ConocoPhillips is taking further actions to respond to the oil market downturn. The company also announced it will elect to curtail production in Canada and the Lower 48 regions until market conditions improve.
At Surmont, the company is currently cutting back production due to low Western Canada Select prices. By May, the company expects to reduce production by approximately 100,000 barrels of oil per day (BOD) gross to 35,000 BOD gross.
In addition, beginning in May, the company plans to begin curtailing production across its Lower 48 region. Initially, the company expects to curtail about 125,000 BOD gross. Curtailment decisions will be made on a month-to-month basis, and are subject to operating agreements and contractual obligations.
In 2019, ConocoPhillips produced an average of 705,000 barrels of crude oil per day. The 225K barrel cut thus represents a 32% reduction.
Other actions include:
A reduction in operating costs of approximately $0.6 billion, representing roughly 10% of the initial 2020 guidance. This brings the current estimate to $5.3 billion. These reductions were sourced from lease operating expenses, general and administrative costs and foreign exchange impacts.
An additional reduction in 2020 operating plan capital expenditures of $1.6 billion, bringing the current estimate to $4.3 billion. Including the previously announced reduction of $0.7 billion, this represents a total reduction in operating plan capital expenditures of $2.3 billion, or approximately 35 percent, compared to the 2020 announced guidance. These reductions are sourced from across our global portfolio, primarily focused on Lower 48, Alaska and Canada areas where we have the highest levels of flexibility.
The company’s share repurchase program has been suspended. On a combined basis, the cumulative capital, operating cost and share repurchase actions represent a reduction in 2020 cash uses of more than $5 billion versus original operating plan guidance.