By Sabrina Valle and Sourasis Bose
(Reuters) -U.S. oil producer ConocoPhillips missed Wall Street bets for first-quarter profit on Thursday, as lower natural gas prices and increased costs offset higher oil production volumes.
A milder-than-expected winter hurt demand for the heating fuel in the quarter and pulled down U.S. natural gas prices to a three-and-a-half-year low in February, also affecting earnings of U.S. oil majors Exxon Mobil and Chevron.
The Houston, Texas-based company’s net profit dropped 10% from a year ago to $2.6 billion in the quarter. Adjusted earnings fell to $2.4 billion, or $2.03 per share, from $2.38 per share a year earlier, missing analysts’ average estimate of $2.04 per share, according to LSEG data.
ConocoPhillips’ total average realized price fell 7% to $56.60 per barrel of oil equivalent (boe) in the first quarter, from $60.86 per boe a year earlier.
Most of the hit came from a 46% drop in realized natural gas prices in the first quarter. Almost half of the company’s production volumes are of natural gas or natural gas liquids.
ConocoPhillips said it expects continued volatility in the second quarter coming from its operations in the Permian Basin, the main U.S. shale basin, due to pipeline maintenance and third-party offtake constraints.
Meanwhile, U.S. oil production is on the rise with advancements in fracking technology in the United States offsetting declining well productivity.
Production at ConocoPhillips rose to 1.9 million barrels of oil equivalent per day (boepd) from 1.79 million boepd in the year-ago quarter.
Its second-quarter production is expected to rise even more to 1.91 to 1.95 million boepd, the company said.
(Reporting by Sourasis Bose in Bengaluru; Editing by Shinjini Ganguli and Ros Russell)
