ConocoPhillips joined other major oil and gas firms in reporting billions of dollars in profits in the first quarter of the year.
The company had earnings of $5.8 billion or $4.39 a share, far better than the $1 billion and 75 cents a share earnings in the first quarter of 2021.
Excluding special items, first-quarter 2022 adjusted earnings were $4.3 billion, or $3.27 per share, compared with first-quarter 2021 adjusted earnings of $0.9 billion, or $0.69 per share.
In addition, ConocoPhillips announced a $2 billion increase in expected 2022 returns of capital to $10 billion. The company declared both an ordinary dividend of 46 cents per share and a third-quarter variable return of cash (VROC) payment of 70 cents per share.
“The first quarter saw all aspects of the business running well as we continued to deliver on our strategic, financial, and operational plans,” said Ryan Lance, chairman and chief executive officer.
He said the company managed to increase its targeted 2022 returns to shareholders by another 25% to a new total of $10 billion.
ConocoPhillips announced a quarterly ordinary dividend of 46 cents per share, payable June 1, 2022, to stockholders of record at the close of business on May 17, 2022. In addition, the company announced a third-quarter VROC of 70 cents per share, payable July 15, 2022, to stockholders of record at the close of business on June 28, 2022.
First-Quarter Review
Production for the first quarter of 2022 was 1,747 thousand barrels of oil equivalent per day (MBOED), an increase of 220 MBOED from the same period a year ago. After adjusting for closed acquisitions and dispositions, the conversion of previously acquired Concho contracted volumes from a two-stream to a three-stream basis, and 2021 Winter Storm Uri impacts, first-quarter 2022 production decreased by 36 MBOED or 2% from the same period a year ago. This decrease was primarily due to downtime and seasonality impacts as new production from the Lower 48 and other development programs more than offset decline.
In the Lower 48, production averaged 967 MBOED, including 640 MBOED from the Permian, 208 MBOED from the Eagle Ford and 97 MBOED from the Bakken. Lower 48 ended the quarter with 22 drilling rigs and eight frac crews at work. In Canada, drilling and completion activities continued at Montney while construction progressed on the second phase of the company’s processing facility. In Qatar, a planned major turnaround at Train 6 was successfully completed.
Earnings increased from first-quarter 2021 primarily due to higher realized prices and volumes, as well as a tax benefit related to closure of an audit. Excluding special items, adjusted earnings were higher compared with first-quarter 2021 due to higher realized prices and volumes. The company’s total average realized price was $76.99 per barrel of oil equivalent (BOE), 70% higher than the $45.36 per BOE realized in the first quarter of 2021, as production remains unhedged and thus realizes the full benefit of higher marker prices.
For the quarter, cash provided by operating activities was $5.1 billion. Excluding a $2.0 billion change in operating working capital, ConocoPhillips generated CFO of over $7 billion. Dispositions generated $2.3 billion, including $1.4 billion from sale of CVE shares, with the proceeds from CVE sales applied to additional share repurchases. The company funded $3.2 billion of capital expenditures and investments, comprised of $1.8 billion in operating capital and $1.4 billion to acquire an additional 10% interest in APLNG. In addition, the company paid $0.9 billion in ordinary dividends and VROC, repurchased $1.4 billion of shares, refinanced its revolving credit facility and paid $1.1 billion to reduce total debt. In April, the company also initiated the early retirement of a $1.25 billion note due 2026 that is expected to settle in May 2022 and further accelerate progress toward the debt reduction target.
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