ConocoPhillips (COP) Provides Preliminary First-Quarter 2021 Operational and Financial Update

March 31, 2021 8:33 AM EDT

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ConocoPhillips (NYSE: COP) today provided information regarding preliminary first-quarter 2021 operational and financial updates as well as certain full-year 2021 guidance items. The information discussed herein reflects the combined company following the close of the Concho transaction in January. Final first-quarter results will be reported on May 4.

First-Quarter Production

The company expects to report first-quarter 2021 production volumes of 1,470 to 1,490 thousand barrels of oil equivalent per day (MBOED). This estimate includes approximately 50 MBOED of unplanned weather impacts experienced throughout the Lower 48 as a result of Winter Storm Uri. Production in the Lower 48 was fully restored in March.

Preliminary production estimates by area and product for the first quarter of 2021 are shown below:

1Q 2021 Production Midpoint Estimate

Total
(MBOED)

Crude Oil
(MBD)

NGL
(MBD)

Bitumen
(MBD)

Natural Gas
(MMCFD)

Consolidated Operations

Alaska

205

190

14

-

5

Lower 48

710

410

80

-

1,320

Canada

100

10

5

70

90

Norway

135

80

5

-

300

China

30

30

-

-

-

Indonesia

55

2

-

-

320

Malaysia

45

35

-

-

60

Equity Affiliates

200

15

5

-

1,080

Total Excluding Libya

1,470–1,490

772

109

70

3,175

Note: Libya production for 1Q 2021 is estimated to be 40 MBOED.

First-Quarter Realized Pricing and Commercial Activity

Total average realized prices are expected to be $43 to $45 per barrel of oil equivalent (BOE) for the first quarter of 2021. These estimates reflect prices received under existing contract terms as well as normal pricing variability due to timing and local differentials, but exclude the effects of commodity derivatives. Preliminary estimates of average realized prices by area and product for the first quarter of 2021 are shown below:

1Q 2021 Average Realized Price Midpoint Estimate

Crude Oil
($/BBL)

NGL
($/BBL)

Bitumen
($/BBL)

Natural Gas
($/MCF)

Consolidated Operations

Alaska

59

-

-

2.20

Lower 48

56

24

-

3.80

Canada

46

20

31

2.40

Norway

57

39

-

6.20

Libya

60

-

-

2.90

China

58

-

-

-

Indonesia

51

-

-

6.90

Malaysia

63

-

-

2.60

Equity Affiliates

60

49

-

2.80

Total

56 – 58

26 – 27

30 – 32

4.30 – 4.50

Note 1: The estimated total realized price represents the company’s weighted average price for 1Q 2021.
Note 2: Existing contracts assumed as part of the Concho acquisition are based on 2 stream recognition.

In addition, the company expects to record before-tax earnings of approximately $0.1 billion related to commercial performance in the first quarter.

Concho-Related Unusual Items

The company expects to report first-quarter transaction and restructuring related expenses associated with the Concho acquisition of approximately $0.3 billion before tax, which will be treated as a special item when reporting non-GAAP adjusted earnings. Table 1 at the end of this news release provides additional information on projected first-quarter and full-year 2021 adjusted operating costs.

In addition, the company expects to incur losses of approximately $0.3 billion before tax from commodity hedging positions. This includes losses of approximately $0.1 billion before tax related to positions for which the company accelerated settlement into the first quarter that will be treated as a special item when reporting non-GAAP adjusted earnings. As of the end of the quarter, the company had settled all oil and gas hedging positions acquired from Concho.

Excluding working capital, the expected total impact to cash from operations from the transaction and restructuring expenses in combination with the hedging impacts is a reduction of approximately $1.0 billion. This includes approximately $0.8 billion related to settling all oil and gas positions acquired from Concho, of which approximately $0.5 billion in net liability was recorded on the acquisition close date of Jan. 15.

See the table below for a summary of the estimated financial statement impacts associated with the items mentioned above.

Estimated 1Q 2021 Impacts from Concho Unusual Items - $ Billion

Earnings Impact
(Before Tax)

Cash from
Operations ex WC

Transaction & Restructuring Expenses*

(0.3)

(0.3)

Settlement of Q1 2021 Hedges

(0.2)

(0.2)

Accelerated Settlement of Concho Hedging Program**

(0.1)

(0.6)

Total

~(0.6)

~(1.0)

* To be treated as a special item when reporting non-GAAP adjusted earnings.
** To be treated as a special item when reporting non-GAAP adjusted earnings; cash from operations reflects the impacts of settling oil and gas hedging positions acquired from Concho, inclusive of approximately $0.5 billion net liability at Jan 15.

First-Quarter and Full-Year Guidance

In addition to the updates above, the company is providing the following guidance estimates for first-quarter and full-year 2021:

1Q 2021

Full-Year 2021

Adjusted Operating Costs

$1,495 – 1,565 million

$6.2 billion

DD&A

$1,840 – 1,910 million

$7.4 billion

Adjusted Corporate Segment Net Loss

$225 – 275 million

$1.0 billion

Capital Expenditures

$1,210 – 1,290 million

$5.5 billion

Production Excluding Libya

1.47 – 1.49 MMBOED

1.5 MMBOED

All updates and estimates provided were calculated using actual results for January and February along with forecasts for the remaining periods. ConocoPhillips will announce first-quarter 2021 operational and financial results on May 4 and host a conference call on that date at 12:00 p.m. Eastern time.



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