ConocoPhillips Unveils 10-Year Operating, Financial Plan

The plan targets some $50 billion in free cash flow over the period while growing production more than 3%/year.

ConocoPhillips-operated rigs in the Eagle Ford Shale of south Texas, where it intends to reach plateau production of 300,000 BOE/D at some point in the next decade. Source: ConocoPhillips.

ConocoPhillips announced an operating and financial plan for 2020–2029 that targets some $50 billion in free cash flow over the period.

The Houston independent said the free cash flow will fund dividend payouts of $20 billion during the 10-year period and share buybacks totaling $30 billion—50% of its current market capitalization.

The plan is one in a broader effort by exploration and production companies, particularly those involved in US shale, to improve their standing in the public markets, where the sector’s stock value on the S&P 500 Index has contracted markedly over the past half-decade.

ConocoPhillips said it expects to achieve a leverage ratio of net debt to cash from operations of less than one. The plan is based on a West Texas Intermediate (WTI) price of $50/bbl and capital expenditures averaging less than $7 billion/year, centering on assets with low-declining base production.

The company will leverage its 15 billion BOE resource base at a less than $40/bbl WTI average cost of supply, with production growth averaging more than 3%/year, it said in a news release.

Future divestments include a 25% sale of its operated Alaska assets, which is “consistent with the company’s historical practice of not funding major-project expenditures at 100%,” ConocoPhillips said. 

ConocoPhillips in October reported third-quarter earnings of $3.1 billion, up from $1.9 billion in third-quarter 2018. Companywide production for this year’s fourth quarter is expected at 1.27–1.31 million BOE/D.