Driven by higher oil prices, U.S. oil major ConocoPhillips returned to profit in the second quarter of 2018 and increased its production guidance for the year.
ConocoPhillips on Thursday reported a second-quarter 2018 profit of $1.6 billion, compared with a second-quarter 2017 loss of $3.4 billion.
Excluding special items, second-quarter 2018 adjusted earnings were $1.3 billion, compared with 2Q 2017 adjusted earnings of $0.2 billion.
Special items for the current quarter were primarily driven by an unrealized gain on Cenovus Energy equity and recognition of deferred licensing revenue, partially offset by pension settlement expense.
The company said that the earnings were higher compared with the second quarter of 2017 primarily due to the absence of non-cash impairments of APLNG, San Juan, and Barnett, and current-quarter higher realized prices, partially offset by the absence of the gain on the Canada disposition.
Also, ConocoPhillips’ total realized price was $54.32 per barrel of oil equivalent (boe), compared with $36.08 per boe in the second quarter of 2017.
Ryan Lance, chairman and CEO of ConocoPhillips, said: “We’re benefitting from higher oil prices, but also driving underlying cash flow expansion. In accordance with our priorities, we’ve differentially allocated excess cash toward debt reduction and distributions, while continuing to grow our diversified, low cost of supply resource base.
“Since we launched our disciplined strategy almost two years ago, we’ve met or exceeded all our key strategic milestones. We achieved our debt target 18 months ahead of plan, we’ve outperformed on our target payout to shareholders, we’re executing our operating plan and remain committed to our disciplined approach to the business.”
As for production, ConocoPhillips produced 1,211 thousand barrels of oil equivalent per day (mboed) in the second quarter of 2018, excluding Libya. This is a decrease of 214 mboed compared with the same period a year ago.
Excluding the impact of closed dispositions, underlying production increased by 58 mboed, or five percent. The increase came primarily from growth in the Big 3 unconventional assets (Eagle Ford, Bakken, and Delaware) and other major projects, which more than offset normal field decline. Production from Libya was 38 mboed.
The company added that it increased full-year 2018 production guidance to 1,225 to 1,255 mboed to reflect the higher-than-budgeted partner-operated activity, improved performance across several operating areas, and completion of the Alaska Western North Slope bolt-on acquisition.
Third-quarter 2018 production is expected to be 1,215 to 1,255 mboed, reflecting typical seasonal turnarounds and maintenance activity. Conoco said that all production guidance excluded Libya.
The company’s 2018 operated capital scope remains unchanged, excluding acquisition-related activity. However, the company adjusted its capital guidance to $6 billion from $5.5 billion, to reflect a higher $65 WTI per barrel price environment versus the $50 WTI per barrel initially expected.