Amid massive losses in its global portfolio that led ConocoPhillips to reduce its dividend for the first time in decades, the oil giant in 2015 earned $482 million from oil and gas production in Alaska and plans to keep capital spending in the state at a high level.
Announcing its fourth quarter results on Monday, ConocoPhillips also recorded large losses in its Alaska sector primarily related to its offshore leases in the Chukchi Sea, part of a $412 million adjustment to its books. ConocoPhillips in 2013 froze plans to drill an exploration well in the U.S. Arctic Ocean following Shell's troubled efforts in the region.
ConocoPhillips, the top oil producer in Alaska, is also the only operator on the North Slope to separate out its Alaska earnings in quarterly reports, providing a unique window into the field's profitability as state politicians consider tweaking the production tax system to help close a $3.8 billion deficit.
The Houston-based company and other producers are struggling to control costs amid a devastating drop in the price of oil over the last 20 months that has led to mass layoffs and shuttered oil and gas projects. ConocoPhillips reported a loss of $1.7 billion in adjusted earnings for the year, an amount that was offset partially by the company's positive performance in Alaska.
Natalie Lowman, communications director for ConocoPhillips Alaska, said in an email that in the big picture, ConocoPhillips had a "negative cash flow" of more than $100 million in Alaska in 2015. She included an estimated $665 million in taxes and royalties paid to the state, as well as capital expenses that amounted to $1.4 billion in 2015.
ConocoPhillips has maintained a relatively high level of capital spending in Alaska, compared with reductions at fields around the world. The company reported spending $1.6 billion on Alaska capital costs in 2014.
The capital spending has helped to bring oil-field projects into production while the company continues to advance other prospects with an eye on the National Petroleum Reserve-Alaska on the western frontier of the state's sprawling North Slope oil fields.
Lowman said capital spending is expected to remain high in Alaska in 2016. The company previously said it would spend $1.3 billion on Alaska projects in 2016. The company now expects to see a "slight decrease" in that estimate because oil prices have continued to slide, Lowman said.
"We still anticipate levels of spending higher than our capital budget in 2012 — prior to oil-tax reform and when oil prices were in excess of $100 per barrel," she said.
She said Senate Bill 21, the production tax overhaul approved in 2013, has created a "positive investment climate."
Alaska remains a bright spot for ConocoPhillips, according to its adjusted earnings. The $482 million made in Alaska's oil and gas fields is second only to "Asia Pacific and Middle East," which reported $1.1 billion in adjusted earnings.
Adjusted earnings were negative in three of the company's provinces around the world, with the "Lower 48" losing the most in 2015 at $1.8 billion.
A barrel of North Slope crude is selling for around $30, down from more than $100 in summer 2014. The plunging price has led to hundreds of job losses in Alaska's oil patch, including at ConocoPhillips, which completed a 10 percent reduction of its workforce in October, eliminating 120 positions.
The state labor department forecasts 1,000 job losses in the industry this year, taking the sector back to 2012 employment levels of more than 12,000 workers.