ConocoPhillips Chops Capex Again as Revenues Sink

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ConocoPhillips (NYSE: COP) reported first-quarter 2016 results before markets opened Thursday. The oil and gas production company posted an adjusted diluted net loss per share of $0.95 on revenues of $5.02 billion. In the same period a year ago, the company reported a net loss of $0.18 per share on $8 billion in revenues. First-quarter results also compare to the Thomson Reuters consensus estimates for a net loss of $1.05 on revenues of $7.22 billion.

On a GAAP basis, Conoco’s net loss totaled $1.18 per share, including non-cash impairment charges on Gulf of Mexico and U.K. projects, along with some pension settlement expenses.

Conoco slashed its 2016 capital spending budget for the second time this year, lowering its expected spending to $5.7 billion, down from the $6.4 billion total announced in February. The original forecast called for capex of $7.7 billion. The latest cut reflects reduced exploration in deepwater projects. The company reported $10.1 billion in capital spending for 2015.

The company expects production to reach approximately 1.525 million barrels of oil equivalent per day, in line with 2015 production, excluding 64,000 barrels a day that were disposed of last year. Second-quarter production is forecast at 1.50 million to 1.54 million barrels of oil equivalent per day, down from 1.578 million barrels in the first quarter.

CEO Ryan Lance said:

We continue to safely deliver on our operational targets while taking steps to manage through this period of low prices. During the quarter, we took actions to conserve cash, improve liquidity and position the company for strong performance as prices improve. We reduced our dividend, further reduced our 2016 capital expenditures guidance, raised low-cost debt and continued to improve our cost structure. These actions, in combination with ongoing strong execution of the business, allow us to deliver on our value proposition, which recognizes the importance of distributions to shareholders, disciplined capital allocation, a focus on returns and a strong investment-grade balance sheet. As challenging as this price downturn has been, we are a much stronger company for the long term.

The company’s first-quarter average realized price per barrel of oil equivalent fell from $48.05 in the first quarter of 2015 to $31.47. Daily production for the quarter dropped about 2%.

Conoco’s shares traded up 2.2% Thursday morning, at $49.18 in a 52-week range of $31.05 to $69.03. Thomson Reuters had a consensus analyst price target of $46.29 before the report.