Conoco Phillips (COP) Q1 2017


Alan J. Hirshberg – ConocoPhillips

Efficiency drives improved energy production

“Our first quarter production out of this piece of our business was up 2% or 3% over what we were predicting, say, a quarter ago. And it’s the continuing drumbeat of improvements from technology and other efficiency drivers, things like data analytics that are helping us continue to get more and more efficient in the results that we get there….. If I had to call out one thing that’s really gained steam over the last couple of years and it’s paying significant dividends for us now, it would be just generically data analytics, big data where we’ve been working hard on that for quite a few years, but we’ve been able to standardize and drive it through more and more of our operations and have it much more handily helping us make day-to-day decisions on how to develop as a stronger force. ”

There is deflation in the non-shale outside the US

“…there’s really been no big changes in my views about inflation for this year versus the comments I made on the last quarter call. If I look at our spending year-to-date where we track this every month, we are still net deflation year-to-date as a company. So we’ve certainly experienced more deflation in our costs after the first quarter in 2017 versus 2016 and there is a mix there.”

Don Wallette, Jr. – ConocoPhillips

Deflationary impacts of improving productivity and efficiency outside of the U.S. is expected to persist this year

“Our model predicts that we will continue to see deflationary forces throughout this year outside the U.S. internationally, but that they’ll be becoming smaller and smaller, and that by the time you get to next year that you would stop seeing significant deflation even outside the U.S. and that would start to even up”

Recovering oil prices help boost the bottom line

“This quarter, Brent averaged about $54 a barrel and Henry Hub averaged about $3.30 an MCF. This resulted in an average overall realized price of about $36 a barrel. We reported an adjusted loss of $19 million or $0.02 a share. Year-over-year, adjusted earnings improved nearly $1.2 billion. The biggest driver was a 58% improvement in realized prices, but we also benefited from the actions we’ve been taking to improve our cost structure…One way to think about this quarter is that with $54 Brent, on an adjusted basis, we were very close to being profitable. ”