ConocoPhillips (NYSE: COP) today reported a first-quarter 2020
loss of $1.7 billion, or ($1.60) per share, compared with
first-quarter 2019 earnings of $1.8 billion, or $1.60 per share.
Excluding special items, first-quarter 2020 adjusted earnings were
$0.5 billion, or $0.45 per share, compared with first-quarter 2019
adjusted earnings of $1.1 billion, or $1.00 per share. Special
items for the current quarter were primarily driven by an
unrealized loss on Cenovus Energy equity and price-driven non-cash
impairments.
Quarterly Dividend
The company also announced a quarterly dividend of 42 cents per
share, payable June 1, 2020, to stockholders of record at the close
of business on May 11, 2020.
First-Quarter Highlights
- Cash provided by operating activities was $2.1 billion.
Excluding working capital, cash from operations (CFO) was $1.6
billion.
- Ended the quarter with cash, cash equivalents and restricted
cash totaling $4.2 billion and short-term investments of $3.9
billion, equaling more than $8.0 billion in ending cash and
short-term investments.
- Ended the quarter with approximately $14 billion of liquidity,
including $6 billion of available revolving credit facility.
- Repurchased $0.7 billion of shares and paid $0.5 billion in
dividends.
- Achieved first-quarter production, excluding Libya, of 1,278
MBOED.
- Produced 399 MBOED from the Lower 48 Big 3
unconventionals.
- Started up first Montney pad and infrastructure.
- Generated $0.5 billion in disposition proceeds from Lower 48
non-core asset sales.
First-Quarter Review
Production excluding Libya for the first quarter of 2020 was
1,278 thousand barrels of oil equivalent per day (MBOED), a
decrease of 40 MBOED from the same period a year ago. Adjusting for
closed and pending dispositions, production increased 52 MBOED
primarily due to growth from the Big 3, as well as development
programs in Europe, Asia Pacific and Lower 48. This growth more
than offset normal field decline and impacts from a third-party
pipeline outage on the Kebabangan Field in Malaysia. Production
from Libya averaged 11 MBOED.
In the Lower 48, production from the Big 3 averaged 399 MBOED,
including Eagle Ford of 233 MBOED, Bakken of 96 MBOED and Permian
Unconventional of 70 MBOED. In Alaska, the company progressed
construction on the multi-year GMT-2 project, which remains on
track for startup in late 2021. The company also completed drilling
two wells to further appraise the Willow discovery and one well to
test the Harpoon prospect, prior to early termination of the 2020
winter exploration program to minimize risks associated with
COVID-19. In Canada, the first phase of development at Montney was
initiated with the startup of a 14-well pad and associated
infrastructure. Additionally, a planned 24-day turnaround in Qatar
was completed.
Earnings decreased from first-quarter 2019 due to a change in
Cenovus Energy equity market value, lower realized prices, and
price-driven non-cash impairments. Excluding special items,
adjusted earnings were lower compared with first-quarter 2019 due
to lower realized prices and volumes, partially offset by decreases
in operating costs. Dry hole and lease impairment expenses totaled
$67 million pre-tax for the quarter, primarily for the Kamunsu East
Field in Malaysia that is no longer in our development plans, as
well as a dry hole in Norway. The company’s total average realized
price was $38.81 per barrel of oil equivalent (BOE), 23 percent
lower than the $50.59 per BOE realized in the first quarter of
2019, reflecting lower marker prices.
For the quarter, cash provided by operating activities was $2.1
billion. Excluding a $0.5 billion change in operating working
capital, ConocoPhillips generated CFO of $1.6 billion. CFO included
a non-cash downward inventory valuation adjustment of $0.2 billion
driven by lower commodity prices, which was offset in operating
working capital. The company also generated $0.5 billion in
disposition proceeds from the sale of the Lower 48 Niobrara and
Waddell assets. In addition, the company funded $1.6 billion of
capital expenditures and investments, repurchased $0.7 billion of
shares, and paid $0.5 billion in dividends. Capital expenditures
and investments included approximately $0.1 billion for payments
toward the 2019 Argentina acreage acquisition, as well as bolt-on
acquisitions in Lower 48. The company also purchased $0.9 billion
of short-term and long-term financial instruments.
Other Items
Upcoming operational activities for the company include several
seasonal turnarounds and maintenance projects typically conducted
in the second and third quarters each year. These activities are
planned in Alaska, Norway and various areas in the Asia Pacific
region.
The company recently announced that it expects to voluntarily
curtail production due to weak prices. Voluntary curtailments for
the month of May are now estimated to be 265 thousand barrels of
oil per day (MBOD) gross, comprised of 165 MBOD gross in the Lower
48 and 100 MBOD gross at Surmont. This represents approximately 230
MBOED on a net basis.
