ConocoPhillips (NYSE: COP) today reported third-quarter 2019
earnings of $3.1 billion, or $2.74 per share, compared with
third-quarter 2018 earnings of $1.9 billion, or $1.59 per share.
Excluding special items, third-quarter 2019 adjusted earnings were
$0.9 billion, or $0.82 per share, compared with third-quarter 2018
adjusted earnings of $1.6 billion, or $1.36 per share. Special
items for the current quarter were primarily due to a gain realized
on the completed United Kingdom (U.K.) divestiture.
Third-Quarter Highlights and Recent
Announcements
- Cash provided by operating activities was $2.3 billion.
Excluding working capital, cash from operations (CFO) of $2.6
billion exceeded capital expenditures and investments, generating
free cash flow of $1.0 billion.
- Repurchased $0.75 billion of shares and paid $0.34 billion in
dividends in the third quarter, representing a return of 41 percent
of CFO to shareholders.
- Third-quarter production excluding Libya of 1,322 MBOED;
year-over-year underlying production grew 7 percent overall and 6
percent on a debt-adjusted share basis.
- Increased production from the Lower 48 Big 3 unconventionals by
21 percent year-over-year.
- Executed turnarounds in Alaska, Malaysia and Norway.
- Ended the quarter with cash, cash equivalents and restricted
cash totaling $7.5 billion and short-term investments of $0.9
billion, equaling $8.4 billion of ending cash and short-term
investments.
- Completed the U.K. divestiture, generating $2.2 billion in
proceeds.
- Completed the previously announced Alaska Nuna discovered
resource acquisition for approximately $0.1 billion.
- Announced the Australia-West divestiture agreement for $1.4
billion, plus customary closing adjustments, subject to regulatory
and other approvals.
- Announced a 38 percent increase in the quarterly dividend to 42
cents per share, and $3.0 billion in planned 2020 share
repurchases.
“This business is all about having a sustainable strategy with
consistent execution,” said Ryan Lance, chairman and chief
executive officer. “We believe ConocoPhillips offers both – a
shareholder-friendly, returns-oriented value proposition and strong
delivery on our commitments. This quarter extends our successful
track record of performance since we reset our value proposition in
2016. In November, we’ll present a 10-year capital and financial
plan at our Analyst & Investor Meeting that emphasizes free
cash flow generation with competitive returns on capital and
returns of capital. We look forward to sharing a long-term outlook
that fulfills our purpose of creating value for all
stakeholders.”
Third-Quarter Review
Production excluding Libya for the third quarter of 2019 was
1,322 thousand barrels of oil equivalent per day (MBOED), a 98
MBOED increase over the same period a year ago. Adjusting for
closed dispositions and acquisitions, underlying production
increased 83 MBOED primarily due to production growth from the Big
3 unconventionals, development programs and major projects in
Alaska, Europe and Asia Pacific. This growth more than offset
normal field decline. Production from Libya averaged 44 MBOED.
In the Lower 48, production from the Big 3 unconventionals
averaged 379 MBOED. The company also completed construction and
commissioning of the Montney Phase 1 gas plant in Canada, with
startup awaiting completion of a third-party pipeline. In Malaysia,
production from the Kebabangan Field continued ramping up and first
oil was achieved from Gumusut Phase 2. Turnarounds were completed
during the quarter in Alaska, Malaysia and Norway.
Earnings increased compared with third-quarter 2018 primarily
due to the gain from the U.K. divestiture, partially offset by
lower realized prices. Excluding special items, adjusted earnings
were lower compared with third-quarter 2018 due to lower realized
prices and higher exploration expenses from increased dry hole
costs, partially offset by higher volumes. The company’s total
realized price was $47.07 per barrel of oil equivalent (BOE), 18
percent lower than the $57.71 per BOE realized in the third quarter
of 2018, reflecting lower marker prices.
For the quarter, cash provided by operating activities was $2.3
billion. Excluding a $0.3 billion change in operating working
capital, ConocoPhillips generated $2.6 billion in CFO. CFO included
approximately $0.1 billion from the PDVSA ICC settlement and was
reduced by a $0.3 billion U.K. pension fund contribution. In
addition, the company generated $2.2 billion in disposition
proceeds. The company incurred $1.7 billion in capital expenditures
and investments that included approximately $0.1 billion for the
Alaska acreage acquisition. In addition, the company repurchased
$0.75 billion in shares and paid $0.34 billion in dividends.
Nine-Month Review
ConocoPhillips’ nine-month 2019 earnings were $6.5 billion, or
$5.72 per share, compared with nine-month 2018 earnings of $4.4
billion, or $3.72 per share. Nine-month 2019 adjusted earnings were
$3.2 billion, or $2.83 per share, compared with nine-month 2018
adjusted earnings of $4.0 billion, or $3.41 per share.
