On Thursday, America’s biggest independent oil producer, ConocoPhillips, announced that they will be selling up to $8 billion in natural gas assets. The Fortune 500 Company hopes to reduce their budget by 4% next year and reallocate those funds toward improving operations.
On Thursday, ConocoPhillips’ shares fell by almost 2.6% as U.S. oil prices fell by over 1.3%. The decision comes at a time when the energy industry is pushing for more efficient, cost-effective, and environmentally friendly ways to extract oil and natural gas from the earth.
“The world has changed,” said Ryan Lance, Chief Executive Officer of ConocoPhillips. “You can’t count on rising commodity prices to bail out your business model. You have to position your business for the commodity price cycles.”
Lance believes that by focusing more on operations, the company will be more competitive with Brent oil prices. While Brent oil prices are typically $50 per barrel, Brent traded at $46.18 on Thursday.
ConocoPhillips’ increased operations funds will finance shale projects in the U.S. and Europe. The company will also be funding the upkeep of current operations.
But alongside budget cuts, the company is also downsizing its portfolio. The company used to operate in 28 locations around the world. Now, they operate in just 14.
But Don Wallet, Chief Financial Officer at ConocoPhillips, assured investors that the recent downsizing is a step in the right direction. He asserts that it’s the result of a new strategy—a strategy that focuses on higher standards.
“When your treadmill’s not running at breakneck speed, you can focus on quality, not quantity,” Wallette stated.
Analysts report that next year’s changes will result in the production of 1.54 million to 1.57 million barrels of oil per day, a small increase from last year.
ConocoPhillips will also be instating a $3 billion share repurchase program. The buybacks are scheduled to begin this quarter.