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ConocoPhillips' (COP) Q1 Profits to Jump Y/Y on Higher Output

Zacks Equity Research
·4 min read

ConocoPhillips COP recently provided some preliminary operational and financial updates for the March quarter of 2021. The company is scheduled to report first-quarter results on May 4. Its acquisition of Concho Resources, which was completed in January, has been taken into account in the preliminary data. It reiterated 2021 capital budget at $5.5 billion, suggesting an increase from the 2020 level of around $4.7 billion.

Production

ConocoPhillips’ first-quarter overall production is estimated in the range of 1,470-1,490 thousand barrels of oil equivalent per day (MBoe/d), excluding Libya. The company reported production of 1,289 MBoe/d in the year-ago quarter. Also, the expected figure indicates a sequential rise from 1,169 MBoe/d. First-quarter Libya production is expected to be 40 MBoe/d. The total expected figure includes a 50 MBoe/d hit from cold Winter Storm Uri.

The company expects total crude oil production for the quarter to be 772 thousand barrels per day (MBbls/d), excluding Libya. The figure indicates a jump from 654 MBbls/d in the year-ago period.

Average Realized Price

The company expects first-quarter average realized prices in the range of $43-$45 per Boe, indicating a rise from the year-ago level of $38.81. Moreover, the estimated figure signals a significant improvement from the fourth-quarter 2020 level of $33.21 per Boe.

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ConocoPhillips expects average realized price for crude oil in the band of $56-$58 per barrel for the first quarter, indicating a jump from $48.86 in the year-ago period. Furthermore, the figure suggests a rise from $40.89 per barrel in the fourth quarter.

Average realized price for natural gas is expected within $4.30-$4.50 per thousand cubic feet (Mcf), the upper limit of which indicates a surge from the year-ago figure of $4.30. Moreover, it signals a sequential rise from $3.23 per Mcf.

Profits

Hence, increased production, and improved oil and gas prices will likely to lead to a year-over-year rise in profit levels. The Zacks Consensus Estimate for first quarter earnings per share is pegged at 52 cents, indicating a 15.6% year-over-year rise. However, the company expects a $600 million profit hit due to the Concho Resources acquisition and related hedges. Notably, the company expects full-year adjusted operating expenses of $6.2 billion.

Price Performance

The upstream company’s shares have jumped 35% in the year-to-date period.

Zacks Rank & Other Stocks to Consider

ConocoPhillips currently has a Zacks Rank #2 (Buy). Other top-ranked players in the energy space include DCP Midstream, LP DCP, Equinor ASA EQNR and Royal Dutch Shell plc RDS.A, each having a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DCP Midstream’s bottom line for 2021 is expected to rise 45.3% year over year.

Equinor’s bottom line for first-quarter 2021 is expected to rise 111.8% year over year.

Shell’s bottom line for 2021 is expected to increase 200% year over year.

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