ConocoPhillips Tags $9.7B for 2010 E&P Budget

ConocoPhillips has approved a 2010 capital program of $11.2 billion, representing a 10 percent decrease from estimated 2009 expenditures. Approximately 86 percent of the capital program will be in support of the company's Exploration and Production (E&P) segment, while the Refining and Marketing (R&M) segment represents about 12 percent of the program. The 2010 program is consistent with the company's recently announced plan to improve returns through increased capital discipline, asset sales and continued growth in shareholder distributions.

"Our planned 2010 capital program will advance existing exploration and production projects, while preserving the potential to develop the company's large resource position in the future," said Jim Mulva, chairman and chief executive officer. "We intend to achieve our objectives of organically replacing reserves and increasing our upstream production from a reduced, more strategic asset base, consistent with our recently announced portfolio optimization plan.

"We look forward to discussing our 2010 capital, operating and financial plans in greater detail when we meet with the investment community next year."

Exploration and Production

The 2010 capital program for E&P is approximately $9.7 billion, including capitalized interest of $0.5 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 $1.4 billion for worldwide exploration.

In North America, the capital program is expected to total approximately $4.1 billion. Spending in North America is reduced, compared with prior years, with emphasis on the highest-graded production basins and opportunities.

  • In the U.S. Lower 48, capital funding will be prioritized on oil and certain natural gas assets that offer the highest potential returns, including ongoing development in the San Juan and Permian basins and the Bakken, Lobo and Barnett trends.
  • Spending in Canada will focus on existing oil sands projects and selective programs in the Western Canada gas basins, primarily on high-graded resource plays and on maintaining a substantial lease position for future development.
  • Spending in Alaska is expected to be directed toward development of the existing Prudhoe Bay and Kuparuk fields, as well as the Alpine field and satellites on the Western North Slope.
  • In Europe, Asia, Africa and the Middle East, the E&P capital program is expected to total about $5.6 billion.
  • Within the Asia Pacific region, funds will be used for further development of coalbed methane projects associated with the APLNG joint venture, as well as for the continued development of Bohai Bay in China, new fields offshore Malaysia, offshore Block B and onshore South Sumatra in 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 development of the Jasmine discovery in the J Block and the Clair Ridge project.
  • Capital for the Middle East and Africa region is expected to be primarily directed toward completion of the Qatargas 3 project in Qatar, with remaining funds supporting onshore developments in Nigeria, Algeria and Libya.
  • Spending in the Russia and Caspian Sea region will primarily support continued development of the Kashagan field in the Caspian Sea.

Exploration will be focused on finding significant resources, advancing high-potential opportunities and appraisal of recent discoveries.

Spending on wildcat wells will be directed to the Deepwater Gulf of Mexico, Australia's Browse Basin, Kazakhstan's Block N, Canada's East Coast, offshore Indonesia and the North Sea. The company also plans to progress exploration drilling in the Eagle Ford shale position in the U.S. Lower 48, a coal seam gas play in China, and a shale gas play in Poland.