ConocoPhillips (NYSE: COP) today reported second-quarter 2023
earnings and adjusted earnings of $2.2 billion, or $1.84 per share,
compared with second-quarter 2022 earnings of $5.1 billion, or
$3.96 per share, and second-quarter 2022 adjusted earnings of $5.1
billion, or $3.91 per share.
“The second quarter demonstrated our strong underlying
performance and commitment to advancing the returns-focused value
proposition we shared at our Analyst & Investor Meeting in
April,” said Ryan Lance, chairman and chief executive officer. “We
achieved record production and increased our full-year production
guidance for the second consecutive quarter. We executed an
agreement to purchase the remaining 50% interest in Surmont and
further progressed our global LNG strategy. Our full-year
distribution target of $11 billion remains unchanged. 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.”
Second-Quarter Highlights and Recent
Announcements
- Delivered record company and Lower 48 production of 1,805
thousand barrels of oil equivalent per day (MBOED) and 1,063 MBOED,
respectively.
- Executed agreement to purchase the remaining 50% interest in
Surmont, subject to regulatory approvals and other closing
conditions.
- Completed acquisition of an equity interest in Qatar’s North
Field South project.
- Signed 20-year offtake agreements at the Saguaro LNG export
facility on the west coast of Mexico for approximately 2.2 million
tonnes per annum, subject to Mexico Pacific reaching final
investment decision.
- Generated cash provided by operating activities of $3.9 billion
and cash from operations (CFO) of $4.7 billion.
- Distributed $2.7 billion to shareholders through a three-tier
framework, including $1.4 billion through the ordinary dividend and
variable return of cash (VROC) and $1.3 billion through share
repurchases.
- Ended the quarter with cash and short-term investments of $7.1
billion.
Quarterly Dividend and Variable Return
of Cash
ConocoPhillips announced a quarterly ordinary dividend of $0.51
per share, payable September 1, 2023, to stockholders of record at
the close of business on August 16, 2023. In addition, the company
announced a VROC of $0.60 per share, payable October 16, 2023, to
stockholders of record at the close of business on September 28,
2023.
Second-Quarter Review
Production for the second quarter of 2023 was 1,805 MBOED, an
increase of 113 MBOED from the same period a year ago. After
adjusting for impacts from closed acquisitions and dispositions,
second-quarter 2023 production increased 100 MBOED or 6% from the
same period a year ago. Organic growth from Lower 48 and other
development programs more than offset decline and downtime.
Lower 48 delivered record production of 1,063 MBOED, including
709 MBOED from the Permian, 235 MBOED from the Eagle Ford and 104
MBOED from the Bakken. Turnarounds were successfully completed in
Norway and Qatar.
Earnings and adjusted earnings decreased from the second quarter
of 2022 primarily due to lower prices partially offset by increased
volumes. The company’s total average realized price was $54.50 per
BOE, 38% lower than the $88.57 per BOE realized in the second
quarter of 2022.
For the quarter, cash provided by operating activities was $3.9
billion. Excluding a $0.8 billion change in working capital,
ConocoPhillips generated CFO of $4.7 billion and received $0.2
billion primarily related to a prior year disposition. The company
funded $2.9 billion of capital expenditures and investments. In
addition, the company paid $1.4 billion in ordinary dividends and
VROC and repurchased $1.3 billion of shares.
Six-Month Review
ConocoPhillips’ six-month 2023 earnings and adjusted earnings
were $5.2 billion, or $4.22 per share, compared with six-month 2022
earnings of $10.9 billion, or $8.36 per share, and six-month 2022
adjusted earnings of $9.4 billion, or $7.18 per share.
Production for the first six months of 2023 was 1,798 MBOED, an
increase of 78 MBOED from the same period a year ago. After
adjusting for impacts from closed acquisitions and dispositions,
production increased 82 MBOED or 5% from the same period a year
ago. Organic growth from Lower 48 and other development programs
more than offset decline and downtime.
The company’s total realized price during this period was $57.63
per BOE, 30% lower than the $82.70 per BOE realized in the first
six months of 2022.
In the first six months of 2023, cash provided by operating
activities was $9.3 billion. Excluding a $1.1 billion change in
working capital, ConocoPhillips generated CFO of $10.4 billion and
received disposition proceeds of $0.4 billion. The company funded
$5.8 billion of capital expenditures and investments, repurchased
$3.0 billion of shares and paid $2.8 billion in ordinary dividends
and VROC.
