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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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[ ] Preliminary Proxy Statement
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Rule14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Rule 14a-12
BURLINGTON RESOURCES INC.
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(Name of Registrant as Specified in its Charter)
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On December 13, 2005, ConocoPhillips and Burlington Resources Inc. made a
joint analyst presentation concerning the proposed acquisition by
ConocoPhillips of Burlington Resources Inc. The following consists of the
slides and fact sheet used in connection with the analyst presentation.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING
INFORMATION FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for the historical and factual information contained herein,
the matters set forth in this filing, including statements as to the
expected benefits of the acquisition such as efficiencies, cost savings,
market profile and financial strength, and the competitive ability and
position of the combined company, and other statements identified by words
such as "estimates, "expects," "projects," "plans," and similar expressions
are forward-looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to risks and uncertainties that may
cause actual results to differ materially, including required approvals by
Burlington Resources shareholders and regulatory agencies, the possibility
that the anticipated benefits from the acquisition cannot be fully
realized, the possibility that costs or difficulties related to the
integration of Burlington Resources operations into ConocoPhillips will be
greater than expected, the impact of competition and other risk factors
relating to our industry as detailed from time to time in each of
ConocoPhillips' and Burlington Resources' reports filed with the SEC.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their dates. Burlington Resources Inc.
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
ADDITIONAL INFORMATION
In connection with the proposed transaction, ConocoPhillips will file
a Form S-4, Burlington Resources will file a proxy statement and both
companies will file other relevant documents concerning the proposed merger
transaction with the Securities and Exchange Commission (SEC). INVESTORS
ARE URGED TO READ THE FORM S-4 AND THE PROXY STATEMENT WHEN THEY BECOME
AVAILABLE, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION REGARDING THE MERGER. Investors may
obtain a free copy of the Form S-4 and the proxy statement (when available)
and the other documents free of charge at the website maintained by the SEC
at www.sec.gov.
ConocoPhillips, Burlington Resources and their respective directors
and executive officers may be deemed to be participants in the solicitation
of proxies from Burlington Resources' stockholders in connection with the
merger. Information about the directors and executive officers of
ConocoPhillips and their ownership of ConocoPhillips stock will be set
forth in the proxy statement for ConocoPhillips' 2006 Annual Meeting of
Stockholders. Information about the directors and executive officers of
Burlington Resources and their ownership of Burlington Resources stock is
set forth in Burlington Resources' proxy statement for its 2005 annual
meeting, which was filed with the SEC on March 10, 2005. Investors may
obtain additional information regarding the interests of such participants
by reading the Form S-4 and proxy statement for the merger when they become
available.
Investors should read the Form S-4 and proxy statement carefully when
they become available before making any voting or investment decision.
Jim Mulva
Chairman & CEO
ConocoPhillips
Bobby Shackouls
Chairman & CEO
Burlington Resources
December 13, 2005
Creating a Leading
North American
Gas Supplier
1
Agenda
Introduction Gary Russell
Transaction Overview & Jim
Mulva
Strategic Rationale
Burlington Resources Overview Bobby Shackouls
Portfolio Impact Jim Mulva
Financial Impact Jim Mulva
2
CAUTIONARY STATEMENT
FOR THE PURPOSES OF THE “SAFE HARBOR” PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
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 the presentations are 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, the failure to receive required approvals by Burlington Resources shareholders and regulatory agencies, the possibility that the anticipated benefits from the acquisition cannot be fully realized, the possibility that costs or difficulties related to the integration of Burlington Resources’ operations into ConocoPhillips will be greater than expected; 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-Q for the quarter ending September 30, 2005. Unless legally required, 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 use certain terms in this presentation such as “oil/gas resources,” “Syncrude,” and/or “Society of Petroleum Engineers (SPE) proved reserves” that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. U.S. investors are urged to consider closely the oil and gas disclosures in our Form 10-K for the year ended December 31, 2004.
This presentation includes certain non-GAAP financial measures, as indicated. Such non-GAAP measures are intended to supplement, not substitute
for, comparable GAAP measures. Investors
are urged to consider closely the GAAP reconciliation tables provided in the presentation Appendix.
