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ConocoPhillips Hits Record Output but Sees Profit Fall

by Jov Onsat|Rigzone Staff|Monday, August 07, 2023

Weaker oil and gas prices dragged down second quarter net income for ConocoPhillips Co. but the USA producer nonetheless plans to sustain record production through the rest of 2023.

The Texas state-based company pocketed $2.232 billion in net earnings for the April-June quarter, apparently with no impact from extraordinary or non-recurring items, according to its filing with the Securities and Exchange Commission (SEC). That was down by $688 million against the prior three-month period.

As with its multinational peers, the slump in the second quarter becomes steeper when compared to April-June 2022. USA-based rivals Chevron Corp. fell $5.707 billion year on year to $6.008 billion, Exxon Mobil Corp. shed $9.97 billion to $7.88 billion and Occidental Petroleum Corp. slumped $2.895 billion to $860 million.

The trend reflects an apparent normalization in fossil fuel prices, which hit record highs following Russia's invasion of Ukraine February 2022. International petroleum benchmark Brent peaked last year in the month of June at $122.71 a barrel on a monthly average. But June 2023 was the weakest month for Brent in the last 13 months at an average of $74.84 per barrel, according to data from the USA Energy Information Administration (EIA). The West Texas Intermediate (WTI), another global standard for crude spot pricing, also peaked June in the year 2022 at $114.84 per barrel before plummeting to a 13-month low of $70.25 June 2023, based on the EIA bulletin.

The international natural gas benchmark Henry Hub plunged from last year's peak of $8.81 per British thermal unit (Btu) in the month of August to $2.18 per Btu June 2023. The Louisiana state-based distribution center changed only by cents on a monthly average during the second quarter of 2023, according to the same database.

Annual average prices for the North Sea-based Brent and the WTI in 2022 were the highest since 2014, according to the EIA data. That of the Henry Hub was the highest since 2009, the EIA figures show.

ConocoPhillips' total average realized price in the second quarter of 2023 dropped to $54.5 per barrel of oil equivalent (boe) from $88.57 in the 2022 second quarter, according to the SEC disclosure.

The weaker prices offset higher output, which also resulted in higher operating expenses. ConocoPhillips achieved its biggest ever production during the 2023 second quarter at 1.805 million boe per day (MMboepd). That was driven by the Lower 48 (the USA states excluding Alaska and Hawaii), with this region also recording its highest output during the quarter at 1.063 MMboepd. Besides the USA contributing wells were in Australia, Canada, China, Libya, Malaysia, Norway and Qatar.

ConocoPhillips, which also does business in exploration, generated $9.257 billion in cash from operating activities in the second quarter of 2023. It had $5.735 billion in cash and cash equivalents as of the end of the quarter. Short-term debt stood at $879 million.

ConocoPhillips declared $0.51 in ordinary dividend plus $0.6 in variable return of cash (VROC) per common share for the second quarter, compared to the company's net profit of $1.84 per common stock. "We returned $1.3 billion to shareholders through share repurchases and $1.4 billion through our ordinary dividend and a VROC", it said in the filing, maintaining full-year shareholder returns at $11 billion.

"We re-invested $2.9 billion into the business in the form of capital expenditures and investments during the second quarter of 2023, with over half of the expenditures related to flexible, short-cycle unconventional plays in the Lower 48 segment, where our production has access to both domestic and export markets", ConocoPhillips added.

It plans to spend up to $11.2 billion in operating capital for the full year, up from $10.2 billion invested into operations last year.

"Third-quarter 2023 production is expected to be 1.78 to 1.82 million barrels of oil equivalent per day", ConocoPhillips said. "Full-year production is now expected to be 1.80 to 1.81 MMBOED, as compared to prior guidance of 1.78 to 1.80 MMBOED."

Chair and chief executive Ryan Lance said in a statement, "Looking ahead, we remain constructive on the second half of the year as well as the long-term outlook for the sector".

"By continuing to enhance our deep, durable and diversified asset base, we are well positioned to generate competitive cash flow and returns for decades", Lance added.

