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Vol. 14, No. 32 Week of August 09, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

Conoco 2nd-quarter earnings up over 1st

Company shows profit of $404 million in Alaska for second quarter, up from $244 million in first quarter, driven by higher prices

Kristen Nelson

Petroleum News

ConocoPhillips reported second-quarter earnings of $1.298 billion, 87 cents per share, compared with $5.439 billion, $3.50 per share, in the second quarter of 2008, on revenues of $35.4 billion, compared to $71.4 billion in last year’s second quarter.

“Although we experienced significantly lower commodity prices and margins than in the second quarter of last year, we delivered solid operational results during the quarter,” ConocoPhillips Chairman and CEO Jim Mulva said in a July 29 statement.

“E&P production was up 7 percent, and we realized cost reductions due to market forces and other improvements. During the second quarter, total production, including our share of Lukoil, was up 2.3 million BOE per day and our worldwide refining crude oil capacity utilization rate was 88 percent,” he said.

Alaska half of E&P earnings

ConocoPhillips had $725 million in second-quarter exploration and production earnings, compared with $3.999 billion in the second quarter of 2008.

The company said in early August filings that the 82 percent decrease in earnings from the E&P segment was “primarily due to substantially lower crude oil, natural gas and natural gas liquids prices. This decrease was partially offset by lower Alaska and Lower 48 production taxes due to lower prices, higher international volumes and improved operating costs.”

More than half of ConocoPhillips’ second-quarter exploration and production earnings came from Alaska: $404 million out of $725 million for the three months ending June 30. In the second quarter of 2008 the company’s Alaska E&P earnings were $700 million out of total E&P earnings of $3.999 billion.

The company said its exploration expenses decreased 22 percent in the first six months of 2009, “predominantly due to decreases in geological and geophysical expenses, leasehold impairments and dry hole costs.”

Taxes — other than income taxes — decreased 36 percent in the second quarter and 34 percent in the first six months of 2009, “primarily due to lower production taxes resulting from lower crude oil prices, as well as reduced excise taxes on petroleum product sales.”

Alaska production down

ConocoPhillips’ Alaska second-quarter crude oil production averaged 236,000 barrels per day, down from 244,000 bpd in the second quarter of 2008.

The company’s total production worldwide averaged 859,000 bpd in the second quarter, up from 772,000 bpd in the second quarter last year.

Alaska natural gas liquids production averaged 16,000 bpd in the second quarter, down from 17,000 bpd in 2008.

Alaska natural gas produced for sale averaged 83 million cubic feet per day compared to 98 million cubic feet per day in the second quarter last year.

Alaska spending down

Capital expenditures in Alaska were $481 million for the first six months of 2009, down by 46 percent from expenditures of $890 million in the first half of 2008. Total E&P capital expenditures and investments were $4.435 billion for the first six months of 2009, down from $5.624 billion in the first six months of 2008, a decrease of 21 percent.

Total capital expenditures were $5.578 billion for the first six months of this year compared to $6.72 billion for the first half of 2008, a decrease of 17 percent.

The company’s capital budget for Alaska this year was $832 million, compared to $1.4 billion the company spent in the state in 2008. However, $506 million of the 2008 Alaska spending went to bids in the February Chukchi Sea lease sale.



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