ConocoPhillips (COP) on Q1 2021 Results - Earnings Call Transcript

Operator: Welcome to the First Quarter 2021 ConocoPhillips Earnings Conference Call. My name is Hilda, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note, that this conference is being recorded. Ellen DeSanctis: Thank you, Hilda. Hello, and welcome this morning to our listeners. I'll first introduce the members of our ConocoPhillips executive team who are on today's call. We have Ryan Lance, our Chairman and CEO; Bill Bullock, our Executive Vice President and Chief Financial Officer; Tim Leach, our Executive Vice President of Lower 48; Dominic Macklon, our SVP of Strategy & Technology; and Nick Olds, our SVP of Global Operations. Today, several of our executives will make prepared remarks, and then the team will take your questions. Before I turn the call over to Ryan, a few quick reminders. In conjunction with this morning's press release, we posted a short deck of supplemental material that includes first quarter highlights, earnings and cash flow summaries, operational highlights and updated sensitivities. We also announced this morning that ConocoPhillips will host a virtual market update on June 30th. So save that date, we will be providing details on that meeting shortly. In today's call, we will make some forward-looking statements based on current expectations. Actual results could differ due to the factors described in today's press release and in our periodic SEC filings. And finally, we'll also refer to some non-GAAP financial measures today. Reconciliations to the nearest corresponding GAAP measure can be found in this morning's press release and on our website. And with that, I'll turn the call over to Ryan. Ryan Lance: Thank you, Ellen. And welcome to all our call participants. It's a very busy but exciting time at ConocoPhillips. With the Concho transaction now closed, our entire workforce is on a mission to emerge from last year's extreme sector volatility and the transaction integration activities as the strongest competitor in our business. Reviewing 2021 as a catalyst moment like we did in 2016 to improve every aspect of our business and again, step out from the pack by taking our disciplined, shareholder-friendly value proposition to the next level. We're taking actions across every aspect of the company to improve our underlying drivers, and our first quarter results represent an early indication of our progress. Some of the actions we're taking are transformational such as capturing synergies, others are chipping away at core drivers to improve efficiency and returns, such as the debt reduction plans we announced this morning. Here's what everyone in our organization is focused on. First, we believe a safe company is a successful one. With the Concho transaction, we've combined two industry-recognized safety leaders, which has aided our overall integration. And again, I want to recognize our workforce for their exceptional handling of the many challenges presented by the Winter Storm Uri last quarter. Bill Bullock: Thanks, Ryan. Well, we're certainly off to a good start in 2021. In today's posted materials, there's a summary of highlights from the first quarter, and I'll cover just a few of those items. As we foreshadowed on our March 31 market update, the financial results reflected some one-time contra-related items. Adjusted for these known items, underlying financial performance was very strong. Adjusted earnings were $0.69 per share versus $0.45 per share in the first quarter last year. Production came in at the high end of the range, and all producing segments generated positive earnings in the quarter. As shown in the cash waterfall in the supplemental materials posted on our website, first quarter cash from operations was $2.1 billion and free cash flow was $0.9 billion. These figures include the cash flow impacts related to previously announced contra-related items, which reduced both CFO and free cash flow by about $1 billion. But even with the roughly $1 billion in one-time transaction-related impacts, our CFO of $2.1 billion very nearly covered capital, dividends and buybacks. We returned 46% of CFO to shareholders in the quarter in the form of our ordinary dividend and share repurchases. And we ended the quarter with $7.3 billion of cash and short-term investments. Tim Leach: Thanks, Bill. We're just a few months into the ConocoPhillips-Concho integration process. And like Ryan and our other leaders, I'm more excited now than ever to tell you about our vision for the company and a great progress we've already made. I'll do a quick recap of the Lower 48 from the first quarter, which was nothing short of historic, not only because of a fast-paced integration activity, but because of Winter Storm Uri. Overall, the storm impacted Lower 48 production by about 50,000 barrels a day for the quarter. However, facility damage from the storm was negligible, and we quickly resumed production in March. It was a heck of a test for our expanded Lower 48 region. They passed with flying colors. Total Lower 48 production for the quarter was 715,000 BOEs per day, which includes 405,000 in the Permian, 187,000 in the Eagle Ford and 86,000 in the Bakken. We exited the first quarter with 15 drilling rigs, 11 in the Permian and four in the Eagle Ford. And we had seven frac spreads, five in the Permian and two in the Eagle Ford. It doesn't get a lot of attention, but I also wanted to mention that during the quarter, we executed several innovative pilots across the Lower 48, including more than 40 twin frac wells, electrification of our frac spreads and additional V5 completions. The point is, while we're executing the base business, we're also combining the experience of both companies by conducting numerous tests that should yield future efficiency gains. My entire Lower 48 organization is excited about the role