Super independent ConocoPhillips had a strong start to 2018, with production for 1Q2018 excluding Libya over 1.2 million boe/d, a 4% increase compared with 1Q2017 after adjusting for dispositions, the company said Thursday.
"We are seeing the earnings power of our unconventional engine driving the bottom line results, with our Lower 48 earnings breakeven now at less than $45 a barrel," CFO Don Wallette said during a conference call with analysts.
The production increase was primarily due to the ramp up of the Houston-based company's Big Three unconventional assets. Year-over-year production in the Eagle Ford, Bakken and Permian Basin Delaware grew 20%, with 163,000 boed/d out of the Eagle Ford, 68,000 boe/d from the Bakken and 19,000 Boe/d from the Delaware sub-basin.
ConocoPhillips was facing Lower 48 earnings breakeven above $70/bbl two years ago, but it has trimmed that amount by 36%.
The No. 1 independent in the world expects 2Q2018 production to be 1.17-1.21 million boe/d, reflecting seasonal turnarounds. Full-year 2018 production guidance was increased slightly to 1.20-1.24 million boe/d, and 2018 capital guidance is unchanged at $5.5 billion.
In February, San Antonio-based Andeavor acquired the Kenai liquefied natural gas (LNG) facility in Alaska from ConocoPhillips, which had been trying to sell the facility for more than a year.
At the end of the quarter, ConocoPhillips added the Austin Chalk in Louisiana to its exploration portfolio and bolted on acreage in Western Canada's Montney formation to expand its North American development opportunities. Until then, the company had been concentrating its development efforts in the Permian Basin, as well as the Eagle Ford and Bakken shales, and had sold off noncore packages and bolted on acreage in select areas.
In the limestone-rich Austin Chalk, which extends along the Gulf Coast from Texas into Louisiana, about 245,000 net acres were purchased for an undisclosed price from an unnamed buyer. Several exploration wells are planned in the Austin Chalk this year without adding any more funds to the planned capital budget.
"We're currently in the process of permitting exploration wells and expect to begin drilling in the position later this year," said Executive Vice President Al Hirshberg, who is in charge of production, drilling and projects.
ConocoPhillips also acquired another 35,000 net acres in the Montney formation in British Columbia for $120 million. The acreage is adjacent to an existing position in the liquids-rich portion of the unconventional play. With the purchase, ConocoPhillips now holds 140,000 net acres in the Montney.
ConocoPhillips, which remains Alaska's biggest producer, said recently it drilled more wells than planned during its winter exploration and appraisal program on the state's western North Slope with encouraging results.
ConocoPhillips reported 1Q2018 earnings of $900 million (75 cents/share), compared with $600 million (47 cents) in 1Q2017.