ConocoPhillips sets preliminary 2022 capex at $7.2 billion

ConocoPhillips expects companywide 2022 capital expenditures of $7.2 billion, which reflects the addition of Shell’s Permian basin properties and includes previously announced expected capital expenditures and production associated with the $8.6-billion transaction (OGJ Online, Sept. 20, 2021).

Expected 2022 annual average production is 1.8 MMboe/d, representing low single-digit percentage underlying growth versus pro forma 2021, and including expected annual production from the recent Permian transaction of about 200,000 boe/d. Guidance also includes the impact of the conversion to 3-stream from 2-stream reporting for volumes acquired from Concho Resources and a planned convention change to include production from Libya in guidance beginning in 2022.

Spending breakdown

The 2022 capital expenditures include $700 million associated with the Permian transaction. Some 60% of total planned capital will be directed to the Lower 48 for short-cycle investment across the company’s extensive, high-quality unconventional asset base. About 40% will be allocated toward mid- and longer-cycle projects across the company’s Alaska and international regions, including ongoing project and development activity in Alaska, a second central processing facility in the Montney play, bolt-on developments in Asia Pacific, and both project and development activity in Norway.

Some $200 million will be allocated toward energy transition efforts aimed at accelerating the reduction of the company’s Scope 1 and 2 emissions and evaluating potential investments in end-use (Scope 3) emissions-reduction investments. The planned expenditures include production efficiency measures, methane and flaring intensity-reduction initiatives, asset electrification projects, and investments in several early-stage low-carbon technology opportunities such as CCUS and hydrogen.

Return of capital to shareholders in 2022 is expected to reach $7 billion, representing a 16% increase versus 2021.

Additional 2022 guidance is expected with the operator’s fourth-quarter 2021 earnings release in early February 2022.