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ConocoPhillips (COP) Posts Earnings in Q2, Cuts Capex View

Upstream energy player ConocoPhillips COP reported second-quarter 2017 adjusted earnings of 14 cents per share that compared favorably with the Zacks Consensus Estimate of a loss of 2 cents and year-ago-quarter loss of 79 cents.

Revenues of $8,882 million beat the Zacks Consensus Estimate of $6,735 million. The top line also improved from $5,575 million in the year-ago quarter.  

Higher realized prices from commodities sold primarily led to the strong Q2 numbers. Production ramp up from numerous key developments also supported the numbers.

Exploration and Production

Production from continuing operations averaged 1,437 thousand barrels of oil equivalent per day (MBOED) in the quarter, as compared with 1,546 MBOED in the year-ago quarter. The decline was led by field decline, which was negated partially by production ramp up from numerous key developments.

Price Realization

Average realized price for oil was $48.16 per barrel, compared with $42.72 in the year-earlier quarter. Natural gas liquids were sold at $20.99 a barrel versus $16.55 a year ago. The price of natural gas was $3.83 per thousand cubic feet, compared with $2.49 in second-quarter 2016.    

Financials

As of Jun 30, 2017, the company had total cash and cash equivalents of $7.5 billion and debt of $23.5 billion, with a debt-to-capitalization ratio of 43%. In the reported quarter, ConocoPhillips generated $1.8 billion in cash from operating activities. The company spent $1 billion as capital expenditures and investments and paid dividends worth $331 million.

Total Expense

The company reported expenses of $13.2 billion in the second quarter, as compared with $7.2 billion in the April-June quarter of 2016.

Q2 Share Performance

The company’s price chart has shown considerable weakness through the quarter. During the aforesaid period, ConocoPhillips has lost 11.9%, compared with the 16.9% decline of the industry.

Guidance

ConocoPhillips' third-quarter 2017 production guidance is pegged at the range of 1,170–1,210 MBOED, excluding production from Libya.

Weak oil and gas pricing scenario compelled the company to slash 2017 capital budget from the earlier projection of $5 billion to $4.8 billion. It seems that ConocoPhillips is following the likes of Anadarko Petroleum Corporation APC and Hess Corporation HES in this regard.

Zacks Rank & Key Pick

ConocoPhillips currently carries a Zacks Rank #4 (Sell). A better-ranked player in the energy sector is TransCanada Corporation TRP, with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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TransCanada Corporation (TRP): Free Stock Analysis Report
 
Anadarko Petroleum Corporation (APC): Free Stock Analysis Report
 
Hess Corporation (HES): Free Stock Analysis Report
 
ConocoPhillips (COP): Free Stock Analysis Report
 
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