CONOCO NET INCOME $586 MLN
CONOCOPHILLIPS - ConocoPhillips (NYSE: COP) reported first-quarter 2017 earnings of $0.8 billion, or $0.62 per share, compared with a first-quarter 2016 loss of $1.5 billion, or ($1.18) per share. Excluding special items, first-quarter 2017 adjusted earnings were a loss of $19 million, or ($0.02) per share, compared with a first-quarter 2016 adjusted loss of $1.2 billion, or ($0.95) per share. Special items for the current quarter were primarily driven by a financial tax accounting benefit related to the previously announced Canadian disposition, partially offset by a non-cash impairment in Alaska.
- Achieved first-quarter production excluding Libya of 1,584 MBOED; 2 percent production growth year over year when adjusted for downtime and dispositions.
- Reduced production and operating expenses by 4 percent year over year; reduced adjusted operating costs by 6 percent year over year.
- Increased quarterly dividend by 6 percent.
- Announced strategic Canada and San Juan Basin asset dispositions in March and April, respectively, for total consideration of more than $16 billion.
- Strengthened balance sheet through $0.8 billion of early debt retirement; announced revised debt target of $15 billion by year-end 2019.
- Progressed share buyback program and increased authorization to $6 billion.
"We are off to a strong start in 2017," said Ryan Lance, chairman and chief executive officer. "Operationally, the business is running well. We grew our production, while maintaining our cost and capital discipline. Financially, our cash from operating activities more than covered capital spending and the dividend. Strategically, we increased our quarterly dividend, paid down debt and continued to execute our share buyback program. We also announced agreements to divest our interests in several Canadian assets and the San Juan Basin. When these transactions close, proceeds will be used to accelerate our value proposition by significantly reducing debt, and increasing share repurchases over the next three years. We believe ConocoPhillips offers a differentiated strategy, one that can deliver consistent double-digit returns to shareholders through the cycles."
Production excluding Libya for the first quarter of 2017 was 1,584 thousand barrels of oil equivalent per day (MBOED), an increase of 6 MBOED compared with the same period a year ago. The increase was the result of production ramping up from several major projects, multiple development programs and improved well performance, partly offset by normal field decline and dispositions. Excluding the net impact from dispositions of 36 MBOED and reduced downtime of 18 MBOED, production increased 24 MBOED, or 2 percent.
In the Lower 48, drilling rigs were added in the Eagle Ford and the Permian, which increased the operated rig count to 12 in April. Production was partially curtailed at Surmont in Canada due to a third-party facility fire, with return to normal operations expected in May. In Alaska, winter construction activities continued at GMT 1, the 1H NEWS drill site facility was prepared for startup and a seismic survey was completed in the GMT Unit. Project work progressed in Europe, with commissioning work underway at the Clair Ridge production platform and the sailaway of the Aasta Hansteen spar achieved in April. In Australia, the APLNG Train 1 turnaround was completed in April and appraisal drilling continued at Barossa. In Malaysia, Malikai production is exceeding expectations. Production from Libya was 9 MBOED.
Earnings were higher compared with the first quarter of 2016 due to a financial tax accounting benefit related to the previously announced Canada disposition, which was treated as a special item, and higher realized prices. Adjusted earnings improved compared with first-quarter 2016 primarily due to higher realized prices. The company's total realized price was $36.18 per barrel of oil equivalent (BOE), compared with $22.94 per BOE in the first quarter of 2016, reflecting higher average realized prices across all commodities. First-quarter earnings were negatively impacted by $101 million of pre-tax dry hole expense, which includes the Shenandoah-6 well in the Gulf of Mexico.
For the quarter, cash provided by operating activities was $1.8 billion, with minimal impact from operating working capital. Cash provided by operating activities was negatively impacted from the settlement of a $0.2 billion currency swap, partially offset by $0.1 billion from a tax loss carryforward in Libya. In addition, the company funded $0.9 billion in capital expenditures and investments, repaid debt of $0.8 billion, paid dividends of $0.3 billion, purchased $0.2 billion in short-term investments and repurchased company common stock of $0.1 billion. Share repurchases resumed in April following the Canada transaction. The company also received $0.1 billion in deposits from the previously announced Canada transaction.
Second-quarter 2017 production is expected to be 1,495 to 1,535 MBOED, which excludes Libya and does not reflect impacts from the recently announced Canada and San Juan Basin dispositions.
The company's full-year guidance items, excluding the impacts from the Canada and San Juan Basin dispositions, are unchanged. However, the company will update guidance as necessary after these transactions close.
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BLOOMBERG - While Europe as a whole gets more than a third of its gas from Russia, that share is lower in the U.K., which receives the bulk of its fuel from North Sea fields and Norway. Still, Moscow-based Gazprom PJSC was the second-biggest supplier to major industrial consumers in the U.K. last year, according to Britain’s energy regulator Ofgem.
FT - of the six LNG tankers that have made deliveries into the UK so far in 2018 three have carried cargoes originally from Russia, leading to questions about whether Moscow was gaining a foothold in the UK gas market after starting up the Yamal LNG facility in Siberia late last year.
REUTERS - So far this year, two Yamal cargoes unloaded at British terminals for domestic consumption, accounting for about a third of Britain’s 2018 LNG imports after typical supplier Qatar pre-sold the bulk of its winter output to Asia last year.
REUTERS - U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $60.77 a barrel at 0753 GMT, up 6 cents, or 0.1 percent, from their previous settlement. Brent crude futures LCOc1 were at $64.62 per barrel, down just 2 cents from their last close.