The company currently estimates voluntary curtailments for the
month of June will be 460 MBOD gross, comprised of 260 MBOD gross
in the Lower 48, 100 MBOD gross at Surmont and 100 MBOD gross in
Alaska. This represents approximately 420 MBOED on a net basis.
Future voluntary curtailment decisions across our areas of
operations will be made on a month-by-month basis. Daily net barrel
oil equivalent impacts may vary from estimates due to differences
in working interests and product mixes.
The company also expects some level of additional curtailments
from infrastructure constraints, actions from partner-operated
assets or government mandates.
Given ongoing uncertainty, continued market volatility, and
production curtailments over the coming months, the company
recently announced that its original 2020 guidance items should not
be relied upon and that further guidance has been temporarily
suspended. During this suspension, the company may provide periodic
updates, as appropriate. In addition, the previously provided net
income and cash flow sensitivities should not be relied upon as
current marker prices are outside the reference price ranges to
which the previous sensitivities applied.
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 supplemental information, go to
www.conocophillips.com/investor.
--- # # # ---
About ConocoPhillips
Headquartered in Houston, Texas, ConocoPhillips had operations
and activities in 17 countries, $65 billion of total assets, and
approximately 10,400 employees as of March 31, 2020. Production
excluding Libya averaged 1,278 MBOED for the three months ended
March 31, 2020, and proved reserves were 5.3 BBOE as of Dec. 31,
2019. 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 the
impact of public health crises, such as pandemics (including
coronavirus (COVID-19)) and epidemics and any related company or
government policies and actions to protect the health and safety of
individuals or government policies or actions to maintain the
functioning of national or global economies and markets; global and
regional changes in the demand, supply, prices, differentials or
other market conditions affecting oil and gas and the resulting
company actions in response to such changes, including changes
resulting from the imposition or lifting of crude oil production
quotas or other actions that might be imposed by the Organization
of Petroleum Exporting Countries and other producing countries;
changes in commodity prices; changes in expected levels of oil and
gas reserves or production; operating hazards, drilling risks,
unsuccessful exploratory activities; 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 fiscal regime or 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. 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 measures adjusted
earnings (both on an aggregate and a per-share basis) 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. 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 terms
liquidity and underlying production. Liquidity includes cash, cash
equivalents, short-term investments and available borrowing
capacity under the company’s revolving credit facility. The company
believes liquidity is useful to investors to provide insight into
the company’s ability to fund its business plans and debt
obligations. Underlying production excludes Libya and reflects the
impact of closed and pending dispositions with an assumed close
date of January 1, 2019. The company believes that underlying
production is useful to investors to compare production excluding
Libya and reflecting the impact of closed and pending dispositions
on a consistent go-forward basis across periods and with 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
1Q20 1Q19 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
$
(1,739
)
(1.60
)
1,833
1.60
Adjustments: Unrealized (gain) loss on CVE shares
1,691
-
1,691
1.56
(343
)
-
(343
)
(0.30
)
Impairments
770
(177
)
593
0.54
60
(13
)
47
0.04
Net gain on asset sales
38
(9
)
29
0.03
-
-
-
-
Unrealized (gain) loss on FX derivative
(75
)
16
(59
)
(0.05
)
6
(1
)
5
0.00
Pending claims and settlements
(29
)
-
(29
)
(0.03
)
(130
)
(68
)
(198
)
(0.17
)
Recognition of deferred revenue
-
-
-
-
(248
)
52
(196
)
(0.17
)
Adjusted earnings / (loss)
$
486
0.45
1,148
1.00
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 underlying production
In MBOED, Except as Indicated
1Q20 1Q19 Total
Reported Production
1,289
1,361
Adjustments: Libya
(11)
(43)
Total Production excluding Libya
1,278
1,318
Closed Dispositions1
(11)
(93)
Pending Dispositions2
(46)
(56)
Total Underlying Production
1,221
1,169
1Includes production from the completed U.K. and various Lower 48
dispositions.2Includes production from the announced Australia-West
disposition.
ConocoPhillips Table 3:
Reconciliation of liquidity position In $ Millions, Except as
Indicated
Quarter-Ended3/31/2020
Quarter-Ended12/31/2019 Cash and cash equivalents
3,908
5,088
Short-Term Investments
3,866
3,028
Revolver
6,000
6,000
Total Liquidity
13,774
14,116
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200430005137/en/
John C. Roper (media) 281-293-1451
john.c.roper@conocophillips.com Investor Relations 281-293-5000
investor.relations@conocophillips.com
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