ConocoPhillips posts seventh straight quarterly profit
Lower global LNG and natural gas prices took a small bite out of ConocoPhillips’ profits, but the major producer still generated a healthy profit of nearly $1.6 billion in the second quarter.
Company executives released the quarterly earnings report July 30.
Chairman and CEO Ryan Lance said in a statement accompanying the report that the period was the seventh consecutive quarter the company was able to generate free cash flow and pay for capital investments, share buybacks and dividends out of cash from operations while meeting its operational and financial targets.
“ConocoPhillips has embraced an approach to our cyclical industry that we believe will deliver superior returns and create value across a range of commodity prices,” Lance said. “This quarter represents a continuation of strong performance on our business model that prioritizes financial returns, discipline, resilience with upside and shareholder distributions.”
The companywide profit was generated from more than $8.3 billion in revenue and translated into earnings of $1.40 per share. ConocoPhillips stock closed trading July 30 at $59.56 per share, up 4.2 percent from the pre-earnings report start to the day.
Lance added that company leaders will present a plan detailing their ability to continue the strong returns over the long term at a November investor meeting.
ConocoPhillips had achieved profits greater than $1.8 billion for three quarters in a row before the $1.6 billion second quarter net.
ConocoPhillips’ total realized price for all of the oil and natural gas it sold during the first half of the year was $50.55 per barrel of oil equivalent, compared to $52.37 in the first six months of 2018, according to the report.
The company also continued to realize strong returns from its North Slope Alaska operations, which netted a $462 million profit during the period. However, several special item costs “predominately related to non-cash adjustments for certain state and federal tax adjustments” totaling $81 million resulted in $381 million in adjusted quarterly earnings for ConocoPhillips’ Alaska business segment, spokeswoman Natalie Lowman wrote in an email.
ConocoPhillips paid $278 million in State of Alaska taxes and royalties during the quarter as well, according to Lowman. She added that the company has reinvested all of its adjusted Alaska earnings totaling $765 million so far in 2019 back into projects in the state. ConocoPhillips Alaska spent $370 million on capital investments during the quarter.
The second quarter also marked the end to one of the company’s largest Alaska exploration seasons, in which eight exploration wells were drilled and tested, Lowman wrote via email.
A slide presentation accompanying the earnings report states ConocoPhillips had “encouraging” results from the wells drilled at its North Slope Willow and Narwhal prospects, but the company has not released additional information on the exploration results.
ConocoPhillips also announced a deal to purchase the mid-sized Nuna prospect on the North Slope from small independent Caelus Energy, but a purchase price has not yet been disclosed.
The $462 million Alaska profit accounted for 29 percent of ConocoPhillips global earnings for the quarter, while the company’s production from the state — dominated by high-value oil — accounted for 16 percent of its total combined oil and gas production.
Alaska has also accounted for 23 percent of the company’s overall year-to-date capital spend of $3.4 billion.
Elwood Brehmer can be reached at [email protected].