ConocoPhillips Plans To Divest Up To $8 Bln Asset, Buy Back $3 Bln Of Shares

(RTTNews) - ConocoPhillips (COP) announced a $3 billion share repurchase program and the initiation of a $5 billion to $8 billion divestiture program, which will focus primarily on North American natural gas.

The company said it will hold an Analyst and Investor Meeting today to outline the company's strategy and discuss several planned actions for accelerating the company's value proposition of a strong balance sheet, growing dividend and disciplined growth.

The company will also provide details on its 2017 operating plan, which further reduces capital expenditures and adjusted operating costs compared with 2016, while delivering modest production growth.

Ryan Lance, chairman and chief executive officer said, "The acceleration actions we've announced today will allow us to achieve our value proposition priorities at Brent prices of about $50 per barrel. These priorities include a debt target of $20 billion, a 20 to 30 percent payout of operating cash flows to shareholders, and modest production growth to drive margin and cash flow expansion."

The company's 2017 operating plan includes capital expenditures guidance of $5 billion, a decrease of 4 percent compared with 2016 guidance of $5.2 billion and more than 50 percent lower than 2015 capital expenditures and investments of $10.1 billion. Spending in 2017 will focus primarily on flexible unconventional development programs in the Lower 48, conventional projects in Europe, Asia Pacific and Alaska, and base asset maintenance. Approximately $0.6 billion is included for exploration, which is primarily focused on unconventionals, appraisal of the Barossa discovery, and the closeout of deepwater Gulf of Mexico and Nova Scotia drilling obligations.

Full-year 2017 production is expected to be 1,540 to 1,570 thousand barrels of oil equivalent per day (MBOED), which results in flat to 2 percent growth compared with expected full-year 2016 production of approximately 1,540 MBOED when adjusted for 2016 expected dispositions. Growth is expected to come primarily from ramp up at APLNG in Australia, Surmont 2 in Canada and Kebabangan in Malaysia, as well as increased activity in the Lower 48 unconventionals, partly offset by normal field decline. The company's production outlook excludes Libya.

The company continues to achieve cost reductions across the business. Guidance for 2017 production and operating expenses is approximately $5.2 billion, which results in adjusted operating cost guidance of $6 billion, a 9 percent improvement compared with 2016 adjusted operating cost guidance.