10-QPeriod: Q2 FY2023

CONOCOPHILLIPS Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 3, 2023For Securities:COP

Summary

ConocoPhillips reported a net income of $2.23 billion for the second quarter of 2023, a significant decrease from $5.15 billion in the same period last year. This decline was primarily driven by lower realized commodity prices for crude oil and natural gas, which averaged $54.50 per BOE compared to $88.57 per BOE in Q2 2022. The company also saw a reduction in gains from asset dispositions and higher depreciation, depletion, and amortization (DD&A) expenses. Despite the lower profitability, ConocoPhillips continued to return capital to shareholders, distributing $2.7 billion in the second quarter through dividends and share repurchases, with a full-year capital return program of $11 billion. The company also made strategic moves, including agreeing to purchase the remaining 50% interest in the Surmont oil sands asset and closing on its interest in Qatar's North Field South (NFS) LNG project, signaling a continued focus on portfolio optimization and LNG expansion. Production levels remained strong, with record company and Lower 48 production, indicating operational resilience.

Financial Highlights

44 data points
Beta

Revenue

$12.35B

62.6% Gross Margin

Net Income

$2.23B

18.1% Net Margin

EPS (Diluted)

$1.84

Total Assets

$89.61B

Cash & Equivalents

$5.74B

Free Cash Flow

$3.85B

Financial Statements
Beta
Revenue$12.35B
Cost of Revenue$4.62B
Gross Profit$7.74B
SG&A Expenses$205.00M
Net Income$2.23B
EPS (Basic)$1.84
EPS (Diluted)$1.84
Shares Outstanding (Basic)1.21B
Shares Outstanding (Diluted)1.21B

Key Highlights

  • 1Net income decreased by 56.8% to $2.23 billion in Q2 2023 compared to $5.15 billion in Q2 2022, primarily due to lower commodity prices.
  • 2Average realized prices for total production decreased by 38.5% to $54.50 per BOE in Q2 2023 compared to $88.57 per BOE in Q2 2022.
  • 3The company generated $3.9 billion in cash from operating activities in Q2 2023 and returned $2.7 billion to shareholders through dividends and share repurchases.
  • 4ConocoPhillips agreed to acquire the remaining 50% interest in the Surmont oil sands asset for approximately $3 billion CAD, expected to close in H2 2023.
  • 5The company closed on its formation of the North Field South (NFS) LNG joint venture in Qatar, adding to its global LNG portfolio.
  • 6Production reached record levels, with company-wide production at 1,805 MBOED and Lower 48 production at 1,063 MBOED in Q2 2023.

Frequently Asked Questions

The primary reason for the decrease in net income is the significant drop in realized commodity prices for crude oil and natural gas. Average realized prices fell to $54.50 per BOE in Q2 2023 from $88.57 per BOE in the same period last year. This was compounded by lower gains from asset dispositions and higher depreciation, depletion, and amortization (DD&A) expenses.

ConocoPhillips utilizes a three-tier framework for returning capital. In Q2 2023, they returned $2.7 billion to shareholders through ordinary dividends and Variable Return of Cash (VROC) payments ($1.4 billion) and share repurchases ($1.3 billion). The company has reaffirmed its full-year 2023 target to return $11 billion to shareholders.

The company is focused on portfolio optimization and expanding its LNG presence. Key initiatives include the agreement to acquire the remaining 50% interest in the Surmont oil sands asset in Canada and the recent closure of its interest in the North Field South (NFS) LNG project in Qatar. They also signed 20-year offtake agreements for the Saguaro LNG export facility.

Production remained strong, with ConocoPhillips achieving record company-wide production of 1,805 MBOED and record Lower 48 production of 1,063 MBOED in the second quarter of 2023. This growth was driven by new wells coming online from development programs across various segments, largely offsetting normal field declines.