What’s ConocoPhillips’s Worldwide Operations Production Mix?



ConocoPhillips’s production mix

As you can see in the graph below, ConocoPhillips’s (COP) production mix for 3Q16 was ~38.0% crude oil, ~12.0% bitumen, ~10.0% natural gas liquids, and ~40.0% natural gas. That means ConocoPhillips (COP) is tilted more toward liquids production. Its total liquids production is ~60.0%. Typically, upstream companies with more liquids production have better operating margins.

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Production mix trend

COP’s quarterly crude oil and bitumen percentage in its production mix has increased from ~44.0% in 4Q11 to ~50.0% in 3Q16, with an average rate of increase of ~0.60% quarter-over-quarter. In 3Q16, the percentage of crude oil and bitumen in its production mix increased by 1.0 percentage point to ~50.0%, from ~49.0% in 2Q16.

Worldwide operations

For 3Q16, ConocoPhillips’s Lower 48 operations reported a production mix of ~40.0% crude oil, ~18.0% natural gas liquids, and ~42.0% natural gas. That means the company’s 3Q16 production from its Lower 48 operations contains ~58.0% liquids and is tilted toward liquids production.

COP’s Canada operations reported ~62.0% bitumen in their production mix with total liquids production of ~72.0% and natural gas production of ~28.0%. All of ConocoPhillips’s bitumen production comes from its Canada operations.

For 3Q16, ConocoPhillips’s Europe and North Africa operations reported a production mix of ~65.0% crude oil, ~3.0% natural gas liquids, and ~32.0% natural gas.

ConocoPhillips’s Asia Pacific and Middle East operations are tilted toward natural gas production, with ~68.0% natural gas in its production mix.

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What’s COP’s strategy for production mix going forward?

On November 10, 2016, while presenting at AIM (Analyst and Investor Meeting) in New York, ConocoPhillips revealed its production mix strategy for the next two years. COP is planning to reduce natural gas exposure in North America. To know more, refer to Market Realist’s article ConocoPhillips’s Production Mix Strategy for 2017–2018.

Other upstream companies

Other upstream companies with higher crude oil percentages in their production mixes are Stone Energy (SGY), Devon Energy (DVN), and Pioneer Natural Resources (PXD). These companies have ~43.0%, ~40.0%, and ~57.0%, respectively, of crude oil in their production mixes.

Volatility in oil prices also impacts ETFs and ETNs such as the ProShares UltraShort Bloomberg Crude Oil (SCO), the Vanguard Energy ETF (VDE), and the VelocityShares 3x Long Crude Oil ETN (UWTIF).

Now let’s take a look at ConocoPhillips’s oil and gas revenue mix for 3Q16.


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