Several of the leading North American-focused oil and gas producers reported strong quarterly earnings on Wednesday, with three out of four — ConocoPhillips, Amerada Hess and Kerr-McGee — up on higher commodity prices. However, even though EnCana’s earnings were off compared with a year ago, it far and away took the honors in higher natural gas production.

ConocoPhillips

Houston-based ConocoPhillips reported first quarter net income of $1.616 billion ($2.33/share), compared with $1.221 billion ($1.79/share) for the same quarter in 2003. Total revenues were $30.2 billion, versus $27.1 billion. Income from continuing operations for the first quarter was $1.603 million ($2.31/share), compared with $1.263 billion ($1.85) a year earlier.

“Our operations turned in another quarter of solid performance,” said CEO Jim Mulva. He said “favorable commodity prices and margins, along with further synergy capture, helped income from continuing operations grow 25% per share on a diluted basis over the first quarter of 2003, and provided significant improvement over the previous quarter.”

Exploration & Production (E&P) segment income was $1.257 billion, up from $991 million sequentially in the fourth quarter of 2003 and slightly higher than 1Q2003’s $1.125 billion. However, daily production, including Canadian Syncrude, averaged 1.61 MMboe for the first quarter, which was flat sequentially from the fourth quarter, and slightly less than last year’s 1.63 MMboe.

Mulva said ConocoPhillips’s asset sales are “nearing completion,” and said since its merger, “we have realized approximately $3.8 billion in proceeds from asset sales. Through the remainder of 2004, we expect to close additional dispositions, primarily midstream and marketing assets, completing our asset disposition program.”

EnCana

“Our first quarter 2004 operational performance is firmly on plan and our financial results remain solid,” said CEO Gwyn Morgan. “Continued strong gas production growth from resource plays in Western Canada and the U.S. Rockies, plus strong oil production increases from Ecuador and our steam-assisted gravity drainage projects in northeast Alberta, is anchoring our sustained growth and value creation.”

Production-wise, EnCana’s gas output was up 10% over a year ago, and oil and NGL sales were up 34% to stand at 265,000 boe/d. First quarter gas sales were 2.7 Bcf/d, up 5% over last year, when it sold 120 MMcf/d. Operating costs were $3.53/boe, slightly higher than forecast because of weather and a weak U.S. dollar, the company said. For the full year, the company expects operating costs to be in its forecast range of between $3.30-$3.50/boe. The first quarter capital program was $1.5 billion. Net divestitures of about $300 million reduced investment to $1.2 billion of net capital.

Kerr-McGee

“We continue to consistently meet or exceed our guidance in all aspects of our operations,” said CEO Luke R. Corbett. “The ongoing efficient execution of our development and exploitation program, including the early start-up of Gunnison, enabled us to achieve total volumes near the upper end of our guidance.” Other major development projects also are going well, he said, adding that the merger with Westport Resources Corp., announced in early April, “will add depth, breadth and balance to our oil and gas operations.”

Operating profit in the quarter was $330.3 million, compared with $269.6 million in 1Q2003. E&P income was $329.9 million, compared with $272.2 million for the prior-year quarter. The increase came on higher oil and gas sales prices, slightly higher natural gas sales volumes and lower exploration costs, which were partially offset by lower crude oil sales volumes and higher other operating costs.

Kerr-McGee’s gas sales averaged 763 MMcf/d in the first quarter, slightly higher than the 761 MMcf/d reported in 1Q2003. The average gas sales price, including the effects of the company’s hedging program, was $5.35/Mcf, a 14% increase from the 2003 first quarter. Kerr-McGee’s daily oil production from continuing operations averaged 143,200 bbl in the quarter, down 13% from 165,400 bbl/d a year ago. The decrease followed the sale of some of its non-core, high-cost properties, as well as lower production in North Sea operations.

Amerada Hess

E&P earnings were $207 million, compared with $120 million in 1Q2003. However, production was down 18% from a year ago to stand at 346,000 boe/d, with 60% of that loss blamed on asset sales and exchanges last year. Hess’ average U.S. natural gas selling price, including the effect of hedging, was $5.20/Mcf in the quarter, an increase of 77 cents from 1Q2003.

Capital expenditures in the first quarter were $364 million, of which $352 million related to E&P activities. Capital expenditures in the first quarter of 2003 amounted to $341 million, including $321 million for E&P.

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