ConocoPhillips saw its highest earnings in 10 years, bouncing back from the pandemic-induced oil consumption slump. The company more than doubled its 2021 profits in 2022, increasing from $8.1 billion to $18.7 billion, according to its Feb. 2 fourth-quarter 2022 earnings call.
In its earnings announcement, ConocoPhillips said its fourth-quarter 2022 adjusted earnings were $3.4 billion, or $2.71/share, up from its 2021 adjusted earnings of $3.0 billion, or $2.27/share.
“We're pretty pleased where the portfolio is at,” Ryan Lance, chairman and CEO of ConocoPhillips said on the earnings call. “I think we've spent a lot of time over the last five years really coring up the portfolio, really focused on getting it as low cost of supply as we can, getting the margins as expanded as we can, leading to the returns and the productivity that we're seeing today.”
In the Lower 48, ConocoPhillips received record production from their assets, averaging a total of 997 Mboe/d, including 671 Mboe/d from the Permian, 214 Mboe/d from the Eagle Ford and 96 Mboe/d from the Bakken in 2022. Total fourth-quarter production was 1,758 Mboe/d, a 150 Mboe/d increase from the previous year.
Full-year production for 2023 is forecasted between 1,760 Mboe/d and 1,800 Mboe/d, which Lance says represents “1% to 4% of organic growth.”
“On the demand side, we think that growth will continue in 2023, aided by normalization in China mobility, following the loosening of COVID restrictions,” Lance said on the call.
Willow, Port Arthur projects
ConocoPhillips is excited about two projects—the Willow project in Alaska and Port Arthur LNG.
While still waiting on the final record of decision (ROD), which is expected in March, the Willow project is estimated to cost between $7 billion and $7.5 billion, said Andy O’Brien, ConocoPhillips’ senior vice president of global operations. Once ROD has been issued, the company will “immediately initiate gravel road construction [and] ramp up fabrication and supply chain activities,” O’Brien continued.
The Port Arthur LNG project is slightly further along than the Willow project, as final investment decision is expected in first-quarter 2023. ConocoPhillips signed a 20-year agreement with Sempra Energy for 5 million tonnes per annum of LNG offtake and executed an agreement to purchase 30% equity stake in Phase 1 of Port Arthur LNG. The 30% share of equity is expected to be just under $2 billion, said Bill Bullock, executive vice president and CFO of ConocoPhillips.
While ConocoPhillips is satisfied with its 2022 progress, it still has its eyes set on the continuous execution of their triple mandate to reliably meet energy transition pathway demand, delivering competitive returns on and of capital and achieving net-zero operational emissions ambition.
“Looking ahead, ConocoPhillips is well positioned to further deliver on our triple mandate in 2023 with a well-balanced capital allocation strategy. This morning, we announced the plan to return $11 billion of capital to shareholders, which represents about 50% of our forecasted CFO at $80 WTI. The other half of our cash flow will be dedicated to reinvesting in the business,” said Lance. “From a portfolio perspective, our deep and well-diversified asset base is well-positioned to generate solid cash flow growth for decades to come.”
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