 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 ConocoPhillips’ business generally as set forth in ConocoPhillips’ filings with the Securities and Exchange Commission (SEC), including our Form 10-K for the year ending December 31, 2009. ConocoPhillips is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Cautionary Note to U.S. Investors – The U.S. Securities and Exchange Commission 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. We may use certain terms in this presentation such as “oil/gas resources,” “oil in place,” “recoverable bitumen,”“exploitable bitumen in place,” and “bitumen in place” that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. The term “reserves,” as used in this presentation, includes proved reserves from Syncrude oil sands operations in Canada which are currently reported separately as mining operations in our SEC reports. Under amendments to the SEC rules, mining oil sands reserves will no longer be reported separately. U.S. investors are urged to consider closely the oil and gas disclosures in our Form 10-K for the year ended December 31, 2009.

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE “SAFE HARBOR” PROVISIONS

OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

40

45

50

55

60

65

1970 1975 1980 1985 1990 1995 2000 2005 2010

Bcf / day

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$ / mmBtu

US Lower 48 Natural Gas Production

2

15 years of growth enabled by:•Market based pricing • Tax incentives for tight gas and Unconventional CBM 

Technology innovated from 1980’s incentives 

helped drive further shale success

Source:  US Department of Energy, Energy Information Administration

Government ceilings on gas pricing reduced 

supply

Enabliing Policy and Regulations •Deregulating Prices•Incentives for unconventional gas

80

60

40

20

0

US Natural Gas Supply Sources

Billion cubic feet per day

U.S Natural Gas Pipeline Infrastructure

4

Over 300,000 miles of Pipelines

US Infrastructure Growth

Source:  INGAA Foundation, Inc

40

45

50

55

60

1970

1975

1980

1985

1990

1995

2000

2005

2010

Dai

ly P

rod.

(BC

F)

The "Unconventional Reservoir" Revolution:Impact on the North American Natural Gas Market

Rapid supply growth

Supply greater than demand

Natural gas price collapse

LNG imports no longer needed

Arctic pipelines no longer needed

Increase in exports to Mexico

LNG exports being considered

>> share of electric gen. market

Chemical industry rejuvenation

40

45

50

55

60

1970

1975

1980

1985

1990

1995

2000

2005

2010

Dai

ly P

rod.

(BC

F)

U.S. Natural Gas Production

Y2KPredictions

Artist Drawing of LNG Import Terminal

6,000

7,000

8,000

9,000

10,000

11,000

12,000

1970

1975

1980

1985

1990

1995

2000

2005

2010

Bar

rels

Oil

Per D

ay (T

hous

ands

)Unconventional Reservoirs Produce Liquids Also

U.S. = World’s Largest Producer(11,300 MBOPD Peak Rate)

Uncon. Res.2 (+600)Deep Water (+100)

1 Data from BP 2011 Statistical Review of World Energy; Oil includes condensate & NGLs; split between Unconv. Res. and Deep Water is approximate2 “Uncon. Res.” = Unconventional Reservoirs, which include shale and carbonate source rocks, CBM and ultra-tight sandstones and carbonates

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800Ja

n-88

Jan-

89

Jan-

90

Jan-

91

Jan-

92

Jan-

93

Jan-

94

Jan-

95

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Dril

ling

Rig

Cou

nt

U.S. Drilling Fleet Deployment in Response to the"Liquids from Unconventional Reservoirs"

- More rigs are drilling for oil than gas for first timesince early 1990’s- Over 1,000 rigs are drilling for oil; highest number in over 25 years- Additional rigs being deployed for oil drilling at a rapid pace

$150 per barrel oil

Liquids from UnconventionalReservoirs Breakthrough

Gas Wells

Oil Wells

From Baker Hughes’ website

Gas Infrastructure in Indonesia

PHILIPPINESSOUTH CHINA SEA

PhilippinesIndonesia

KAMPUCHEA

VIETNAM

THAILAND

Medan

Tanjungkarang

Palembang

Bengkulu

Padang

Kuala Lumpur

MALACCA STRAIT

Yogyakarta

Ujungpandang

Palu

Jayapura

PAPUA

SULAWESI

B A N D A S E A

A R A F U R AS E A

C E L E B E S S E A

Kuching

Palangkaraya

Banjarmasin

BRUNEIDARUSALAM

MAK

ASSA

R

STR

AIT

J A V A S E A

K A L I M A N T A N

SARAWAK

MalaysiaIndonesia

Semarang

S U M A T R A

Bandung

Jambi

6° S

12° S

0°

12° N

6°N Banda Aceh

112° E100° E 106° E

I N D I A N O C E A N

118° E 124° E 130° E 136° E

SINGAPORE

Pontianak

Kendari

Kupang

MataramDenpasar

Manado

Ambon

SABAH

Toba Lake

Dili

TIMOR

PhilippinesMalaysia

THAILAND

HALMAHERA

LOMBOK

BATAM

BANGKA

MADURA

MaselaFLNG

DonggiLNG

TangguhLNG

BontangLNG

ArunLNG

PRINCIPAL INDUSTRY ISSUES TO BE ADDRESSED

GR NO. 79/2010 ON COST RECOVERY AND INCOME TAX- Opposes existing PSCs and creates uncertainty of future PSCs

