A deeper look into ConocoPhillips’ 2Q14 financial performance

Market Realist

Must-know: Key takeaways from ConocoPhillips’ Q2 earnings (Part 2 of 8)

(Continued from Part 1)

Lower 48 production supports revenue

Revenues for the quarter amounted to $13.8 billion, missing Wall Street analysts’ estimate of $15.3 billion. They were 10.3 % lower than previous quarter’s revenues, but were 3.5% higher than last year.

One of the reasons revenues were less than the previous quarter’s revenues is likely higher price realizations for natural gas due to the severe winter experienced in the first quarter. Natural gas prices have since come down.

Production levels were, however, 4% or 60 MBOE higher than the previous year’s levels. Approximately 82% of this production growth (49 MBOE) came from COP’s operations in the lower 48 States—especially in the Eagle Ford and Bakken regions. This led to increased revenues from these regions.

Revenue from the Lower 48 states was almost 40% of the total revenue. This was slightly higher than the previous year’s revenue contribution of ~37%.

Capital expenditures and dividends

Capital expenditures in the second quarter were $8,141 million, 33% of which was spent in the Lower 48 states. The company noted in the earnings call that cash flow from operations ($9,958 million) was used to fund the capital expenditure and dividend for the first half of the year.

COP increased its quarterly dividend by 5.8% in July to $0.73, or $2.92 annualized. Dividends paid to its shareholders this quarter amounted to $1,711 million.

Key ETFs

ConocoPhillips (COP) is a component of several important ETFs, including the Energy Select Sector SPDR ETF (XLE), the iShares U.S. Energy ETF (IYE), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), and the Vanguard Energy ETF (VDE).

Operational highlights

Continue to the next part of this series to read about COP’s 2Q 2014 operational highlights.

Continue to Part 3

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