ConocoPhillips, a prominent U.S. oil producer, surpassed the expectations of Wall Street for its third-quarter profit and made a significant move by increasing its quarterly dividend by 14%, driven by favorable price dynamics and increased production.
The company’s shares surged by more than 5% in response to the dividend increase. ConocoPhillips announced its intent to maintain this higher dividend level through 2024, contingent on the volatility of oil and gas prices.
This dividend announcement unfolds within the backdrop of an ongoing industry consolidation, resulting in the emergence of formidable competitors in the U.S. shale sector. ConocoPhillips, a key player in this domain, boasts a daily production capacity of 1.8 million barrels of oil equivalent.
Notably, recent developments in the industry have seen energy giants Exxon and Chevron Corp. acquire shale producers Pioneer Natural Resources and Hess Corp. for over $50 billion each in stock transactions.
ConocoPhillips’ Chief Executive, Ryan Lance, remains unfazed by the intensified competition within the U.S. Permian basin. While acknowledging that consolidation trends will persist, Lance assured analysts during a conference call that ConocoPhillips maintains stringent criteria for considering mergers and acquisitions.
In a move that demonstrates its commitment to shareholders, ConocoPhillips plans to return approximately half of its cash flow, equivalent to $11 billion, this year. This figure surpasses the proportional returns offered by Exxon and Chevron.
Higher oil prices in the third quarter contributed to a 17% rise in adjusted earnings compared to the previous quarter, reaching $2.6 billion. However, when measured against the same quarter the previous year, profits experienced a 43% decline due to a retreat in oil prices from multi-year highs, influenced by the Russia-Ukraine conflict.
ConocoPhillips reported a record production of 1.806 million barrels of oil equivalent per day (boepd) for the third quarter, representing a year-over-year increase of 52,000 boepd. The company anticipates a fourth-quarter production volume of up to 1.90 million boepd.
Excluding exceptional items, ConocoPhillips disclosed a third-quarter profit of $2.16 per share, surpassing the average estimate of $2.08 per share as reported by LSEG data.
Scott Hanold, an analyst at RBC Capital Markets, commended the results, emphasizing that robust production and several new production start-ups position ConocoPhillips for continued momentum through 2024.
ConocoPhillips’ ability to deliver better-than-expected results and enhance its dividend payout underscores its resilience and competitiveness in the dynamic energy sector.
