Articles on ConocoPhillips
New York Times, January 25, 2006, By The Associated Press
HOUSTON (AP) -- ConocoPhillips Co., the nation's third-largest integrated oil and gas company, said Wednesday its fourth-quarter profit ballooned as prices and refining margins remained strong versus a year ago.
Earnings expanded to $3.68 billion, or $2.61 per share, from $2.43 billion, or $1.72 per share, a year ago. ConocoPhillips posted income from continuing operations of $3.78 billion, or $2.69 per share, versus $2.48 billion, or $1.76 per share. Analysts surveyed by Thomson Financial predicted earnings of $2.62 per share.
In the exploration and production segment, earnings from continuing operations increased to $2.43 billion from $1.67 billion in the same quarter last year. Higher natural gas prices and volumes boosted results, while crude oil prices were lower and exploration expenses rose, the company said.
Income from continuing operations in its refining and marketing business increased to $1.06 billion from $753 million a year ago but declined from $1.39 billion the third quarter. Refining margins slimmed from the third quarter, as the aftereffects of the hurricanes that hit the Gulf Coast continued to hurt volumes and raise costs.
Revenue surged to $50.2 billion from $40.1 billion in the year-earlier quarter.
ConocoPhillips recorded production of 1.9 million barrels of oil equivalent per day in the recent quarter, relatively flat year-over-year.
The company's worldwide crude oil refining operations ran at 88 percent of capacity in the quarter, as a Louisiana refinery remained shut due to damage caused by Hurricane Katrina in August. In the 2004 fourth quarter, capacity utilization was 94 percent.
Profit for the full year jumped to $13.53 billion, or $9.55 per share, from $8.13 billion, or $5.80 per share, in 2004. Full-year revenue increased to $183.4 billion from $136.9 billion in 2004.
ConocoPhillips shares slipped 4 cents to $64.44 in morning trading on the New York Stock Exchange.
ConocoPhillips is the third-largest integrated oil and gas company in the U.S., behind Chevron Corp. and Exxon Mobil Corp.
ConocoPhillips Looks To Sunrise For LNG Growth
By Matt Chambers, Dow Jones Newswires
DARWIN, June 19 (Dow Jones)--Upbeat about prospects for the US$5 billion Greater Sunrise gas project in the Timor Sea, U.S. oil giant ConocoPhillips (COP) said Monday it is looking at spending up to US$10 billion to nearly treble the capacity at its Darwin liquefied natural gas plant.
The recently-finished Wickham Point plant in Darwin, which gets gas from the Bayu-Undan field in the Timor Sea, can produce 3.5 million tons of LNG a year but has environmental approval to increase that to 10 million tons if it can find the gas.
ConocoPhillips is looking to either the Greater Sunrise fields, which it owns 30% of, or the newly-discovered Caldita field, near Bayu-Undan, Laura Sugg, president of the company's Australian unit, said Monday.
"The earliest prospect could be Sunrise," which has already been shown to be an economically viable project, Sugg told reporters at the annual South East Asia Australia offshore conference in Darwin. Caldita, is still in the appraisal stage.
Sugg was the second speaker at the conference to speak optimistically of the Sunrise project, which still needs to have a profit-sharing agreement ratified by the Australian and East Timorese governments.
She said ConocoPhillips hopes to have a second processing unit, or train, producing between 5 million and 6.5 million tons a year of LNG by 2012 or 2013.
Northern Territory Chief Minister Clare Martin earlier said in a presentation to the conference that she is "optimistic progress can be made in the coming year" on Sunrise.
Operator Woodside Petroleum Ltd. (WPL.AU) has said it won't approve Sunrise until the agreement between Australia and East Timor is ratified and a fiscal stability agreement with East Timor is signed by the partners.
Another possible sticking point will be the location of a liquefied natural gas facility.
Woodside has said it prefers Darwin to East Timor, which says it will do all it can to have a local plant.
Greater Sunrise includes the Sunrise and Troubadour fields, which hold about eight trillion cubic feet of gas and about 300 million barrels of oil, which may be worth up to US$40 billion. The partners have already spent A$250 million on studies to develop the project. ConocoPhillips' Sugg wouldn't give any indication of how testing at Caldita has gone or the quality of the gas, but said it is still a possible source to fuel an expansion of the Darwin plant.
