ConocoPhillips earned $233M in Alaska in 2016, a global highlight for company
ConocoPhillips slashed its global losses in the final three months of 2016 with help from more than $100 million of profits in Alaska, which continues to stand out among the company's oil and gas operations around the world, according to data released Thursday.
The company worldwide lost $318 million in the quarter, according to adjusted earnings provided to federal securities regulators. But Alaska was the second-best region for the company, bringing in quarterly earnings of $116 million in adjusted earnings. The final quarter was the most profitable one in 2016 for ConocoPhillips in Alaska.
The fourth-quarter income in Alaska was second only to Asia Pacific and the Middle East, where the company reported $182 million in adjusted earnings.
Money-losing regions contributing to the losses included Canada and the Lower 48.
ConocoPhillips is the lone company among Alaska's three major oil producers to separately report its quarterly Alaska income, providing regular glimpses into operations not available from Exxon Mobil Corp. and BP. The U.S. Securities and Exchange Commission requires the Alaska information because of the oversize role the state plays in the company's entire balance sheet.
The report comes with Alaska struggling to close an estimated $3.2 billion state budget deficit — primarily the result of low oil prices that crushed state revenue. To help pay state bills, lawmakers in Juneau are expected to soon consider reducing oil-tax benefits the state provides for ConocoPhillips and other North Slope operators.
In a conference call with financial analysts Thursday, company executives touted recent developments in Alaska to increase oil production, including the large and recently unveiled Willow discovery in the National Petroleum Reserve-Alaska. Potential production there could significantly boost oil flowing through the 800-mile trans-Alaska pipeline, by up to 100,00 barrels daily.
Al Hirshberg, an executive vice president for the Houston-based oil giant, called it an "exciting" prospect with more than 300 million barrels of recoverable oil. Officials also noted ConocoPhillips snatched up large new lease holdings in Alaska following the discovery — grabbing more than 700,000 acres in state and federal lease sales.
Production at Willow isn't expected until at least 2023, officials said.
"Alaska continues to be a very productive area for us," Hirshberg said.
The company provided year-end details and said "final information" about 2016 oil and gas reserves and costs would be provided to the SEC later this month in a separate report.
For the year, the company's Alaska operation booked a $233 million profit, down from $482 million in 2015. Those adjusted earnings for 2016 were second in profit only to operations in Asia Pacific and the Middle East, with $336 million earned.
Worldwide, while the company lost $3.3 billion for the year in adjusted earnings, more than the $1.7 billion lost in 2015. But it slashed losses in the fourth quarter by about $800 million compared to the year before, in part because of higher oil and gas prices.
Slope oil prices were $55.46 on Thursday. Prices have not been that high since mid-2015, but are still well below what's needed to significantly boost income in Alaska, with its heavy dependence on oil-production taxes and royalties.
This story first appeared in Alaska Dispatch News and is reprinted here with permission.