ConocoPhillips Reports on Strategic Progress
2012 Capital Program and Share Repurchase Program Announced
ConocoPhillips [NYSE:COP] today reported on the progress of its
three-year strategic plan to improve returns and create value for its
shareholders. The company also announced a 2012 capital program of $15.5
billion and a program to repurchase up to an additional $10 billion of
the company′s common stock. The company additionally provided an update
on its $15-20 billion asset divestiture program for 2010-2012.
'We have made strong progress on the plan set out in 2010 to enhance our
business through a disciplined approach to capital investment,
maintaining a strong balance sheet and growing distributions to our
shareholders,? said Jim Mulva, chairman and chief executive officer. ?'We
continue to optimize the portfolio, selling noncore holdings and
allocating investments to the highest-returning projects to position our
business for improved returns and greater value.?
The company is also on track to complete its plans to reposition into
two leading energy companies during the second quarter of 2012. The
downstream company, Phillips 66, will offer a unique approach to
downstream integration, comprising segment-leading refining and
marketing, midstream and chemicals businesses. ConocoPhillips will
become one of the largest and most diverse global pure-play exploration
and production companies.
'Our planned repositioning in 2012 will help us grow the value of these
two companies for our shareholders and unlock the potential of our
assets and employees,? said Mulva. 'We believe this is the best way for
us to succeed and be competitive in the long term.?
Capital Program
The 2012 capital program of $15.5 billion reflects an increase in
Exploration and Production (E&P) segment expenditures. Approximately 90
percent will be in support of E&P, while the Refining and Marketing
(R&M) segment represents 8 percent of 2012 planned expenditures.
'The 2012 capital program reflects our strategic emphasis on delivering
value by investing in the most profitable opportunities,? said Mulva.
'We expect competitive returns from our increased investments in
sanctioned unconventional resource projects, such as our growing oil
sands business in Canada, liquids-rich shale plays in the U.S. Lower 48,
and APLNG venture in Australia. As our production profile adjusts over
time to reflect our increased levels of investment in liquids plays and
lower levels in North American conventional natural gas, we expect to
continue increasing margins in the upstream business.?
The company also expects to deliver on its production and organic
reserve replacement targets by continuing to convert its captured
resource base to proved reserves, exploring high-impact prospects and
building high-quality acreage positions for future development.
Exploration and Production
The 2012 capital program for E&P is $14.0 billion and includes $2.2
billion for worldwide exploration, $0.4 billion of capitalized interest
and $0.7 billion for the company′s contributions to the FCCL business
venture and loans to other affiliates.
Approximately 60 percent of the E&P capital program will be spent in
North America. This represents an increase in the U.S. Lower 48 and
Canada compared with prior years, reflecting improved market conditions,
with additional emphasis on liquids-rich resource plays and high-return
investments.
In the U.S. Lower 48, capital funding will be focused on the Eagle
Ford and other liquids-rich plays in the Permian, Bakken and Barnett
fields. The program also funds ongoing development in the San Juan
Basin as well as the company′s contribution to the Marine Well
Containment Company.
Spending in Canada will focus on existing steam-assisted gravity
drainage oil sands projects and selective programs in western Canada
conventional basins, primarily on high-graded resource plays and to
maintain a substantial position for future development.
Capital spending in Alaska is expected to be slightly down compared to
2011 levels, and will be directed toward development of the existing
Prudhoe Bay and Kuparuk fields, as well as fields on the Western North
Slope.
In Europe, Asia Pacific and Africa, total spending is expected to be
approximately 40 percent of the E&P capital program.
Within the Asia Pacific region, funds will be used for further
development of the coalbed methane-to-LNG project being developed by
the Australia Pacific LNG (APLNG) joint venture, as well as for the
development of new fields offshore Malaysia and Indonesia.
In the North Sea, spending is planned for existing and new
opportunities in the Greater Ekofisk Area, the Greater Britannia
fields and development of the Jasmine and Clair Ridge projects.
The company will continue its focus on accessing, testing and appraising
material opportunities in both conventional and non-conventional oil and
gas plays. ?ConocoPhillips plans further appraisal of the Poseidon
discovery in the Browse Basin, offshore Australia, and the Tiber and
Shenandoah discoveries in the Gulf of Mexico. ?The company also plans to
test material prospects in the Gulf of Mexico and
Kazakhstan. ?Delineation of the company′s position in the Eagle Ford
shale play will continue, as will pilot programs in shale plays in the
Canadian Horn River Basin, Australia and Poland.
