10-QPeriod: Q1 FY2016

CONOCOPHILLIPS Quarterly Report for Q1 Ended Mar 31, 2016

Filed May 3, 2016For Securities:COP

Summary

ConocoPhillips reported a significant net loss of $1.469 billion for the first quarter of 2016, a sharp contrast to the $272 million net income in the same period of 2015. This downturn was primarily driven by a substantial decrease in commodity prices, with Brent crude oil averaging $33.89 per barrel and Henry Hub natural gas at $2.09 per MMBTU. The company's revenues and other income fell by 37% year-over-year. In response to the challenging market environment, ConocoPhillips took proactive steps, including reducing its 2016 capital expenditure guidance by 17% and cutting its quarterly dividend by 66% to $0.25 per share, aiming to preserve balance sheet strength and conserve cash. The company also strengthened its liquidity by issuing $3.0 billion in debt and securing a $1.6 billion term loan. Despite the net loss, operational performance remained resilient in some areas, with production at the high end of guidance, aided by the ramp-up of the APLNG project in Australia. ConocoPhillips is actively managing its costs and seeking non-core asset dispositions to further optimize its portfolio. Investors should closely monitor the company's ability to navigate the low commodity price environment and its progress on cost management and strategic asset sales.

Financial Highlights

43 data points
Beta

Revenue

$5.12B

Net Income

-$1.47B

-28.7% Net Margin

EPS (Diluted)

$-1.18

Total Assets

$99.83B

Cash & Equivalents

$4.87B

Free Cash Flow

$421.00M

Financial Statements
Beta
Revenue$5.12B
SG&A Expenses$186.00M
Operating Expenses$7.24B
Net Income-$1.47B
EPS (Basic)$-1.18
EPS (Diluted)$-1.18
Shares Outstanding (Basic)1.24M
Shares Outstanding (Diluted)1.24M

Key Highlights

  • 1Reported a net loss of $1.469 billion for Q1 2016, compared to a net income of $272 million in Q1 2015, largely due to lower commodity prices.
  • 2Total Revenues and Other Income decreased by 37% to $5.015 billion in Q1 2016 from $8.002 billion in Q1 2015.
  • 3Reduced 2016 capital expenditures guidance from $7.7 billion to $6.4 billion (later revised to $5.7 billion), and cut the quarterly dividend by 66% to $0.25 per share.
  • 4Secured additional liquidity by issuing $3.0 billion in new debt and a $1.6 billion term loan in March 2016.
  • 5Production remained strong, with Q1 2016 production at 1,578 MBOED, at the high end of guidance, supported by the APLNG project ramp-up.
  • 6Recognized $136 million in impairments in Q1 2016, a significant increase from $16 million in Q1 2015, primarily impacting the Europe and North Africa segment.
  • 7Total debt increased to $29.455 billion as of March 31, 2016, up from $24.880 billion as of December 31, 2015, reflecting the new debt issuances.

Frequently Asked Questions

ConocoPhillips reported a net loss of $1.469 billion for the first quarter of 2016, a significant decline from a net income of $272 million in the same period of 2015. This was primarily driven by a substantial decrease in commodity prices.

In response to weak commodity prices, ConocoPhillips revised its 2016 capital expenditure guidance downwards and reduced its quarterly dividend by 66% to $0.25 per share. The company also raised $4.6 billion in debt and secured a $1.6 billion term loan to enhance its liquidity.

Revenues and Other Income decreased by 37% to $5.015 billion in Q1 2016, primarily due to lower prices for crude oil and natural gas. Despite the price pressure, total production was at the high end of guidance at 1,578 MBOED, partly due to the ramp-up of the APLNG project.

Yes, ConocoPhillips recorded $136 million in impairments in the first quarter of 2016, a considerable increase from $16 million in the prior year. These impairments were mainly in the Europe and North Africa segment, attributed to lower natural gas prices in the UK and exploration write-offs in the Gulf of Mexico.