ConocoPhillips Projects 25% Lower Capital Spending In 2016 - Quick Facts

(RTTNews) - ConocoPhillips (COP) announced 2016 capital budget of $7.7 billion, which represents a 55 percent reduction compared with 2014 capital spending and a 25 percent reduction compared with expected 2015 capital spending. Reductions compared with expected 2015 capital spending of $10.2 billion come primarily from lower major project spending, deflation capture and efficiency improvements.

Chairman and Chief Executive Officer Ryan Lance said, "We're setting an operating plan for 2016 that recognizes the current environment, which remains challenging. We are significantly reducing capital and operating costs, while maintaining our commitment to safety and asset integrity."

The company also announced it expects to close approximately $2.3 billion of non-core asset sales. This number includes approximately $0.6 billion from transactions that closed through the first three quarters. The remaining $1.7 billion represents transactions with definitive agreements in place that are expected to close in the fourth quarter of 2015 or the first quarter of 2016. Production from these assets, of which 80 percent is natural gas, accounts for more than 70 thousand barrels of oil equivalent per day (MBOED) of 2015 production. The company continues to pursue ongoing, non-core asset sales across the portfolio.

The company's full-year 2015 production guidance remains unchanged at 1,585 to 1,595 MBOED, excluding dispositions. Full-year 2015 production associated with $2.3 billion of divestitures is approximately 70 MBOED. Adjusted for these volumes, 2015 production guidance would be 1,515 to 1,525 MBOED. This is the new baseline from which the company expects to grow 1 to 3 percent in 2016. All guidance excludes Libya.

Production growth in 2016 will come primarily from the startup of APLNG in Australia, continued ramp up of oil sands production in Canada and recent project startups in Alaska. Growth from these areas will be partially offset by decline in Europe and Lower 48.