ConocoPhillips announces reductions due to market downturn
ConocoPhillips has made several adjustments related to the market downturn, including reducing capital expenditures for 2020 by $700 million.
That is a 10 percent decrease from the previously announced guidance. The reduction will result in slowed development activity through the United States and deferred drilling in Alaska. These reductions will impact 2020 full-year production guidance by approximately 20 thousand barrels of oil equivalent per day (MBOED).
“Our industry is clearly experiencing an unprecedented event brought about by simultaneous supply and demand shocks,” Ryan Lance, chairman and chief executive officer at ConocoPhillips, said. “The actions we are now taking reflect an acknowledgment of current events as well as uncertainty around the timing and path of a recovery. We believe we have a significant advantage compared to most of the industry through our strong balance sheet, diverse and low-decline portfolio, and low capital intensity.”
Also, the company’s planned share repurchase program will be reduced from $750 million to a quarterly run rate of $250 million beginning in the second quarter. This action, along with other efforts, results in a reduction in 2020 cash uses of $2.2 billion, with a limited impact on the company’s productive capacity.
The company ended 2019 with over $14 billion of liquidity, including cash, cash equivalents, short-term investments, and availability under our revolving credit facility.
“We continue to monitor market conditions and consider various scenarios to inform any future actions. We have a significant level of flexibility between our capital, operating costs, and share repurchase program, but we are choosing to exercise only a portion of it at this time. We believe that the highest-value longer-term response is price-path dependent,” Lance said.
Houston-based ConocoPhillips has $17 billion in total assets with operations and activities in 17 countries.
“Today’s circumstances require action, and we believe we’re taking the right steps at the right time,” Lance added. “Current conditions represent a significant challenge for our industry overall, but we remain focused on creating long-term value, especially through cycles.”
