Phillips' Board of Directors Approves 2001 Capital Budget
The board of directors of Phillips Petroleum Company today approved $2.5 billion for capital projects in 2001.
This exceeds estimated 2000 capital spending of $2 billion, excluding the $6.7 billion spent in 2000 to purchase ARCO's Alaska assets, informed Phillips Petroleum in a press release on Tuesday.
"Our 2001 budget reflects the dramatic change our company has undergone in the past year," said Jim Mulva, Phillips' chairman and chief executive officer.
"We are building on our legacy asset positions in Alaska and Norway, and moving forward with the development of our three international legacy projects -- Hamaca, Bohai Bay and Bayu-Undan.
We're excited about the long-term potential these assets offer our company.
These projects and others will provide sustained production growth for many years and serve as a springboard to additional opportunities worldwide."
The company will allocate 87 percent of its 2001 capital budget to exploration and production activities.
Ten percent will fund the company's refining, marketing and transportation business, for which Phillips plans to pursue a 50/50 joint venture in late 2001 or 2002.
The remaining three percent of the budget will be used for general corporate purposes.
Cash generated from continuing activities are expected to fund the 2001 capital program while providing for continued debt reduction.
Exploration and Production (E&P) E&P's 2001 capital budget is $2.2 billion, 30 percent higher than estimated 2000 expenditures of $1.7 billion, excluding the purchase of the Alaska assets.
Due to the timing of the Alaska acquisition, only eight months of that business unit's capital spending are included in the 2000 estimated expenditures.
The largest portion of next year's budget -- 53 percent -- will be spent domestically, with the Alaska business unit receiving 77 percent of planned domestic spending.
Phillips has budgeted $202 million for worldwide exploration activities, with 44 percent of that amount allocated domestically to fund prospects in Alaska and the Lower 48, including coalbed methane plays.
Internationally, the company plans to participate in exploration drilling activities in Kazakhstan, China, Oman, Nigeria, the United Kingdom, Denmark and the Faroe Islands. The company plans to spend $914 million for the Alaska business unit, including exploration.
That amount includes the study under way on the potential North Slope pipeline to the Lower 48 and the 2001 spending on the construction of four Millennium Class tankers to transport North Slope crude oil.
It also includes funds for the development of the Alpine and Meltwater fields, and the satellite fields of both Prudhoe Bay and the Greater Kuparuk Area.
In the Lower 48, the company plans to develop coalbed methane projects in the San Juan, Powder River and Uinta basins, as well as natural gas fields in north Louisiana.
Phillips is directing $1 billion toward development of international projects.
These projects include the Hamaca heavy-oil development in the Orinoco Oil Belt of Venezuela, phases I and II of the company's PL19-3 field in China's Bohai Bay, and the Bayu-Undan liquids recycle and regional gas pipeline projects in the Timor Sea.
Other projects, in the North Sea, include development of the Jade field in the United Kingdom sector, and the Eldfisk waterflood project and further exploitation of the company's long-producing Ekofisk field in the Norwegian sector.
Refining, Marketing and Transportation (RM&T) RM&T's capital budget is $246 million, a seven percent increase from estimated 2000 spending of $230 million.
The company will use the funds to complete refinery projects, such as a low-sulfur gasoline demonstration unit, a 20,000 barrels-per-day expansion, and manufacturing automation, all at the Borger (Texas) refinery.
At the Sweeny (Texas) refinery, which recently completed a major coker project, a portion of the funds will be used for environmental projects related to state-mandated emissions reductions.
Marketing and transportation capital will be directed toward support of the company's strategy to aggressively grow its independent marketer trade.
Corporate Corporate expenditures, which comprise three percent of the budget, are increasing from 2000 for two primary reasons:
-- The company is creating a corporate fund that will provide for investments in new technologies, including new fuels and related technologies.
-- Phillips' technology and project development group recently was reorganized as a corporate staff, whereas previously these activities were part of each business unit's budget. Phillips is an integrated petroleum company with interests around the world.
Founded in Bartlesville, Okla., in 1917, the company had, as of September 30, $21 billion of assets and annualized revenues of $21 billion.
© 2000 Mena Report (www.menareport.com)