ConocoPhillips earnings up quarter-over-quarter, year-over-year

ConocoPhillips had fourth-quarter 2021 earnings of $2.6 billion, compared with a fourth-quarter 2020 loss of $800 million, and third-quarter 2021 earnings of $2.4 billion (OGJ Online, Feb. 2, 2021; Nov. 2, 2021).

Excluding special items, fourth-quarter 2021 adjusted earnings were $3 billion, compared with a fourth-quarter 2020 adjusted loss of $200 million. Special items for the current quarter were primarily comprised of non-cash impairments related to the company’s existing investment in APLNG and noncore assets in Lower 48, partially offset by a gain on Cenovus Energy (CVE) equity.

Full-year 2021 earnings were $8.1 billion, compared with a full-year 2020 loss of $2.7 billion. Excluding special items, full-year 2021 adjusted earnings were $8 billion, compared with a full-year 2020 adjusted loss of $1 billion.

Fourth quarter

Production excluding Libya for fourth-quarter 2021 was 1.57 MMboe, an increase of 423,000 boe/d from the same period a year ago. After adjusting for closed acquisitions and dispositions as well as impacts from converting previously acquired Concho two-stream contracted volumes to a three-stream basis, fourth-quarter 2021 production increased by 70,000 boe/d, or 5% from the same period a year ago. This increase was primarily due to new production from Lower 48 and other development programs across the portfolio, partially offset by normal field decline. Production from Libya averaged 41,000 boe/d.

In the Lower 48, production averaged 818,000 boe/d, including 483,000 boe/d from the Permian basin, 213,000 boe/d from the Eagle Ford, and 100,000 boe/d from the Bakken. Lower 48 ended the quarter with 20 drilling rigs and nine frac crews at work, including ongoing activity on the Permian basin assets acquired in the fourth quarter. In Alaska, GMT2 achieved first oil on schedule at rates in line with expectations.

For the quarter, cash provided by operating activities was $5.9 billion. Excluding a $0.4 billion change in operating working capital, ConocoPhillips generated cash flow from operations of $5.5 billion.

Full year

Production excluding Libya for 2021 was 1.53 MMboe/d. After adjusting for closed acquisitions and dispositions, impacts from 2020 curtailments, 2021 Winter Storm Uri, and the conversion of Concho two-stream contracted volumes to a three-stream basis, production increased by 28,000 boe/d or 2%. This increase was primarily due to new production from Lower 48 and other development programs across the portfolio, partially offset by normal field decline. Production from Libya averaged 40,000 boe/d.

In 2021, cash provided by operating activities was $17 billion. Excluding a $1.3 billion change in operating working capital, ConocoPhillips generated cash flow from operations of $15.7 billion.

Outlook

The operator’s 2022 operating plan capital budget is $7.2 billion. The plan includes funding for ongoing development drilling programs, major projects, exploration and appraisal activities, base maintenance and $200 million for projects to reduce the company’s Scope 1 and 2 emissions intensity and fund investments in several early-stage low-carbon opportunities that address end-use emissions.

The company’s 2022 production guidance is 1.8 MMboe/d, including Libya but excluding impacts from the pending Indonesia disposition and acquisition of additional APLNG shareholding interest. First-quarter 2022 production is expected to be 1.75-1.79 MMboe/d, essentially flat to fourth-quarter 2021 on a pro forma basis.

Guidance for 2022 includes adjusted operating cost of $7.3 billion reflecting increased production, costs incurred following conversion of previously acquired Concho two-stream contracted volumes to a three-stream basis, and some anticipated inflation; adjusted corporate segment net loss of $1.0 billion; and depreciation, depletion and amortization of $7.9 billion. Guidance excludes potential special items.