ConocoPhillips (NYSE: COP) today reported third-quarter 2023
earnings of $2.8 billion, or $2.32 per share, compared with
third-quarter 2022 earnings of $4.5 billion, or $3.55 per share.
Excluding special items, third-quarter 2023 adjusted earnings were
$2.6 billion, or $2.16 per share, compared with third-quarter 2022
adjusted earnings of $4.6 billion, or $3.60 per share. Special
items for the current quarter were primarily comprised of a benefit
related to the reversal of a tax reserve and a gain associated with
the divestiture of a Lower 48 equity investment.
"ConocoPhillips continues to execute well on our returns-focused
value proposition,” said Ryan Lance, chairman and chief executive
officer. “For the third consecutive quarter, we achieved record
production and, with the purchase of the remaining 50% interest in
Surmont, raised our full-year guidance. In September, we further
progressed our global LNG strategy by securing regasification
capacity in the Netherlands. In October, several international
projects reached first production, positioning us for 2024 and
beyond. And today we announced a 14% increase in our quarterly
ordinary dividend, consistent with our long-term objective to
deliver top quartile growth relative to the S&P 500."
Third-Quarter Highlights and Recent
Announcements
- Increased the quarterly ordinary dividend by 14% to $0.58 per
share.
- Completed the purchase of the remaining 50% interest in Surmont
in October for approximately $2.7 billion as well as future
contingent payments of up to $0.4 billion CAD ($0.3 billion).
- Achieved first steam at Surmont Pad 267 and startup at the
second phase of Montney’s central processing facility (CPF2) in
Canada.
- Reached first production ahead of schedule in October at
Tommeliten A and partner-operated Breidablikk and Kobra East &
Gekko in Norway and partner-operated Bohai Phase 4B in China.
- Further diversified LNG portfolio by signing a 15-year
throughput agreement for approximately 1.5 million tonnes per annum
of regasification at the Gate LNG Terminal in the Netherlands.
- Delivered company and Lower 48 production of 1,806 thousand
barrels of oil equivalent per day (MBOED) and 1,083 MBOED,
respectively.
- Generated cash provided by operating activities of $5.4 billion
and cash from operations (CFO) of $5.5 billion.
- Distributed $2.6 billion to shareholders through a three-tier
framework, including $1.3 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 $9.7
billion, which included proceeds from long-term debt issuances of
$2.7 billion to fund the Surmont acquisition.
Quarterly Dividend and Variable Return
of Cash
ConocoPhillips announced a quarterly ordinary dividend of $0.58
per share, payable Dec. 1, 2023, to stockholders of record at the
close of business on Nov. 14, 2023. ConocoPhillips paid its fourth
quarter VROC of $0.60 per share on Oct. 16, 2023, to stockholders
of record at the close of business on Sept. 28, 2023. Beginning in
the first quarter of 2024, ConocoPhillips plans to pay its
quarterly ordinary dividend and VROC concurrently and will announce
such payments in the same quarter they will be paid.
Third-Quarter Review
Production for the third quarter of 2023 was 1,806 MBOED, an
increase of 52 MBOED from the same period a year ago. After
adjusting for impacts from closed acquisitions and dispositions,
third-quarter 2023 production increased 49 MBOED or 3% 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 production of 1,083 MBOED, including 722
MBOED from the Permian, 232 MBOED from the Eagle Ford and 111 MBOED
from the Bakken. In Canada, Surmont Pad 267 achieved first steam
and Montney’s CPF2 came online, both in late September. Turnarounds
were successfully completed in Norway and Alaska.
Earnings and adjusted earnings decreased from the third quarter
of 2022 primarily due to lower prices. The company’s total average
realized price was $60.05 per BOE, 28% lower than the $83.07 per
BOE realized in the third quarter of 2022.
For the quarter, cash provided by operating activities was $5.4
billion. Excluding working capital, ConocoPhillips generated CFO of
$5.5 billion and received proceeds of $0.2 billion primarily from
the sale of a Lower 48 equity investment. In addition, the company
funded $2.5 billion of capital expenditures and investments, paid
$1.3 billion in ordinary dividends and VROC and repurchased $1.3
billion of shares.
Nine-Month Review
ConocoPhillips’ nine-month 2023 earnings were $8.0 billion, or
$6.54 per share, compared with nine-month 2022 earnings of $15.4
billion, or $11.93 per share. Nine-month 2023 adjusted earnings
were $7.8 billion, or $6.38 per share, compared with nine-month
2022 adjusted earnings of $14.0 billion, or $10.79 per share.
Production for the first nine months of 2023 was 1,801 MBOED, an
increase of 70 MBOED from the same period a year ago. After
adjusting for impacts from closed acquisitions and dispositions,
production increased 72 MBOED or 4% from the same period a year
ago. Organic growth from Lower 48 and other development programs
more than offset decline and downtime.
Earnings and adjusted earnings for the first nine months of 2023
decreased from the same period a year ago primarily due to lower
prices. The company’s total realized price during this period was
$58.45 per BOE, 29% lower than the $82.82 per BOE realized in the
first nine months of 2022.
