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ConocoPhillips reported better than expected fourth quarter earnings before the market opened Tuesday on higher production. Houston based $COP is the largest U.S. based independent exploration and production firm based on production volumes. On Jan. 15, 2021, ConocoPhillips closed the acquisition of Concho.


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ConocoPhillips Q4 Earnings

Conoco Phillips Inc. (NYSE: $COP) Reported Earnings Before Open Tuesday

($0.19) Beat ($0.28) EPS Forecast And $6.05 Billion Beat $5.42 Bil Revenue Forecast

Earnings

ConocoPhillips (COP) on Tuesday reported fourth-quarter earnings excluding impairments, of a $200 million a loss or 19 cents per share, smaller than analysts’ expectations of 28 cents, according to Refinitiv IBES data. ConocoPhillips the fourth-quarter 2020 loss was $800 million, compared with fourth-quarter 2019 earnings of $700 million.

Revenue improved to $6.05 billion from $4.4 billion in the third quarter and $4 billion in the second. Revenues beat the Zacks Consensus Estimate by 15.33%. This compares to year-ago revenues of $8.14 billion. Annual revenue plunged by nearly half to $19.3 billion, down from $36.7 billion in 2019'

"There was nothing easy about 2020, but the lessons from the year served to strengthen our conviction that ConocoPhillips offers the right value proposition for this volatile business -- free cash flow generation, a strong balance sheet, commitment to differential returns of and on capital and ESG leadership,” CEO Ryan Lance said in a statement. “Despite the significant industry-wide downturn in 2020, we successfully delivered this value proposition and remain committed to it.”

Special items for the current quarter were primarily due to non-cash impairments related to the Alaska North Slope Gas asset and non-core assets in Lower 48, in addition to exploration-related expenses in other International, partially offset by an unrealized gain on Cenovus Energy equity.

Full-year 2020 earnings were a loss of $2.7 billion, compared with full-year 2019 earnings of $7.2 billion. Excluding special items, full-year 2020 adjusted earnings were a loss of $1.0 billion, compared with full-year 2019 adjusted earnings of $4.0 billion.

 

ConocoPhillips NYSE: $COP

Market Reaction Close: $40.94 ▲ 0.21 (+0.52%)

Highlights

“Demand recovery is taking longer, spare supply remains and inventories remain elevated,” Chief Executive Officer Ryan Lance said in a post-earnings call, adding that “it makes no sense to grow into this market environment”.

Quarter Production

  • Production excluding Libya for fourth-quarter 2020 was 1.14 MMboe/d, a decrease of 145,000 boe/d from the same period a year ago.
  • After adjusting for closed acquisitions and dispositions, fourth-quarter 2020 production decreased 88,000 boe/d or 7% from the same period a year ago.
  • This decrease was primarily due to normal field decline partially offset by new production from the Lower 48 and other development programs across the portfolio.
  • In the Lower 48, production averaged 395,000 boe/d including Eagle Ford of 183,000 boe/d, Bakken of 94,000 boe/d, and Permian of 88,000 boe/d.
  • At Montney, the first phase of development continued as drilling and completion operations progressed as planned, with the third pad on track to come online in the first quarter of 2021.
  • In Norway, in addition to achieving first oil at Tor II, the company made two significant discoveries with an estimated total resource of 125-390 MMboe.
  • In China, first oil was achieved at Bohai Phase 4A.

Full-year Production

Production excluding Libya for 2020 was 1.12 MMboe/d. After adjusting for closed acquisitions and dispositions as well as estimated curtailments of 80,000 boe/d, of which 55,000 boe/d were in the Lower 48, production for 2020 would have been 1.17 million boe/d. This represents a 15,000 boe/d decrease from 2019. Production from Libya averaged 9,000 boe/d in 2020 as operations remained in force majeure for most of the year.

ConocoPhillips' big three shale plays, Bakken, Eagle Ford, and Permian Basin were its key growth drivers in 2020.

Financials

The company generated $1.3 billion in disposition proceeds, funded $4.7 billion of capital expenditures and investments (including bolt-on acquisitions of $500 million) and paid dividends of $1.8 billion.

On Jan. 15, 2021, ConocoPhillips closed the acquisition of Concho.

2021 Capital Budget

The company has set a 2021 operating plan capital budget of $5.5 billion. This includes $5.1 billion to sustain current production and $400 million for investment in major projects, primarily in Alaska, in addition to ongoing exploration appraisal activity.

Conoco’s portfolio includes resource-rich North American tight oil and oil sands assets; lower-risk legacy assets in North America, Europe, Asia and Australia; various international developments; and an inventory of conventional and unconventional exploration prospects. $COP has reloaded portfolio depth in the Bakken and Eagle Ford, and with visibility on future growth from a sizable position in the Permian.

About ConocoPhillips

ConocoPhillips explores for, produces, transports and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG) and NGLs worldwide. Conoco’s portfolio includes resource rich North American tight oil and oil sands assets; lower-risk legacy assets in North America, Europe, Asia and Australia; various international developments; and an inventory of conventional and unconventional exploration prospects.

Source: ConocoPhillips

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