ConocoPhillips said Friday the company’s third quarter results would be crimped by weak North American natural gas prices. Oil and gas output worldwide is expected to fall 5% from the second quarter.

“Total third quarter production on a barrel-of-oil equivalent (BOE) per day basis, including Syncrude and excluding LUKOIL, is anticipated to be approximately 1.78 million BOE per day,” the company said in an update Friday. “Third quarter production was impacted by seasonal planned maintenance activities, mainly in the United Kingdom and Alaska. Exploration expenses are expected to be approximately $400 million before-tax for the quarter.”

In the second quarter the Houston-based producer’s net earnings totaled $1.3 billion (87 cents/share), compared with $5.4 billion ($3.50) in 2Q2008. Revenues dropped to $35.4 billion from $71.4 billion. U.S. exploration results were impacted by realized gas prices that fell dramatically from a year ago, CFO Sig Cornelius said (see Daily GPI, July 30).

Last month the Energy Information Administration (EIA) reported that the Henry Hub spot price averaged $3.23/Mcf in August, 25 cents/Mcf below the average spot price in July. “Prices continue to be pushed lower as robust production adds to already high inventories,” the agency said (see Daily GPI, Sept. 10a). ConocoPhillips and other producers will have to wait out the low-gas price environment a while longer. “On an annual basis, the projected Henry Hub spot price averages $3.65/Mcf in 2009 and $4.78/Mcf in 2010,” EIA said.

Noting that natural gas prices fell nearly 20% in August and were already down almost another 20% in the first four days of September, Raymond James analyst J. Marshall Adkins said last month that fundamentals “remain awful,” but he expects a rebound to occur next year (see Daily GPI, Sept. 10b).

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