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ConocoPhillips (COP) |
HenryTo
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 Posted: Thu Apr 23, 2009 11:38 am Post subject: ConocoPhillips (COP) |
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Morningstar's first impressions on COP's 1Q earnings:
http://quicktake.morningstar.com/Stocknet/san.aspx?id=288204
| Quote: | | On Thursday, ConocoPhillips COP reported an 80% drop in earnings for the first quarter compared with the year-ago period. As indicated in the company's interim update three weeks ago, lower oil and gas prices for the exploration and production segment led to the quarter's dramatically lower results despite an increase in production. Refining operations performed just as poorly, as a low capacity utilization rate combined with low worldwide refining margins to deliver weaker year-over-year earnings. The performance of the upstream and downstream segments is not surprising, though the increase in production offers a bright spot. Hurting all producers is the fall in oil prices from above $90 per barrel in the first quarter of last year to below $50 for the first quarter of 2009 on weakened demand as a result of the global recession. Also as expected, ConocoPhillips' refining segment suffered as demand for refined products continued to decline, particularly in the United States. These results are probably an early indication of what can be expected from the other major integrated firms. Lower oil and gas realizations, reduced refining capacity utilization, and weak refining margins will be common themes. |
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ConocoPhillips (COP) Replies |
HenryTo
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| Posted: Tue Apr 24, 2012 8:27 pm Post subject: |
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Morningstar on COP's 1Q earnings.
| Quote: | | In what will be its last full quarter as an integrated company, ConocoPhillips COP reported first-quarter earnings of $2.9 billion compared with $3.0 billion a year ago. Adjusted earnings, excluding the gains on asset sales of $987 million largely from the sale of the Vietnam business unit and impairments of $562 million, were flat year over year at $2.6 billion. Exploration and production adjusted first-quarter earnings were $2.1 billion compared with $2.2 billion in 2011 as reduced volumes and lower natural gas prices offset higher crude oil and liquefied natural gas prices. Production volumes of 1.64 million barrels of oil equivalent per day were 65 thousand boe/d lower than a year ago, thanks to dispositions and suspension of operations at the Peng Lai Field in Bohai Bay, China. Excluding those effects, production rose 9 thousand boe/d. Full-year production guidance of 1.55-1.6 million boe/d remains intact as the second and third quarters will be hurt by major turnarounds, maintenance, and continued dispositions. However, under the headline numbers, we see positives for the E&P segment. During the quarter, Libyan operations resumed at 36 thousand boe/d and the Peng Lai Field production increased to 40 thousand boe/d by the end of the period. Also, lower 48 liquids production increased 34% year over year to 201 thousand boe/d as ConocoPhillips continues to expand its more attractive opportunities in the Eagle Ford, Permian, and Bakken. These regions will continue to play a large role in ConocoPhillips achieving its 3%-5% yearly growth target. Refining and marketing adjusted first-quarter earnings fell to $444 million from $480 million a year earlier thanks to lower refining margins. Meanwhile, the chemical segment posted record earnings of $218 million, compared with $193 million last year. Midstream first-quarter earnings rose to $93 million from $74 million a year ago thanks to higher volumes and improved reliability. During the quarter, the company repurchased $1.9 billion in stock and will repurchase $5 billion in total by the end of the second quarter. Further repurchases could continue after the spin-off, scheduled for May 1. Repurchases for the E&P company will largely be dependent on asset sales, while Phillips 66 (PSX) will repurchase shares based on market conditions and excess cash flow. |
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HenryTo
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HenryTo
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Location: Los Angeles, California
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| Posted: Thu Jul 28, 2011 1:05 pm Post subject: |
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Morningstar on COP's 2Q earnings:
| Quote: | | ConocoPhillips COP reported second-quarter adjusted earnings of $3.4 billion compared with $2.5 billion a year earlier as a result of higher oil prices and improved refining conditions. Strong midstream earnings and lower corporate expenses also boosted earnings during the quarter. As expected, production for the quarter fell to 1.64 million barrels of oil equivalent per day from 1.73 million boe/d a year earlier as asset dispositions and lost Libyan volumes offset the benefit of new projects and reduced downtime. Adjusted refining and marketing earnings rose to $740 million during the quarter from $720 million a year ago and $480 million in the first quarter. While refining margins in the United States continued to strengthen during the quarter, international refining margins weakened and costs rose. Total capacity utilization edged up to 91% from 89% in the first quarter, but utilization of 90% in the U.S. remained below last year's 96%. We expect refining earnings to remain strong in the third quarter as market conditions remain robust. ConocoPhillips made additional progress in its return improvement plan by repurchasing an additional $3.1 billion of shares. However, asset sales slowed during the quarter. We expect asset sales to pick up later this year as management recently reiterated its target of $5 billion-$10 billion of asset sales through next year. Also, management uses the proceeds for asset sales to fund share repurchases, which are currently running at about $1 billion per month. The disposition of additional assets will also probably be key to a successful spin-off of the company 's downstream assets, scheduled for mid-2012. |
