ConocoPhillips is moving into the liquefied natural gas market in a big way in its effort to help cut greenhouse gas emissions.
Chairman-CEO Ryan Lance of Houston says that need “is going to drive increasingly strong global LNG demand and related opportunities well into the future.
“As recently announced, we entered into an agreement with Sempra for a possible investment in the Port Arthur LNG project that’s currently underway,” Lance said in ConocoPhillips’ second quarter call report. “This potential investment is designed to leverage our company’s considerable strength as one of the largest gas producers and marketers in North America while expanding our global LNG business.
“This potential investment is expected to be project-financed and if executed would afford us the opportunity to participate in additional strategically located LNG projects as well as to jointly pursue related emissions reduction opportunities.”
Lance said that followed his company’s recently completed 10-percent ownership increase in Australia Pacific LNG along with its selection to participate in Qatar’s North Field East project.
“Looking first at returns on capital, we generated a trailing 12-month return on capital employed of 24 percent in the quarter, five points higher than the 19 percent we delivered last quarter,” he said. “Turning next to our returns of capital, once again we have increased our targeted 2022 distributions to shareholders, taking the total full-year expected returns to $15 billion.
“This represents a 50-percent increase from the target announced last quarter.”
Executive Vice President Bill Bullock said production in the United States’ lower 48 states averaged 977,000 barrels of oil equivalent per day for the quarter, including 634,000 from the Permian Basin, 233,000 from Eagle Ford and 91,000 from the Bakken.
“Operations across the rest of our global portfolio also ran well, leading us to generate $7.8 billion in cash from operations in the quarter, excluding working capital,” Bullock said. “This includes roughly $750 million in distributions from APLNG and we continue to project full-year distributions of $2.3 billion with roughly $300 million expected in the third quarter.”
Bullock said ConocoPhillips invested $2 billion back into the business in the second quarter, resulting in free cash flow of $5.9 billion.
“That more than covered the total $3.3 billion that we returned to shareholders in the quarter as well as the $1.9 billion we used to reduce total debt,” he said. “These actions, taken in combination with the $600 million in disposition proceeds and the purchase of approximately $300 million in long-term investments, resulted in ending cash of $8.5 billion as of June 30.”