Conoco To Box Suncor Out Of Oil Sands Deal
By Julianne Geiger - May 26, 2023,

> ConocoPhillips will snap up TotalEnergies' 50% stake in the Surmont oil sands field.
> The deal keeps Suncor from buying into the project.
> ConocoPhillips said on Friday that it will purchase the assets for $3 billion and up to $325 million in contingent payments.

ConocoPhillips will snap up TotalEnergies' 50% stake in the Surmont oil sands field for more than $3 billion in a move that will prevent Suncor Energy from buying into the project.

"We look forward to leveraging our position as 100 per cent owner and operator of Surmont to further optimize the asset while progressing toward our overall interim and long-term emissions intensity objectives," ConocoPhillips CEO Ryan Lance said in a Friday statement.
ConocoPhillips said on Friday that it will purchase the assets for $3 billion and up to $325 million in contingent payments on a deal expected to close in the second half of 2023.
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ConocoPhillips lance un projet pilote de réduction du torchage de gaz grâce au minage de bitcoins

Agence Ecofin 17 fev 2022

Le minage de bitcoins est une activité énergétivore. Une aubaine pour certaines compagnies pétrolières qui peuvent, grâce à cette opération, limiter leurs émissions de CO2 tout générant des revenus.

Le producteur de pétrole et de gaz naturel ConocoPhillips a lancé à Bakken, dans le Dakota du Nord, une opération consistant à récupérer du gaz destiné au torchage et à le réinjecter dans une plateforme de minage de bitcoins (BTC). Une activité gourmande en énergie qui consiste à vérifier la validité d’un ensemble de transactions liées à la monnaie électronique.

Il s’agit d’un projet expérimental à travers lequel la société compte limiter non seulement les pertes liées au torchage du gaz, mais aussi les émissions de CO2 qu’elle génère. Le gaz est vendu à une entreprise de minage de BTC qui l’utilise pour couvrir ses besoins énergétiques. En pratique, le gaz, qui est habituellement brûlé par torchage, est utilisé pour alimenter les équipements d’extraction de la cryptomonnaie installés à proximité d’un puits de pétrole.

Le mécanisme a été expérimenté pour la première fois en 2021, aux Etats-Unis et depuis, de plus en plus d’entreprises du secteur se disent intéressées. Cela constituera une façon pour elles de réduire leur impact environnemental dans un contexte d’efforts à l’échelle mondiale pour limiter les effets du changement climatique.

Selon les déclarations d’un représentant du géant pétrolier qui s’est exprimé sur les conséquences environnementales du torchage du gaz, la vision de ConocoPhillips en s’engageant dans le projet est d’éliminer, d’ici 2030, le torchage systématique du gaz.

D’après le rapport « Gas Flaring-Thematic Research » publié en 2021 par la firme britannique d’analyse et de conseils GlobalData, le torchage du gaz naturel fait perdre environ 82 milliards de dollars aux pays producteurs de pétrole, chaque année.

ConocoPhillips Posts Highest Profit Since 2018

by Bloomberg|Kevin Crowley|Tuesday, August 03, 2021

ConocoPhillips beat estimates as rising commodity prices led America’s biggest independent oil producer to the highest profit in nearly three years.

Conoco posted adjusted earnings of $1.27 a share in the second quarter, compared with the $1.13 estimate in a Bloomberg survey of analysts. The stock rose 1.9% in pre-market trading.

U.S. energy companies are using buybacks and dividends to attract investors to the sector after years of poor performance left it making up just 2.6% of the S&P 500, down from more than 12% a decade ago. Conoco became one of the first large energy companies to increase shareholder returns in response to high commodity prices when it lifted its share buyback by two thirds to $2.5 billion a year in June.

As such there was little expectation the company would further increase cash returns.

This “is a defining moment for the sector,” Chief Executive Officer Ryan Lance said in the statement. “ConocoPhillips uniquely meets this moment with a credible multiyear plan, continued strong execution.”

Lance has been lowering capital spending and slowing production growth as part of a pledge to reinvest only half of its cash flow in new drilling and return the rest to shareholders. The promise underscores how U.S. oil producers are maintaining production discipline and are unlikely to go back to high growth rates seen in the past.

