Oil major ConocoPhillips on Wednesday lowered its long-term production growth rate to 2 percent from a previous forecast of 3 percent, saying the company's goal was value not volume.
The third-largest U.S. oil company also said it expects its reserve-replacement rate to exceed 100 percent over the next five years.
Reserve replacements represent the ratio of reserves found over production for a given period. Analysts typically say a company's reserve replacements should average more than 100 percent over a three- to five-year period to indicate growth.
Proved reserves are a key asset of oil companies.
"We expect we're going to more than replace our reserves over the next five years, and we'll do that not from what we hope to do, or what we might get from exploration success," ConocoPhillips Chairman Jim Mulva said at a presentation to Wall Street analysts in New York. "This comes from defined projects and resources that we're going to bring and book."
In February, ConocoPhillips said it lost the equivalent of more than a billion barrels of oil when its Venezuelan operations were expropriated last year, leaving the company to replace less than a third of its 2007 output with new reserves. Excluding the assets seized by the Venezuelan government in an ongoing dispute, the company said it replaced 159 percent of production.
The Houston-based company said it expects to sustain a long-term, average production growth rate of 2 percent. At a similar meeting in New York a year ago, it predicted a growth rate of 3 percent.
John Lowe, ConocoPhillips' executive vice president of exploration and production, said the company could grow production more than 2 percent, but it wants to maintain a balance on matters such as dividend payments versus capital spending.
"We are not going to chase volume to the detriment of value," Lowe said. "So our focus is on value creation -- however best we can do that."
ConocoPhillips shares were down $1.09, or 1.4 percent, to $78.41 in midday trading. They've traded in a range of $64.97 to $90.84 in the past year.
The company reaffirmed its intent to fund a capital program of $15.3 billion in 2008, up from about $13 billion in 2007. Lowe said the company plans to emphasize projects with "material resource potential" in North America, the Arctic and the deepwater Gulf of Mexico, among other regions.
ConocoPhillips plans to spend $10 billion on share repurchases this year, up from $7 billion in 2007.
In January, ConocoPhillips reported 2007 earnings of $11.9 billion, down from $15.5 billion the year before. However, excluding a $4.5 billion charge in the second quarter to write off its Venezuelan assets, the company's earnings amounted to $16.4 billion -- its best-ever result.
Earlier this month, a Lehman Brothers analyst downgraded shares of ConocoPhillips, saying the stock was close to a fair price. Analyst Paul Cheng cut his rating to "Equal Weight" from "Overweight" and noted ConocoPhillips was struggling to improve its natural gas and oil upstream production and processing operations. He also predicted the company would have to cut its growth forecasts.
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