ConocoPhillips will virtually cease capital spending on North American dry natural gas assets to focus on projects that offer higher returns, Chairman and CEO Ryan Lance said Wednesday.
Speaking to reporters on the sidelines of the company's first shareholder meeting as a pure-play exploration and production company, Lance said that while US gas holdings account for 24% of ConocoPhillips' portfolio, the company plans to invest "hardly any capital at all" into domestic dry gas plays.
ConocoPhillips became an independent E&P company May 1, when it completed the spinoff of its refining operations, now known as Phillips 66.
Lance said that because the bulk of the E&P company's US gas assets are held by production "we're not forced to invest" in the plays "Our strategy is continuing to make positive cash flow, but we are not investing any capital in the business," he said.
Lance added that "dry gas production in our portfolio is declining," but could not specify by how much.
He said the company plants to pursue investments in US unconventional plays that provide opportunities for liquids and crude oil production, such as the Eagle Ford and Bakken shale plays and the Permian Basin.
"As we look at North America, the unconventional provides opportunities for land ownership and infrastructure in the US," he said. "Most of our focus is on the liquids side in the unconventional plays."
"We plan to take advantage of the commodity price," Lance said.
ConocoPhillips will pursue $8 billion to $10 billion in asset sales over the next 12 months, Lance said, adding that the divestitures might include the company's assets in Nigeria, as well as other areas that are no longer considered core to ConocoPhillips' new focus.
