ConocoPhillips plans to spend about $5.5 billion a year on capital projects in the next 3 years as long as oil prices stay above $50 per barrel.The company hold an analyst and investor meeting on November 8, 2017, to outline its 2018-2020 operating plan and strategy for long-term value creation.
These include greater than 20 % cash return on capital employed (CROCE) by 2020; sustaining capital of $3.5 billion; less than a $40-per-barrel average sustaining price; greater than 30 % payout of cash provided by operating activities to shareholders annually, including dividends and share buybacks; extending the $1.5 billion per year of share buybacks for an additional year through 2020, resulting in total 2017-2020 share buybacks of $7.5 billion.
It also includes debt reduction to $15 billion in 2019; total share buybacks of $7.5 billion and debt reduction to $15 billion will represent a 20 % decrease in debt-adjusted share count by year-end 2020; approximately 5 % underlying production compound annual growth rate (CAGR) and over 5 % cash margin CAGR, resulting in more than a 10 % cash flow CAGR; improvement in financial returns driven by disciplined investments in the company’s resource base of 15 billion barrels of oil equivalent with an average cost of supply of less than $35 per barrel.
«During 2017, we significantly transformed ConocoPhillips to succeed across a range of commodity prices,» said the company´s CEO Ryan Lance.
«Through accretive asset sales and an ongoing focus on capital and cost efficiency, we’ve lowered the capital intensity and sustaining price of the company, reduced the cost of supply of our investment portfolio, substantially strengthened our balance sheet and returned a significant portion of cash flow to our owners.»
Lance added: «We want to be the company that can attract and retain capital to this sector by offering superior returns to shareholders through cycles. Today we will provide a clear, measurable plan to achieve this goal.»