ConocoPhillips Earmarks $13.5B Capital Budget for 2011

ConocoPhillips has approved a 2011 capital program of $13.5 billion, representing a significant increase in Exploration and Production (E&P) segment expenditures. Almost 90 percent of the capital program will be in support of E&P, while the Refining and Marketing (R&M) segment represents about 9 percent of this year's spending. The 2011 capital program is consistent with the company's plan to enhance returns on equity through shifting capital to higher returning investments, maintaining capital discipline and funding growth in shareholder distributions.

"This year's capital budget reflects our emphasis on building the upstream business," said Jim Mulva, chairman and chief executive officer. "We expect competitive returns from our increased investments in North American and Australian unconventional resource projects. In addition, we are pursuing organic reserve and production growth by converting our existing resource base to proven reserves, participating in high-impact exploration wells and building acreage positions for future development."

"We look forward to discussing our 2011 capital, operating and financial plans in greater detail when we meet with the financial community in March," added Mulva.

Exploration and Production

The 2011 capital program for E&P is approximately $12.0 billion, including capitalized interest of $0.4 billion and $0.7 billion for the company's contributions to the FCCL business venture and loans to other affiliates. This program also includes about $1.7 billion for worldwide exploration.

In North America, the capital program is expected to total approximately $6.0 billion. Spending in North America is increased, compared with prior years, with emphasis on liquids-rich resource plays and highest-return investments.

  • In the U.S. Lower 48, capital funding will be focused on the Eagle Ford and other liquids-rich plays in the Permian, Bakken and Barnett Fields. The program also allows ongoing development in the San Juan Basin and the company's contribution to the Marine Well Containment Company.
  • Spending in Canada will focus on existing SAGD oil sands projects and selective programs in the Western Canada gas basins, primarily on high-graded resource plays and on maintaining a substantial position forfuture development.
  • Spending in Alaska is expected to be directed toward development of the existing Prudhoe Bay and Kuparuk Fields, as well as the Western North Slope.

In Europe, Asia Pacific and Africa, the E&P capital program is expected to total about $6.0 billion.

  • Within the Asia Pacific region, funds will be used for further development of the coalbed methane-to-LNG project associated with the Australia Pacific LNG joint venture, as well as for the development of new fields offshore Malaysia, Indonesia, and offshore Vietnam.
  • In the North Sea region, spending is planned for existing and new opportunities in the Greater Ekofisk Area, the Greater Britannia Fields, various Southern North Sea assets, and the development of the Jasmine and Clair Ridge projects.
  • Capital for the Africa region is expected to be in support of onshore developments in Nigeria, Algeria and Libya.
  • Spending in the Caspian Sea region is planned to be in support of continued development of the Kashagan Field.

The company will continue its focus on accessing, testing and appraising material opportunities in both conventional and non-conventional oil and gas plays. Exploration plans further appraisal of the Browse Basin Poseidon discovery and the Tiber and Shenandoah discoveries in the Gulf of Mexico. The company also plans to test material prospects in the Gulf of Mexico, Kazakhstan and the North Sea. Delineation of the company's position in the Eagle Ford shale play will continue, as will pilot programs in the Canadian Horn River Basin shale play and Poland.