ConocoPhillips to implement $2.2B in cash-saving measures

ConocoPhillips announced that it is taking several actions in response to the recent oil market downturn. Company announced an increase in its quarterly dividend of 38 percent, to 42 cents per share. ConocoPhillips (NYSE: COP) today completed its previously announced transaction to sell two ConocoPhillips United Kingdom (U.K.) subsidiaries.

ConocoPhillips (NYSE: COP) will host a conference call webcast on Tuesday, Oct. 29, 2019 at 12:00 p.m. eastern time. ConocoPhillips (NYSE: COP) today reported first-quarter 2019 earnings of $1.8 billion, or $1.60 per share. ConocoPhillips (NYSE: COP) continued its commitment to advance data science education with contributions to four universities totaling nearly $3 million.

Ryan Lance, chairman and chief executive officer says “Our industry is clearly experiencing an unprecedented event brought about by simultaneous supply and demand shocks”.

The actions we are now taking reflect an acknowledgement of current events as well as uncertainty around the timing and path of a recovery. The ICSID tribunal ruled in 2013 that the expropriation of ConocoPhillips’ substantial investments in the Hamaca. Company announced the winners of its 2018 Supplier Recognition Award program.

It ended 2019 with over $14 billion of liquidity, including cash, cash equivalents, short-term investments. The subsidiaries indirectly held the company’s exploration and production assets in the U.K. Company continue to monitor market conditions and consider various scenarios to inform any future actions.

Excluding special items, first-quarter 2019 adjusted earnings were $1.1 billion, or $1.00 per share. ICSID tribunal’s decision, which upholds the principle that governments cannot unlawfully expropriate private investments. The 10 recipient companies were honored for exhibiting exceptional leadership in observance of SPIRIT Values.

It have a significant level of flexibility between our capital, operating costs, and share repurchase program. Cash provided by operating activities was $2.9 billion. Excluding working capital, cash from operations (CFO) of $2.9 billion exceeded capital expenditures. The donations will help meet the growing demand for data science college coursework by funding programs at Oklahoma State University.

They believe that the highest-value longer-term response is price-path dependent. This represents an annualized increase in the dividend of approximately $500 million. Proceeds will be used for general corporate purposes. Repurchased $0.8 billion of shares and paid $0.3 billion in dividends funded entirely from free cash flow.

2020 operating plan capital expenditures will be reduced by $0.7 billion, representing about a 10 percent decrease from the previously announced guidance. It representing a return of CFO to shareholders of 37 percent. The multi-year contributions will help shape the universities’ data science curricula across various disciplines, with a focus on applications related to the oil and gas industry.

The reduction will be sourced by slowing operated development activity in the Lower 48. First-quarter production excluding Libya of 1,318 MBOED; year-over-year underlying production grew 5 percent overall. The ICC tribunal’s ruling arose out of PDVSA’s failure to uphold its contractual commitments.

“We believe we have a significant advantage compared to most of the industry through our strong balance sheet”, Lance said.

It expected decreases in non-operated activity in the Lower 48, and deferred drilling in Alaska. The company also announced that it expects to repurchase $3 billion of its shares in 2020. ConocoPhillips also has a pending contractual ICC arbitration against PDVSA related to the Corocoro project.

These reductions are expected to impact 2020 full-year production guidance by approximately 20 thousand barrels of oil equivalent per day (MBOED). In the first six months of 2019, production associated with the U.K. assets sold was 72 thousand barrels of oil equivalent per day (MBOED).

Grew production from the Lower 48 Big 3 unconventionals by 30 percent year-over-year. Oklahoma State University will use a $670,000 contribution to expand existing data science and analytics offerings to create a campus-wide. The 2020 planned share repurchase program will be reduced to a quarterly run rate of $250 million beginning in the second quarter.

Ended the quarter with cash, cash equivalents and restricted cash totaling $6.5 billion and short-term investments of $0.2 billion. This effort will also enable students to work collaboratively with ConocoPhillips employees. ConocoPhillips helped Venezuela develop the Petrozuata, Hamaca and Corocoro projects.

On a combined basis, the capital and share repurchase actions represent a reduction in 2020 cash uses of $2.2 billion. ConocoPhillips business units around the world generated nominations internally. There is no impact to third-quarter production guidance as a result of the sale. The company’s financial and operating results will be released before the market opens on Oct. 29.

The company continues to review its capital and operating plans and will provide a full 2020 guidance update in conjunction with first-quarter earnings on April 30. It increase ordinary dividend reflects the significant transformation our company has undergone over the past few years.

ConocoPhillips will hold an Analyst & Investor meeting on Nov. 19, 2019 in Houston, Texas. The University of Houston will use a previously announced $1 million contribution to fund new faculty positions. The Venezuelan government expropriated ConocoPhillips’ investments in their entirety without compensation.

Over the last several years ConocoPhillips has reduced its cost of supply while continuing to achieve outstanding operational results. ConocoPhillips is the world’s largest independent E&P company based on production and proved reserves. The University of Oklahoma will use a $1 million contribution in support of its Data Science and Analytics Institute.

Lance says “Today’s circumstances require action and we believe we’re taking the right steps at the right time”.

Current conditions represent a significant challenge for our industry overall. Company will provide updated full-year guidance to applicable items on the upcoming third-quarter conference call. It closed the sale of the Greater Sunrise Fields in April for $350 million before customary adjustments.

The University of Texas will utilize a $300,000 contribution to fund a research educator position. The company will present a 10-year outlook that includes a capital investment plan. The company has posted an investor table that summarizes the impact of this transaction. It remain focused on creating long-term value, especially through cycles.

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