ConocoPhillips Reports Fourth-Quarter and Full-Year 2021 Results; Increases Planned 2022 Return of Capital to $8 Billion and Declares Quarterly Dividend and Variable Return of Cash Distribution
ConocoPhillips (NYSE: COP) reported Q4 2021 earnings of $2.6 billion, equating to $1.98 per share, a significant recovery from a loss of $0.8 billion in Q4 2020. Full-year earnings reached $8.1 billion, compared to a loss of $2.7 billion in 2020. The company announced a $1 billion increase in expected 2022 return of capital to shareholders, totaling $8 billion, alongside a quarterly dividend of 46 cents per share and a variable return of cash payment of 30 cents per share. Production for 2021 averaged 1,527 MBOED, with a total cash flow from operations of $17 billion.
- Q4 2021 earnings of $2.6 billion; full-year earnings of $8.1 billion.
- Return of capital to shareholders increased to $8 billion for 2022, a 30% rise.
- Raised ordinary dividend to 46 cents per share and VROC to 30 cents per share.
- Non-cash impairments recorded for investments in APLNG and noncore assets.
- Higher operating costs led to reduced margins despite increased production.
Full-year 2021 earnings were
In addition,
“Our strong fourth-quarter results capped a transformative year for our company as we continue to deliver on our Triple Mandate,” said
Full-Year 2021 Summary and Recent Announcements
-
Announced an increase to expected 2022 return of capital to shareholders to a total of
$8 billion $1 billion -
Acquired and integrated
Concho , capturing over$1 billion Dec. 1, 2021 . -
Exercised preemption right to purchase additional
10% shareholding interest in APLNG, expected to close in the first quarter of 2022. -
Generated
$0.3 billion $1.8 billion -
Delivered strong operational performance across the company’s asset base, resulting in full-year production of 1,527 MBOED, excluding
Libya . -
Achieved first production from GMT2, Malikai Phase 2 and SNP Phase 2; completed Tor II project and started production from a third
Montney multi-well pad. -
Generated cash provided by operating activities of
$17.0 billion $15.7 billion $5.3 billion $10.4 billion -
Achieved
14% return on capital employed;16% cash-adjusted return on capital employed. -
Distributed
$6.0 billion $2.4 billion $3.6 billion 38% return of CFO. -
Ended the year with cash, cash equivalents and restricted cash totaling
$5.4 billion $0.4 billion $5.8 billion -
Initiated paced monetization of the company’s CVE investment, generating
$1.1 billion 91 million CVE shares remained outstanding at year-end 2021. -
Advanced the company’s net-zero ambition with an increase in Scope 1 and 2 greenhouse gas emissions-intensity reduction targets to 40
-50% from a 2016 baseline on a net equity and gross operated basis by 2030, from the previous target of 35-45% on only a gross operated basis.
Quarterly Dividend and Variable Return of Cash
Fourth-Quarter Review
Production excluding
In the Lower 48, production averaged 818 MBOED, including 483 MBOED from the Permian, 213 MBOED from the Eagle Ford and 100 MBOED from the Bakken. Lower 48 ended the quarter with 20 drilling rigs and nine frac crews at work, including ongoing activity on the Permian assets acquired in the fourth quarter. In
Earnings and adjusted earnings increased from fourth-quarter 2020 due to higher realized prices and volumes, partially offset by higher operating costs associated with the higher volumes. The company’s total average realized price was
For the quarter, cash provided by operating activities was
Full-Year Review
Production excluding
The company’s total realized price for 2021 was
In 2021, cash provided by operating activities was
Reserves Update
Preliminary 2021 year-end proved reserves are approximately 6.1 billion BOE, with total reserve replacement of
Reserve changes excluding closed acquisitions and dispositions as well as market factors are expected to add 0.4 billion BOE, resulting in an organic reserve replacement ratio of approximately
Final information related to the company’s 2021 oil and gas reserves, as well as costs incurred, will be provided in ConocoPhillips’ Annual Report on Form 10-K, to be filed with the
Outlook
The company’s 2022 operating plan capital budget is
The company’s 2022 production guidance is 1.8 million barrels of oil equivalent per day (MMBOED), including
Guidance for 2022 includes adjusted operating cost of
--- # # # ---
About
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This news release contains forward-looking statements as defined under the federal securities laws. Forward-looking statements relate to future events, plans and anticipated results of operations, business strategies, and other aspects of our operations or operating results. Words and phrases such as “anticipate," “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict," “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and other similar words can be used to identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. Where, in any forward-looking statement, the company expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to be reasonable at the time such forward-looking statement is made. However, these statements are not guarantees of future performance and involve certain risks, uncertainties and other factors beyond our control. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in the forward-looking statements. Factors that could cause actual results or events to differ materially from what is presented include the impact of public health crises, including pandemics (such as COVID-19) and epidemics and any related company or government policies or actions; global and regional changes in the demand, supply, prices, differentials or other market conditions affecting oil and gas, including changes resulting from a public health crisis or from the imposition or lifting of crude oil production quotas or other actions that might be imposed by
