ConocoPhillips’ second-quarter 2023 profits down on lower prices

ConocoPhillips had second-quarter 2023 earnings and adjusted earnings of $2.2 billion, compared with second-quarter 2022 earnings of $5.1 billion and adjusted earnings of $5.1 billion (OGJ Online, Aug. 4, 2022).

The decrease was primarily due to lower prices, partially offset by increased volumes. Total average realized price was $54.50/boe, 38% lower than the $88.57/boe realized in second-quarter 2022.

For the quarter, the company generated cash provided by operating activities of $3.9 billion and cash from operations of $4.7 billion. The company funded $2.9 billion of capital expenditures and investments, paid $1.4 billion in ordinary dividends and variable return of cash (VROC), and repurchased $1.3 billion of shares.

ConocoPhillips announced a quarterly ordinary dividend of $0.51/share, payable Sept. 1, 2023, to stockholders of record at the close of business on Aug. 16, 2023. In addition, the company announced a VROC of $0.60/share, payable Oct. 16, 2023, to stockholders of record at the close of business on Sept. 28, 2023.

During this year's second quarter, ConocoPhillips executed agreement to purchase the remaining 50% interest in Surmont, subject to regulatory approvals and other closing conditions (OGJ Online, June 5, 2023). The company also completed acquisition of an equity interest in Qatar’s North Field South project and signed 20-year offtake agreements at the Saguaro LNG export plant on the west coast of Mexico of about 2.2 million tpy, subject to Mexico Pacific reaching final investment decision (OGJ Online, Oct. 31, 2022). 

Oil and gas production

Production for second-quarter 2023 was 1.805 MMboe/d, an increase of 113,000 boe/d from the same period a year ago. After adjusting for impacts from closed acquisitions and dispositions, second-quarter 2023 production increased 100,000 boe/d or 6% from the same period a year ago. Organic growth from Lower 48 and other development programs more than offset decline and downtime.

Lower 48 delivered record production of 1.063 MMboe/d, including 709,000 boe/d from the Permian basin, 235,000 boe/d from Eagle Ford shale, and 104,000 boe/d from Bakken shale. Turnarounds were successfully completed in Norway and Qatar.

Outlook

Third-quarter 2023 production is expected to be 1.78-1.82 MMboe/d. Full-year production is now expected to be 1.80-1.81 MMboe/d, revised from prior guidance of 1.78-1.8 MMboe/d. 

Consistent with raising full-year production guidance for two consecutive quarters, the operator updated its 2023 adjusted operating cost guidance to $8.3 billion versus prior guidance of $8.2 billion and updated full-year guidance for depreciation, depletion, and amortization to $8.2 billion versus prior guidance of $8.1 billion.

Full-year guidance for adjusted corporate segment net loss has been lowered to $800 million from $900 million driven by lower net interest expense. On capital, the guidance range has been narrowed to $10.8-11.2 billion from $10.7-11.3 billion, reflecting ongoing progress on the company’s development plans.

All guidance excludes any impact from the previously announced Surmont and APLNG transactions.