ConocoPhillips grows global interests

Full acquisition of Canadian field a third quarter highlight

An array of pumpjacks operate Thursday, July 7, 2022, in Odessa. (Odessa American File Photo)

The ConocoPhillips Corp. closed on a major Canadian acquisition in early October and it’s aggressively pursuing liquefied natural gas operations in Australia, The Netherlands, Norway and the Texas Gulf Coast among other sites.

That’s according to Chairman-CEO Ryan Lance, who led his Houston-based company’s third quarter earnings call report with the observation that he has long expected to see further industry consolidation.

“ConocoPhillips remains steadfast in our returns-focused value proposition and cost of supply principles,” Lance said. “As a recent example, we are pleased to have closed on the acquisition of the remaining 50 percent of Surmont in early October.”

He said the company took an opportunity to get all of the Surmont field in northeastern Alberta “at a very attractive price that fit our financial framework, an asset we can make better through our full ownership and an acquisition that makes our 10-year plan even better.

“Surmont is a long-life, low-declining and low capital-intensity asset that we know well,” Lance said. “We achieved first steam from Pad 267 in the third quarter and production is expected to start up in the first quarter of 2024. This is our first new pad addition since 2016.”

He reported securing the capacity of 1.5 million metric tons per annum at the Gate LNG terminal in The Netherlands and said that would bring ConocoPhillips’ European regassification capacity to 4.3 mtpa.

“We’ve now effectively secured destinations for nearly half of our Port Arthur LNG offtake commitment in the first six months since we sanctioned the project,” Lance said. “Now elsewhere in the international portfolio, we started up our second central processing facility, CPF2 in the Montney (in British Columbia and Alberta) and in Norway we just started three project developments ahead of schedule in October including the company-operated Tommeliten Alpha A, a subsea tieback project at Ekofisk that is nearly six months earlier than originally planned, as well as two non-operated projects.”

In China, he said, “Our partner started at Bohai Phase 4b ahead of schedule in October.

“We had record global and Lower 48 production in the third quarter and we raised our full-year production guidance to account for the closing of the Surmont acquisition while achieving continued capital efficiency improvements as our full-year capital guidance remained unchanged.”

Executive Vice President-CFO Bill Bullock reported booming third quarter production with 722,000 barrels of oil per day from the Permian Basin and 232,000 and 111,000 respectively from the Eagle Ford and Bakken formations.

“Planned turnarounds were successfully completed in Norway and Alaska and Lower 48 production averaged 1,083,000 barrels equivalent per day,” Bullock said. “Lower 48 underlying production grew eight percent year on year with new wells online and strong well performance relative to our expectations.

“Third quarter cash flow was $5.5 billion including Australia Pacific LNG distributions of $442 million. Third quarter capital expenditures were $2.5 billion, which included $360 million for longer-cycle projects.”

Through the end of the third quarter, Bullock said, ConocoPhillips funded $875 million for the Port Arthur LNG out of its planned $1.1 billion for the year.

He forecast fourth quarter production of 1.86 million to 1.9 million barrels of oil equivalent per day.

“For APLNG we expect distributions of $300 million in the fourth quarter and $1.9 billion for the full year,” Bullock said. “And while APLNG distributions can vary quarter to quarter a normalized run rate to think about moving forward is around $400 million per quarter at current price levels.”