Refining and Marketing
The 2012 capital program for R&M is approximately $1.2 billion, with
$1.0 billion for its U.S. businesses and the remaining $0.2 billion for
international operations. These funds will be used primarily for
projects related to sustaining and improving the existing business with
a focus on safety, regulatory compliance, efficiency and reliability.
Other
Consistent with prior years, the 2012 capital program for Corporate and
all other segments is approximately $0.3 billion, primarily for global
information systems and corporate facilities.
Share Repurchase Program
For 2011, ConocoPhillips expects to repurchase approximately 155 million
of its own shares, or 11 percent of shares outstanding, for $11 billion.
This will bring the company′s total shares repurchased to 15 percent of
the shares outstanding at the inception of the $15 billion repurchase
program in 2010.
ConocoPhillips today announced its board of directors had approved a
share repurchase program for up to a further $10 billion of common stock.
Share acquisitions will be made at management′s discretion at prevailing
prices as permitted by securities laws and other legal requirements, and
subject to market conditions and other factors. Purchases may be
increased, decreased or discontinued at any time without prior notice.
Shares of stock repurchased under the plans are held as treasury shares.
Asset Divestiture Program
The company remains committed to its previously announced $15-20 billion
asset divestiture program for 2010-2012. Through September 2011, ?the
program has yielded ?proceeds of $8 billion. Recently announced
agreements to sell the company′s interests in two U.S. pipeline
companies, along with other sales already closed in the fourth quarter,
will increase that total to approximately ?$10.5 billion.
Separately, ConocoPhillips also completed the sale of its interest in
LUKOIL in early 2011, generating total proceeds of $9.5 billion in 2010
and 2011, which were largely used to fund share repurchases by the
company.
'We have made significant progress toward optimizing our portfolio by
divesting low-return, noncore assets,? said Mulva. 'We are
well-positioned to meet our three-year target and position the company
for growth and enhanced rates of return in the future.?
Proceeds from 2012 asset sales are expected to be used primarily to fund
share repurchases under the new program announced today.
'The execution of our strategic plan uniquely positions our businesses
for growth and long-term value creation,? said Mulva. 'We believe our
commitment to capital discipline, portfolio optimization and increasing
shareholder distributions will deliver the greatest value to our owners.?
ConocoPhillips is an integrated energy company with interests around the
world. ?Headquartered in Houston, the company had approximately 29,700
employees, $155 billion of assets, and $247 billion of annualized
revenues as of Sept. 30, 2011. For more information, go to www.conocophillips.com.
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE 'SAFE HARBOR' PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This press release contains forward-looking statements.
Forward-looking statements relate to future events and anticipated
results of operations, business strategies, and other aspects of our
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'target' and other similar words. However, the absence of these words
does not mean that the statements are not forward-looking. Where, in any
forward-looking statement, the company expresses an expectation or
belief as to future results, such expectation or belief is expressed in
good faith and believed to have a reasonable basis. However, there can
be no assurance that such expectation or belief will result or be
achieved. The actual results of operations can and will be affected by a
variety of risks and other matters including, but not limited to,
changes in commodity prices and refining and marketing margins; changes
in expected levels of oil and gas reserves or production; operating
hazards, drilling risks, unsuccessful exploratory activities;
difficulties in developing new products and manufacturing processes;
unexpected cost increases or difficulties maintaining or improving
company manufacturing or refining facilities; unexpected difficulties in
manufacturing, transporting or refining crude oil; international
monetary conditions; potential liability for remedial actions under
existing or future environmental regulations; potential liability
resulting from pending or future litigation; limited access to capital
or significantly higher cost of capital related to illiquidity or
uncertainty in the domestic or international financial markets; and
general domestic and international economic and political conditions; as
well as changes in tax, environmental and other laws applicable to our
business. Other factors that could cause actual results to differ
materially from those described in the forward-looking statements
include other economic, business, competitive and/or regulatory factors
affecting our business generally as set forth in our filings with the
Securities and Exchange Commission (SEC). Unless legally required,
ConocoPhillips undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.
ConocoPhillips
Aftab Ahmed, 281-293-4138 (media)
aftab.ahmed@conocophillips.com
or
Clayton
Reasor, 212-207-1996 (investors)
c.c.reasor@conocophillips.com