Outlook
Third-quarter 2023 production is expected to be 1.78 to 1.82
million barrels of oil equivalent per day (MMBOED). 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.
Consistent with raising full-year production guidance for two
consecutive quarters, the company updated its 2023 adjusted
operating cost guidance to $8.3 billion versus the prior guidance
of $8.2 billion and updated full-year guidance for depreciation,
depletion and amortization to $8.2 billion versus the prior
guidance of $8.1 billion. Full-year guidance for adjusted corporate
segment net loss has been lowered to $0.8 billion from $0.9 billion
driven by lower net interest expense. On capital, the guidance
range has been narrowed to $10.8 to $11.2 billion from $10.7 to
$11.3 billion, reflecting ongoing progress on the company’s
development plans.
All guidance excludes any impact from the previously announced
Surmont and APLNG transactions.
ConocoPhillips will host a conference call today at 12:00 p.m.
Eastern time to discuss this announcement. To listen to the call
and view related presentation materials and supplemental
information, go to www.conocophillips.com/investor.
--- # # # ---
About ConocoPhillips
ConocoPhillips is one of the world’s leading exploration and
production companies based on both production and reserves, with a
globally diversified asset portfolio. Headquartered in Houston,
Texas, ConocoPhillips had operations and activities in 13
countries, $90 billion of total assets, and approximately 9,700
employees at June 30, 2023. Production averaged 1,798 MBOED for the
six months ended June 30, 2023, and proved reserves were 6.6 BBOE
as of December 31, 2022. For more information, go to
www.conocophillips.com.
CAUTIONARY STATEMENT FOR THE PURPOSES
OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
This news release contains forward-looking statements as defined
under the federal securities laws. Forward-looking statements
relate to future events, plans and anticipated results of
operations, business strategies, and other aspects of our
operations or operating results. Words and phrases such as
“anticipate," “estimate,” “believe,” “budget,” “continue,” “could,”
“intend,” “may,” “plan,” “potential,” “predict," “seek,” “should,”
“will,” “would,” “expect,” “objective,” “projection,” “forecast,”
“goal,” “guidance,” “outlook,” “effort,” “target” and other similar
words can be used to identify forward-looking statements. However,
the absence of these words does not mean that the statements are
not forward-looking. Where, in any forward-looking statement, the
company expresses an expectation or belief as to future results,
such expectation or belief is expressed in good faith and believed
to be reasonable at the time such forward-looking statement is
made. However, these statements are not guarantees of future
performance and involve certain risks, uncertainties and other
factors beyond our control. Therefore, actual outcomes and results
may differ materially from what is expressed or forecast in the
forward-looking statements. Factors that could cause actual results
or events to differ materially from what is presented include
changes in commodity prices, including a prolonged decline in these
prices relative to historical or future expected levels; global and
regional changes in the demand, supply, prices, differentials or
other market conditions affecting oil and gas, including changes
resulting from any ongoing military conflict, including the
conflict between Russia and Ukraine, and the global response to
such conflict, security threats on facilities and infrastructure,
or from a public health crisis or from the imposition or lifting of
crude oil production quotas or other actions that might be imposed
by OPEC and other producing countries and the resulting company or
third-party actions in response to such changes; insufficient
liquidity or other factors, such as those listed herein, that could
impact our ability to repurchase shares and declare and pay
dividends such that we suspend our share repurchase program and
reduce, suspend, or totally eliminate dividend payments in the
future, whether variable or fixed; changes in expected levels of
oil and gas reserves or production; potential failures or delays in
achieving expected reserve or production levels from existing and
future oil and gas developments, including due to operating
hazards, drilling risks or unsuccessful exploratory activities;
unexpected cost increases, inflationary pressures or technical
difficulties in constructing, maintaining or modifying company
facilities; legislative and regulatory initiatives addressing
global climate change or other environmental concerns; public
health crises, including pandemics (such as COVID-19) and epidemics
and any impacts or related company or government policies or
actions; investment in and development of competing or alternative
energy sources; potential failures or delays in delivering on our
current or future low-carbon strategy, including our inability to
develop new technologies; disruptions or interruptions impacting
the transportation for our oil and gas production; international
monetary conditions and exchange rate fluctuations; changes in
international trade relationships or governmental policies,
including the imposition of price caps, or the imposition of trade
restrictions or tariffs on any materials or products (such as
aluminum and steel) used in the operation of our business,
including any sanctions imposed as a result of any ongoing military
conflict, including the conflict between Russia and Ukraine; our
ability to collect payments when due, including our ability to
collect payments from the government of Venezuela or PDVSA; our
ability to complete any announced or any future dispositions or
acquisitions on time, if at all; the possibility that regulatory