Cautionary Note to U.S. Investors – The
Use of Non-GAAP Financial Information – To supplement the presentation of the company’s financial results prepared in accordance with
The company believes that the non-GAAP measures adjusted earnings (both on an aggregate and a per-share basis), adjusted operating costs and adjusted corporate segment net loss are useful to investors to help facilitate comparisons of the company’s operating performance associated with the company’s core business operations across periods on a consistent basis and with the performance and cost structures of peer companies by excluding items that do not directly relate to the company’s core business operations. Operating costs is defined by the company as the sum of production and operating expenses, selling, general and administrative expenses, exploration general and administrative expenses, geological and geophysical, lease rentals and other exploration expenses. Adjusted operating costs is defined as the company’s operating costs further adjusted to exclude expenses that do not directly relate to the company’s core business operations and are included as adjustments to arrive at adjusted earnings to the extent those adjustments impact operating costs. The company further believes that the non-GAAP measure CFO is useful to investors to help understand changes in cash provided by operating activities excluding the timing effects associated with operating working capital changes across periods on a consistent basis and with the performance of peer companies. Free cash flow is defined as CFO net of capital expenditures and investments. The company believes free cash flow is useful to investors in understanding how existing cash from operations is utilized as a source for sustaining our current capital plan and future development growth. Free cash flow is not a measure of cash available for discretionary expenditures since the company has certain non-discretionary obligations such as debt service that are not deducted from the measure. Return on capital employed (ROCE) is a measure of the profitability of the company’s capital employed in its business operations compared with that of its peers. The company calculates ROCE as a ratio, the numerator of which is net income, and the denominator of which is average total equity plus average total debt. The net income is adjusted for after‐tax interest expense, for the purposes of measuring efficiency of debt capital used in operations; net income is also adjusted for non‐operational or special items impacts to allow for comparability in the long-term view across periods. The company believes ROCE is a good indicator of long‐term company and management performance as it relates to capital efficiency, both absolute and relative to the company’s primary peer group. The basis of cash adjusted ROCE utilizes ROCE as defined above and further adjusts for cash and cash equivalents, restricted cash, and short-term investments as well as the after-tax interest income generated by these capital sources, as the company may retain these sources for other strategic purposes and not fully employ such capital for use in operations. As such, cash adjusted ROCE is useful for comparability across periods that may be cyclically impacted by significant cash-related transactions. Adjusted corporate segment net loss is defined as corporate and other segment earnings adjusted for special items. The company believes that the above-mentioned non-GAAP measures, when viewed in combination with the company’s results prepared in accordance with GAAP, provides a more complete understanding of the factors and trends affecting the company’s business and performance. The company’s Board of Directors and management also use these non-GAAP measures to analyze the company’s operating performance across periods when overseeing and managing the company’s business.
Each of the non-GAAP measures included in this news release and the accompanying supplemental financial information has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of the company’s results calculated in accordance with GAAP. In addition, because not all companies use identical calculations, the company’s presentation of non-GAAP measures in this news release and the accompanying supplemental financial information may not be comparable to similarly titled measures disclosed by other companies, including companies in our industry. The company may also change the calculation of any of the non-GAAP measures included in this news release and the accompanying supplemental financial information from time to time in light of its then existing operations to include other adjustments that may impact its operations.
