A month has gone by since the last earnings report for ConocoPhillips (
COP Quick Quote COP - Free Report) . Shares have added about 6.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ConocoPhillips due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
ConocoPhillips Q1 Earnings & Revenues Beat Estimates
ConocoPhillips 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.
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.
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.
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 Energyin the open market within 2022-end. The proceeds will be utilized for share buybacks.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 14.72% due to these changes.
Currently, ConocoPhillips has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, ConocoPhillips has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.