approvals for any announced or any future dispositions or
acquisitions will not be received on a timely basis, if at all, or
that such approvals may require modification to the terms of the
transactions or our remaining business; business disruptions
following any announced or future dispositions or acquisitions,
including the diversion of management time and attention; the
ability to deploy net proceeds from our announced or any future
dispositions in the manner and timeframe we anticipate, if at all;
potential liability for remedial actions under existing or future
environmental regulations; potential liability resulting from
pending or future litigation, including litigation related directly
or indirectly to our transaction with Concho Resources Inc.; the
impact of competition and consolidation in the oil and gas
industry; limited access to capital or insurance or significantly
higher cost of capital or insurance related to illiquidity or
uncertainty in the domestic or international financial markets or
investor sentiment; general domestic and international economic and
political conditions or developments, including as a result of any
ongoing military conflict, including the conflict between Russia
and Ukraine; changes in fiscal regime or tax, environmental and
other laws applicable to our business; and disruptions resulting
from accidents, extraordinary weather events, civil unrest,
political events, war, terrorism, cybersecurity threats or
information technology failures, constraints or disruptions; and
other economic, business, competitive and/or regulatory factors
affecting our business generally as set forth in our filings with
the Securities and Exchange Commission. Unless legally required,
ConocoPhillips expressly disclaims any obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Cautionary Note to U.S. Investors – The SEC permits oil
and gas companies, in their filings with the SEC, to disclose only
proved, probable and possible reserves. We may use the term
“resource” in this news release that the SEC’s guidelines prohibit
us from including in filings with the SEC. U.S. investors are urged
to consider closely the oil and gas disclosures in our Form 10-K
and other reports and filings with the SEC. Copies are available
from the SEC and from the ConocoPhillips website.
Use of Non-GAAP Financial Information – To supplement the
presentation of the company’s financial results prepared in
accordance with U.S. generally accepted accounting principles
(GAAP), this news release and the accompanying supplemental
financial information contain certain financial measures that are
not prepared in accordance with GAAP, including adjusted earnings
(calculated on a consolidated and on a segment-level basis),
adjusted earnings per share, cash from operations (CFO), adjusted
operating costs and adjusted corporate segment net loss.
The company believes that the non-GAAP measure adjusted earnings
(both on an aggregate and a per-share basis), adjusted operating
costs and adjusted corporate segment net loss is useful to
investors to help facilitate comparisons of the company’s operating
performance associated with the company’s core business operations
across periods on a consistent basis and with the performance and
cost structures of peer companies by excluding items that do not
directly relate to the company’s core business operations. Adjusted
operating costs is defined as the sum of production and operating
expenses, selling, general and administrative expenses, exploration
general and administrative expenses, geological and geophysical,
lease rentals and other exploration expenses, adjusted to exclude
expenses that do not directly relate to the company’s core business
operations and are included as adjustments to arrive at adjusted
earnings to the extent those adjustments impact operating costs.
Adjusted corporate segment net loss is defined as corporate and
other segment earnings adjusted for special items. The company
further believes that the non-GAAP measure CFO is useful to
investors to help understand changes in cash provided by operating
activities excluding the timing effects associated with operating
working capital changes across periods on a consistent basis and
with the performance of peer companies. The company believes that
the above-mentioned non-GAAP measures, when viewed in combination
with the company’s results prepared in accordance with GAAP,
provides a more complete understanding of the factors and trends
affecting the company’s business and performance. The company’s
Board of Directors and management also use these non-GAAP measures
to analyze the company’s operating performance across periods when
overseeing and managing the company’s business.
Each of the non-GAAP measures included in this news release and
the accompanying supplemental financial information has limitations
as an analytical tool and should not be considered in isolation or
as a substitute for an analysis of the company’s results calculated
in accordance with GAAP. In addition, because not all companies use
identical calculations, the company’s presentation of non-GAAP
measures in this news release and the accompanying supplemental
financial information may not be comparable to similarly titled
measures disclosed by other companies, including companies in our
industry. The company may also change the calculation of any of the
non-GAAP measures included in this news release and the
accompanying supplemental financial information from time to time
in light of its then existing operations to include other
adjustments that may impact its operations.
Reconciliations of each non-GAAP measure presented in this news
release to the most directly comparable financial measure
calculated in accordance with GAAP are included in the release.
