ConocoPhillips (NYSE:COP) plans to spend billions in 2011 on the development of oil and gas properties outside of North America, as the company attempts to generate production off its large base of international properties.
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2011 Capital Budget
ConocoPhillips will spend approximately 50% of its $12 billion upstream capital budget on international projects in 2011. These funds will be spread across many different projects across Asia-Pacific, Africa and the North Sea. (L2)
The company plans to spend $2.4 billion in 2011 on various projects in the Asia-Pacific region, with a major focus on a liquefied natural gas (LNG) project in Australia. The hope is to grow production here by an 8% compound annual growth rate (CAGR) through 2015.
The Australian LNG project involves the development of multiple coal bed methane fields located onshore and the construction of two LNG trains on an island off the coast. ConocoPhillips is looking to sanction the project by the middle of 2011, and plans to spend $1.4 billion on this project in 2011. The company expects first production of LNG in 2015.
ConocoPhillips is partnering with China Petroleum & Chemical Corporation (NYSE:SNP) and Origin Energy, a local Australian company to develop this project, the total cost of which is estimated at $18 billion.
There are several other projects of this type in Australia. BG Group (LSE:BG) is planning a $15 billion LNG project, and (L5) Royal Dutch Shell (NYSE:RDS) is involved with PetroChina (NYSE:PTR) on another LNG facility.
ConocoPhillips is also investing $600 million in various projects in Indonesia and Malaysia in 2011. These projects are expected to have peak production of 105,000 barrels of oil equivalent (BOE) per day.
Another major area for ConocoPhillips is the North Sea, where the company is planning to spend $1.5 billion in 2011. One project under development is the Jasmine Field in the English part of the North Sea, and which is expected to start up production in 2012.
ConocoPhillips estimates peak production of 88,000 BOE per day from Jasmine, and is developing the field in partnership with Eni (NYSE:E) and BG Group.
ConocoPhillips is active in Algeria and is working on the El Merk project. The company expects first production here in 2012. Another project is being developed in Libya, but recent events here may have delayed the start up of this project.
The Bottom Line
ConocoPhillips is counting on the development of its international portfolio of oil and gas properties to meet the company's goals on production growth. The company has many to choose from in Asia-Pacific, Africa and the North Sea. (Before jumping into this hot sector, learn how these companies make their money. Check out Oil And Gas Industry Primer.)
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