The board of directors of ConocoPhillips 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.

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