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.
Analysts on average had forecast profit of $3.08 per share and revenue of $73 billion, according to Reuters Estimates.
Conoco said it expected fourth-quarter output in its exploration and production unit -- excluding its 20 percent stake in Russia's Lukoil (LKOH.MM)-- to exceed the 1.75 million barrels of oil equivalent per day of the third quarter.
But the company forecast full-year production at slightly less than 1.8 million boed, compared with 1.88 million boed in 2007.
Hurricanes Gustav and Ike, which swept through the Gulf of Mexico and battered the coast in September, reduced Conoco's output and hurt its refining and marketing arm in the third quarter. The production impact from hurricane disruptions was approximately 17,000 boed, the company said.
Net income in the refining and marketing arm fell to $849 million in the third quarter from $1.3 billion a year earlier.
Worldwide, the company's crude oil capacity utilization rate declined to 87 percent from 94 percent. For the fourth quarter, Conoco said it expected that rate to be in the mid-90-percent range.
Shares of Conoco fell $5, or 9.3 percent, to $48.96 in afternoon New York Stock Exchange trading. That compared with a 9.1 percent decline in the Chicago Board Options Exchange index of oil companies .OIX. The sector was under pressure from a sharp drop in crude oil prices. (Reporting by Anna Driver in Houston, editing by Dave Zimmerman and Lisa Von Ahn)
