Yahoo Finance ConocoPhillips (NYSE:COP) Q1 2024 Earnings Call Transcript
ConocoPhillips (NYSE:COP) Q1 2024 Earnings Call Transcript May 2, 2024
ConocoPhillips misses on earnings expectations. Reported EPS is $2.03 EPS, expectations were $2.04. ConocoPhillips isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Welcome to the First Quarter 2024 ConocoPhillips Earnings Conference Call. My name is Liz, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session. [Operator Instructions] I will now turn the call over to Phil Gresh, Vice President, Investor Relations. Sir, you may begin.
Phil Gresh: Thank you, Liz, and welcome, everyone, to our first quarter 2024 earnings conference call. On the call today, we have several members in the ConocoPhillips' leadership team, including Ryan Lance, Chairman and CEO; Tim Leach, Advisor to the CEO; Bill Bullock, Executive Vice President and Chief Financial Officer; Andy O'Brien, Senior Vice President of Strategy, Commercial Sustainability and Technology; Nick Olds, Executive Vice President of Lower 48; and Kirk Johnson, Senior Vice President of Global Operations. Ryan and Bill will kick it off with opening remarks, after which the team will be available for your questions. A few quick reminders. First, along with today's release, we published supplemental financial materials and a slide presentation, which you can find on the Investor Relations website.
Second, during this call, we will make forward-looking statements based on current expectations. Actual results may differ due to factors noted in today's release and in our periodic SEC filings. We will make reference to some non-GAAP financial measures. Reconciliations to the nearest corresponding GAAP measure can be found in today's release and on our website. And third, of course, when we move to Q&A, we will be taking one question per caller. So with that, I will turn it over to Ryan.
Ryan Lance: Thanks, Phil, and thank you to everyone for joining our first quarter 2024 earnings conference call. It was another solid quarter of focused execution across the portfolio on our strategic plan. Starting with our international projects. We continue to ramp up production at Surmont Pad 267 in Canada, Bohai Bay 4B in China and three subsea tiebacks in Norway. And we expect to start up the fourth subsea tieback in Norway in the next month. In Canada at Montney, production reached a new record level following the start-up of the second central processing facility, leading to over 20% growth versus the fourth quarter. Shifting to our other projects. We are wrapping up a successful first major winter construction season at Willow this week and module fabrication is going according to plan.
As we build out our LNG portfolio, our Qatar and Port Arthur projects are also progressing well. Moving to the Lower 48. Our primary focus remains on capital efficient growth as we continue to improve efficiency in drilling and completions. For 2024, we still expect to deliver low single-digit production growth at flat activity levels with lower capital spending versus 2023. Shifting to return of capital, we remain on track to distribute at least $9 billion to shareholders this year. And we announced a VROC of $0.20 per share for the second quarter, consistent with our guidance of a 60-40 split between buybacks and cash distributions for the year. To wrap-up, it was a solid start to the year. We are on track with the full year guidance that we laid out back in February, which anticipates a well-balanced growth across our global portfolio.
And as we discussed in our Analyst and Investor Meeting last year, we continue to invest in our deep, durable and diverse asset base, which will drive significant cash flows and shareholder distributions over the course of our 10-year plan. Now, let me turn the call over to Bill to cover our first quarter performance and 2024 guidance in more detail.
Bill Bullock: Thanks, Ryan. In the first quarter, we generated $2.03 per share in adjusted earnings. We produced 1,902,000 barrels of oil equivalent per day, representing 2% underlying growth year-over-year. Lower 48 production averaged 1,046,000 barrels of oil equivalent per day with 736,000 in the Permian, 197,000 in the Eagle Ford and 96,000 in the Bakken. Now this included a 25,000 barrel per day headwind from weather, which impacted Lower 48 production by about 2% and was slightly higher than the 20,000 barrel per day guidance provided on the fourth quarter call. As a result, Lower 48 underlying growth was roughly 1% year-over-year. Now for the rest of the company, Alaska International production averaged 856,000 barrels of oil equivalent per day, representing roughly 4% underlying growth year-over-year, excluding the Surmont acquisition effects, and this really highlights the benefit of our diversified global portfolio.
Moving to cash flows. First quarter CFO was $5.1 billion, which included APLNG distributions of $521 million. Capital expenditures were $2.9 billion. Debt retirement payments were $500 million and this was partially offset by proceeds of $200 million from disposition of non-core assets. And we returned $2.2 billion to shareholders in the quarter, including $1.3 billion in buybacks and $900 million in ordinary dividends and VROC payments. We ended the quarter with cash and short-term investments of $6.3 billion and $1.1 billion in longer-term liquid investments. Turning to guidance. We've maintained our full year production outlook of 1.91 million to 1.95 million barrels of oil equivalent per day, which translates to 2% to 4% underlying growth.
And for the second quarter, we expect production to be in the range of 1.91 million to 1.95 million barrels a day equivalent also which represents a similar 2% to 4% year-over-year underlying growth. Our full year turnaround forecast is 30,000 barrels per day. This includes 25,000 barrels per day of turnarounds in the second quarter primarily in Alaska, Norway and Qatar and 90,000 barrels per day for the third quarter. And as we mentioned on the last earnings call, the heavy third quarter maintenance was driven by our once every five-year turnaround at Surmont. For CapEx our full year guidance remains $11 billion to $11.5 billion with a greater weight to the first half of the year. Now this is due to the $400 million of equity contributions at Port Arthur LNG that are almost entirely in the first half of the year as we discussed on the last call.
For APLNG we expect $300 million of distributions in the second quarter with no change to full year guidance of $1.3 billion. And finally for the second quarter, we're forecasting a $600 million working capital outflow related to tax payments and timing in the US and Norway. All other full year guidance items are unchanged. So we continue to deliver on our strategic initiatives. We remain focused on executing our plan for 2024 and we're committed to staying highly competitive on our shareholder distributions. That concludes our prepared remarks. I'll now turn it back over to the operator to start the Q&A.
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