) reported third quarter 2013 adjusted earnings of $1.47 per
share, in line with the Zacks Consensus Estimate and higher than
the year-earlier profit of $1.38. The year-over-year growth was
mainly attributed to increased volumes, continued portfolio shift
to liquids and increased proportion of production in
higher-margin areas as well as higher liquids and gas price
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Revenues in the reported quarter increased to $15,470.0 million
from the year-ago level of $14,713.0 million and comfortably
surpassed our projection of $12,451.0 million.
Exploration and Production
Daily production averaged 1.470 million barrels of oil equivalent
(MMBOE) in the quarter, flat year-over-year.
Overall price realization was up 6.2% at $69.68 per BOE from
$65.62 per BOE in the third quarter of 2012.
Average realized price for oil was $106.74 per barrel compared
with $102.72 in the year-earlier quarter. Natural gas liquids
(NGL) were sold at $40.47 per barrel, reflecting an increase of
0.2% from the year-ago level of $40.39 per barrel. The price for
natural gas was $5.88 per thousand cubic feet (Mcf) versus $5.18
in third quarter 2012, reflecting an increase of 13.5%. The
company's bitumen prices rose from $56.86 per barrel a year ago
to $76.06 in the reported quarter.
At the end of the third quarter, ConocoPhillips generated $3.6
billion in cash from continuing operating activities (excluding
working capital). As of Sep 30, 2013, the company had total cash
and cash equivalents of $3.9 billion and $21.7 billion in debt,
with a debt-to-capitalization ratio of 30%.
ConocoPhillips also paid $0.9 billion in dividends and incurred
$4.2 billion in capital expenditures during the quarter.
For the fourth quarter of 2013, the company reduced its
production outlook by 50 MBOED to reflect the ongoing production
disruptions in Libya. For the full year, production has been
revised to 1,505-1,515 MBOE from the earlier estimate of
1,515-1,530 MBOE per day.
The ongoing ramp-up in major North American programs, mainly in
the Eagle Ford and oil sands continue to contribute favorably to
The company also remains on track to deliver average annual
production as well as margin growth of 3% to 5%, as it focuses on
liquid-rich ventures primarily in the U.S. and Canada.
During the quarter, the company announced its plans to farm out
its interest in Kashagan, Algeria and Nigeria businesses. These
transactions are expected to generate proceeds of around $8.9
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. ConocoPhillips' exploration
initiatives toward liquids-rich plays are gaining momentum
through the Eagle Ford, Bakken and North Barnett shale plays.
Again, ConocoPhillips completed the spin-off of its
refining/sales business into a separate, independent and publicly
) in 2012. With this, ConocoPhillips shifted its complete focus
to upstream operations and thus oil and gas prices play a major
role in determining its performance.
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.
We have a Zacks Rank #3 (Hold) for ConocoPhillips. However, Zacks
TransAtlantic Petroleum Ltd
Northern Oil and Gas, Inc.
) are expected to outperform the market over the next few months.