01—Abstract
Summary
Summary of the 10-K filed February 16, 2021. Cited figures are marked; the original filing is the authoritative source.
ConocoPhillips reported a net loss of $2.7 billiona for the year ended December 31, 2020, a significant decrease from a net income of $7.2 billion in 2019.
This downturn was primarily attributed to lower commodity prices, reduced sales volumes due to asset divestitures and production curtailments, and a substantial impairment charge related to its Alaska North Slope Gas assets. Despite the challenging market conditions, particularly the impact of the COVID-19 pandemic and the resulting oil price collapse, the company proactively managed its operations and finances.
This included reducing capital expenditures and operating costs, and maintaining a strong liquidity position with over $12 billionb in cash and short-term investments at year-end 2020. Furthermore, ConocoPhillips completed the significant acquisition of Concho Resources Inc. in January 2021, which is expected to enhance its Permian Basin presence and drive substantial cost and capital savings.
02—Key points
Key Highlights
- Reported a net loss of $2.7 billion for the year ended December 31, 2020, compared to a net income of $7.2 billion in 2019, driven by lower commodity prices and reduced volumes.
- Total production decreased by 16% to 1,127 MBOED in 2020, impacted by normal field decline, asset dispositions, and production curtailments.
- The company recorded impairments totaling $1.3 billion after-tax, primarily related to developed properties and the Alaska North Slope Gas asset.
- ConocoPhillips maintained a strong liquidity position with $6.6 billion in cash and short-term investments at year-end 2020.
- Completed the acquisition of Concho Resources Inc. in January 2021, a significant strategic move expected to yield $750 million in annual cost and capital savings by 2022.
- Announced a Paris-aligned climate risk framework with an ambition to achieve net-zero operated emissions by 2050, demonstrating a commitment to ESG principles.
- Returned $2.7 billion to shareholders through dividends ($1.8 billion) and share repurchases ($0.9 billion) in 2020.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 16, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $18.78B$32.57B | −42.3% |
| Cost of Revenue | $8.08B$11.84B | −31.8% |
| Gross Profit | $10.71B$20.73B | −48.3% |
| R&D Expenses | $75.00M$82.00M | −8.5% |
| SG&A Expenses | $430.00M$556.00M | −22.7% |
| Interest Expense | $788.00M$799.00M | −1.4% |
| Net Income | -$2.70B$7.19B | −137.6% |
| EPS (Basic) | $-2.51$6.43 | −139.0% |
| EPS (Diluted) | $-2.51$6.40 | −139.2% |
| Shares Outstanding (Basic) | 1.08B1.12M | +96388.7% |
| Shares Outstanding (Diluted) | 1.08B1.12M | +95849.8% |
05—Questions
Frequently Asked Questions
What was ConocoPhillips' financial performance in 2020?
ConocoPhillips reported a net loss of $2.7 billion for the year ended December 31, 2020, a significant decline from the $7.2 billion net income reported in 2019. This was primarily due to a challenging market environment characterized by lower commodity prices and reduced production volumes.
How did the company manage the impact of lower commodity prices in 2020?
In response to the significant downturn in commodity prices, ConocoPhillips implemented several measures, including a $2.3 billion reduction in capital expenditures, a $600 million reduction in operating costs, and the suspension of its share repurchase program. The company also voluntarily curtailed production by approximately 80 MBOED at its peak to manage inventory and align with market conditions.
What is the significance of the Concho Resources Inc. acquisition?
The acquisition of Concho Resources Inc., completed in January 2021, is a significant strategic move aimed at strengthening ConocoPhillips' Permian Basin position with complementary acreage. The combined entity is expected to achieve approximately $750 million in annual cost and capital savings by 2022, enhancing operational efficiency and financial performance.
What is ConocoPhillips' outlook on environmental, social, and governance (ESG) factors?
ConocoPhillips demonstrated its commitment to ESG by adopting a Paris-aligned climate risk framework with an ambition to achieve net-zero operated emissions by 2050. The company also joined the World Bank's 'Zero Routine Flaring by 2030' initiative and is focused on emissions management and sustainable business practices.
06—Continue