ConocoPhillips earns $5.1 billion in second quarter

ConocoPhillips reported second-quarter 2022 earnings of $5.1 billion, compared with second-quarter 2021 earnings of $2.1 billion. Excluding special items, second-quarter 2022 adjusted earnings were $5.1 billion, compared with second-quarter 2021 adjusted earnings of $1.7 billion. Special items for the current quarter were comprised of gains on asset sales including contingent payments related to prior dispositions, partially offset by a loss on debt extinguishment and a Norway tax reform-related adjustment.

Earnings and adjusted earnings increased from second-quarter 2021 primarily due to higher realized prices. The company’s total average realized price was $88.57/boe, 77% higher than the $50.03/boe realized in the second quarter of 2021, as production remains unhedged and thus realizes the full impact of changes in marker prices.

ConocoPhillips also announced a $5-billion increase in planned 2022 return of capital to shareholders to a total of $15 billion. The company declared both a third-quarter ordinary dividend of 46¢/share and a fourth-quarter variable return of cash payment of $1.40/share.

For the quarter, cash provided by operating activities was $7.9 billion. Excluding a $100 million change in operating working capital, ConocoPhillips generated cash flow from operating activities of $7.8 billion. Dispositions generated $600 million from the sale of Lower 48 noncore assets and contingent payments received. The company funded $2 billion of capital expenditures and investments, paid $1.9 billion to reduce total debt, distributed $1 billion in ordinary dividends and VROC and repurchased $2.3 billion of shares.

Production

Production for second-quarter 2022 was 1.69 MMboe/d, an increase of 104,000 boe/d from the same period a year ago. After adjusting for closed acquisitions and dispositions and the conversion of previously acquired Concho contracted volumes from a two-stream to a three-stream basis, second-quarter 2022 production decreased by 69,000 boe/d or 4% from the same period a year ago. Organic growth from Lower 48 and other development programs more than offset decline; however, production was lower overall primarily due to planned and unplanned downtime.

In the Lower 48, production averaged 977,000 boe/d, including 634,000 boe/d from the Permian basin, 233,000 boe/d from the Eagle Ford, and 91,000 boe/d from the Bakken. In Canada, drilling and completion activities continued at Montney while construction progressed on the second phase of the company’s processing plant. Turnarounds were completed in Europe and Canada. In Qatar, the company signed an agreement with QatarEnergy to form a new joint venture that will participate with a 12.5% interest in the North Field East LNG project. Subject to regulatory approvals, ConocoPhillips will hold a 25% interest in this joint venture.