NEWS BULLETIN

July 26, 2012 --- Vol. 18, No. 50July 2012

ConocoPhillips earns $551 million in second quarter

ConocoPhillips earned $551 million in Alaska in the second quarter, down from $620 million earned in the first quarter on steadily declining production and lower oil prices.

“Our legacy asset in Alaska continues to operate well and provides strong earnings and production performance… The lower production was driven by natural gas field decline partially offset by improved drilling performance and lower unplanned downtime,” Chief Financial Officer Jeff Sheets said during a quarterly earnings call July 25.

The largest producer of oil in the state had an output of 215,000 barrels of oil equivalent per day in Alaska in the second quarter, down nearly 9 percent quarter over quarter and nearly 8 percent year over year. Companywide, ConocoPhillips produced 1.54 million boe per day during the second quarter, down nearly 6 percent both quarter over quarter and year over year.

In the second quarter, ConocoPhillips paid around $1.25 billion in taxes and royalties on its operations in Alaska, including $983 million paid to the state of Alaska in severance taxes, royalties, property taxes and state income tax, or around $11 million per day.

—Eric Lidji

Co-op proposes rig sale to Baker Hughes

A troubled Southwest Alaska electric power cooperative says it has a deal to sell its geothermal drilling rig to oilfield service company Baker Hughes.

The deal could send the rig to work in the Cook Inlet basin. But the transaction is contingent on U.S. Bankruptcy Court approval.

The co-op, Naknek Electric Association, has been operating under Chapter 11 bankruptcy protection from creditors since September 2010. It filed for bankruptcy due to financing difficulties associated with its geothermal exploration effort.

Naknek Electric bought an oil and gas rig, a National 1320 model, to conduct its geothermal drilling. The utility managed to drill only one well, which experienced serious technical problems.

The co-op on July 20 filed a motion seeking the court’s permission to sell the rig and accessories to Baker Hughes.

The sales price would be $1 million cash, far below the $8.5 million Naknek Electric paid for the rig and nowhere close to co-op’s tens of millions of dollars in debts.

But the sale would benefit the co-op well beyond the $1 million sale price, as Baker Hughes would drop nearly $4.5 million in lien claims.

—Wesley Loy

See full stories in July 29 issue, available online at 11 a.m. Friday, July 27, at www.PetroleumNews.com


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