ConocoPhillips (NYSE:COP) today reported first-quarter 2015
earnings of $272 million, or $0.22 per share, compared with
first-quarter 2014 earnings of $2.1 billion, or $1.71 per share.
Excluding special items, first-quarter 2015 adjusted earnings were
a net loss of $222 million, or ($0.18) per share, compared with
first-quarter 2014 adjusted earnings of $2.3 billion, or $1.81 per
share. Special items for the current quarter related to a deferred
tax benefit from a change in U.K. tax law, partially offset by
restructuring costs across the company.
Highlights
- Achieved first-quarter production of
1,610 MBOED.
- Five percent year-over-year production
growth from continuing operations, adjusted for Libya, downtime and
dispositions.
- Seven percent year-over-year reduction
in operating costs; 12 percent reduction when adjusted for
restructuring charges of $104 million pre-tax.
- First production at Eldfisk II and the
Brodgar H3 subsea tie-back in Europe, as well as Bayu Undan Phase
III in Australia.
- On track for five major project
startups at Surmont 2, APLNG, Enochdhu, CD5 and Drill Site 2S by
year end.
- Exploration and appraisal activity
ongoing with conventional activity in the Gulf of Mexico and
Angola; unconventional activity in the Lower 48 and Canada.
“This significant downturn in prices has been a test for the
industry,” said Ryan Lance, chairman and chief executive officer.
“We responded by quickly adjusting our plans, while remaining
focused on executing the aspects of the business that we control.
By these measures, the first quarter was a success. We delivered on
our growth targets, reduced our costs and progressed the programs
and projects that will position us for strong future performance in
what we expect could be a more favorable commodity price
environment. While the environment remains uncertain, our value
proposition remains unchanged – deliver a compelling dividend and
predictable growth, with a focus on margins and financial
returns.”
Operations Update
Lower 48 – Quarterly production increased by 35 thousand
barrels of oil equivalent per day (MBOED) over the same period in
2014, to 542 MBOED. The increase was primarily from growth in
liquids-rich development plays, partially offset by normal field
decline and winter weather impacts. The Eagle Ford and Bakken
collectively delivered 230 MBOED for the quarter, a 26 percent
increase compared with the first quarter of 2014. Lower 48 crude
production grew 16 percent year over year.
Canada – First-quarter production was 318 MBOED, an
increase of 38 MBOED compared with the first quarter of 2014. The
increase was primarily driven by strong plant and well performance
in the oil sands operations, as well as production from new wells
brought on line during a successful western Canada winter drilling
program. Bitumen production increased 26 percent compared with the
first quarter of 2014. Foster Creek Phase F is continuing to ramp
up and Surmont 2 is on track for first steam in mid-2015.
Alaska – Production for the quarter was 186 MBOED, a
decrease of 14 MBOED compared with the same period in 2014. This
decrease was due to normal field decline and downtime, partially
offset by improved well performance. The 1H NEWS Project was
sanctioned and construction planning is underway. Progress also
continues at the CD5 and Drill Site 2S projects, with startup
expected at both projects in late 2015. In April, Kenai LNG resumed
operations with exports commencing in May.
Europe – Quarterly production was 209 MBOED, a decrease
of 11 MBOED compared with the same period in 2014. The decrease was
primarily the result of normal field decline, partially offset by
new production from major projects, improved well performance and
lower unplanned downtime. First production was achieved at Eldfisk
II in January and the Brodgar H3 subsea tie-back in March. A third
project, Enochdhu, is progressing toward startup in the third
quarter.
Asia Pacific and Middle East – First-quarter production
was 351 MBOED, an increase of 32 MBOED compared with the first
quarter of 2014. The increase was primarily the result of growth
from major projects and new wells online, partially offset by
normal field decline. In Malaysia, Gumusut continues to ramp up and
domestic gas sales were initiated from Kebabangan (KBB). Production
remains constrained at KBB pending third-party pipeline repairs. In
Australia, first gas was achieved at Bayu Undan Phase III. In
April, APLNG achieved a significant milestone with successful
startup of the first of seven gas turbine generators. The project
is expected to start up in the third quarter.
Other International – Production was 4 MBOED in the first
quarter, flat compared with the same period in 2014 excluding
Libya, where the Es Sider Terminal remains shut-in as a result of
ongoing unrest.
Unconventional exploration – North American activity
remained focused on drilling in the Permian Basin in the Lower 48,
as well as in western Canada. Internationally, the Picoplata well
in Colombia was completed and results are undergoing
evaluation.
Conventional exploration – In the Gulf of Mexico,
appraisal drilling is ongoing at Gila and Tiber. The non-operated
Vernaccia exploration well is expected to spud during the second
quarter. In Angola, the third well, Vali-1, spud in April. The
Harrier exploration well in the Gulf of Mexico and the Omosi-1
exploration well in Angola were expensed as dry holes during the
quarter.
First-Quarter Review
Production from continuing operations, excluding Libya, for the
first quarter of 2015 was 1,610 MBOED, an increase of 80 MBOED
compared with the same period a year ago. The net increase reflects
82 MBOED, or 5 percent growth, after adjusting for 2 MBOED from
dispositions and downtime. Growth was primarily due to new
production from major projects and development programs, partially
offset by normal field decline.
