ConocoPhillips rolls out new operating model for 2019

By Luke Geiver | December 11, 2018

ConocoPhillips intends to keep spending flat in 2019 while it pays out more to shareholders and produces more oil and gas. The world’s largest independent exploration and production company believes that it has achieved a new operating model that has become the norm for public operators trying to maintain success through varying oil price cycles.

“We no longer think of our value proposition as merely disciplined, we view it as the new order. We are running our business for sustained through-cycle financial returns, which is necessary for attracting investors back to the E&P sector,” said Ryan Lance, chairman and CEO. “We believe we have designed ConocoPhillips to offer investors both resilience to lower prices and participation in higher prices via an approach that rations capital across a low cost of supply portfolio.”

For 2019, ConocoPhillips intends to spend $6.1 billion—the same number it spent in 2018.

Throughout the Bakken, Eagle Ford and Permian, the operator will run a 10 to 11 drilling rig program. The company noted that it will remain flexible about the location of its rigs depending on the returns possible in each play. The Louisiana Austin Chalk play will also receive some funding for exploration and appraisal activity. The lower 48 operations will receive the majority of the budget at $3.1 billion, followed by Alaska at $1.2 billion, Canada at $500 million, the Middle East at $500 million and Europe and North Africa at $700 million.

The operations around the world should yield a production range of 1.3 mboed to 1.35 mboed. “Production growth in 2019 will come primarily from continued ramp up of unconventional production in the lower 48 and conventional production increases in Alaska,” the company said.