ConocoPhillips has entered a new era. The Houston-based corporation became the nation’s largest independent oil and natural gas exploration and production company when it split from its refining business last spring.
The new ConocoPhillips, which released its 2012 earnings Wednesday, has come under the leadership of Ryan Lance, a petroleum engineer who rose through the ranks over three decades and through a number of acquisitions. Lance sat for an interview with FuelFix to explain his vision for the company. Among his plans: make Conoco a bigger player in the Gulf of Mexico, open up its corporate culture, and exploit the company’s sizeable position in shale and other unconventional resources.
Here are edited excerpts from Lance’s interview:
Q: Conoco has been rapidly selling off assets in recent years to streamline its operations, an effort started under your predecessor Jim Mulva. Now that you’re at the end of that program, where will you focus the company’s investments?
A: There are five broad areas of investment that are driving the growth and the returns and the margin improvement that we’ll see over the next five years. First, North American unconventionals: the Eagle Ford, the Bakken, the Permian Basin, the Duvernay, the Montenay up in Canada. We pivoted as fast as anybody, I think, in recognizing the potential of these unconventionals.
Second, we’re a very large player in the Canadian oil sands and that’s taking a lot of our investment and growth. The third area is the North Sea. We have a number of projects that will be coming online over the next couple of years. Fourth is Malaysia, which is a new emerging business unit for us. We’ve got a series of projects that we’re executing. And by 2015, we’ll be producing about 80,000 barrels a day. Fifth is what we are doing down in Australia at our APLNG [Australia Pacific liquefied natural gas] project. That’s commanding a lot of investment right now.
Q: You have set ambitious growth targets for the company, including increasing production 3 percent to 5 percent a year. Will acquisitions be a part of that growth plan?
A: No. That’s been one of the changes we’ve made as a company after spinning off Phillips 66. Our focus is really on organic growth. Since about the latter part of 2011, we’ve added over 700,000 acres of land in North America, on the unconventional side.
Our poster child for that strategy really is the Eagle Ford development. We started acquiring our position in the Eagle Ford in about 2005, before a lot of industry even knew what was going on there. Our position is now 230,000 to 240,000 acres and we’ve done that for less than $300 an acre. Today we’re producing over 100,000 barrels a day from that particular development. That’s how impactful these unconventionals can be.
A lot of people, five or six years ago said the Achilles’ heel of ConocoPhillips was the fact that we had too big a North American position. Today, people are saying, we’re kind of glad you have a big North American position, because the focus of most of the worldwide investment these days is back to North America.
To read the rest of the interview, including Lance’s plans for the Gulf of Mexico, visit HoustonChronicle.com.