we can play in making ConocoPhillips, a company that can supply the cheapest, cleanest barrels to the market, successfully navigate the price cycles, achieve the highest level of execution efficiency and continue to lead the industry on the innovation front. From a size and scale perspective, our Lower 48 is clearly differentiated in the industry. With the acquisition of Concho, the Lower 48 grew to be about half of ConocoPhillips production and among the largest domestic producers. We have a high quality set of assets, with a low cost of supply resource base made up of core positions in the three premier tight oil basins in the world. Nick Olds: Thanks, Tim. While there's clearly a lot going on in our Lower 48 business, we believe ConocoPhillips has a significant advantage over our independent peers because we also have diverse global businesses that generate significant free cash flow. Today, our Alaska and International businesses comprise about 50% of our company's operated 1.5 million barrels per day production. I'll take this opportunity to recap some of the achievements from the first quarter and bring you up to speed on activities we have underway around the globe. So starting in Alaska, I'm pleased to report that Greater Mooses Tooth 2 project has made significant progress over the past several months, and facility and construction costs are about 10% below budget, as we finish our third and final construction season. The project is expected to be online by the end of this year at approximately 10,000 barrels a day, with peak production of 35,000 barrels a day that will leverage our existing Alpine infrastructure. We're also back to development drilling on the Slope. After suspending virtually all activity in 2020, we are restarting four rigs across our operated assets in Alaska. In the Western North Slope, we restarted drilling at CD5 and commissioning activities on the new extended reach drilling rig. The ERD rig will play a significant role in augmenting Alaska's base business, allowing us to drill wells in excess of 35, 000 feet, accessing low cost supply resources, while minimizing surface disturbance. So our base Alaska business is performing very well and we've built a strong momentum coming out of 2020. And of course, it's been an eventful quarter for Willow. Let me give you a quick update on where that project stands. We continue to progress the front-end engineering and design work, while at the same time taking actions to address the legal challenges that have been recently raised. The 600 million barrel oil discovery remains very competitive in our portfolio, but we won't take final investment decision or make significant long lead investments until the litigation risks have been resolved. Now moving to Canada. At Montney, we continue to optimize our development plans to incorporate the liquids-rich acreage we acquired from Kelt, mid last year. We're leveraging our Lower 48 unconventional resource expertise and reduced drilling costs by 25% over the first four pads. This part of our business doesn't get a lot of external attention yet, but it's worth noting, that's currently produced an approximately 30,000 barrels a day, of which 50% is liquids. We continue to be excited about our future in this premier 300,000 acre unconventional position. At Surmont, we continue to take actions to reduce costs, improve netbacks and reduce emissions, and we're seeing encouraging improvements on all three of these fronts. So in summary, Canada remains an important part of our business, with quite a lot of upside and learning curve opportunities. Now moving to our Europe, Middle East and North Africa segment. In Norway, we've made good progress on several projects, which benefit from the fiscal incentives implemented by the Norwegian government last year. We're nearing completion of Port 2 and are on track to make final investment decisions on both Tommeliten Alpha and Kobra East Gecko later this year, and work continues to assess our recent discoveries at Barca and Slagugle. In Qatar, our QG3 asset continues to deliver very strong performance and generate free cash flow and we continue to advance our evaluation of the North Field expansion opportunity. We're still very interested in participating in this project if it fits our financial framework. So we'll keep you posted as this plays out. Moving on into our Asia Pacific region. APLNG is running extremely well. Production continues to be strong, which when combined with ongoing focus on reducing capital, operating and financing costs has brought the cash breakeven down to $25 per barrel Brent. APLNG distributed almost $100 million to the company in the first quarter of 2021 and is expected to distribute about $200 million in the second quarter. Finally, in Malaysia, we have several low cost of supply, high margin bolt-on projects at various stages of development. The Malikai Phase 2 project achieved first oil in this year and SMP Phase 2 and Gumusut Phase 3 are on track for first oil in late 2021 and '22, respectively. So that's a brief update of our global operations. In summary, we have a lot of exciting work underway that will continue to enhance free cash flow generation. Now I'll turn it back to Ryan for some short closing comments. Ryan Lance: All right. Thanks, team. To wrap up, let me go back to how I started today's call. We're viewing 2021 as a catalyst as an opportunity to further own every part of the business and continue leading this sector the aspect of the company to improve and we're looking forward to sharing more on that and what that means for our shareholders when we get together with you again on June 30. So now with that, let's open it up to Q&A. Operator: Thank you.
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ConocoPhillips (NYSE:COP) Stock Analysis: A Deep Dive into Financial Performance and Market Position