Reconciliations of each non-GAAP measure presented in this news release to the most directly comparable financial measure calculated in accordance with GAAP are included in the release.
Other Terms – This news release also contains the term pro forma underlying production, return of capital, reserve replacement and organic reserve replacement. Pro forma underlying production excludes
References in the release to earnings refer to net income/(loss) attributable to
| Table 1: Reconciliation of earnings to adjusted earnings | |||||||||||||||||||||||||||||||||||||||
| $ Millions, Except as Indicated | |||||||||||||||||||||||||||||||||||||||
4Q21 |
4Q20 |
2021 FY | 2020 FY | ||||||||||||||||||||||||||||||||||||
| Pre-tax | Income tax |
After-tax | Per share of common stock (dollars) |
Pre-tax | Income tax | After-tax | Per share of common stock (dollars) |
Pre-tax | Income tax | After-tax | Per share of common stock (dollars) |
Pre-tax | Income tax |
After-tax | Per share of common stock (dollars) |
||||||||||||||||||||||||
| Earnings | $ |
2,627 |
|
1.98 |
|
(772 |
) |
(0.72 |
) |
8,079 |
|
6.07 |
|
(2,701 |
) |
(2.51 |
) |
||||||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||||||||||
| Impairments | 773 |
|
(20 |
) |
|
753 |
|
0.56 |
|
1,124 |
|
(255 |
) |
869 |
|
0.81 |
|
684 |
|
1 |
|
685 |
|
0.51 |
|
1,680 |
|
(377 |
) |
1,303 |
|
1.20 |
|
||||||
| Transaction and restructuring expenses | 69 |
|
(16 |
) |
|
53 |
|
0.04 |
|
24 |
|
(5 |
) |
19 |
|
0.02 |
|
435 |
|
(94 |
) |
341 |
|
0.26 |
|
24 |
|
(5 |
) |
19 |
|
0.02 |
|
||||||
| Pension settlement expense | 29 |
|
(6 |
) |
|
23 |
|
0.02 |
|
17 |
|
(4 |
) |
13 |
|
0.01 |
|
99 |
|
(20 |
) |
79 |
|
0.06 |
|
44 |
|
(10 |
) |
34 |
|
0.03 |
|
||||||
| (Gain) loss on CVE shares | (297 |
) |
- |
|
|
(297 |
) |
(0.22 |
) |
(447 |
) |
- |
|
(447 |
) |
(0.41 |
) |
(1,040 |
) |
- |
|
(1,040 |
) |
(0.78 |
) |
855 |
|
- |
|
855 |
|
0.79 |
|
||||||
| (Gain) loss on asset sales | (126 |
) |
29 |
|
|
(97 |
) |
(0.07 |
) |
- |
|
- |
|
- |
|
- |
|
(347 |
) |
32 |
|
(315 |
) |
(0.24 |
) |
(551 |
) |
(14 |
) |
(565 |
) |
(0.52 |
) |
||||||
| Unrealized (gain) loss on FX derivative | (21 |
) |
4 |
|
|
(17 |
) |
(0.01 |
) |
17 |
|
(3 |
) |
14 |
|
0.01 |
|
(9 |
) |
1 |
|
(8 |
) |
(0.01 |
) |
(38 |
) |
8 |
|
(30 |
) |
(0.03 |
) |
||||||
| Deferred tax adjustments | - |
|
(35 |
) |
|
(35 |
) |
(0.03 |
) |
- |
|
- |
|
- |
|
- |
|
- |
|
40 |
|
40 |
|
0.03 |
|
- |
|
92 |
|
92 |
|
0.09 |
|
||||||
| Exploration expenses | - |
|
- |
|
|
- |
|
- |
|
84 |
|
(17 |
) |
67 |
|
0.06 |
|
- |
|
- |
|
- |
|
- |
|
84 |
|
(17 |
) |
67 |
|
0.06 |
|
||||||
| Net loss on accelerated settlement of |
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
132 |
|
(31 |
) |
101 |
|
0.08 |
|
- |
|
- |
|
- |
|
- |
|
||||||
| Pending claims and settlements | - |
|
- |
|
|
- |
|
- |
|
46 |
|
(10 |
) |
36 |
|
0.03 |
|
48 |
|
(10 |
) |
38 |
|
0.03 |
|
(75 |
) |
9 |
|
(66 |
) |
(0.06 |
) |
||||||
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(48 |
) |
(48 |
) |
(0.04 |
) |
|||||||
| Adjusted earnings / (loss) | $ |
3,010 |
|
2.27 |
|
(201 |
) |
(0.19 |
) |
8,000 |
|
6.01 |
|
(1,040 |
) |
(0.97 |
) |
||||||||||||||||||||||
