ConocoPhillips’ shrink-to-grow strategy is doing more than benefitting the company and its shareholders. It turns out the architect of the programme, Jim Mulva, Conoco’s chief executive (pictured), got a 25 per cent increase in total compensation to $17.9m in 2010.
While it is difficult for an outsider to put a dollar amount on Mr Mulva’s value, the turnround he has staged since the economic downturn exposed weaknesses in his acquisition spree is worth noting.
In early 2009, the US’ third biggest oil and gas company by production and market capitalisation, disclosed a 2008 fourth-quarter net loss of $31.8bn; a $34bn writedown; 1,300 in job losses; and a $2.8bn cut in capital spending.
Conoco Phillips, the US’ third biggest oil and gas company, said today it scaled back north America natural gas production late in the third quarter by about 180m cubic feet equivalent per day. It did so because of low natural gas prices, under constant pressure from the shale gas production boom.
Jim Mulva, Conoco’s chief executive, said the company easily could have boosted its production for the quarter, which would have meant a rise in overall production – something analysts always hone in on when evaluating Big Oil’s results. But it didn’t make sense given where US gas prices were - even if Conoco could break even by producing the gas.
Mr Mulva said the gas prices of today for US natural gas (around $3-$4 per million British thermal units (mBtu), down from the record $13.69 per mBtu reached in 2008) are “unsustainable”. And the company believes it better to wait to produce its gas until it can get more for its money. Makes sense.