ConocoPhillips has since the beginning of this year quietly amassed more than 340,000 net acres in promising North American plays, executives said Wednesday.

The acquisitions were revealed during a conference call to discuss second quarter earnings.

The Houston-based producer, which among U.S. majors is ranked third in total market value behind ExxonMobil Corp. and Chevron Corp., earned $3.4 billion ($2.41/share), down from $4.2 billion ($2.77) in the year-ago period. The losses in the latest period included an impairment for the Denali natural gas pipeline in Alaska, which has been canceled.

About $6.3 billion in cash was generated from operations during the quarter, and the company also funded a $3.1 billion capital program, repurchased $3.1 billion of common stock and paid $900 million in dividends.

“We had a solid quarter,” said CEO Jim Mulva, who credited the higher adjusted earnings and cash flow to “better commodity prices and refining margins.”

In mid-July the producer launched plans to become a pure-play exploration and production (E&P) company by spinning off the refining and marketing arm as a new publicly traded company (see Daily GPI, July 15). The ultimate goal, said Mulva, is to “create differentiated value for our shareholders.”

Once the integrated major becomes an independent, ConocoPhillips would be the largest U.S.-based pure-play E&P, with output from investments in unconventional resource plays, Canadian oilsands and liquefied natural gas (LNG).

However, comments about the split remained sparse during the conference call; most of the details about the split is to be unveiled in September, said CFO Jeff Sheets.

What Sheets did reveal, however, were tidbits about how the evolving E&P would be positioned in North America. In addition to its substantial holdings in the offshore and Alaska, ConocoPhillips now has a stable of U.S. unconventional projects in the Eagle Ford, Barnett and Bakken shales, and in the Permian Basin.

Since the beginning of this year the producer also has snagged another 340,000 net acres in “emerging” resource plays, which include the emerging Canol Shale in northern Canada, said Sheets. About two-thirds of the new properties are in Canada with the remainder in the Lower 48. As to where the acreage is, Sheets wouldn’t say for competitive reasons, but he assured analysts that more information would be revealed once development gets under way in 2012.

ConocoPhillips produced 1.64 million boe/d in 2Q2011, which was down from 900,000 boe/d in 2Q2010. Excluding asset sales and civil unrest in Libya, worldwide output was actually higher year/year.

“Upstream operated well and we are seeing the benefits of our focus on margins and returns,” said Mulva. “While our production fell, the earnings impact was limited as we shifted production from North American natural gas toward higher margin production of oil sands, Lower 48 liquids and LNG.”

In its North American operations ConocoPhillips has followed the crowd and begun to move rigs from gas basins to liquids-rich and oil plays. The move resulted in the loss of 16,000 boe/d in natural gas-weighted output during 2Q2011. Including asset sales, gas-weighted output was 28,000 boe/d lower in the latest period.

However, the shift to liquids is paying off, Sheets told analysts.

“Our activities continue to ramp up. Currently in the Eagle Ford we are producing 24,000 boe/d. The results are encouraging but we do have some production curtailments due to third-party condensate trucking constraints.” ConocoPhillips was operating 13 rigs in the play during the quarter and expects to increase the rig count there to 16 by year’s end.

“We’re also planning to increase activity in the Bakken and in North Barnett in 2012,” where the “rig count is expected to double” by the end of next year, said Sheets. Together with the Permian Basin operations, production currently is around 30,000 boe/d.

“As we continue to develop our Lower 48 opportunities, we are finding opportunities for increased investments with strong economic returns,” he said. “We’ve already allocated $500 million to these activities and we look for more increased investment in 2012.”

The “key” to North America’s growth, said the CFO, “is our assessment of capacity, of service providers, drillers and crews and our ability to bring production on line as quickly as…the build-out of infrastructure and takeaway capacity increases.”

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