ConocoPhillips Posts Strong Q1 Results Backed By Higher Oil Prices

ConocoPhillips (NYSE: COP) released its first-quarter 2018 results on April 26 and conducted a conference call with analysts the same day. The company reported better than expected results backed by higher oil prices. Adj-EPS was reported at $0.96 per share, vis-à-vis a negative adj-EPS of $-0.02 in the same period last year. Revenue also grew materially by 15% and was reported at $8.96 billion.

The company’s top line was favorably impacted by higher crude oil prices. ConocoPhillips reported its average realized crude oil price at $65.49 /barrel, 28% higher y-o-y. Furthermore, the total realized price for the company increased by almost 40% y-o-y and was reported at $50.49 per barrel of oil equivalent (BOE), reflecting the company’s advantage on a more “liquid-weighted portfolio.” Oil prices have increased significantly since the beginning of 2018 due to favorable macroeconomic factors including an extension of the oil output cut by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC allies, geopolitical tension in the middle-east, and a weaker dollar.

Production volume (excluding Libya), on the other hand, fell by 23% y-o-y to 1,224 million barrels of oil equivalent per day (MBOED) due to a resultant impact of asset sales. However, excluding the impact of asset dispositions, the first-quarter production grew by 4% y-o-y. This growth was primarily driven by a growth in output in the company’s Big 3 assets: Eagle Ford, Bakken, and Delaware, which grew by over 20% in Q1.

Thus, based on the company’s first-quarter outperformance and adjusting for previous dispositions, ConocoPhillips has raised its 2018 production outlook to 1,200 to 1,240 MBOED from its initial guidance of 1,195 to 1,235 MBOED, excluding Libya. This would reflect a 5% y-o-y increase in the company’s production volume. Additionally, the company also increased its quarterly cash dividend by 7.5% in Q1, administering the company’s focus on maintaining its high shareholder return. ConocoPhillips expects to produce 1,170 to 1,210 MBOED in Q2 2018 and continue to deliver “high-margin growth rates in its Big 3 throughout the remainder of the year.” Higher production volume in an environment of rising oil prices would continue to remain beneficial for ConocoPhillips.

Our base case assumptions have been upgraded based on the company’s latest results. You can use our interactive dashboard to make changes to our assumptions and arrive at your own fair price estimate for the company.

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