ConocoPhillips’ 106% production increase from Australia, Canada, Norway

Allen Baker

Petroleum News contributing writer

ConocoPhillips added 650 million barrels of oil equivalent to its proved reserves during 2003, as the company replaced 106 percent of its production. Factoring out sales and acquisitions, company geologists brought in 133 percent of the oil and gas pumped from ConocoPhillips fields during the year.

Major increases in reserves came from Australia, Canada and Norway, executives said. Total reserve base at the end of the year was 7.8 billion barrels of oil equivalent, plus 0.3 billion barrels of Canadian syncrude, which is excluded under U.S. accounting rules.

The Houston-based company now has reserves representing 12.6 years of production at current rates. For comparison, ExxonMobil has 22.0 billion barrels of proved reserves, representing 14 years of production. ExxonMobil’s reserve replacement also was similar to the ConocoPhillips number, at 105 percent of production.

ConocoPhillips reported its finding and development costs for the year came to $5.35 per barrel. Putting together the five-year record of predecessor companies Conoco and Phillips, average replacement was 210 percent of production at an average finding and development cost of $5.12 per barrel.

For 2004, executives say ConocoPhillips is moving toward development of the giant Kashagan field in Kazakhstan, comparable in size to Prudhoe Bay with estimates of 13 billion barrels of recoverable oil. The company’s plan for development of that field received government approval Feb. 25. Initial production target is 75,000 barrels daily, starting in 2008, with the field eventually expected to yield up to 1.2 million barrels a day. ConocoPhillips has just over 10 percent of that field, which is expected to cost $29 billion to develop.

The company also expects authorization of major projects in Alaska, China and the United Kingdom this year.