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

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:

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:

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.

* 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:

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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