ConocoPhillips (NYSE: COP) today provided information regarding
preliminary first-quarter 2021 operational and financial updates as
well as certain full-year 2021 guidance items. The information
discussed herein reflects the combined company following the close
of the Concho transaction in January. Final first-quarter results
will be reported on May 4.
First-Quarter Production
The company expects to report first-quarter 2021 production
volumes of 1,470 to 1,490 thousand barrels of oil equivalent per
day (MBOED). This estimate includes approximately 50 MBOED of
unplanned weather impacts experienced throughout the Lower 48 as a
result of Winter Storm Uri. Production in the Lower 48 was fully
restored in March.
Preliminary production estimates by area and product for the
first quarter of 2021 are shown below:
1Q 2021 Production Midpoint
Estimate
Total (MBOED)
Crude Oil (MBD)
NGL (MBD)
Bitumen (MBD)
Natural Gas
(MMCFD)
Consolidated Operations
Alaska
205
190
14
-
5
Lower 48
710
410
80
-
1,320
Canada
100
10
5
70
90
Norway
135
80
5
-
300
China
30
30
-
-
-
Indonesia
55
2
-
-
320
Malaysia
45
35
-
-
60
Equity Affiliates
200
15
5
-
1,080
Total Excluding Libya
1,470–1,490
772
109
70
3,175
Note: Libya production for 1Q 2021 is estimated to be 40
MBOED.
First-Quarter Realized Pricing and
Commercial Activity
Total average realized prices are expected to be $43 to $45 per
barrel of oil equivalent (BOE) for the first quarter of 2021. These
estimates reflect prices received under existing contract terms as
well as normal pricing variability due to timing and local
differentials, but exclude the effects of commodity derivatives.
Preliminary estimates of average realized prices by area and
product for the first quarter of 2021 are shown below:
1Q 2021 Average Realized Price
Midpoint Estimate
Crude Oil
($/BBL)
NGL ($/BBL)
Bitumen ($/BBL)
Natural Gas
($/MCF)
Consolidated Operations
Alaska
59
-
-
2.20
Lower 48
56
24
-
3.80
Canada
46
20
31
2.40
Norway
57
39
-
6.20
Libya
60
-
-
2.90
China
58
-
-
-
Indonesia
51
-
-
6.90
Malaysia
63
-
-
2.60
Equity Affiliates
60
49
-
2.80
Total
56 – 58
26 – 27
30 – 32
4.30 – 4.50
Note 1: The estimated total realized price represents the
company’s weighted average price for 1Q 2021. Note 2: Existing
contracts assumed as part of the Concho acquisition are based on 2
stream recognition.
In addition, the company expects to record before-tax earnings
of approximately $0.1 billion related to commercial performance in
the first quarter.
Concho-Related Unusual
Items
The company expects to report first-quarter transaction and
restructuring related expenses associated with the Concho
acquisition of approximately $0.3 billion before tax, which will be
treated as a special item when reporting non-GAAP adjusted
earnings. Table 1 at the end of this news release provides
additional information on projected first-quarter and full-year
2021 adjusted operating costs.
In addition, the company expects to incur losses of
approximately $0.3 billion before tax from commodity hedging
positions. This includes losses of approximately $0.1 billion
before tax related to positions for which the company accelerated
settlement into the first quarter that will be treated as a special
item when reporting non-GAAP adjusted earnings. As of the end of
the quarter, the company had settled all oil and gas hedging
positions acquired from Concho.
Excluding working capital, the expected total impact to cash
from operations from the transaction and restructuring expenses in
combination with the hedging impacts is a reduction of
approximately $1.0 billion. This includes approximately $0.8
billion related to settling all oil and gas positions acquired from
Concho, of which approximately $0.5 billion in net liability was
recorded on the acquisition close date of Jan. 15.
See the table below for a summary of the estimated financial
statement impacts associated with the items mentioned above.
Estimated 1Q 2021 Impacts from
Concho Unusual Items - $ Billion
Earnings Impact (Before
Tax)
Cash from Operations ex
WC
Transaction & Restructuring
Expenses*
(0.3)
(0.3)
Settlement of Q1 2021 Hedges
(0.2)
(0.2)
Accelerated Settlement of Concho Hedging
Program**
(0.1)
(0.6)
Total
~(0.6)
~(1.0)
* To be treated as a special item when reporting non-GAAP
adjusted earnings. ** To be treated as a special item when
reporting non-GAAP adjusted earnings; cash from operations reflects
the impacts of settling oil and gas hedging positions acquired from
Concho, inclusive of approximately $0.5 billion net liability at
Jan 15.
