Assets across the Lower 48 continued to drive production growth for ConocoPhillips in the third quarter, with output from the global producer’s “Big 3” unconventionals leading the way.
The world’s largest independent said production from the Bakken and Eagle Ford shales, along with the Permian Basin, averaged 379,000 boe/d in the third quarter, up 21% year/year and 3% from 2Q2019.
The Houston-based operator has Lower 48 interests that stretch from the Rockies to the Gulf Coast and offshore, which comprise its largest production segment, but its primary focus of late has been the three onshore plays. The Eagle Ford, where the company added a seventh rig in the second quarter, accounted for the bulk of onshore volumes in the quarter at 226,000 boe/d.
Global production, excluding Libya, came in at 1.322 million boe/d, up 7% from the year-ago period and from 1.29 million boe/d in 2Q2019. Libya averaged 44,000 boe/d.
Adjusting for assets sales, production increased 83,000 boe/d overall “due to production from the Big 3 unconventionals, development programs and major projects in Alaska,” management said, adding that the growth more than offset normal field decline.
The company also completed construction and commissioning of the Montney Phase 1 gas plant in Canada, with startup awaiting completion of a third-party pipeline. Because of delays on the pipeline, COO Matt Fox said management now expects the project to be online in early 2020.
The company also continues to appraise the Willow discovery on the North Slope of Alaska and the Narwhal trend, which is south of the Alpine field. The company is Alaska’s largest oil producer, and earlier in October it drilled a horizontal well from an existing Alpine site into the Narwhal trend, said Fox, who said the well would help optimize future development in the prospect.
While the realized price fell 18% year/year to $47.07/boe in the third quarter, ConocoPhillips said it still managed to generate $1 billion in free cash flow for the period.
“This quarter extends our successful track record of performance since we reset our value proposition in 2016,” CEO Ryan Lance said of the goal to generate strong returns as many independents struggle to meet increasing pressure from shareholders. Next month the management team is issuing a 10-year financial plan at the analyst meeting that is to emphasize “free cash flow generation with competitive returns on capital and returns of capital.”
For now, the operating budget remains unchanged at $6.3 billion. ConocoPhillips is guiding for 1.265-1.305 million boe/d of fourth quarter production after completing the sale of its UK subsidiaries for $2.2 billion in the third quarter.
Net income was $3.1 billion ($2.74/share) in 3Q2019, compared with $1.9 billion ($1.59) in the year-ago period.