10-QPeriod: Q2 FY2022

CONOCOPHILLIPS Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 4, 2022For Securities:COP

Summary

ConocoPhillips reported a substantial increase in financial performance for the second quarter and first half of 2022, driven by significantly higher commodity prices for crude oil and natural gas compared to the prior year. Net income for the quarter surged to $5.15 billion ($3.98 per diluted share), a significant jump from $2.09 billion ($1.55 per diluted share) in Q2 2021. For the first half of the year, net income reached $10.9 billion ($8.36 per diluted share), up from $3.07 billion ($2.31 per diluted share) in the same period last year. The company's strong operational execution, coupled with favorable market conditions, resulted in robust cash flow from operations, totaling $13.0 billion for the first six months of 2022. This financial strength allowed ConocoPhillips to return significant capital to shareholders, announcing an increased total expected distributions of $15 billion for 2022, which includes ordinary dividends, a variable return of capital (VROC), and substantial share repurchases. The company also made progress on its debt reduction target, reducing total debt by $3 billion through refinancing and retirement activities.

Financial Highlights

44 data points
Beta

Revenue

$21.16B

56.4% Gross Margin

Net Income

$5.14B

24.3% Net Margin

EPS (Diluted)

$3.96

Total Assets

$93.69B

Cash & Equivalents

$6.91B

Free Cash Flow

$7.91B

Financial Statements
Beta
Revenue$21.16B
Cost of Revenue$9.23B
Gross Profit$11.93B
SG&A Expenses$96.00M
Net Income$5.14B
EPS (Basic)$3.98
EPS (Diluted)$3.96
Shares Outstanding (Basic)1.29B
Shares Outstanding (Diluted)1.30B

Key Highlights

  • 1Net income for Q2 2022 was $5.15 billion, a significant increase from $2.09 billion in Q2 2021.
  • 2Diluted earnings per share for Q2 2022 were $3.96, compared to $1.55 in Q2 2021.
  • 3Total cash provided by operating activities for the first six months of 2022 was $13.0 billion, a substantial increase from $6.3 billion in the prior year.
  • 4The company announced an increased return of capital to shareholders, targeting $15 billion for 2022 through dividends, VROC, and share repurchases.
  • 5ConocoPhillips reduced total debt by $3 billion in the first half of 2022 as part of its $5 billion debt reduction target.
  • 6The company expanded its global LNG business through participation in QatarEnergy's North Field East LNG project and a non-binding agreement with Sempra for the Port Arthur LNG project.
  • 7Production for Q2 2022 averaged 1,692 MBOED, up from 1,588 MBOED in Q2 2021, reflecting contributions from acquisitions like Shell Permian.

Frequently Asked Questions

The substantial increase in net income was primarily driven by significantly higher realized commodity prices for crude oil and natural gas compared to the same period in 2021, coupled with higher sales volumes, partly due to the acquisition of Shell's Permian assets. Higher equity in earnings of affiliates, mainly from improved LNG sales prices, also contributed positively.

ConocoPhillips has a three-tier return of capital framework. For 2022, the company has increased its total expected distributions to $15 billion. This includes an ordinary dividend, a Variable Return of Capital (VROC) payment, and significant share repurchases. In the first half of 2022, the company returned $3.7 billion through share repurchases and approximately $1.9 billion in dividends (ordinary and VROC).

ConocoPhillips is progressing towards its target of reducing total debt by $5 billion by the end of 2026. In the first half of 2022, the company reduced its total debt by $3 billion through a combination of debt refinancing transactions, tender offers, debt exchange offers, and note retirements. This activity also contributed to reducing the company's annual cash interest expense.

ConocoPhillips is actively expanding its global LNG portfolio. Key initiatives include increasing its equity share in the Asia Pacific LNG (APLNG) project, entering a new joint venture with QatarEnergy for the North Field East LNG project, and signing a Heads of Agreement with Sempra Infrastructure for potential participation in the Port Arthur LNG project, which includes an offtake agreement.