ConocoPhillips (NYSE:COP) reported better-than-expected second-quarter earnings on Thursday as production ramped up in the key Eagle Ford shale and the oil giant continued to reposition itself to take advantage of the U.S. shale boom.
However, earnings were down 9.6% as it struggled with a lack of production from the spun-off Phillips 66 unit, which contributed to a 4.7% decline in revenues to $14 billion.
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The Houston-based oil and natural gas explorer reported net income of $2.1 billion, or $1.65 a share, down from a year-earlier profit of $2.3 billion, or $1.80.
Excluding one-time items related to the sold-off downstream operations, ConocoPhillips said it earned $1.41 a share, topping average analyst estimates of $1.23 in a Thomson Reuters poll.
The oil giant also posted strong adjusted production performance of 1,510 millions of barrels of oil equivalent a day, up from 1,489 MBOED a year ago, thanks in large part to the doubling of production in the Eagle Ford shale, and raised its full-year production guidance.
The company has been undergoing a three-year overhaul that has led to the axing of billions of dollars in assets and operational costs. It is looking to reposition itself so that it can take advantage of the shale boom in the U.S.
"We had a very strong quarter, with our base operations and turnaround activity performing as planned," ConocoPhillips CEO Ryan Lance said in a statement. “Our exploration momentum also continues, with drilling activity ongoing in deepwater, conventional and unconventional plays around the world."
ConocoPhillips has four major projects on tracks for startups by year end in the North Sea and Malaysia and said exploration momentum continues with drilling in the Gulf of Mexico, Australia’s Browse Basin and unconventional plays in Canada.
The shares are up about 1.5% Thursday afternoon.
ConocoPhillips also said on Thursday that it has reached an agreement to pull out of the Freeport LNG project in Texas, which could help it save as much as $60 million annually in costs over the next 19 years.