ConocoPhillips to reduce costs by $1 billion while increasing development of unconventionals

ConocoPhillips (NYSE: COP) provided details of its financial priorities and operating plan at its Analyst and Investor Meeting on April 8 in New York.

“The energy landscape has changed dramatically as a result of the recent decline in commodity prices, but we responded quickly to position the company as a core energy holding in a lower, more volatile price environment,” said Ryan Lance, chairman and CEO. “We have a diverse, world-class portfolio that provides increasing capital flexibility as our major projects start to come online. We also have a strong balance sheet with the financial flexibility to respond to changes in the price environment.”

In the meeting, the company confirmed its priorities of a compelling dividend and cash flow neutrality in 2017 and beyond. It also outlined its cost improvement goal of reducing operating costs by $1 billion by year-end 2016 compared with 2014. Reductions will come primarily from lower lifting costs, improvements, and standardization of processes, and lower general and administrative costs.

The company released details on a three-year investment plan with annual capital expenditures of approximately $11.5 billion. Under this plan, the company expects to increase capital to development programs, primarily in the North American unconventionals, by 50% as major project spending declines by 45%.

It outlined its plans for volume growth, which is expected to be 2% to 3% in 2015 and increase to 1.7 million barrels of oil equivalent per day in 2017. Production from the company’s Asia Pacific and Middle East, Canada, and US Lower 48 segments is expected to increase over this period, while production from the Alaska and Europe segments is expected to remain relatively flat. The company’s growth outlook excludes production from Libya.

The company also provided details on its captured resource base of 44 billion barrels of oil equivalent, which are primarily low cost of supply resources in OECD countries. These resources provide a diverse source of long-term growth opportunities.

“We believe we are uniquely positioned to execute a viable, prudent plan that delivers on our commitments to shareholders,” Lance said. “The dividend remains our top priority, and we will continue to exercise our capital flexibility and financial strength to achieve cash flow neutrality in 2017. We have successfully delivered on our commitments to shareholders over the past three years and we remain committed to continuing that track record of success.”

Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now


Logistics Risk Management in the Transformer Industry

Transformers often are shipped thousands of miles, involving multiple handoffs,and more than a do...

Secrets of Barco UniSee Mount Revealed

Last year Barco introduced UniSee, a revolutionary large-scale visualization platform designed to...

The Time is Right for Optimum Reliability: Capital-Intensive Industries and Asset Performance Management

Imagine a plant that is no longer at risk of a random shutdown. Imagine not worrying about losing...

Going Digital: The New Normal in Oil & Gas

In this whitepaper you will learn how Keystone Engineering, ONGC, and Saipem are using software t...