Thursday, April 7, 2011

ConocoPhillips increases 2011 capital budget by $2.5 billion to $16 billion!! ConocoPhillips to venture in to GoM, shale areas and Angola.

ConocoPhillips intends to target shale gas and deepwater acquisitions as part of the company's current asset management program. The company will increase planned capital spending of $13.5 billion by $2.5 billion for 2011 for favourable opportunities, the Gulf of Mexico in particular. Conoco is also looking at deep-water prospects off the coast of Angola. Shale assets are being sought in the US, Canada, eastern Europe (Poland) and China. ConocoPhillips’ chief executive Jim Mulva said, “The Company has its sights set on shale plays outside the key Marcellus and Eagle Ford regions”.

Why is ConocoPhillips on shopping spree?? May be these reasons-
  • Steady increase in oil price which is reaching approximately $120/barrel, the highest since July 2008 when it had hit $147/barrel
  • Unconventional fever is spreading across US, Canada, Europe and China. Recently, the Asians- in particular Chinese are striking back to back deals in US/Canada shale areas. Then, why not the US supermajor?? To make use of the robust oil price season, is ConocoPhillips looking at Bakken and Niobrara plays, if they are looking at the plays outside Marcellus and Eagle Ford.
  • Angola- Possesses similar characteristics to the pre-salt play located offshore Brazil. Many companies are active in exploring this pre-salt play in Angolan waters including Cobalt International, which is the operator of three blocks. Other operators that were awarded blocks by the Angolan government include Statoil, Total and BP. So, even ConocoPhillips may like to step into Angola.

Below are the significant deals in Angola:

  • Post Macondo oil spill, the companies like Shell, Noble Energy and BHP Billiton have been issued drilling permits in the GoM. This shows that the situation is slowly recovering in GoM. This may be one of the reasons why Conoco is interested towards GoM.

Following are the GoM packages which may be attractive to ConocoPhillips:

ConocoPhillips, currently being focused onshore US and Canada, wants to establish the company as a diversified player stepping into new areas like GoM, Angola, China, Poland, etc.,

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