ConocoPhillips posts biggest quarterly profit since 2014

  • ConocoPhillips beat analyst expectations for earnings in the second quarter with its largest quarterly profit since 2014. (Photo/Mark Thiessen/AP)

This spring turned out to be ConocoPhillips’ best quarter in nearly four years as the oil major reported a profit of more than $1.6 billion in its second quarter earnings report released Thursday morning.

The $1.6 billion of net income was accomplished on the back of more than $9.2 billion in revenue for the quarter.

The last time ConocoPhillips had a higher revenue quarter was the fourth quarter of 2014 when it brought in $11.8 billion but still lost $39 million overall. The last time the company managed better quarter earnings was the third quarter of 2014 when oil prices averaged $97 per barrel and it netted $2.7 billion.

In Alaska, ConocoPhillips had a second quarter profit of $418 million, compared to $445 million in the first quarter and a $167 million profit a year ago. The company paid $291 million in taxes and royalties to the State of Alaska during the quarter, according to spokeswoman Natalie Lowman.

The companywide profit translates to earnings of $1.40 per share, compared with second quarter 2017 adjusted earnings of 14 cents per share. The company paid a dividend of 28.5 cents per share last quarter, which it announced July 11 it will pay again in the third quarter. The adjusted earnings per share of $1.09 beat Wall Street expectations of $1.08 per share.

CEO Ryan Lance said in a formal statement that the company is now positioned for high performance during industry cycles by focusing on free cash flow generation.

“We’re benefiting from higher oil prices, but also driving underlying cash flow expansion. In accordance with our priorities, we’ve differentially allocated excess cash towards debt reduction and distributions, while continuing to grown our diversified, low cost of supply resource base,” Lance said.

“Since we launched our disciplined strategy almost two years ago we’ve met or exceeded all our key strategic milestones. We achieved our debt target 18 months ahead of plan; we’ve outperformed on our target payout to shareholders; we’re executing or operating plan and remain committed to our disciplined approach to the business.”

ConocoPhillips repurchased $600 million worth of stock during the quarter and increased its 2018 repurchase plan by 50 percent to $3 billion. It additionally paid down $2.1 billion of debt and hit a $15 billion debt target mentioned by Lance while ending the quarter with $4.1 billion in cash and short-term investments.

BP and ConocoPhillips announced a deal July 3 that ostensibly amounted to a trade, in which ConocoPhillips will acquire BP’s 39 percent stake in the large, North Slope Kuparuk River oil field and BP will add 16 percent ownership in the U.K. Clair field, which it operates.

The deal will give ConocoPhillips 93 percent ownership in Kuparuk, which it operates and produces roughly 140,000 barrels of oil per day. It is also expected to be a cash-neutral transaction for both companies, according to a statement from BP.

ConocoPhillips also made capital investments totaling $581 million in Alaska out of its worldwide capital spend of nearly $2 billion during the quarter. The company has put $844 million towards its Alaska projects so far this year, according to the earnings report.

ConocoPhillips’ crude production in the state averaged 170,000 barrels per day during the quarter, down slightly from 174,000 barrels per day in the first quarter of 2018 but just more than the 169,000 barrels per day it extracted a year ago.

It announced July 16 that the six exploration and appraisal wells drilled on the North Slope last winter added up to 1.4 billion barrels of oil and gas to its resource portfolio.

ConocoPhillips’ Alaska oil and gas production accounted for 15 percent of its worldwide production for the quarter; its $418 million net income in the state accounted for 25 percent of its overall quarterly profit.

Elwood Brehmer can be reached at [email protected].

07/26/2018 - 12:26pm