ConocoPhillips reports full-year, 4Q earnings gains

Feb. 12, 2018
ConocoPhillips recorded fourth-quarter 2017 earnings of $1.6 billion, up from third-quarter 2017 earnings of $400 million and up from the fourth-quarter 2016 net loss of $35 million. Full-year earnings were a net loss of $0.9 billion compared with a full-year 2016 net loss of $3.6 billion.

ConocoPhillips reports full-year, 4Q earnings gains

Mikaila Adams

Editor-News

ConocoPhillips recorded fourth-quarter 2017 earnings of $1.6 billion, up from third-quarter 2017 earnings of $400 million (OGJ Online, Oct. 26, 2017), and up from the fourth-quarter 2016 net loss of $35 million. Full-year earnings were a net loss of $0.9 billion compared with a full-year 2016 net loss of $3.6 billion.

Benefits from US tax reform, higher realized prices, and the $337-million settlement of Ecuador arbitration were primary drivers of the jump in earnings quarter-over-quarter, the company said. For the quarter, cash provided by operating activities was $2.5 billion, exceeding $1.5 billion in capital expenditures and investments and $300 million in dividends. Also in the fourth-quarter, ConocoPhillips repaid debt of $1.3 billion, repurchased $1 billion in company stock, sold $800 million of short-term investments, and received $100 million in asset sale proceeds.

Production for the fourth quarter, excluding Libya, was 1.219 million boe/d, a decrease of 360,000 boe/d compared with fourth-quarter 2016. Excluding the impact of dispositions, underlying production increased 45,000 boe/d, or 4%. Production from Libya was 37,000 boe/d.

Full-year 2017, cash from operating activities was $7.1 billion, exceeding $4.6 billion in capital expenditures and investments and dividends of $1.3 billion. The company received cash proceeds from asset dispositions of $13.9 billion, paid $7.9 billion to reduce debt, repurchased stock for $3 billion reducing ending share count by 5% year-over-year, purchased a net $1.8 billion in short-term investments, and contributed $600 million to the US pension fund. At yearend, ConocoPhillips has $6.3 billion of cash and cash equivalents, $1.9 billion of short-term investments, and held 208 million shares of Cenovus Energy. The company ended the year with debt of $19.7 billion.

Production excluding Libya for 2017 was 1.356 million boe/d compared with 1.567 million boe/d for the same period in 2016. Excluding the impact of dispositions, underlying production increased 32,000 boe/d, or 3%. The increase was due to major projects, development programs and improved well performance, which offset normal field decline, ConocoPhillips said. Production from Libya was 21,000 boe/d.

ConocoPhillips has "entered 2018 with strong operational and financial momentum," said Chief Executive Officer Ryan Lance. Since the start of the year, the company has paid down $2.25 billion in additional debt, raised its quarterly dividend rate by 7.5%, increased planned 2018 share buybacks to $2 billion, and signed an agreement to acquire Alaska assets from Anadarko Petroleum Corp., Houston. In the deal, ConocoPhillips will bolt-on Anadarko's 22% non-operated interest in the Western North Slope of Alaska, as well as its interest in the Alpine pipeline, for $400 million in cash. In 2017, gross production from the assets was 63,000 boe/d.

Full-year 2018 production is expected to be 1.195-1.235 million boe/d, the company said. First-quarter 2018 production is expected to be 1.18-1.22 million boe/d. Both production forecasts exclude Libya.

Guidance for 2018 production and operating expenses and 2018 adjusted operating cost is $5.7 billion.