ConocoPhillips (COP), Large Cap AI Study of the Week

September 17, 2024

Weekly AI Pick from the S&P 500

Company Overview

ConocoPhillips (COP) is an independent exploration and production company operating in 13 countries, focusing on extracting and marketing crude oil, bitumen, natural gas, NGLs, and LNG. The company is organized into six segments: Alaska, Lower 48 (U.S.), Canada, Europe/Middle East/North Africa, Asia Pacific, and Other International. As of the end of 2023, ConocoPhillips employed around 9,900 people and produced 1,826 thousand barrels of oil equivalent per day. Significant growth projects include the Nuna and Coyote projects in Alaska and the Willow project, expected to start production in 2029. The Lower 48 segment is the largest, leveraging unconventional plays in the Delaware Basin, Eagle Ford, Midland Basin, and Bakken regions.

In Canada, ConocoPhillips focuses on the Surmont oil sands and Montney play, while in the EMEA region, it has substantial operations in the Greater Ekofisk Area in the North Sea and LNG projects in Qatar. Recently, the company secured a 25% interest in two new LNG joint ventures with QatarEnergy. Other international operations include significant crude oil and natural gas production in Libya and a joint venture in Australia for coalbed methane conversion to LNG. The company also has exploration and production activities in China, Malaysia, and Colombia. New ventures and projects in Qatar, Australia, and Malaysia are potential future revenue and profit drivers.

ConocoPhillips is also investing in low-carbon technologies, focusing on emissions reduction, carbon capture and storage (CCS), and low-carbon fuel production, aligning with its net-zero ambition for 2030. The company manages market risks through firm and interruptible transportation agreements to major market hubs and has LNG facilities in Australia and Qatar, with expansions planned in North America and Europe. Human Capital Management (HCM) is a priority, with programs emphasizing safety, accountability, innovation, diversity, equity, and inclusion (DEI). Competitive compensation, benefits, and flexible work arrangements further support their commitment to a strong organizational culture and workforce development.

By the Numbers

Annual 10-K Report Summary (2023):

• Cash from operating activities: $20 billion
• Shareholder returns (dividends and share repurchases): $11 billion
• Production: 1,826 MBOED (up 5% from 2022)
• Acquisition investment (Surmont): $2.7 billion
• Updated GHG emissions reduction target: 50-60% by 2030
• WTI crude oil average price: $78 per barrel (down from $94 in 2022)
• Brent crude oil average price: $82.62 per barrel (down 18%)
• Henry Hub natural gas average price: $2.74 per MMBTU (down 59%)
• Worldwide annual average realized price: $58.39 per BOE (down 27% from $79.82 in 2022)
• Net income: $10.957 billion (down from $18.680 billion in 2022)
• Capital expenditures guidance for 2024: $11.0 to $11.5 billion
• Production guidance for 2024: 1.91 to 1.95 MMBOED
• Alaska segment net income: $1,778 million (down 24%)
• Lower 48 segment net income: $6,461 million (down 41%)
• Canadian operations net income: $402 million (down 44%)
• Europe, Middle East, and North Africa segment net income: $1,189 million (down 47%)
• Asia Pacific segment net income: $1,961 million (down from $2,736 million in 2022)
• Operating cash flow: $20.0 billion (down from $28.3 billion in 2022)
• Capital expenditures and investments: $11.2 billion
• Share repurchases: $5.4 billion
• Cash and cash equivalents: $5.6 billion (down from $6.5 billion)

Quarterly 10-Q Report Summary (Q2 2024):

• Marathon Oil acquisition value: $22.5 billion (including debt)
• Quarterly dividend increase: 34% starting in Q4
• Brent crude oil price increase: 8% year-over-year
• WTI crude oil price increase: 9% year-over-year
• Henry Hub natural gas average price: $1.89 per MMBTU (down 10% year-over-year)
• Realized bitumen price: $54.59 per barrel (up 33%)
• Total average realized price per BOE: $56.56 (up from $54.50 prior year)
• Earnings per share: $1.98
• Cash from operations: $4.9 billion
• Shareholder distributions: $1.9 billion
• Production: 1,945 MBOED (up 8% year-over-year)
• Net income for Q2: $2,329 million
• Net income for first half of 2024: $4,880 million
• Alaska segment earnings for Q2: $360 million
• Lower 48 segment net income for Q2: $1,259 million
• Canada segment earnings for Q2: $261 million
• Europe, Middle East, and North Africa segment net income for Q2: $251 million
• Asia Pacific segment net income for Q2: $444 million
• Total liquidity as of June 2024: $11.5 billion
• Operating cash flows for first half of 2024: $9 billion (down from $9.3 billion in 2023)
• Capital investments for 2024: $11.5 billion (up from $11.2 billion in 2023)
• Debt retired: $461 million (total debt reduced to $18.4 billion)
• Dividends and VROC payments for first half of 2024: $1.16 per share (up from $1.02 per share in 2023)