3
Transaction Overview
$92 per BR share based on COP closing <<>>
price on December 9, 2005
For each BR share:
$46.50 cash
0.7214 COP shares
Enterprise value: $35.6B
Including net debt
Principal conditions to closing
BR shareholder approval – Q1 2006
Regulatory clearances – 1H 2006
4
Securing Management Strengths
Two BR directors to join COP Board
Bobby Shackouls
Bill Wade
Talent retention plan
Randy Limbacher to become EVP
Responsible for North and South America E&P
Key technical / operational talent
Integration planning teams formed
5
Strategic Rationale
Creates leading North American gas position
High-quality, long-lived, low-risk gas reserves
Significant unconventional resource plays
Enhances production growth / N.A. gas supply
Near-term conventional / unconventional
Long-term LNG and Arctic gas
Enhances business mix
Increases E&P, OECD, and North American gas
Significant free cash flow
Synergies of $375 MM
Access to technical capabilities
6
Burlington Resources Overview
7
BR – A Premier N.A. Gas Company
Note: Reserves are YE 2004 numbers, with NGLs converted to Gas, per BR convention
Production is FY 2005 (E), based on Q3 actuals
Reserves
Oil
Gas
Reserves Production
United States 1329 MMBOE 249 MBOE/d
Canada 460 MMBOE 164 MBOE/d
Rest of World 212 MMBOE 62 MBOE/d
TOTAL 2001 MMBOE 475 MBOE/d
NGL
Reserves
North
America
ROW
8
San Juan
High quality, long-lived gas reserves
7.5
2.4
5.1
Reserves (TCFE)
1610
770
840
Acreage (M acres)
1308
564
744
Production (MMCFED)
Total
COP
BR
BR
COP
Significant synergy potential
Production enhancement
Operating and admin expenses
Lower gathering & transportation costs
Better utilization of COP 50% owned
Blanco Gas Processing Plant
Colorado
New Mexico
9
BR - High Impact Resource Plays
South Louisiana
Deep Bossier
Barnett Shale
35,000 net acres
13 – 14,000’ targeted depths
Similar to Barnett Shale
Woodford Shale
28,000 net core acres
92,000 net non-core acres
70,000 acres Parker, Hood,
Johnson Counties
Seismic covering 65% of acreage
position
215 risked locations
200,000 net acres
Franklin Block tested at 640 acre
spacing
200 Mmcfd gross (115 Mmcfd
net)
Savell field development
Five rigs deployed
660,000 net acres fee land
Pine Prairie Redell
Four Isle Dome
Bakken Shale
67,000 net acres
Unconventional oil exploration
Ramping up drilling program
6 Mpd net of production
Additional EOR Options
Production expected to grow from
25 MBOPD to over 35 MBOPD in
2007
Cedar Creek Anticline
Conventional
Unconventional
10
Western Canada
Strong Conventional Gas
Position
Over 1 million net acres of land
Conventional and tight gas
200 locations planned in 2005
Production 358 MMcfed
Deep Basin / Foothills
820,000 net acres of land
570 square miles of 3D seismic to
identify drilling opportunities
Production 128 MMcfed
Kaybob
728,000 net acres of land
150 gross operated wells planned
in 2005
Production 210 MMcfed
O’Chiese
Southern Plains
1,300,000 net acres of land
Includes the Viking-Kinsella
property
Production 182 MMcfed
Northern Plains
738,000 net acres of land
Significant trend extension
opportunities for future growth.
Production 97 MMcfed
11
Portfolio Impact
12
Compelling Transaction for
BR Shareholders
Expanded position in global energy
Attractive premium / cash component
Ongoing value by joining a major global
integrated energy company
Creates better long-term growth options
Leveraging technical strengths to broader
portfolio
13
Strengthens N.A. Gas Position
COP
COP and BR
BR
14
Note: Production figures are based on YE 2004 Filings
COP volumes do not include fuel gas production.
