ConocoPhillips returns to profit on higher crude prices

U.S.-based oil and gas company ConocoPhillips returned to profit in the third quarter 2017 helped by rising crude prices but still decided to further reduce its capital budget for the year. 

ConocoPhillips on Thursday reported third-quarter 2017 earnings of $420 million compared with a third-quarter 2016 loss of $1.04 billion.

Excluding special items, third-quarter 2017 adjusted earnings were $0.2 billion compared with a third-quarter 2016 adjusted loss of $0.8 billion.

Special items for the current quarter were primarily driven by a net gain from previously announced dispositions and a tax benefit related to the company’s prior decision to exit Nova Scotia deepwater exploration, partially offset by premiums on early debt retirement.

According to the company, its earnings improved due to higher realized prices, reduced depreciation expense, lower exploration expense, impacts from dispositions as well as the absence of special item impacts from a tax functional currency change at APLNG and restructuring costs.

The company’s total realized price was $39.49 per barrel of oil equivalent (BOE), compared with $29.78 per BOE in the third quarter of 2016, reflecting higher average realized prices across all commodities.

Ryan Lance, chairman and chief executive officer, said: “While the outlook for commodity prices has improved, we remain committed to our disciplined strategy. We are focused on free cash flow generation, strong financial returns, shareholder value creation and distributions through the cycles.”

ConocoPhillps’ production excluding Libya for the third quarter of 2017 was 1,202 thousand barrels of oil equivalent per day (MBOED), a decrease of 355 MBOED compared with the same period a year ago. Excluding the third-quarter volume impact from closed and signed dispositions of 58 MBOED in 2017 and 429 MBOED in 2016, underlying production increased 16 MBOED, or 1.4 percent. Underlying production increased from the ramp up of several major projects and multiple development programs, which more than offset normal field decline and hurricane downtime.

The company’s fourth-quarter and full-year 2017 production is expected to be 1,195 to 1,235 MBOED and 1,350 to 1,360 MBOED, respectively.

Full-year guidance for capital expenditures has been lowered to $4.5 billion, a 10 percent reduction from initial guidance.

The company expects to reduce its debt to less than $20 billion by year-end 2017, and expects full-year share repurchases of $3 billion, accelerating performance on a per debt-adjusted share basis.

Offshore Energy Today Staff