ConocoPhillips has delivered on the initial objectives it set out to accomplish when its mega merger took effect two years ago, but “much more remains to be accomplished,” CEO Jim Mulva said Wednesday. Mulva and his executive team outlined the strategic plans for the coming year at a meeting in New York with financial analysts.
Mulva outlined plans to maintain capital, operating and financial discipline, while capitalizing on ConocoPhillips’ integrated portfolio and improving financial position to grow and develop the company with a well-defined set of strong projects worldwide.
“We are pleased with our performance during 2004, and going forward we will maintain our focus on continuous improvement in all of our operations,” said Mulva. A lot has been accomplished to date, “yet we know there is much more that remains to be accomplished. As a result, we are raising our own expectations for the future.”
Worldwide, the company’s oil and natural gas production is forecast to increase by 5% in 2005 and 2006, then grow about 3% a year after that. It plans to hold production steady at 1.3 million boe/d over the next two years in the developed western companies it operates in, said Mulva. Projects in Venezuela, Asia and Russia also will contribute to the growth targets.
Capital spending for exploration and production is estimated at $5.1 billion in 2005, up from $4.5 billion this year because of adverse foreign-exchange effects, higher oilfield service costs and additional projects. The total capital budget for 2005 is about $7.4 billion.
Mulva noted that keeping costs down while expanding with new projects remains the priority for the upstream. If the company can maintain combined production and finding and development costs at around $10/boe, he said it will stay competitive with the larger oil producers.
ConocoPhillips is “opportunity rich,” Mulva said, “with a strong and sustainable set of well-defined projects that will provide the momentum to take us into the next decade and further. Our developing legacy projects continue to progress, complemented by our recent Lukoil transaction,” which he said gives the producer “access to one of the most resource-rich regions of the world.”
In September, ConocoPhillips and OAO Lukoil Holdings announced an alliance, with ConocoPhillips taking up to a 20% stake in Russian’s second largest producer (see Daily GPI, Sept. 30).
In its exploration and production (E&P) business, ConocoPhillips plans to grow production and reserves by maintaining stable production in Asia and the Middle East. Mulva said that the company is making good progress on its plan to grow its E&P segment to 65-70% of capital employed.
Plans for contributions from the company’s Commercial operations, and its Midstream, Chemicals and Emerging Businesses segments also were provided.
“We have strong technological capabilities and financial resources, and more importantly, we have the talent and commitment of an exceptional group of women and men,” said Mulva. “They continue to raise the bar in generating returns, and in operating safely, reliably and responsibly. It is their spirit that will enable us to execute the operating and financial plans which are the key ingredients for our success.”
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