ConocoPhillips Reports Fourth-Quarter and Full-Year 2020 Results; Announces Quarterly Dividend
The 2020 results discussed herein reflect the performance of
Full-year 2020 earnings were a loss of
“I want to thank our workforce for their efforts in the face of a most challenging year,” said
“Despite the significant industry-wide downturn in 2020, we successfully delivered this value proposition and remain committed to it. As we enter 2021, our ability to lead the sector in value creation is enhanced by the recent
Full-Year 2020 Summary and Recent Announcements
-
Enhanced both our portfolio and financial framework through the acquisition of
Concho in an all-stock transaction, as well as purchasing bolt-on acreage inCanada and Lower 48. -
Full-year production, excluding
Libya , of 1,118 MBOED; curtailed approximately 80 MBOED during the year. -
Cash provided by operating activities was
$4.8 billion . Excluding working capital, cash from operations (CFO) of$5.2 billion exceeded capital expenditures and investments of$4.7 billion , generating free cash flow of$0.5 billion . -
Generated
$1.3 billion in disposition proceeds from non-core asset sales. -
Distributed
$1.8 billion in dividends and repurchased$0.9 billion of shares, representing a 53 percent return of CFO to shareholders. -
Ended the year with cash, cash equivalents and restricted cash totaling
$3.3 billion and short-term investments of$3.6 billion , equaling$6.9 billion in ending cash and short-term investments. -
Announced two significant discoveries in
Norway and achieved first production at Tor II; continued appraisal drilling and started up first pads and related infrastructure inMontney . -
Adopted a
Paris -aligned climate risk framework with ambition to achieve net-zero operated emissions by 2050 as part of our commitment to ESG excellence.
Quarterly Dividend
Fourth-Quarter Review
Production excluding
In the Lower 48, production averaged 395 MBOED including
Earnings decreased from fourth-quarter 2019 due to lower realized prices and reduced volumes, as well as non-cash impairments in
For the quarter, cash provided by operating activities and CFO was
Full-Year Review
Production excluding
The company’s total realized price for 2020 was
In 2020, cash provided by operating activities was
Reserves Update
Preliminary 2020 year-end proved reserves are approximately 4.5 billion BOE. The total reserve replacement ratio, including market factors and closed acquisitions and dispositions, is expected to be negative 86 percent.
Reserve changes excluding market factors and closed acquisitions and dispositions are expected to add 0.3 billion BOE, resulting in an organic reserve replacement ratio of approximately 65 percent. Market factors represent the use of historical 12-month pricing in measuring proved reserves as prescribed by
Final information related to the company’s 2020 oil and gas reserves, as well as costs incurred, will be provided in ConocoPhillips’ Annual Report on Form 10-K, to be filed with the
Outlook
On
The company has set a 2021 operating plan capital budget of
The operating plan capital budget of
Lance commented, “While the industry fundamentals have strengthened off the 2020 lows, we believe setting a sustaining capital program for 2021 is the right approach for our company. It clearly demonstrates our commitment to free cash flow generation and creates flexibility to return additional capital to shareholders at higher prices. Most importantly, the closing of the
Lance continued, “To put our current expectations into perspective, in 2019 the two companies’ combined pro forma 2019 adjusted operating costs were approximately
See the table at the end of this release for additional information about 2019 pro forma adjusted operating costs.
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About
Headquartered in
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This news release contains forward-looking statements as defined under the federal securities laws. Forward-looking statements relate to future events and anticipated results of operations, business strategies, and other aspects of our operations or operating results. Words and phrases such as “anticipate," “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict," “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and other similar words can be used to identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. Where, in any forward-looking statement, the company expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to be reasonable at the time such forward-looking statement is made. However, these statements are not guarantees of future performance and involve certain risks, uncertainties and other factors beyond our control. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in the forward-looking statements. Factors that could cause actual results or events to differ materially from what is presented include the impact of public health crises, including pandemics (such as COVID-19) and epidemics and any related company or government policies or actions; global and regional changes in the demand, supply, prices, differentials or other market conditions affecting oil and gas, including changes resulting from a public health crisis or from the imposition or lifting of crude oil production quotas or other actions that might be imposed by
Cautionary Note to U.S. Investors
– The
Use of Non-GAAP Financial Information
– To supplement the presentation of the company’s financial results prepared in accordance with
The company believes that the non-GAAP measures adjusted earnings (both on an aggregate and a per-share basis), operating costs and adjusted operating costs are useful to investors to help facilitate comparisons of the company’s operating performance associated with the company’s core business operations across periods on a consistent basis and with the performance and cost structures of peer companies by excluding items that do not directly relate to the company’s core business operations. Operating costs is defined by the company as the sum of production and operating expenses, selling, general and administrative expenses, exploration general and administrative expenses, geological and geophysical, lease rentals and other exploration expenses. Adjusted operating costs is defined as the company’s operating costs further adjusted to exclude expenses that do not directly relate to the company’s core business operations and are included as adjustments to arrive at adjusted earnings to the extent those adjustments impact operating costs. The company has also calculated adjusted operating costs on a pro forma basis to supplement investors’ understanding of forward-looking information of the combined company. The company has made certain reclassification adjustments to conform historical
Each of the non-GAAP measures included in this news release and the accompanying supplemental financial information has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of the company’s results calculated in accordance with GAAP. In addition, because not all companies use identical calculations, the company’s presentation of non-GAAP measures in this news release and the accompanying supplemental financial information may not be comparable to similarly titled measures disclosed by other companies, including companies in our industry. The company may also change the calculation of any of the non-GAAP measures included in this news release and the accompanying supplemental financial information from time to time in light of its then existing operations to include other adjustments that may impact its operations.