"We would need somewhere north of 3 trillion cubic feet or 4 trillion cubic feet of gas" reserves to launch the project, she said.
In September, minority partner Santos said initial tests at the Caldita field gave an "encouraging result" but was hesitant to talk up expansion of the LNG operation.
While not giving away much on what has been found at the field, which is 265 kilometers northwest of Darwin, Santos earlier this year said it is keen to expand the LNG plant using Caldita gas, if an appraisal well could sure up reserves.
Sugg said ConocoPhillips has ambitions to expand the plant further than the allowed 10 million tons a year if approvals can be gained and gas found to process.
"We may add a third train," possibly more, she said.
Woodside operates and owns 33.4% of Sunrise, which is 150 kilometers south of East Timor. Its partners are ConocoPhillips with 30%, Royal Dutch Shell PLC (RDSA) with 26.6% and Japan's Osaka Gas Co. (9532.TO) with 10%.
Santos owns 40% of Caldita and 10.6% of the Darwin LNG plant.
The Australian, Tuesday, June 20, 2006
Conoco Plans US$6-10 Billion Expansion in Timor Sea
By Nigel Wilson, Energy writer
WORLD energy giant ConocoPhillips is considering a $US6-10 billion (A$8-13.5 billion) expansion of its newly completed Wickham Point LNG plant in Darwin, which would more than double its capacity as early as 2012.
Laura Sugg, president of ConocoPhillips in Australasia, told the South East Asia Offshore Oil Conference in Darwin the expansion could be in the range of 5-7 million tonnes a year with gas supplies coming from Greater Sunrise or the new Caldita discovery, both in the Timor Sea.
ConocoPhillips accepted delivery of the Wickham Point plant, Australia's second LNG export facility after the North West Shelf, from construction contractors Bechtel earlier this month, and is ramping up production to a target level of 3.3 million tonnes a year to satisfy 17-year supply contracts with Tokyo Electric and Tokyo Gas.
Ms Sugg said this translated into one LNG cargo a week. She noted that the Wickham Point plant site had approval for annual production of 10 million tonnes of LNG, which suggested expansion plans could either be covered by cloning the existing plant -- which has a nominal capacity of 3.7 million tonnes a year -- or by looking to ConocoPhillips' international experience to develop an uprated production train of 5-7 million tonnes a year capacity.
Wickham Point takes its gas from the small Bayu-Undan field in which Santos is the only Australian participant, with 10.6 per cent.
Ms Sugg flagged that gas supply for expansion could come from the Greater Sunrise reservoirs, which are estimated to contain about 7 trillion cubic feet of gas, or the new Caldita discovery, for which reserves have yet to be released.
ConocoPhillips is a 30 per cent partner in Greater Sunrise and a 60 per cent stakeholder in Caldita, where the Australian interest is held by Santos with 40 per cent. Ms Sugg said she remained confident the Treaty on Certain Maritime Arrangements signed in January would be ratified shortly, while conceding recent unrest in East Timor meant ratification could be delayed until after elections in East Timor scheduled for April next year.
"We remain hopeful and confident this project will come forward expeditiously," she said.
Ms Sugg declined to give details of the Caldita discovery or its gas composition, saying only that Wickham Point expansion would need at least 3-4 trillion cubic feet of gas reserves to justify investment in expansion.
There are two gas supply expansion options: Greater Sunrise, which has well established reserves but labours under a political and diplomatic cloud; and Caldita, where commercial reserves have yet to be established.
Ms Sugg said an appraisal well would be drilled at Caldita, beginning next month, which is several months ahead of previously announced schedules.
Global Insight Daily Analysis, June 19, 2006
ConocoPhillips Suggests Timor Sea Operational Expansion
By Steven Knell
With LNG deliveries based on the gas reserves of the Bayu-Undan fields steady at one cargo per week, ConocoPhillips wants to push the commercialisation of the Sunrise and Caldita gas fields by expanding the capacity of the Darwin LNG plant by 2013.
A second LNG processing train, capable of producing 5 to 6.5 million tonnes of LNG per annum could warrant as much as US$10-bil.-worth of investment. It would take Darwin LNG capacity to over 10 million tonnes per annum and would improve prospective LNG export market capture through economies of scale.
