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October 2010

Week of October 31, 2010

ConocoPhillips earns $361 million in 3Q

Down 5 percent quarter-over-quarter but up 1 percent year-over-year; oil, natural gas and LNG production continues falling

Eric Lidji

For Petroleum News

ConocoPhillips earned $361 million in Alaska in the third quarter of the year.

Slightly lower oil prices and continually falling production led to a drop from the $381 million ConocoPhillips earned in the second quarter, but higher prices year-over-year yielded a slight increase over the $356 million earned in the third quarter of 2009.

Companywide, ConocoPhillips earned $3.05 billion in the quarter, down from $4.16 billion in the second quarter, but up from $1.47 billion in the third quarter of last year.

ConocoPhillips continues to earn more in Alaska than in the rest of the United States. The company earned $202 million in the Lower 48 during the third quarter of the year.

ConocoPhillips is the largest oil and gas producer in Alaska by volume, and the only major oil company to break out Alaska earnings figures on a quarterly basis.

Production down, prices level

While earnings have zigzagged over the past two years, production keeps falling. ConocoPhillips produced 215,000 barrels of oil and natural gas liquids per day in Alaska in the third quarter of 2010, down both year-over-year and quarter-over-quarter. The company produced 221,000 bpd in the second quarter and 229,000 in the third quarter of 2009.

However, ConocoPhillips continues to produce more liquids in Alaska than in the Lower 48, where the company produced 160,000 bpd in the third quarter of the year.

Oil prices remain relatively level following the huge swings of 2008. ConocoPhillips reported an average sales price of $75.87 per barrel of Alaska North Slope crude in the third quarter, down $1.57 quarter over quarter, but up $7.96 year over year.

ConocoPhillips produced 82 million cubic feet of natural gas in Alaska in the third quarter, even from the second quarter but down from 105 mmcfpd year-over-year.

Alaska natural gas prices fell to $4.59 per thousand cubic feet in the third quarter, down from $4.73 per mcf in the second quarter and $4.87 per mcf in the third quarter of 2009.

“Over the next several years, production declines are expected to be mitigated by new production from major projects offshore Southeast Asia, LNG projects in Qatar and Australia, Canadian SAGD oil sands projects and Lower 48 shale developments,” Jim Mulva, ConocoPhillips chairman and chief executive officer said in a prepared statement.

LNG sales down, prices up

Liquefied natural gas sales are down considerably year over year.

ConocoPhillips sold 49 mmcfpd of LNG in the third quarter of 2010, down from 51 mmcfpd in the second quarter of the year and 82 mmcfpd in the third quarter of last year.

But LNG prices are on the rise.

ConocoPhillips reported an average sales price of $12.84 per mcf in the third quarter, up from $12.08 per mcf in the second quarter and $8.29 per mcf in the third quarter of 2009.

ConocoPhillips and partner Marathon Oil recently got federal approval to continue LNG exports to Asian markets for at least another two years, until March 31, 2013. The companies jointly own an LNG export terminal on the Kenai Peninsula.

Exploration charges, DDA down

ConocoPhillips posted $10 million in exploration charges in Alaska in the third quarter, level with the second quarter and down slightly from $11 million year over year.

Depreciation, depletion and amortization of costs stayed relatively level quarter over quarter at $151 million, but dropped somewhat from $167 million year over year.






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