A key question is what Conoco executives plan to do with the company’s cash pile worth about $7 billion. The company is said to be among several suitors for Royal Dutch Shell Plc’s Permian Basin assets, worth as much as $10 billion, people familiar with the matter said last month. The U.S. shale patch has become a hotbed of merger activity this year, and Conoco secured the biggest deal to date with the $13 billion stock purchase of Concho Resources Inc.

The company will hold a call discussing earnings results at noon New York time.

Pétrole de schiste : le groupe américain ConocoPhillips veut racheter son concurrent Concho pour 9,7 milliards de dollars

AFP parue le 19 oct. 2020

Le groupe américain ConocoPhillips a annoncé lundi son intention de racheter son concurrent Concho Resources, spécialisé dans l'exploitation du pétrole de schiste, pour 9,7 milliards de dollars, nouveau signe de consolidation dans un secteur secoué par la pandémie.

Ensemble, les deux sociétés produiront plus de 1,5 million de barils par jour et deviendront un acteur de poids dans le bassin permien, une zone à cheval entre le Texas et le Nouveau Mexique riche en hydrocarbures de schiste. Les producteurs de pétrole sont fragilisés depuis plusieurs mois par le ralentissement soudain de l'économie mondiale, le plongeon de la demande en énergie au pic des mesures de restrictions imposées pour freiner la propagation du Covid-19 et la chute des prix qui en a découlé.

Même si le cours du baril s'est stabilisé autour de 40 dollars au troisième trimestre, cela reste inférieur au niveau de rentabilité pour une grande partie de la production d'or noir.

De nombreuses entreprises du secteur, qui avaient beaucoup emprunté pour croître ces dernières années, sont dans le rouge. Plusieurs d'entre elles ont déjà déposé le bilan quand d'autres se sont rapprochées, Chevron rachetant par exemple en juillet pour 5 milliards de dollars le producteur de pétrole et de gaz naturel Noble tandis que Devon Energy a acquis WPX Energy en septembre.

Selon les termes de l'accord, approuvé par les conseils d'administration des deux sociétés, les actionnaires de Concho recevront pour chaque titre 1,46 action de ConocoPhillips. Cela représente une prime de 15% par rapport au cours de clôture du 13 octobre, avant la diffusion de premières informations sur l'accord.

Les deux groupes disposent au total d'environ 23 milliards de barils en réserve à un coût inférieur à 40 dollars l'unité. Ils espèrent pouvoir faire des économies de l'ordre de 500 millions de dollars par an d'ici 2022.

Avec cette opération, ConocoPhillips parvient presque à rattraper ExxonMobil dans le bassin permien en matière de production, remarque Robert Clarke, analyste chez Wood Mackenzie. "Concho a procédé à de nombreuses acquisitions dans la région et apporte une grande connaissance sur la production" dans la région, a-t-il souligné.

ConocoPhillips de son côté a développé une réelle expertise dans l'exploitation du schiste, ce qui lui a notamment permis de faire baisser les coûts dans ses projets situés dans les bassins de Bakken (nord des États-Unis) et d'Eagle Ford (sud du pays), a ajouté le spécialiste.

October 14, 2020 Bloomberg

ConocoPhillips is in talks to acquire rival Concho Resources Inc., according to people familiar with the matter, as one of America’s largest independent oil explorers looks to make a bold bet on shale during an historic industry downturn.

The companies may announce a deal in the next few weeks, said the people, who asked to not be identified because the matter isn’t public. No final decision has been made and talks could fall through.

Representatives for Conoco and Concho didn’t immediately respond to requests for comment. Concho shares fell 1.3% in New York Tuesday, closing at $44.14 and giving the Midland, Texas-based company a market value of about $8.7 billion. Conoco was down 2% at $34.88, with a market value of about $37 billion.

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ConocoPhilips: Oil Demand Will Return And Grow

By Julianne Geiger - Sep 24, 2020

ConocoPhillips is the latest to issue forward-looking statements regarding the global oil demand forecast, stating that global oil demand would indeed return to 100 million barrels per day—and keep growing from there, according to Reuters.

