Phillips reports second-quarter net income of $442 million

Petroleum News Alaska Staff

Phillips Petroleum Co. reported second-quarter net income of $442 million, $1.74 a share, compared with second-quarter 1999 net income of $68 million, 27 cents a share. The company said July 27 that total revenues for the quarter were $5.4 billion, compared to $3.2 billion a year ago.

“In the second quarter,” said Jim Mulva, Phillips’ chief executive officer, “we began to realize the results of our strategy to grow our exploration and production business while positioning our other business lines for profitable growth through the creation of competitive joint ventures.

“The acquisition in Alaska had a substantial impact on our upstream business: it doubled our worldwide reserves and has already significantly increased daily crude oil production — up 74 percent from first quarter 2000,” Mulva said.

The Alaska transaction closed in late April, so second-quarter results include only two months of production from the acquisition.

“For the 65 days since Phillips closed out the acquisition (April 27-June 30), the average production rate for the acquired assets was 302,000 BOE per day,” he said. Worldwide, Phillips’ oil production was up 83 percent for the quarter; natural gas production remained about the same as for the same 1999 period. ago.

“We are moving forward with our plans to grow E&P by developing legacy assets, such as our recent acquisition in Alaska,” Mulva said. Other upstream projects include the first phase of development for Bohai Bay, scheduled to come on stream in first quarter 2002; Hamaca heavy-oil in Venezuela, scheduled to begin first production in early 2001; and Bayu-Undan gas-recycle project, scheduled to come on stream in 2004.

In Alaska, Mulva said, the is “planning an expanded drilling program” and “studying ways to capitalize on the vast natural gas reserves on the North Slope.”

A combination of increased production from Alaska and a 17 percent third quarter increase in worldwide production is expected to increase Phillips’ average worldwide production from 474,000 BOE per day for 1999 to an estimated average of 713,000 BOE per day for 2000, an increase of about 50 percent, Mulva said.