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Released February 03, 2021 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--The onset of the COVID-19 pandemic in early 2020 took was a shock to oil and gas producers, causing them to rein in capital spending as demand plummeted and hope for a better 2021. Among these companies was oil and gas major ConocoPhillips (NYSE:COP) (Houston, Texas). However, 2020 presented a time of multiple opportunities for mergers and acquisitions in the oil and gas sector, and ConocoPhillips took advantage of this, agreeing to acquire Concho Resources (Midland, Texas) in October in a $9.7 billion all-stock deal, strengthening its position in the Permian Basin. The acquisition was completed earlier this year.
In its third-quarter 2020 earnings report, ConocoPhillips said it expected 2021 capital spending similar to 2020's $4.3 billion. However, in its latest earnings report for the fourth quarter, the company appears to have changed its tune a bit, expecting 2021 capital spending to be about $5.5 billion. Much of this will be used to sustain current production, with only about $400 million invested in major growth projects, primarily in Alaska, and ongoing exploration activity.
In this week's earnings conference call, Chief Executive Officer Ryan Lance said, "We've set the capital budget at about $5.5 billion for two principal reasons. First, while the macro environment has firmed up recently, we are cautious about the trajectory and timing of a recovery. Demand recovery is taking longer, spare supply remains, and inventories remain elevated. It makes no sense to grow into this market environment, so we're choosing to stay at a sustaining level for the year." Secondly, the company wants to generate significant free cash flow.
Lance also spoke of the Biden administration's recent moves in the energy sector, including the temporary moratorium on oil and gas leasing and permitting on federal lands. "From our perspective, some of the recent executive actions targeting U.S. oil and gas production will have negative economic and environmental consequences to the American people. If the moratoriums become permanent, they will eliminate well-paying jobs, mainly in rural America, slow economic recovery, negatively impact energy and national security, and increase our reliance on higher [greenhouse gas] foreign barrels. We certainly want to avoid these outcomes."
Industrial Info is tracking more than $4 billion in active ConocoPhillips in Alaska, among them the Greater Mooses Tooth 2 (GMT2) project on Alaska's North Slope. The project entails constructing new well pads with up to 48 wells to produce 35,000 to 40,000 barrels per day of crude oil. In addition, an 8.5-mile pipeline will be built connecting the Greater Mooses Tooth Unit to the Alpine central processing facility. The projects kicked off in the first half of 2019 and are expected to wrap up soon. For more information, see Industrial Info's project reports on GMT2 and the pipeline addition.
Other Alaska projects with a future kickoff date include the Bear Tooth drilling program and project, which includes drilling wells at multiple sites near Nuiqsut, Alaska, about 20 miles south of the Arctic Ocean coast. Click here for project reports related to the Bear Tooth project, including an infield pipeline.
While probably not kicking off this year, the company has several developing projects in the Norwegian North Sea, including the Tommeliten Alpha offshore field development, which is in the planning stage, but could kick off next year, followed by a drilling program. ConocoPhillips will construct and install an unmanned platform in a water depth of 78 meters, which will be tied back to the Ekofisk field center. For more information, see Industrial Info's project reports on the offshore platform, subsea infrastructure, subsea pipeline installation and drilling program.
ConocoPhillips reported a fourth-quarter 2020 net loss of $772 million, compared with net income of $720 million in the prior-year quarter. The company's results did not include Concho Resources as the transaction was not completed until after the quarter had finished. The company expects 2021 production of approximately 1.5 million barrels of oil equivalent per day.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
In its third-quarter 2020 earnings report, ConocoPhillips said it expected 2021 capital spending similar to 2020's $4.3 billion. However, in its latest earnings report for the fourth quarter, the company appears to have changed its tune a bit, expecting 2021 capital spending to be about $5.5 billion. Much of this will be used to sustain current production, with only about $400 million invested in major growth projects, primarily in Alaska, and ongoing exploration activity.
In this week's earnings conference call, Chief Executive Officer Ryan Lance said, "We've set the capital budget at about $5.5 billion for two principal reasons. First, while the macro environment has firmed up recently, we are cautious about the trajectory and timing of a recovery. Demand recovery is taking longer, spare supply remains, and inventories remain elevated. It makes no sense to grow into this market environment, so we're choosing to stay at a sustaining level for the year." Secondly, the company wants to generate significant free cash flow.
Lance also spoke of the Biden administration's recent moves in the energy sector, including the temporary moratorium on oil and gas leasing and permitting on federal lands. "From our perspective, some of the recent executive actions targeting U.S. oil and gas production will have negative economic and environmental consequences to the American people. If the moratoriums become permanent, they will eliminate well-paying jobs, mainly in rural America, slow economic recovery, negatively impact energy and national security, and increase our reliance on higher [greenhouse gas] foreign barrels. We certainly want to avoid these outcomes."
Industrial Info is tracking more than $4 billion in active ConocoPhillips in Alaska, among them the Greater Mooses Tooth 2 (GMT2) project on Alaska's North Slope. The project entails constructing new well pads with up to 48 wells to produce 35,000 to 40,000 barrels per day of crude oil. In addition, an 8.5-mile pipeline will be built connecting the Greater Mooses Tooth Unit to the Alpine central processing facility. The projects kicked off in the first half of 2019 and are expected to wrap up soon. For more information, see Industrial Info's project reports on GMT2 and the pipeline addition.
Other Alaska projects with a future kickoff date include the Bear Tooth drilling program and project, which includes drilling wells at multiple sites near Nuiqsut, Alaska, about 20 miles south of the Arctic Ocean coast. Click here for project reports related to the Bear Tooth project, including an infield pipeline.
While probably not kicking off this year, the company has several developing projects in the Norwegian North Sea, including the Tommeliten Alpha offshore field development, which is in the planning stage, but could kick off next year, followed by a drilling program. ConocoPhillips will construct and install an unmanned platform in a water depth of 78 meters, which will be tied back to the Ekofisk field center. For more information, see Industrial Info's project reports on the offshore platform, subsea infrastructure, subsea pipeline installation and drilling program.
ConocoPhillips reported a fourth-quarter 2020 net loss of $772 million, compared with net income of $720 million in the prior-year quarter. The company's results did not include Concho Resources as the transaction was not completed until after the quarter had finished. The company expects 2021 production of approximately 1.5 million barrels of oil equivalent per day.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