CVX pro forma for UCL
North American Gas Production
15
Major U.S. Gas Supplier
Delivering gas
to the U.S. from various supply sources
#1 in N. A. gas production
50% owner in DEFS
A leading gas marketer
Developing multiple LNG projects and
re-gasification capabilities
Major existing positions in both Alaskan
North Slope gas and Mackenzie Delta
16
Enhanced Business Mix
COP
Pro Forma w/ BR
Non-OECD
38%
OECD
62%
Non-OECD
31%
OECD
69%
OECD Mix
Based on Reserves
Note: Capital Employed is estimated YE 2005, with LUK (at 10% equity) allocated 70% E&P, 30% R&M.
Reserves are YE 2004.
Gas
35%
Oil
65%
Oil
59%
Gas
41%
Oil / Gas Mix
Based on Reserves
Capital Employed
By Business Segment
Midstream &
Chemicals
R&M
31%
E&P
61%
Other
3%
5%
E&P
74%
R&M
21%
Midstream &
Chemicals
3%
Other
2%
17
Reserves are YE 2004 actual, excludes Syncrude for COP.
CVX pro forma for UCL.
COP includes the additional 4.8% LUK equity purchased through Q3 2005.
Production is 2004 average except for COP and BR (both 2005 (E)).
Pro Forma Operating Impact
18
Pro Forma Production Profile
CAGR ~3%
Note: Production is company estimates.
2006 includes 6 months of BR production.
Lukoil average equity is assumed at 13% in 2005, 18% in 2006, & 20% thereafter
COP includes equity affiliates and Syncrude.
19
Synergy Estimate
$375 MM Pre-Tax
Corporate G&A redundancies
Consolidation of regional E&P offices
Exploration portfolio optimization
Operating expense reductions
Revenue enhancements
20
Financial Summary
Accretive to CFPS
Slightly dilutive to 2006 EPS (First Call estimates)
Slightly accretive to 2006 EPS (Strip Pricing)
Dilutive to GAAP ROCE / Accretive to Adjusted ROCE
Lowers E&P unit production cost
Excess cash flow quickly reduces incremental debt
21
CFPS
Accretion / Dilution
2.2%
3.5%
Strip1
-3.9%
-2.1%
First Call
2007
2006
EPS
8.6%
10.6%
Strip1
4.1%
6.2%
First Call
2007
2006
1 FC consensus earnings adjusted for strip pricing
22
Discretionary Cash Flow
First Call Prices
(15.4)
(17.2)
Capital Expenditures & other
22.8
23.1
Cash Flow from Operations
7.4
5.9
Net Cash Flow
13.6
14.9
Net Income
2007
2006
$ Billion
Note: Capital expenditures and other includes LUK, share purchases, and loans to affiliates.
Capital expenditures are from company sources
23
Debt Ratio Impact
First Call Prices
Equity $B
Balance sheet
debt $B
Debt to capital
ratio %
Based on 2006 & 2007 First Call Prices
Equity includes minority interest.
All excess cash flow applied to pay down debt.
Assumes initial net debt @ closing of $29B
24
Discretionary Cash Flow
NYMEX Strip Prices
(15.4)
(17.2)
Capital Expenditures & other
28.6
28.8
Cash Flow from Operations
13.2
11.6
Net Cash Flow
19.2
20.2
Net Income
2007
2006
$ Billion
Note: Capital expenditures and other includes LUK, share purchases, and loans to affiliates.
Capital expenditures are from company sources
25
Debt Ratio Impact
NYMEX Strip Prices
Equity $B
Balance sheet
debt $B
Debt to capital
ratio %
Based on 2006 & 2007 NYMEX Strip prices
Equity includes minority interest.
All excess cash flow applied to pay down debt.
