Businessmodel of ConocoPhillips

Customer Segments

ConocoPhillips markets crude oil, natural gas, natural gas liquids, liquefied natural gas and bitumen to customers worldwide. This principally comprises medium and large businesses operating within the energy, utility, and petroleum industries, including private and state-owned entities.

ConocoPhillips provides oil and gas to a number of high-profile companies, including British multinational oil and gas company BG Group, China’s state-controlled PetroChina, and Malaysia’s government-owned Petroliam Nasional.

ConocoPhillips serves a global customer base, recording sales across numerous jurisdictions including Australia, Canada, China, Indonesia, Malaysia, Norway, and the UK. The Company’s largest market, however, is its native US, which in 2015 accounted for around 55% of total sales revenue for the year.

Value Propositions

ConocoPhillips provides value to its customers in the following ways:

• Its industry standing and brand recognition, with the Company an established and well-respected name within the oil and gas industry, serving a range of high-profile companies;
• Its track-record for reliable project and product delivery, with the Company having successfully completed numerous projects and delivering a range of products over the course of more than 100 years;
• Its global sales and operational reach, with the Company serving customers and participating in exploration and production projects across the Americas, Europe, Asia Pacific, and other jurisdictions worldwide; and
• Its experience and technical expertise, with the Company employing specialist staff across its across its various departments and operational locations, including experienced industry executives. ### Channels

ConocoPhillips operates a website at www.conocophilips.com, where it provides information to customers on in activities, services, and operating locations. The nature of the Company’s operations, however, does not allow for the operation of an online sales channel.

ConocoPhillips primarily makes sales through its own direct sales teams, which are organised by geographic location. The Company also collaborates directly with customers on certain projects through its own operating teams and equipment.

ConocoPhillips transports oil and natural gas using pipelines, tankers, trucks and rail to connect its supply to customers worldwide, with the chosen delivery method depending on the project, location, economics, accessibility and environmental considerations.

Customer Relationships

ConocoPhillips does not provide products or services to its customers on a self-service basis. Instead, the Company’s business model requires that customers consult directly with members of the ConocoPhillips sales and operations teams in order to establish a clear brief and an understanding of deliverable requirements.

The Company’s personal care extends to various support and assistance services provided to customers during projects and after sales. Customers are able to contact ConocoPhillips directly through an online contact form, receiving tailored responses to queries, concerns and enquiries.

ConocoPhillips provides its customers with information on company developments and activities through its Newsroom portal, which includes news releases, presentations, and information. Customers can also interact directly with the Company through its social media accounts, including with Facebook, Twitter, LinkedIn and YouTube.

Key Activities

ConocoPhillips is an oil and gas exploration and production company. It locates, produces, transports and markets crude oil, bitumen, natural gas and liquefied natural gas to customers across the petrochemical, utility, energy sectors. ConocoPhillips operates through six operating segments, which are defined principally by geographic region: Alaska; Lower 48; Canada; Europe and North Africa; Asia Pacific and Middle East, and Other International.

The Company’s has ongoing production projects across the US, Norway, the UK, Canada, Australia, Timor-Leste, Indonesia, China, Malaysia and Qatar, and includes in its operational portfolio unconventional assets in North America, oil sands assets in Canada, various other international developments, and an inventory of global conventional and unconventional exploration prospects.

Key Partners

ConocoPhillips collaborates with a range of companies throughout the process of producing and distributing its oil and gas products. These partners can be divided into the following principal categories:

• Joint-Venture Partners, primarily comprising oil and gas operators with which the Company collaborates on exploration and production products through jointly-owned operating entities that typically operate on a regional basis;
• Supplier Partners, comprising suppliers of resources, equipment, tools and services, as well as contracting firms, that support the Company’s exploration, production and distribution activities; and
• Shipping and Distribution Partners, comprising companies that assist in the transportation of the Company’s products, including shipping, logistics and pipeline operators. ConocoPhillips has joint-venture partnerships with a number of high-profile companies, including Total, Sinopec, Qatar Petroleum, and Origin Energy. The Company also has a partnership with SEMCO Maritime for the development of telecommunication systems at the Norwegian oil fields Ekofisk and Eldfisk.

Key Resources

ConocoPhillips’s key resources are its technologies and intellectual properties, its project equipment and tools, its supply chain, its physical logistics and storage infrastructure, its sales and distribution channels, its partnerships, and its personnel.

At the end of 2015, ConocoPhillips held a total of 1,012 active patents in 58 countries worldwide, including 387 active US patents. During 2015, the Company received 46 patents in the US and 85 foreign patents. The Company does not consider the overall profitability of any business segment to be dependent on any single patent, trademark, or licence.

Cost Structure

ConocoPhillips incurs costs in relation to its research and development activities, the purchase and maintenance of equipment, the acquisition of supplies, the operation of active project assets, the storage and transportation of oil and gas, the management of its partnerships, and the retention of its personnel.

In 2015 ConocoPhillips largest expense related to its purchase of commodities, which amounted to $12.43 billion. This was followed by production and operating expenses in the amount of $7.01 billion, and exploration costs in the amount of $4.19 billion.

Revenue Streams

ConocoPhillips primarily generates revenue through the sale of crude oil, bitumen, natural gas, liquefied natural gas, natural gas liquids and other related items. In 2015 the Company’s revenue was recorded at $30.94 billion, down considerably on the $55.52 billion generated by the Company in 2014. The Company attributed this principally to a 44% decrease in sales and operating revenue as a result of lower prices across all commodities.

ConocoPhillips’s sales of crude oil were its largest revenue generator in 2015, amounting to $12.83 billion, while sales of natural gas amounted to $11.89 billion. The Company’s Lower 48 segment was its most lucrative, generating $11.98 in sales revenue for the year, more than 38% of the Company’s total annual revenue.