ConocoPhillips announced that Q1 earnings rose 43 per cent to hit US$3 billion as higher oil and gas prices made up for a sharp decline in production.
"While our financial results were much improved from a year ago, E&P production and R&M capacity utilization did not meet our targets," said Jim Mulva, chairman and chief executive officer.
"The quarter was negatively impacted by approximately $200 million from unplanned downtime and from variable compensation expense related to prior-year performance."
For the first quarter of 2011, ConocoPhillips reported earnings of US$3 billion, compared with earnings of $2.1 billion for the same period in 2010. First-quarter 2011 earnings included $394 million in gains from North American asset sales and LUKOIL share dispositions.
Exploration and Production's (E&P) Q1 2011 adjusted earnings were higher, compared with the same period in 2010, primarily due to higher prices, partially offset by lower volumes and higher taxes.
"While we had significant improvement in earnings from our downstream business, we did not capture all the market opportunities available to us due to downtime at several refineries," said Mulva.
Production for the first quarter of 2011 was 1.7 million barrels of oil equivalent (BOE) per day, a decrease of about 125,000 BOE per day versus the same period in 2010. Field decline, primarily in the North Sea, Lower 48, China and Alaska, decreased production by approximately 190,000 BOE per day, which was largely offset by about 180,000 BOE per day of new production and improved well performance.
The new production was primarily from the company's Qatargas 3 project, Bohai Bay's development optimisation program and the liquids-rich shale plays in the Lower 48.
Unplanned E&P downtime, primarily from the temporary shutdown of the Trans Alaska Pipeline System in January, a supply vessel collision with the company's Britannia platform and civil unrest in Libya, adversely impacted production by about 65,000 BOE per day.
Asset dispositions in 2010 and the first quarter of 2011 also negatively impacted year-over-year production by approximately 50,000 BOE per day. The unplanned E&P downtime of approximately 65,000 BOE per day reduced earnings for the quarter by about $100 million.
"Consistent with our strategy, we continue to build our exploration portfolio of high-impact drillable prospects and expand our positions in world-class shale opportunities," added Mulva.
Refining & Marketing's (R&M) Q1 2011 earnings were higher than the corresponding period of 2010, primarily due to improved global refining margins. Improved market crack spreads were partially offset by weaker crude differentials and lower secondary product margins.
The chemicals segment posted record earnings of $193 million in the first quarter. The strong earnings were due to higher margins, mostly in olefins and polyolefins, as well as lower costs. The midstream segment's results for the first quarter of 2011 were in line with the first quarter of 2010.
