) intends to allocate $15.8 billion on capital projects in 2013,
almost same as the expected capital spending in 2012. The
majority (or approximately 60%) of the company's capital budget
is aimed at the growing oil and gas output in North America, in
keeping with the trend that has seen other independent oil and
gas producers, including
Marathon Oil Corp.
Noble Energy Inc.
) increasingly shift their concentration on the U.S. oil shale
operations for 2013. The remaining 40% of ConocoPhillips'
spending will be directed toward Europe, Asia Pacific and other
CONOCOPHILLIPS (COP): Free Stock Analysis
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In line with 2012, investments in 2013 will be dominated by
high-quality growth projects and programs that are currently in
the implementation stage, as well as exploration prospects that
will assist in growing its assets for the upcoming years.
ConocoPhillips is expected to allot its capital toward the
maintenance of high-quality legacy base portfolio, highly
profitable exploitation programs in its legacy asset base,
approved major projects and on the worldwide exploration and
appraisal program. The proportion of its spending on these
activities is 10%, 40%, 35% and 15% respectively.
The maintenance activities will be mainly carried out in Alaska,
the Lower 48, western Canada and the North Sea, with major
turnaround activity expected in the Greater Kuparuk Area, Greater
Ekofisk Area and various fields in the U.K. North Sea.
Under the company's highly profitable exploitation programs,
ConocoPhillips will continue drilling and building infrastructure
in unconventional formations in the continental U.S. The assets
comprise the Eagle Ford and Barnett shales in Texas; the Bakken
shale in North Dakota; and the Niobrara in Colorado. Dry gas
plays will get minimal support, due to the all-time low
natural-gas prices that has impelled many oil and gas producers
to move focus towards oil.
ConocoPhillips plans to allocate about 35% of its capital budget
toward major projects - the FCCL joint venture and Surmont oil
sands projects in Canada, expansion projects in Norway's North
Sea, and offshore developments in Malaysia - that will help it in
growing its future yield.
Another 15% of the budget will be directed toward exploration and
appraisal activities. This includes drilling in the Gulf of
Mexico along with evaluation of oil and gas rich shale plays in
ConocoPhillips holds a Zacks #3 Rank (short-term Hold rating).
Longer term, we maintain our Neutral recommendation.