ConocoPhillips Sees Boom in U.S. Production in First-Quarter 2013, Although Realized Prices Tumble

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Global energy leader ConocoPhillips (NYSE:COP) (Houston, Texas) saw strong operational--but mixed fiscal--results in the first quarter of 2013. Production increased substantially in key areas and the company saw opportunities open up, including two major discoveries in the deepwater Gulf of Mexico, but realized prices for crude oil and natural gas liquids (NGL) tumbled. Net income for the quarter was reported to be $2.14 billion, a 27.17% decrease from first-quarter 2012.

ConocoPhillips executives stressed that results were different when excluding expenses from discontinued operations, as well as net gains and losses from asset sales, in both quarters. The first quarter of 2012 also included revenues from the company's downstream operations, before those operations were spun off into a separate company, Phillips 66 (NYSE:PSX) (Houston, Texas). When excluding these and some smaller one-time expenses, earnings for the quarter stood at $1.75 billion, only a 1.52% decrease from the same period last year.

Total revenues were reported to be $14.65 billion, an 8.9% decrease from first-quarter 2012. The production mix in Canada and the contiguous "Lower 48" U.S. states reached a turning point as liquids made up a majority, increasing from 45% of the production in the same period last year to 51% today. Production totaled almost 1.6 billion barrels of oil equivalent per day, an increase of 19 million barrels from first-quarter 2012; in three key areas--the Eagle Ford, Bakken and Permian fields--production increased 42%. Oil sands production increased 30% to 109 million barrels of oil equivalent per day.

Capital expenditures and investments for the quarter totaled $3.39 billion, compared with $3.82 billion in first-quarter 2012. Expenditures are expected to increase in the coming quarters.

Industrial Info is tracking more than $47.9 billion in active projects involving ConocoPhillips, including the $1 billion, Phase II expansion of the steam-assisted gravity drainage (SAGD) processing plant at the Surmont oil sand site near Fort McMurray, Alberta. The project involves drilling more than 100 wells and constructing a gathering system and plant with a production capacity of 83,000 barrels per day (BBL/d) of bitumen from oil sands. The expansion is expected to increase capacity from 27,000 BBL/d to 110,000 BBL/d.

"Strategically we continue to make good progress on our announced asset sales," said Jeff Sheets, the executive vice president of Finance and the chief financial officer of ConocoPhillips, in a conference call. "In the first quarter, we closed the Cedar Creek Anticline transaction and some small asset sales, which generated total proceeds of about $1.1 billion."

He added: "At the same time as we work to monetize these non-core non-strategic assets in our portfolio, we continue to add assets that will allow us to sustain our long-term growth. We added acreage in our deepwater Gulf of Mexico position and continue to make selected entries into new exploration plays globally."

Production in the second quarter is expected to be between 1.44 billion and 1.47 billion barrels of oil equivalent per day. Full-year production is expected to be between 1.48 billion and 1.52 billion barrels of oil equivalent per day. ConocoPhillips plans to sell off its Algeria, Nigeria and Kashagan assets for proceeds of an estimated $8.5 billion, and expects to close those in 2013.

"We've got a lot of exciting things underway in terms of growth and margin catalysts," said Matt Fox, the executive vice president of exploration and production for ConocoPhillips, in the conference call. "For example, the four major projects we're bringing on this year--Jasmine, Ekofisk South Gumusut and Siakap North-Petai--will have a total average production of about 80,000 barrels of oil equivalnt per day in 2014. But this is actually only half of the total production that we'll be adding from all of our major projects in 2014. We'll also add production from projects at FCCL, and increase production at Australia Pacific LNG for domestic sales and several other smaller projects around the company."

"FCCL" refers to a 50:50 partnership between ConocoPhillips and Cenovus Energy (NYSE:CVE) that consists of the Foster Creek and Christina Lake projects, as well as the proposed Narrows Lake project, in the Athabasca oil sands.

For more information, visit Industrial Info's North American Oil & Gas Production Project Database.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.