ConocoPhillips will need to line up long-term supply deals to support its bullish commercial strategy. Its LNG will be competitive on the basis of existing infrastructure but the development of Greater Sunrise in particular will require a favourable resolution of East Timorese entitlements.
ConocoPhillips has wasted no time in setting out an aggressive plan for the further commercial development of the untapped gas potential of the Timor Sea. Dow Jones, Platts and Reuters report comment made by the president of the U.S. company's Australian subsidiary, Laura Sugg, which suggest it plans to build upon the strong foundation it has laid in the near future.
Sugg is quoted as saying that the company is considering adding a second LNG processing train to its existing operations at the Darwin LNG plant it operates. The additional capacity sought would be in the area of 5 to 6.5 million tonnes per annum initially, with the suggestion of scope for further trains in the future. It is a bold move at a time when other LNG developments, notably the commercialisation of the Greater Gorgon gas fields led by ExxonMobil, have stumbled over worsening cost assessments (see Australia: 8 May 2006:). The investment required would be in the area of US$6-10 billion and at least three to four trillion cubic feet of gas reserves would be necessary to support the prospective expansion. The most likely sources were said to be the Timor Sea's Sunrise or Caldita fields, in which ConocoPhillips holds a stake alongside operator Woodside and fellow IOC Shell.
The offshore basins of the Timor Sea have proven a reliable and commercially viable source of gas supply for ConocoPhillips in the recent past. Indeed, the increasingly strong performance of the company's existing LNG operations at the Darwin LNG plant is among the factors leading to the expansion suggested. On the basis of the gas reserves held in the Bayu-Undan field in the Timor Sea, ConocoPhillips brought the 3.7 million tonnes of annual LNG production capacity onstream earlier this year. Feeding into the long-term (17-year) supply contracts it holds with Japanese utilities, Tokyo Electric Power (TEPCO) and Tokyo Gas, the Darwin LNG facility is now loading one cargo roughly every seven days.
Darwin LNG loading capacity could reach as much as 10 million tonnes per annum if ConocoPhillips goes ahead with installing another train. This would be much larger than the existing facility and reflects the movement towards economies of scale in LNG production. Larger trains suggest lower unit costs, a factor that is augmented when one considers that many components that raise the price of greenfield developments are already accounted for. Seen alongside the market for the proven seven trillion cubic feet of gas held in the Sunrise field and prevailing price levels alone, the commerciality of an increase in operations is convincing.
Outlook and Implications
Although the market forecasts for LNG demand are bullish, with opportunities for new producers like ConocoPhillips to secure emerging and established markets alike, the company will have to line up some long-term supply deals to provide the requisite backstops for the investment called for. Its track record will give offtakers confidence, as will the potential for equity stakes of the manner that furthered the development of the Darwin LNG commercialisation of Bayu-Undan gas reserves in the first instance. Tying in leading customers like TEPCO and Tokyo Gas worked well the first time around and can be replicated, especially with Indonesia's market share shrinking in the key Japanese utility market. The hesitancy over the future of the Greater Gorgon development also plays into the hand of an expanded Darwin LNG facility. Should the developers decide against that project as currently conceived, the commerciality of not only a second but also a third Darwin processing train would be buoyed still further.
Gas from Sunrise and Caldita could be commercialised by 2012 or 2013 according to Sugg, but the developmental programme will require a positive resolution to outstanding matters involving East Timorese authorities. The necessary treaties covering the revenues generated by the Sunrise field have been drafted. They are awaiting what could be a lengthy ratification process at the hands of authorities in East Timor and Australia. Nevertheless, the positive reserves estimates to date make the development of these stranded gas reserves a question of when and not if. It is likely that a Darwin LNG expansion is foremost amongst the routes to market they will follow.
A House committee will investigate and request documents on a real estate deal involving the government's top environmental prosecutor and ConocoPhillips' top lobbyist, and legal agreements between the government and the oil company.
The inquiry by the House Oversight and Government Reform Committee was announced hours after The Associated Press reported that the prosecutor, Sue Ellen Wooldridge, bought a $1 million vacation home on Kiawah Island, S.C., with ConocoPhillips Vice President Donald R. Duncan, nine months before agreeing to let the company delay a half-billion-dollar pollution cleanup. It was one of two proposed consent decrees Wooldridge signed with ConocoPhillips just before resigning last month.