| The income tax effects of the special items are primarily calculated based on the statutory rate of the jurisdiction in which the discrete item resides. | |||||||||||||||||||||||||||||||||||||||
| Table 2: Reconciliation of reported production to pro forma underlying production | |||||||||||||
| In MBOED, Except as Indicated | |||||||||||||
4Q21 |
4Q20 |
2021 FY | 2020 FY | ||||||||||
| Total Reported ConocoPhillips Production | 1,608 |
|
1,169 |
|
1,567 |
|
1,127 |
|
|||||
| Adjustments: | |||||||||||||
(41 |
) |
(25 |
) |
(40 |
) |
(9 |
) |
||||||
| Total Production excluding |
1,567 |
|
1,144 |
|
1,527 |
|
1,118 |
|
|||||
| Closed Dispositions1 | (2 |
) |
(11 |
) |
(12 |
) |
(31 |
) |
|||||
| Closed Acquisitions 2 | - |
|
322 |
|
- |
|
322 |
|
|||||
| Total Pro Forma Underlying Production | 1,565 |
|
1,455 |
|
1,515 |
|
1,409 |
|
|||||
| Estimated Production Curtailments3 | - |
|
- |
|
- |
|
80 |
|
|||||
| Estimated Downtime from Winter Storm Uri4 | - |
|
- |
|
12 |
|
- |
|
|||||
| Estimated Uplift from 2 to 3 stream conversion5 | (40 |
) |
- |
|
(10 |
) |
- |
|
|||||
| Total reported production excludes impacts from the Shell Permian acquisition as an accounting close date of |
|||||||||||||
| 1Includes production related to the completed Australia-West disposition and various Lower 48 dispositions. | |||||||||||||
| 2Includes production related to the acquisition of |
|||||||||||||
| 3Estimated production impacts from price related curtailments, which are excluded from Total Production excluding |
|||||||||||||
| 4Estimated production impacts from Winter Storm Uri, which are excluded from Total Production excluding |
|||||||||||||
| 5Estimated production impacts from the conversion of |
|||||||||||||
| Table 3: Reconciliation of net cash provided by operating activities to free cash flow | ||||||||
| $ Millions, Except as Indicated | ||||||||
4Q21 |
2021 FY | |||||||
| Net Cash Provided by Operating Activities | 5,868 |
16,996 |
||||||
| Adjustments: | ||||||||
| Net operating working capital changes | 373 |
1,271 |
||||||
| Cash from operations | 5,495 |
15,725 |
||||||
| Capital expenditures and investments | 1,557 |
5,324 |
||||||
| Free Cash Flow | 3,938 |
10,401 |
||||||
| Table 4: Calculation of Reserve Replacement Ratios | ||||||||||
| MMBOE, Except as Indicated | ||||||||||
| End of 2020 | 4,459 |
|
||||||||
| End of 2021 | 6,101 |
|
||||||||
| Change in reserves | 1,642 |
|
||||||||
| Production1 | 593 |
|
||||||||
| Change in reserves excluding production1 | 2,235 |
|
||||||||
| Total reserve replacement ratio | 377 |
% |
||||||||
| Production1 | 593 |
|
||||||||
| Purchases2 | (1,169 |
) |
||||||||
| Sales2 | 54 |
|
||||||||
| Market Factors3 | (718 |
) |
||||||||
| Changes in reserves excluding production1, purchases2, sales2 and market factors3 | 402 |
|
||||||||
| Organic reserve replacement ratio, excluding Market Factors | 68 |
% |
||||||||
| 1Production includes fuel gas and |
||||||||||
| 2Purchases refers to acquisitions and sales refers to dispositions. | ||||||||||
| 3Market factors represent the use of historical 12-month pricing in measuring proved reserves as prescribed by |
||||||||||
| Table 5: Return on capital employed (ROCE) and Cash Adjusted ROCE | ||||||||||||||||||
