ConocoPhillips 2Q report shows $222M Alaska loss, restores output
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Kay Cashman Petroleum News
In July ConocoPhillips restored the rest of its curtailed Alaska production, which was an estimated 100,000 barrels of oil a day for the month of June.
According to the big independent’s July 30 second quarter earnings report and conference call, a total of approximately 40 thousand barrels of oil equivalent per day (mostly oil) were actually curtailed from the two Alaska producing units ConocoPhillips operates - the North Slope Colville River and Kuparuk River units.
Other Alaska news in the quarterly report included:
* ConocoPhillips made a finance lease payment of $200 million upon acceptance of the ultra-extended reach drilling rig, Doyon 26.
* ConocoPhillips completed appraisal testing at Narwhal with “encouraging” initial results. (The U.S. Geological Survey now refers to this Nanushuk system of discoveries and associated sand bodies as the Pikka-Narwhal-Horseshoe trend.)
Nothing was mentioned about last winter’s exploration results from the Tinmiaq (Willow) or Harpoon prospect wells beyond what was already reported.
In a follow-up question regarding North Slope development, appraisal and exploration drilling, ConocoPhillips Alaska spokeswoman Natalie Lowman said, “We do not intend to resume drilling activity at our North Slope operations for the remainder of 2020. The capital reductions we announced in March and April were directed under the premise that we would not resume drilling activity this year.”
Lowman also said the company’s “estimated obligations to the state of Alaska in the form of taxes and royalties totaled $85 million. So even though ConocoPhillips Alaska had a net loss of $222 million, we still paid the state of Alaska $85 million in taxes and royalties. And despite this quarter’s loss, the company invested $223 million in capital in the state, which represents 25% of ConocoPhillips’ $876 million global capital spend in 2Q 2020.”
Company-wide performance ConocoPhillips reported company-wide second-quarter earnings of $300 million, or 24 cents per share, compared with second quarter 2019 earnings of $1.6 billion, or $1.40 per share.
Excluding special items, second quarter adjusted earnings this year were a loss of $1 billion, or 92 cents per share, compared with second quarter 2019 adjusted earnings of $1.1 billion, or $1.01 per share.
Special items for the current quarter were primarily due to a realized gain on the completion of the Australia-West divestiture and an unrealized gain on Cenovus Energy equity.
Cash provided by operating activities was $200 million. Excluding working capital, cash from operations was $700 million.
“Headline second-quarter performance was dominated by weak realized prices, coupled with our rational economic action to curtail production in favor of expected higher future prices,” said Ryan Lance, ConocoPhillips chairman and chief executive officer.
“Importantly, our underlying business results were strong, reflecting our ongoing commitment to safely executing our plans and the dedication of our workforce during this challenging time,” he continued. “We are monitoring the market closely to develop a view around the timing and path of price recovery and to guide our corresponding actions. For example, as the market strengthened late in the second quarter, we began reversing our second-quarter curtailments and ramping up production across the Lower 48, Alaska and Canada.”
ConocoPhillips “financial strength, flexibility and portfolio diversity represent a distinct competitive advantage that enables us to navigate and preserve value in this volatile environment,” Lance said.
- KAY CASHMAN
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