In a statement on Thursday, the energy giant said its plan is to initiate a $5 to $8 billion divestiture program, which will focus primarily on North American natural gas. When it comes to its 2017 operating plan, ConocoPhillips said it will further reduce capital expenditures and adjusted operating costs compared with 2016 while delivering modest production growth.

Ryan Lance, chairman and chief executive officer, said: “We believe our plan offers a differentiated strategy within the E&P sector that is focused on free cash flow generation and improving returns to shareholders.”

“The acceleration actions we’ve announced today will allow us to achieve our value proposition priorities at Brent prices of about $50 per barrel,” added Lance.

“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. In setting out these priorities, our goal is to have strong resilience to low commodity prices with the ability to capture upside during periods of higher prices.”

Spending cuts

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.

According to the company, 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.

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.

Lance said: “We’ve reset virtually every aspect of the business – our capital program, our cost structure and our portfolio – during the recent industry downturn. Now, we’re in a differential position to generate free cash flow as prices recover and we implement our clear priorities for allocating available cash.”

Source: Offshore Energy Today