ConocoPhillips nets $2.3B in 3rd quarter, $405M in Alaska

  • The bountiful earnings for the Houston-based major exemplify the suddenness of the rebound for an industry that was in full-fledged survival mode just a year ago.

ConocoPhillips rode a strong oil market to its second-consecutive $2 billion quarter over the summer.

The predominant North Slope operator netted $405 million in Alaska, part of a $2.3 billion profit in the third quarter, ConocoPhillips executives said Nov. 2.

The bountiful earnings for the Houston-based major exemplify the suddenness of the rebound for an industry that was in full-fledged survival mode just a year ago. While leaders regularly emphasized the relatively healthy position ConocoPhillips was in to manage its way through the pandemic’s impacts last year, the company lost $450 million in the third quarter of 2020 — $16 million of which was attributable to Alaska — and generated less than 40% of the $11.6 billion in revenue it collected in the most recent period.

Year-to-date, ConocoPhillips has netted more than $5.4 billion overall and $935 million from Alaska, compared to nearly $2 billion in losses over the first three quarters of 2020. The $2.3 billion third quarter profit translated to earnings of $1.78 per share. ConocoPhillips’ stock traded at $73.08 per share in the final hours of activity Nov. 2, down 2.2% following the morning earnings report.

CEO Ryan Lance told investors that the oil major is on track to close out the year in its strongest position in more than a decade.

“Every aspect of our triple mandate is moving in the right direction. Our underlying portfolio cost of supply is improving; our overall (greenhouse gas) intensity is lower; our emissions intensity reduction targets are more stringent; underlying margins are expanding and our trailing 12-month return on capital employed is headed towards an estimated 14% by year-end, reflecting the benefit of more than just strong commodity prices,” Lance said in an earnings call.

Prices for Alaska North Slope and global benchmark Brent crude largely recovered to pre-pandemic levels early in the year and averaged more than $70 per barrel in the third quarter for the first time since 2018. Alaska oil traded for $85.83 per barrel Nov. 1, according to state Revenue Department officials.

In Alaska, ConocoPhillips produced approximately 163,000 barrels of oil per day in the third quarter, down from 184,000 barrels per day a year ago. However, ConocoPhillips Alaska President Erec Isaacson noted in a statement that the company’s Greater Mooses Tooth and Fiord West drill site projects — with peak combined production estimated at 55,000 barrels per day — will begin producing oil soon.

The company paid an estimated $301 million in taxes and royalties to the State of Alaska during the quarter and an additional $68 million to the federal government, according to a statement from ConocoPhillips Alaska representatives.

The company also invested $235 million in North Slope projects in the third quarter, bringing its total 2021Alaska investment to $698 million, or 19% of its global capital expenditure, which is in line with recent history.

In mid-October the company opted not to appeal a U.S. District Court ruling invalidating key federal environmental approvals for its $6 billion-$8 billion Willow project in the National Petroleum Reserve-Alaska. The decision sets the stage for Bureau of Land Management Alaska officials to conduct what is likely to be a multi-year supplemental environmental review to address the flaws identified in the District Court ruling.

Elwood Brehmer can be reached at [email protected].

11/04/2021 - 8:18am