Ryan Lance is defining the new ConocoPhillips as the independent E&P company moves into organic growth mode with a focus on unconventional plays, major development projects, and an emerging exploration program.

This past July, ConocoPhillips reported its first quarterly results as a standalone upstream company, having split off its downstream assets into Phillips 66 earlier this year to become the largest North American-based independent. Production that quarter was 1.5 MMboe/d (55% liquids, 25% North American natural gas, and 20% international gas and LNG). Cash from continuing operations was US $2.2 billion.

At the helm of the Houston company is Chairman and CEO Ryan M. Lance. He is moving the new entity forward by capitalizing on its major production bases in North America, Norway, the UK, Australia, Indonesia, Qatar, and China. Production has declined since 2009 as a result of non-core asset divestments. But volume ramp-ups from shale liquids in the US, oil sands in Canada, and international development projects, as well as emerging exploration opportunities, should soon take care of that.

The company's roots date back more than a century to Oklahoma, through heritage companies Continental Oil and Phillips Petroleum. Today the new independent has 16,500 employees and assets in 30 countries. North America makes up more than half the portfolio.

"Five years ago, people would have said that our North American focus was a problem, but now it's where everybody wants to be thanks to its unconventional resources and deepwater potential," noted Lance. "Also, 80% of our assets are in OECD countries, and we like the stability and risk mitigation this provides."

What does forging a new identity as a pure upstream company look like?

It's blending the old and the new – combining the size, scale, and scope of a major integrated company with the aggressiveness and agility of an independent.

People always tell me, "You have to act like an independent now," and I say, "No, we need to define what it means to be an independent ConocoPhillips." We are unique and uniquely capable. Under [retired chairman and CEO] Jim Mulva's leadership during an era of restricted resource access and rising commodity prices, acquisitions built the major portfolio we enjoy today, with 43 Bbbl of total resources. With years of exploitation and development opportunities in inventory and shale opening up once-undreamed-of new potential, we can move into organic growth mode through the drill bit while building on our capabilities as an explorer.

I also like to remind people that some things won't change – our commitment to safety, environmental protection, operations excellence, financial strength, our moral and ethical compass, and our relationships with the community and host governments.

As the largest North American independent out there, how are you positioning the "new" ConocoPhillips?

On the basis of production and reserves, we are about two times the size of the next-largest independent. But we're still smaller than the majors, so we are carving out a new space.

Analysts don't quite know what box to put us in. They don't know whether to value us as a growth-oriented company or a returns-oriented company. In fact, we believe we are both. We're aiming for 3% to 5% average production and margin compound annual growth beginning in 2013. We're producing 1.5 million boe/d to 1.6 million boe/d now and plan to get to 1.8 million over the next five years, all from visible projects already under way. The unique thing is that this growth also will improve cash flows and margins. For our size, scale, and scope, we've built a pretty exciting growth platform.

World View

The company has identified five major projects worldwide to maintain steady growth.

To what extent are you focused on unconventionals?

What a huge game-changer they are! When you add in the oil sands, there's tremendous opportunity in North America. For example, ConocoPhillips expects 210,000 b/d of new production from Lower 48 shale trends by 2016. In the Eagle Ford, we're drilling 180 wells this year and producing 70,000 b/d – up from zero only 18 months ago. In the Bakken, we'll drill 120 wells this year on a 600,000-acre position. In the Permian, we plan 300 wells this year on a 1.1-millionacre position that includes two shale trends as well as conventional potential, with 7,000 identified new well locations.

As for the US overall, rewind five years and everyone was talking about peak oil and importing more than 60% of its oil. The whole conversation is tipped on its head now when you think about the opportunity we have as a country and its impact on energy policy.

How do you achieve 3% to 5% growth?

We have five high-margin areas that will account for 550,000-plus boe/d by 2016: US unconventionals; the Canadian oil sands, where we got out of surface mining and remain in [steam-assisted gravity drainage]; the North Sea, where we have several projects in development; Malaysia, where we have a big deepwater position; and Australia, through the coalbed methane-to-LNG project in Queensland.

The organization knows what it will take, and all of these projects are now under way. Some will start up this year, like the first phase of the Malaysia development. The UK Jasmine project comes online next year, as do more of our Canadian oil sands. The Asia-Pacific LNG project is in 2015 and 2016. LNG is very important as Asia and Europe are short on natural gas, making these projects very competitive.

For the longer term, we've built a significant exploration portfolio of both unconventional and conventional opportunities. For example, we're now the industry's sixth-largest deepwater acreage holder in the Gulf of Mexico and have recently started drilling there. We hold two exploration blocks offshore Angola offsetting large recent discoveries as well as blocks in the Bengal fan off Bangladesh and the Browse basin off Australia, to name a few. We're looking to expand our positions and add new ones if they can be competitive.

How much are you buying in the US?

We've added about 700,000 acres since 2011 in North American unconventional plays and are always looking for opportunities. We seek out areas where we can build material positions early at reasonable cost – as in the Eagle Ford, where our position cost only around $300 an acre.

What kind of portfolio mix are you aiming for?

I don't have a set goal for a certain mix, but we're not investing any money in North American dry gas plays, obviously. We target investments in high-quality assets that will improve our margins and fit in with where we're going overall.

People ask me, "Do you like oil or gas? In what areas?" I like good rocks, low cost of supply, and access to good markets. You can get these through either oil or gas, depending on location. I don't have an absolute target – I don't think about the business that way.

Tell us more about the Eagle Ford.

We love it. We were one of the first in this play and added about 300,000 acres in 2005 and 2006. We identified the condensate window early on. Today we're among the best operators there and are taking lessons learned and applying them in a dozen other North American shale trends.

You talked about the shales at the OPEC meeting earlier this year. How did the ministers react?

I told them that these unconventional plays and the oil sands have changed the game and that there is an opportunity for North America to be a net exporter by, pick a date, maybe 2025.

The reaction varied from some people who don't want to believe this will happen to others who want to learn more about it and consider it in their own plans. There's no doubt the reserves are there, so it's a question of deliverability, timing of production, and whether appropriate legislative and regulatory approvals can be obtained.

The other question is how will the unconventional opportunities present themselves abroad? For example, the jury is still out in Poland, where we are drilling pilot wells and preparing to fracture them. It's still early. The resource is there; the question is deliverability.

You know, the juxtaposition of all these trends – development of the unconventional resources, the deepwater plays, the LNG projects, and so on – makes it a great time to be in this business. I'm excited about where we are and where we're going and the opportunity to deliver on the plans we've set in motion. The best days for ConocoPhillips are still ahead.