ConocoPhillips Reports Strong Q2 Results Backed By Higher Crude Oil Prices, Raises Full-Year Production Guidance

ConocoPhillips (NYSE: COP) reported its second-quarter results and conducted a conference call with analysts on July 26th. The company reported better than expected earnings and reported an EPS (Non-GAAP) of $1.09 per diluted share in comparison to an EPS (Non-GAAP) of $0.14 reported a year ago. The significant growth in the company’s profitability broadly reflects the prevailing strength in crude oil prices and the advantage of a significantly lower debt level. The company’s revenue also displayed a robust growth rate of approximately 5% as a consequence of the same and was reported at $9.24 billion.

ConocoPhillips reported the total realized price was $54.32 per barrel of oil equivalent (BOE), reflecting more than 50% year-on-year (y-o-y) growth rate. This growth was largely driven by higher realized crude oil prices which were reported at $70.55 per barrel, displaying a 46% y-o-y 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.

The company reported a lower production level as a consequence of a significant proportion of asset sales in the previous year, however, excluding the impact of the same, ConocoPhillips reported a 5% y-o-y growth in output (excluding Libya). The company’s strong level of output was driven by its Big 3 assets: Eagle Ford, Bakken, and Delaware, which cumulatively displayed a y-o-y growth rate of 37% during the quarter. The company additionally achieved its $15 billion debt target during the quarter. Lower debt level has significantly aided the company’s bottom line through lower interest costs.

Thus, based on such strong performance, the company has revised its 2018 production outlook by almost 2% to the range of 1.225 million-1.255 million Boe/d. The enhanced guidance largely reflects the efficiency in the company’s existing production facilities and its caliber to benefit from higher crude oil prices. The company, however, expects to experience some significant cost headwinds as a result of the recently imposed steel tariffs in the U.S. We have consequently updated our base case estimate for the company’s full-year performance based on these developments. You can modify our assumptions to arrive at your own fair price estimate for the company by using our interactive dashboard: ConocoPhillips’ Q2 2018 Results Imply An Upward Price Adjustment For The Company.

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