UPDATE 3-ConocoPhillips sees capex flat in 2009

* Sees capex flat in 2009

* Sees 2008 E&P production slightly below 2007

* Shares fall more than 9 pct as crude drops

* Net profit jumps 41 percent (Recasts; adds details from conference call, analyst comment; updates share price)

By Anna Driver

HOUSTON, Oct 22 (Reuters) - ConocoPhillips (COP.N) will hold 2009 capital spending flat at the $15 billion planned for this year as the company navigates a sharp drop in crude oil prices and a global credit crunch, its chief executive said on Wednesday.

Conoco in coming months aims to maintain a strong balance sheet, fund its capital commitments, maintain liquidity and increase dividends, Jim Mulva, CEO of the third-largest U.S. oil company, said on a conference call with investors.

"The company's early indication for the 2009 capex budget being flat is, I suspect, lower than they planned four months ago, but prudent in the current environment," said oil analyst Robert Kessler of Houston-based energy investment bank and research firm Simmons & Co International.

Conoco will provide a fuller update in mid-December on its 2009 capital expenditure plan, it said.

And until the commodity and financial markets show signs of stability, Conoco will stay away from taking on new long-term debt to buy back its shares, Mulva said.

"We want to live within our means," Mulva said in remarks broadcast over the Internet.

In its third-quarter earnings release on Wednesday, Conoco also struck a cautious tone on share buybacks, saying repurchases for the balance of the year will depend on market conditions and the Houston company's capital needs. So far in 2008, Conoco has purchased about $8 billion of the $10 billion in shares authorized under its buyback program.

Crude oil futures prices, while higher than a year earlier, have tumbled more than 50 percent from July peaks above $140 per barrel on worries about falling demand and a rally in the U.S. dollar.

2008 PRODUCTION LOWER

Conoco reported higher-than-expected earnings for the third quarter, although revenue missed Wall Street estimates.

Net income increased to $5.2 billion, or $3.39 per share, from $3.7 billion, or $2.23 per share, a year earlier. Revenue climbed to $70 billion from $46 billion.