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ConocoPhillips considering ending

production curtailments

US US-BASED ConocoPhillips, the largest inde- (COVID-19) pandemic took hold, hitting oil
pendent producer, is considering ending its demand.
output curtailments and gradually ramping up “It’s a longer road back to above 10mn [bar-
activity on strengthening oil prices. rels] a day or so, where we’re at today. If I were a
Speaking with consultancy IHS Markit for its betting man, today I would say it would be pretty
CERAWeek Conversations series, ConocoPhil- difficult for us to return to 13mn barrels a day.
lips’ CEO, Ryan Lance, said this week that his But we’ll get back above 10 [million bpd], back
company had shut down about 400,000 barrels above 11 [million bpd] maybe encroaching on
per day (bpd), or around a third of its produc- 12 [million bpd] as we go through. A lot of that
tion. ConocoPhillips’ cuts were the largest to be depends on the shape of this recovery,” he said.
made by any North American producer in April. He added, however, that despite the challenges
“We made a decision pretty early on to start ahead, plenty of potential still remained for the
curtailing our production,” Lance said. “We were shale industry.
getting single-digit kinds of offers at the wellhead “I don’t think shale’s gone. I don’t think any-
for some of the product that we were producing, body says that. There’s going to be some very
and we just didn’t feel like that was sufficient.” low cost-to-supply shale resource and they still With more
His comments suggest that the company will exist in the United States. We have a lot of that
proceed with caution despite the positive signs in our own company as well,” Lance said. “Shale potential oil price
in the market. is not broke; shale is not gone; shale will come
“I would say we’re probably thinking of slowly back. But I do think it comes back slower because volatility looming
coming back into the market over the next few there’s going to be pressure on companies to con-
months and reducing the amount we’ve got cur- fine their capital programme, maybe not grow beyond June, it
tailed because we’re seeing some strengthening dramatically as they were before, because I don’t is not surprising
in the price,” he said. think the access to capital in the investor com-
Lance also noted that the industry had to munity, at least in the public side of the business, that producers
worry about a “double bump”, depending on is going to be as robust as it was over the last
what the OPEC+ countries agree to do about decade.” are being
maintaining output cuts. Indeed, while the Speaking at a separate June 10 webinar hosted
OPEC+ countries have agreed to extend their by the Independent Petroleum Association of cautious.
output curbs by an additional month, Saudi America (IPAA), Lance said the swiftness of the
Arabia – the de facto leader of OPEC – has sig- oil price recovery in recent weeks had surprised
nalled that it would not continue with additional, him. He added that some consolidation in the
deeper cuts after June. industry would be a positive, and that Cono-
With more potential oil price volatility loom- coPhillips was monitoring such developments.
ing beyond June, it is not surprising that produc- “We’re in the market every day. Asset deals,
ers are being cautious. Indeed, Lance warned smaller deals, and we’ll see if some of the cor-
that he did not expect US production to rebound porate transactions take hold, which should,” he
quickly to the levels seen before the coronavirus said.™

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