ConocoPhillips aims to sell up to $8 billion in gas assets

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(Reuters) ConocoPhillips, the largest US independent oil producer, will sell up to $8 B in natural gas assets and trim its capital budget by 4% next year to provide funds to bolster operations, it said on Thursday.

The moves highlight not only the energy industry's increasing push for efficiency gains that reduce the cost of drawing oil and natural gas from the earth but also low commodity prices, which have hampered Conoco and its peers over the past two years.

The asset sale alone reflects a bold move by Chief Executive Ryan Lance to reduce the company's $28.7-B debt load.

Conoco plans to sell $5 B to $8 B in North American natural gas assets, a divestiture that is massive in its size and scope. For example, Chesapeake Energy Corp., the second-largest US natural gas producer, has a $5-B market valuation.

The spending reduction comes after Conoco more than halved its budget last year. Indeed, its 2015 capex had eclipsed $10-B.

"We’ve reset virtually every aspect of the business – our capital program, our cost structure and our portfolio – during the recent industry downturn," Lance said in a statement.

Lance said the spending cuts, asset sales and other steps should help the company be profitable with Brent oil prices LCOc1 of $50/bbl. Brent traded at $46.18/bbl on Thursday.

Most of the budget next year will be spent on shale projects in the contiguous US, with some focus on Alaska and Europe, as well as maintenance of existing operations.

The spending should result in 2017 production of 1.54 MMboed to 1.57 MMboed, which would be a slight increase from estimated 2016 output, executives said.

The company also announced a $3-B share repurchase program. It was not immediately clear when the buybacks would start.

Reporting by Ernest Scheyder; Editing by Chizu Nomiyama and Lisa Von Ahn

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