ConocoPhillips lowers 2017 capex by 10pc to $4.5bn
Houston, 26 October (Argus) — ConocoPhillips cut its 2017 spending plans by another 10pc amid assets sales and as spending on large projects ends.
The world's biggest independent pared its capex to $4.5bn from the $4.8bn given in the second quarter, which was revised down from $5bn estimated earlier. But the producer stuck with its full-year output guidance despite disruptions from Hurricane Harvey, which hit the US Gulf Coast in end-August, particularly at its US onshore operations in Texas' Eagle Ford basin.
It expects 2017 production to be between 1.35-1.36mn b/d of oil equivalent (boe/d), narrower than an earlier guidance of 1.34-1.37mn boe/d. Output in the fourth quarter is expected to come in at 1.2-1.24mn boe/d.
Production, excluding Libya, in the third quarter fell by 21pc from a year earlier to 1.23mn boe/d from 1.56mn boe/d a year earlier, largely on account of asset dispositions. Excluding the impact from dispositions of 58,000 boe/d in the third quarter of this year and 429 boe/d a year earlier, underlying production increased by 16,000 boe/d, or 1.4pc. That came from the ramp up of major projects and ongoing development work, which more than offset normal field decline and hurricane downtime.
"We continued to deliver transformational actions to reset our company through non-core asset sales, debt reduction and share repurchases," chief executive Ryan Lance said. "While the outlook for commodity prices has improved, we remain committed to our disciplined strategy."
During the quarter, Eagle Ford production fell by 15,000 boe/d from Harvey, but output has been restored by the end of September.
Capex in the third quarter was $1.1bn and $3.1bn for the nine months. During the quarter, it received $3.0bn from asset divestitures, paid $2.5bn to reduce debt and repurchased $1bn worth of company stock. Large projects nearing completion include those in Alaska and liquefied natural gas facilities in Australia.
ConocoPhillips closed the $3bn sale of its San Juan basin assets in New Mexico and southwest Colorado during the quarter. Overall, it expects to receive $16bn from divestitures this year, the bulk of it coming from its Canadian oil sands sale.
The independent's total debt fell to $21bn as of end-September compared with $28.7bn a year earlier and $27.3bn as of end-2016. It expects to reduce debt to less than $20bn by the end of this year and repurchase shares worth of $3bn.
Earnings improved compared with the third quarter of 2016 due to higher realized prices, lower exploration expense and impacts from dispositions. Overall, the company's production and operating expenses fell to $1.22bn during the quarter from $1.53bn a year earlier.
Those factors helped the producer post a profit of $420mn in the third quarter, on revenue of $7.2bn, compared with a loss of $1.04bn a year earlier, on revenue of $6.5bn.