(Reuters) - ConocoPhillips (COP.N), the largest U.S. independent oil and gas company, on Thursday reported higher third-quarter profit after the sale of its Nigerian unit and said overall spending would decline next year, partly in response to falling crude oil prices.
Crude oil prices have tumbled more than 20 percent in recent weeks as global demand slows and supplies rise. Crude traded in New York fell to a more than two-year low on Monday at $79.44 a barrel but recovered a bit to above $81 on Thursday.
Conoco expects to spend less than $16 billion next year, down from the $16.7 billion projected for 2014, Ryan Lance, the chief executive officer, told investors on a conference call to discuss earnings.
Over the last several years, Conoco has shed lower-margin assets, directing more capital to projects like shale drilling in Eagle Ford area in south Texas and the Bakken formation in North Dakota that offer higher returns and faster production growth.
Even with a drop in spending, the company expects to meet its forecast to boost oil and gas output 3 percent to 5 percent in 2015, Lance told investors.
Conoco will continue to invest near current levels in Eagle Ford and Bakken, but has the flexibility to pare spending in exploration and on less-developed fields in such places as the Permian Basin in West Texas and western Canada, it said.
“Beginning in 2015 capital in our major projects begins to taper off,” said Lance, “We have significantly more flexibility to ramp up or down our capital as circumstances dictate.”
Profit rose to $2.7 billion, or $2.17 per share, from $2.5 billion, or $2.00 per share, in the 2013 third quarter.
Excluding items such as the proceeds from the sale of its Nigerian business in July and a tax benefit, Conoco had a profit of $1.29 per share. Analysts, on average, expected $1.20, according to Thomson Reuters I/B/E/S. The proceeds from the Nigerian sale were $1.4 billion.
ConocoPhillips had third-quarter oil and gas production from continuing operations, excluding Libya, of 1.473 million barrels oil equivalent per day (boed), up 25,000 boed from a year ago.
For the fourth quarter, Conoco forecast production from continuing operations rising to 1.545 million boed to 1.575 million boed, excluding Libya. Previously, it said it would produce as much as 1.590 million boed to 1.640 million boed.
The production cut is due in part to third-party infrastructure constraints in Malaysia and a depressed market for the natural gas liquid (NGL) ethane in the United States, according to analysts at Wells Fargo.
Shares of Conoco rose 0.8 percent to $71.32 in afternoon trading.
Reporting by Anna Driver in Houston; Editing by W Simon, JS Benkoe and Terry Wade