ConocoPhillips COP reported fourth-quarter 2018 adjusted earnings per share of $1.13, beating the Zacks Consensus Estimate of 99 cents and improving significantly from the year-ago 45 cents. The outperformance stems from higher oil realizations and strong volumes from the unconventional assets.
The Houston, TX-based world’s largest independent oil and gas producer’s quarterly revenue – at $10.4 billion – came 18.6% higher than the fourth-quarter 2017 sales of $8.7 billion and beat the Zacks Consensus Estimate of $10.2 billion.
ConocoPhillips’ fourth-quarter total expenses increased 3.8% from the corresponding period of 2017 to $7.7 billion.
ConocoPhillips Price, Consensus and EPS Surprise
ConocoPhillips Price, Consensus and EPS Surprise | ConocoPhillips Quote
Production Growth, Higher Selling Prices
The production of oil and natural gas averaged 1,357 thousand barrels of oil equivalent per day (66% liquids), up 8% from last year and ahead of the Zacks Consensus Estimate of 1,298 thousand barrels of oil equivalent per day. Results were helped by growth in the company’s Big 3 unconventional assets (Eagle Ford, Bakken and Delaware). ConocoPhillips’ production for oil, natural gas liquids (NGLs) and bitumen was 893 thousand barrels per day, while natural gas output came in at 2,785 million cubic feet per day.
The average realized crude oil price during the fourth quarter was $63.86 per barrel, representing an increase of 8.3% from the year-ago realization of $58.99. Meanwhile, the average realized natural gas price during the December quarter of 2018 was $6.46 per thousand cubic feet, up 40.7% from the year-ago period.
Balance Sheet & Capital Spending
As of Dec 31, 2018, the oil giant, with a market capitalization of around $75 billion, had $6.2 billion in total cash, cash equivalents and restricted cash. The company had total debt of nearly $15 billion, representing a debt-to-capitalization ratio of 32%.
In the reported quarter, ConocoPhillips generated $3.8 billion in cash from operating activities. Capital expenditures and investments totaled $1.6 billion and dividend payments grossed $354 million.
Guidance
ConocoPhillips guided toward 2019 capital spending of $6.1 billion. For the January-to-March quarter of this year, the company projects production in the range of 1,290-1,330 thousand barrels of oil equivalent per day. However, production is likely to speed up in the second half of 2019 following which full year volume is expected to average between 1,300 thousand barrels of oil equivalent per day and 1,350 thousand barrels of oil equivalent per day.
Zacks Rank & Stock Picks
ConocoPhillips currently carries a Zacks Rank #5 (Strong Sell), implying that it is expected to underperform above the broader U.S. equity market over the next one to three months.
Some better-ranked players in the energy space are Murphy USA Inc. MUSA, TransCanada Corporation TRP and SilverBow Resources, Inc. SBOW. All three companies have a Zacks Rank #2 (Buy).
(You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.)
Murphy USA has an expected earnings growth of 4.9% for 2019.
TransCanada has an expected earnings growth of 1.4% for 2019.
SilverBow Resources has an expected earnings growth of 67.3% for 2019.
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