In the first nine months of 2023, cash provided by operating
activities was $14.7 billion. Excluding a $1.2 billion change in
working capital, ConocoPhillips generated CFO of $15.9 billion and
received disposition proceeds of $0.6 billion. The company funded
$8.4 billion of capital expenditures and investments, repurchased
$4.3 billion of shares and paid $4.2 billion in ordinary dividends
and VROC.
Outlook
All guidance has been updated to reflect the acquisition of an
additional 50% interest in Surmont but excludes any impacts from
the previously announced APLNG transaction.
Fourth-quarter 2023 production is expected to be 1.86 to 1.90
million barrels of oil equivalent per day (MMBOED). Full-year
production is expected to be approximately 1.82 MMBOED, as compared
to prior guidance of 1.80 to 1.81 MMBOED, due to the Surmont
acquisition.
Full-year guidance for adjusted operating cost was updated to
$8.6 billion versus the prior guidance of $8.3 billion, reflecting
the increased working interest at Surmont, increased Lower 48
non-operated activity and inflationary impacts primarily in the
Lower 48. Full-year guidance for depreciation, depletion and
amortization was updated to $8.3 billion versus prior guidance of
$8.2 billion primarily due to the Surmont acquisition.
Full-year guidance for capital and adjusted corporate segment
net loss remains 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. A recording and
transcript of the call will be posted afterward.
--- # # # ---
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, $94 billion of total assets, and approximately 9,800
employees at Sept. 30, 2023. Production averaged 1,801 MBOED for
the nine months ended Sept. 30, 2023, and proved reserves were 6.6
BBOE as of Dec. 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
conflicts in Ukraine and the Middle East, 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 conflicts in Ukraine and
the Middle East; 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 conflicts in Ukraine and the Middle East; 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 (EPS), 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 are 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
earnings is defined as earnings removing the impact of special
items. Adjusted EPS is a measure of the company’s diluted net
earnings per share excluding special items. 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
September 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 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
3Q23
3Q22
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
$
2,798
2.32
$
4,527
3.55
$
7,950
6.54
$
15,431
11.93
Adjustments: (Gain) loss on asset sales1
(94
)
(6
)
(100
)
(0.08
)
70
(16
)
54
0.04
(94
)
(6
)
(100
)
(0.08
)
(947
)
94
(853
)
(0.66
)
Tax adjustments
-
(144
)
(144
)
(0.12
)
-
-
-
-
-
(144
)
(144
)
(0.12
)
-
(407
)
(407
)
(0.33
)
(Gain) loss on CVE shares
-
-
-
-
-
-
-
-
-
-
-
-
(251
)
-
(251
)
(0.20
)
(Gain) loss on debt extinguishment and exchange fees
-
-
-
-
-
-
-
-
-
-
-
-
(44
)
52
8
0.01
Transaction and restructuring expenses
-
-
-
-
-
-
-
-
-
-
-
-
28
(8
)
20
0.02
(Gain) Loss on FX derivative
59
(12
)
47
0.04
-
-
-
-
59
(12
)
47
0.04
10
(2
)
8
0.01
Pending claims and settlements
-
-
-
-
(20
)
29
9
0.01
-
-
-
-
(20
)
29
9
0.01
Adjusted earnings / (loss)
$
2,601
2.16
$
4,590
3.60
$
7,753
$
6.38
$
13,965
10.79
1Includes 3Q23 divestiture of Lower 48 equity investment. 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
3Q23
3Q22
2023 YTD 2022 YTD Total Reported ConocoPhillips
Production
1,806
1,754
1,801
1,731
Closed Dispositions1
-
(12
)
(1
)
(27
)
Closed Acquisitions 2
-
15
-
17
Total Pro Forma Underlying Production
1,806
1,757
1,800
1,721
Estimated Uplift from 2 to 3 stream conversion3
-
-
-
7
1Includes production related to the 2022 Indonesia
disposition and various Lower 48 dispositions. 2Includes 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. 3Estimated 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 free cash flow
$ Millions, Except as Indicated
3Q23
2023 YTD
Net Cash Provided by Operating
Activities
5,445
14,702
Adjustments:
Net operating working capital changes
(23
)
(1,151
)
Cash from operations
5,468
15,853
ConocoPhillips Table 4: Reconciliation of
production and operating expenses to adjusted operating costs $
Millions, Except as Indicated
2023 FY Guidance
Production and operating expenses
~7,700
Selling, general and administrative (G&A) expenses
~700
Exploration G&A, G&G and lease rentals
~200
Operating costs
~8,600
Adjustments to exclude special items:
None
-
Adjusted operating costs
~8,600
ConocoPhillips
Table 5: Reconciliation of adjusted corporate segment net
loss
$ Millions, Except as Indicated
2023 FY Guidance
Corporate and Other earnings
~(850)
Adjustments to exclude special items:
(Gain) loss on FX derivative
~60
Income tax on special items
~(10)
Adjusted corporate segment net loss
~(800)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102727686/en/
Dennis Nuss (media) 281-293-1149
dennis.nuss@conocophillips.com
Investor Relations 281-293-5000
investor.relations@conocophillips.com
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