ConocoPhillips (NYSE: COP) today reported first-quarter 2022
earnings of $5.8 billion, or $4.39 per share, compared with
first-quarter 2021 earnings of $1.0 billion, or $0.75 per share.
Excluding special items, first-quarter 2022 adjusted earnings were
$4.3 billion, or $3.27 per share, compared with first-quarter 2021
adjusted earnings of $0.9 billion, or $0.69 per share. Special
items for the current quarter were primarily comprised of a tax
benefit related to closure of an audit, a gain associated with the
Indonesia divestiture and a gain on Cenovus Energy (CVE)
equity.
In addition, ConocoPhillips today announced a $2 billion
increase in expected 2022 returns of capital to $10 billion. The
company declared both an ordinary dividend of 46 cents per share
and a third-quarter variable return of cash (VROC) payment of 70
cents per share.
“The first quarter saw all aspects of the business running well
as we continued to deliver on our strategic, financial, and
operational plans,” said Ryan Lance, chairman and chief executive
officer. “We efficiently and safely delivered on our capital scope,
enhanced our balance sheet strength and closed strategic
transactions that further optimize our diverse, low-cost of supply
portfolio. We also increased our targeted 2022 returns to
shareholders by an additional 25%, to a new total of $10 billion,
as we continue to execute on all elements of our Triple
Mandate.”
First-Quarter Highlights and Recent
Announcements
- Announced an increase in expected 2022 returns of capital to
shareholders to a total of $10 billion, with the incremental $2
billion to be distributed through share repurchases and VROC
tiers.
- Distributed $2.3 billion to shareholders through a three-tier
return of capital framework, including $0.9 billion through the
ordinary dividend and VROC and $1.4 billion through share
repurchases.
- Generated cash provided by operating activities of $5.1 billion
and cash from operations (CFO) of $7.0 billion.
- Continued to integrate and optimize the recently acquired
Permian assets while efficiently and safely executing company-wide
capital programs, delivering record production of 1,747 MBOED in
the quarter.
- Received 20-year production license extension in the Norway
Greater Ekofisk Area from 2028 to 2048.
- Accelerated progress towards the company’s debt reduction
target while executing debt transactions that will result in lower
annual cash interest expense.
- Closed the purchase of an additional 10% interest in APLNG for
$1.4 billion in cash.
- Divested $1.4 billion of noncore assets during the quarter and
an additional $0.4 billion in April.
- Completed monetization of the company’s CVE common shares,
generating proceeds of $1.4 billion during the quarter with funds
applied to share repurchases, and $2.5 billion in total proceeds
since May 2021.
- Published Plan for the Net-Zero Energy Transition focused on
meeting the company’s Triple Mandate objectives: reliably and
responsibly meeting energy transition pathway demand, delivering
competitive returns on and of capital and achieving net-zero
operational emissions ambitions.
- Ended the quarter with cash and short-term investments of $7.5
billion.
Quarterly Dividend and Variable Return
of Cash
ConocoPhillips announced a quarterly ordinary dividend of 46
cents per share, payable June 1, 2022, to stockholders of record at
the close of business on May 17, 2022. In addition, the company
announced a third-quarter VROC of 70 cents per share, payable July
15, 2022, to stockholders of record at the close of business on
June 28, 2022.
First-Quarter Review
Production for the first quarter of 2022 was 1,747 thousand
barrels of oil equivalent per day (MBOED), an increase of 220 MBOED
from the same period a year ago. After adjusting for closed
acquisitions and dispositions, the conversion of previously
acquired Concho contracted volumes from a two-stream to a
three-stream basis, and 2021 Winter Storm Uri impacts,
first-quarter 2022 production decreased by 36 MBOED or 2% from the
same period a year ago. This decrease was primarily due to downtime
and seasonality impacts as new production from the Lower 48 and
other development programs more than offset decline.
In the Lower 48, production averaged 967 MBOED, including 640
MBOED from the Permian, 208 MBOED from the Eagle Ford and 97 MBOED
from the Bakken. Lower 48 ended the quarter with 22 drilling rigs
and eight frac crews at work. In Canada, drilling and completion
activities continued at Montney while construction progressed on
the second phase of the company’s processing facility. In Qatar, a
planned major turnaround at Train 6 was successfully completed.
Earnings increased from first-quarter 2021 primarily due to
higher realized prices and volumes, as well as a tax benefit
related to closure of an audit. Excluding special items, adjusted
earnings were higher compared with first-quarter 2021 due to higher
realized prices and volumes. The company’s total average realized
price was $76.99 per barrel of oil equivalent (BOE), 70% higher
than the $45.36 per BOE realized in the first quarter of 2021, as
production remains unhedged and thus realizes the full benefit of
higher marker prices.
For the quarter, cash provided by operating activities was $5.1
billion. Excluding a $2.0 billion change in operating working
capital, ConocoPhillips generated CFO of over $7 billion.
