ConocoPhillips offers 25% interest in W. Natuna?s Nila PSC

The following is a summary of ConocoPhillips Indonesia?s paper presented at SEAPEX?s 2003 Exploration Conference and Farmout Forum, Sept 15-17, 2003, in Singapore.

Nila PSC Farmout

ConocoPhillips Indonesia Ltd (?COPI?) seeks a partner who will earn 25% of COPI?s participating interest by paying a percentage of COPI?s sunk costs and carrying a percentage of COPI's forward costs through the firm commitment period.

ConocoPhillips Indonesia Ltd (?COPI?)? Nila Block PSC is located in the Indonesian waters of the West Natuna Sea and positioned immediately adjacent to two producing COPI operated blocks; South Natuna Sea Block B and the Kakap Block. The Nila Block covers an area of 5,271 sq. km. and water depth in the area is approximately 300 feet.

The Nila Block was awarded to ConocoPhillips (65%) and Inpex (35%) on November 22nd 2001. The Block has a 10-year exploration phase with a firm work program for the first three years.

Nila Block Prospectivity
Six wells have been drilled within the Nila acreage area resulting in one discovery, the NBZ-1. This well flowed 15.5 MMCFGD from a reservoir in the Post-rift Gabus formation.

The few wells and pre-existing sparse seismic coverage across the block demonstrate that this acreage is very under-explored and could contain significant hydrocarbon potential, as encountered in the adjacent blocks.

The diverse play trends and prospect styles of the Nila Block can be subdivided into four separate exploration areas, each having unique risk and reserves potential. The four separate areas of interest include the Anoa subthrust, the Bukit High, the NBA Graben and the NW Ikan Pari Graben play trends.

The NW Ikan Pari and NBA areas are considered to have the most significant commercial potential and are designated by COPI as the highgraded area.

This area is seen as an extension of commercial oil and gas plays and contains proven reservoir and source rocks. Recently acquired 2D seismic has resulted in significantly improved seismic imaging and has allowed for the identification of numerous leads and prospects with independent risks attributes. Maturation modeling shows gas with associated liquids to be the most likely hydrocarbon phase, although oil is a possible outcome. Currently the un-risked reserves for individual prospects in this highgraded area range between 150 BCF and 800 BCF.

Nila Block Work Program and Budget
The work program on the Nila Block, as per the partnership?s bid submission, included both seismic and well commitments. The ?firm? work program commitment for the first three years was bid as follows:

Year 1: 1100 kms 2D seismic, 800 square km 3D seismic
Year 2: three wells
Year 3: none

As per the Nila PSC agreement the specific seismic and well work program activities represent the commitment, rather than a monetary obligation attached to these.

After being awarded the Block, ConocoPhillips was successful in negotiating a flexible execution of the above work program, such that the activities do not necessarily have to be executed in the timing as per bid, as long as the activities committed to are completed within the first three years. To date 1,578 kms 2D seismic have been acquired and plans are to drill two wells and acquire 3D seismic in 2003. The third commitment well is planned for 2004.

The estimated cost associated with the work program and associated cost of the license bid are summarized below:

Nila Budget -- Gross $MM
	2001	2002	2003	2004
Total O&O (incl. Seismic)	$0.463	$2.870	$11.300	$3.850
Total Capex	$1.500	$0.000	$8.500	$5.200
Total Expenditures	$1.963	$2.870	$19.800	$9.050

Nila Block Development Scenarios
The Nila Block is adjacent to the Natuna Sea Block B, in which COPI is the PSC operator. This position provides opportunities for synergies with Block B using existing and planned infrastructure.

Gas from Nila Block could use the spare capacity purposely built into both the West Natuna System and the HangTuah to Duyong System without having to bear the large upfront capital costs of constructing such a system. The COPI facilities in the adjacent Block B PSC offers a regional infrastructure hub and will provide the opportunity to capture operational and logistics synergies resulting in lower cost development options in the Nila PSC.

The initial field development in the Nila Block is expected to utilize a production processing platform and export pipeline to the North Belut Field located in nearby Block B. Future prospects are likely to be lower cost developments through tie-back to the main processing platform via in-field pipelines.

The project timeline for the Nila Block shows Exploration and Appraisal drilling commencing 3rd quarter 2003, leading to a projected first gas date in 2010.

Nila Block ? Marketing Opportunities for Natural Gas
The Nila Block is strategically positioned to capture the emerging demand for natural gas in the two key regional markets ? Malaysia and Singapore. Both markets, especially Malaysia, are projected to have significant unsupplied demand from 2006 onwards. We forecast that Malaysia alone will require over 580 MMCFGD of gas imports by 2006. The markets will need additional supplies of gas and will seek the most secure and cost effective sources of supply.

The Nila Block?s position in the Natuna Sea provides natural security of a maritime location and, whilst the Nila Block will be in competition for the Malaysia and Singaporean markets, its proximity to existing transportation infrastructure with spare capacity is a significant competitive advantage. The existing pipeline infrastructure and commercial agreements that currently deliver gas to Singapore and Malaysia are designed to encourage third party access. The agreement structures have contemplated third party gas and Nila Block will benefit from the existing transportation and tariff structures, with the possibilities of the Nila Block providing gas to supply existing gas contracts ? allowing adjacent PSCs to optimize field development plans. (end of summary)