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) Demonstrates Strong Production and Financial Resilience

  • ConocoPhillips exceeded its production guidance with 2.39 million barrels of oil equivalent per day, showcasing robust operational performance.
  • The company reported adjusted earnings of $1.42 per share, despite a $1.5 billion working capital headwind, highlighting its financial resilience.
  • ConocoPhillips returned $2.2 billion to shareholders through share repurchases and dividends, emphasizing its commitment to shareholder value.

ConocoPhillips (NYSE:COP) is a major player in the energy sector, primarily involved in the exploration and production of oil and natural gas. The company operates globally, with significant activities in the Lower 48 states, Alaska, and international locations like Norway and Qatar. As of August 7, 2025, Leo Mariani from Roth Capital set a price target of $108 for COP, suggesting a potential upside of 16.57% from its current trading price of $92.65.

In its second-quarter 2025 earnings report, ConocoPhillips demonstrated strong production capabilities, achieving 2.39 million barrels of oil equivalent per day. This figure exceeded the upper end of their guidance, with the Lower 48 states contributing 1.51 million barrels per day. Alaskan and international operations, including turnarounds in Norway and Qatar, averaged 883,000 barrels per day. These production levels highlight the company's robust operational performance.

Despite facing a $1.5 billion working capital headwind, ConocoPhillips reported adjusted earnings of $1.42 per share. This performance underscores the company's ability to navigate financial challenges while maintaining profitability. Additionally, ConocoPhillips returned $2.2 billion to shareholders through $1.2 billion in share repurchases and $1 billion in dividends, totaling $4.7 billion in returns for the first half of 2025.

Capital expenditures for the quarter were $3.3 billion, showing a slight decrease from the previous quarter. This reduction in capital spending indicates a strategic approach to managing expenses while maintaining operational efficiency. The company also maintained cash and investments totaling $5.7 billion, reflecting a strong liquidity position.

Currently, COP's stock price is $92.60, reflecting a decrease of 0.51, or approximately -0.55% in percentage terms. The stock has traded between $91.18 and $95.14 today, with a 52-week high of $116.08 and a low of $79.88. With a market capitalization of approximately $116.9 billion and a trading volume of 9,314,972 shares on the NYSE, ConocoPhillips remains a significant player in the energy market.

ConocoPhillips (NYSE:COP) Maintains Strong Position in Oil and Gas Industry

ConocoPhillips (NYSE:COP) is a major player in the oil and gas industry, headquartered in Houston, Texas. The company is involved in the exploration, production, and marketing of crude oil, natural gas, and natural gas liquids. As a leading entity in the Zacks Oil and Gas - Integrated - United States industry, ConocoPhillips competes with other giants like ExxonMobil and Chevron.

On August 7, 2025, Roth Capital maintained its "Buy" rating for ConocoPhillips, with the stock priced at approximately $94.17. Roth Capital also adjusted its price target for COP, increasing it from $107 to $108. This decision aligns with the company's recent financial performance, as highlighted in its Q2 2025 earnings report.

ConocoPhillips reported an adjusted earnings per share of $1.42 for Q2 2025, surpassing the Zacks Consensus Estimate of $1.36. Despite this positive surprise of 4.41%, the earnings per share decreased from $1.98 in the same quarter last year. The company has consistently outperformed consensus EPS estimates over the past four quarters, demonstrating its resilience in a challenging market.

The company's total production increased to 2,391 thousand barrels of oil equivalent per day, with significant contributions from regions like Europe, the Middle East, and North Africa. However, realized oil equivalent prices fell to $45.77 per barrel from $56.56 a year ago. Despite weaker prices, ConocoPhillips' quarterly revenues rose to $14.7 billion, up from $14.1 billion last year, though slightly below the Zacks Consensus Estimate of $14.9 billion.

Currently, COP's stock price is $94.14, reflecting a 1.11% increase from the previous trading session. The stock has traded between $91.18 and $95.14 today, with a market capitalization of approximately $118.8 billion. Over the past year, COP has seen a high of $116.08 and a low of $79.88, indicating its volatility in the market.

ConocoPhillips Surpasses Q2 Estimates, Hikes Asset Sale Target After Marathon Integration

ConocoPhillips (NYSE:COP) reported second-quarter 2025 adjusted earnings of $1.42 per share, beating analyst expectations of $1.38, as the company advanced the integration of Marathon Oil (NYSE:MRO) and unveiled new cost-cutting measures.

The Houston-based energy firm generated $4.7 billion in cash from operations during the period. Production rose 23% year-over-year to 2,391 thousand barrels of oil equivalent per day (MBOED), up from 1,945 MBOED in the prior-year quarter.

However, average realized prices declined 19% to $45.77 per barrel of oil equivalent (BOE), down from $56.56 in Q2 2024.

CEO Ryan Lance said the company delivered “strong results financially, operationally, and strategically,” and confirmed the Marathon Oil integration is expected to generate over $1 billion in synergies and one-time benefits.

ConocoPhillips announced a $1.3 billion deal to divest its Anadarko Basin assets, with the transaction set to close in early Q4. The sale pushes total divestitures above its initial $2 billion target, prompting management to raise the goal to $5 billion by the end of 2026.

During the quarter, the company returned $2.2 billion to shareholders through $1.2 billion in buybacks and $1.0 billion in dividends. It declared a third-quarter dividend of $0.78 per share, payable on September 2, 2025.

Looking ahead, ConocoPhillips maintained its full-year production forecast of 2.35 to 2.37 MMBOED, and projected Q3 output between 2.33 and 2.37 MMBOED.

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.