Other Terms – This news release also contains the term pro forma
underlying production. Pro forma underlying production reflects the
impact of closed acquisitions and closed dispositions as of June
30, 2023. The impact of closed acquisitions and dispositions
assumes a closing date of January 1, 2022. The company believes
that underlying production is useful to investors to compare
production reflecting the impact of closed acquisitions and
dispositions on a consistent go-forward basis across periods and
with peer companies. Return of capital or company distributions is
defined as the total of the ordinary dividend, share repurchases
and variable return of cash (VROC).
References in the release to earnings refer to net income.
ConocoPhillips Table 1: Reconciliation of earnings
to adjusted earnings $ Millions, Except as Indicated
2Q23
2Q22
2023 YTD
2022 YTD
Pre-tax Income tax After-tax Per share of
common stock (dollars) Pre-tax Income tax
After-tax Per share of common stock (dollars)
Pre-tax Income tax After-tax Per share of
common stock (dollars) Pre-tax Income tax
After-tax Per share of common stock (dollars)
Earnings
$
2,232
1.84
$
5,145
3.96
$
5,152
4.22
$
10,904
8.36
Adjustments: Net gain on asset sales
-
-
-
-
(254
)
57
(197
)
(0.15
)
-
-
-
-
(1,017
)
110
(907
)
(0.70
)
Tax adjustments
-
-
-
-
-
58
58
0.04
-
-
-
-
-
(407
)
(407
)
(0.32
)
(Gain) loss on CVE shares
-
-
-
-
-
-
-
-
-
-
-
-
(251
)
-
(251
)
(0.20
)
(Gain) loss on debt extinguishment and exchange fees
-
-
-
-
83
(13
)
70
0.05
-
-
-
-
(44
)
52
8
0.01
Transaction and restructuring expenses
-
-
-
-
14
(4
)
10
0.01
-
-
-
-
28
(8
)
20
0.02
(Gain) Loss on FX derivative
-
-
-
-
-
-
-
-
-
-
-
-
10
(2
)
8
0.01
Adjusted earnings / (loss)
$
2,232
1.84
$
5,086
3.91
$
5,152
4.22
$
9,375
7.18
The income tax effects of the special items are primarily
calculated based on the statutory rate of the jurisdiction in which
the discrete item resides.
ConocoPhillips Table 2:
Reconciliation of reported production to pro forma underlying
production In MBOED, Except as Indicated
2Q23
2Q22
2023 YTD 2022 YTD Total Reported ConocoPhillips
Production
1,805
1,692
1,798
1,720
Closed Dispositions1
(2
)
(12
)
(2
)
(34
)
Closed Acquisitions 2
-
13
-
18
Total Pro Forma Underlying Production
1,803
1,693
1,796
1,704
Estimated Uplift from 2 to 3 stream conversion3
-
10
-
10
1 Includes production related to the Indonesia disposition
and various Lower 48 dispositions. 2 Includes production related to
the acquisitions related to additional 10% shareholding interest in
APLNG, additional 4% shareholding interest in Libya and a Lower 48
bolt-on acquisition. 3 Estimated production impacts from the
conversion of Concho two-stream contracted volumes to a
three-stream (crude oil, natural gas and natural gas liquids)
reporting basis, which are not included in Total Production and
Total Underlying Production.
ConocoPhillips
Table 3: Reconciliation of net cash provided by operating
activities to cash from operations $ Millions, Except as
Indicated
2Q23
2023 YTD
Net Cash Provided by Operating Activities
3,854
9,257
Adjustments: Net operating working capital changes
(845
)
(1,128
)
Cash from operations
4,699
10,385
ConocoPhillips Table 4: Reconciliation of
production and operating expenses to adjusted operating costs $
Millions, Except as Indicated
2023 FYGuidance
Production and operating expenses
~7,400
Selling, general and administrative (G&A) expenses
~700
Exploration G&A, G&G and lease rentals
~200
Operating costs
~8,300
Adjustments to exclude special items:
None
-
Adjusted operating costs
~8,300
ConocoPhillips
Table 5: Reconciliation of adjusted corporate segment net
loss
$ Millions, Except as Indicated
2023 FYGuidance
Corporate and Other earnings
~(800)
Adjustments to exclude special items:
None
-
Adjusted corporate segment net loss
~(800)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230801017719/en/
Dennis Nuss (media) 281-293-1149
dennis.nuss@conocophillips.com
Investor Relations 281-293-5000
investor.relations@conocophillips.com
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