Revenue soars for ConocoPhillips
High crude prices, increased production, key buys push quarterly profits to $5.8B
ConocoPhillips’ profits soared in the first three months of the year, driven by high crude prices, record production and two key acquisitions in the Permian Basin.
ConocoPhillips, one of the world’s biggest independent oil and gas companies, said its profits increased nearly six times from same period a year earlier, surging to $5.8 billion from $1 billion in the first quarter of 2021. Revenues nearly doubled to $19.3 billion from $10.6 billion in 2021.
CEO Ryan Lance said strong performance followed what he has called the “transformative” year in 2021 when the Houston company vastly expanded its Permian Basin holdings with the $9.7 billion acquisition of Permian Basin operator Concho Resources and $9.5 billion purchase of Shell’s Permian business. The Permian, which straddles West Texas and New Mexico, is one of the world’s most prolific oil fields, producing more than 5 million barrels day, or nearly half of U.S. output of about 12 million barrels a day, according to the Energy Department.
The Permian accounted for more than one-third of ConocoPhillips record output of 1.7 million barrels a day, the company said. The increased production combined with oil prices above $100 a barrel helped to generate the stellar results.
“We’re running well, and with very strong financial performance,” Lance told investors in Thursday’s quarterly earnings call. “Now building on two very successful Permian transactions, we have truly transformed ConocoPhillips.”
ConocoPhillips joins the parade of oil companies reporting blockbuster profits, lifted by prices that surged to 14-year highs following the Russian invasion of Ukraine. Exxon Mobil said it earned $5.5 billion de
spite a more than $3 billion write-off to leave Russia. Chevron reported more than $6 billion in profits, and Shell raked in just over $7 billion.
Analysts expect the industry to continue to rake in the money his year. Oil and gas exploration and production companies are forecast to earn record profits this year — as much as $834 billion, according to research from Norwegian consulting firm Rystad Energy.
“The financial hot streak for public (oil) companies is only likely to continue in the near term, with profits and cash flow set to strengthen further this year and next,” said Espen Erlingsen, Rystad Energy’s head of upstream research, in an email.
Oil and gas companies have largely expanded production cautiously, maintaining their focus on delivering profits to their shareholders. But they are beginning to increase spending as oil prices remain elevated, setting them up for solid production growth this year, according to data from the Energy Department. Still, production remains about 10 percent below pre-pandemic levels, hampered in part by labor and supply shortages that have made it difficult to move crews, rigs and equipment into oil fields.
The Russian war against Ukraine has only added to those difficulties, roiling global markets and trade.
“This deeply troubling war is also disrupting supply chains at a time of recovering global economic growth and energy demand,” Lance told ConocoPhillips investors. “It is affecting every aspect of the global economy and impacting the energy security of our allies in Europe, and it’s driving significant volatility in commodity prices.”