ConocoPhillips reported a net loss of $3.6 billion in 2016, but the company continued its shift toward unconventional production by dispatching additional rigs to the Permian Basin, Bakken and Eagle Ford shales, and plans to have 11 rigs deployed in the Lower 48 in the next few weeks.

During a conference call to discuss 4Q2016 and the full-year 2016 results, CEO Ryan Lance said the Houston-based company had generated enough cash from operations to cover its $5 billion capital expenditure (capex) budget for 2017 and to pay for a 6% increase to its quarterly dividend, which ConocoPhillips has raised to 26.5 cents/share.

"The dividend is an important part of our commitment to return capital to our shareholders, and we believe this increase sends a strong signal that we intend to operate dividend that is competitive, sustainable, and affordable through the cycles," Lance said. One year ago, ConocoPhillips cut its quarterly dividend for the first time in at least 25 years, from 74 cents/share to 25 cents.

Production was down slightly for the fourth quarter and the full-year 2016, attributed to normal field decline and dispositions, which were unable to completely offset new production, improved well performance and lower downtime.

ConocoPhillips said 4Q2016 production was 1.59 million boe/d, a decrease of 12,000 boe/d year/year. For the full year, production was about 1.57 million boe/d, down from 1.59 million boe/d in 2015. Both figures excluded production from Libya.

In the Lower 48, production was 458,000 boe/d in 4Q2016, a 9.1% decrease from the previous fourth quarter (504,000 boe/d). For the full year, Lower 48 production also declined 4.9%, from 511,000 boe/d in 2015 to 486,000 boe/d in 2016.

The company followed through on its plans, announced last October, to add five rigs and form an eight-rig drilling program before the end of 2017. According to the 4Q2016 presentation, ConocoPhillips added two rigs in the Eagle Ford and three rigs in the Bakken, thereby increasing the total number of rigs deployed in both plays to four each.

The company plans to run an average of 11 operated rigs in 2017. ConocoPhillips said it expects full-year production for 2017 to range from 1.54-1.57 million boe/d, including 1.54-1.58 million boe/d in 1Q2017. Included is output from the Permian Basin’s Delaware sub-basin.

"Since the beginning of this year we've added an additional rig in the Eagle Ford, so we're up to five there, and we've added one rig in the Delaware at China Draw," said Executive Vice President Al Hirshberg, who runs production, drilling and projects. "We have a second Permian rig that'll be coming on in the next week or two that'll then take us to 11, and then we'll have additional activity with another rig in the Permian that may also have part of the year in the Niobrara [formation] as well.

"We also plan to do some drilling in some of our Permian conventional this year. So we'll be in that kind of two- to three-rig range in the Permian this year. As we've been adding these rigs, we've been doing what I talked about on the last call of very carefully checking the costs and going out into the market, seeing what kind of rates we can get, and long we can lock for. That's been one of the things that's driving our pace of moving back into these areas."

Lance conceded that he was surprised at the pace of capital coming back into onshore drilling in North America. "I guess it surprised us a bit to the upside," he said. "But in the heart of these unconventional plays, the cost of supplies is come down. We're still getting more efficient, and the technology and the innovation is still improving."

ConocoPhillips recorded a net loss of $35 million (minus 3 cents/share) in 4Q2016, compared with a net loss of $3.5 billion (minus $2.78/share) in 4Q2015. Excluding special items -- specifically, gains from a sale in Senegal and a reversionary interest in Minnesota iron ore -- adjusted losses in 4Q2016 were $318 million (minus 26 cents/share), compared with an adjusted net loss of $1.1 billion (minus 90 cents) in 4Q2015.

For the full-year 2016, ConocoPhillips recorded a net loss of $3.6 billion (minus $2.91/share). By comparison, the company reported a net loss of $4.4 billion (minus $3.58/share) for the full-year 2015.