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ConocoPhillips’s Production Costs and Margins for 4Q16

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ConocoPhillips’s production costs and margins

Excluding hedges, ConocoPhillips (COP) reported a positive cash margin as well as a positive total margin in 4Q16, as shown in the chart below.

Gains on crude oil (USO) and natural gas (USO) hedges helped ConocoPhillips increase its cash margin and total margin, as shown in the chart below.

In 4Q16, upstream companies such as Diamondback Energy (FANG), Pioneer Natural Resources (PXD), Encana (ECA), and EOG Resources (EOG) also reported positive cash margins. Encana reported a cash margin of ~$5.96 per boe, including hedging benefits.

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Definitions

Production cash cost = LOE (lease operating expenses) + production and ad valorem taxes + transportation expenses + G&A (general and administration) cash expenses + interest expenses

Total production cost = cash cost + DD&A (depletion, depreciation, and amortization)

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