ConocoPhillips Lower 48 unconventional production troughed a bit sooner than the company expected -- during the first quarter instead of the second. And now production is up from what was only recently planned, Alan Hirshberg, executive vice president for production, drilling and projects said Tuesday.
Lower 48 unconventional production averaged 221,000 b/d for the quarter, with the Eagle Ford at 133,000, the Bakken at 59,000 and the Permian at 17,000 b/d; the balance was in the Barnett and Niobrara, Hirshberg told analysts Tuesday during an earnings conference call.
“On the last [earnings conference] call, I mentioned the low point for unconventional production was expected to be in the second quarter this year,” he said. “We now see the inflection point behind us in the first quarter. In April, we reached 12 rigs in the Lower 48 as planned. We are currently running five in the Eagle Ford, four in the Bakken and three in the Permian.”
First quarter production came in 2-3% higher than what the company was predicting a quarter ago, he said. “It's the continuing drumbeat of improvements from technology and other efficiency drivers -- things like data analytics -- that are helping us continue to get more and more efficient…”
Hirshberg said previously that on a full-year basis, 2017 production would be 5-10% lower than during 2016. “I think it's clear just from the progress we've already made this year that we will be at the low end of that decline range, if you will, so we will do better,” he said Tuesday. “Instead of declining 5 to 10% we will be closer to the 5%.”
No increase in Lower 48 drilling rigs is expected.
“As we move forward in 2017 we are on track to deliver on continued strong operational performance,” Hirshberg said. “In the Lower 48, we expect our unconventional production to increase throughout the year with an exit rate of around 250,000 b/d while maintaining the average of rigs at around 11 to 12.”
However, if the company were to add a rig, it would be in the Eagle Ford, Hirshberg said in response to an analyst’s question.
“The Eagle Ford is mature enough; it has the infrastructure capacity that you could add a rig there,” he said. “...[W]ith all the pressure in other places like the Permian, the Eagle Ford has been a good place to operate with less pressure on [cost] inflation and better netbacks for the barrels that you are sending out…”
ConocoPhillips reported first-quarter earnings $800 million (62 cents/share) compared with a first-quarter 2016 loss of $1.5 billion (minus $1.18/share). Excluding special items, first-quarter 2017 adjusted earnings were a loss of $19 million (minus 2 cents/share) compared with a first quarter 2016 adjusted loss of $1.2 billion (minus 95 cents/share).
Adjusted earnings improved compared with first quarter of 2016 primarily due to higher realized prices. The company’s total realized price was $36.18/boe, compared with $22.94/boe in the first quarter of 2016, reflecting higher average realized prices across all commodities.