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ConocoPhillips Back In Black In Q3, Further Cuts Capex

Offshore

The largest independent U.S. exploration and production company ConocoPhillips (NYSE:COP) returned to profit in the third quarter with earnings beating analyst estimates, and further cut its capital guidance for 2017 as it focuses on financial and shareholder returns.

ConocoPhillips reported on Thursday Q3 adjusted earnings—excluding special items—of $0.16 per share, compared to a loss of $0.66 per share for the third quarter last year. The Q3 2017 earnings per share (EPS) easily beat the analyst consensus of $0.08.

The company lowered its full-year capital expenditure guidance to $4.5 billion, a 10 percent reduction from initial guidance. This is the second reduction from the initial 2017 guidance of $5.0 billion announced in February. Upon reporting Q2 2017 figures in July, Conoco reduced its full-year capex guidance to $4.8 billion.

ConocoPhillips, like all U.S. companies, is looking to further cut costs, and has managed to reduce its production and operating expenses by 20 percent in Q3 compared to the same quarter last year, and cut its adjusted operating costs by 15 percent year on year.

The firm expects to generate proceeds from asset sales worth a total of $16 billion this year.

ConocoPhillips is also proceeding with a $3.0-billion share repurchase program, including repurchases of $1.0 billion in shares in Q3, which reduced ending share count by 2 percent compared to the end of Q2.   

For the nine months between January and September, ConocoPhillips generated $4.5 billion in cash from operations, received proceeds from divestments of $13.7 billion, paid $6.6 billion to reduce debt, and repurchased company common stock of $2.0 billion.  

Related: Canada’s Oil Output To Grow For Decades To Come

The company expects to cut its debt to below $20 billion by the end of this year.

“While the outlook for commodity prices has improved, we remain committed to our disciplined strategy. We are focused on free cash flow generation, strong financial returns, shareholder value creation and distributions through the cycles,” said Ryan Lance, chairman and chief executive officer.

At 1:13 p.m. EDT on Thursday, Conoco’s shares were up 2.94 percent on the NYSE, at $51.43.

By Tsvetana Paraskova for Oilprice.com

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