) reported second quarter 2013 adjusted earnings of $1.41 per
share, surpassing both the Zacks Consensus Estimate of $1.28 and
year-earlier profit of $1.19. The year-over-year growth was
mainly attributable to increased volumes, continued portfolio
shift to liquids and higher proportion of production in
CONOCOPHILLIPS (COP): Free Stock Analysis
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Revenues in the reported quarter decreased to $14,142.0 million
from the year-ago level of $14,842.0 million but comfortably
surpassed our projection of $11,478.0 million.
Exploration and Production
Daily production averaged 1.510 million barrels of oil equivalent
(MMBOE) in the quarter, up 1.4% from 1.489 MMBOE in the year-ago
quarter. This increase was primarily attributable to new
production from development programs and major projects.
Overall price realization was flattish at $66.82 per BOE versus
$66.81 per BOE in the second quarter of 2012. This was due to
lower overall crude and natural gas liquids prices, offset by
higher natural gas and bitumen prices.
Average realized price for oil was $100.14 per barrel compared
with $105.56 in the year-earlier quarter. Natural gas liquids
(NGL) were sold at $37.24 per barrel, reflecting a decrease of
14.5% from the year-ago level of $43.55 per barrel. The price for
natural gas was $5.77 per thousand cubic feet (Mcf) versus $5.14
in second quarter 2012, reflecting an increase of 12.3%. The
company's bitumen prices rose from $51.38 per barrel a year ago
to $55.69 in the reported quarter.
At the end of the second quarter, ConocoPhillips generated $4.4
billion in cash from continuing operating activities (excluding
working capital). As of Jun 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 31%.
ConocoPhillips also paid $0.8 billion in dividends and incurred
$3.7 billion in capital expenditures during the quarter.
Asset Sale Program
The company generated $542 million in proceeds from asset sales
and expects to raise $10.5 billion from the disposition program
For the third quarter of 2013, daily production is expected in
the band of 1,460-1,490 thousand barrels of oil equivalent
(MBOE). For full-year 2013, production has been revised to
1,515-1,530 MBOE from the earlier estimate of 1,485-1,520 MBOE
per day range.
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.
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 for crude oil and natural gas.
We have a Zacks Rank #3 (Hold) for ConocoPhillips. However, Zacks
Gulfmark Offshore, Inc.
) are expected to outperform the market over the next few