ConocoPhillips’s Steps to Reduce Its Break-Even Price
Since 2014, ConocoPhillips (COP) has been focusing on reducing its break-even price.
ConocoPhillips’s break-even price
Since 2014, ConocoPhillips (COP) has been focusing on reducing its break-even price. In the last two years, ConocoPhillips’s break-even price has decreased from greater than $75 per barrel of Brent crude oil to less than $50 per barrel of Brent crude oil.
This movement represents a break-even price reduction of more than ~33% in the last two years. ConocoPhillips defines its break-even price as the Brent price that can cover costs needed to sustain production and pay its dividends.
ConocoPhillips’s break-even price reduction efforts
As shown in the above chart, ConocoPhillips (COP) successfully reduced its break-even costs by using measures such as:
- completion of megaprojects in the LNG and oil sand space
- exiting deepwater projects
- reducing capital intensity by increasing capital efficiency
- lowering operating costs
- dividend reduction
Capital deflation and operating costs deflation also contributed to lowering its break-even price reduction efforts. We’ll study ConocoPhillips’s latest operating costs guidance in Part 11. To learn more about ConocoPhillips’s capital intensity, please refer to Part 5 of this series.