ConoccoPhillips Reduces Eagle Ford Rig Count

Company Meets Operational Targets for Q2
ConocoPhillips Q2 Report

ConocoPhillips Q2 Report

ConocoPhillips released 2015 second quarter earnings that credited its operations in unconventional plays, such as the Eagle Ford, with production increases.

Related: ConocoPhillips Reports Q4 Losses

ConocoPhillips reported last week that quarterly production in the upper 48 states increased by 16 thousand barrels MBOED over the same period in 2014, to 556 MBOED. They credited the increase to growth in unconventional plays with the Eagle Ford and Bakken collectively delivering 242 MBOED for the quarter, a 16 percent increase compared with the 2014.

The company also followed through on its plan to reduce rigs across the board and is currently running six rigs in the Eagle Ford, four in the Bakken and three in the Permian.

In a Q2 conference call last week, executives from ConocoPhillips assured investors that despite the prolonged commodity pricing crisis, the company is solid and focused on navigating the sharp downturn with a long-term perspective.

Ryan M. Lance, Chairman & Chief Executive Officer commented, “Weak prices have certainly dealt us and the industry a significant headwind, but the reality is we don’t control prices. That said, there are many things we do control like how much capital we return to the shareholders, how much and where we spend the capital and the cost of running the business.”

Lance elaborated that went ConocoPhillips has been able to cut capital for three years and take a $1 billion cost-cutting challenge all while continuing to meet our operational targets.

Conoco reports over 220,000 acres of core Eagle Ford properties in South Texas. Read more: ConocoPhillips and its Eagle Ford Operations

Q2 Highlights

  • Achieved second-quarter production of 1,595 MBOED
  • Eleven percent year-over-year reduction in operating costs
  • Announced reductions in future deepwater exploration spending
  • Lowering 2015 capital expenditures guidance from $11.5 billion to $11.0 billion and operating cost guidance from $9.2 billion to $8.9 billion



Conoco Liquids Up 22% in Lower 48 Thanks to Eagle Ford

Eagle Ford Condensate Exports Tabled For Now
Conoco Phillips Ealge Ford Acreage Map

Conoco Phillips Ealge Ford Acreage Map

Liquids production volumes from Conoco Phillips’ (COP) Lower 48 assets increased by 22% year-over-year thanks largely to the Eagle Ford and the Bakken, company officials reported in their second quarter 2014 report at the end of July.

COP production grew by 38% year-over-year to 208,000 boe/d in the Eagle Ford Shale and Bakken Shale plays combined. That’s ~39% of the company’s total production for its Lower 48 asset portfolio. In the Eagle Ford alone, production grew 12% quarter-on-quarter from 140,000 boe/d to 157,000 boe/d. However, company officials expect for the rate of growth to slow in both plays in the second half of the year due to multi-pad drilling effects and weather-related issues in the fourth quarter.

Read more: Conoco Phillips’ Eagle Ford Production Up 58% to 141,000 boe/d in Q4 2013

Conoco’s EVP, Exploration and Production Matt Fox, said, “we expect to have multi pad drilling effects and are anticipating winter weather impacts in the fourth quarter. So the rate of growth will slow in the second half of the year. The net effect of this is we are still on track to achieve our 2014 volume targets for both the Eagle Ford and Bakken but we do expect rates to flatten in third and fourth quarters and then begin to ramp up as we head in to 2015.”

Conoco Doesn’t Have Plans to Apply for Permit to Export Eagle Ford Condensate

Despite advocating for condensate and crude oil exports, COP management indicated in the company’s second quarter conference call on July 31st that it would not apply with the U.S. Commerce Department (U.S. DoC) for a permit to export Eagle Ford condensate.

Recently, the U.S. Commerce Department granted permission to certain companies to export minimally processed Eagle Ford condensate, which it considers a refined product. The oil export ban, which has been in place for nearly forty years does not limit the export of refined products. Just last week, BHP Billiton, a major Eagle Ford producer, applied with the U.S. DoC for an export permit.

Read more: Eagle Ford’s BHP Billiton Seeks to Export Condensate

CEO Ryan Lance, said, “the larger issue we are having in North America is growing light oil production and the feasibility or the capacity being used up in the refining sector to really absorb. Right now we’re getting most of our condensate to the Gulf Coast putting it on ships and getting it around.”

Lance continued, saying if the company saw an advantage to applying for a similar permit to those recently issued, the company would approach the U.S. DoC.