ConocoPhillips swings to profit, raises dividend

Britannia satellites in the UK North Sea; Image: ConocoPhillips

U.S. oil major ConocoPhillips returned to quarterly profit helped by higher oil prices and increased its dividend and share buyback.

ConocoPhillips on Thursday reported fourth-quarter 2017 earnings of $1.6 billion, compared with a fourth-quarter 2016 net loss of $35 million.

Excluding special items, fourth-quarter 2017 adjusted earnings were $0.5 billion, compared with a fourth-quarter 2016 adjusted net loss of $0.3 billion. Special items for the current quarter were primarily driven by benefits from U.S. tax reform and the settlement of Ecuador arbitration.

Earnings were higher compared with the fourth quarter of 2016 due to benefits from U.S. tax reform, higher realized prices and the settlement of the Ecuador arbitration. The U.S. tax reform non-cash benefit was approximately $0.9 billion, primarily resulting from the revaluation of deferred taxes at the lower 21 percent federal statutory rate.

Adjusted earnings were improved compared with fourth-quarter 2016 primarily due to higher realized prices, higher underlying production, and lower depreciation expense.

The company’s full-year 2017 earnings were a net loss of $0.9 billion, compared with a full-year 2016 net loss of $3.6 billion. Excluding special items, full-year 2017 adjusted earnings were $0.7 billion, compared with a full-year 2016 adjusted net loss of $3.3 billion.

ConocoPhillips also announced an increase in its distributions to shareholders, consisting of an increase to the quarterly dividend and an increase in the previously announced planned 2018 share repurchases.

The board of directors approved a 7.5 percent increase to the quarterly dividend, from 26.5 cents to 28.5 cents per share. The dividend is payable on March 1, 2018 to stockholders of record at the close of business on Feb. 12, 2018.

Ryan Lance, chairman and chief executive officer, said: “We entered 2018 with strong operational and financial momentum. While the outlook for commodity prices has improved, our operating plan remains unchanged and we have already taken clear actions to demonstrate our commitment to maintain discipline and follow our priorities.”

Lance continued: “Since the year began, we’ve paid down $2.25 billion of additional debt, raised our quarterly dividend rate by 7.5 percent, increased our planned 2018 share buybacks to $2 billion, and announced an attractive bolt-on transaction in a high-quality, legacy asset with significant exploration upside.”

 

Production down

 

ConocoPhillips’ production for the fourth quarter of 2017, excluding Libya, was 1,219 mboed, a decrease of 368 mboed compared with the same period a year ago. According to the company, the fourth-quarter volume impact from closed and planned dispositions was 14 mboed in 2017 and 427 mboed in 2016.

Excluding the impact of dispositions, underlying production increased 45 mboed, or 4 percent. The increase came from the ramp up of major projects and development programs, which more than offset normal field decline and downtime. Production from Libya was 37 mboed.

The company’s total realized price was $46.10 per boe, compared with $32.93 per boe in the fourth quarter of 2016, reflecting higher average realized prices across all commodities.

Full-year 2018 production is expected to be 1,195 to 1,235 mboed. This results in approximately 5 percent growth compared with full-year 2017 underlying production, which excludes disposition impacts of 191 mboed. First-quarter 2018 production is expected to be 1,180 to 1,220 mboed. Production guidance for 2018 excludes Libya.

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

The company’s 2018 guidance for capital expenditures is $5.5 billion; corporate segment net expense is $1.2 billion or $1 billion adjusted corporate segment net expense; depreciation, depletion and amortization is $5.8 billion; and exploration dry hole and leasehold impairment expense is $0.2 billion.

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