ConocoPhillips beats estimates and posts highest profit since 2018

(Bloomberg) – ConocoPhillips topped estimates as rising commodity prices led America’s largest independent oil producer to the highest profit in nearly three years.

Conoco posted second-quarter adjusted earnings of $ 1.27 per share, up from $ 1.13 estimated in a Bloomberg survey of analysts. The stock rose 1.9% on the pre-market.

US energy companies are using buyouts and dividends to lure investors into the sector after years of poor performance that left it just 2.6% of the S&P 500, up from over 12% a decade ago . Conoco became one of the first major energy companies to increase shareholder returns in response to high commodity prices when it increased its share buyback by two-thirds to $ 2.5 billion a year in June.

As such, the company was not expected to increase cash returns any further.

This is “a watershed moment for the industry,” CEO Ryan Lance said in the statement. “ConocoPhillips is uniquely responding at this time with a credible multi-year plan, strong and continued execution. “

READ: Conoco buyout up 67% signals tight US oil supply

Lance has cut capital spending and slowed production growth as part of a commitment to only reinvest half of its cash flow in new drilling and return the rest to shareholders. The pledge underscores how U.S. oil producers maintain production discipline and are unlikely to return to the high growth rates seen in the past.

A key question is what Conoco executives plan to do with the company’s cash flow worth around $ 7 billion. The company is believed to be among several contenders for Royal Dutch Shell Plc’s Permian Basin assets, worth up to $ 10 billion, people familiar with the matter said last month. The patch of US shale has become a hotbed of fusion activity this year, and Conoco struck the largest deal to date with the purchase of $ 13 billion shares of Concho Resources Inc.

The company will host a call to discuss earnings results at noon New York time.

© 2021 Bloomberg LP

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