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HenryTo
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| Posted: Thu Jul 14, 2011 1:13 pm Post subject: |
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COP to spin off its downstream assets, courtesy of Morningstar:
| Quote: | | ConocoPhillips COP announced Thursday that it plans to split into two companies through a spin-off of its downstream refining and marketing assets in the first half of 2012. Though not the first integrated energy firm to engage in such a transaction, ConocoPhillips is by far the largest and most prominent. This also marks another milestone in the move away from the classic oil and gas integrated model we have previously highlighted. Over the past year, the company has engaged in a series of efforts to improve returns, including asset sales, share repurchases, and dividend hikes. As part of those efforts, management planned to target refinery sales. However, given the weak market for such assets and the size of ConocoPhillips' facilities, finding buyers is difficult, probably leading management to pursue the spin-off. Actual division of assets has yet to be determined. In contrast to Marathon MRO, which spun off its downstream assets a month ago, ConocoPhillips has a greater degree of integration, particularly between its Mid-Continent refining and Canadian oil sands assets through a partnership with Cenovus CVE. The level of integration could make a separation potentially more difficult. Though few details are now available, more information should emerge over the coming months. A conference call is scheduled for later Thursday, during which we hope to receive further information. |
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HenryTo
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| Posted: Fri Apr 29, 2011 1:03 am Post subject: |
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Morningstar on COP's 1Q earnings:
| Quote: | | ConocoPhillips COP reported first-quarter earnings of $3.0 billion compared with $2.1 billion a year earlier as a result of higher oil prices and improved refining conditions. Adjusted earnings for the quarter were $2.6 billion compared with $2.2 billion a year ago. Reported earnings reflect the benefit of asset sales, including disposition of the remainder of the company's Lukoil stake. Production for the quarter fell to 1.7 million barrels of oil equivalent per day from 1.83 million boe/d a year earlier as natural field decline, asset dispositions, and other one-time events offset the addition of new production. Outside the impact of Libya, the temporary shutdown of the Alaskan pipeline, and an accident with a platform in the North Sea, which resulted in a reduc tion of 65,000 boe/d, we anticipated the decline in volumes. Management previously guided to the lower volumes as a result of the asset sales, which will continue through next year, probably resulting in further declines. In contrast, refining and marketing profits surged during the quarter to $482 million from a loss of $4 million a year ago and a profit of $207 million in the fourth quarter. Though capacity utilization increased from a year ago, operating rates were still lower than management anticipated, particularly in the Gulf Coast and Central United States. As a result, earnings were $50 million lower than they would have been otherwise. We expect refining and marketing earnings to improve further in the second quarter as market conditions remain robust and the company raises utilization rates. ConocoPhillips continued to follow through with its improvement plans by repurchasing $1.6 billion of shares and increasing the quarterly dividend 20%. We'd expect share repurchases to continue as more assets are sold. Also, a working capital increase of $2.1 billion related to inventory management for the refining segment crimped operating cash flow. While the company expects to realize a $100 million earnings benefit this year as a result, we suspect it limited share repurchases during the quarter. We hope to hear more on share-repurchase plans for the remainder of the year and the outlook for the refining segment on the conference call. |
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HenryTo
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| Posted: Thu Mar 24, 2011 7:01 pm Post subject: |
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Morningstar on the details of COP's analyst day:
| Quote: | | At its annual analyst day, ConocoPhillips COP laid out plans to expand the asset sales and share repurchases that were central tenets of its previously announced return improvement plans. In 2010, the company executed on its plans by generating $7 billion from asset divestments plus about $9 billion from the sale of its stake in Lukoil LUKOY. Proceeds went towards debt reduction, a 20% dividend increase, and about $4 billion worth of share repurchases. On Wednesday, management announced plans to increase asset sales by $5 billion-$10 billion over its original plan of $10 billion, which should result in asset sales of $12 billion-$17 billion over three years. Divestitures will focus on nonstrategic, mature properties with little growth potential. Proceeds will go toward an additional $10 billion worth of share repurchases over the next two years. Since this amount is well above what is needed for capital investment, we believe additional repurchases beyond 2012 or above guidance are likely. Management