Conoco plans capex reduction in 2021
US major ConocoPhillips said July 1 it was reducing its planned capital expenditures by $200mn for the year.
After reporting losses for three straight quarters, Conoco in May reported that first quarter earnings of $1bn was a marked improvement over its $1.7bn loss during the same period last year.
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Over the next five years, Conoco said in its Q1 report, it aims to lower its debt burden by some $5bn. In a July 1 presentation, the company said it was cutting its planned capital expenditures for the year by $200mn and its operating cost guidance by $100mn “due to stronger-than-projected business execution.”
Apart from improved earnings, cash flow in Q1 came in at $900mn. In an updated guidance, Conoco said it expected to see free cash flow of around $70bn over the current 10-year plan period, assuming West Texas Intermediate (WTI) real 2020 prices at $50/barrel. Free cash flow could improve annually by a rate of 2%, the company added.
WTI, the US benchmark for the price of oil, was closing in on $76/barrel in early trading Thursday as traders mulled rumours that OPEC and its allies would not release the 500,000 barrels/day of additional oil from August as expected.
Elsewhere, the company said it expected to save about $1bn per year from the $9.7bn takeover in January of Permian-focused Concho Resources, sharply higher than previous estimates. In announcing the takeover plan in October, Conoco said it expected “to capture $500 million of annual cost and capital savings by 2022” through the deal.