ConocoPhillips posts $1.5-billion first-quarter net loss, cuts spending again

ConocoPhillips has reduced its 2016 capital expenditures guidance to $5.7 billion from $6.4 billion, primarily driven by reduced deepwater exploration activity, deferrals, and lower costs across its portfolio.

The firm expects to meet its previously stated full-year production guidance of 1.53 million boe/d, in line with 2015 output adjusted for 64,000 boe/d for the full-year impact of 2015 dispositions (OGJ Online, Feb. 4, 2016). Second-quarter production guidance is 1,500 to 1.54 million boe/d, which reflects significant planned turnaround activity during the quarter.

The capex reduction comes after a first-quarter net loss of $1.5 billion, compared with first-quarter 2015 earnings of $272 million.

First-quarter adjusted earnings were a net loss of $1.2 billion, compared with a first-quarter 2015 adjusted net loss of $222 million. Special items for the current quarter were related to noncash impairments in the Gulf of Mexico and UK and pension settlement expense.

Companywide production for the quarter was 1.58 million boe/d, a decrease of 32,000 boe/d compared with the same period a year ago. Normal field decline and impacts from dispositions exceeded growth from major projects and development programs, improved well performance, and the impact of lower prices on royalties and production sharing contracts.

During the quarter, Australia Pacific LNG loaded 11 cargoes from Train 1 in Australia (OGJ Online, Dec. 11, 2015). Lower 48 transitioned from 13 operated rigs at yearend 2015 to 3 in April. Drilling continued at CD5 and Drill Site 2S in Alaska with production continuing to ramp up from both projects (OGJ Online, Apr. 22, 2016).

In the Gulf of Mexico, the Melmar exploration well was plugged and abandoned as a dry hole. The exploration and appraisal program continues in Senegal.