ConocoPhillips (NYSE: COP) today provided an update on its
operating plan for Alaska, focusing on the company’s long history
of creating value in the state and an ongoing commitment to invest
in low cost of supply opportunities. Over the past few years, the
company’s Alaska business has undergone a significant
transformation, driven by a more competitive fiscal framework, cost
reductions, technological advancements and an exploration
renaissance.
Highlights include:
- An outlook for continued investment and
growth from investments in legacy assets and development of
exploration success;
- Captured net resource of 2.0 billion
barrels of oil equivalent (BBOE) of less than $40 per barrel cost
of supply resource in legacy assets;
- Captured 0.5 – 1.1 BBOE of additional
gross discovered resource associated with the exploration program
in Alaska since 2016, with 75 percent of the play still undrilled;
and
- Strong realizations driven by premium
ANS-priced oil.
The company’s legacy asset base consists of a non-operated
interest in the Prudhoe Bay Field, an operated interest in the
Kuparuk Field and an operated interest in the Alpine Field/Western
North Slope assets. In 2018, the company acquired additional
interest in the Alpine Field/Western North Slope assets and
announced it has entered into an agreement to acquire additional
interest in the Kuparuk Field (which is subject to regulatory and
other approvals). On a pro-forma basis including the recent
transactions, the company estimates 2018 production from its legacy
assets would be approximately 225 thousand barrels of oil
equivalent per day (MBOED).
Since 2016, ConocoPhillips has undertaken a significant and
successful exploration program in Alaska. Based on the exploration
results to date, the company believes it has captured 0.5 – 1.1
BBOE of gross discovered resource, with 75 percent of its
prospective exploration acreage still to be drilled. The cost of
supply of the new resource is estimated to be less than $40 per
barrel. The company has a 100 percent working interest in this
resource.
In the Greater Willow Area, the company now estimates its
2016-2018 exploration and appraisal campaign has discovered 400-750
MMBOE of gross resource, with undrilled resource upside. The
company believes this resource estimate is sufficient to justify
developing the area with a stand-alone hub. Preliminarily, the
company estimates first oil can be achieved by 2024-2025 for
approximately $2-3 billion spent over the course of four to five
years after final investment decision. Once first oil is achieved,
the company anticipates ramping quickly to full production.
Thereafter, the company estimates that an additional $2-3 billion
of cumulative drilling capital will be executed over multiple years
to maintain production at this facility. Efforts are underway to
analyze and evaluate results from the 2018 appraisal season in
order to advance development planning and future appraisal
needs.
In addition to exploration in the Greater Willow Area, the 2018
exploration campaign included the drilling, coring and flow testing
of the Putu and Stony Hill wells in the Narwhal trend south of
Alpine. Additional appraisal is required for both discoveries, but
current discovered resource is estimated to be between 100 and 350
MMBOE gross. The company also has a 100 percent working interest in
this resource.
The company expects another active exploration and appraisal
season in 2019.
“We believe that the company’s Alaska plan aligns with our
disciplined, returns-focused strategy, supports Alaska’s economy
and creates significant value for shareholders,” said Ryan Lance,
chairman and chief executive officer. “Alaska provides competitive
investment opportunities and will generate profitable growth from
diversified investments with significant exploration upside. We are
proud of the value we create for the State of Alaska through the
revenues we generate, the jobs we create and the community
investments we make. Our shareholders realize the advantages of
ANS-priced oil, competitive cash and earnings margins from our
operations and our years of expertise and sound stewardship. We
plan to continue to strive to safely unlock the energy potential of
this world-class oil province for years to come and play an active
role in Alaska’s economic future.”
More information on the company’s Alaska outlook is available
through an investor presentation on the ConocoPhillips Investor
Relations site, www.conocophillips.com/investor.
--- # # # ---
About ConocoPhillips
ConocoPhillips is the world’s largest independent E&P
company based on production and proved reserves. Headquartered in
Houston, Texas, ConocoPhillips had operations and activities in 17
countries, $71 billion of total assets, and approximately 11,200
employees as of March 31, 2018. Production excluding Libya averaged
1,224 MBOED for the three months ended March 31, 2018, and proved
reserves were 5.0 billion BOE as of Dec. 31, 2017. For more
information, go to www.conocophillips.com.
