Mikaila Adams
Editor-News
ConocoPhillips is raising its 2018 capital spending budget as well as its full-year production guidance considering a higher West Texas Intermediate benchmark price environment, higher-than-budgeted partner-operated activity, improved performance across several operating areas, and completion of the Alaska Western North Slope bolt-on acquisition.
The Houston independent reported an increase in capital guidance to $6 billion from $5.5 billion as WTI prices sit near $65/bbl vs. the initially assumed $50/bbl. Excluded is the previously announced $400-million bolt-on acquisition in the Alaska Western North Slope and $100 million to acquire additional acreage in the Montney in Canada.
The company increased full-year 2018 production guidance to 1.225-1.255 million boe/d. Third-quarter 2018 production is expected to be 1.215-1.255 million boe/d, which reflects typical seasonal turnarounds and maintenance activity. All production guidance excludes Libya.
The company reported second-quarter earnings of $1.6 billion compared with a second-quarter 2017 loss of $3.4 billion. Excluding special items, second-quarter adjusted earnings were $1.3 billion compared with second-quarter 2017 adjusted earnings of $200 million.
Special items for the quarter were primarily driven by an unrealized gain on Cenovus Energy Inc. equity and recognition of deferred licensing revenue, partially offset by pension settlement expense.
For the quarter, cash provided by operating activities was $3.34 billion. Excluding working capital, cash from operations of $3.16 billion exceeded capital expenditures, dividends, and share repurchases.
Production
Production excluding Libya for this year’s second quarter was 1.211 million boe/d, a decrease of 214,000 boe/d compared with the same period a year ago. Year-over-year underlying production excluding the impact of closed dispositions rose 5% overall and 34% on a production per debt-adjusted share basis.
Excluding the second-quarter volume impact from closed dispositions of 272,000 boe/d in 2017, underlying production increased 58,000 boe/d. The increase came primarily from growth in unconventional assets and other major projects, which more than offset normal field decline. Production from Libya was 38,000 boe/d.
In the Lower 48, production from the Eagle Ford, Bakken, and Delaware unconventional areas increased 37% year-over-year. In Alaska, GMT-1 drilling continued, and the project is on track to start oil production in this year’s fourth quarter.
In Europe, Aasta Hansteen and Clair Ridge are on track to deliver first production by yearend. Turnarounds were completed at Darwin LNG and Bayu Undan in Australia, as well as in the UK and Norway. Additional turnarounds and maintenance activity will continue in the third quarter.