  • Wells Fargo sets a price target of $117 for ConocoPhillips (NYSE:COP), indicating a potential 31.46% increase.
  • COP's stock experienced a 3.15% decline recently, contrasting with the broader market's gains, yet it has outperformed the Oils-Energy sector over the past month.
  • Despite a projected 28.79% year-over-year decline in earnings per share, quarterly revenue is expected to rise by 5.52% to $14.92 billion.

ConocoPhillips (NYSE:COP) is a major player in the oil and gas industry, focusing on exploration, production, and transportation of crude oil, natural gas, and natural gas liquids. As a leading energy company, it competes with other giants like ExxonMobil and Chevron. On June 26, 2025, Wells Fargo set a price target of $117 for COP, suggesting a potential 31.46% increase from its then-current price of $89.

Recently, COP's stock closed at $91.71, marking a 3.15% decline from its previous close. This drop contrasts with the broader market, where the S&P 500, Dow Jones, and Nasdaq all saw gains. Despite this, COP has shown resilience, with an 11.15% increase over the past month, outperforming the Oils-Energy sector's 6.67% gain and the S&P 500's 0.5% rise.

Investors are closely watching ConocoPhillips' upcoming earnings report. The company is expected to announce earnings of $1.41 per share, a 28.79% year-over-year decline. However, quarterly revenue is anticipated to rise by 5.52% to $14.92 billion, indicating strong sales performance despite the earnings drop.

For the full fiscal year, Zacks Consensus Estimates project earnings of $6.21 per share and total revenue of $62.36 billion. This outlook reflects the company's ability to maintain robust revenue streams, even as earnings face pressure. COP's market capitalization is approximately $113.1 billion, with a trading volume of 589,867 shares, highlighting its significant presence in the market.

Currently, COP's stock price is $89.60, with a daily fluctuation between $89.22 and $89.99. Over the past year, the stock has reached a high of $118.40 and a low of $79.88, showcasing its volatility. As investors consider Wells Fargo's price target, they weigh these fluctuations and the company's financial performance.

ConocoPhillips (NYSE:COP) Stock Update and Financial Outlook

ConocoPhillips (NYSE:COP) is a major player in the oil and gas industry, focusing on exploration, production, and transportation of petroleum products. The company competes with other energy giants like ExxonMobil and Chevron. On June 26, 2025, Wells Fargo maintained its "Overweight" rating for COP, with the stock priced at $89. They also raised the price target from $113 to $117.

Recently, COP's stock closed at $91.71, marking a 3.15% drop from its previous close, as highlighted by Zacks. This decline contrasts with the broader market, where the S&P 500, Dow Jones, and Nasdaq all saw gains. Despite this dip, COP has increased by 11.15% over the past month, outperforming the Oils-Energy sector's 6.67% gain and the S&P 500's 0.5% rise.

Investors are eagerly awaiting COP's upcoming earnings report. The company is expected to announce earnings of $1.41 per share, indicating a 28.79% year-over-year decline. However, quarterly revenue is projected to rise by 5.52% to $14.92 billion. For the full fiscal year, earnings are forecasted at $6.21 per share, with total revenue of $62.36 billion.

Currently, COP's stock is priced at $89, reflecting a slight decrease of 0.44%. The stock has traded between $88.80 and $90.02 today. Over the past year, COP has seen a high of $118.40 and a low of $79.88. The company has a market capitalization of approximately $112.35 billion, with a trading volume of 6,374,190 shares today.

