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ConocoPhillips’s Production Costs and Margins for 2Q16

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ConocoPhillips’s production costs and margins

In 2Q16, excluding hedges, ConocoPhillips (COP) reported a positive cash margin but a negative total margin (see Chart 1).

Gains on crude oil (USO) and natural gas (USO) hedges helped ConocoPhillips increase its cash margin and reduce the deficit in its total margin (see Chart 2).

For 2Q16, other upstream companies such as Diamondback Energy (FANG) and EOG Resources (EOG) have reported positive cash margins. Southwestern Energy (SWN) had a negative cash margin.

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Definitions

  • production cash cost: LOE (lease operating expenses) + production and ad valorem taxes + transportation expenses + G&A (general and administrative) cash expenses + interest expenses
  • total production cost: cash cost + DD&A (depletion, depreciation, and amortization)
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