Page 10 - NorthAmOil Week 31

NorthAmOil COMMENTARY NorthAmOil

The next largest US player after the super-ma- Canadian players were now moving to restore all
jors, ConocoPhillips, posted an adjusted sec- of the output they had curtailed.
ond-quarter loss of $1bn, or $0.92 per share Imperial, for its part, noted that it had
– wider than analysts’ average expectations of a revised its schedule for turnaround activities in
loss of $0.58 per share. The company’s per-bar- response to COVID-19, which resulted in its sec-
rel earnings more than halved, as crude average ond-quarter production falling to 347,000 bar-
prices crashed by over 50% early in the second rels of oil equivalent per day from 400,000 boepd
quarter. a year ago. The company has extended some of
However, ConocoPhillips is now in the pro- its plans to operate certain assets at reduced rates
cess of restoring the output it curtailed in April into the third quarter.
– which accounts for about a third of its total pro- South of the border, meanwhile, shale drillers
duction – in response to the crude price collapse. are also cautiously returning curtailed output to
The company expects production curtailments the market – but are well-positioned to shut in
in the third quarter to be roughly half as much as additional barrels if market conditions require
in the previous quarter and said it would restore it.
most of its output by the end of September. Pioneer said it had curtailed roughly 7,000
bpd of net production in the second quarter and
What next? expected to keep roughly 6,000 bpd of this offline ConocoPhillips is
ConocoPhillips is one of a growing number of in the current price environment. The company
North American companies that are gradually said it was making decisions on returning cur- one of a growing
restoring curtailed production as relatively sta- tailed production to the market on a well-by-well number of
ble crude prices help boost industry confidence. basis.
Indeed, the price of WTI has stayed around $40 Continental, meanwhile, said it was ready North American
per barrel since the start of July, and has crept to resume most of its curtailed produc-
above $42 per barrel this week. However, some tion. However, the company – which shut companies that
of these companies have cautioned that activity in around 70% of its output in the spring –
will not be quick to ramp up unless crude prices warned that US oil production growth would are gradually
rise further. only be moderate unless crude prices rose to restoring
In Canada, Husky has said it has the capacity $50-60 per barrel.
to ramp up production in the third quarter, as Continental said its costs for resuming pro- curtailed
about 30,000 barrels per day (bpd) of its crude duction were running at about $1,500 per well,
output remain curtailed across the US and West- and that reopened wells were yielding double production.
ern Canada. their previous flow rates. The company is a
Across Alberta – Canada’s leading oil-produc- major producer in North Dakota’s Bakken play.
ing province – around 1mn bpd of production If its findings are replicated by other shale drill-
was curtailed this spring, with Western Cana- ers as they restart production, this could slow
dian prices suffering as they already trade at a them from rushing into new drilling if return-
discount to WTI. But Suncor Energy, a leading ing existing wells to service results in increased
Canadian producer, said in late July that Western rates initially.™

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