ConocoPhillips Beats Q1 Estimates, Lowers Full-Year Spending Forecasts

ConocoPhillips (NYSE:COP) delivered first-quarter earnings that topped Wall Street expectations and trimmed its full-year spending plans, signaling strong operational discipline in the face of ongoing market volatility. Shares rose 5% intra-day today following the announcement.

The company reported adjusted earnings per share of $2.09, beating the consensus estimate of $1.98 and marking a modest increase from $2.03 in the same period a year ago.

In a move welcomed by investors, ConocoPhillips lowered its full-year 2025 capital expenditures guidance to a range of $12.3 billion to $12.6 billion, down from an earlier forecast of approximately $12.9 billion. The company also cut its expected adjusted operating costs for the year to $10.7 billion–$10.9 billion, from the prior $10.9 billion–$11.1 billion range.

CEO Ryan Lance emphasized the company’s consistent execution and capital discipline, noting that its diversified asset portfolio and solid balance sheet position it well to navigate a shifting macroeconomic environment while maintaining shareholder returns.

ConocoPhillips Beats Q1 Estimates, Lowers Full-Year Spending Forecasts

ConocoPhillips (NYSE:COP) delivered first-quarter earnings that topped Wall Street expectations and trimmed its full-year spending plans, signaling strong operational discipline in the face of ongoing market volatility. Shares rose 5% intra-day today following the announcement.

The company reported adjusted earnings per share of $2.09, beating the consensus estimate of $1.98 and marking a modest increase from $2.03 in the same period a year ago.

In a move welcomed by investors, ConocoPhillips lowered its full-year 2025 capital expenditures guidance to a range of $12.3 billion to $12.6 billion, down from an earlier forecast of approximately $12.9 billion. The company also cut its expected adjusted operating costs for the year to $10.7 billion–$10.9 billion, from the prior $10.9 billion–$11.1 billion range.

CEO Ryan Lance emphasized the company’s consistent execution and capital discipline, noting that its diversified asset portfolio and solid balance sheet position it well to navigate a shifting macroeconomic environment while maintaining shareholder returns.

ConocoPhillips (NYSE:COP) Surpasses Earnings Estimates

  • Earnings per share (EPS) of $1.78 exceeded the estimated $1.64, showcasing the company's ability to outperform market expectations.
  • Despite a year-over-year decline in EPS, shares rose by 2.8% in premarket trading due to a strong production outlook.
  • Financial health indicators such as a debt-to-equity ratio of 0.37 and a current ratio of 1.33 highlight ConocoPhillips' stability.

ConocoPhillips (NYSE:COP) is a major player in the oil and gas industry, known for its exploration and production activities. The company operates globally, focusing on the extraction of crude oil, natural gas, and natural gas liquids. ConocoPhillips competes with other energy giants like ExxonMobil and Chevron, striving to maintain its position in a volatile market.

On October 31, 2024, ConocoPhillips reported earnings per share (EPS) of $1.78, exceeding the estimated $1.64. This performance also surpassed the Zacks Consensus Estimate of $1.68 per share, as highlighted by Zacks. However, the EPS decreased from $2.16 per share in the previous year, indicating a decline in profitability year-over-year.

Despite the revenue of $13.6 billion falling short of the estimated $13.97 billion, ConocoPhillips shares rose by 2.8% in premarket trading. This increase was driven by the company's strong production outlook, which bolstered investor confidence. The boost in profits was attributed to increased production levels, as reported by Wall Street.

ConocoPhillips' financial metrics provide insight into its market valuation. The company has a price-to-earnings (P/E) ratio of 11.8, reflecting how the market values its earnings. The price-to-sales ratio is 2.22, and the enterprise value to sales ratio is 2.47, indicating the market's valuation of its revenue and total value compared to sales.

The company's financial health is further illustrated by its debt-to-equity ratio of 0.37, showing a moderate level of debt. The current ratio of 1.33 suggests ConocoPhillips can cover its short-term liabilities with its short-term assets. Additionally, the earnings yield of 8.48% represents the return on investment for shareholders, providing a positive outlook for investors.