Next year, however, ConocoPhillips expects “quite a bit of uncertainty next year,” according to Senior Vice President Dominic Macklon, who was answering questions with Raymond James.

This projection on global oil demand is different than BP’s, who sees the coronavirus pandemic having a long-term effect on oil demand, compounded by climate concerns, and that oil demand may never again recover to those seen in 2019.


It is, however, in line with Gazprom Neft’s projections, which sees full oil demand recovery by the end of next year. Russian Energy Minister Alexander Novak had an even rosier outlook, seeing oil demand recovering fully by the second quarter of next year.

OPEC and the International Energy Agency (IEA), however, have more pessimistic views of global oil demand, with both stating that they do not expect that global oil demand will ever fully recover from being crushed by the coronavirus pandemic.

“The path ahead is treacherous,” the IEA said in its latest oulook, adding that the market outlook was “even more fragile” than expected.


Macklon sees U.S. shale output falling by 4 million barrels per day in 2022.

For Conoco specifically, it sees next year’s capital spending as below what it had planned to spend this year, which was $6.6 billion.

Conoco has not joined its peers in laying off staff, but it had halted all fracking crews amid the pandemic. It is in the process of returning two of those fracking crews back into the field, Macklon has said.

ConocoPhillips to Add Canada Acreage in $375MM Deal

by Matthew V. Veazey|Rigzone StaffThursday, July 23, 2020

ConocoPhillips reported Wednesday that it has agreed to acquire acreage in the Montney formation in Western Canada from Kelt Exploration Ltd.

Under the terms of deal, ConocoPhillips will pay Kelt approximately $375 million before customary adjustments and assume approximately $30 million in financing obligations for associated partially owned infrastructure. In return, ConocoPhillips noted in a written statement that it will add 140,000 net acres in the liquids-rich Inga-Fireweed asset Montney zone directly adjacent to its existing Montney position.

“We have tracked and analyzed this adjacent acreage position for a long time,” remarked Matt Fox, executive vice president and chief operating officer with ConocoPhillips. “It represents a high-value extension of our existing Montney position, and we’re pleased to capture this opportunity at an attractive cost of supply that meets our criteria for resource additions.”

According to ConocoPhillips, the transaction:

Adds more than 1 billion barrels of oil equivalent (boe) of high-value resource with an all-in mid-$30s (West Texas Intermediate (WTI) basis) cost of supply
Reflects an approximate acquisition cost ranging from $2 to $4 per barrel on a WTI cost of supply basis.
Boosts exposure to the core of the liquids-rich Montney acreage
Adds an asset with associated production of approximately 15,000 boe per day
Adds more than 1,000 high-quality well locations
Increases scale, driving supply chain and offtake improvements
Assumes no incremental capital investments in the Montney in the next several years.

ConocoPhillips added that it expects the transaction, which is subject to regulatory approval, to close during the third quarter of this year. The company also stated the deal’s effective date is July 1, 2020.

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ConocoPhillips : résultats mitigés

Jean-Noël Legalland, publié le 04/02/2020
(Boursier.com)

ConocoPhillips a annoncé pour son quatrième trimestre fiscal un bénéfice net en déclin à 700 millions de dollars soit 65 cents par action, contre 1,9 milliard de dollars et 1,61$ par titre un an auparavant. Le géant pétrolier américain a réalisé un bénéfice trimestriel ajusté par action de 76 cents, contre 1,13$ un an plus tôt et 80 cents de consensus. La production hors Libye a reculé d'environ 2% en glissement annuel à 1,289 million de barils équivalent pétrole par jour.

Pour l'exercice 2020, ConocoPhillips table sur des dépenses de capitaux allant de 6,5 milliards de dollars à 6,7 milliards de dollars. La guidance en termes de production est située entre 1,23 et 1,27 million de barils équivalent pétrole par jour. Le groupe renforce enfin de 10 milliards de dollars son programme de rachat d'actions, à 25 milliards de dollars.

