At its annual shareholder meeting, ConocoPhillips CEO Jim Mulva said the company will be reducing its refining activity and focusing on projects with the best return potential.
“Refining has been under lots of pressure in the deep recession,” Mulva told shareholders. And though the company expects there will be some recovery, Mulva said that going forward refining will make up 15 percent of ConocoPhillips’ portfolio, down from 25 percent.
Exploration and production activity will grow to make up 80 percent of the portfolio in the coming years.
The company will reduce its refining activity through dispositions, joint ventures and other approaches, Mulva said. Many major oil companies have been reducing refining activity in recent months, because of declining demand.
In March, ConocoPhillips said it would be engaging in portfolio changes and other restructuring for a two-year period in order to respond to the business environment. The company had been underperforming in comparison to other majors.
Some of those changes include more disciplined capital spending — Mulva said it will reduce spending to $11 or $12 billion a year — less debt and an emphasis on more aggressive increases in dividends.
The company also said it would be halving its 20 percent stake in Russian oil firm Lukoil, and selling $10b in some of its older assets.
The consensus view from the financial community is that ConocoPhillips will have cash flow in 2010 of $17.5 billion, Mulva said. Cash flow in 2011 is expected to be stronger than 2010.
The company plans to reduce its debt from about $28 million to $20 billion, Mulva said, which will reduce ts debt ratio to 15 percent.