Massive turnaround in earnings for ConocoPhillips in the past year

A day after ConocoPhilips announced a quarterly dividend of 30.5 cents per share, the firm announced fourth quarter 2018 earnings of $1.9 billion and full year 2018 earnings of $6.3 billion. The turnaround proved to be gigantic for the firm.

The Houston based company with major operations in Oklahoma said the quarterly earnings were $1.61 a share compared with fourth quarter 2017 earnings of $1.6 billion or $1.32 a share.

Adjusted earnings for the fourth quarter of 2018 came to $1.3 billion or $1.13 a share, far higher than the $0.5 billion in adjusted earnings and 45-cents a share reported for the fourth quarter of 2017.

The full-year 2018 earnings of $6.3 billion translated into earnings of $5.32 per share. A year earlier, ConocoPhillips reported a net loss of $0.9 billion or 70 cents a share for the full year.

The company’s adjusted earnings for 2018 came to $5.3 billion or $4.54 a share. The adjusted earnings for all of 2017 were $0.7 billion or 60 cents a share. 

“I am proud of our organization for safely delivering exception results in 2018,” said Ryan Lance, chairman and chief executive officer. “Our accomplishments reflect our clear commitment to a value proposition that is focused on returns and free cash flow generation and that balances investments with returning cash flow to shareholders through price cycles.”

Full-Year 2018 Summary

 

  • Cash provided by operating activities was $12.9 billion. Excluding working capital, cash from operations (CFO) of $12.3 billion exceeded capital expenditures and investments, generating free cash flow of $5.5 billion.
  • Repurchased $3 billion of shares and paid $1.4 billion in dividends funded entirely from free cash flow, representing a return of CFO to shareholders of 35 percent.
  • Paid down $4.7 billion of balance sheet debt, achieving $15 billion debt target 18 months ahead of plan.
  • Received credit rating upgrades to single “A” from Fitch, Moody’s and S&P.
  • Full-year production excluding Libya of 1,242 MBOED; underlying production grew 18 percent on a production per debt-adjusted share basis.  

  • Increased full-year Lower 48 Big 3 production by 37 percent.
  • Achieved first production from Bayu-Undan final development phase, GMT-1, Bohai Phase 3, Aasta Hansteen and Clair Ridge.
  • Acquired additional working interest in our legacy assets in Alaska and increased our acreage in the liquids-rich Montney play in Canada and in the early-lifecycle unconventional Louisiana Austin Chalk.
  • Executed successful exploration program in Alaska and started drilling in Louisiana Austin Chalk.

  • Reached a settlement agreement with PDVSA to fully recover the ICC arbitration award of approximately $2 billion; recognized $430 million toward the settlement.
  • Generated disposition proceeds of $1.1 billion from non-core asset sales.

  • Announced preliminary year-end proved reserves of 5.3 billion BOE; 147 percent total reserve replacement and 109 percent organic replacement ratio.
  • Achieved 12.6 percent return on capital employed.