Reconciliations of each non-GAAP measure presented in this news release to the most directly comparable financial measure calculated in accordance with GAAP are included in the release.
Other Terms – This news release also contains the term underlying production. Underlying production excludes
References in the release to earnings refer to net income/(loss) attributable to
|
|||||||||||||||||||||
Table 1: Reconciliation of earnings to adjusted earnings | |||||||||||||||||||||
$ Millions, Except as Indicated | |||||||||||||||||||||
4Q20 |
|
4Q19 |
|
2020 FY |
|
2019 FY |
|||||||||||||||
Pre-tax |
Income tax |
After-tax |
Per share of common stock (dollars) |
Pre-tax |
Income tax |
After-tax |
Per share of common stock (dollars) |
Pre-tax |
Income tax |
After-tax |
Per share of common stock (dollars) |
Pre-tax |
Income tax |
After-tax |
Per share of common stock (dollars) |
||||||
Earnings |
|
(0.72) |
720 |
0.65 |
(2,701) |
(2.51) |
7,189 |
6.40 |
|||||||||||||
Adjustments: | |||||||||||||||||||||
Impairments |
1,124 |
(255) |
869 |
0.81 |
386 |
(90) |
296 |
0.27 |
1,680 |
(377) |
1,303 |
1.20 |
682 |
(156) |
526 |
0.47 |
|||||
Exploration expenses |
84 |
(17) |
67 |
0.06 |
- |
- |
- |
- |
84 |
(17) |
67 |
0.06 |
- |
- |
- |
- |
|||||
Pending claims and settlements |
46 |
(10) |
36 |
0.03 |
10 |
33 |
43 |
0.04 |
(75) |
9 |
(66) |
(0.06) |
(378) |
(4) |
(382) |
(0.34) |
|||||
Transaction and restructuring expenses |
24 |
(5) |
19 |
0.02 |
- |
- |
- |
- |
24 |
(5) |
19 |
0.02 |
- |
- |
- |
- |
|||||
Unrealized (gain) loss on FX derivative |
17 |
(3) |
14 |
0.01 |
18 |
(3) |
15 |
0.01 |
(38) |
8 |
(30) |
(0.03) |
33 |
(5) |
28 |
0.02 |
|||||
Pension settlement expense |
17 |
(4) |
13 |
0.01 |
8 |
(2) |
6 |
0.01 |
44 |
(10) |
34 |
0.03 |
45 |
(9) |
36 |
0.03 |
|||||
Unrealized (gain) loss on CVE shares |
(447) |
- |
(447) |
(0.41) |
(160) |
- |
(160) |
(0.14) |
855 |
- |
855 |
0.79 |
(649) |
- |
(649) |
(0.58) |
|||||
Net gain on asset sales |
- |
- |
- |
- |
(67) |
11 |
(56) |
(0.05) |
(551) |
(14) |
(565) |
(0.52) |
(1,880) |
(348) |
(2,228) |
(1.98) |
|||||
Malaysia Deepwater tax incentive |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(164) |
(164) |
(0.15) |
|||||
|
- |
- |
- |
- |
- |
- |
- |
- |
- |
(48) |
(48) |
(0.04) |
- |
- |
- |
- |
|||||
Deferred tax adjustments |
- |
- |
- |
- |
- |
(151) |
(151) |
(0.14) |
- |
92 |
92 |
0.09 |
- |
(178) |
(178) |
(0.16) |
|||||
|
- |
- |
- |
- |
118 |
- |
118 |
0.11 |
- |
- |
- |
- |
118 |
- |
118 |
0.11 |
|||||
|
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(25) |
(25) |
(0.02) |
|||||
Recognition of deferred revenue |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(297) |
62 |
(235) |
(0.21) |
|||||
Adjusted earnings / (loss) |
|
(0.19) |
831 |
0.76 |
(1,040) |
(0.97) |
4,036 |
3.59 |
|||||||||||||
The income tax effects of the special items are primarily calculated based on the statutory rate of the jurisdiction in which the discrete item resides. |
|
||||||||||
Table 2: Reconciliation of reported production to underlying production | ||||||||||
In MBOED, Except as Indicated | ||||||||||
4Q20 |
4Q19 |
|
2020 FY |
2019 FY |
||||||
Total Reported Production |
1,169 |
1,334 |
1,127 |
1,348 |
||||||
Adjustments: | ||||||||||
|
(25) |
(45) |
(9) |
(43) |
||||||
Total Production excluding |
1,144 |
1,289 |
1,118 |
1,305 |
||||||
Closed Acquisitions & Dispositions1 |
(7) |
(64) |
(22) |
(114) |
||||||
Total Underlying Production |
1,137 |
1,225 |
1,096 |
1,191 |
||||||
Estimated Production Curtailments2 |
- |
- |
80 |
- |
||||||
1Includes production from the completed disposition, in addition to production from the completed |
||||||||||
