ConocoPhillips (NYSE: COP) today announced a 2014 capital expenditures budget of $16.7 billion for continuing operations. Investments during 2014 will target the company's diverse portfolio of global opportunities. Approximately 55 percent of the budget is allocated toward North America and 45 percent toward Europe, Asia Pacific and other international businesses.
"2014 is an important year for ConocoPhillips," said Ryan Lance, chairman and chief executive officer. "Since becoming an independent E&P company, we have set out to deliver a unique value proposition of 3 to 5 percent volume and margin growth with a compelling dividend. To position the company for these goals, we generated proceeds of more than $12 billion from the disposition of nonstrategic assets since the start of 2012, while investing in programs to drive future profitable growth. Today, we have an unparalleled inventory of opportunities that will enable us to deliver organic growth from continuing operations in 2014 and beyond. In addition, our planned conventional and unconventional exploration activity should provide opportunities that can keep us on track for sustained growth and returns."
In 2013, the company anticipates utilizing a portion of its cash balance to fully prepay the $2.8 billion joint venture acquisition obligation to its 50 percent owned FCCL business venture. This obligation would have otherwise been paid with interest over the 2014 to 2017 time period.
The capital budget includes funding for base maintenance, development drilling programs, major projects, and exploration and appraisal spending, as well as corporate expenditures. The allocations to these categories are generally consistent with the company's long-term guidance. The key categories of capital spending are as follows:
Base Maintenance
Approximately 13 percent of the capital budget is allocated for maintenance of the company's high-quality legacy base portfolio, including 2014 planned turnarounds.
Development Drilling Programs
Approximately 39 percent of the capital budget is allocated to the company's high-margin development drilling programs, with approximately 90 percent targeted toward North America. Growth from these development drilling programs should account for 600 MBOED of production by 2017 and offsets normal field decline from the company's producing assets.
