ConocoPhillips nets $445M in Alaska to start 2018

  • ConocoPhillips earned $445 million in Alaska in the first quarter of 2018, representing more than half of its global net of $888 million. It's the best performance for the company in Alaska since mid-2014 before oil prices crashed to less than $30 per barrel before recovering recently to more than $70. (Photo/Courtesy/ConocoPhillips)

ConocoPhillips’ first quarter earnings report issued Thursday was full of good news for the company as it generated $888 million of profits with oil prices in the $70 per barrel range.

Houston-based ConocoPhillips grossed more than $8.9 billion in the first three months of 2018, which is its highest revenue quarter since oil prices collapsed in the fall of 2014.

The company netted $445 million in adjusted earnings in Alaska during the quarter, also its highest income quarter in the state since the oil market reset. In fact, the $445 million of Alaska income is more than four times greater than its first quarter 2017 earnings in the state and nearly 70 percent of its total 2017 Alaska earnings of $652 million.

ConocoPhillips paid $298 million in state royalty and tax payments during the quarter, according to spokeswoman Amy Burnett.

As an upstream production-driven company, ConocoPhillips’ financials have been subject to oil and gas market prices far more than other major producers in Alaska that also have substantial refined product business operations.

“We continue to differentiate ourselves by executing our strategic, financial, and operational plans. We remain focused on creating value for our shareholders by maintaining discipline, following our priorities and staying committed to our returns-focused value proposition,” CEO Ryan Lance said in a formal statement. “We safely delivered our plan again this quarter, while generating a strong improvement in free cash flow, reducing our debt and returning over 30 percent of cash from operations to shareholders through our dividend and buyback program.”

The $888 million profit breaks down to 75 cents per share of common stock. ConocoPhillips stock traded for $66.85 per share shortly before the close of trading Thursday, up slightly from Wednesday’s closing price of $65.07 per share prior to the earnings release.

The company increased its dividend payment by 7.5 percent to 28.5 cents per share during the quarter as well. After oil prices crashed the company reduced its dividend from 75 cents to 25 cents per share.

ConocoPhillips spent $263 million of its $1.5 billion quarterly capital budget in Alaska. It produced an average of 190,000 barrels per day of oil and natural gas liquids from the state, which was about 15 percent of its daily worldwide oil and gas equivalent production during the quarter.

However, that Alaska production may be set for a substantial increase down the road based on the six winter exploration drilling successes ConocoPhillips announced earlier this month.

Three wells intended to delineate the company’s Willow prospect in the National Petroleum Reserve-Alaska largely confirmed the initial estimate that the prospect in the National Petroleum Reserve-Alaska holds at least 300 million barrels of recoverable oil. Additionally, the wells indicate the Willow oil resource could support its own processing facility, meaning it has the potential to produce up to about 100,000 barrels per day, according to Alaska spokeswoman Natalie Lowman.

Other exploration results from wells to the south and east on state land also proved what industry experts in the state suspected: the Nanushuk formation oil play is going to be a major target in the western portion of the North Slope for years to come.

While this year’s discoveries are five years or more from production, ConocoPhillips is scheduled to bring its Greater Mooses Tooth-1 project in the NPR-A — with up to 30,000 barrels per day of peak production — online this fall.

Elwood Brehmer can be reached at [email protected].

04/26/2018 - 5:05pm