JUNEAU -- Alaska's big three oil producers are all reporting falling profits in the last quarter, but only ConocoPhillips, the state's largest producer, reported an overall loss.
With oil prices hammering revenues for all companies producing oil, Alaska's big producers, which include BP and Exxon Mobil along with ConocoPhillips, have announced capital spending cutbacks.
So far, none of the three producers has singled out Alaska for extra cuts, but company capital spending is crucial in Alaska for both stemming the decline in traditional oil production and to finance a massive liquefied natural gas export project that state leaders hope will be its economic salvation.
The Alaska LNG project needs ongoing spending to get to a point where a decision to build it can be made, and then may need $45 billion to $65 billion to build it.
But analysts who follow the energy business say all capital spending is going to be under scrutiny. As companies have announced quarterly results recently, their executives have been peppered with questions about spending cuts. They have been quick to reassure nervous investors that they are cutting everywhere they can.
"I think you are going to see capital spending coming in lower, perhaps much lower," said John Herrlin, a New York-based energy analyst for the French investment bank Societe Generale.
In Alaska, he said in an interview, the stronger finances of Exxon Mobil and BP will give them more flexibility to keep making capital investments even during the downturn.
ConocoPhillips told analysts that its key message for them was about cuts and concentrating capital spending only where they get strong returns.
"We continue to exercise capital flexibility and we're further reducing our planned 2015 capital spending," said Matt Fox, ConocoPhillips executive vice president. More details about next year will be provided in December, he said.
Low petroleum prices mean that everybody in the business of producing oil and natural gas is hurting, but some more than others.
At Exxon Mobil, profits were almost cut in half, to $4.2 billion, during the just-ended third quarter from $8 billion in the same quarter last year, but the company remained profitable.
BP too was profitable during the quarter but just barely. It reported making $46 million, down from $1.3 billion in the same quarter last year.
ConocoPhillips lost $1 billion last quarter, compared to profits of $2.7 billion in the same quarter last year. It made $63 million in Alaska, however.
ConocoPhillips' current losses stem in large part from actions the company itself took when it decided to get rid of its profitable but staid refining operations. They were spun off into Phillips 66, a new, separate company in 2012.
That converted ConocoPhillips from an integrated oil company to what's known as a "pure play" exploration and production company, in contrast with ExxonMobil and BP.
Pure play E&P companies are more exposed to the price of oil, but low oil prices can actually boost profits at refiners, said analyst Herrlin. At the time ConocoPhillips made the change, prices were high and Wall Street praised the change.
"The integrated companies have refining to fall back on," Herrlin said, but exploration and production companies such as ConocoPhillips are suffering. Some without the diverse worldwide asset base similar to ConocoPhillips are hurting even more, he said.
Now, Exxon is reporting $3 billion in profits from its refining and similar operations, while BP is reporting $2.6 billion in refining profits, both about double compared to the same quarter last year.
Phillips 66, the spun-off ConocoPhillips company, reported profits of $1.5 billion during the quarter.
With ConocoPhillips spending money faster than it is bringing it in, the company told analysts it hopes to reach cash flow neutrality by 2017, largely by cutting costs,. The company says it has the financial flexibility to deal with low prices.
The company's two top priorities for its cash, it said, are to continue to fund the company's dividend and capital expenses. If cash flow from the operation doesn't accomplish that, ConocoPhillips also has the ability to borrow more and to sell off assets. Some asset sales have already been announced, and the company earlier reported it was looking to sell its Cook Inlet natural gas fields.
ConocoPhillips has an investment-grade credit rating, which would allow it to borrow to keep up the dividend payments and capital spending, Jeff Sheets, the company's chief financial officer, told analysts.
"Between cash on hand, debt capacity within a single A credit rating and expected asset sales proceeds we have the means to manage through the current period of low prices," he said.
Sheets didn't say whether paying dividends would come at the expense of capital investments but he said that continuing to pay a dividend was a top priority. In July, in the face of declining profits, ConocoPhillips actually increased its dividend, which Sheets called an "important signal to the market."
Analyst Herrlin too said that signal was important.
"Boards don't take an action to raise the dividend lightly," he said.
But despite the financial pressures on companies crucial to Alaska, some state leaders say they're not worried.
House Majority Leader Charisse Millett, R-Anchorage, took to the House floor this week to express her confidence that the oil companies will keep investing in projects such as Alaska LNG .
"Our partners are putting other projects on hold because of the availability of capital; they are not putting this project on hold," she said, after reviewing a list of suspended projects around the world.
Meeting with reporters following the end of a special session of the Alaska Legislature Thursday, Gov. Bill Walker expressed guarded optimism for continued investment in Alaska despite falling profits.
"I am a glass-half-full kind of person to begin with," he said. "I always walk into things as positive as possible, so I maintain that now."