What To Expect From ConocoPhillips’ Second Quarter Results

ConocoPhillips (NYSE: COP) will release its second quarter results and conduct a conference call with analysts on July 26, 2018. The company is expected to post a strong set of results, with EPS (Non-GAAP) expected to grow to $1.09, roughly 14% higher sequentially and revenue expected to grow to $9.93 billion, almost 12% higher sequentially. These considerably higher growth rates are expected to be backed by sequentially higher crude oil prices and lower debt levels aiding the company’s bottom line.

Brent crude oil spot price averaged at approximately $68.06 per barrel for the June ’18 quarter, representing roughly an 8% sequential growth rate. Crude oil prices in the second quarter benefited from the sustained production cuts by Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC allies and the continued uncertainty with respect to Iran’s oil operations. However, the production level is expected to be slightly lower sequentially in the second quarter and is expected to range between 1,170 to 1,210 thousand barrels of oil equivalent per day (MBOED) in comparison to a production level of 1,224 MBOED achieved in the first quarter.

ConocoPhillips’ bottom line is expected to continue and benefit from lower debt levels. The company has systematically been reducing its debt levels to be better equipped to face an environment of fluctuating commodity prices and had successfully reduced its total debt to less than $20 billion by the end of 2017. In Q1 and Q2, the company had paid down an additional $2.7 billion and $2.1 billion of debt, respectively, and is thus well ahead of achieving its target debt level of $15 billion by 2019. Such materially lower levels of debt are expected to result in huge interest cost savings for the company and enhance its bottom line. Furthermore, based on such strong balance sheet position, the company has increased its 2018 share repurchase program by $1 billion to a total program of $3 billion. The company has also increased its previously announced repurchase authorization by $9 billion to $15 billion, administering the company’s focus on maintaining a high shareholder return.

Overall, the company expects its full-year 2018 production (excluding Libya) to average between 1,200 to 1,240 MBOED, translating into a growth of 5% on a year-on-year basis. Thus, with notably higher production volume and higher commodity prices and a strong balance sheet, ConocoPhillips is well positioned to have a strong year ahead. Our key expectations from the company’s full-year performance are highlighted in our interactive dashboard analysis: Q2 ’18: What To Expect From ConocoPhillips In 2018? You can modify our assumptions to arrive at your own fair price estimate for the company.

What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams | Product, R&D, and Marketing Teams

More Trefis Research

Like our charts? Explore example interactive dashboards and create your own.