AMENDMENT TO LAW NO.22/2011 ON OIL AND GASMinimal changes required

APPROVAL AND REGULATORY ENVIRONMENT - Move from managing costs to managing production

MARKET BASED GAS PRICING NEEDED TO BE COMPETITIVE- To ensure investment is made to explore for and develop gas the price needs to be competitive

LICENSE EXTENSIONS NEED TO BE TRANSPARENT AND EARLY - Delays in extension process put investment and production

BANK INDONESIA REGULATION OF FOREIGN EXCHANGE PROCEEDS- PSC rights should be preserved

CONCLUSIONS

INDONESIA HAS STRONG ECONOMIC GROWTH OF 6.5% in 2011 • Economy’s energy needs are growing and more oil and gas are needed

• Transitioning from revenue generator to economic enabler will take time

HYDROCARBON PRODUCTION HAS BECOME MORE DIFFICULT • Mature fields are declining 

• New opportunities are in more challenging areas (remote, offshore, East)

• Unconventional developments are untested and require a lot of wells, technology and infrastructure

EXPLORATION INVESTMENT AND PRODUCTION HAS DECLINED • Fiscal policies need to be competitive to attract necessary investment 

MANAGING COST RECOVERY IS NOT SUPPORTING PRODUCTION INCREASES 

MARKET BASED PRICING, SUPPORTING REGULATIONS AND INCENTIVES HAS GENERATED SIGNIFICANT INVESTMENT AND NEW SUPPLIES OF NATURAL GASAND LIQUIDS PRODUCTION IN THE US

THE CREATION OF NEW SUPPLIES OF OIL AND GAS CAN BENEFIT ECONOMICGROWTH & THE PEOPLE OF INDONESIA

TERIMA KASIH

Lower‐48 Natural Gas Production

13

Source:  US Department of Energy, Energy Information Administration

U.S Natural Gas Storage Infrastructure

14

Over 4 Trillon Cubic Feet of Working Gas Storage Capability

LNG Indonesia

Malaysia

Indonesia

PHILIPPINESSOUTH CHINA SEA

PhilippinesIndonesia

KAMPUCHEA

VIETNAM

THAILAND

Medan

Tanjungkarang

Palembang

Bengkulu

Padang

Kuala Lumpur

MALACCA STRAIT

Yogyakarta

Ujungpandang

Palu

Jayapura

PAPUA

SULAWESI

B A N D A S E A

A R A F U R AS E A

C E L E B E S S E A

Kuching

Palangkaraya

Banjarmasin

BRUNEIDARUSALAM

MAK

ASSA

R

STR

AIT

J A V A S E A

K A L I M A N T A N

SARAWAK

MalaysiaIndonesia

Semarang

S U M A T R A

Bandung

Jambi

6° S

12° S

0°

12° N

6°N Banda Aceh

112° E100° E 106° E

I N D I A N O C E A N

118° E 124° E 130° E 136° E

SINGAPORE

Pontianak

Kendari

Kupang

MataramDenpasar

Manado

Ambon

SABAH

Toba Lake

LOCATION MAP

P A C I F I C O C E A N

J A V A

EAST TIMORFLORES

SUMBA

SUMBAWABALI

BURU

SERAM

TANIMBAR

Samarinda

Balikpapan

NATUNA

Surabaya

BandarSeri Begawan

VietnamMalaysia

MLAYSIA

Indo

nesi

aPa

pua

New

Gui

nea

0 500

KM

INDONESIA

ACREAGE

Dili

TIMOR

PhilippinesMalaysia

THAILAND

HALMAHERA

LOMBOK

BATAM

BANGKA

MADURA

COPI Acreage

LNG PLANT

Pakanbaru

Nila PSC

South China Sea"B" PSC (Ext)

South Jambi PSC

Corridor PSC

Block 'A' PSC

Corridor TAC

Pangkah PSC

Sakakemang JOB

Banyumas PSC

Ketapang PSC

Warim PSC

Jakarta

12/02/2004 S:\TIS\.........\DESIGNER\GENERAL\COPI_ACREAGE.DSF (P3)

TangguhLNG Plant

DonggiLNG Plant

BontangLNG Plant

NatunaLNG Plant

MaselaLNG Plant

ArunLNG Plant

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Ja

n-88

Jan-

89

Jan-

90

Jan-

91

Jan-

92

Jan-

93

Jan-

94

Jan-

95

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Perc

enta

ge o

f Tot

al R

igs

(%)

Utilization of the U.S. Rig Fleet:  Gas versus Oil

- More rigs drilling for oil than gas for first time since early 1990’s- Fleet switched from 90% gas / 10% oil in 2005, to 54% oil / 46% gas today

$150 per barrel oil

Liquids from UnconventionalReservoirs Breakthrough

Gas Wells

Oil Wells

From Baker Hughes’ website