CAUTIONARY STATEMENT FOR THE PURPOSES
OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
This news release contains forward-looking statements.
Forward-looking statements relate to future events and anticipated
results of operations, business strategies, and other aspects of
our operations or operating results. In many cases you can identify
forward-looking statements by terminology such as "anticipate,"
"estimate," "believe," "continue," "could," "intend," "may,"
"plan," "potential," "predict," "should," "will," "expect,"
"objective," "projection," "forecast," "goal," "guidance,"
"outlook," "effort," "target" and other similar words. However, the
absence of these words does not mean that the statements are not
forward-looking. Where, in any forward-looking statement, the
company expresses an expectation or belief as to future results,
such expectation or belief is expressed in good faith and believed
to have a reasonable basis. However, there can be no assurance that
such expectation or belief will result or be achieved. The actual
results of operations can and will be affected by a variety of
risks and other matters including, but not limited to changes in
commodity prices; changes in expected levels of oil and gas
reserves or production; operating hazards, drilling risks,
unsuccessful exploratory activities; difficulties in developing new
products and manufacturing processes; unexpected cost increases or
technical difficulties in constructing, maintaining, or modifying
company facilities; international monetary conditions and exchange
rate fluctuations; our ability to liquidate the common stock issued
to us by Cenovus Energy Inc at prices we deem acceptable, or at
all; our ability to complete the sale of our announced dispositions
on the timeline currently anticipated, if at all; the possibility
that regulatory approvals for our announced dispositions will not
be received on a timely basis, if at all, or that such approvals
may require modification to the terms of our announced dispositions
or our remaining business; business disruptions during or following
our announced dispositions, including the diversion of management
time and attention; the ability to deploy net proceeds from our
announced dispositions in the manner and timeframe we currently
anticipate, if at all; potential liability for remedial actions
under existing or future environmental regulations; potential
liability resulting from pending or future litigation; limited
access to capital or significantly higher cost of capital related
to illiquidity or uncertainty in the domestic or international
financial markets; the stability and competitiveness of our fiscal
framework; and general domestic and international economic and
political conditions; as well as changes in tax, environmental and
other laws applicable to our business. Other factors that could
cause actual results to differ materially from those described in
the forward-looking statements include other economic, business,
competitive and/or regulatory factors affecting our business
generally as set forth in our filings with the Securities and
Exchange Commission (SEC). Unless legally required, ConocoPhillips
undertakes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Cautionary Note to U.S. Investors – The SEC permits oil
and gas companies, in their filings with the SEC, to disclose only
proved, probable and possible reserves. We use the term “resource”
in this release that the SEC’s guidelines prohibit us from
including in filings with the SEC. U.S. investors are urged to
consider closely the oil and gas disclosures in our Form 10-K and
other reports and filings with the SEC. Copies are available from
the SEC and from the ConocoPhillips website.
The release contains the terms cost of supply, resource and
discovered resource. Cost of supply is the WTI equivalent price
that generates a 10 percent after-tax return on a point-forward and
fully burdened basis. Fully burdened includes capital
infrastructure, foreign exchange, price-related inflation and
G&A. Resource is based on Petroleum Resources Management
System, developed by industry to classify recoverable hydrocarbons
as commercial or sub-commercial to reflect their status at the time
of reporting. The company’s resource estimate includes volumes
associated with both commercial and contingent categories.
Discovered resource are known accumulations of quantities of oil
and gas estimated to exist in naturally occurring
accumulations.
Pro Forma figures are presented on the basis as if the Alpine
Field/Western North Slope and Kuparuk transactions were completed
on Jan. 1, 2018. The Kuparuk transaction is subject to regulatory
and other approvals.
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version on businesswire.com: https://www.businesswire.com/news/home/20180716005912/en/
ConocoPhillipsDaren Beaudo, 281-293-2073
(media)daren.beaudo@conocophillips.comorAndy O’Brien, 281-293-5000
(investors)andy.m.obrien@conocophillips.com
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