Our many stakeholders already know ConocoPhillips as a proud member of the energy industry, with a long and distinguished heritage as a fully integrated major company. In May 2012 we became an independent exploration and production (E&P) company through the spinoff to shareholders of our downstream energy businesses. ConocoPhillips is now exclusively focused on global exploration and production. While North America is our home and provides the majority of our production, we operate in almost 30 countries that include some of the world’s best prospects for development.
Our vision is to be the E&P company of choice by pioneering a new standard of excellence in financial and operational performance, business conduct, environmental protection and reputation. We recognize that to ensure true sustainability, we must continue returning value to shareholders, while helping supply the energy needed to drive the global economy, improving our environmental performance and contributing to the wellbeing of society.
ConocoPhillips considers safety performance as the highest operating priority. Our goal is zero injuries, illnesses and incidents in our workplaces and communities. We performed strongly during 2011 with low incident rates in both personal and process safety. We achieved this performance through a commitment to our time-honored SPIRIT values (Safety, People, Integrity, Responsibility, Innovation and Teamwork), which guide our actions globally, and through rigorous safety training and audit programs.
ConocoPhillips recognizes the environmental impacts associated with our operations, and is committed to raising environmental performance and sharing best practices. This past year we revamped our Health, Safety, and Environmental (HSE) Management System Standard, and increased emphasis on our environmental and sustainable development performance expectations.
Substantial investments in technology are enhancing our ability to find and produce oil and natural gas safely and efficiently, while reducing environmental impacts. For example, we continually research technologies to improve the operational and environmental performance of our world-scale oil sands development projects in Canada. Pilot projects in steam generation, flow controls, hydrocarbon injection and insulated tubing technologies seek to enhance energy efficiency and resource recovery, while reducing greenhouse gas (GHG) emissions, land footprint and water use. We are also a charter member of the U.S. EPA Natural Gas STAR Program and an early adopter of green completion technology to reduce GHG emissions associated with production.
Additionally, we support industry environmental efforts. For example, we co-led recent work by the Global Environmental Management Initiative and the World Business Council for Sustainable Development to manage water resources better and are now implementing the resulting tools. We also collaborated with a municipality in Australia to use existing water treatment facilities to conserve water, minimize land footprint and improve project financials for both the city and the company.
ConocoPhillips implements comprehensive action plans designed to address our social performance.
Our contributions to society begin with supplying energy that powers modern life. They extend to direct employment, capital investments, tax, fee and royalty payments, and community investments.
ConocoPhillips creates and maintains inclusive, honest and mutually beneficial relationships with our stakeholders, and views these relationships as tangible assets that are critical to our business success. Therefore, we engage openly and transparently to promote understanding of our activities, learn more about local issues and seek collaborative solutions. As part of this commitment, we revised our human rights position to include and align with specific references to widely accepted international frameworks regarding indigenous communities.
We work with communities near our operations to help them meet the needs of citizens and enhance the quality of life. During 2011, our community investments included more than $65 million in charitable contributions and thousands of hours of personal time volunteered by employees to assist worthy charitable and civic initiatives. We also build community capacity by conducting business with local suppliers. To ensure diversity in our supplier base, we cultivate relationships with minority- and women-owned businesses, and host our own annual internal supplier diversity awards program to encourage the efforts of our business units. The most recent competition was won by ConocoPhillips Canada for an integrated plan that delivered $350 million in business to local and Aboriginal contractors working on our oil sands development projects.
Our employees are our most important asset, and we strive to ensure their wellbeing and professional development. The Houston Business Journal recently honored us for offering the best employee wellness programs among large Houston-based companies. We were also named an employer of choice by an equal opportunity agency in Western Australia for encouraging advancement of women in the workplace.
We remain committed to delivering strong financial performance to our diverse stockholder base, which includes pension and investment funds that benefit millions of individual investors. During 2011, through share-price appreciation, attractive dividends and aggressive share repurchases, shareholders realized a total return of about 11 percent on their investment in our stock. We continued successfully executing our planned portfolio optimization through the sale of non-core properties, allowing closer focus on assets that offer attractive opportunities for organic growth. The recent repositioning of ConocoPhillips into two leading energy companies is part of our longstanding objective to create shareholder value.
As a large and geographically diverse E&P company, ConocoPhillips is well positioned to produce strong financial returns and secure promising investment opportunities. Meanwhile, the separate and independent Phillips 66 incorporates our former refining, marketing, transportation, midstream and chemicals businesses into a low-cost, integrated company with an investment grade credit rating and significant financial flexibility. Both companies are positioned to create value through earnings growth, higher returns and sector-leading distributions. While this report focuses on ConocoPhillips’ examples and plans for sustainable development as a new upstream company, it also includes the combined metrics for our integrated performance during 2011.
At ConocoPhillips, we view sustainable development as a vital element in earning the "license to operate" granted us by the many stakeholders we serve. We are committed to setting the standard for excellence as we build on our reputation as a respected and preferred operator, community member, employer, business partner and supplier. By combining our legacy strengths with the focus and culture of an independent company, we believe we can unlock the full potential of our employees and assets, thus benefiting all our stakeholders. We look forward to sharing our exciting future with you.
Sincerely,
Ryan LanceChairman and Chief Executive Officer