ConocoPhillips (NYSE:COP) Surpasses Earnings Estimates

  • Earnings per share (EPS) of $1.78 exceeded the estimated $1.64, showcasing the company's ability to outperform market expectations.
  • Despite a year-over-year decline in EPS, shares rose by 2.8% in premarket trading due to a strong production outlook.
  • Financial health indicators such as a debt-to-equity ratio of 0.37 and a current ratio of 1.33 highlight ConocoPhillips' stability.

ConocoPhillips (NYSE:COP) is a major player in the oil and gas industry, known for its exploration and production activities. The company operates globally, focusing on the extraction of crude oil, natural gas, and natural gas liquids. ConocoPhillips competes with other energy giants like ExxonMobil and Chevron, striving to maintain its position in a volatile market.

On October 31, 2024, ConocoPhillips reported earnings per share (EPS) of $1.78, exceeding the estimated $1.64. This performance also surpassed the Zacks Consensus Estimate of $1.68 per share, as highlighted by Zacks. However, the EPS decreased from $2.16 per share in the previous year, indicating a decline in profitability year-over-year.

Despite the revenue of $13.6 billion falling short of the estimated $13.97 billion, ConocoPhillips shares rose by 2.8% in premarket trading. This increase was driven by the company's strong production outlook, which bolstered investor confidence. The boost in profits was attributed to increased production levels, as reported by Wall Street.

ConocoPhillips' financial metrics provide insight into its market valuation. The company has a price-to-earnings (P/E) ratio of 11.8, reflecting how the market values its earnings. The price-to-sales ratio is 2.22, and the enterprise value to sales ratio is 2.47, indicating the market's valuation of its revenue and total value compared to sales.

The company's financial health is further illustrated by its debt-to-equity ratio of 0.37, showing a moderate level of debt. The current ratio of 1.33 suggests ConocoPhillips can cover its short-term liabilities with its short-term assets. Additionally, the earnings yield of 8.48% represents the return on investment for shareholders, providing a positive outlook for investors.

ConocoPhillips Receives Bullish Price Target from Mizuho Securities

  • Nitin Kumar of Mizuho Securities has updated the price target for ConocoPhillips to $132, indicating a potential upside of 17.57%.
  • The company's strategic acquisition of Marathon Oil (MRO) aims to bolster its market position and financial strength.
  • Despite recent stock price volatility, ConocoPhillips' strategic initiatives and financial metrics support a positive outlook.

Nitin Kumar of Mizuho Securities has recently updated the price target for ConocoPhillips (NYSE:COP) to $132, indicating a significant potential upside of 17.57% from its current trading price of $112.27. This new target, as covered by StreetInsider, suggests a bullish outlook on COP's future market performance. ConocoPhillips, a leading player in the U.S. oil and gas industry, has been making strategic moves to bolster its market position and financial strength, which could be driving the positive assessment from Mizuho Securities.

One of the key strategic initiatives undertaken by ConocoPhillips is its agreement to acquire Marathon Oil (MRO) in an all-stock transaction valued at $22.5 billion, including $5.4 billion in debt. This acquisition is a significant step in the ongoing consolidation of the oil and gas sector in the United States, aiming to create a more competitive and financially robust entity. The move is expected to enhance ConocoPhillips' market share and operational efficiencies, potentially contributing to the optimistic price target set by Mizuho Securities.

Despite the positive outlook from analysts, ConocoPhillips' stock has seen a decline of $1.6, or -1.41%, with its price currently at $112.27. The stock has experienced fluctuations, trading between a low of $111.299 and a high of $113 during the session. Over the past year, the shares have hit a high of $135.18 and a low of $99.35, reflecting the volatile nature of the oil and gas market. The company's market capitalization stands at approximately $130.72 billion, with a trading volume of about 6.02 million shares.

The acquisition of Marathon Oil represents a strategic move by ConocoPhillips to strengthen its position in a competitive industry. By consolidating its operations and expanding its asset base, ConocoPhillips aims to achieve greater economies of scale and operational efficiencies. This strategic direction, coupled with the company's financial metrics and market performance, likely contributes to the positive valuation of Mizuho Securities.

Overall, the adjustment in ConocoPhillips' price target by Mizuho Securities reflects an optimistic view of the company's growth prospects, underpinned by strategic acquisitions and market consolidation efforts. Despite recent stock price volatility, the company's strategic moves and financial strength position it well for future growth, aligning with the analyst's bullish outlook.