Image source: ConocoPhillips.

2016 has been a pretty rough year for ConocoPhillips (COP -1.29%). It has lost more than $2 billion due in large part to the poor financial performance of its lower 48 business. That said, not all of the company's operating segments are bleeding red this year -- its Asia Pacific and Middle East (APME) operating region is still making money. Here's why that segment is the company's best performer through the first half of the year.

Drilling down into APME

As the chart below shows, only half of ConocoPhillips' operating regions are making money this year:

Data source: ConocoPhillips investor presentations. Chart by author. Note: In millions of dollars. 

Leading the pack is APME, which reported an adjusted operating profit of $67 million. While that is a far cry from the $2.3 billion that the segment earned in the first half of 2014 before prices started crashing, it's at least still in the green. Driving this profitable performance is APME's production, which was up 14% year over year in the second quarter to 398,000 barrels of oil equivalent per day (BOE/d). That result was also up from the first quarter when the company produced 387,000 BOE/d. Contrast this with its other operating regions, where production either declined or was only modestly higher:

Data source: ConocoPhillips investor presentation. Chart by author. Note: Production in thousands of barrels of oil equivalent per day.

While several factors are driving APME's production growth, the primary contributor is the ongoing ramp-up of the company's APLNG facility in Australia. The first train of that LNG export facility has already loaded 27 cargoes this year, which is ahead of the company's expectations. In addition to that, the company's Gumusut project in Malaysia, which oil giant Royal Dutch Shell (RDS.A) (RDS.B) operates, continues to produce at a high level and is exceeding expectations.

Will APME continue to drive results?

Looking ahead, ConocoPhillips believes that its APME segment can continue to drive results. Not only is production from APLNG's first train ahead of expectations, but the company expects to deliver its first cargo from train two in the fourth quarter. That is a big turning point because APLNG starts becoming a cash flow generator for the company at $45 oil once both trains ramp up.

In addition to that, a third party is commissioning a pipeline at the company's KBB project in Malaysia, which it also jointly owns with Royal Dutch Shell. Getting that pipeline up and running is critical because repairs were constraining sales. With those repairs complete, it should drive production volumes higher at KBB in the second half of this year.

Finally, ConocoPhillips' APME segment could see an additional boost from improving oil prices. After averaging around $39 per barrel during the first half of this year, Brent crude has been in the mid-$40s for much of the third quarter. Furthermore, while estimates vary, several analysts expect oil to head even higher by the end of this year. Needless to say, higher crude prices, when combined with rising production, should drive even stronger second-half earnings for ConocoPhillips' APME segment.

Investor takeaway

Weak oil prices put intense pressure on ConocoPhillips' earnings, especially those from its North American segments. While its global operations are under that same pressure, its APME segment was a bright spot thanks to stronger-than-expected production from recent major projects. Given that production is expected to continue ramping up this year, that segment should continue to be a bright spot in 2016.