10-QPeriod: Q1 FY2023

CONOCOPHILLIPS Quarterly Report for Q1 Ended Mar 31, 2023

Filed May 4, 2023For Securities:COP

Summary

ConocoPhillips reported a net income of $2.92 billion for the first quarter of 2023, a significant decrease from $5.76 billion in the same period of 2022. This decline was primarily driven by lower realized commodity prices, the absence of a substantial tax benefit recognized in Q1 2022 from an IRS audit closure, and the lack of gains from asset dispositions and investments in Cenovus Energy, which boosted prior-year results. Despite lower revenues, the company demonstrated resilience by generating $5.4 billion in cash from operating activities. ConocoPhillips continued its commitment to returning capital to shareholders, distributing $3.2 billion through dividends and share repurchases. The company also made strategic investments, notably acquiring a 30% equity interest in the Port Arthur LNG project. The company maintained a strong liquidity position with $14.1 billion in total liquidity.

Financial Highlights

45 data points
Beta

Revenue

$14.81B

58.6% Gross Margin

Net Income

$2.92B

19.7% Net Margin

EPS (Diluted)

$2.38

Total Assets

$91.44B

Cash & Equivalents

$6.97B

Free Cash Flow

$5.40B

Financial Statements
Beta
Revenue$14.81B
Cost of Revenue$6.14B
Gross Profit$8.67B
SG&A Expenses$159.00M
Net Income$2.92B
EPS (Basic)$2.38
EPS (Diluted)$2.38
Shares Outstanding (Basic)1.22B
Shares Outstanding (Diluted)1.22B

Key Highlights

  • 1Net income decreased by 49.1% year-over-year to $2.92 billion, primarily due to lower commodity prices and the absence of significant one-time benefits from the prior year.
  • 2Generated strong operating cash flow of $5.4 billion, indicating robust operational performance despite market headwinds.
  • 3Returned $3.2 billion to shareholders in Q1 2023 through a combination of ordinary dividends ($1.5 billion) and share repurchases ($1.7 billion).
  • 4Acquired a 30% equity interest in the Port Arthur LNG project, signaling a strategic move to expand its global LNG portfolio.
  • 5Production reached a record 1,792 MBOED (Million Barrels of Oil Equivalent per Day) for the company and 1,036 MBOED for the Lower 48 segment, driven by new well completions and improved performance.
  • 6Maintained a strong liquidity position with $14.1 billion in total liquidity, comprising cash, short-term investments, and available credit facility capacity.
  • 7Accelerated its greenhouse gas (GHG) emissions intensity reduction target, now aiming for a 50-60% reduction by 2030 from 2016 levels.

Frequently Asked Questions

The primary drivers for the decrease in net income were lower realized commodity prices and the absence of significant one-time benefits recognized in the first quarter of 2022. These included a $515 million tax benefit from the closure of an IRS audit and gains from asset dispositions and the sale of Cenovus Energy shares, which boosted the prior year's results.

ConocoPhillips is returning capital through a three-tier framework: an ordinary dividend, a discretionary Variable Return of Cash (VROC) payment, and share repurchases. In Q1 2023, the company distributed $1.5 billion in dividends (ordinary and VROC) and $1.7 billion through share repurchases, totaling $3.2 billion.

Key strategic initiatives include expanding its global LNG portfolio, as evidenced by the investment in the Port Arthur LNG project. The company is also focused on operational excellence, achieving record production, and advancing its environmental, social, and governance (ESG) goals, including accelerating its GHG emissions reduction targets. Strategic investments continue in key areas like the Lower 48 and Alaska.

ConocoPhillips raised its full-year production guidance midpoint by 10 MBOED. Full-year production is now expected to be between 1.78 to 1.80 MMBOED (Million Barrels of Oil Equivalent per Day). Second-quarter 2023 production is projected to be between 1.77 to 1.81 MMBOED.