The US major also flagged a further $1 billion cut in operating costs next year.
In Australia, first gas was achieved at Bayu Undan Phase III while last month, APLNG started up the first of seven gas turbine generators. The project is expected to start up in the third quarter.
The other major projects it plans to bring online by year-end are Surmont 2 (a 50/50 joint venture with Total Canada), Enochdhu North Sea development with Chevron, CD5 and Drill Site 2S in Alaska.
Conoco’s New York shares edged up 0.7% in pre-market trading yesterday as the major also backed its guidance for the year, having been the first big US oil producer to slash its 2015 spending to deal with dropping oil prices when it announced last month it would curb capex through 2017 to reflect expectations that prices will remain volatile.
The company said it was on track to meet its previously stated target of 2-3% production growth in 2015 from continuing operations, excluding Libya. Second-quarter 2015 production is expected to be 1.555-1.595Bboed, which also excludes Libya.
Conoco is also on track for $11.5 billion of capital expenditures and investments in 2015. Capital spending is expected to decrease throughout the year as major projects come on line and activity levels continue to ramp down in the North American unconventionals.
The company said its previous guidance remains unchanged, with depreciation, depletion and amortisation of $9 billion, operating costs of $9.2 billion, exploration dry hole and leasehold impairment expense of $800 million and corporate segment expense of $1 billion.
Chief financial officer Jeff Sheets told a conference call that the company was “already moving to needle” around its goal of reducing opex, and had made “significant progress” on capturing deflation capital benefits on its capital program which it outlined at a recent analyst meeting.
The major achieved a 7% year-over-year reduction in operating costs; which converts to a 12% reduction when adjusted for restructuring charges of $104 million pre-tax.
Conoco recently announced its new three year operating plan that Sheets said would provide “predictable growth” for about $11.5 billion of capital per year.
“We’re making good progress on implementing that plan this year, as we ramp down activity across the portfolio,” he said.
“We still grow high margin volumes in this capex level and in 2015 we plan to deliver production growth from continuing operations without Libya of 2% to 3% compared to 2014.”
Conoco maintained its production growth of 5% that it recorded in the same period last year, adjusted for Libya dispositions and downtime, producing 1.61 million barrels of oil equivalent per day.
It generated $2.1 billion in cash from operation excluding impacts from working capital and ended the quarter with $2.7 billion in cash.
Conoco CEO Ryan Lance said that while the “significant downturn” had been a “test for the industry”, the company had responded by quickly adjusting its plans, while remaining focused on executing the aspects of the business that it could control.
“By these measures, the first quarter was a success,” Lance said.
“We delivered on our growth targets, reduced our costs and progressed the programs and projects that will position us for strong future performance in what we expect could be a more favourable commodity price environment.
“While the environment remains uncertain, our value proposition remains unchanged – deliver a compelling dividend and predictable growth, with a focus on margins and financial returns.”
