ConocoPhillips reports $4.4-billion net loss for 2015, further reduces 2016 budget

ConocoPhillips, Houston, has lowered its capital expenditures guidance for 2016 to $6.4 billion from $7.7 billion and operating cost guidance to $7 billion from $7.7 billion. The previously determined spending levels were outlined in December (OGJ Online, Dec. 10, 2015).

The lower guidance primarily reflects reduced activity in the US Lower 48.

The company posted a 2015 net loss of $4.4 billion, down from 2014 earnings of $6.9 billion. Adjusted earnings, excluding special items, came to a net loss of $1.7 billion, down from 2014 adjusted earnings of $6.6 billion.

That includes a fourth-quarter 2015 net loss of $3.5 billion, compared with a fourth-quarter 2014 net loss of $39 million. Excluding special items, fourth-quarter 2015 adjusted earnings were a net loss of $1.1 billion, compared with fourth-quarter 2014 adjusted earnings of $700 million.

Special items for the current quarter related primarily to noncash impairments due to price impacts and changes to future exploration plans, partially offset by net gains on asset sales.

“While we don’t know how far commodity prices will fall, or the duration of the downturn, we believe it’s prudent to plan for lower prices for a longer period of time,” said Ryan Lance, ConocoPhillips chairman and chief executive officer.

“The actions we have announced will improve net cash flow by $4.4 billion in 2016,” he said. “Our actions also position us to deliver strong absolute and relative performance as prices recover.”

The company also has revised its full-year 2016 production guidance to be essentially flat with 2015 production of 1.53 million boe/d, excluding 64,000 boe/d for the full-year impact of completed dispositions. First-quarter 2016 production guidance is 1.54-1.58 million boe/d.

The company’s preliminary yearend 2015 proved reserves are 8.2 billion boe. Additions excluding market factors and dispositions are expected to be 523 million boe, or an 86% adjusted replacement ratio. Dispositions were 175 million boe.

Market factors, primarily related to lower prices, were a reduction of 464 million boe. The company says it expects to rebook reserves as prices improve. The total reserve replacement ratio, including dispositions and market factors, is expected to be down 19% compared with 2015 production.