Conoco CEO sees Oil at 60 to 70 USD

Monday, October 12, 2009

ConocoPhillips' (COP) chief executive said Wednesday that the company sees oil prices moving up to $60 or $70 a barrel over time but not going more than $80.

Speaking at the company's analyst meeting in New York, Jim Mulva said the Houston-based oil giant's strategy is based on modest oil prices.

"We don't have expectations of oil prices of $80, $90, $100, but we do look at oil prices moving up from the low levels we've seen," Mulva said. "Maybe in neighborhood of $60 to $70 over time."

In the same meeting, ConocoPhillips Chief Financial Officer Sig Cornelius said the company needs oil prices to average $52 a barrel and natural gas prices to average $6 per million British Thermal Units to break even and for it to able to pay dividends in 2009. If oil prices average $40 a barrel, ConocoPhillips could lose $3 billion this year and force the company to cut its capital expenditure budget further, he said.

"We believe we do have flexibility to make further capital reductions if necessary," Cornelius said. "Our debt may creep up if facing that scenario." He added, however, that reducing the company's dividend is not under consideration.

ConocoPhillips reduced its 2009 budget to $12.5 billion.

Answering questions about possible acquisitions, Mulva said bringing down debt takes priority over making purchases.

"Given our share price...and our debt position, we really think the priority is bringing the debt down," he said.

Earlier Wednesday, the company's exploration and productions vice president said ConocoPhillips' current strategy doesn't include acquisitions targets, but the company isn't ruling out entering into deep-water joint ventures.

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