CONOCOPHILLIPS cède ses actifs dans l'ouest australien pour 1,39 milliard de dollars

PUBLIÉ LE 14/10/2019

ConocoPhillips a conclu un accord en vue de céder ses actifs dans l'ouest de l'Australie à son partenaire australien Santos pour 1,39 milliard de dollars. La compagnie pétrolière américaine pourra recevoir 75 millions de dollars supplémentaires si la décision de développer le projet gazier offshore de Barossa était prise.

Le géant américain ConocoPhillips vend son activité en mer du Nord à Chrysaor pour 2,7 milliards de dollars

AFP parue le 18 avr. 2019

Le géant pétrolier américain ConocoPhillips va vendre à l'entreprise Chrysaor son activité d'exploration et de production en mer du Nord britannique pour 2,7 milliards de dollars, ont annoncé les deux sociétés jeudi.

Le groupe basé à Houston, au Texas, a expliqué dans un communiqué qu'il ne garderait au Royaume-Uni que des activités commerciales et une part de 40% dans un terminal pétrolier.

Le PDG de ConocoPhillips, Ryan Lance, a rappelé que le géant était présent dans la région depuis plus de 50 ans. Il a expliqué ce retrait "par un souci d'affûter notre portefeuille dans le but de concentrer nos investissements sur des productions à bas coût".

Le bassin de la mer du Nord est mature et les exploitants y sont parfois confrontés à des coûts de production relativement élevés, même si un certain nombre d'investissements ciblés de diverses entreprises du secteur lui ont donné un nouvel élan dernièrement.

Les actifs concernés par cette transaction assurent la production d'environ 72 000 barils équivalent pétrole par jour (bep/j). En les intégrant, Chrysaor a expliqué, dans un communiqué distinct, que sa production totale allait passer à quelque 180 000 bep/j.

Basée à Londres, Chrysaor est une société non cotée fondée en 2007 et qui a pris de l'ampleur en 2017 en rachetant les participations de la major anglo-néerlandaise Shell dans une dizaine de champs d'hydrocarbures de mer du Nord britannique pour quelque 3 milliards de dollars.

Avec cette nouvelle acquisition annoncée jeudi, Chrysaor va devenir l'un des tout premiers producteurs d'hydrocarbures dans cette région. Les actifs achetés comprennent notamment des participations dans deux projets d'exploitation qui ont démarré récemment dans la zone centrale de la mer du Nord britannique - Britannia et J-Block.

Parmi les propriétés acquises figure aussi une participation de 7,5% dans le vaste champ Clair situé à l'ouest des îles Shetland au large de l'Ecosse et exploité par la major britannique BP.

"Ces actifs complètent nos exploitations actuelles. Avec des coûts opérationnels inférieurs à 15 dollars le baril pour l'ensemble de notre entreprise, nous disposons d'un portefeuille doté de marges élevées", s'est félicité le directeur général de Chrysaor, Phil Kirk.

Soumise à l'approbation des autorités de régulation, la transaction devrait être bouclée à la fin 2019. Ceci fait, elle sera mise en place avec un effet rétroactif à compter du 1er janvier 2018.

ConocoPhillips Pursues More Growth Opportunities As Production Rises

January 31, 2019

With a capital budget of $6.1 billion and plans to grow production between 5% and 10% this year, ConocoPhillips (NYSE: COP) is pursuing several projects that could add low-cost supply resource, strengthen its portfolio and create future optionality, the company’s CEO said.

Speaking to analysts on an earnings call Jan. 31, ConocoPhillips CEO Ryan Lance shared insight on some of what he called “potentially impactful operating milestones.” These include advanced construction at the company’s Greater Moose Tooth (GMT) 2 project in Alaska, where exploration and appraisal drilling is underway, and a 14-well pad program taking place in Canada’s Montney play.