Production excluding Libya for the first nine months of 2019 was
1,310 MBOED, an 89 MBOED increase from 1,221 MBOED for the 2018
period. Adjusting for closed dispositions and acquisitions,
underlying production increased 69 MBOED primarily due to growth
from the Big 3 unconventionals, development programs and major
projects in Alaska, Europe and Asia Pacific. This growth more than
offset normal field decline. Production from Libya averaged 43
MBOED for the first nine months of 2019.
The company’s total realized price during the first nine months
of 2019 was $49.35 per BOE, 9 percent lower compared with $54.20
per BOE in 2018. This reduction reflected lower crude, natural gas
liquids and natural gas prices, partially offset by higher
liquefied natural gas and bitumen prices.
For the nine months ended Sept. 30, 2019, cash provided by
operating activities was $8.1 billion. Excluding a $0.9 billion
change in operating working capital, ConocoPhillips generated $9.0
billion in CFO, exceeding the total of $5.0 billion in capital
expenditures and investments, $2.8 billion in share repurchases and
$1.0 billion in dividends. In addition, the company generated $2.9
billion in disposition proceeds. Capital expenditures and
investments included approximately $0.2 billion primarily for Lower
48 bolt-on acquisitions and the Alaska acreage acquisition.
Outlook
Fourth-quarter 2019 production is expected to be 1,265 to 1,305
MBOED. The guidance excludes Libya and reflects the impacts from
the completed U.K. divestiture. All other guidance items are
unchanged.
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.
ConocoPhillips will also conduct an Analyst & Investor
Meeting in Houston on Tuesday, Nov. 19 to outline the company’s
10-year operating plan and strategy for long-term value creation. A
live webcast of the meeting will be available on the ConocoPhillips
Investor Relations site, www.conocophillips.com/investor, with a
recording and transcript available afterward.
--- # # # ---
About ConocoPhillips
Headquartered in Houston, Texas, ConocoPhillips had operations
and activities in 17 countries, $70 billion of total assets, and
approximately 10,400 employees as of Sept. 30, 2019. Production
excluding Libya averaged 1,310 MBOED for the nine months ended
Sept. 30, 2019, and proved reserves were 5.3 BBOE as of Dec. 31,
2018. 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 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; 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 or
technical difficulties in constructing, maintaining, or modifying
company facilities; legislative and regulatory initiatives
addressing global climate change or other environmental concerns;
investment in and development of competing or alternative energy
sources; disruptions or interruptions impacting the transportation
for our oil and gas production; international monetary conditions
and exchange rate fluctuations; changes in international trade
relationships, including the imposition of trade restrictions or
tariffs on any materials or products (such as aluminum and steel)
used in the operation of our business; our ability to collect
payments when due under our settlement agreement with PDVSA; our
ability to collect payments from the government of Venezuela as
ordered by the ICSID; our ability to liquidate the common stock
issued to us by Cenovus Energy Inc. at prices we deem acceptable,
or at all; our ability to complete our announced dispositions or
acquisitions on the timeline currently anticipated, if at all; the
possibility that regulatory approvals for our announced
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 our announced dispositions, acquisitions or our
remaining business; business disruptions during or following our
announced dispositions or acquisitions, including the diversion of
management time and attention; the ability to deploy net proceeds
from our announced dispositions in the manner and timeframe we
currently anticipate, if at all; potential liability for remedial
actions under existing or future environmental regulations;
potential liability resulting from pending or future litigation;
the impact of competition and consolidation in the oil and gas
industry; limited access to capital or significantly higher cost of
capital related to illiquidity or uncertainty in the domestic or
international financial markets; general domestic and international
economic and political conditions; changes in tax, environmental
and other laws applicable to our business; and disruptions
resulting from extraordinary weather events, civil unrest, war,
terrorism or a cyber attack; 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 (SEC). 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) and free
cash flow.
The company believes that the non-GAAP measures adjusted
earnings (both on an aggregate and a per-share basis) 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. 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 impact of working capital changes across
periods on a consistent basis and with the performance of peer
companies. The company also believes that free cash flow is useful
to investors as it provides a measure to compare CFO after
deduction of capital expenditures and investments across periods on
a consistent basis. Free cash flow is not a measure of cash
available for discretionary expenditures since the company has
certain non-discretionary obligations such as debt service that are
not deducted from the measure. 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 – The release also contains the terms underlying
production and production per debt-adjusted share. Underlying
production excludes Libya and reflects the impact of closed
acquisitions and dispositions (A&D) with an assumed close date
of January 1, 2018. Production per debt-adjusted share is
calculated on an underlying production basis using ending period
debt divided by ending share price plus ending shares outstanding.
