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We further advanced our workforce priorities during 2014. We are building a culture of collaboration, and investing in health and wellness programs and professional development. We believe these are important aspects of our goal to make ConocoPhillips a great place to work. We also strive to make our company a safer place to work. In 2014, we implemented our 8 Life Saving Rules  worldwide, with a continued focus on process safety. 

We also developed a strategy framework to guide improvements in environmental performance. For the eighth year in a row, the Dow Jones Sustainability Index North America recognized us for our sustainability e ff orts. We recognize that long-term success in our industry demands strong health, safety, environmental and social performance. We take pride in our accomplishments, but never stop looking for ways to improve. 

In the communities where we operate, we are committed to being a responsible neighbor and partner. We proactively engage with stakeholders to understand their expectations and incorporate these insights into our business plans. We have refocused our charitable investments primarily on two signature programs—one focused on global water and biodiversity stewardship and another that is focused on mathematics education for middle and high school students. 

By almost every measure, 2014 was another successful year for ConocoPhillips on our journey as an independent E&P company. We delivered on our commitments and strategic objectives. We are pleased that the market took notice. I want to thank our dedicated workforce, our board of directors and our shareholders for your part in our success. 

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An ongoing focus on safety through the 8 Life Saving Rules 

## Looking Ahead 

While we are very pleased with our progress in 2014, it is impossible to ignore the dramatic weakening of oil and gas prices that began toward the end of the year and continued into 2015. While the duration of the current oil and gas price downturn cannot be predicted, world supplies appear to be more abundant than previously anticipated, in large part due to growth from the North American unconventionals. In addition, global oil demand is growing less rapidly than previously forecast. Therefore, the supply and demand imbalance could constrain prices through 2015 or longer. 

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We responded quickly to the current low price environment and are well positioned with a large portfolio of low cost of supply development opportunities, the majority of our major project spending behind us and a strong balance sheet. Almost as soon as prices began declining, we made decisive adjustments to our capital plans. We reduced our 2015 capital expenditures budget to $11.5 billion, a reduction of more than 30 percent compared to 2014. Additionally, we had more than $5 billion of cash and cash equivalents on hand at year-end 2014, with balance sheet capacity that we are prepared to utilize. 

