Profits are high these days in the oil and natural gas business, but thorny challenges persist.
The ConocoPhillips Corp. reports fourth quarter 2022 earnings of $3.2 billion, up from $2.6 billion in the fourth quarter last year, and full-year profits of $15 billion.
In apparent reference to Russia’s year-old war in Ukraine, ConocoPhillips Chairman-CEO Ryan Lance said, “As we sit here today, there are a number of cross-currents in the global economy.
“The energy sector is not immune to potential macro headwinds, but our fundamental outlook remains constructive. On the demand side, we think growth will continue in 2023, aided by a normalization in China’s mobility following the loosening of COVID restrictions.”
While current oil and gas prices are below 2022 averages, Lance said, “We see duration to this up cycle.
“Stepping back, we remain steadfast in our view that a successful energy transition must meet society’s fundamental need for secure, reliable and affordable energy while progressing toward a lower carbon future.
“We all recognize the challenges global energy policymakers face to achieve the goals of the Paris (climate) Agreement and it’s clear that doing so requires an all-the-above approach. This can be done by enacting policies that encourage the development of lower-emission energy sources and oil and gas resources including efforts aimed at fiscal stability, streamlining the permitting process, increasing transparency on timelines and supporting critical infrastructure.”
Executive Vice President-Chief Financial Officer William Bullock said from Houston that his company’s fourth quarter production was 1,758,000 barrels of oil per day including 671,000 from the Permian Basin, 214,000 from the Eagle Ford Shale Play and 96,000 from the Bakken Formation.
The Eagle Ford underlies 26 counties from the Mexican border between Laredo and Eagle Pass through counties east of Temple and Waco and the Bakken is under parts of Montana, North Dakota and the Canadian provinces of Saskatchewan and Manitoba.
“Full year return of capital was $15 billion while $3.4 billion went to debt reduction with cash and short-term investments ending the year at $9.5 billion,” Bullock said. “Turning to 2023, we forecast full year production in a range of 1.76 million to 1.8 million barrels of oil equivalent per day.
“On capital spending, we expect a range of $10.7 billion to $11.3 billion, operating costs of $8.2 billion, depreciation, depletion and amortization of $8.1 billion and a corporate net loss of $900 million.”
Bullock said ConocoPhillips projects an average price of $80 per barrel for West Texas Intermediate Crude Oil and $3.25 per thousand cubic feet for natural gas.
“Included in our cash flow forecast is $1.9 billion in Australia Pacific Liquefied Natural Gas distributions with $600 million expected in the first quarter,” he said.