ConocoPhillips Cuts 2016 Capex but Boosts Production

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Researched by Industrial Info Resources (Sugar Land, Texas)--Another dip in oil prices has led to further reductions in capital spending at ConocoPhillips (NYSE:COP) (Houston, Texas), yet the oil and gas major is upping its full-year production guidance as it benefits from strong domestic activity. The company also began production at one of its trains at the closely followed Australia Pacific LNG (APLNG) Production facility in Australia. Industrial Info is tracking $75 billion in active projects involving ConocoPhillips.

ConocoPhillips reported a third-quarter net loss of $1 billion, compared with a $1.1 billion loss in the same period last year; total revenues stood at $6.53 billion, a 13% decrease. But over the first nine months of 2016, the company saw net losses of $3.6 billion, which is $2.6 billion more than it lost over the first nine months of 2015. Executives attributed the third quarter's silver lining to a 17% year-over-year reduction in production and operating expenses, despite a 9.4% decline in the total realized price per barrel of oil equivalent from third-quarter 2015.

The company lowered its full-year capital-expenditure guidance from to $5.5 billion to $5.2 billion; at the beginning of the year, capital spending had been projected to be $7.7 billion. By comparison, full-year capital spending for 2015 stood at $10.1 billion.

Full-year guidance for adjusted operating costs also was pared back to $6.6 billion, from $6.8 billion.

Despite the reduction in spending, ConocoPhillips raised its production outlook for the second straight quarter, and now expects the midpoint of its full-year production, excluding Libya, to be about 1.57 million barrels of oil-equivalent per day, citing strong performance from the U.S. shale plays. Executives indicated that the company will continue to shift its emphasis away from international projects to more profitable unconventionals in the "Lower 48."

Last week, ConocoPhillips achieved first production for Train 2 at its APLNG facility, near Curtis Island, Australia. Joint-venture partner Origin Energy Limited (Sydney, New South Wales) reported that the facility "had produced the maiden LNG [liquefied natural gas] cargo from the second of its 4.5 million-tonne-per-annum production trains." The joint-venture partners also have proposed the $11.45 billion construction of trains 3 and 4 at APLNG, which now is in its economic evaluation phase. If built, each train would produce 3.5 million to 4.5 million tonnes per year, bringing overall capacity at the facility to 16 million to 18 million tonnes per year. For more information, see Industrial Info's project report.

Also in Australia, ConocoPhillips is part of a joint venture conducting an economic evaluation for a $1.91 billion natural gas subsea development in the Timor Sea's Bonaparte Basin. Companies involved plan to build and install a subsea infrastructure to extract natural gas from the Caldita and Barossa fields, in hopes of replacing gas from the nearby Bayu-Undan field, which is expected to be depleted by 2023. The Caldita and Barossa fields combined are estimated to contain 3.5 trillion cubic feet of gas. For more information, see Industrial Info's project report.

Much of the Caldita-Barossa product is expected to support ConocoPhillip's Darwin LNG Production Plant, via the offshore Bayu-Undan Facilities, which themselves would be supplied by a proposed, $800 million natural gas pipeline tie-back. The diameter and detailed route for the estimated 250- to 270-kilometer subsea pipeline has yet to be determined. For more information, see Industrial Info's project report.

Much of the ConocoPhillips projects tracked by Industrial Info are in and around Alaska, two of the largest being the proposed $900 million GMT-1 and $1 billion GMT-2 well-pad additions to the Greater Moose's Tooth area of the Fiord West Development near Nuiqsut. The projects will drill eight and 19 wells, respectively, in hopes of eventually drilling a total of 33 production and injection wells with a capacity of 20,000 to 25,000 barrels per day (BBL/d), to maintain a crude capacity of 115,000 to 120,000 BBL/d. For more information, see Industrial Info's project reports on the GMT-1 and GMT-2 additions.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 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.