Houston –26 Oct 2017 450 pm EDT/2050 GMT
Ten months into 2017, ConocoPhillips has nonetheless shaved 10% from its capital budget for the year to $4.5 billion, but still expects 3% underlying production growth excluding asset dispositions, a top company executive said Thursday.
Meanwhile, Whiting Petroleum has been seeing results of larger sand volumes raise recoveries, particularly in its Bakken Shale wells in that large North Dakota oil play.
ConocoPhillips, which has chipped away at its spending ever since early 2015 when an industry downturn began and ConocoPhillips’ capex initially was set at $13.5 billion, has pushed efficiencies throughout the organization, Al Hirschberg, executive vice president of production, drilling and projects, said during a third-quarter earnings conference call.
“At a high level, it reflects our continued capital discipline,” Hirshberg said. “We’ve done better than expected.”
For example, not only have multiple major projects been completed, reducing capital spending on them, but the company has “resisted inflation” starting several months ago as industry began “tapping the brakes” on activity and rig count growth, which halted inflation from expected higher levels, he said.
As those major projects now contribute to cash flow, “our organization is a lot more focused on the base, and our base production is what has been outperforming, and I do expect that to continue,” he said. “This is not a one-trick deal this year. It will continue.”
In addition, delays and work not performed during Hurricane Harvey in Texas during late August and early September, has played a small part in lowering costs, Hirshberg said although he was not specific. In addition, GMT-1, a major Alaskan project, has performed well and has underspent its budget. And, slowdowns in non-operated project spending has occurred in several cases.
ConocoPhillips’ third-quarter production totaled 1.226 million b/d of oil equivalent, including 24,000 b/d from Libya, and also including 582,000 b/d of oil. Total production was up 16,000 boe/d or 1.4% year over year excluding closed or inked asset sales.
Third quarter production was impacted by 15,000 boe/d from Harvey shut-ins of production and third-party infrastructure. Fourth-quarter production is anticipated at 1.195-1.235 million boe/d, while full-year output is pegged at 1.350-1.360 million boe/d.
In the Lower 48, the company ran 12 rigs in its “Big Three” US plays — six in the Eagle Ford Shale in South Texas, four in the Bakken Shale, and two in the Permian Basin in West Texas and New Mexico, Hirshberg said.
Also in the third quarter, the company exported few to no waterborne oil cargoes, compared to “pretty active” exporting in the first half of the year, Don Wallette, ConocoPhillips’ chief financial officer, said.
“We’re seeing markets improve in the US,” Wallette said. “In the third quarter we didn’t see an arbitrage advantage of exporting relative to [price] strength domestically.”
Meanwhile, western US producer Whiting Petroleum said it is getting higher production volumes from enhanced completions on wells that use 9 million-10 million pounds of sand per well, compared to 7 million-8 million pounds used earlier.
Wells with increased sand are turning out close to 1.5 million boe, while those using lesser sand volumes have yielded expected ultimate recoveries of about 1 million boe, outgoing Whiting CEO James Volker said in his company’s quarterly conference call.
“We [are not] the only ones thinking about this,” Volker, who leaves his CEO post at the end of this month after 15 years in that position, said. “Most other operators in my opinion are finding and saying the same thing we are.” On November 1, Brad Holly takes over as new Whiting CEO. Holly previously served as executive vice president for US onshore E&P at Anadarko Petroleum.
Whiting produced 114,350 boe/d in Q3, down 4.6% from the same period in 2016 but up 1.5% from second-quarter 2017. (Platts)