will also target double-digit yearly dividend growth. Further debt reduction will be limited. ConocoPhillips plans capital spending of $13.5 billion in 2011 and about $14 billion-$15 billion annually from 2012 to 2015. Despite the increased investment, production will probably fall through 2013 as result of asset sales and reduced natural gas production. Beyond 2013, ConocoPhillips expects long-term production growth of 2%-3% with 500,000 barrels oil equivalent per day of production coming from major projects by 2015. Also, the company expects liquids production from the U.S. shale plays and the Permian to add 170,000 boe/d by 2013. Startup of several projects over the next few years will expand steam-assisted gravity drainage production to well over 100,000 barrels per day by 2015. As a result, ConocoPhillips expects North American natural gas to be a smaller portion of its 2015 production portfolio than in 2011. On the downstream side, management plans to reduce refining capacity by 500,000 barrels a day through divestiture of noncompetitive, noncore assets. Downstream asset sales will total about $1 billion in 2011. After many years of prioritizing growth over returns, the company reversed course in the past year. Additionally, management now continually stresses disciplined capital management and internal growth. Combining this with the focus on shareholder return, we believe ConocoPhillips is better positioned to begin narrowing the return on investment gap with its peers. |
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HenryTo
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| Posted: Thu Jan 27, 2011 12:51 am Post subject: |
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Morningstar on COP's 4Q earnings:
| Quote: | | ConocoPhillips COP reported fourth-quarter earnings of $2.0 billion compared with $1.3 billion a year earlier. Adjusted earnings for the quarter were $1.9 billion compared with $1.8 billion a year ago. Reported earnings reflect the benefit of $718 million from sale of the company's Lukoil LUKOY stake and North American exploration and production assets, which helped to offset a $638 million noncash impairment related to the investment in the Naryanmarneftegaz joint venture with Lukoil. Upstream adjusted earnings rose 8.5% thanks to higher oil prices, which offset decreased production volume. Production fell to 1.73 million barrels of oil equivalent compared with 1.83 million in the fourth quarter of 2009. The decline is primarily a result of normal field decline in North America and Europe and asset dispositions. For the full year, production fell to 1.75 million barrels per day from 1.85 million in 2009. Production could continue to decline into next year as asset sales and recently enacted natural gas curtailments in North America take effect. The downstream segment rebounded strongly from the previous year and continued its recovery that began in the second quarter. Downstream adjusted earnings were $207 million compared with a loss of $204 million in the same period a year ago. The gains came despite turnarounds at five U.S. facilities during the quarter. While benchmark margins were mixed, ConocoPhillips saw improvement in its realized margins, particularly in the international market. However, capacity utilization in the international segment continues to suffer as a result of ongoing difficulties with the Wilhelmshaven refinery. ConocoPhillips continued to make progress with its return improvement plans. The company received $3.1 billion in proceeds from asset dispositions and repurchased $2.6 billion of shares in the quarter. For the full year, asset disposition proceeds and share repurchases totaled $15.4 billion and $3.9 billion, respectively. The company finished the year with a cash balance of $10.4 billion, a significant portion of which it expects to use to repurchase shares. Additionally, plans are for the remaining 2% stake in Lukoil to be sold by the end of the first quarter, with proceeds primarily going toward repurchases. We remain impressed by the speed at which ConocoPhillips has executed its disposition plan and look forward to guidance on additional potential sales in 2011. Also, along with increased drilling and development in the Canadian oil sands, Eagle Ford, an d Bakken, the asset sales should result in a portfolio more weighted toward oil and natural gas liquids production. |
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HenryTo
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| Posted: Tue Apr 13, 2010 11:02 am Post subject: |
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Morningstar on COP's divesture plans:
| Quote: | | On Monday, ConocoPhillips COP announced an agreement with subsidiaries of Sinopec International Petroleum Exploration and Production to sell its 9.03% stake in Syncrude for $4.65 billion. The sale comes as part of ConocoPhillips' plan to sell $10 billion worth of underperforming and nonstrategic assets over the next two years in an effort to improve returns. ConocoPhillips previously indicated half of the $10 billion worth of sales would occur in 2010, but could now exceed that goal, given the size of this deal. As a result, ConocoPhillips may be able to accelerate debt-reduction and share-repurchase plans. The deal marks a continuation of the recent trend of investment by Chinese state-owned firms in overseas resources, particularly Canada. Syncrude will be Sinopec's second investment in oil sands after acquiring interests in two projects through a deal with Total TOT just last year. Also last year, PetroChina PTR acquired majority interests in two oil sands projects from Athabasca Oil Sands Company for CAD 1.9 billion. Given these deals, we believe the Syncrude sale is unlikely to face difficulty clearing regulatory hurdles in either China or Canada. |
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