2Estimated production impacts from price related curtailments, which are excluded from Total Production excluding |
||||||||||
|
||||||||
Table 3: Reconciliation of net cash provided by operating activities to free cash flow | ||||||||
$ Millions, Except as Indicated | ||||||||
4Q20 |
2020 FY |
|||||||
Net Cash Provided by Operating Activities |
1,672 |
4,802 |
||||||
Adjustments: | ||||||||
Net operating working capital changes |
10 |
(372) |
||||||
Cash from operations |
1,662 |
5,174 |
||||||
Capital expenditures and investments |
1,058 |
4,715 |
||||||
Free Cash Flow |
604 |
459 |
||||||
|
|||||||||
Table 4: Calculation of Reserve Replacement Ratios | |||||||||
MMBOE, Except as Indicated | |||||||||
End of 2019 |
5,262 |
||||||||
End of 2020 |
4,459 |
||||||||
Change in reserves |
(803) |
||||||||
Production1 |
432 |
||||||||
Change in reserves excluding production1 |
(371) |
||||||||
Total reserve replacement ratio |
-86% |
||||||||
Production1 |
432 |
||||||||
Purchases2 |
(29) |
||||||||
Sales2 |
36 |
||||||||
Market Factors3 |
640 |
||||||||
Changes in reserves excluding production1, purchases2, sales2 and market factors3 |
276 |
||||||||
Organic reserve replacement ratio, excluding Market Factors |
64% |
||||||||
1Production includes fuel gas and |
|||||||||
2Purchases refers to acquisitions and sales refers to dispositions. | |||||||||
3Market factors represent the use of historical 12-month pricing in measuring proved reserves as prescribed by |
|||||||||
|
||||||||||
Table 5: Reconciliation of 2020 pro forma production for |
||||||||||
In MBOED, Except as Indicated | ||||||||||
Pro Forma 2020 FY |
||||||||||
Total Reported ConocoPhillips Production |
1,127 |
|||||||||
Adjustments: | ||||||||||
|
(9) |
|||||||||
Closed Dispositions1 |
(20) |
|||||||||
Estimated Production Curtailments2 |
80 |
|||||||||
Total ConocoPhillips Production adjusted for Dispositions and Curtailment Impacts |
1,178 |
|||||||||
Estimated Concho Production3 |
322 |
|||||||||
Total Pro Forma Production |
1,500 |
|||||||||
1Includes production from the completed Australia-West disposition and various Lower 48 dispositions. | ||||||||||
2Estimated production impacts from price related curtailments, which are excluded from Total Reported ConocoPhillips Production. |
||||||||||
3
months ended |
||||||||||
|
||||
Table 6: Reconciliation of pro forma adjusted operating costs for |
||||
$ Millions, Except as Indicated | ||||
Pro Forma 2019 FY |
||||
|
||||
Production and operating expenses |
5,322 |
|||
Selling, general and administrative (G&A) expenses |
556 |
|||
Exploration G& |
322 |
|||
Operating costs |
6,200 |
|||
Adjustments to exclude special items: | ||||
Less pending claims and settlements |
(60) |
|||
Adjusted |
6,140 |
|||
Adjustments: | ||||
Dispositions1 |
(481) |
|||
Adjusted |
5,659 |
|||
|
||||
Oil and natural gas production expenses |
716 |
|||
Gathering, processing and transportation expenses |
115 |
|||
General and administrative expenses |
326 |
|||
Exploration and abandonment expenses |
201 |
|||
Operating costs |
1,358 |
|||
Adjustments:2 | ||||
Leasehold abandonment expenses |
(147) |
|||
Other exploration expenses |
(37) |
|||
Estimated accounting differences |
125 |
|||
Adjusted |
1,299 |
|||
Total Pro Forma Adjusted Operating Costs |
6,958 |
|||
1Includes costs associated with the dispositions. |
||||
2Adjustments for reporting and accounting differences based on operating costs. |
||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20210202005184/en/
281-293-1451
john.c.roper@conocophillips.com
Investor Relations
281-293-5000
investor.relations@conocophillips.com
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