ConocoPhillips held its annual analyst meeting today in New York. The company's senior leadership team outlined ConocoPhillip' strategic objectives and operating plans for 2009, and explained how the company will maximize the value of its asset portfolio in a challenging economic and political environment.
"While we have adjusted to the near-term environment, we have not altered our long-term view. ConocoPhillips is a self-sustaining and competitive international, integrated energy company with a high-quality asset base, strong operating expertise and substantial financial capabilities," said Jim Mulva, chairman and chief executive officer. "We responded aggressively to the current industry operating environment by adjusting our operational plans and capital program, implementing cost reductions and enhancing our focus on maintaining our balance sheet strength and flexibility.
"Over the last decade, we have executed a number of key strategic transactions that increased our scale and operational capabilities, and have invested $73 billion in organic growth. These steps created a company with more than 50 billion equivalent barrels of resources and 3 million barrels per day of refining capacity, including our LUKOIL investment, that is well-positioned to provide growth and significant value creation as the economy improves."
Mulva reaffirmed that ConocoPhillips will fund a capital program of $12.5 billion in 2009, which while lower than 2008, essentially equals the company's four-year average level of investment. The program is structured to continue funding those projects in the company's opportunity portfolio that offer the most significant growth and development potential.
In its Exploration and Production (E&P) segment, the company outlined plans to focus on operational excellence, maximize the value of existing assets through exploitation, and deliver a number of major growth projects. The latter initiatives include the Qatargas 3 LNG venture, the Bohai Bay Phase II oil projects, several Canadian oil sands projects, the Kashagan oil field, the Shah sour gas development in Abu Dhabi, and planned coal bed methane-to-LNG production in Australia. E&P expects to prioritize its remaining investment opportunities in its resource-rich, well-balanced portfolio.
The company holds 10 billion barrels of proved reserves at year-end 2008 as well as leading positions in both natural gas production and heavy-oil acreage in North America, a legacy asset position in the North Sea, and strong growth prospects in the Asia Pacific, Russia and Caspian, and Middle East regions. Major near- and long-term drilling and development projects are under way in all these regions. ConocoPhillips also expects to apply advanced technology to unlock additional value.
Also outlined were expected contributions from its Commercial organization, as well as plans to leverage the company's growing technology capabilities. ConocoPhillips expects to spend approximately $325 million on technology in 2009, primarily to improve the exploitation of existing reserves and enhance the search for new resources, and to progress technologies for heavy oil, gas hydrates, carbon capture and conversion, biofuels, and refining processes.
ConocoPhillips continues to optimize its human resources for the future by emphasizing diversity and inclusion, maintaining focus on technical and project development skills, and strengthening supervisory and leadership skills.
Concluding, Mulva said, "We remain confident in our strategies, and intend to operate very efficiently in today's difficult economic environment, while conserving our capital and taking full advantage of advancing technology and our experience and expertise. At the same time, we will continue advancing the major projects that will drive our future growth. Over the long term, we expect energy demand to resume growing in response to rising world population, an eventual global economic recovery, and a desire for improved living standards throughout the world. We are well positioned to provide the oil and natural gas that will continue serving as two of society's primary energy sources for decades into the future, while also preparing for the increasingly important role that will be played by alternative energy sources."
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