COP

After the call, February 3, 2022, SeekingAlpha:

Conoco underperformed at the margin following an earnings beat, as a relatively conservative call paired with strong relative performance saw shares down ~1.5%. It would likely be healthy for the industry for all shale companies adopt Conoco's prudent outlook:

• Macro - CEO Lance sees 800-900kb/d of supply growth from the US this year, a slight increase from the 800kb/d increase he discussed at a conference in late January; he went on to address US supply growth's impact on the macro by referencing 2014 growth levels, saying "if we're getting back to the level of growth in the U.S. that if you're not worried about it, you should be."
• M&A - further consolidation makes sense as more assets need to be in the hands of "responsible" operators like COP; that said, following Concho and Shell, the bar is high for new acquisitions.
• Rigs - Conoco is running 20 rigs in the lower 48 and plans to add 4 more throughout the year; 1 rig will go into the Bakken and COP will continue to run 4 rigs on the newly acquired Shell acres.

Like Chevron, Conoco appears to be running the business for "mid-cycle" oil prices.

Payouts are manageable, as the company continues to pay down debt. The production profile is unchanged, as Management high-grades the portfolio. And the CEO is keeping an eye towards the macro, in hopes the industry doesn't return to a "growth for growth's sake" mentality. A responsible way to run a business for the long term, but perhaps not likely to drive outperformance when oil prices hit new highs daily. 

Previously posted:

COP, earnings beat: whoo-hoo! Link here. I've accumulated shares in COP longer than almost any other holding. 

The first company I ever invested in? BNI -- Burlington Northern -- which ended up being bought by Berkshire Hathaway. Another early stock, began accumulating forty years ago, SRE -- although it was called something else then: San Diego Gas & Electric. Texaco was an early investment; long story; I've told it before, but truly amazing through thick and thin. Now a dilemma, but we'll talk about that later. Right now COP:

• adjusted earnings per share of $2.27 beat estimates of $2.19 for Q4.
• additional $1b to be allocated to shareholder returns in 2022 for a total of $8b (~7% of current market cap).
• includes a $0.46 base dividend (unchanged) and a Q2 special dividend of $0.30.
• bumped the capex plan to $7.2b versus 2021 spend of $5.3b.
• expects to produce 1.8mb/d in 2022 versus 2021 production of 1.6mb/d, and Q4 production of ~1.8mb/d (pro-forma).

COP, more here:

• ConocoPhillips press release: Q4 Non-GAAP EPS of $2.27 beats by $0.08.

• Outlook: The company’s 2022 operating plan capital budget is $7.2 billion; production guidance is 1.8 million barrels of oil equivalent per day.

• First-quarter 2022 production is expected to be 1.75 MMBOED to 1.79 MMBOED, essentially flat to fourth-quarter 2021 on a pro forma basis.

• Guidance for 2022 includes adjusted operating cost of $7.3 billion and some anticipated inflation; adjusted corporate segment net loss of $1.0 billion; and depreciation, depletion and amortization of $7.9 billion. Guidance excludes potential special items.

Transcript, COP: link here.

Analysts: one of my favorite contributors over at SeekingAlpha was also a long-term investor in COP. 

He grew disillusioned when COP announced it would cut its dividend starting in late 2021 / early 2022. That contributor, who I thought really knew his/her stuff, completely missed what COP was going to do. The good news: his cost basis in COP was so low, he "couldn't afford" to sell it.

Flashback: COP -- well design provides narrative for the Bakken, 2018 - 2019. Michael Filloon.  

One of the best posts ever: Michael Fitzsimmons, December 6, 2021. The comments are well worth reading. Hopefully this article does not disappear into the cloud.