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Behind ConocoPhillips’s Capital Expenditure

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COP’s capex

In 2Q16, ConocoPhillips (COP) spent ~$1.1 billion in capital expenditure, or capex, which was ~53% lower than in 2Q15. In 1H16, COP spent ~$3 billion in capex, which was ~48% lower than in 1H15.

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Capex guidance

On July 28, 2016, ConocoPhillips reduced its 2016 capex guidance by $200 million to ~$5.5 billion, which is ~46% lower than what it spent in 2015. In 2016, COP plans to spend considerably less in the Lower 48 region than it spent in 2015.

COP’s 2016 capex guidance is ~70%, or ~$11.6 billion, lower than its 2014 capex. Investors should note that lower capex has a negative impact on future production volumes.

Other upstream players

By contrast, S&P 500 (SPY) upstream peers Southwestern Energy (SWN), Devon Energy (DVN), and Pioneer Natural Resources (PXD) all recently increased their fiscal 2016 capex guidance.

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