10-QPeriod: Q1 FY2019

CONOCOPHILLIPS Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 2, 2019For Securities:COP

Summary

ConocoPhillips reported strong financial results for the first quarter of 2019, driven by increased production volumes and higher realized prices in key segments. Net income attributable to ConocoPhillips more than doubled year-over-year, reaching $1.83 billion ($1.60 per diluted share), compared to $888 million ($0.75 per diluted share) in the first quarter of 2018. This performance was bolstered by significant unrealized gains on investments in Cenovus Energy and a favorable settlement related to Venezuelan operations. The company also saw robust operating cash flow of $2.9 billion, enabling substantial share repurchases and dividend payments, while maintaining a strong liquidity position with $6.5 billion in cash and cash equivalents. Operationally, ConocoPhillips achieved a 7% increase in total production and a 13% increase in production per debt-adjusted share, highlighting operational efficiency and growth, particularly in the Lower 48 unconventionals. The company also announced significant divestitures, including the sale of its U.K. assets for $2.675 billion, expected to close in the second half of 2019, which will further optimize its portfolio and generate substantial proceeds. These results and strategic moves underscore ConocoPhillips' commitment to returning value to shareholders while navigating a dynamic energy market.

Financial Highlights

44 data points
Beta

Revenue

$9.15B

59.8% Gross Margin

Net Income

$1.83B

20.0% Net Margin

EPS (Diluted)

$1.60

Total Assets

$71.50B

Cash & Equivalents

$6.22B

Free Cash Flow

$2.89B

Financial Statements
Beta
Revenue$9.15B
Cost of Revenue$3.67B
Gross Profit$5.47B
SG&A Expenses$153.00M
Net Income$1.83B
EPS (Basic)$1.61
EPS (Diluted)$1.60
Shares Outstanding (Basic)1.14M
Shares Outstanding (Diluted)1.15M

Key Highlights

  • 1Net income attributable to ConocoPhillips surged to $1.83 billion, a significant increase from $888 million in the prior year's quarter, driven by operational performance and investment gains.
  • 2Diluted earnings per share (EPS) rose to $1.60 from $0.75 year-over-year, reflecting improved profitability.
  • 3Cash provided by operating activities was strong at $2.9 billion, allowing the company to fund capital expenditures ($1.6 billion), dividends ($0.3 billion), and share repurchases ($0.8 billion).
  • 4Total production increased by 7% year-over-year, with underlying production growing 5% and production per debt-adjusted share up by 13%, showcasing operational strength.
  • 5The company announced a significant divestiture of its U.K. assets for $2.675 billion, with an expected gain of $2 billion, which will enhance portfolio optimization.
  • 6ConocoPhillips ended the quarter with a healthy liquidity position, holding $6.5 billion in cash, cash equivalents, and restricted cash.
  • 7The company received an $8.7 billion compensation award from an ICSID tribunal against Venezuela for unlawful expropriation.

Frequently Asked Questions

ConocoPhillips reported net income attributable to ConocoPhillips of $1.83 billion for the first quarter of 2019, a substantial increase from $888 million reported for the same period in 2018. This represents more than a doubling of net income year-over-year.

The increase in net income was primarily driven by a strong operational performance, including higher sales volumes and improved realized prices in certain segments. Additionally, the company benefited from an unrealized gain of $343 million on its investment in Cenovus Energy shares and a $147 million income recognized from a settlement agreement with Petróleos de Venezuela, S.A. (PDVSA).

ConocoPhillips generated $2.9 billion in cash from operating activities. This cash was primarily used for capital expenditures and investments totaling $1.6 billion, dividends paid amounting to $0.3 billion, and share repurchases totaling $0.8 billion, demonstrating a balanced approach to capital allocation.

ConocoPhillips expects full-year 2019 production to be between 1,300 to 1,350 MBOED, unchanged from prior guidance, excluding Libya and the impact of the announced U.K. divestiture. Capital expenditures guidance remains at $6.1 billion, also not including the impact of the U.K. divestiture.