ConocoPhillips Chairman and Chief Executive Officer Jim Mulva commented, "We operated very well during the third quarter, with E&P production and R&M refinery utilization rates higher than a year ago. Through September year to date, our E&P production has increased nearly 100,000 BOE per day, or more than 5 percent, compared with the same period in 2008."
Year-to-date production in Exploration and Production (E&P) was 1.86 million barrels of oil equivalent (BOE) per day, compared with 1.76 million BOE per day in the same period of 2008. The increase was mainly due to new production from major project developments in the United Kingdom, Russia, China, Canada, Vietnam and Norway. Production also increased due to higher operating efficiency and lower production sharing and royalty volumes, partially offset by base field decline and planned downtime.
For the quarter, total production, including the company's share of LUKOIL, was 2.2 million BOE per day and worldwide refining crude oil capacity utilization rate was 90 percent. Third-quarter production was impacted by the partial shut-in of the Ekofisk field in Norway due to the previously communicated platform incident. Ekofisk resumed full operations in mid-September.
Mulva added, "Although we operated well, we were adversely impacted by low North American natural gas prices and worldwide refining margins, which led us to curtail approximately 300 MMCFD of natural gas production starting in late August and reduce refinery runs. During the quarter, R&M returned to positive earnings, and both R&M and Chemicals continue to benefit from low utility costs. In addition, for the third consecutive quarter, our operating costs were down compared with 2008, and our full-year cost reduction target of $1.4 billion has been achieved.
"Our refocused exploration program is delivering strong results so far this year. During the third quarter, the BP-operated Tiber discovery was announced. This is our second discovery in the Lower Tertiary play in the Gulf of Mexico this year, and we are currently drilling the Rickenbacker prospect. In the Eagle Ford shale play, we have seen encouraging drilling results and are pleased with our large acreage position. Off the northwest coast of Australia, although the Kontiki well, which tested a separate structure in the Browse Basin, was unsuccessful, the basin remains promising and we are continuing with appraisal of our Poseidon discovery. Finally, during the quarter we executed new agreements for exploration opportunities in Indonesia, coalbed methane in China, and shale gas in Poland."
The company progressed major projects during the quarter with the approval of plans to expand the Christina Lake development in Canada, site selection for the LNG plant in the APLNG Australian joint venture, and the expected fourth-quarter startup of the North Belut E&P development in Indonesia. At the joint venture Wood River refinery in Roxanna, Ill., construction continued on the CORE project, which is expected to be completed in 2011. Finally, in the third quarter the competitive position of the company's refinery in Rodeo, Calif., was improved with the startup of a new hydrocracker unit.
ConocoPhillips' third-quarter earnings were $1.5 billion, or $1.00 per share, compared with earnings of $5.2 billion, or $3.39 per share, for the same quarter in 2008. Cash from operations for the quarter was $2.9 billion and the company raised $0.7 billion from asset dispositions. The capital program was $2.9 billion and dividends of $0.7 billion were paid. Debt was $30.5 billion, including a $0.5 billion increase attributable to redemption of the noncontrolling interest in Ashford Energy Capital S.A. The company's debt-to-capital ratio was 33 percent.
The company recently announced plans to strengthen its financial position and enhance returns on capital through a combination of portfolio rationalization and reduced capital expenditures. To accelerate the reduction in the debt-to-capital ratio, the company plans to sell approximately $10 billion in assets during 2010 and 2011. Additionally, the capital program will be reduced from $12.5 billion in 2009 to $11 billion in 2010. These actions are expected to improve returns and deliver long-term organic growth from a reduced, but more strategic, asset base. ConocoPhillips also announced a quarterly dividend of 50 cents per share, an increase of 6 percent in the dividend rate for the company's common stock.
2009 Financial Highlights
ConocoPhillips' total third-quarter 2009 earnings were $1.5 billion, compared with $5.2 billion from the same period in 2008. The decrease was primarily due to the impact of significantly lower crude oil and natural gas prices, as well as refining margins. Prices, margins and other market impacts decreased earnings by approximately $4.4 billion after-tax. The decrease was partially offset by higher E&P volumes and cost reduction benefits of more than $0.4 billion after-tax across the company.
Most Popular Articles
From the Career Center
Jobs that may interest you