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ConocoPhillips (COP) Chief Executive Ryan Lance said that the company stopped investing in its dry natural-gas production in North America, which is seeing its profitability challenged by low prices for natural gas.
Conoco continues "to have positive cash flow" in its natural-gas production in North America, Lance told reporters at a press conference following the company's first shareholder meeting as an independent oil and gas producer. But Conoco isn't "investing any capital in that business," he added. "Dry-gas production in our portfolio is declining."
Over the long term, however, natural-gas demand in the U.S. will pick up and so will prices, and Conoco will resume investing in that area, Lance said. At the same time "it's probably reasonable to start looking" at exports of liquefied natural gas from the lower-48 U.S., Lance said. "We think there's opportunity given the excess supply situation."
Conoco holds a stake in the Golden Pass LNG import terminal in Sabine Pass, La., along with Exxon Mobil Corp. (XOM) and Qatargas, which was planned and built when a shortage of natural gas in North America was expected; but by the time it was finished, a natural gas boom rendered imports moot. "The partners are looking at what to do with that terminal," Lance said, adding that no decision had been made.
ConocoPhillips, which began operating as an independent oil and gas producer this month after spinning off its refining and midstream business, is taking a different approach from its integrated predecessor, Lance said. Instead of growing through acquisitions, like the old ConocoPhillips, "we're going to organically going to grow this company," he said.
-By Angel Gonzalez, Dow Jones Newswires; 281-536-3064;email@example.com