ConocoPhillips 2Q Adjusted Earnings at $1.8 Billion

ConocoPhillips today reported second-quarter 2013 earnings of $2.1 billion, or $1.65 per share, compared with second-quarter 2012 earnings of $2.3 billion, or $1.80 per share.

Second-quarter 2012 reported earnings included $0.5 billion from downstream operations prior to the separation of Phillips 66 on April 30, 2012.

Excluding special items, second-quarter 2013 adjusted earnings were $1.8 billion, or $1.41 per share, compared with second-quarter 2012 adjusted earnings of $1.5 billion, or $1.19 per share. Special items for the current quarter primarily related to favorable outcomes from pending claims and settlements.

“We are delivering on our 3 to 5 percent growth targets for both volumes and margins and have raised our full-year production guidance,” said Ryan Lance, chairman and CEO. “We also reaffirmed our commitment to shareholders, and confidence in our long-term plans, by increasing the dividend rate in July.

“We had a very strong quarter, with our base operations and turnaround activity performing as planned,” added Lance. “Production exceeded expectations as growth continued from our development programs, notably in the Eagle Ford where production nearly doubled compared with a year ago. Our major projects are progressing as planned, with Christina Lake Phase E first production in July and startups expected at Jasmine, Ekofisk South, SNP and the Gumusut FPS before year end. Our exploration momentum also continues, with drilling activity ongoing in deepwater, conventional and unconventional plays around the world.”

Production from continuing operations for the second quarter of 2013 was 1,510 MBOED, compared with 1,489 MBOED for the second quarter of 2012. Adjusted for dispositions and planned downtime, production grew by 64 MBOED, or 4 percent, compared with second-quarter 2012. This increase was primarily due to new production from development programs and major projects, partially offset by normal field decline.

Adjusted earnings increased compared with second-quarter 2012 primarily due to the impact of increased volumes, a continued portfolio shift to liquids and a higher proportion of production in higher-margin areas. The company’s total realized price was $66.82 per barrel of oil equivalent (BOE), flat compared with $66.81 per BOE in the second quarter of 2012. This reflected lower overall crude and natural gas liquids prices, offset by higher natural gas and bitumen prices.

For the quarter, cash provided by continuing operating activities was $3.7 billion. Excluding a $0.7 billion increase in working capital, ConocoPhillips generated $4.4 billion in cash from operations. The company also received $0.5 billion in proceeds from asset dispositions, funded a $3.9 billion capital program and paid dividends of $0.8 billion.

During the quarter, ConocoPhillips repaid $0.85 billion of debt at maturity and recognized a capital lease asset and capital lease obligation of $0.9 billion for the Gumusut FPS in Malaysia.

Outlook

Third-quarter 2013 production from continuing operations is expected to be 1,460 to 1,490 MBOED, reflecting previously announced planned downtime and turnaround activity. Full-year 2013 production from continuing operations is expected to be 1,515 to 1,530 MBOED. Full-year production from discontinued operations is expected to be 25 to 40 MBOED.

The full-year 2013 capital program is expected to be $15.9 billion for continuing operations and $0.6 billion for discontinued operations.