ConocoPhillips earns, spends $1.5B in Alaska during 2019

  • Doyon Drilling Rig 26, the largest mobile drilling rig in North America, will start drilling on the North Slope this spring for ConocoPhillips. The state’s largest oil producer reported Feb. 4 that it spent roughly $1.5 billion on capital projects in Alaska during 2019, slightly more than its $1.44 billion in net income. (Photo/Courtesy/ConocoPhillips)

Lower oil and gas prices took a bite out of ConocoPhillips’ fourth quarter earnings but the upstream-focused oil major still managed to net its largest full-year profit in 2019 since the global reset of energy markets more than five years ago.

ConocoPhillips executives reported $720 million fourth quarter and nearly $7.2 billion full-year profits for 2019 during a Feb. 4 earnings call.

In Alaska, the Houston-based producer netted $368 million for the quarter, which rounded out a nearly $1.5 billion full-year profit from its extensive North Slope operations.

The company paid approximately $263 million in combined fourth quarter taxes and royalties to the State of Alaska, according to ConocoPhillips Alaska spokeswoman Natalie Lowman. Overall, ConocoPhillips paid just more than $1 billion in taxes and royalties to the state in 2019, according to company figures.

ConocoPhillips’ companywide capital program declined just more than $100 million in 2019 to $6.6 billion, but its capital investments in Alaska grew by about $200 million to $1.5 billion for the year.

Lowman noted via email that the company’s 2019 Alaska capital investments exceeded its adjusted net income of $1.44 billion in the state last year.

The companywide earnings were down 62 percent year-over-year for the fourth quarter, but up 14 percent for all of 2019. Company officials attributed the drop in quarterly earnings to a slight decline in global production and oil and gas prices that were 11 percent lower than the fourth quarter of 2018 on a per-barrel equivalent basis, according to the earnings report.

The $7.2 billion full-year profit was boosted by a nearly $1.8 billion gain from selling European assets that was realized in the third quarter.

The earnings were the result of $8.1 billion of quarterly revenue, a 21 percent year-over-year decline, and $36.6 billion of full-year revenue, which was down 5 percent from 2018.

The $720 million and $7.2 billion profits translated to fourth quarter earnings of 66 cents per share and full-year earnings of $6.43 per share. ConocoPhillips stock traded at around $57.10 per share in the hours after the earnings release, down slightly from a $58.50 per share Tuesday opening price.

The company repurchased approximately $3.5 billion of stock and paid $1.5 billion in dividends to shareholders during the year, actions that were funded from free cash flow and marked a 43 percent return of cash flow from operations to shareholders, according to the earnings report. ConocoPhillips also increased its quarterly dividend to 42 cents per share last year.

The company’s full-year Alaska earnings were down 16 percent to just more than $1.5 billion in 2019 on a 9 percent drop in oil prices despite 18 percent growth in the company’s North Slope oil production from 2018.

Alaska oil production attributable to ConocoPhillips averaged 202,000 barrels of per day in 2019, meaning the company accounted for more than 40 percent of all North Slope oil production last year.

CEO Ryan Lance emphasized in a formal statement that 2019 capped a “highly successful” three-year period in which the company transformed its operations and balance sheet to match the new realities of energy markets even with the fourth quarter earnings decline.

“We’ve positioned ConocoPhillips to deliver sustained value through price cycles due to our strong balance sheet, focus on free cash flow generation, compelling returns of and returns on capital and our commitment to environmental, social and governance leadership,” Lance said. “We have laid out a powerful 10-year plan based on our formula for value creation and we look forward to successfully delivering that plan in the quarters and years ahead.”

Company leaders have frequently stressed a goal to be profitable at market prices of $40 per barrel of oil equivalent, which also accounts for natural gas and liquids production. ConocoPhillips realized an average price of $48.78 per barrel of oil equivalent in 2019.

ConocoPhillips is advancing several oil projects in the National Petroleum Reserve-Alaska on the western North Slope and has ramped up its winter exploration drilling program in recent years.

Elwood Brehmer can be reached at [email protected].

Updated: 
02/04/2020 - 2:22pm