Why COP’s 2Q17 Production Fell
ConocoPhillips’ 2Q17 production
ConocoPhillips (COP) reported production of 1,437 thousand barrels of oil equivalent per day (or Mboed) in 2Q17, a decline of 7% compared to 2Q16 production of 1,546 Mboed. However, when adjusted for asset dispositions of 278 Mboed in 2017 and 429 Mboed in 2016, production in 2Q17 was higher by 4% compared to 2Q16.
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In the graph above, we can see that COP’s production levels have mostly stayed steady between 2Q15 and 1Q17. In 2Q17, however, its production fell both on a year-over-year (unadjusted) basis and sequentially.
COP noted that the decrease in production primarily resulted from normal field decline and non-core asset dispositions including its Canada transaction with Cenovus (CVE). In 2Q17, COP completed the sale of its 50% non-operated interest in the Foster Creek Christina Lake oil sands partnership along with the majority of its Western Canada Deep Basin gas assets.
Oil as a percent of COP’s total production
As we can see in the image above, oil’s share as a percent of COP’s total production has varied since 2Q15. Given that total production levels have mostly remained steady between 2Q15 and 2Q17, this means that absolute oil production volumes have varied since 2Q15.
However, since 4Q16, oil’s share in total production has been rising consistently. In 2Q17, COP’s oil production as a percent of total production rose despite lower year-over-year and sequential total production volumes. This could be because the company sold its gas-heavy assets in the Canada transaction and its Barnett sale transaction even as it is focusing on reducing natural gas exposure in North America.
Read ConocoPhillips’s Production Mix Strategy for 2017–2018 to know more. COP’s 2Q17 oil volumes were 590 thousand barrels per day compared to 592 thousand barrels per day in 2Q16.
COP’s 3Q17 and 2017 production expectations
For 3Q17, COP has provided a production guidance range of 1,170 Mboed to 1,210 Mboed (excluding Libya) or 1,190 Mboed at the midpoint. The lower production reflects forecast impacts from COP’s planned San Juan Basin, Barnett, and Panhandle dispositions.
COP’s full-year production is expected to range between 1,340 Mboed to 1,370 Mboed or 1,355 Mboed at the midpoint.