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April 12 (Reuters) - U.S. oil producer ConocoPhillips (COP.N) on Wednesday said it expects to generate some $115 billion in free cash flow for distribution over the next 10 years and expand oil and gas output by up to 5% a year over the same time.
The largest U.S. independent oil company laid out sizeable increases in cash flow, shareholder returns and oil and gas production in a presentation to Wall Street analysts. The outlook is based on U.S. oil prices of about $60 a barrel, compared to the $77 a barrel average so far this year.
Major oil and gas firms have posted record profits in the past year as oil prices jumped following Russia's invasion of Ukraine. ConocoPhillips and other publicly traded firms have restrained production amid a focus on increasing shareholder returns.
But ConocoPhillips said it could grow its production by up to 5% in the next decade on annual capital spending of around $10 billion, in line with last year. It expects its shale growth in North America to jump by 6% over that same 10-year period.
"The macro environment is really quite uncertain as central banks try to tap down on inflation without triggering a recession," warned ConocoPhillip's CEO Ryan Lance. He said the company remained committed to meeting energy demand while also delivering "superior" returns to shareholders.
The company can generate free cash flow at an average West Texas Intermediate (WTI) price of $35 a barrel over the next 10 years, it said. On Wednesday, WTI was trading around $82.73 a barrel.
ConocoPhillips also expects to meet its goal of gross debt reduction of $5 billion by 2026.
The plan was in line with the company's previous comments about modest growth with solid shareholder returns among others, said Truist analyst Neal Dingmann.
Shares of ConocoPhillips were up 1.2% to $108.03 each on Wednesday morning.
GROWTH PLANS
ConocoPhillips anticipates growing production in the Permian, the largest U.S. shale basin, by 7% in the next decade at roughly a 50% reinvestment rate, with two-thirds of that growth focused on its Delaware assets. Its Eagle Ford output in south Texas is expected to grow at single digits, while its Bakken operations in North Dakota are anticipated to hit a plateau, the company said.
In Canada, the company will add a rig in the Montney shale next year, it said, and boost output by some 100,000 barrels per day over the next decade there using two rigs. It drilled its first new pad at its Surmont oil sands facility in Canada since 2016, at a 30% reduction in cost, and anticipates first-steam later this year.
In Alaska, ConocoPhillips recently won approval for its $7 billion oil drilling Willow project, which has drawn criticism from environmentalists over concerns it would exacerbate climate change and damage pristine wildlife habitat.
The company on Wednesday said the upper-end of spending on that project to $7.5 billion, and said it would spend between $1 billion and $1.5 billion annually from 2024 to 2028 on it, with first oil anticipated in 2029.
Conoco, which has investments in liquefied natural gas (LNG) projects in Australia, Qatar and the U.S., said its outlook for the market remained robust through the mid-century, with Asia driving higher demand.
The company on Wednesday said its 10-year plan includes acceleration of greenhouse gas (GHG)-intensity reduction target through 2030 from 40%-50% to 50%-60%. It also expects to spend between $10.7 billion and $11.3 billion this year.
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April 12, 2023 at 09:07PM
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Conoco forecasts big cash flow gains, up to 5% output growth - Reuters
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