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ConocoPhillips expects flat production for 2009

ConocoPhillips expects flat production for 2009

ConocoPhillips, the third-largest U.S. oil company, said Wednesday it expects its global oil and gas production to be flat this year versus 2008 even as it sharply reduces capital spending and tries to cut costs.
During a presentation for Wall Street analysts in New York, the Houston-based company stuck by its $12.5 billion capital spending budget announced in January, when ConocoPhillips also said it was cutting 1,300 jobs, or about 4 percent of its work force. This year's capital budget is 37 percent lower than last year's outlay of $19.9 billion.
ConocoPhillips, like others in the industry, has faced difficult market conditions amid the worst global recession in a generation, and chairman and chief executive Jim Mulva told analysts that signs of a rebound have yet to emerge.
"The issue for most of us is there's no real indication of quite where the bottom is," Mulva said. "There's really quite a lack of confidence in the market place."
Mulva said he's hopeful for the start of a recovery sometime in 2010, but "whether that's early, mid- or the latter part, who really knows?"
ConocoPhillips shares rose a penny to $38.01 in afternoon trading Wednesday. They've traded in a range of $34.12 to $95.96 in the past year and have fallen about 60 percent since early July.
After peaking near $150 in July, crude prices fell more than 70 percent to end 2008 at $44.60 a barrel. Price have fluctuated somewhat to start 2009 but remain near year-end levels. Light, sweet crude for April delivery was trading Wednesday around $45 a barrel on the New York Mercantile Exchange.
Conoco said it expects 2009 production to amount to 1.8 billion barrels of oil equivalent a day, roughly the same as 2008 levels. Production estimates include ConocoPhillips' Canadian Syncrude operations but not its Russian Lukoil business.
The company also expects its reserves-replacement rate to exceed 100 percent over the next five years.
Of the $12.5 billion budgeted for its capital program, ConocoPhillips said it plans to spend $10.3 billion at its exploration and production, or upstream, arm and $2 billion at its refining and marketing division.
Roughly 60 percent of the refining and marketing spending will go toward maintenance, while the rest will fund major projects.
The largest portion of upstream spending _ $4.6 billion _ will be used to finance major projects around the world.
As it adjusts to lower commodity prices, the company said it hopes to trim costs by about $1.4 billion this year, in part from the job reductions.
Even as oil and gas producers navigate this difficult period, they're preparing to adjust to President Barack Obama's plans for a "green energy economy" and, in particular, legislation aimed at addressing carbon emissions and climate change.
As he has in the past, Mulva said it's vital for oil companies to have a voice in policy discussions, which include proposals for either a carbon tax or a cap-and-trade system.
"You can do it both ways," he acknowledged. But Mulva said one of his big concerns is oil and gas producers will be targeted to carry more of the cost burden than they should based on emissions levels.
"We know we need to be responsible for our emissions, but we don't feel we should be overly taxed," he said. "This is quite a challenge for us."


Updated : 2021-04-11 23:22 GMT+08:00