ConocoPhillips logs $1.7B loss, cuts its Alaska output by half
On April 30 ConocoPhillips reported a net loss of nearly $1.74 billion, or $1.60 per share, for the first quarter of 2020, which compares to $1.8 billion, or $1.60 per share, in earnings for the first quarter of 2019. At the same time the company said it was cutting June production by 420,000 net barrels of oil equivalent per day, 100,000 barrels of which will come from its Alaska’s North Slope daily production - specifically from the Kuparuk River unit, GMT-1 and the Colville River unit.
The other June production cuts will be 260,000 barrels a day from the Lower 48 and 100,000 barrels a day from Canada at Surmont.
ConocoPhillips Alaska said April 30 in a separate statement that its first quarter Alaska production was approximately 218,000 net equivalent barrels a day of the state’s total output of approximately 500,000 barrels per day.
The company is making production curtailment decisions on a month-by-month basis. In May no production reductions were made in Alaska, although development drilling in ConocoPhillips operated North Slope fields was deferred, per a mid-March announcement.
In fourth quarter ConocoPhillips produced an average of 205,000 barrels per day on the North Slope, while in first quarter of this year 198,000 barrels a day came from Alaska, the parent company said.
In its separate April 30 statement, ConocoPhillips Alaska quoted the 218,000 barrel a day figure and said “the ramp down to reduce production will begin in late May. … Any extensions of the curtailment beyond June will be determined on a month-to-month basis. The curtailment is not expected to impact operations of the trans-Alaska Pipeline.”
The decision to cut production “was made in response to unacceptably low oil prices resulting from global oil demand destruction caused by the impacts of the COVID-19 pandemic, combined with a global oversupply of oil. The curtailment will essentially leave the oil stored in the reservoirs, available for resumption of production at a later date. The actions ConocoPhillips Alaska is taking with this production curtailment underscore the extraordinary challenges currently facing the oil and natural gas industry in Alaska and elsewhere.”
Alaska earnings, operationsAdjusted earnings from Alaska in first quarter were $201,000, as compared to $364,000 in fourth quarter.
ConocoPhillips reported that income tax rates were about 24.3% in Alaska in first quarter, as compared to 22.3% in the Lower 48 and 26.8% in Canada.
In Alaska, ConocoPhillips said it progressed construction on its multi-year North Slope GMT-2 project, which remains on track for startup in late 2021. The company also completed drilling two Tinmiaq wells to further appraise the Willow discovery and one rank exploration well to test the Harpoon prospect, prior to early termination of the 2020 winter exploration program to minimize risks associated with the coronavirus.
Scott Jepsen, ConocoPhillips Alaska’s vice president of external affairs and transportation, told the Alaska Support Industry Alliance Sept. 12 that GMT2’s estimated peak gross production will be 35,000-40,000 barrels per day from 48 wells.
Upcoming operational activities for the company include several seasonal turnarounds and maintenance projects typically conducted in the second and third quarters each year. These activities are planned in Alaska, Norway and various areas in the Asia Pacific region. Headquartered in Houston, Texas, ConocoPhillips had operations and activities in 17 countries, $65 billion of total assets, and approximately 10,400 employees as of March 31. Production excluding Libya averaged 1,278 MBOED for first quarter, and proved reserves were 5.3 BBOE as of Dec. 31, 2019.
The company ended first quarter with approximately $14 billion of liquidity, including $6 billion of available revolving credit facility.
- KAY CASHMAN