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ConocoPhillips sees cautious increase in 2017 oil output, slightly lower capex

Published 11/10/2016, 03:33 PM
ConocoPhillips sees cautious increase in 2017 oil output, slightly lower capex
COP
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  • ConocoPhillips (COP -1.8%) is lower after saying it expects to increase production by no more than 2% next year, in a sign of how many companies are only cautiously stepping up activity following a stabilization in oil prices.
  • In an investor presentation highlighting its plans for the coming year, which includes 4% lower capex Y/Y to $5B and a goal of $5B-$8B in asset sales, COP emphasizes that its priorities - in order - are maintaining production, paying a growing dividend, cutting its debts, buying back shares and only then investing for growth.
  • CEO Ryan Lance says he expects a world of “lower, more volatile prices," and that COP has “shifted our mindsets to be a business that is managed for free cash flow," making it more resilient to downturns in the cycle, and that “You can’t count on rising commodity prices to bail out your business model. You have to position your business for the cycle.”
  • Lance says COP’s plans would allow it to achieve its priorities at $50/bbl crude, including cutting its debts, which will total ~$27B at year-end, to $20B by the end of 2019.
  • COP's focus is smaller than earlier this decade, whenit operated in more than 28 locations around the world; today it operates in 14, a smaller portfolio that executives say will further help focus capital.

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