Conoco Phillips (NYSE:COP) is actively exploring for new oil and gas discoveries across its vast inventory of worldwide properties, as the company attempts to generate production growth later in the decade.

ARTICLE: A Primer On Offshore Drilling

2011 Capital Expenditures
Conoco Phillips has budgeted $1.7 billion for these activities in 2011, up from $1.3 billion in 2010. These funds will be spent on exploratory and appraisal drilling, as well as lease acquisition costs.

One area that Conoco Phillips is working on is Angola, where the company is negotiating leases on two deepwater blocks. The industry believes that this area has similar characteristics to a pre salt play located offshore Brazil. Conoco Phillips is looking to conduct seismic over the next two years and start drilling in 2013.

Many companies are active in exploring this pre salt play in Angolan waters including Cobalt International (NYSE:CIE), which is the operator of three blocks. Other operators that were awarded blocks by the Angolan government include Statoil ASA (NYSE:STO), Total (NYSE:TOT) and BP (NYSE:BP)

Gulf of Mexico
Conoco Phillips is also exploring for oil and gas in the deepwater area of the Gulf of Mexico. The company hopes to drill the Coronado prospect as it explores the Lower Tertiary formation in the deepwater. Conoco Phillips is also involved as a non operator on the Tiber and Shenandoah discoveries, and hopes that appraisal wells move forward here in 2011.

Conoco Phillips is one of many energy companies that are exploring for unconventional resources in Europe, as other countries seek to emulate the successful exploitation of that has occurred in North America. Conoco Phillips is active in exploring for these resources in Poland, and has one million acres in several different parts of the country. The company drilled two vertical pilot wells in 2010, and plans to drill two horizontal test wells in 2011.

Some independent oil and gas companies have also started to get involved in exploring shale formations in Europe. Continental Resources (NYSE:CLR) recently announced a program targeting the Paris Basin.

Other Areas
Conoco Phillips also plans to drill two wildcat wells in the Norwegian section of the North Sea over the next two years. The company believes that these two prospects have similar characteristics to a discovery nearby in the English part of the North Sea. On top of that, the company is active in exploring in the Caspian Sea, and recently finished drilling an exploratory well in Kazakhstan. It is also evaluating the results of this well, and plans a second one in late 2011 or 2012.

The Bottom Line
Conoco Phillips has a large inventory of prospective opportunities across the world, and will spend billions in 2011 to explore these areas. The company needs to be successful here in order to set up for future growth later in the decade. (For related reading, see A Guide To Investing In Oil Markets.)

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