ConocoPhillips misses profit estimates, boosts share buyback by $10 billion


(Reuters) – ConocoPhillips (COP.N) boosted its share buyback program by $10 billion on Tuesday even as lower oil and gas prices continued to batter the world’s largest independent oil and gas producer’s profit.

Investors of oil and gas drillers have been pressing companies to boost buybacks and dividends instead of growing production at a time when commodity pricing remains volatile.

ConocoPhillips’ profit fell short of analysts’ estimates in the fourth quarter after an 11.3% drop in its average realized price per barrel and a fall in total production.

The results are no different from what are expected from other exploration and production (E&P) companies, said Bill Selesky, a senior analyst at Argus Research.

E&P companies are missing quarterly numbers on lower realized prices for oil, natural gas and natural gas liquids, Selesky said.

Houston-based ConocoPhillips’ total production, excluding Libya, fell by 24,000 boe/d to 1.289 million boe/d in the quarter.

Shares of the company were down nearly 2% at $58.11.

The company confirmed it would spend $6.5 billion to $6.7 billion in 2020 but revised down its annual production forecast range to 1.230 to 1.270 million barrels of oil equivalent per day (boe/d) due to the impact of a third-party pipeline outage at the Kebabangan field in Malaysia.

Analysts on average were expecting the company to spend $6.48 billion in 2020, with production at 1.287 million boe/d.

“Given COP’s consistent outperformance for the last two years, guidance slightly below consensus expectations will probably slightly tarnish the company’s gold reputation,” Scotiabank analyst Paul Cheng said in a note.

While other E&P companies have reduced capital expenditures for the year and cut down on their drilling program, ConocoPhillips said in November it would boost its oil and gas production by about 3% per year until 2029 while keeping its annual spending to about $7 billion.

In 2019, the U.S. oil rig count, an early indicator of future output, notched its first annual decline since 2016 as independent E&P companies cut spending on new drilling.

The company reported a 61.5% plunge in net income, partly hit by impairment charges of $386 million related to the pending sale of oil and gas properties in Colorado.

Excluding items, profit was 76 cents per share, missing analysts’ estimates of 80 cents, according to IBES data from Refinitiv.

Reporting by Shanti S Nair in Bengaluru; Editing by Maju Samuel