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ConocoPhillips Plans 2019 Capex Of $6.1 Bln; Expects Share Buyback Of $3 Bln

ConocoPhillips (COP) on Monday announced its 2019 capital expenditure budget and operating plan. The company noted that the operating plan reflects its ongoing commitment to free cash flow generation, differentiated payout to shareholders and financial returns through business cycles.

The company expects its 2019 operating plan to continue driving underlying improvement in return on capital employed.

Key highlights of the 2019 operating plan are: planned 2019 capital expenditures of $6.1 billion that will result in free cash flow at prices above $40 per barrel WTI, and increased target payout to shareholders to greater than 30 percent of cash from operations from 20 percent to 30 percent.

The 2019 capital expenditure budget of $6.1 billion is flat to expected full-year 2018 capital expenditures excluding acquisition costs.

Compared to the 2018 expected capital of $6.1 billion excluding acquisition costs, the 2019 capital budget reflects the roll-off and roll-on of major projects, additional activity associated with Montney success, and the impact of increased scope and a higher working interest in Alaska. It does not reflect potential dispositions that may occur in 2019.

ConocoPhilips also expects share repurchases of $3 billion in 2019, representing a payout to shareholders, including dividends, of about 50 percent of cash from operations at $50 WTI.

The company's expected full-year 2019 production is 1,300 MBOED to 1,350 MBOED, excluding Libya, and assuming the previously announced Clair and Kuparuk transactions will close by year-end 2018. At midpoint, this represents year-over-year growth of 8 percent per debt-adjusted share and 5 percent production growth on a pro-forma basis.

"The 2019 operating plan follows a successful year in 2018 in which we achieved key strategic and operational goals well ahead of schedule. As we head into 2019, we plan to keep capital flat, increase our payout target, and deliver high-margin production per-share growth," said Ryan Lance, chairman and chief executive officer of ConocoPhillips.

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