Key Trends To Watch For In ConocoPhillips’ 3Q’16 Earnings

-2.22%
Downside
127
Market
124
Trefis
COP: ConocoPhillips logo
COP
ConocoPhillips

With a notable recovery in commodity prices over the last three months, ConocoPhillips (NYSE:COP), a leading independent oil and gas producer, is expected to report an improvement in its third quarter financial results, slated for release on 27th October 2016 [1]. The US-based exploration and production company had suffered a severe decline in its top line as well as profitability in the June quarter, despite the sudden recovery in commodity prices. However, since then, the company has revised its 2016 production guidance upwards by almost 2% in anticipation of higher commodity prices and better-than-expected production from its key regions. While the company is likely to post losses even in this quarter, the magnitude of loss is expected to be much lower compared to the previous quarter due to higher price realizations.

COp-Q&A-3Q16

HAL-Q&A-3Q16-1

Relevant Articles
  1. Up 15% In Last Six Months, Will ConocoPhillips Stock Continue To Grow Post Q3?
  2. ConocoPhillips Q2 Earnings: What Are We Watching?
  3. What’s Next For ConocoPhillips Stock?
  4. ConocoPhillips Stock To Likely Trade Higher Post Q4
  5. This Stock Appears To Be A Better Bet Than EOG Resources
  6. Earnings Beat In The Cards For ConocoPhillips Stock?

ConocoPhillips expects to produce 1,510 to 1,550 MBOED (thousand barrels of oil per day) in the September quarter, despite major turnaround activities planned during the quarter. On the one hand, the company will continue to ramp up its production in the Canadian oil sands at FCCL and Surmont. On the other hand, the Houston-based oil and gas producer will continue to exit the deepwater exploration market in a phased manner.

On the cost side, the company has been consistently working towards reducing its operating costs to sustain its margins in the current downturn. In line with this, the Houston-based oil and gas producer had revised its operating cost guidance from $7 billion to $6.8 billion for the full year 2016. Thus, we expect these operational efficiencies to result in better margins for the company in this quarter, as well as the next couple of quarters.

COP-Q&A-2Q16-7

As a positive news for the company’s shareholders, ConocoPhillips has announced a quarterly dividend of 25 cents per share for the quarter [2]. Although the company had lowered its quarterly dividend a few quarters ago, it has not completely discontinued its dividends, unlike other oil and gas producers who have either suspended their dividends, or have filed for bankruptcy. Thus, we figure that ConocoPhillips is fighting tooth and nail to sustain its operations in this commodity slump.

Have more questions about ConocoPhillips (NYSE:COP)? See the links below:

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for ConocoPhillips

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap

More Trefis Research

Notes:
  1. ConocoPhillips To Announce Third Quarter Results, 6th October 2016, www.conocophillips.com []
  2. ConocoPhillips Announces Quarterly Dividend, 6th October 2016, www.conocophillips.com []