Phillips hikes spending plans for 1996

Phillips Budget [21310 bytes]

Phillips Petroleum Co. last week disclosed a 16% increase in its 1996 capital budget to $1.62 billion.

The increase, 11% above 1995 outlays, hikes the company's spending to its highest level since the mid-1980s. Earlier plans for 1996 called for a budget of $1.4 billion (OGJ, Dec. 25, 1995, p. 30).

The enhanced budget enables Phillips to more aggressively pursue "significant growth opportunities," said Wayne Allen, chairman and chief executive officer.

"Seventy-seven percent of the projects in this year's budget are payout projects-that is, significant money making projects that increase income and build shareholder value. As a result, we'll see accelerated growth in oil and gas reserves, chemicals and plastics volumes, and retail marketing."

Allen credited "improved financial flexibility and greater growth opportunities" for the increase in spending plans.

The biggest gain will occur in exploration and production (E&P), where this year's budget has been notched up to $1.029 billion from $856 million spent last year.

That will allow Phillips to complete its $78 million acquisition of a larger interest in undeveloped Bayu gas/condensate field off Australia and Indonesia. Phillips and partners plan to develop the field and build an onshore natural gas liquefaction plant using Phillips' LNG technology (OGJ, Apr. 8, p. 26).

The boost in E&P spending also will help Phillips take advantage of recent exploration successes in the North Sea and Gulf of Mexico.

Increases in refining, marketing, and transportation will help speed the company's plans to hike the number of company owned Phillips 66 outlets to more than 500 during the next several years from 300 at present.

Chemicals and plastics spending plans remain unchanged at $240 million from the earlier budget, a 62% increase over the sum spent in 1995. Also unchanged from the earlier budget are gas gathering, processing, and marketing (GPM) outlays, holding at $80 million, compared with $274 million spent last year.

Funds for the 1996 budget will come from financing and continuing operations.