ConocoPhillips’ Midstream business primarily is conducted through a 50 percent equity investment in DCP Midstream, LLC as well as directly held assets and other equity affiliates. These assets include natural gas gathering and processing operations and natural gas liquids (NGL) fractionation and marketing businesses. The Midstream business purchases raw natural gas from producers and gathers natural gas through extensive pipeline gathering systems. The gathered natural gas is then processed to extract NGL. The remaining residue gas is marketed to electrical utilities, industrial users and marketing companies. Most of the NGL are fractionated – separated into individual components such as ethane, propane and butane. These individual products are marketed as chemical feedstock, fuel or refinery blendstock.

ConocoPhillips’ NGL extraction for 2006 totaled 240 MBPD, of which approximately 180 MBPD was from its interest in DCP Midstream and 60 MBPD from other Midstream assets. The company’s share of DCP Midstream’s raw gas throughput was 3.4 TBtu/d.

DCP Midstream LLC 

In July 2005, ConocoPhillips and Duke Energy Corp. restructured their perspective ownership levels in Duke Energy Field Services, now known as DCP Midstream, which resulted in an increase from ConocoPhillips’ ownership from 30.3 percent to 50 percent and equally shared governance of DCP Midstream by the two companies. On Jan. 1, 2007, Duke Energy’s 50 percent ownership of DCP Midstream transferred to Spectra Energy.

Headquartered in Denver, Colo., DCP Midstream is one of the largest natural gas and gas liquids gathering, processing and marketing companies in the United States. Operations include gathering and transporting raw natural gas through approximately 56,000 miles of pipeline in the following regions: the Gulf Coast, Central Texas, East Texas/North Louisiana, Mid-Continent, Permian and the Rocky Mountains area. The collected gas is processed at 52 owned or operated plants. DCP Midstream also has 10 fractionating facilities.

In December 2005, DCP Midstream created a new master limited partnership, DCP Midstream Partners, LP, of which DCP Midstream owns the general partner. DCP Midstream Partners gathers, compresses, treats, processes, transports and sells natural gas and also transports and sells natural gas liquids, and is a leading distributor of propane. The company began trading on the New York Stock Exchange under the symbol “DPM.”

In November 2006, DCP Midstream Partners completed the acquisition of Gas Supply Resources, a propane logistics company in the northeastern United States, from DCP Midstream.

Directly Held Assets and Other Affiliates

ConocoPhillips owns a 39 percent interest in Phoenix Park Gas Processors Limited, which operates a 1.35 BCFD gas processing plant and a 70 MBPD NGL fractionator in Trinidad. A third gas processing train is currently under construction, and when complete in 2008, will bring Phoenix Park’s total capacity to 2 BCFD. ConocoPhillips’ share of NGL extracted from this facility averaged 6,600 BOPD in 2006.

The company holds a 22.5 percent equity interest in Gulf Coast Fractionators, which owns a NGL fractionation plant in Mont Belvieu, Texas. ConocoPhillips operates this facility and owns 28 MBPD of its capacity. Additional assets include a 25 MBPD-capacity NGL fractionation plant in Gallup, N.M.; a 40 percent interest in a NGL fractionation plant in Conway, Kan., in which ConocoPhillips’ share of capacity is as much as 44 MBPD; a 50 percent interest in a NGL extraction plant in San Juan Co., N.M., with total capacity of 500 MMCFD; and minor interests in two NGL extraction plants located in Texas and Louisiana.