Conoco records a fivefold profit jump, increases shareholder returns

The ConocoPhillips logo is displayed on a screen on the floor at the New York Stock Exchange (NYSE) in New York, US, January 13, 2020. REUTERS/Brendan McDermid/File Photo

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HOUSTON (Reuters) – US oil producer ConocoPhillips on Thursday reported first-quarter profit that jumped fivefold and beat Wall Street estimates of higher energy prices and volumes.

Conoco pledged to increase shareholder returns by 25% to $10 billion this year, but gave a weaker-than-expected forecast for production for the full year as spending on the project increased.

However, its annual profit outweighs those of rivals Exxon Mobil Corp (XOM.N), BP Plc (BP.L) and TotalEnergies (TTEF.PA) thanks to no write-offs in Russia and a primary focus on crude oil. and the production of gas instead of fuels or renewable energy sources. Read more

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“We see that demand will continue to grow over the next two years,” CEO Ryan Lance told analysts, adding that oil prices “will likely be above $90 a barrel” for this year.

Major oil producers in recent years have faced pressure from investors to switch away from fossil fuels and cut carbon emissions, and more recently to pump more oil to lower fuel prices for consumers.

Shares were down 0.5% at $103.36 Thursday afternoon, as analysts raised concerns about Conoco’s 8% increase in this year’s capital spending budget.

The results “will be viewed as fairly neutral,” Scott Hanold and Davis Petros, analysts at RBC Capital Markets, said in a note.

Adjusted earnings for the Houston-based company jumped to $4.29 billion, or $3.27 a share, in the first quarter, from $902 million, or 69 cents a share a year earlier, topping Wall Street’s estimate of $3.03 a share, according to Refinitiv IBES data.

Oil and gas were at $76.99 a barrel, up 70% from the first quarter of 2021, reflecting crude’s jump above $100 a barrel this year as demand and supply concerns grow over the Russian invasion of Ukraine.

Production rose about 15 percent in the first quarter to 1.75 million barrels per day of oil and gas compared to the previous year, as a result of a large acquisition of Shell’s holdings of oil shale. But excluding Shell’s assets, production fell in the quarter.

The company also expects a successive decrease in production in the second quarter, to between 1.67 million – 1.73 million barrels per day.

Conoco raised its capital spending budget to $7.8 billion from the previous guidance of $7.2 billion. She said increased cash flow would help speed up the pace of debt reduction.

While the company has committed to making its operations generate net zero carbon emissions by 2050, it has rejected broader Scope 3 targets, in which emissions from fuel use are counted.

Should a company like ConocoPhillips be held responsible for a consumer decision to buy a pickup truck versus a Toyota Prius? asked Lance. “The problematic piece was always scope 3 due to double counting.”

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Reporting by Sabrina Valli in Houston and Rithika Krishna and Arunima Kumar in Bengaluru Editing by Barbara Lewis, Bernadette Bohm and Matthew Lewis

Our Standards: Thomson Reuters Trust Principles.

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