In the Lower 48 Big 3—Eagle Ford, Bakken and Permian Basin—ConocoPhillips plans to grow production by about 19% this year.
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Total production, excluding Libya, was 1.31 million boe/d, up 94,000 boe/d, in the fourth quarter. Leading the pack was production from the company’s Lower 48 assets, where oil production rose to 262 million barrels per day and gas production increased to 616 million cubic feet per day.
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ConocoPhillips expects to produce between 1.29 million boe/d and 1.33 million boe/d in first-quarter 2019, with full-year 2019 production—excluding Libya—between 1.3 million boe/d and 1.35 million boe/d.
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This Supermajor Is Leading The Energy Sector

By Irina Slav - Dec 30, 2018

ConocoPhillips is the best-performing energy stock on the S&P 500 Energy Index this year. The news is all the more impressive because it is the only stock with a positive performance on the index in the year to date, Bloomberg reported this week, adding that the S&P 500 Energy Index has itself booked a 25-percent slide since the beginning of 2018, on track to finish with the worst annual performance since the 2008 crisis. Conoco clearly stands out.

In fact, the supermajor has been standing out in the oil crowd for a while now. Earlier this year, when the company announced it would be parting with some of its acreage in the Permian and South Texas, some were confused: wasn’t everyone flocking to the Permian? But Conoco made it clear it’s not an “at all costs” situation for it. The company offloaded some non-core assets worth US$250 million to focus on its priorities, among them higher shareholder returns and a focus on higher-return projects.

As of April this year, Conoco’s average sustaining cost per barrel was US$40. At the start of February, the company announced it will lift the 2018 dividend by 7.5 percent and buy back shares worth US$2 billion, despite booking a loss for 2017. During that year, Conoco also paid down US$7.6 billion in debt and bought back US$3 billion in shares. Besides, it reported a 200-percent organic reserve base replacement rate.

With such a track record after the 2014 price meltdown, what’s not to love about Conoco? The strategy it is using to recover from the crisis is what other supermajors are using, too: raise dividends, buy back shares issued in the heat of the crisis, pay down debt. However, it’s booking better results than the other supermajors.

Earlier this year, after it announced the Permian and South Texas asset sale, Conoco also said it will be divesting its business in the UK section of the North Sea. The price tag for the assets was an impressive one: US$3 billion for fields producing a total 67,000 bpd of oil equivalent as of the third quarter of this year and infrastructure. The supermajor is in exclusive talks with Ineos for the assets.

Conoco also pursued Venezuela’s PDVSA aggressively to enforce a court ruling awarding the supermajor with a US$2-billion compensation for the forced nationalization of its operations in Venezuela by the Chavez government. Conoco seized PDVSA assets in the Caribbean, which eventually forced the state-owned company to negotiate a payment schedule. This victory in a long-running dispute cannot have passed investors by.

The latest in the good news department for Conoco shareholders was the announcement of the 2019 budget, which revealed the company is rather upbeat about the future despite the recent slide in international oil prices. Conoco said it planned to pay shareholders more than 30 percent of cash from operations and buy back another US$3 billion worth of shares. It also said it would achieve free cash flow generation at oil prices of US$40 a barrel for West Texas Intermediate.

Conoco is not inventing the wheel. The company is using tactics that would make the most sense in a hypervolatile oil price environment. And these tactics are working better than they are working for its peers.

By Irina Slav for Oilprice.com

ConocoPhillips creuse ses pertes, abaisse son dividende

Publié le 04 février 2016,

ConocoPhillips a fortement creusé ses pertes au cours du quatrième trimestre 2015, sous le coup de charges de dépréciation, la chute des cours du brut pesant sur les performances de la société pétrolière et gazière américaine, qui a également annoncé jeudi une baisse de son dividende trimestriel.

Ce dernier est ainsi ramené à 0,25 dollar par action contre 0,74 dollar précédemment.

Comme d'autres acteurs du secteur, ConocoPhillips va réduire ses investissements cette année, retenant une enveloppe de 6,4 milliards de dollars (5,7 milliards d'euros) contre 7,7 milliards en 2015.

La perte nette du groupe s'est établie à 3,5 milliards de dollars, soit 2,78 dollars par action, contre -39 millions (-0,03 dollar/action) il y a un an.

Hors éléments exceptionnels, la perte nette par action est de 0,90 dollar, alors que les analystes financiers avaient anticipé -0,65 dollar, selon le consensus Thomson Reuters I/B/E/S.