| $ Millions, Except as Indicated | ||||||||||||||||||
| ROCE | CASH ADJUSTED ROCE | |||||||||||||||||
| Numerator | 2021 FY | 2020 FY | 2021 FY | 2020 FY | ||||||||||||||
| Net Income Attributable to |
8,079 |
|
(2,701 |
) |
8,079 |
|
(2,701 |
) |
||||||||||
| Adjustment to exclude special items | (79 |
) |
1,661 |
|
(79 |
) |
1,661 |
|
||||||||||
| Net income attributable to noncontrolling interests | - |
|
46 |
|
- |
|
46 |
|
||||||||||
| After-tax interest expense | 698 |
|
637 |
|
698 |
|
637 |
|
||||||||||
| After-tax interest income | - |
|
- |
|
(26 |
) |
(77 |
) |
||||||||||
| ROCE Earnings | 8,698 |
|
(357 |
) |
8,672 |
|
(434 |
) |
||||||||||
| Denominator | ||||||||||||||||||
| Average total equity¹ | 42,293 |
|
31,528 |
|
42,293 |
|
31,528 |
|
||||||||||
| Average total debt² | 19,338 |
|
15,123 |
|
19,338 |
|
15,123 |
|
||||||||||
| Average total cash³ | - |
|
- |
|
(8,430 |
) |
(7,427 |
) |
||||||||||
| Average capital employed | 61,631 |
|
46,651 |
|
53,201 |
|
39,224 |
|
||||||||||
| ROCE (percent) | 14 |
% |
-1 |
% |
16 |
% |
-1 |
% |
||||||||||
| ¹Average total equity is the average of beginning total equity and ending total equity by quarter. | ||||||||||||||||||
| ²Average total debt is the average of beginning long-term debt and short-term debt and ending long-term debt and short-term debt by quarter. | ||||||||||||||||||
| 3Average total cash is the average of beginning cash, cash equivalents, restricted cash and short-term investments and ending cash, cash equivalents, restricted cash and short-term investments by quarter. | ||||||||||||||||||
| Table 6: Reconciliation of production and operating expenses to adjusted operating costs | |||||||||
| $ Millions, Except as Indicated | |||||||||
| 2021 FY | 2022 FY Guidance |
||||||||
| Production and operating expenses | 5,694 |
|
~6,600 |
||||||
| Selling, general and administrative (G&A) expenses | 719 |
|
~500 |
||||||
| Exploration G& |
300 |
|
~200 |
||||||
| Operating costs | 6,713 |
|
~7,300 |
||||||
| Adjustments to exclude special items: | |||||||||
| Less pending claims and settlements | (48 |
) |
- |
|
|||||
| Less transaction and restructuring expenses | (404 |
) |
- |
|
|||||
| Adjusted operating costs | 6,261 |
|
~7,300 |
||||||
| Table 7: Reconciliation of adjusted corporate segment net loss | |||||||||
| $ Millions, Except as Indicated | |||||||||
| 2021 FY | 2022 FY Guidance |
||||||||
| Corporate and Other earnings | (210 |
) |
~(1,000 |
) |
|||||
| Adjustments to exclude special items: | |||||||||
| Less loss (gain) on CVE share | (1,040 |
) |
- |
|
|||||
| Less transaction and restructuring expenses | 109 |
|
- |
|
|||||
| Less pension settlement expense | 99 |
|
- |
|
|||||
| Less unrealized loss (gain) on FX derivative | (9 |
) |
- |
|
|||||
| Less pending claims and settlements | 48 |
|
- |
|
|||||
| Less tax on special items | 16 |
|
- |
|
|||||
| Adjusted corporate segment net loss | (987 |
) |
~(1,000 |
) |
|||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20220203005033/en/
281-293-1149
dennis.nuss@conocophillips.com
Investor Relations
281-293-5000
investor.relations@conocophillips.com
Source:
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