"There appears to be a breakdown of ethics at the Justice Department," the committee's chairman, Rep. Henry Waxman, D-Calif., said Wednesday night. "Senior Justice Department officials should not be handling cases that affect their close friends and investment partners."
The third buyer of the beachshore getaway was former Deputy Interior Secretary J. Steven Griles, the highest-ranking Bush administration official targeted for criminal prosecution in the Jack Abramoff corruption probe.
In one of her last acts, Wooldridge signed proposed consent decrees with ConocoPhillips, one delaying the required installation of $525 million in pollution controls at nine refineries and the other dealing with a Superfund toxic waste cleanup.
Last April, Wooldridge, Duncan and Griles bought a $980,000 home in a gated community at Kiawah Island. Records from the Charleston County Auditor's office obtained by the AP list Duncan as a 50 percent owner of the home and Wooldridge and Griles as 25 percent owners.
ConocoPhillips said in a statement Wednesday night that Duncan had no involvement in negotiating the consent agreements.
"We object to the suggestion that the real estate transaction involving Don Duncan, which was cleared in advance by the ethics office of the Department of Justice, had any impact whatsoever on the consent decrees entered into by ConocoPhillips or the recent SEC filing amending ConocoPhillips code of ethics," company officials said. "Any savings resulting from these delays are expected to be offset by the cost of additional and stricter controls agreed to in the amended agreement."
Griles, now an oil and gas lobbyist, began dating Wooldridge while he was her boss at Interior. He was the department's No. 2 official from July 2001 to January 2005, behind only former Secretary Gale Norton. He and Duncan, ConocoPhillips' chief Washington lobbyist, both served on President Bush's presidential transition team.
Wooldridge and Griles have known each other at least since the first year of the Bush administration in 2001, when Wooldridge became deputy chief of staff and counselor to Norton. Bush appointed Wooldridge as Interior's top lawyer in June 2004.
After she became Interior solicitor, Wooldridge told the department's ethics office she and Griles had begun dating, an Interior spokesman said.
Bush later appointed Wooldridge to head the Justice Department's environment division, representing virtually every federal agency, and she began working there in November 2005.
Stephen W. Grafman, Wooldridge's attorney, said she paid for her share in the home and was told by the Justice Department's ethics office a month before the sale went through "that the purchase was not a problem."
"There was no need to recuse herself from ConocoPhillips since she was advised by the appropriate ethics officials that there was not a conflict," Grafman said. "Mr. Duncan invested in the property as an individual and friend."
Grafman said Duncan never lobbied Wooldridge for himself or his company.
Justice Department spokeswoman Cynthia Magnuson confirmed that Wooldridge "sought the advice of ethics officials who informed her that the purchase did not raise ethical issues."
Magnuson said the consent decrees with ConocoPhillips "were approved through the normal management channels and were presented to Sue Ellen with the unanimous recommendations of her career staff as well as those of the EPA."
Griles' lawyer, Barry M. Hartman, called the home a shared investment among people who have known each other for years. "What exactly is wrong with three close personal friends sharing a vacation/rental home?" he said.
Wooldridge submitted her resignation letter from Justice on Jan. 8, three days after other prosecutors in the department met with Griles to outline criminal charges they are seeking against him. She said in the letter she wanted to return to private sector work.
The federal task force heading the Abramoff corruption probe also has become interested in Wooldridge and her connections to Griles, people familiar with the investigation said on condition of anonymity, citing the issue's sensitivity.
Paul Light, a professor at New York University's Wagner School of Public Service and an expert on presidential appointees, said Wooldridge's participation in the home purchase and ConocoPhillips settlements "creates the impression of favoritism, or favors due."
"From an appearance standpoint it's awful, and from a legal standpoint it's questionable," Light said Wednesday. "Political appointees have been indicted for less."
Wooldridge's last day at Justice was Jan. 19. One of the proposed agreements she signed before leaving would change the terms of a major air pollution settlement with ConocoPhillips announced in 2005.
