ConocoPhillips Offers 2015 Capital Budget of $13.5B

ConocoPhillips (NYSE: COP) today announced a 2015 capital budget of $13.5billion, a decrease of approximately 20 percent compared to 2014. Thereduction in capital relative to 2014 primarily reflects lower spending onmajor projects, several of which are nearing completion, as well as thedeferral of spending on North American unconventional plays.Despite the lower investment level, the company expects to achieveapproximately 3 percent production growth in 2015 from continuing operations,excluding Libya. Key sources of growth include recent major project startupsin Canada, Europe and Malaysia, development drilling programs in the EagleFord and Bakken, and new production from 2015 major project startups atEldfisk II, the Australia Pacific LNG (APLNG) Project and Surmont Phase 2.“We are setting our 2015 capital budget at a level that we believe is prudentgiven the current environment,” said Ryan Lance, chairman and chief executiveofficer. “This plan demonstrates our focus on cash flow neutrality and acompetitive dividend, while maintaining our financial strength. We arefortunate to have significant flexibility in our capital program. Spending onseveral major projects has peaked and we will get the benefit of productionuplift from those projects over the next few years. In addition, we havesignificant identified inventory in the unconventionals, where we also retaina high degree of capital flexibility.”The 2015 capital budget includes funding for base maintenance and corporateexpenditures, development drilling programs, major projects, and explorationand appraisal spending. The breakdown is as follows:Base MaintenanceApproximately $1.9 billion is allocated to base maintenance and corporateexpenditures. This is a slight reduction compared to 2014, reflecting lowerplanned spending in several producing assets across the portfolio.Development Drilling ProgramsApproximately $5.0 billion is allocated toward the company's developmentdrilling programs. This compares to the 2014 budget of $6.5 billion. In 2015,the Lower 48 development program capital will continue to target the EagleFord and Bakken, and will defer significant investment in the emerging NorthAmerican unconventional plays, including the Permian, Niobrara, Montney andDuvernay. The company retains the flexibility to ramp up or down activity inthe unconventionals.Major ProjectsApproximately $4.8 billion is focused on the company's sanctioned majorprojects. This represents a significant reduction compared to 2014, whichincluded peak spending at the APLNG and Surmont Phase 2 projects. Funding in2015 will focus on completion of APLNG and Surmont Phase 2, as well asmultiple projects in Alaska, Europe and Malaysia.Exploration and AppraisalApproximately $1.8 billion is allocated toward the company's exploration andappraisal programs, down slightly compared to 2014. This spending will focuson conventional activity in the U.S. Gulf of Mexico, offshore West Africa andNova Scotia, as well as unconventional activity in North America.ConocoPhillips will provide additional details on its 2015 capital program andproduction outlook during its fourth-quarter conference call on Jan. 29, 2015and its Analyst Meeting on April 8, 2015 in New York.