By Angela Chen
ConocoPhillips said Thursday it would increase its dividend but
reduce deepwater exploration spending, its latest cut, because of
low oil prices.
The Houston-based oil company's dividend is now 74 cents instead
of 73 cents and is expected to cost an additional $12.3 million a
quarter.
The most significant spending reductions will come from its
program in the Gulf of Mexico where ConocoPhillips will terminate
its contract for the Ensco DS-9 deepwater drill ship. Drilling was
scheduled to begin there later this year.
Financial terms weren't disclosed. ConocoPhillips will pay a
termination fee that represents up to two years of contract day
rates and will take a special item charge for the termination in
the third quarter.
"Since the start of the oil and gas price downturn last year, we
have moved decisively to position ConocoPhillips for lower, more
volatile prices by exercising capital flexibility and reducing
operating costs across our business," said Chief Executive Ryan
Lance. "Our decision to reduce spending in deepwater will further
increase our capital flexibility and reduce expenses without
impacting our growth targets. This strengthens our ability to
achieve cash flow neutrality in 2017 even if lower commodity prices
persist."
ConocoPhillips was the first big U.S. oil producer to slash its
2015 capital spending to deal with the plunging price of crude. In
March, it said it would curb capital spending through 2017 to
reflect expectations that commodities prices will remain volatile.
ConocoPhillips has said it would cut back on exploring for new
sources of oil and gas, as well as on drilling in some shale
formations in North America, including the Niobrara in
Colorado.
Write to Angela Chen at angela.chen@dowjones.com
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