ConocoPhillips expects 2005 oil and natural gas production will be flat when compared with 2004, or about 60,000 boe/d under its initial guidance, but longer term, output should rise 3%, company officials said Wednesday. This year's shortfall was blamed on lost output under production-sharing agreements with foreign governments, as well as the Gulf Coast hurricanes in the third quarter.
The integrated major's management team outlined ConocoPhillips' strategy and outlook during a half-day analyst conference in New York City.
"We like our asset base, we like our businesses," CEO Jim Mulva told analysts. "We're not interested in selling anything, we just want to grow." He noted in hindsight, there were areas ConocoPhillips would like to have a "stronger portfolio." However, "the facts are, we are the company we are because of all of the decisions from the past. We will take what we have, and grow, develop and nurture it, and make it what we want it to be in the future."
Mulva said the company is not counting on replacing a lot of reserves through new exploration. Instead, he said it will concentrate on the reserves it has and new ventures. "We get it by way of technology. We do it through business development, LUKOIL, [liquefied natural gas] LNG...things like this...You just can't throw money at new projects," he said. "In hindsight, it's not an efficient use to shareholders to just throw money at things. In terms of capability, we feel we can go anywhere in the world and do any project and compete anywhere in the world."
Bill Berry, executive vice president of exploration and production, said in 2006, production should rise about 1.6% to 1.65 million boe/d. ConocoPhillips had earlier set output in 2006 at 1.7 million boe/d. However, over the longer term, the oil major is forecasting average production growth of 3%, which includes a contribution from its equity stake in Russian-based LUKOIL.
Developments to bring arctic gas from Alaska and Canada's Mackenzie Delta are progressing, Berry said, along with LNG projects in the Timor Sea, Qatar, Russia, Nigeria and Venezuela. Domestically, ConocoPhillips plans to expand its drilling programs in Canada and the Lower 48.
"This has been a good year, and our strong operating and financial performance will help us take steps to address the challenges our industry faces in meeting the continually growing demand for energy," Mulva said. "Our strong reinvestment rate will continue in 2006, where we have earmarked an estimated $12 billion in investment activity," up from about $11 billion this year. "This will fund our efforts to improve our access to worldwide exploration and production resources and increasing our refining capacity and capabilities."
ConocoPhillips also announced a stock repurchase program to repurchase up to $1 billion in stock over the next two years. This plan is in addition to the prior two $1 billion programs announced in February and August, under which the company has repurchased about $1.9 billion of its common stock.
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