ConocoPhillips announced a 2013 capital budget of $15.8 billion (including contributions to the FCCL joint venture), which is approximately flat to expected 2012 capital program spending.
Investments during 2013 will target the company’s diverse portfolio of global opportunities, with approximately 60 percent of the budget allocated toward North America and 40 percent toward Europe, Asia Pacific and other international businesses.
“The 2013 capital budget reflects continued progress toward achieving a unique combination of growth and returns as an independent E&P company,” said Ryan Lance, chairman and chief executive officer. “Similar to 2012, next year’s investments will be directed predominantly toward high-quality growth projects and programs that are already in execution mode, as well as exploration opportunities to build inventory for the future. We also expect to complete our announced strategic asset disposition program in 2013. When this program is complete, the combination of portfolio high-grading and strong ongoing investment programs will put ConocoPhillips on track to deliver on our long-term annual growth goals of 3 to 5 percent on both volumes and margins, with a compelling dividend.”
The budget includes allocations for base maintenance, exploitation, major project, and exploration and appraisal spending, as well as corporate expenditures. In addition, the budget reflects assumptions regarding the timing of asset sales. The actual timing of dispositions could cause capital to be higher or lower. The key categories of capital spending are as follows:
Base Maintenance
Approximately 10 percent of the capital budget will be directed toward maintenance of the company’s high-quality legacy base portfolio.
Exploitation
Approximately 40 percent of the capital budget is allocated to the company’s highly profitable exploitation programs in its legacy asset base, which includes 21 million net acres of onshore leasehold in the Lower 48 and western Canada. A significant portion of this leasehold is held by production. Growth from these exploitation programs offsets natural decline from the company’s producing assets.
Major Projects
Approximately 35 percent of the capital budget is expected to be spent on the company’s sanctioned major projects, which provide significant future production growth.
Exploration and Appraisal
Approximately 15 percent of the capital budget is planned for the company’s worldwide exploration and appraisal program, which targets acquiring, testing and appraising material opportunities in both conventional and unconventional plays.
“Our 2013 capital budget provides funding for the key growth projects and programs in our portfolio and provides flexibility to capture new opportunities that may arise,” added Lance. “The budget supports our plan to increase value for shareholders through focused capital investments that deliver growth in production and cash margins, improved returns on capital, and sector-leading shareholder distributions.”
[mappress] LNG World News Staff, December 10, 2012; Image: ConocoPhillips