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ConocoPhillips (COP) Q1 Earnings Beat on Higher Crude Output

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ConocoPhillips (COP - Free Report) reported first-quarter 2021 adjusted earnings per share of 69 cents, comfortably beating the Zacks Consensus Estimate of 57 cents. Moreover, the figure increased from adjusted earnings of 45 cents per share a year ago.

Based in Houston, TX, one of the world’s largest independent oil and gas producers, ConocoPhillips’ quarterly revenues of $10,559 million increased from first-quarter 2021 sales of $4,811 million. Moreover, the figure beat the Zacks Consensus Estimate of $8,343 million.

Strong first-quarter results stemmed from increased production and realized commodity prices. Production from the Lower 48, Canada and other regions marked an increase.

ConocoPhillips Price, Consensus and EPS Surprise

ConocoPhillips Price, Consensus and EPS Surprise

ConocoPhillips price-consensus-eps-surprise-chart | ConocoPhillips Quote

Production

Total production averaged 1,527 thousand barrels of oil equivalent per day (MBoe/d), up from the year-ago quarter’s 1,289 MBoe/d. Of the total output, 53.6% was crude oil. Overall production was higher than the year-ago period, primarily due to significantly increased output in Lower 48, Canada and other regions. This was partially offset by decreased production in Alaska, Norway and other places.

ConocoPhillips’ production of crude oil came in at 818 thousand barrels per day (MBD), significantly higher than the year-ago quarter’s 654 MBD. Also, natural gas output came in at 3,155 million cubic feet per day (MMcf/d), higher than the year-ago level of 2,674 MMcf/d. Also, bitumen production for the quarter was recorded at 70 MBD, higher than the first-quarter 2020 figure of 66 MBD. However, the company’s production of natural gas liquids totaled 113 MBD, lower than the year-ago period’s 123 MBD.

Realized Prices

Markedly, average realized oil equivalent prices rose to $45.36 per barrel from the year-ago level of $38.81.

The average realized crude oil price for the first quarter was $57.22 per barrel, reflecting an increase from the year-ago realization of $48.86. Realized natural gas liquids price was recorded at $26.44 per barrel, higher than the year-ago quarter’s $14.82. Average realized natural gas price for first-quarter 2021 was $4.42 per thousand cubic feet, up from the year-ago period’s $4.30. Moreover, average realized bitumen price was recorded at $30.78 per barrel, much higher than the year-ago figure of $5.90.

Total Expenses Rise

ConocoPhillips’ first-quarter total expenses rose to $8,845 million from $6,374 million in the corresponding period of 2020. Production and operating expenses rose to $1,383 million for the reported quarter from $1,173 million a year ago. However, exploration costs decreased to $84 million for first-quarter 2021 from $188 million in the comparable period of 2020.

Balance Sheet & Capital Spending

As of Mar 31, 2021, the oil giant had $2,831 million in total cash and cash equivalents, down from the fourth-quarter level of $2,991 million. The company had a total long-term debt of $19,338 million, up sequentially from $14,750 million. It had a debt-to-capitalization ratio of 0.32. At first quarter-end, the company had a short-term debt of $689 million.

Capital expenditures and investments totaled $1,200 million, and dividend payments grossed $588 million. Net cash provided by operating activities was recorded at $2,080 million, down from the year-ago figure of $2,105 million.

Outlook

The company expects full-year production to be 1.5 million barrels of oil equivalent per day (MMBoe/d). The figure indicates an improvement from the 2020 level of 1.1 MMBoe/d. Second-quarter production will likely be within 1.5-1.54 MMBoe/d. For the full year, adjusted operating costs will likely be $6.2 billion. The company reiterated 2021 capital budget at $5.5 billion, indicating an increase from the 2020 level of around $4.7 billion.

Importantly, the company intends to divest its stake in Cenovus Energy Inc. (CVE - Free Report) in the open market within 2022-end. The proceeds will be utilized for share buybacks.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Frank's International N.V. (FI - Free Report) and Hess Corporation (HES - Free Report) , each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Frank's International’s bottom line for 2021 is expected to rise 46.7% year over year.

Hess’ bottom line for 2021 is expected to surge 145.4% year over year.

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