(ConocoPhillips, 8.Feb.2024) — ConocoPhillips (NYSE: COP) reported fourth-quarter 2023 earnings of $3bn, or $2.52 per share, compared with fourth-quarter 2022 earnings of $3.2bn, or $2.61 per share. Excluding special items, fourth-quarter 2023 adjusted earnings were $2.9bn, or $2.40 per share, compared with fourth-quarter 2022 adjusted earnings of $3.4bn, or $2.71 per share. Special items for the current quarter were comprised of a benefit related to the reversal of a tax reserve, partially offset by a loss on foreign exchange contracts.
Full-year 2023 earnings were $11bn, or $9.06 per share, compared with full-year 2022 earnings of $18.7bn, or $14.57 per share. Excluding special items, full-year 2023 adjusted earnings were $10.6bn or $8.77 per share, compared with full-year 2022 adjusted earnings of $17.3bn, or $13.52 per share.
“During 2023, ConocoPhillips continued to demonstrate strong financial and operational performance, executing on our returns-focused value proposition,” said Ryan Lance, chairman and chief executive officer. “We achieved record production, reached several key milestones across our global operations and returned $11bn to shareholders. We also continued to enhance our portfolio by opportunistically acquiring the remaining 50% of Surmont, reaching a final investment decision on the Willow project in Alaska and further progressing our global LNG strategy. We remain committed to our Triple Mandate of responsibly and reliably meeting energy transition pathway demand, delivering competitive returns on and of capital, and achieving our net-zero operational emissions ambition. Our deep, durable, and diversified portfolio continues to generate robust cash flow, enabling us to start the year with a $9bn return of capital target.”
Full-year summary and recent announcements
- Generated cash provided by operating activities of $20bn and cash from operations (CFO) of $21.3bn.
- Distributed $11bn to shareholders through a three-tier framework, including $5.6bn through the ordinary dividend and variable return of cash (VROC) and $5.4bn through share repurchases.
- Achieved 17% return on capital employed; 19% cash-adjusted return on capital employed.
- Ended the year with cash and short-term investments of $6.9bn.
- Delivered record full-year total company and Lower 48 production of 1,826 thousand barrels of oil equivalent per day (MBOED) and 1,067 MBOED, respectively.
- Acquired the remaining 50% interest in Surmont for approximately $2.7bn as well as future contingent payments of up to $0.4bn CAD ($0.3bn).
- Made final investment decision (FID) on the Willow project.
- Progressed global LNG strategy through expansion in Qatar, FID at Port Arthur LNG, regasification agreements in the Netherlands and offtake agreements in Mexico.
- Reached first production at several subsea tiebacks in Norway, Surmont Pad 267 in Canada and Bohai Phase 4B in China.
- Commenced startup at the second phase of Montney’s central processing facility in Canada.
- Awarded Gold Standard Pathway designation by Oil and Gas Methane Partnership 2.0.
- Accelerated the company’s GHG emissions-intensity reduction target through 2030 from 40-50% to 50-60%, using a 2016 baseline.
Return of capital update
ConocoPhillips announced its 2024 planned return of capital to shareholders of $9bn. The company declared an ordinary dividend of $0.58 per share and a VROC of $0.20 per share, both payable 1 Mar. 2024, to stockholders of record at the close of business on 19 Feb. 2024.
Fourth-quarter review
Production for the fourth quarter of 2023 was 1,902 MBOED, an increase of 144 MBOED from the same period a year ago. After adjusting for impacts from closed acquisitions and dispositions, fourth-quarter 2023 production increased 75 MBOED or 4% from the same period a year ago.
Lower 48 delivered production of 1,086 MBOED, including 750 MBOED from the Permian, 211 MBOED from the Eagle Ford and 110 MBOED from the Bakken. First production was achieved at several subsea tiebacks in Norway, Surmont Pad 267 in Canada and Bohai Phase 4B in China.
Earnings decreased from the fourth quarter of 2022 primarily due to lower prices, partially offset by increased volumes and benefits from special items including the reversal of a tax reserve. Adjusted earnings decreased due to lower prices, partially offset by higher volumes. The company’s total average realized price was $58.21 per BOE, 18% lower than the $71.05 per BOE realized in the fourth quarter of 2022.
For the quarter, cash provided by operating activities was $5.3bn. Excluding a $0.2bn change in working capital, ConocoPhillips generated CFO of $5.5bn. The company completed the acquisition of the remaining 50% interest in Surmont for $2.7bn. In addition, the company funded $2.9bn of capital expenditures and investments, paid $1.4bn in ordinary dividends and VROC, and repurchased $1.1bn of shares.
Full-year review
Production for 2023 was 1,826 MBOED, an increase of 88 MBOED from the same period a year ago. After adjusting for impacts from closed acquisitions and dispositions, production increased 73 MBOED or 4% from the same period a year ago.
The company’s total average realized price during this period was $58.39 per BOE, 27% lower than the $79.82 per BOE realized in 2022.
In 2023, cash provided by operating activities was $20bn. Excluding a $1.4bn change in working capital, ConocoPhillips generated CFO of over $21.3bn and received disposition proceeds of $0.6bn. The company completed the acquisition of the remaining 50% interest in Surmont for $2.7bn using long- term debt issuances, funded $11.2bn in capital expenditures and investments, paid $5.6bn in ordinary dividends and VROC, and repurchased shares of $5.4bn.
Reserves update
Preliminary 2023 year-end proved reserves are 6.8 billion barrels of oil equivalent (BBOE), with a total reserve replacement ratio of 123%.
Final information related to the company’s 2023 oil and gas reserves will be provided in ConocoPhillips’ Annual Report on the Form 10-K, to be filed with the SEC in February.
Outlook
The company’s 2024 total capital expenditure guidance is $11bn to $11.5bn.
The company’s 2024 production guidance is 1.91 to 1.95 million barrels of oil equivalent per day (MMBOED). First-quarter 2024 production is expected to be 1.88 to 1.92 MMBOED.
Guidance for 2024 includes adjusted operating cost of $8.9bn to $9.1bn, adjusted corporate segment net loss of $1bn to $1.1bn and depreciation, depletion and amortization of $9.4bn to $9.6bn. Guidance excludes special items.
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