A key analysis of ConocoPhillips’ capex breakdown for 2015
ConocoPhillips’ capex breakdown for 2015 includes major projects, development drilling, exploration and appraisal, and base maintenance.
Jan. 26 2015, Updated 1:28 p.m. ET
Capex allocation
Following dull prospects for crude prices, ConocoPhillips (COP) reduced its capex (capital expenditures) by 20% compared to 2014 levels. The company also deferred spending on North American unconventional plays.
ConocoPhillips (COP) plans to allocate its capital budget mainly on base maintenance and corporate expenditures, development drilling programs, major projects, and exploration and appraisal spending.
Capex breakdown
Below is ConocoPhillips’ capex breakdown for 2015.
- Major projects. About $4.8 billion of the company’s total capex is allocated for major projects. ConocoPhillips expects to complete APLNG (Australia Pacific liquid natural gas) and Surmont Phase 2 as well as multiple projects in Alaska, Europe, and Malaysia.
- Development drilling. The company has allocated about $5 billion to its development drilling program. ConocoPhillips will defer investments in emerging shale plays, including the Permian, Niobrara, Montney, and Duvernay.
- Exploration and appraisal. ConocoPhillips has allocated ~$1.8 billion to fund drilling activities in the US Gulf of Mexico, offshore West Africa, and Nova Scotia.
- Base maintenance. ConocoPhillips expects to spend ~$1.9 billion on base maintenance and corporate expenditure.
In spite of lower spending, ConocoPhillips (COP) expects production from continuing operations, excluding Libya, to grow about 3%.
ConocoPhillips (COP) is a component of key energy ETFs such as the Energy Select Sector SPDR (XLE), the Vanguard Energy ETF (VDE), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), and the Vanguard Total World Stock Index Fund (VT).