Despite ConocoPhillips' top executive terming 2017 "an exceptional year," investors had little cheer for the company after the oil and gas supermajor's fourth-quarter 2017 earnings call on a down day on Wall Street.
Conoco reported earnings of $1.6 billion, or $1.32 per share, for the fourth quarter of 2017, compared to a $35 million loss in 2016's fourth quarter. That topped the S&P Global Market Intelligence consensus estimate of a profit of 44 cents per share. Conoco's normalized earnings of 45 cents per share met the S&P consensus estimate.
Chairman and CEO Ryan Lance credited the strong quarter and full-year performance to strategic discipline and "a very significant portfolio reset."
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"We substantially reduced our exposure to North American gas and oil sands, with dispositions that generated about $16 billion of proceeds. Our lower sustaining capital and our peer-leading sustaining price enabled us to deliver top-tier free cash flow," he said during the company's earnings call Feb. 2.
"At 2017 average Brent prices of $54 per barrel, our cash flow from operations exceeded CapEx by $2.5 billion," he continued. "We turned the corner on profitability with full-year adjusted earnings of more than $700 million. And more importantly, we're in a much stronger position to deliver improved cash and financial returns even at crude prices of $50 per barrel or less."
Lance said the sales of the assets reduced Conoco's debt by nearly 30% to less than $20 billion. "It's hard to argue that 2017 wasn't an exceptional year for ConocoPhillips," he said.
Even with an increase in oil prices, Conoco will not increase its CapEx budget for 2018 but will use excess cash flow for continued debt reduction, dividend growth and share buybacks, he said.
"We have already paid down an additional $2.25 billion of debt this year. We just announced a 7.5% increase in our quarterly dividend, and we're upsizing our planned 2018 share repurchases by over 30%, to $2 billion," he said.
Conoco said little about its "big 3" unconventional plays in the U.S. — the Eagle Ford and Bakken shales and the Delaware Basin — save for mentioning that production had hit "an inflection point" in 2017 before growing again, with fourth-quarter production in those plays outpacing 2016's fourth quarter by 10%.
The company also discussed its acquisition of the remaining 22% working interest on its assets on Alaska's Western North Slope from Anadarko Petroleum Corp. for approximately $400 million.
"We now own 100% of these assets containing about 200 million barrels of gross reserves and about 900 million barrels of risked gross resource, with gross production of about 63,000 barrels per day in 2017," Executive Vice President of Production, Drilling and Projects Alan Hirshberg said.
Despite the positive commentary, Conoco shares lost 2.8% on Feb. 2, to $57.72. The S&P 500 dropped 2.1% on the day.

