ConocoPhillips ended a string of three consecutive losses by posting a profit in the first quarter as rising oil and gas prices outweighed the cost of unwinding in-the-red hedges.
The Houston-based company also announced Tuesday plans to sell its 10 per cent stake in Cenovus Energy Inc., valued at about $2 billion at current prices, and use the proceeds to fund increased share buybacks. Conoco said in a statement it will reduce debt by $5 billion over the next five years. The shares rose as much as 2.4 per cent in pre-market trading in New York.
Conoco became the first large U.S. independent oil producer to resume its share buyback, worth $1.5 billion a year, in March after crude prices rallied from their 2020 lows. Despite its acquisition of Concho Resources Inc. giving it a prime drilling position in the Permian Basin, Conoco is restraining future capital spending, like many of its peers, and pledging to reinvest just 70 per cent of its cash flow while returning the rest to shareholders through dividends and the share buybacks.
Conoco’s adjusted earnings were 69 cents a share in the first quarter, beating the 54-cent average of analysts’ estimates in a Bloomberg survey.
Previously, Conoco warned its profit would be hit by $300 million of hedging losses in the period, partly due to positions inherited from its $11.4 billion takeover of Concho last year. The company has now closed out all those hedges, it said.
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