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NEWS BULLETIN

December 10, 2004 --- Vol. 10, No. 114December 2004

State opens east coastal area of North Slope to tundra travel

Commissioner Tom Irwin announced today that the Department of Natural Resources has opened the east coastal area of the North Slope for oil and gas exploration activities.

Irwin said this is the earliest opening since 1995 and two weeks earlier than last year, and is based on a study the department conducted last winter in conjunction with the Department of Energy and Yale University.

ConocoPhillips okays 2005 capex budget; Alaska, Canada spending up

The board of directors of ConocoPhillips has approved 2005 cash capital expenditures of approximately $6.9 billion, the company said in a statement today. This total excludes approximately $0.3 billion in capitalized interest and $0.2 billion in minority interest.

“Two-thirds of our 2005 capital program is focused on payout projects, those that will build on our strengths and advantaged positions in certain areas of the world to even further improve returns to our shareholders,” said Jim Mulva, chairman and chief executive officer.

The company will allocate approximately 75 percent of its 2005 capital budget to its exploration and production and midstream segments. Refining and marketing will receive about 22 percent of the budget. The remaining budget will be allocated to emerging businesses and corporate.

E&P's 2005 capital budget is approximately $5.1 billion, excluding capitalized interest and minority interest related to the Bayu-Undan project in the Timor Sea. Approximately $500 million budgeted for worldwide exploration activities is included in the regional totals that follow.

Approximately $1.4 billion of the E&P budget is allocated toward projects in the North Sea and West Africa.

ConocoPhillips said E&P anticipates spending approximately $900 million in the development of projects in the Asia Pacific region. The majority of these funds will go toward continued development of the Bayu-Undan 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.

The company has allocated roughly $900 million of the E&P budget to developments in the U.S. Lower 48 and Latin America. The focus in these areas will be on ongoing development programs in Lobo and San Juan in the Lower 48, as well as the development of the offshore Corocoro field and the Plataforma Deltana project, both in Venezuela.

The company intends to spend approximately $700 million of the E&P budget for its Alaska operations – up $100 million from 2004. Projects include the development of the Alpine satellites and the West Sak heavy oil field, but ConocoPhillips Alaska spokeswoman Dawn Patience told Petroleum News this afternoon that the company is still reviewing the U.S. Army Corps of Engineers record of decision on the Alpine satellites received Dec. 6 and will not be sanctioning satellite work until that review is complete. She said ConocoPhillips will be drilling four exploration wells on the North Slope this winter – two wildcat wells and two appraisal wells.

In Canada, E&P capital expenditures are expected to be about $700 million – up $300 million from 2004 – “with a focus on ongoing development programs in Western Canada, Syncrude expansion, Surmont heavy oil development, and continued work on the Mackenzie Delta gas pipeline,” the company said.

ConocoPhillips allocated roughly $400 million for projects in the Russia and Caspian region, primarily for continued development of the Kashagan field in the Caspian Sea and for the Timan-Pechora joint venture in northern Russia.

E&P estimates it will spend approximately $100 million in the Middle East and North Africa.

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