To settle charges of Clean Air Act violations, the new agreement Wooldridge signed would delay deadlines the government imposed - some by two to three years - for cutting emissions of chemicals that cause smog and soot. It also postponed by more than a year potential penalties and pollution reporting requirements. The agreement cited damage to a refinery from Hurricane Katrina as reason for some of the delays.
Wooldridge did not list her share in the South Carolina home in a financial disclosure she submitted a month after the real estate deal. That report covered calendar 2005 and Wooldridge resigned before having to submit a new report for 2006.
Wooldridge also put her undated signature on a proposed consent decree involving ConocoPhillips and a Superfund toxic waste site. It is among dozens of company that would pay $500,000 in damages and up to $10 million to clean an 8-acre site in Elkton, Md.
Mulva predicts progress at Sunrise development
ConocoPhillips chief executive Jim Mulva told an earnings conference call last week that "the time has come to advance and develop the Sunrise project. Sunrise is really important to us".
However, he acknowledged that decisions still need to be taken on how to develop the project.
"We could do Sunrise by taking LNG to Darwin (the producing ConocoPhillips-operated export project in Australia), but Shell, our partner, has always had an interest in a floating LNG concept," he said.
However, he added that recently he came to the decision with the chief executives of Woodside and Shell "that this is the year we need to be moving out on Sunrise".
"In terms of whether it is a Darwin proposal, or offshore or something else, we are all agreed that this will come on our list of our list of projects to be developed," he said.
Operator Woodside said in its latest quarterly report in mid-January that feasibility studies on various concepts for the project were under way, with the aim of leading towards a preliminary development plan for the project.
The Sunrise project includes the Sunrise and Troubadour fields, which contain about 8 trillion cubic feet of gas and 300 million barrels of condensate.
The fields are located about 80% in Australian waters, but with 20% extending into the East Timor-Australia Joint Petroleum Development area.
Action is behind the scenes for LNG sector
It has been an interesting start to the year for the liquefied natural gas sector if you look below the surface.
It is true that none of the underlying factors that have created such a tough climate for the industry in the past couple of years has changed - costs and resources are still big issues, resource accessibility is a growing challenge and at the core of everything it is still exceptionally hard to put new LNG projects together.
However, after the late 2007 boost to the sector from the Angola LNG final investment decision there are further signs that behind the scenes operators are working increasingly hard to get their projects moving and starting to resolve some of the issues that have delayed fresh project sanctions.
That does not mean anybody should expect that the final investment decision logjam will suddenly end this year. However, it is encouraging to see big operators talking positively.
Last Friday, for example, ConocoPhillips boss Jim Mulva highlighted his company's desire to see movement on the Sunrise project in the Timor Sea between Australia and East Timor.
He did not hide the point that there are issues to be overcome on development solutions but chose to emphasise agreement with major project partners Shell and Woodside that they want to move the project forward in 2008.
ConocoPhillips is also a partner in Brass LNG, where a more active publicity campaign seems to be building on the potential for getting down to construction.
A land-lease agreement signed, after much haggling, with local communities is another sign that there could be progress, even if unrest in the Niger Delta, let alone Nigeria's talk of reviewing its gas policy, will make the partnership think long and hard before moving on to a project sanction decision.
Perhaps better placed for forward movement is the delayed, but potentially giant Gorgon project off Western Australia.
The Chevron-led partnership here seems to have concluded that it will stick to its planned location on Barrow Island and, if it manages to secure environmental approval later this year for three liquefaction trains instead of two, Gorgon could be set fair to head in the direction of a final investment decision.
There are others too where there are signs of progess.
ExxonMobil, which along with Shell is Chevron's partner in Gorgon, is also taking some early decisions on the planned Papua New Guinea LNG project.
Agreement on a move into front-end engineering and design is still seen as possible this quarter for what, it has just been decided, would be a two-train project to produce 6.3 million tonnes per annum.
There are plenty of other projects too where operators are trying to make their sums add up and put the regulatory pieces in place for a workable LNG development.
Nobody should expect this to mean that there will quickly be a rash of new projects hurtling towards production.
StatoilHydro's start-up woes at Snohvit are a reminder, if any were needed, that LNG projects are big, expensive beasts that are tough, troublesome and very costly to put together.
However, there is also a market out there that wants to buy gas and sooner or later there will be more LNG projects coming together to help feed it.
The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)