ConocoPhillips has reported third-quarter 2014 earnings of $2.7 billion, or $2.17 per share, compared with third-quarter 2013 earnings of $2.5 billion, or $2.00 per share.
Excluding special items, third-quarter 2014 adjusted earnings were $1.6 billion, or $1.29 per share, compared with third-quarter 2013 adjusted earnings of $1.8 billion, or $1.47 per share.
Special items for the current quarter primarily related to discontinued operations as a result of a gain from the sale of the Nigerian business.
“Operationally, we are meeting our growth milestones,” said Ryan Lance, chairman and CEO.
Ryan Lance further explained: “On the financial side, we increased the dividend in July, and we continue to remain focused on returns and growing our margins.
“ConocoPhillips is well positioned in the current environment to deliver 3 to 5 percent volume and margin growth with an attractive dividend. We have completed a significant transformation that provides us with strong base assets and a high-quality inventory of investment opportunities. Importantly, we expect strong growth in 2015 driven by ongoing success in the North American unconventionals and startup of several major projects, including Surmont 2 and APLNG. Capital spending on those projects peaked in 2014, which provides increasing capital flexibility. This increased flexibility allows us to respond more easily to changing market conditions while continuing to deliver organic growth and an attractive dividend.”
Europe – Quarterly production was 194 MBOED, an increase of 18 MBOED compared with the same period a year ago. The increase was primarily the result of major project ramp ups, partially offset by normal field decline. During the quarter, several major turnarounds were completed across the North Sea and startup was achieved at the Britannia Long-Term Compression Project. Offshore hook up and commissioning activities continue at Eldfisk II, which is on track for first production in early 2015.
Asia Pacific and Middle East – Third-quarter production was 301 MBOED, a decrease of 16 MBOED compared with the third quarter of 2013. The decrease was primarily the result of normal field decline and the major turnaround at the Bayu-Undan Field and the Darwin liquefied natural gas (LNG) facility in Australia, partially offset by growth from major projects. In early October, first oil production began from the floating production system at the Gumusut Field, which was the second major project startup in Malaysia this year. At Kebabangan, hook up and commissioning activities are ongoing in preparation for first gas in the fourth quarter of 2014. In Australia, APLNG remains on track for first production in mid-2015 and drilling commenced at Bayu-Undan Phase III.
Conventional exploration – Offshore Senegal, the company discovered a new working petroleum system at the FAN-1 exploration well, with further evaluation required to determine commerciality. Drilling is currently underway on the second Senegal prospect, SNE-1. In the Gulf of Mexico, ConocoPhillips continued to add acreage as the high bidder on approximately 576,000 net acres in the recent lease sale. Appraisal will continue at Shenandoah, Tiber and Gila during the remainder of 2014.
After further evaluation, the company has elected not to continue appraisal of the Coronado prospect and expensed the initial wildcat well costs as a dry hole. In Australia, Poseidon Phase II appraisal activity was completed during the quarter and appraisal drilling commenced at Barossa in October. In Angola, drilling is ongoing at the Kamoxi-1 well, with total depth expected to be reached in November.
Production from continuing operations, excluding Libya, for the third quarter of 2014 was 1,473 MBOED, an increase of 25 MBOED compared with the same period a year ago. The net increase reflects 62 MBOED, or 4 percent growth, partly offset by 37 MBOED from higher downtime. Growth was primarily due to new production from development programs and major projects, partially offset by normal field decline.
Adjusted earnings were lower compared with third-quarter 2013 primarily due to lower realized prices and higher operating costs associated with increased turnaround activity, partially offset by higher volumes. The company’s total realized price was $64.78 per barrel of oil equivalent (BOE), compared with $69.68 per BOE in the third quarter of 2013, reflecting lower average realized prices across all products.
Special items for the quarter include a gain from the sale of the Nigerian business as well as favorable settlements and a tax benefit on interest expense within the Canada, Asia Pacific and Middle East, and Corporate segments, which more than offset property and leasehold impairments in the Lower 48 segment, the company said.
For the quarter, cash provided by continuing operating activities was $4.15 billion. Excluding a $0.22 billion decrease in working capital, ConocoPhillips generated $3.93 billion in cash from operations. Proceeds from asset dispositions were $1.4 billion. In addition, the company funded $4.6 billion in capital expenditures and investments for continuing operations, and paid dividends of $0.9 billion.
ConocoPhillips says the company is on track to meet its previously stated growth target of 3 to 5 percent volume and margin growth in 2014.