ConocoPhillips profit falls but beats views by a wide margin as production jumps

By Tomi Kilgore

Oil giant's initial target for 2024 capital returns is 18% below the $11 billion returned in 2023

Shares of ConocoPhillips rose Thursday after the oil exploration and production company saw fourth-quarter profit fall due to lower prices but still beat expectations by a wide margin as daily production reached record levels last year.

Meanwhile, the company said it was starting 2024 with a target of returning $9 billion to shareholders this year, citing its ability to generate "robust" cash flow. That amount is about 18% less than the $11 billion returned in 2023.

Truist analyst Neal Dingmann said he believes the company is being "rather conservative" with its capital-return target, as free cash flow has improved and operations continue to trend positively.

The stock (COP) tacked on 0.6% in morning trading.

With an annual dividend rate of $2.32, the implied dividend yield for the stock at current prices was 2.05%, compared with the yield for the Energy Select Sector SPDR exchange-traded fund XLE of 3.54% and the implied yield for the S&P 500 index SPX of 1.43%.

Net income for the quarter to Dec. 31 fell to $3.01 billion, or $2.52 a share, from $3.25 billion, or $2.61 a share, in the same period a year ago, as lower prices offset higher volumes. Excluding nonrecurring items, adjusted earnings per share of $2.40 were well above the FactSet consensus of $2.09.

Average realized prices tumbled 18.1% to $58.21 barrels of oil equivalent, or BOE.

Production increased 8% to 1,902 thousand barrels of oil equivalent per day, or MBOED, which helped raise 2023 MBOED to a record 1,826.

The company expects 2024 production of 1,910 to 1,950 MBOED. The company also plans to spend $11 billion to $11.5 billion on capital expenditures in 2024.

Revenue for the fourth quarter declined 20.5% to $15.31 billion but was above the FactSet consensus of $15.15 billion.

The stock has lost 1.3% over the past three months, while the SPDR energy ETF has gained 1.8% and the S&P 500 has rallied 13.9%.

-Tomi Kilgore

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02-08-24 1007ET

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