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ConocoPhillips Reiterates Maintaining Current CAPEX Spending For The Next Three Years

|Includes: ConocoPhillips (COP)

US oil major also secures exploration rights for Myanmar's western Rakhine coast along with Statoil.

ConocoPhillips (NYSE:COP) has confirmed that it will maintain its CAPEX spending for the next three years, after reducing its spending from $ 13.5 billion to $11.5 billion earlier this year, despite a modest increase in the price of oil, as CEO, Ryan Lance, said on the sidelines of the Asia Oil and Gas Conference in Kuala Lumpur.

The US oil and gas major is also likely to continue with the trimming of rig count for fields in all of 48 states. This will result in a fall in production in the coming third and fourth quarters in many shale oil fields from the Permian in West Texas to the Bakken field in North Dakota. Despite that though, output is expected to rise by around 2-3 percent for the year ahead.

The decision to maintain the level of spending is concerned with the fact that most of the shale oil projects, which were initiated when oil prices were in the high 80's and 90's and subsequently more than $100 till last year, only needs to be completed by the year 2017, according to the company's three year plan. This implies that no new investments are in the pipeline. It is recognized among the industry that sub-$100 oil price is the new norm.

All this while, the company increases its footprint in the Asian region, especially in new markets of South East Asia. Last week, the company announced that it has been awarded contracts alongside Statoil, Norwegian oil major, for oil and gas exploration in a Deepwater offshore block in the region of Myanmar's western Raphine coast in Block AD 10.

The two companies' regional subsidiaries - Singapore-registered Statoil Myanmar Private Ltd. and ConocoPhillips Myanmar E&P Pte. Ltd. - have pledged to invest more than $320 million. The contracts are in the form of production sharing agreements that would span for years. Before that, the companies will undertake environmental studies as a part of social corporate responsibility to determine that no wildlife is harmed from exploration activities.

ConocoPhillips stock price ended the day at $65.12, down 1.40% the previous day. This can be attributed to the company's feeble growth in the company's earnings per share, declining net income, and poor return on equity, despite scoring high on reasonable valuation levels and a largely solid financial position with very reasonable debt levels, since it has not committed to any new investments, other than the ones already being pledged.