ConocoPhillips Co. is cutting spending and putting up to $8-billion (U.S.) of gas assets on the block, including holdings in Western Canada, as the company seeks to repair finances damaged by falling oil prices.
The Houston-based company on Thursday said it would spend $5-billion in 2017, down 4 per cent from this year and more than 50 per cent below its budget of $10.1-billion in 2015.
A Calgary-based spokesman said it is looking to shed properties that don’t fit with future growth plans, although marketing details and specific properties targeted have yet to be finalized.
“These are high-quality assets that no longer align with our future growth strategy and we will only consider offers that recognize their value,” Rob Evans said in an e-mail. “We are anchoring our Western Canada portfolio on unconventional key strategic plays in northeastern British Columbia and northwestern Alberta.”
The move marks a part retreat by another major oil producer from the provinces, where pipeline constraints have weighed on regional prices for heating fuel.
Conoco and others have winnowed their Canadian holdings and cut jobs to shore up finances after global oil prices fell more than 50 per cent from mid-2014.
Last year, the company sold oil and gas assets in Alberta and northeastern B.C. to Canadian Natural Resources Ltd. for an undisclosed sum. Conoco has laid off 1,000 employees from its Canadian operations since October, 2015, in a bid to trim costs.
Conoco’s announcement follows Royal Dutch Shell PLC’s sale, last month, of B.C. and Alberta natural gas properties to Tourmaline Oil Corp. for $1.4-billion (Canadian) in cash and stock. Shell maintains a sizable position in the B.C.’s Montney zone.
Conoco said it plans to sell between $5-billion (U.S.) and $8-billion of primarily North American natural gas assets. It also said it would buy back $3-billion worth of shares, although a timeline was not provided. The company’s debt load is about $28.7-billion.
It produced around 157,000 barrels of oil equivalent a day (boe/d) from its Western Canadian gas holdings in 2015. By contrast, it pumped about 139,000 boe/d last year from its main U.S. gas asset in the San Juan basin, which is located in New Mexico and Colorado.
In Canada, the company has focused spending primarily on its so-called core areas in the Deep Basin, which straddles the boundary between northwest Alberta and B.C., as well as the Kaybob-Edson and Clearwater zones in west-central Alberta. The company also operates or holds interests in about 50 natural gas processing plants.
GMP FirstEnergy analyst Michael Dunn said likely buyers could include Tourmaline, Peyto Exploration and Development Corp. and Canadian Natural.
In the oil sands, Conoco said it expects to lower by half the cost of drilling new wells by 2018. The company is a partner on steam-driven assets with Cenovus Energy Inc. at Foster Creek and Christina Lake, and with French oil major Total SA at Surmont.
Despite lower spending, it said it expects overall production to rise modestly next year to a range of between 1.54 million and 1.57 million barrels a day.Report Typo/Error
- Canadian Natural Resources Ltd$43.97+0.24(+0.55%)
- Royal Dutch Shell PLC$56.13-0.21(-0.37%)
- Tourmaline Oil Corp$36.79+0.01(+0.03%)
- Peyto Exploration & Development Corp$34.22+0.08(+0.23%)
- Cenovus Energy Inc$20.67+0.19(+0.93%)
- Total SA$49.16+0.16(+0.33%)
- Updated December 9 4:00 PM EST. Delayed by at least 15 minutes.