Please ensure Javascript is enabled for purposes of website accessibility

ConocoPhillips Trims Capital Spending, Slows Its Share Repurchase Pace

By Matthew DiLallo - Mar 18, 2020 at 10:31AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The oil giant's actions are in response to the recent downturn in the oil market.

ConocoPhillips (COP 1.28%) announced that it would reduce its capital spending plan as well as its share repurchase activities in response to the recent plunge in crude oil prices. The company intends to trim its budget by $700 million, or about 10% below its prior guidance. It also plans to slow its share repurchase run rate from $750 million per quarter to $250 million per quarter, starting in the second quarter. 

In commenting on the moves, CEO Ryan Lance stated in the press release that: "Our industry is clearly experiencing an unprecedented event brought about by simultaneous supply and demand shocks. The actions we are now taking reflect an acknowledgement of current events as well as uncertainty around the timing and path of a recovery."

An oil pump at dusk with rows of clouds in the sky.

Image source: Getty Images.

Overall, the energy company plans to slow its development activities in the lower 48 states as well as defer some drilling in Alaska. It expects these moves to impact its full-year production by about 20,000 barrels of oil equivalent per day (BOE/D). That's relatively minor, given the company's guidance that output would average between 1.23 million and 1.27 million BOE/D this year.  

The spending reduction, when combined with the slower repurchasing pace, will reduce ConocoPhillips' cash uses by $2.2 billion this year. That will enable it to preserve most of its financial flexibility -- which included $8.4 billion in cash and equivalents -- during this downturn. Further, the company noted that it would continue reviewing its capital and operating plans, leaving the door open for further spending reductions. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

ConocoPhillips Stock Quote
ConocoPhillips
COP
$114.60 (1.28%) $1.45

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
356%
 
S&P 500 Returns
124%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.