ConocoPhillips raises full-year capex on Willow development progress

ConocoPhillips Co., Houston, raised its full-year capital expenditures budget to the high end of guidance as a result of ‘significant milestones’ reached at the Willow development in Alaska as well as increased Lower 48 partner-operated activity.

Full-year capex is now set at about $11.5 billion versus the prior range of $11-11.5 billion, the company said as part of its second-quarter 2024 earnings report released Aug. 1.

ConocoPhillips said late last year that it would continue development of the 600-MMboe Willow project on Alaska’s North Slope following the US Department of the Interior’s Record of Decision and a denial of a request for an injunction in the Ninth Circuit Court of Appeals (OGJ Online, Dec. 26, 2023). The 2023 Biden administration decision approved three core pads for drilling.

In this year’s second quarter, operations center modules arrived in Alaska and fabrication of the central facility began earlier than planned, the company said.

Overall, the operator estimates Willow development will cost $8 billion, delivering $8-17 billion in revenue to the federal government, the state, and Alaska North Slope communities. It is projected to produce 180,000 b/d at its peak.

Production

Production for second-quarter 2024 was 1.945 MMboe/d, an increase of 140,000 boe/d from the same period a year ago. After adjusting for closed acquisitions and dispositions, second-quarter 2024 production increased 76,000 boe/d or 4% from the same period a year ago.

Lower 48 delivered production of 1.105 MMboe/d, including 748,000 boe/d from the Permian basin, 238,000 boe/d from the Eagle Ford, and 105,000 boe/d from the Bakken.

Third-quarter 2024 production is expected to be 1.87-1.91 MMboe/d, inclusive of 90,000 boe/d of turnaround impacts in Canada, Lower 48, Alaska, Norway, Malaysia, and Qatar.

The operator narrowed its full-year production guidance to 1.93-1.94 MMboe/d, as compared to prior guidance of 1.91-1.95 MMboe/d.

Earnings

ConocoPhillips had second-quarter 2024 earnings and adjusted earnings of $2.3 billion, up from second-quarter 2023 earnings and adjusted earnings of $2.2 billion, but down from first-quarter 2024 earnings of $2.6 billion  (OGJ Online, Aug. 3, 2023; May 2, 2024).

The quarter benefited from higher average realized prices, despite weaker Lower 48 gas realizations, and higher volumes. These increases were partially offset by higher depreciation, depletion, and amortization and higher operating costs.

For the quarter, cash provided by operating activities was $4.9 billion and cash from operations was $5.1 billion.