Dispositions generated $2.3 billion, including $1.4 billion from
sale of CVE shares, with the proceeds from CVE sales applied to
additional share repurchases. The company funded $3.2 billion of
capital expenditures and investments, comprised of $1.8 billion in
operating capital and $1.4 billion to acquire an additional 10%
interest in APLNG. In addition, the company paid $0.9 billion in
ordinary dividends and VROC, repurchased $1.4 billion of shares,
refinanced its revolving credit facility and paid $1.1 billion to
reduce total debt. In April, the company also initiated the early
retirement of a $1.25 billion note due 2026 that is expected to
settle in May 2022 and further accelerate progress toward the debt
reduction target.
Outlook
Second-quarter 2022 production is expected to be 1.67 to 1.73
million barrels of oil equivalent per day (MMBOED), reflecting the
impacts of seasonal turnarounds planned in Europe and Canada as
well as weather impacts experienced during April in the Bakken. The
company’s full-year production is expected to be approximately 1.76
MMBOED, reflecting a net reduction of approximately 25 MBOED from
acquisitions and dispositions closed as of May 5, 2022.
The company adjusted its 2022 operating capital guidance to $7.8
billion versus the prior guidance of $7.2 billion, reflecting
higher partner-operated spend in Lower 48 and inflationary impacts.
This guidance excludes $1.4 billion of capital associated with the
closed acquisition of an additional 10% interest in APLNG.
Full-year guidance for depreciation, depletion and amortization
has decreased to $7.7 billion, reflecting the impact of revised
production guidance. All other guidance items remain 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.
--- # # # ---
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, $93 billion of total assets and approximately 9,400
employees at March 31, 2022. Production averaged 1,747 MBOED for
the three months ended March 31, 2022, and proved reserves were 6.1
BBOE as of Dec. 31, 2021. 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 the
impact of public health crises, including pandemics (such as
COVID-19) and epidemics and any related company or government
policies or actions; 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 it, 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; changes in commodity prices, including a prolonged
decline in these prices relative to historical or future expected
levels; 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; 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,
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 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 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 the acquisition of assets
from Shell (the “Shell Acquisition”) or any other announced or any
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 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 or developments, including as a result of any
ongoing military conflict, including the conflict between Russia
and Ukraine; the ability to successfully integrate the assets from
the Shell Acquisition or achieve the anticipated benefits from the
transaction; unanticipated difficulties or expenditures relating to
the Shell Acquisition; 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, cyber attacks 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 and cash from operations (CFO).
The company believes that the non-GAAP measure 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 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 March
31, 2022. The impact of closed dispositions assume they closed
January 1, 2021, while the 2021 impact of the closed Shell Permian
acquisition and the additional 10% APLNG interest acquisition
assume they closed January 1, 2021 and February 1, 2021,
respectively. 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 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
1Q22
1Q21
Pre-tax Incometax After-tax Per share
ofcommonstock(dollars) Pre-tax Incometax
After-tax Per share ofcommonstock(dollars)
Earnings
$
5,759
4.39
982
0.75
Adjustments: Net gain on asset sales
(763
)
154
(609
)
(0.47
)
(200
)
6
(194
)
(0.15
)
Tax adjustments
-
(566
)
(566
)
(0.43
)
-
75
75
0.06
(Gain) loss on CVE shares
(251
)
-
(251
)
(0.19
)
(308
)
-
(308
)
(0.24
)
Gain on debt extinguishment and exchange fees
(127
)
65
(62
)
(0.05
)
-
-
-
-
Transaction and restructuring expenses
14
(4
)
10
0.01
291
(48
)
243
0.19
(Gain) loss on FX derivative
10
(2
)
8
0.01
4
(1
)
3
-
Net realized loss on accelerated settlement of Concho hedging
program
-
-
-
-
132
(31
)
101
0.08
Adjusted earnings / (loss)
$
4,289
3.27
902
0.69
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
1Q22
1Q21
Total Reported ConocoPhillips Production
1,747
1,527
Closed Dispositions1
(33
)
(67
)
Closed Acquisitions 2
-
200
Total Pro Forma Underlying Production
1,714
1,660
Estimated Downtime from Winter Storm Uri3
-
50
Estimated Uplift from 2 to 3 stream conversion4
(40
)
-
1Includes production related to the completed Indonesia
disposition and various Lower 48 dispositions. 2Includes production
related to the acquisition of Shell's Permian assets as well as the
additional 10% shareholding interest in APLNG. 2021 has been pro
forma adjusted for these acquisitions and assumes 180 MBOED for the
Shell Permian assets. 3Estimated production impacts from Winter
Storm Uri, which are excluded from Total Reported Production and
Total Pro Forma Underlying Production. 4Estimated 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 included in Total Reported Production
and Total Pro Forma Underlying Production.
ConocoPhillips
Table 3: Reconciliation of net cash provided by operating
activities to cash from operations $ Millions, Except as
Indicated
1Q22
Net Cash Provided by Operating Activities
5,068
Adjustments: Net operating working capital changes
(1,957
)
Cash from operations
7,025
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220505005028/en/
Dennis Nuss (media) 281-293-1149
dennis.nuss@conocophillips.com
Investor Relations 281-293-5000
investor.relations@conocophillips.com
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