(Reuters) -ConocoPhillips reported a first-quarter profit on Tuesday that exceeded Wall Street’s expectations as a vaccine-induced return in travel requirement and a winter storm that struck parts of the US in February boosted oil and gas prices.
FILE PHOTO: Flags fly in front of the ConocoPhillips offices in Houston, Texas, April 30, 2019. REUTERS / Loren Elliott
Higher crude oil prices and deep cost cuts implemented at the height of a downturn last year are helping U.S. oil and gas companies achieve improved earnings and cash flow in the first quarter.
Still, CEO Ryan Lance warned that global oil demand has not yet recovered to pre-pandemic levels and that global oversupply is estimated at 5 to 6 million barrels a day.
“We still have to compensate for a lot,” he said to investors on a profit call.
Stronger fuel prices resulted in $ 2.1 billion in cash flow from operating activities, despite $ 1 billion from the release of hedging and restructuring costs through ConocoPhillips’ acquisition of shale competitor Concho Resources.
Conoco sold its oil and gas for an average of $ 45.36 a barrel for the quarter, up 17% from the same period last year. However, production declined 4% year over year due to the impact of a February storm.
The company pledged to reduce debt by $ 5 billion over the next five years and to sell its 10% stake in Canadian producer Cenovus Energy Inc by the end of 2022. The proceeds from the share sale will be used to increase the share buyback, said Conoco.
At the close of trading on Monday, the proportion would be $ 2.06 billion ($ 1.67 billion).
Total Conoco production excluding Libya was 1.49 million barrels of oil equivalent per day (boepd) compared to 1.14 million boepd in the fourth quarter. Production of 1.50 to 1.54 million Boepd is expected this quarter.
The company has restarted four oil rigs in Alaska after operations ceased due to the 2020 pandemic.
Adjusted earnings of 69 cents per share were well above the analysts’ average estimate of 51 cents, according to data from Refinitiv IBES.
ConocoPhillips shares fell a fraction to $ 52.40 in midday trading.
($ 1 = 1.2318 Canadian dollars)
Reporting by Shariq Khan in Bengaluru and Liz Hampton in Denver; Arrangement by Shounak Dasgupta and Marguerita Choy
