ConocoPhillips Exceeds Profit Expectations with Increased Output

ConocoPhillips Stock

ConocoPhillips (NYSE:COP), a U.S. oil and gas producer, surpassed Wall Street’s estimates for fourth-quarter profit on Thursday, benefiting from higher production in the U.S. Permian Basin and a recent acquisition.

U.S. oil companies are witnessing higher-than-anticipated oil production in the country’s primary shale basin, with Chevron Corp (NYSE:CVX) surprising analysts last week, and Exxon Mobil (NYSE:XOM) also expanding its U.S. production. These companies are reaping the rewards of efficiency gains and lower inflation in services and equipment.

Conoco’s pumping hours increased by over 10% last year, as the company employed remote well monitoring, facilitated quicker movement of drilling teams among locations, and utilized electric fracking, according to company officials.

Chief Executive Officer Ryan Lance stated on an earnings call with analysts that they anticipate continued growth from the U.S. shale, albeit at a more modest pace compared to last year.

Conoco revealed plans to boost its global production this year by approximately 6%, with a balance between U.S. and international operations, targeting around 1.93 million barrels per day (bpd) of oil and gas. Last year, the company acquired an additional 50% stake in the Surmont facility in Canada from TotalEnergies, which bolstered its 2023 output to 1.82 million bpd. Lance did not rule out the possibility of further acquisitions.

Shares of Conoco rose about 1% to $113.52 in midday trading.

In addition to its Willow oil development project in Alaska, which received the green light last year, Conoco’s long-term growth prospects are bolstered by LNG ventures with QatarEnergy and Sempra (NYSE:SRE).

Fourth-quarter production surged by 8.2% to 1.9 million bpd, at the higher end of its previous forecast. This increase was driven by a rise in Permian shale output to 750,000 bpd, along with 211,000 bpd from the Eagle Ford shale and 100,000 bpd from the Bakken basin.

Although lower prices, averaging $58.21 per barrel of oil equivalent in the quarter, exerted pressure, higher volumes offset these declines.

Conoco anticipates total capital expenditure in the range of $11.0 billion to $11.5 billion for 2024, in line with last year’s spending. The company aims to return a minimum of $9 billion to shareholders in 2024, compared to $11 billion returned last year.

Conoco reported adjusted fourth-quarter earnings of $2.40 per share, surpassing analysts’ average estimate by 31 cents, according to LSEG data.

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