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ConocoPhillips Cuts North American Spending for 2010

ConocoPhillips last week approved a 2010 capital program of $11.2 billion, which is 10% lower than the company's budget this year. In North America the emphasis will be "on the highest-graded production basins and opportunities," the producer said.

About 86% of next year's capital spending plan will go to support the Exploration and Production (E&P) segment, while the Refining and Marketing (R&M) segment represents about 12% of the program. The budget, said the Houston-based major, is consistent with its recently announced plan to improve returns by "shrinking to grow" (see NGI, Nov. 2).

"Our planned 2010 capital program will advance existing exploration and production projects, while preserving the potential to develop the company's large resource position in the future," said CEO Jim Mulva. "We intend to achieve our objectives of organically replacing reserves and increasing our upstream production from a reduced, more strategic asset base, consistent with our recently announced portfolio optimization plan."

More details on the capital, operating and financial plans will come in early 2010, Mulva said.

The total E&P segment in 2010 was given a $9.7 billion budget, which includes about $1.4 billion for worldwide exploration. North American E&P spending is to total about $4.1 billion, which is down from previous years. Capital spending this year was set at $12.5 billion last January, which was more than 18% lower than in 2008 (see NGI, Jan. 26).

According to ConocoPhillips:

In Europe, Asia, Africa and the Middle East, the E&P capital program is expected to total about $5.6 billion. Capital for the Middle East and Africa region is expected to be primarily directed toward completion of the Qatargas 3 liquefied natural gas project in Qatar, with remaining funds supporting onshore developments in Nigeria, Algeria and Libya.

"Exploration will be focused on finding significant resources, advancing high-potential opportunities and appraisal of recent discoveries," said the company.

Spending on wildcat wells in North America will be focused on the deepwater Gulf of Mexico and Canada's East Coast. The company also plans to "progress exploration drilling in the Eagle Ford Shale position in the U.S. Lower 48, a coal seam gas play in China and a shale gas play in Poland."

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