The company believes that underlying production is useful to
investors to compare production excluding Libya and reflecting the
impact of closed acquisitions and dispositions on a consistent
go-forward basis across periods and with peer companies. The
company believes that production per debt-adjusted share is useful
to investors as it provides a consistent view of production on a
total equity basis by converting debt to equity and allows for
comparisons across peer companies.
References in the release to earnings refer to net income/(loss)
attributable to ConocoPhillips.
ConocoPhillips Table 1: Reconciliation of earnings to
adjusted earnings $ Millions, Except as Indicated
3Q19 3Q18 2019 YTD 2018 YTD
Pre-tax Incometax After-tax Per share
ofcommon stock(dollars) Pre-tax Incometax
After-tax Per share ofcommon stock(dollars)
Pre-tax Incometax After-tax Per share
ofcommon stock(dollars) Pre-tax Incometax
After-tax Per share ofcommon stock(dollars)
Earnings
$
3,056
2.74
1,861
1.59
6,469
5.72
4,389
3.72
Adjustments: Net gain on asset sales
(1,752
)
(93
)
(1,845
)
(1.66
)
(101
)
25
(76
)
(0.06
)
(1,813
)
(359
)
(2,172
)
(1.92
)
(151
)
39
(112
)
(0.09
)
Malaysia Deepwater tax incentive
-
(164
)
(164
)
(0.15
)
-
-
-
-
-
(164
)
(164
)
(0.15
)
-
-
-
-
Pending claims and settlements
(123
)
16
(107
)
(0.10
)
(286
)
7
(279
)
(0.24
)
(388
)
(37
)
(425
)
(0.38
)
(421
)
72
(349
)
(0.30
)
Unrealized gain (loss) on CVE shares
(116
)
-
(116
)
(0.10
)
73
(16
)
57
0.05
(489
)
-
(489
)
(0.43
)
(187
)
25
(162
)
(0.14
)
Unrealized gain (loss) on FX derivative
(15
)
4
(11
)
(0.01
)
3
-
3
-
15
(2
)
13
0.01
(8
)
3
(5
)
-
Impairments
141
(31
)
110
0.10
43
(10
)
33
0.03
296
(66
)
230
0.20
-
9
9
0.01
Recognition of deferred income
(49
)
10
(39
)
(0.03
)
(44
)
-
(44
)
(0.04
)
(297
)
62
(235
)
(0.21
)
(104
)
-
(104
)
(0.09
)
Pension settlement expense
37
(7
)
30
0.03
14
(3
)
11
0.01
37
(7
)
30
0.03
161
(29
)
132
0.11
Alberta tax rate change
-
-
-
-
-
-
-
-
-
(25
)
(25
)
(0.02
)
-
-
-
-
Restructuring
-
-
-
-
37
(8
)
29
0.02
-
-
-
-
37
(8
)
29
0.02
Deferred tax adjustments
-
-
-
-
-
-
-
-
-
(27
)
(27
)
(0.02
)
-
-
-
-
Premiums on early debt retirement
-
-
-
-
-
-
-
-
-
-
-
-
208
(13
)
195
0.17
Adjusted earnings / (loss)
$
914
0.82
1,595
1.36
3,205
2.83
4,022
3.41
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 net cash provided by operating
activities to free cash flow $ Millions, Except as Indicated
3Q19 2019 YTD Net Cash Provided by Operating
Activities
2,337
8,122
Adjustments: Net operating working capital changes
(307
)
(892
)
Cash from operations
2,644
9,014
Capital expenditures and investments
1,675
5,041
Free Cash Flow
969
3,973
ConocoPhillips Table 3: Reconciliation of reported
production to underlying production In MBOED, Except as
Indicated
3Q19 3Q18 2019 YTD 2018
YTD Total Reported Production
1,366
1,261
1,353
1,261
Adjustments: Libya
(44
)
(37
)
(43
)
(40
)
Total Production excluding Libya
1,322
1,224
1,310
1,221
Dispositions1
(58
)
(78
)
(67
)
(89
)
Acquisitions2
-
35
-
42
Total Underlying Production
1,264
1,181
1,243
1,174
1Includes production from the completed U.K. and various Lower 48
dispositions. 2Includes production from the additional interests
acquired in Alaska.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191029005237/en/
Daren Beaudo (media) 281-293-2073
daren.beaudo@conocophillips.com
Investor Relations 281-293-5000
investor.relations@conocophillips.com
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