Exxon, Conoco see a quarterly payoff from natural gas

Thu May 1, 2014 2:34pm EDT
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By Anna Driver and Ernest Scheyder

HOUSTON/NEW YORK (Reuters) - U.S. oil companies Exxon Mobil Corp and ConocoPhillips both reported first-quarter earnings that exceeded Wall Street expectations on Thursday, helped partly by higher natural gas prices.

A brutal winter in North American sapped supplies of natural gas and boosted prices at key delivery point Henry Hub by more than 50 percent in the quarter, propping up profit at both companies, analysts said.

Both Conoco and Exxon have increased investment in North American shale fields that produce crude oil and natural gas liquids. On Wednesday, Royal Dutch Shell reported better-than-expected quarterly results that were also boosted by gas earnings.

Jeff Sheets, chief financial officer of Conoco, said the company was unlikely to see a similar benefit from natural gas prices in the current quarter because markets had returned to a more normal state.

"It was a very unusual quarter because of weather. What you saw in our results is that we had the ability to supply some of the markets where prices were higher than supply based on Henry Hub," Sheets said.

Conoco also said it plans to ship the first of six cargoes of liquefied natural gas (LNG) from its Kenai plant in Alaska this month since renewing its export license in April.

The companies appear to have had better luck in U.S. shale plays than BP PLC, which on Tuesday reported a 24 percent drop in quarterly profit and wrote off $521 million as it scrapped a shale project in the Utica basin.

Exxon remains the largest U.S. producer of natural gas and spent $30 billion in 2010 to acquire gas producer XTO Energy.   Continued...

A view of the Exxon Mobil refinery in Baytown, Texas September 15, 2008. REUTERS/Jessica Rinaldi