OREANDA-NEWS. Top US independent ConocoPhillips expects to ramp up its rig count in 2016 and 2017 amid strengthening oil prices, chief executive Ryan Lance said today.

Lance sees the pullback in drilling capital slowing production growth in the second half of the year, and refineries coming out of turnaround drawing down oil inventories, offering support to oil prices.

"Hopefully if demand stays up globally we ought to see some slight strengthening in the price," Lance said today at the IHS CERAWeek conference in Houston. "We're planning for a ramp up in activity as we go into 2016 and 2017. But that will be a function of whether we see that commodity price improvement or not."

A ramp-up in drilling would mostly occur in unconventional fields such as the Eagle Ford, Bakken and Permian basin.

Equity investors, however, are also factoring in a recovery in oil prices, meaning valuations are too high for ConocoPhillips to consider any strategic mergers or acquisitions, Lance said.

"I haven't seen anything that sort of meets our hurdle," Lance said. "Anything we were to bring into the company has to displace something else and right now that hurdle's pretty high."

The company is seeing 20-30pc reductions in drilling costs and see producers returning to drilling around \$60-70/bl, though prices are expected to be "volatile." ConocoPhillips is also looking for a \$60/bl cost of supply in its investments in the Canadian oil sands and the deepwater Gulf of Mexico.

The company said earlier this month it was exploring opportunities to export its Eagle Ford condensate. The company has not exported any barrels yet, but wants the option when prices are discounted on the Gulf coast, Lance said today.