Adjusted earnings were lower compared with first-quarter 2014
primarily due to lower realized prices and increased dry hole
expense, partially offset by higher volumes. The company’s total
realized price was $36.96 per barrel of oil equivalent (BOE),
compared with $71.21 per BOE in the first quarter of 2014,
reflecting lower average realized prices across all
commodities.
Operating costs for the quarter were $2.1 billion compared with
$2.3 billion in the first quarter of 2014. Adjusted for
restructuring costs of $104 million pre-tax, operating costs were
improved 12 percent year over year.
For the quarter, cash provided by continuing operating
activities was $1.87 billion. Excluding a $0.25 billion increase in
working capital, ConocoPhillips generated $2.1 billion in cash from
operations. In addition, the company funded $3.3 billion in capital
expenditures and investments and paid dividends of $0.9
billion.
As of March 31, 2015, ConocoPhillips had $2.7 billion of cash
and cash equivalents. The company ended the first quarter with debt
of $22.5 billion and a debt-to-capital ratio of 31 percent.
Outlook
The company is on track to meet its previously stated target of
2 to 3 percent production growth in 2015 from continuing
operations, excluding Libya. Second-quarter 2015 production is
expected to be 1,555 to 1,595 MBOED, which excludes Libya.
The company is also on track for $11.5 billion of capital
expenditures and investments in 2015. Capital spending is expected
to decrease throughout the year as major projects come on line and
activity levels continue to ramp down in the North American
unconventionals.
The company’s previous guidance remains unchanged, with
depreciation, depletion and amortization of $9.0 billion, operating
costs of $9.2 billion, exploration dry hole and leasehold
impairment expense of $0.8 billion, and corporate segment expense
of $1.0 billion.
ConocoPhillips will host a conference call today at 12:00 p.m.
EDT to discuss its first-quarter results and provide an operational
update. To listen to the call, and view related presentation
materials and supplemental information, go to
www.conocophillips.com/investor.
--- # # # ---
About ConocoPhillips
ConocoPhillips is the world’s largest independent E&P
company based on production and proved reserves. Headquartered in
Houston, Texas, ConocoPhillips had operations and activities in 27
countries, $31 billion in annualized revenue, $110 billion of total
assets, and approximately 18,800 employees as of March 31, 2015.
Production, excluding Libya, averaged 1,610 MBOED for the three
months ended March 31, 2015, and proved reserves were 8.9 billion
BOE as of Dec. 31, 2014. 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.
Forward-looking statements relate to future events and anticipated
results of operations, business strategies, and other aspects of
our operations or operating results. In many cases you can identify
forward-looking statements by terminology such as "anticipate,"
"estimate," "believe," "continue," "could," "intend," "may,"
"plan," "potential," "predict," "should," "will," "expect,"
"objective," "projection," "forecast," "goal," "guidance,"
"outlook," "effort," "target" and other similar words. 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 have a reasonable basis. However, there can be no assurance that
such expectation or belief will result or be achieved. The actual
results of operations can and will be affected by a variety of
risks and other matters including, but not limited to, changes in
commodity prices; changes in expected levels of oil and gas
reserves or production; operating hazards, drilling risks,
unsuccessful exploratory activities; difficulties in developing new
products and manufacturing processes; unexpected cost increases;
international monetary conditions; potential liability for remedial
actions under existing or future environmental regulations;
potential liability resulting from pending or future litigation;
limited access to capital or significantly higher cost of capital
related to illiquidity or uncertainty in the domestic or
international financial markets; and general domestic and
international economic and political conditions; as well as changes
in tax, environmental and other laws applicable to our business.
Other factors that could cause actual results to differ materially
from those described in the forward-looking statements include
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 undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Use of Non-GAAP Financial Information – This news release
includes the terms adjusted earnings, adjusted earnings per share
and operating costs. These are non-GAAP financial measures. These
terms are included to help facilitate comparisons of company
operating performance across periods and with peer companies.
References in the release to earnings refer to net income/(loss)
attributable to ConocoPhillips.
ConocoPhillips
Reconciliation of Earnings to Adjusted Earnings $ Millions,
Except as Indicated
1Q 2015 2014
Earnings $ 272 2,123 Adjustments: Loss
on capacity agreements - 83 Qatar depreciation adjustment - 28
Pending claims and settlements - 39 International tax law changes
(555 ) - Restructuring 61 - Discontinued operations - other ¹
- (20 )
Adjusted earnings / (loss) $
(222 ) 2,253 1 Includes
Kashagan, Algeria and Nigeria
Earnings per share of
common stock (dollars)
$ 0.22 1.71
Adjusted earnings / (loss) per share of common stock
(dollars)
$ (0.18 ) 1.81
ConocoPhillipsDaren Beaudo, 281-293-2073
(media)daren.beaudo@conocophillips.comSidney J. Bassett,
281-293-5000 (investors)sid.bassett@conocophillips.comVladimir R.
dela Cruz, 281-293-5000
(investors)v.r.delacruz@conocophillips.com
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