First Quarter ConocoPhillips (COP) Earnings Beat Oil Price Rise – May 5, 2022

Conoco Phillips (COP Free Report) reported adjusted earnings per share of $3.27 for the first quarter of 2022, beating Zacks’ consensus estimate of $3.24. In addition, net income improved significantly from 69 cents per share in the prior year quarter.

One of the world’s largest independent oil and gas producers based in Houston, TX, ConocoPhillips’ quarterly revenue of $19,291 million increased from first-quarter 2021 sales of $10,559 million. Additionally, the top line beat Zacks’ consensus estimate of $16,446 million.

Strong quarterly results were aided by higher oil-equivalent production volumes and realized commodity prices.

Along with the quarterly results, ConocoPhillips announced a variable return cash (VROC) payout of 70 cents per share in the third quarter. This reflects an increase of more than 130% from the second quarter VROC.

Production

Total production averaged 1,747,000 barrels of oil equivalent per day (MBoe/d), up from 1,527 Mboe/d in the prior year quarter. Of the total production, 52.4% was crude oil. Overall production was higher than a year ago, primarily due to significantly increased production in the Lower 48.

ConocoPhillips crude oil production was 915,000 barrels per day (MBbls/d), up from 818 MBbls/d in the prior year quarter. Natural gas production was 3,253 million cubic feet per day (MMcf/d), higher than a year ago level of 3,155 MMcf/d. ConocoPhillips natural gas liquids production was 223 MBbl/d, up from 113 MBbl/d a year earlier. Still, bitumen production for the quarter was recorded at 67 MBbls/d, lower than the first quarter 2021 figure of 70 MBbls/d.

Realized Prices

Average realized oil equivalent prices reached $76.99 a barrel, compared to $45.36 a year ago.

The average realized crude oil price for the first quarter was $94.82 per barrel, reflecting a significant increase from the realization of $57.22 a year ago. The realized price for natural gas liquids was $41.80 per barrel, up from $26.44 in the prior year quarter. The average realized natural gas price for the first quarter of 2022 was $8.83 per thousand cubic feet, up from $4.42 in the period a year ago. The average realized bitumen price was $65.86 per barrel, reflecting an increase from the $30.78 level a year ago.

Total expenses

ConocoPhillips’ total expenses in the first quarter reached $11,393 million, compared to $8,845 million for the corresponding period of 2021.

Production and operating expenses reached $1,581 million for the current quarter, compared to $1,383 million a year ago. Similarly, cost of purchased goods increased to $6,751 million for the quarter from $4,483 million a year ago. Nevertheless, exploration costs decreased to $69 million for the quarter to the end of March 2022, compared to $84 million for the comparable period of 2021.

Balance sheet and capital expenditure

As of March 31, 2022, ConocoPhillips had $6,414 million in cash and cash equivalents. The company had total long-term debt of $17,586 million. Its debt-to-capitalization ratio was 0.28. At the end of the first quarter, the company had short-term debt of $1,160 million.

Capital expenditures and investments totaled $3,161 million and dividend payouts brought in $864 million. Net cash from operating activities was $5,068 million.

Orientation

ConocoPhillips projects its 2022 production at 1.76 million barrels of oil equivalent per day (MMBoe/d). For the second quarter of this year, ConocoPhillips expects production to be between 1.67 MMBoe/d and 1.73 MMBoe/d.

ConocoPhillips has revised upwards its scheduled 2022 return of capital to shareholders. The new forecast is $10 billion, reflecting an increase from the previous projection of $8 billion. Additional shareholder returns will be distributed through share buybacks and VROC levels.

Zacks Rank #1 (Strong Buy) estimates its capital budget for the year at $7.8 billion. You can see the full list of today’s Zacks #1 Rank stocks here.

Profit Overview of Other Upstream Energy Companies

Diamondback Energy (CROC Free Report) reported adjusted earnings per share of $5.20 in the first quarter of 2022, beating Zacks’ consensus estimate of $4.74. The outperformance can be attributed to soaring energy prices during the quarter, which led to higher sales of oil, gas and natural gas liquids.

As of March 31, Diamondback had $149 million in cash and cash equivalents and $5.8 billion in long-term debt. Good news for investors, FANG increased its regular quarterly dividend payout by almost 17% to 70 cents per share and declared a variable dividend of $2.35, bringing the total payout to $3.05.

Southwestern Energy Company (SWN Free Report) reported Q1 2022 earnings of 40 cents per share, beating Zacks’ consensus estimate of 36 cents. The strong quarterly results can be attributed to higher natural gas production volumes and commodity price realization.

As of March 31, 2022, Southwestern’s cash and cash equivalents were $21 million. Long-term debt was $4,895 million. For the second quarter of 2022, the company forecasts total production of 418-434 Bcfe, consisting of natural gas of 370-382 Bcfe.

Matador Resource Company (MTDR Free Report) reported adjusted earnings of $2.32 per share in the first quarter of 2022, beating Zacks’ consensus estimate of $2.05 per share. Strong quarterly earnings were driven by higher oil-equivalent production volumes and higher commodity prices.

As of March 31, 2022, Matador had cash and restricted cash of $120.2 million. Long-term debt was recorded at $1,498 million, including $50 million of borrowings under its credit agreement. The debt to capitalization ratio was 39.1%.


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Felix J. Dixon