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ConocoPhillips (COP) Q2 Earnings Beat on Higher Oil Prices

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ConocoPhillips COP reported second-quarter 2021 adjusted earnings per share of $1.27, comfortably beating the Zacks Consensus Estimate of $1.15. Further, the figure significantly improved from adjusted loss of 92 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 $10,211 million increased from second-quarter 2020 sales of $4,016 million. Also, the figure beat the Zacks Consensus Estimate of $10,197 million.

The strong second-quarter results were aided by increased production volumes due to the Concho acquisition and rising realized commodity prices. Production from the Lower 48, Canada, Europe and other regions marked an increase.

ConocoPhillips Price, Consensus and EPS Surprise

ConocoPhillips Price, Consensus and EPS Surprise
ConocoPhillips Price, Consensus and EPS Surprise

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

Production

Total production averaged 1,588 thousand barrels of oil equivalent per day (MBoe/d), up from the year-ago quarter’s 981 MBoe/d. Of the total output, 53.5% 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 Asia Pacific. The Concho acquisition supported production volumes.

ConocoPhillips’ production of crude oil came in at 849 thousand barrels per day (MBbls/d), significantly higher than the year-ago quarter’s 474 MBbls/d. Also, natural gas output came in at 3,260 million cubic feet per day (MMcf/d), higher than the year-ago level of 2,277 MMcf/d. Also, bitumen production for the quarter was recorded at 68 MBbls/d, higher than the second-quarter 2020 figure of 34 MBbls/d. The company’s production of natural gas liquids totaled 128 MBbls/d, higher than the year-ago period’s 93 MBbls/d.

Realized Prices

Average realized oil equivalent prices rose to $50.03 per barrel from the year-ago level of $23.09.

The average realized crude oil price for the second quarter was $65.51 per barrel, reflecting an increase from the year-ago realization of $25.10. Realized natural gas liquids price was recorded at $26.87 per barrel, higher than the year-ago quarter’s $9.88. Average realized natural gas price for second-quarter 2021 was $4.16 per thousand cubic feet, up from the year-ago period’s $3.22. Average realized bitumen price was recorded at $37.60 per barrel, which also reflects a significant improvement from the year-ago level.

Total Expenses

ConocoPhillips’ second-quarter total expenses rose to $7,131 million from $3,995 million in the corresponding period of 2020.

Production and operating expenses rose to $1,379 million for the reported quarter from $1,047 million a year ago. Similarly, the cost of purchased commodities rose to $2,998 million for the quarter from $1,130 million a year ago. Nonetheless, exploration costs decreased to $57 million for the June quarter of 2021 from $97 million in the comparable period of 2020.

Balance Sheet & Capital Spending

As of Jun 30, 2021, the oil and gas giant had $6,608 million in total cash and cash equivalents, reflecting a massive jump from the first-quarter level of $2,831 million. The company had a total long-term debt of $18,805 million, down sequentially from $19,338 million. It had a debt-to-capitalization ratio of 0.31. At first quarter-end, the company had a short-term debt of $1,205 million.

Capital expenditures and investments totaled $1,265 million, and dividend payments grossed $583 million. Net cash provided by operating activities was recorded at $4,251 million, up from the year-ago figure of $157 million. It generated free cash flow of $2.8 billion in the second quarter.

Guidance

The company reiterated its full-year production guidance at 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. Third-quarter production will likely be within 1.48-1.52 MMBoe/d.

For the full year, adjusted operating costs will likely be $6.1 billion. The company expects 2021 capital budget of $5.3 billion, indicating an increase from the 2020 level of around $4.7 billion.

Zacks Rank & Other Stocks to Consider

The company currently sports a Zacks Rank #1 (Strong Buy). Other top-ranked stocks from the energy space include Range Resources Corporation RRC, NOW Inc. DNOW and Braskem S.A. BAK, each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Range Resources’ earnings for 2021 is pegged at $1.53 per share, indicating a massive improvement from the year-ago loss of 9 cents.

NOW’s profits for 2021 are expected to jump 100% year over year.

Braskem’s bottom line for 2021 is expected to surge 326.7% year over year.


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