ConocoPhillips cashes in on refining demand, while Q2 production slips
US-based global energy major ConocoPhillips posted a second quarter net income of $3.1 billion (EUR 2.6 billion), an increase of 51% on the same period last year, despite a slight year-on-year fall in quarterly production.
The refining and marketing (R&M) segment was boosted by “higher US refining market cracks driven by higher gasoline and distillate demand, as well as increased throughput,” the company said, with R&M income for Q2 up 36% on Q2 ’04 to $1.1 billion. Total revenue for the quarter jumped 33.5% to $46.2 billion from a year earlier.
Exploration and production (E&P) income rose by 42% on the second quarter of 2004 to $1.9 billion due to higher realised crude and gas prices. The company said its improved results were partially offset by benefits last year from Canadian tax law changes, higher production taxes and lower foreign exchanges gains.
In a statement Jim Mulva, chairman and c.e.o. of ConocoPhillips, said: “We completed planned and unplanned maintenance in our E&P business and finalised the formation of the Naryanmarneftegaz joint venture to develop resources in the Timan-Pechora region of Russia. “Downstream benefited from a strong market environment in refining, partially offset by narrowing light-heavy differentials,” he added.
Total production hit 1.76 million barrels of oil equivalent (boe) per day, including an estimated 0.22 boe per day from Conoco’s Lukoil investment segment in Russia. Daily E&P production averaged 1.54 million boe per day in Q2, down a little on the 1.56 million BOE over the same period a year ago. The company said this fall was due to “lower production in the North Sea and Alaska partially offset by increased production in Venezuela, the Timor Sea and the Lower 48”.
ConocoPhillips has a 30% stake in a northwest Arctic venture with LUKOIL. Mulva said that, compared with rival companies, ConocoPhillips was pushing a higher proportion of its cash flows into projects. “Some of these projects are in emerging areas and have high reserve potential and the possibility to provide long-term value accretion to out shareholders.”
Naryanmarneftegaz is expected to produce and market approximately 200,000 BOE per day at peak. Production from the joint-venture fields is expected to be piped to Lukoil’s Varandey Bay terminal on the Barents Sea, then shipped via tanker to international markets.
Other Related Stories