• 4 minutes China 2019 - Orwell was 35 years out
  • 7 minutes Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 11 minutes Trump will capitulate on the trade war
  • 14 minutes Glory to Hong Kong
  • 27 mins China's Blueprint For Global Power
  • 2 hours Bloomberg: shale slowing. Third wave of shale coming.
  • 13 hours Boring! See Ya Clowns, And Have Fun In Germany
  • 39 mins ABC of Brexit, economy wise, where to find sites, links to articles ?
  • 2 hours Yesterday Angela Merkel stopped Trump technology war on China – the moral of the story is do not eavesdrop on ladies with high ethical standards
  • 4 hours Brexit agreement
  • 18 hours Crazy Stories From Round The World
  • 12 hours USA Carried Out Secret Cyber Strike On Iran In Wake Of Saudi Oil Attack
  • 42 mins Erdogan Holds All The Cards ... 3.6 Million Of Them
  • 16 hours the future
  • 2 hours Spain Is On The Edge...Clashes Between Catalonia And "Madrid"
  • 13 hours 5 Tweets That Change The World?
Oil Prices Jump On A Lone Piece Of Bullish News

Oil Prices Jump On A Lone Piece Of Bullish News

Oil prices rose on Wednesday…

IEA Draws Gloomy Oil Demand Outlook For 2020

IEA Draws Gloomy Oil Demand Outlook For 2020

A weakening global economy and…

Lower Spending By ConocoPhillips May Mean Higher Oil Prices

The six-month slide in oil prices has driven Houston-based oil and gas giant ConocoPhillips to reduce its capital budget by 20 percent for 2015. The result was an immediate, if small, rise in the price of oil.

The company's spending will be cut to $13.5 billion as it plans to postpone major investments in two Canadian oil fields, Duvernay and Montney, Texas’ Permian Basin and the shale field Niobrara in regions of Colorado, Kansas, Nebraska and Wyoming.

“We are setting our 2015 capital budget at a level that we believe is prudent given the current environment,” the company’s CEO Ryan Lance said Dec. 8. That environment includes a 16 percent drop in the value of ConocoPhillips’ shares since prices began falling in mid-June.

Related: Dropping Oil Prices Send Shockwaves Through Energy Sector

“This plan demonstrates our focus on cash flow neutrality and a competitive dividend, while maintaining our financial strength,” Lance said. “We are fortunate to have significant flexibility in our capital program.”

Early the very next day, two leading benchmark oils, Brent and West Texas Intermediate, rose from their lowest prices in more than five years. The feeling among buyers evidently was that ConocoPhillips isn’t alone in planning to cut budgets – and therefore production – thereby reducing the global oil glut.

Early on Dec. 9, Brent for January delivery rose by 45 cents to $66.64 a barrel on the London-based ICE Futures Europe exchange. Only a day before it had fallen $2.88 to $66.19, its worst showing since September 2009.

Part of ConocoPhillips’ flexibility is that several of its major projects are nearly complete, allowing the company to taper spending on them. In the meantime, the company said, it will keep up its work at the Bakken shale field in North Dakota and the Eagle Ford shale in Texas. The company cited further flexibility in adjusting activity at its shale oil and gas fields, as conditions warrant.

Part of next year’s budget, about $1.9 billion, will be spent on corporate expenditures and base maintenance, a slight decline from the levels in 2014. Another $5 billion is earmarked for development drilling, down from $6.5 billion this year.

Related: Oil Majors Face Long-Term Challenges

About $4.8 billion will go to ConocoPhillips’ leading projects, including the Australia Pacific liquid natural gas project and the Surmont Phase 2 enterprise for extracting Canadian oil sands. Part of this segment of funding also will go to several projects in Malaysia, Europe and Alaska.

Beyond that, the company will spend about $1.8 billion on appraisal and exploration programs that include conventional activity off the West African shore, off Nova Scotia and in the Gulf of Mexico. Also targeted are shale deposits in North America.

Some of the details of the cuts were not available in ConocoPhillips’ announcement on Dec. 8, but the company said it would fill in those gaps during a conference call on its performance during the fourth quarter of 2014 on Jan. 29 and at its analyst meeting in New York on April 8.

By Andy Tully of Oilprice.com

More Top Reads From Oilprice.com:

 



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play