Energy

ConocoPhillips nets quarterly $1.8 billion, with $427 million from Alaska

ConocoPhillips continued its increasingly strong earnings trend by reporting a third-quarter profit of more than $1.8 billion on Thursday.

In Alaska, the state's largest producer by volume netted $427 million during the quarter, bringing its year-to-date earnings in the state to more than $1.3 billion.

The $1.8 billion profit was on the back of $10.1 billion in revenue, the largest such figures ConocoPhillips has realized in several years, more than quadrupling its net income of $420 million in the third quarter of 2017.

So far in 2018 the Houston-based company has netted nearly $4.4 billion on $28.3 billion in revenue compared to the $855 million loss it absorbed in 2017 on $32.5 billion of revenue it generated last year.

The improved financials can largely be attributed to higher oil prices — ConocoPhillips' crude sold for an average of $51.96 per barrel in 2017 versus $69.74 per barrel year-to-date in 2018 — but CEO Ryan Lance said improved internal operations have also contributed to the better returns.

"We're delivering another year of strong performance by successfully executing our disciplined, returns-focused plan. We've accomplished many strategic, financial and operational milestones this year, ahead of our original schedule," Lance said in a prepared statement. "Our strategy is designed to generate superior returns through cycles by maintaining discipline, focusing on free cash flow and allocating this cash according to clear, shareholder-friendly priorities. This is what the market can expect from us again in 2019."

In October the company announced the start of production from its roughly $1 billion Greater Mooses Tooth-1 project in the National Petroleum Reserve-Alaska, which marks the first oil production on federal acreage within the reserve boundary. It also got a favorable permitting decision from the Bureau of Land Management and sanctioned the similar, but slightly larger, $1.5 billion GMT-2 project in the NPR-A.

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Alaska spokeswoman Natalie Lowman said via email the company would be laying gravel for the GMT-2 road and pad this coming winter; the project is expected to come online in late 2021 and produce up to 40,000 barrels of oil per day at its peak.

The quarterly profit translated into earnings of $1.59 per share compared to quarterly earnings of 34 cents per share year-over-year. ConocoPhillips stock sold for $68.48 per share near the end of the trading day Thursday after the positive results, up from a Wednesday closing price of $65.69 per share.

The company ended the quarter holding roughly $4.8 billion in cash and short-term investments.

Its third quarter dividend was increased by 7 percent to 30.5 cents per share.

ConocoPhillips also repurchased $900 million worth of common shares in the third quarter, bringing its 2018 share repurchase total to $2.1 billion, according to an earnings release.

BP and ExxonMobil, the other large producers in the state, will issue their third quarter earnings reports Oct. 30 and Nov. 2, respectively.

Specifically to Alaska, the company had pre-tax net income of $535 million in the third quarter. It estimated its tax and royalty payments to the state during the period at $321 million, according to Lowman.

ConocoPhillips also spent $190 million of its $1.6 billion overall quarterly capital budget in the state, which brought its Alaska investment total to just more than $1 billion so far in 2018, Lowman noted.

Year-to-date the company has made roughly $5.1 billion of capital investments worldwide, making Alaska about 20 percent of the company's overall capital budget, which is on par with recent years.

ConocoPhillips produced an average of 152,000 barrels of oil per day during the quarter, compared with 154,000 barrels per day for the same period in 2017.

The company's total production in Alaska — including natural gas and gas liquids — averaged 165,000 barrels of oil equivalent per day, which was about 13 percent of its global production for the quarter.

Comparatively, Alaska accounted for 23 percent of ConocoPhillips net earnings for the period.

Elwood Brehmer can be reached at elwood.brehmer@alaskajournal.com.

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