ConocoPhillips Q3 Earnings Beat Estimates, Revenues Miss
ConocoPhillips (COP) reported third-quarter 2014 adjusted earnings of $1.29 per share, surpassing the Zacks Consensus Estimate of $1.17 per share and decreasing from the year-earlier profit of $1.47.
Revenues in the reported quarter decreased to $12,917 million from the year-ago level of $15,470 million and missed our projection of $13,984 million.
Exploration and Production
Daily production averaged 1.481 million barrels of oil equivalent (:MMBOE) in the quarter, up from 1.470 MMBOE in the year-ago quarter.
Price Realization
The company’s total realized price was $64.78 per BOE compared with $69.68 per BOE in the third quarter of 2013, reflecting lower average realized prices across all products.
Average realized price for oil was $96.67 per barrel compared with $106.74 in the year-earlier quarter. Natural gas liquids were sold at $37.66 per barrel, down from the year-ago level of $40.47 per barrel. The price for natural gas was $5.91 per thousand cubic feet versus $5.88 in third-quarter 2013.
Financials
At the end of the third quarter, ConocoPhillips generated $4.2 billion in cash from continuing operating activities (excluding working capital). As of Sep 30, 2014, ConocoPhillips had $5.8 billion in cash and short-term investments, including $5.4 billion in cash and cash equivalents. The company ended the quarter with debt of $21.2 billion and a debt-to-capitalization ratio of 28%.
Guidance
For the fourth quarter of 2014, daily production is expected in the band of 1,545–1,575 MBOE, excluding Libya. ConocoPhillips expects to deliver 3–5% production growth in 2014. Excluding Libya, the company’s 2014 daily production is expected in the band of 1,525–1,535 MBOE.
Outlook
With leading positions in both natural gas and heavy crude oil in North America, as well as a legacy position in the North Sea and growing exposure to lucrative international regions, ConocoPhillips expects to replace reserves and sustain production growth over the long term. The company’s exploration initiatives toward liquids-rich plays are gaining momentum through the Eagle Ford, Bakken and North Barnett shale plays.
We believe that any downtrend in the global economy will affect the supply-demand fundamentals of oil and gas, hurting the sales prices of crude oil and natural gas.
ConocoPhillips currently carries a Zacks Rank #5 (Strong Sell). One can consider better-ranked energy sector stocks such as Tallgrass Energy Partners LP (TEP), Delek Logistics Partners LP (DKL) and Enbridge Energy Management LLC (EEQ). All these stocks currently sport a Zacks Rank #1 (Strong Buy).
Read the Full Research Report on COP
Read the Full Research Report on EEQ
Read the Full Research Report on DKL
Read the Full Research Report on TEP
Zacks Investment Research
