ConocoPhillips Chairman-CEO Ryan Lance says inflation and supply chain constraints continue to hamper the energy industry and the world economy.
In his Houston-based company’s third quarter earnings report last Friday, Lance said that’s particularly true in United States oil shale areas like the Permian Basin “where rapidly escalating costs combined with extremely tight supply are limiting the pace of industry-wide production growth.
“We believe the world will need investments in medium- and long-cycle production in addition to U.S. shale plays and ConocoPhillips is well-positioned to win in any environment,” he said.
“We remain committed to delivering on our triple mandate of responsibly and reliably meeting energy transition pathway demand, delivering competitive returns on and off capital and progressing toward achieving our net-zero operational emissions ambition.”
Lance said ConocoPhillips’ third quarter production in the lower 48 states marked a record of more than one million barrels of oil per day. “We anticipate further growth in the fourth quarter,” he said.
“We recently announced a new medium-term methane intensity commitment and from a strategic perspective, I wanted to provide an update on our global liquefied natural gas initiatives. First, we were recently selected to participate in Qatar’s North Field South project following our selection earlier this year to participate in the North Field East, which adds to our long positive relationship with Qatar Energy.
“Second, we agreed to terminal services for a 15-year period at Britain’s vital LNG import terminal in Germany. And third, we continue to progress our Port Arthur LNG project with Sempra, which we expect to reach a final investment decision on early next year. “Overall, we continue to believe the substitution of natural gas in place of coal represents an opportunity for significant reductions in global greenhouse gas emissions,” Lance said. “This should drive global LNG demand and related opportunities well into the future.”
Chief Financial Officer Bill Bullock said ConocoPhillips’ worldwide production was over 1,750,000 barrels of oil per day in the third quarter. “For the fourth quarter, we don’t expect any material turnaround impacts,” Bullock said.
“Lower 48 production averaged a record of 1,013,000 barrels of oil equivalent per day including 668,000 from the Permian, 224,000 from the Eagle Ford and 96,000 from the Balkan. Cash provided from operating activities was $8.7 billion.
“This included a $15 billion benefit from working capital, primarily due to the timing of Norway tax payments and lower receivables,” Bullock said. “Excluding working capital, cash from operations was $7.2 billion.
“On capital, we invested $2.5 billion back into the business in the third quarter, including around $300 million for acquisitions. This resulted in free cash flow of $4.7 billion, which more than covered the $4.3 billion we returned to shareholders in the quarter.
“Ending cash and short-term investments were $10.7 billion Sept. 30, up from $8.5 billion June 30. We still expect full year production of 1.74 million barrels of oil equivalent per day with a fourth quarter guidance range of 1.74 million to 1.8 million bpd.”
