Phillips increases 1997 capital spending budget 6 % to $1.77 Bn

Jul 29, 1997 02:00 AM

July 15, 1997 Phillips Petroleum has increased its 1997 capital budget 6 %, from $ 1.67 billion to $ 1.77 billion, the highest level of capital spending since the mid-1980s. Most of the $ 97 million increase is directed to exploration and production (E&P) operations. The E&P budget was increased 11 %, from $ 905 million to $ 1 billion, which represents 57 % of the company's total capital budget.
The increase in E&P funding will go to purchase the rights to operate and explore existing fields in north-west Venezuela, and for development and enhanced oil recovery projects in Norway and the United Kingdom.
Compared with production of 489,000 barrels-of-oil-equivalent per day (boepd)in 1996, Phillips' production is expected to increase to 503,000 boepd in 1997, a 3 % increase. A further increase of 5 %, to 526,000 boepd, is expected in 1998.

The largest portion of E&P's 1997 capital budget is going for international projects, including:
* The Ekofisk II redevelopment in Norway, E&P's largest 1997 capital project. New facilities at Ekofisk will improve operating efficiency and extend production from this area well into the 21st century.
* The development of the Armada and Britannia gas/condensate fields in the United Kingdom sector of the North Sea, where production is expected to begin in 1997 and 1998, respectively.
* The completion of appraisal drilling at the Bayu-Undan field, a major gas/condensate discovery in the Timor Sea, located between Australia and Indonesia.
--Studying the potential development of extra-heavy oil reserves from the Hamaca region of the Orinoco Oil Belt in eastern Venezuela - believed to be one of the world's largest accumulations of hydrocarbons.

In Phillips' other businesses, the capital budget for GPM, the company's gas gathering, processing and marketing business, increased to $ 135 million, representing 7 % of the total capital budget. GPM's capital projects include acquisitions of gas gathering systems in GPM's core operating area of Texas, Oklahoma andNew Mexico, and technology improvements at GPM facilities.
Funding for refining, marketing and transportation (RM&T) remained unchanged at $ 245 million, or 14 % of the total capital budget. Most of RM&T's capital spending is going for refinery improvements, expanding Phillips' product pipeline network and increasing the number of company-owned Phillips 66 outlets from 317 to more than 500 over the next several years.
The company's chemicals and plastics capital budget was reduced to $ 310 million, or 18 % of the company's total capital budget. The 12 % reduction occurred because some chemicals projects were completed this year under budget, while revised scheduling deferred spending on other projects.
The company's increased spending plan is being funded through cash on hand and improved cash flow from operations, which has shown a marked increase over the last few years, Mr. Allen noted.

Source: not available
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