First-Quarter and Full-Year
Guidance
In addition to the updates above, the company is providing the
following guidance estimates for first-quarter and full-year
2021:
1Q 2021
Full-Year 2021
Adjusted Operating Costs
$1,495 – 1,565 million
$6.2 billion
DD&A
$1,840 – 1,910 million
$7.4 billion
Adjusted Corporate Segment Net Loss
$225 – 275 million
$1.0 billion
Capital Expenditures
$1,210 – 1,290 million
$5.5 billion
Production Excluding Libya
1.47 – 1.49 MMBOED
1.5 MMBOED
All updates and estimates provided were calculated using actual
results for January and February along with forecasts for the
remaining periods. ConocoPhillips will announce first-quarter 2021
operational and financial results on May 4 and host a conference
call on that date at 12:00 p.m. Eastern time.
--- # # # ---
About ConocoPhillips
Headquartered in Houston, Texas, ConocoPhillips had operations
and activities in 15 countries, $63 billion of total assets, and
approximately 9,700 employees at Dec. 31, 2020. Production
excluding Libya averaged 1,118 MBOED for 2020, and proved reserves
were 4.5 BBOE as of Dec. 31, 2020. 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 any
adjustments to our results of operations recognized as part of our
regular process for producing and reviewing our financial
statements for completed periods; 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 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; 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 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 or any future
dispositions or acquisitions on time, if at all; the possibility
that regulatory approvals for our 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 during or following our 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 to our transaction with
Concho Resources Inc. (Concho); 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; the ability to successfully integrate the
operations of Concho with our operations and achieve the
anticipated benefits from the transaction; unanticipated
difficulties or expenditures relating to the Concho transaction;
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 preliminary first quarter 2021
operational and financial update this news release may contain or
describe certain financial measures that are not prepared in
accordance with GAAP, including adjusted earnings, adjusted
operating costs, adjusted corporate segment net loss and cash from
operations (CFO).
The company believes that the non-GAAP measures adjusted
earnings, 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 special items that do not directly relate to the
company’s core business operations, or are of an unusual and
non-recurring nature. 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. Adjusted earnings is defined as net income (loss)
attributable to ConocoPhillips adjusted for the impact of special
items that do not directly relate to the company’s core business
operations, or are of an unusual and non-recurring nature.
Operating costs is defined by the company 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 operating costs is defined as the company’s
operating costs further 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. CFO is defined as cash provided by
operating activities, excluding the impact of changes in operating
working capital. 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 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 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 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.
ConocoPhillips Table 1: Reconciliation of
production and operating expenses to adjusted operating costs $
millions, except as indicated
1Q21 Guidance
2021 FY Guidance
Production and operating expenses ~1,410
~5,625 Adjustments: Selling, general and administrative
(G&A) expenses ~295 ~600 Exploration G&A, G&G and lease
rentals ~90 ~300 Operating costs ~1,795 ~6,525 Adjustments
to exclude special items: Transaction and restructuring expenses
~(265) ~(325)
Adjusted operating costs ~1,530
~6,200 ConocoPhillips Table
2: Reconciliation of adjusted corporate segment net expense $
millions, except as indicated
1Q21 Guidance
2021 FY Guidance
Corporate and Other earnings ~(100)
~(860) Adjustments to exclude special items: Less
unrealized loss (gain) on CVE share ~(285) ~(285) Less unrealized
loss (gain) on FX derivative ~5 ~5 Less transaction and
restructuring expenses* ~75 ~90 Less deferred tax adjustment ~75
~75 Less tax on special items ~(20) ~(25)
Adjusted corporate
segment net expense ~(250) ~(1,000)
*Represents the estimated amount of transaction and restructuring
expenses to be recorded in the Corporate segment. This amount is
included in the transaction and restructuring expense figures of
$265 million for 1Q21 and $325 million for 2021 FY included in the
total company Table 1 above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210331005157/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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