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$5 Billion Returns for ConocoPhillips’ Shareholders as Prices Grow
09/20/2022
Shareholder’s payout target was increased by 50% after the largest U.S. independent oil producer surpass Wall Street’s earnings estimates on growing energy prices, said Houston-based ConocoPhillips Co. on Aug. 4.
Due to Western sanctions on major producer Russia throttling energy supply amid a rebound in demand from pandemic lows, oil and gas prices have soared. Crude has been trading more than 25% higher since the start of the year and results also benefited from high natural gas prices.
Meanwhile, shares were down a fraction, to $91.03, in early trading but are up about 26% year to date.
Its production outlook for the year was reduced by approximately 1% on disruptions to output in Libya, and ConocoPhillips said while inflation was growing its costs, the year’s capital budget would rest at around $7.8 billion.
ConocoPhillips stated, that the average price obtained for a barrel of oil and gas accelerated 77% from a year earlier to $88.57. The company acknowledges that it has not hedged any of its oil and gas sales to make the most of higher market prices.
The capacity of 1.69 million boe/d was in line with Wall Street estimates, however, the company expected the current quarter’s output would be between 1.71 million and 1.76 million boe/d.
ConocoPhillips anticipates returning $15 billion to shareholders this year by means of dividends and share buybacks, joining Chevron Corp. and others in rising payouts after years of pressure on producers to restrict spending and boost returns.
The company, which kept its spending forecast intact, insignificantly decreased its full-year capacity outlook on uncertainty in Libya. ConocoPhillips hoped that the production would be about 1.74 million boe/d for the year.
The company’s second-quarter adjusted earnings of $3.91 per share overcame Wall Street estimates of $3.80 per share, as Refintiv IBES data says.
ConocoPhillips safely transports oil and natural gas using pipelines, tankers, trucks and rail to connect energy supply to demand. The method the company chooses depends on the project, location, economics, accessibility and environmental considerations. All four methods are proven, efficient and economical ways of getting energy to market.
Working with a leading environmental, social and governance (ESG) consultancy firm the company is designing a Net-Zero Governance Framework, with the goal of identifying how to leverage and optimize our process, system, organizational and governance structure to align and drive the company along a net-zero pathway.
In its Gulf Coast business unit, a project is underway to remove the need for pneumatic-powered scavenger injection pumps at each well pad through the installation of scavenger towers at each central facility location. The project could reduce emissions by around 11,250 metric tons per year.
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EIA: Permian Basin Oil and Gas Output is Thought to Beat Record in June
The EIA forecasts that total output in the main U.S. shale oil basins will increase 142,000 bbl/d to 8.761 million bbl/d in June, the most since March 2020. Oil productivity in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. In the largest shale gas basin, the productivity in Appalachia in Pennsylvania, Ohio and West Virginia will grow up to 35.7 Bcf/d in June, its highest since beating a record 36 Bcf/d in December 2021. Gas output in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Speaking of the Permian future output, putting hands on upcoming changes in production has recently been made easier with the new Rextag's service - Pad Activity Monitor. Thanks to satellite imagery and artificial intelligence, customers are able to monitor the oil and gas wells and are provided with near real-time activity reports related to drilling operations. However, it is noticed that productivity in the largest oil and gas basins has decreased every month since setting records of new oil well production per rig of 1,544 bbl/d in December 2020 in the Permian Basin, and new gas well production per rig of 33.3 MMcf/d in March 2021 in Appalachia.
A major U.S. shale oil producer is looking to start a land selloff in the lone star state
Pioneer Natural resources is looking to divest properties in the lone star state. According to Rextag, Pioneer’s Delaware assets on sale have a trailing 12 month production of just over 22 MBOE against a total Permian Basin production of almost 212 MBOE. (The sale, if it happens, will effectively lead to a 10% decrease of Pioneer’s asset base in terms of the previous year's production.)
The Williston Basin is a big area filled with layers of rock that sits next to the Rocky Mountains in western North Dakota, eastern Montana, and the southern part of Saskatchewan in Canada. This area covers roughly 110,000 square miles. Geologically, it's very similar to the Alberta Basin in Canada. People started drilling for oil in the Williston Basin back in 1936, and by 1954, most of the land where oil could likely be found was already claimed for drilling. The Bakken Formation with parts of Montana, North Dakota, Saskatchewan, and Manitoba has become one of only ten oil fields globally to yield over 1 million barrels per day (bpd) since the late 2000s. It is currently the third-largest U.S. shale oilfield, behind the Permian and Eagle Ford. The boom in the Bakken started around September 2008, coinciding with the U.S. housing market crash. The application of new technologies, such as swell packers enabling multiple-stage fracturing, significantly enhanced oil recovery, making the Bakken Formation a key player in the U.S. In 2022, the Bakken oil field saw big improvements in how much oil and gas it could produce. At the start of the year, 27 drilling rigs were working there, more than double the 11 rigs from the start of 2021. Important upgrades included making the Tioga Gas Plant able to process 150 million cubic feet more gas each day, and making the Dakota Access Pipeline bigger, increasing its oil transport capacity from 570,000 to 750,000 barrels every day.
Continental Resources is expanding its operations in the Midland Basin, including taking over some assets that used to belong to Occidental Petroleum. The company plans to use its expertise in exploration in this area.
Equinor and EQT Corporation have agreed that Equinor will exchange its operated assets in the Marcellus and Utica shale formations in Ohio for a stake in EQT’s non-operated interests in the Northern Marcellus formation.