US Major Conoco Reports $1.7bn Q1 Loss

US major ConocoPhillips said April 30 it had a Q1 2020 net loss of $1.7bn, reflecting impairments of about $2.2bn driven largely by an unrealised loss on its 17% equity interest in Canadian oil sands producer Cenovus Energy and “price-driven” non-cash impairments.

The company acquired a 17% equity interest in Cenovus in 2017, part of a $13.3bn sale of most of its oil sands assets and all of its Canadian Deep Basin assets to the Canadian company. Cenovus reported a C$1.8bn (US$1.3bn) first quarter loss, in part reflecting impairment charges of C$335mn in its upstream business causd by low oil prices and C$253mn from inventory.

Without the impairment, Conoco’s adjusted Q1 earnings were $500mn, down from adjusted earnings of $1.1bn in Q1 2019.

Excluding its Libyan operations, the company’s Q1 production averaged 1.29mn barrels of oil equivalent (boe)/day this year, down about 40,000 boe/day from the year-ago period. Adjusted for closed and pending dispositions, Q1 production was 52,000 boe/day higher than a year ago.

Subsequent to Q1, ConocoPhillips earlier reported voluntary curtailments in May associated with demand destruction related to the global Covid-19 pandemic of some 265,000 gross boe/day (230,000 boe/day net), including 165,000 boe/day in the Lower 48 US and 100,000 boe/day (50,000 boe/day net) at its Surmount in-situ oil sands project in Alberta.

Voluntary curtailments, it said, are expected to rise to 460,000 boe/day (420,000 boe/day net) in June, comprised of 260,000 boe/day in the Lower 48, 100,000 boe/day at Surmount and 100,000 boe/day in Alaska.

“Future voluntary curtailment decisions across our areas of operations will be made on a month-by-month basis,” the company said, adding that it expected some level of additional curtailments from production constraints, actions from partner-operated assets or government mandates.