ConocoPhillips reports increases in earnings, production, shareholder returns

ConocoPhillips increased its quarter-over-quarter earnings, continued to integrate recently acquired Permian assets to deliver record production, and increased targeted returns to shareholders by an additional 25%.

The oil and gas major had first-quarter 2022 earnings of $5.8 billion compared to fourth-quarter 2021 earnings of $2.6 billion and first-quarter 2021 earnings of $1 billion (OGJ Online, Feb. 3, 2022). Excluding special items, first-quarter 2022 adjusted earnings were $4.3 billion compared with first-quarter 2021 adjusted earnings of $900 million. Special items for the current quarter were primarily comprised of a tax benefit related to closure of an audit, a gain associated with the Indonesia divestiture and a gain on Cenovus Energy (CVE) equity.

“The first quarter saw all aspects of the business running well as we continued to deliver on our strategic, financial, and operational plans,” said Ryan Lance, chairman and chief executive officer. “We also increased our targeted 2022 returns to shareholders by an additional 25%, to a new total of $10 billion,” he said in a May 5 release.

The company generated cash provided by operating activities of $5.1 billion and cash from operations of $7 billion.

Production

Production for the first quarter was 1.747 MMboe/d, an increase of 220,000 boe/d from the same period a year ago. After adjusting for closed acquisitions and dispositions, the conversion of previously acquired Concho contracted volumes from a two-stream to a three-stream basis, and 2021 Winter Storm Uri impacts, first-quarter 2022 production decreased by 36,000 boe/d or 2% from the same period a year ago. This decrease was primarily due to downtime and seasonality impacts as new production from the Lower 48 and other development programs more than offset decline.

In the Lower 48, production averaged 967,000 boe/d, including 640,000 boe/d from the Permian basin, 208,000 boe/d from the Eagle Ford, and 97,000 boe/d from the Bakken. Lower 48 ended the quarter with 22 drilling rigs and eight frac crews at work. In Canada, drilling and completion activities continued at Montney while construction progressed on the second phase of the company’s processing facility. In Qatar, a planned major turnaround at Train 6 was successfully completed.

Outlook

Second-quarter 2022 production of 1.67-1.73 MMboe/d is expected, reflecting impacts of seasonal turnarounds planned in Europe and Canada as well as weather impacts experienced during April in the Bakken.

Full-year production of 1.76 MMboe/d is expected, reflecting a net reduction of about 25,000 boe/d from acquisitions and dispositions closed as of May 5.

The company adjusted its 2022 operating capital guidance to $7.8 billion from $7.2 billion, reflecting higher partner-operated spend in Lower 48 and inflationary impacts. This guidance excludes $1.4 billion of capital associated with the closed acquisition of an additional 10% interest in Australia Pacific LNG (OGJ Online, Feb. 18, 2022).

Full-year guidance for depreciation, depletion and amortization has decreased to $7.7 billion, reflecting the impact of revised production guidance.