Assumes initial net debt @ closing of $29B
26
2006 ROCE
GAAP / Adjusted
1 FC consensus earnings adjusted for strip pricing
Strip1
First Call Estimates
COP
Pro Forma
27
Compelling Strategic Opportunity
High quality, long-lived, low-risk reserves
Enhances production growth and lowers unit
operating cost
Secures access to significant unconventional
resource plays
Rebalances portfolio towards E&P with significant
OECD / North American gas
Long-term financial strength enhanced
Improved competitiveness Shareholder value creation
28
Appendix
29
$92 / BR share
2006 to 2007 First Call estimates
Number of fully diluted shares, MM
COP – 1406
BR – 381.1
First Call Prices
2006 – Oil – $57.50 ; Gas - $8.52 ; Crack - $8.50
2007 – Oil - $53.32 ; Gas – $7.68; Crack - $8.25
Strip Prices
2006 – Oil – $61.78 ; Gas - $11.83 ; Crack - $11.29
2007 – Oil - $62.68 ; Gas – $10.66; Crack - $9.86
Proforma includes:
Incremental DD&A from purchase accounting write-up
Goodwill of $19B (True - $11.2B; Deferred tax - $8.1 )
Incremental debt
Synergies of $375 MM pre-tax
COP’s Wilhelmshaven refinery acquisition
Financial Analysis - Premises
30
Accretion/Dilution Reconciliation
First
Call Pricing
EPS
CFPS
COP FD shares 11/30/05 – 1435 million
Additional shares issued – 274.8 million
Stepped-up PP&E - $26.7 billion
Resultant Goodwill:
$11.1 billion True
$8.2 billion Deferred Taxes
Goodwill based on early April, 2005
JS Herolds Appraisal Report.
Will ultimately be based on third party
appraisal.
Cash portion to be funded with cash on
hand and incremental debt.
31
Accretion/Dilution Reconciliation
Strip
Pricing Sensitivity
December 9 Prices – Close of Markets
COP and BR Published Sensitivities
32
[LOGO ConocoPhilips] [LOGO - BURLINGTON RESOURCES]
CONOCOPHILLIPS OVERVIEW
ConocoPhillips is an international, integrated energy company. It is the
third-largest integrated energy company in the United States, based on
market capitalization, and oil and gas production and reserves; and one of
the largest refiners in the United States. Worldwide, of
nongovernment-controlled companies, ConocoPhillips has the eighth-largest
total of proved reserves and is the fifth-largest refiner. Following the
acquisition of Burlington Resources, ConocoPhillips will become a leading
natural gas producer in North America and will have:
o Pro-forma reserves of 10.5 BBOE as of December 31, 2004,
excluding 0.3 BBOE associated with ConocoPhillips' Syncrude
operations, of which 52 percent is in North America; and
o Pro-forma 2005 production of 2.3 MMBOE/d, including LUKOIL and
Syncrude, of which 50 percent is in North America.
CONOCOPHILLIPS FACTS & FIGURES
Net Income $8.129 billion (FY2004)
Stock NYSE: COP
Headquarters Houston, Texas
Employees 35,800, as of December 31, 2004
Activities Petroleum exploration and production
Petroleum refining, marketing, supply and transportation
Natural gas gathering, processing and marketing, including
a 50% interest in Duke Energy Field Services LLC
Chemicals and plastics production and distribution through
a 50% interest in Chevron Phillips Chemical Company LLC
Investments in emerging businesses, including technology
solutions, gas-to-liquids, power generation and emerging
technologies
BURLINGTON RESOURCES OVERVIEW
Burlington Resources is one of the world's largest independent oil and
natural gas exploration and production companies, and holds one of the
industry's leading positions in North American natural gas reserves and
production. At year-end 2004, Burlington Resources had a reserves base of
12 trillion cubic feet equivalent of natural gas, concentrated in North
America. These reserves supply nearly 85 percent of current production,
with a key focus being the Rocky Mountain gas fairway of the U.S. and
Canada.
BURLINGTON RESOURCES FACTS & FIGURES
Net Income $1.527 billion (FY2004)
Stock NYSE: BR
Headquarters Houston, Texas
Employees 2,300, as of December 31, 2004
Activities Exploration, development, production and sale of natural gas
and crude oil, primarily in major producing basins in the
U.S., as well as in Canada and selected other international
areas.