ConocoPhillips Says Adjusted Loss Reached $1bn in Q2
US major ConocoPhillips said July 30 special items, including unrealised gains on an Australian asset divestiture and on its equity investment in Canadian oil sands producer Cenovus Energy, allowed it to report Q2 2020 net income of $260mn, down from $1.58bn in the comparable period a year ago.
Without the special items, adjusted earnings would have shown a loss of $994mn compared to Q2 2019 adjusted earnings of $1.1bn.
The Australian and Cenovus gains were partially offset by impairments totaling $219mn throughout the company’s global operations, led by a $109mn impairment in Alaska.
Total revenue for the quarter was cut in half, to $4.02bn from $8.38bn a year ago, while costs and expenses were reduced to $4bn from $6.3bn. Capital expenditures were also cut nearly in half, to $876mn from $1.73bn.
“Headline second-quarter performance was dominated by weak realised prices, coupled with our rational economic action to curtail production in favor of expected higher future prices,” ConocoPhillips CEO Ryan Lance said. “Importantly, our underlying business results were strong, reflecting our ongoing commitment to safely executing our plans and the dedication of our workforce during this challenging time.”
Prevailing market conditions are being monitored closely to develop clarity on the timing and path of price recovery, which will provide guidance for future actions. As an example, ConocoPhillips said, commodity price and demand recovery late in Q2 allowed it to begin reversing curtailments and ramping up production in Canada, Alaska and across the Lower 48 states.
Total production for the quarter averaged 981,000 barrels of oil equivalent (boe)/day, down from 1.33mn boe/day in Q2 2019. Gas production fell to 1.22bn ft3/day from 1.7bn ft3/day, with most of the declines registered in the Lower 48, Australia and Indonesia.