Global energy producer ConocoPhillips (COP -0.72%) disclosed its first-quarter results on Thursday, May 2. The oil and gas titan's adjusted EPS at $2.03 barely missed the analyst estimate of $2.04. Adjusted EPS was also down year over year.
Despite this, the company demonstrated solid operational performance with an uptick in production volumes, alongside sustained efforts to boost shareholder value through significant capital return mechanisms.
| Metrics | Q1 2024 | Analyst Estimates | Q1 2023 | Change (YOY) |
|---|---|---|---|---|
| Net income (unadjusted) | $2.55 billion | $2.53 billion | $2.92 billion | -12.6% |
| Adjusted EPS | $2.03 | $2.04 | $2.38 | -14.7% |
| Production (MBOED) | 1,902 | N/A | 1,792 | +6.1% |
Data source: Company results from company. Analyst estimates from FactSet. YOY = Year over year. MBOED = Thousand barrels of oil equivalent per day.
Company overview
ConocoPhillips is a top-level player in the global energy sector, focusing on exploration and production. With operations spanning 13 countries, it boasts a diversified asset portfolio designed to sustain long-term growth and profitability. ConocoPhillips is always working to optimize operational efficiency, advance its technologies, and manage its reserves to bolster its market positioning and capitalize on strategic growth opportunities. Lately, the company has made significant strides in enhancing production efficiencies, particularly through ramp-ups in international projects and unconventional plays in North America.
Quarterly performance highlights
The slight miss on adjusted EPS versus analyst expectations may prompt cautious investor sentiment. However, the full report suggests ConocoPhillips still has a resilient operation, underscored by growing production. Earnings were adversely affected by a milder-than-expected winter that lowered demand for heating fuel. It also helped significantly pull down U.S. natural gas prices in February. Despite the reduced demand, total company production for the quarter rose to 1,902 thousand barrels of oil equivalent per day (MBOED), up 6% year over year.
Financial discipline remains pivotal, with orchestrated capital expenditure and debt management. The allocation of $2.9 billion toward capital projects aligns with long-term strategic aspirations, whereas the retirement of $500 million in debt underscores robust balance sheet maintenance. The company also bought back $1.3 billion in shares during the quarter.
From a returns perspective, ConocoPhillips continues to show commitment to growing shareholder value. Its Q2 disbursement of $2.2 billion (including $1.3 billion in share buybacks and $900 million in recurring dividends and VROC (variable return of cash)) stands as a testament to its capital return strategy. A forecast production uplift in Q2 2024 points to optimism from management and affirms the company's operational prowess.
Looking ahead
In its Q2 outlook, ConocoPhillips reaffirmed its full-year guidance of sustainable growth. The Q2 production outlook, ranging between 1,910 to 1,950 MBOED, paves a path for consistent operational betterment. It suggests a 6% to 8% jump in MBOED from 2023 totals. Investors should monitor how these projections pan out as well as follow ConocoPhillips' efforts to improve efficiencies and meet its sustainability commitments. Importantly, amid evolving market dynamics, ConocoPhillips's adherence to cost discipline, strategic acquisitions, and innovation investments will play a pivotal role.
