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A key analysis of ConocoPhillips’ balance sheet

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ConocoPhillips’ balance sheet

In this part, we’ll take a deeper look at ConocoPhillips’ (COP) balance sheet for the past couple of quarters.

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ConocoPhillips’ assets

According to ConocoPhillips’s balance sheet, the company’s assets have gone down from ~$120 billion in 3Q13 to ~$119 billion in 3Q14. This represents a year-over-year decline of about $1 billion. Sequentially, assets reduced by ~$2 billion from ~$121 billion in 2Q14 to ~$119 billion in 3Q14. Cash and cash equivalents were $5.4 billion, ~$0.7 billion less than the previous quarter.

During the quarter, ConocoPhillips (COP) sold its Nigerian upstream business to Oando Energy Resources (OER) for a total consideration of $1.4 billion.

ConocoPhillips (COP) is also funding ~$4.6 billion for capital expenditures and investments and to pay dividends of $0.9 billion.

Liabilities and equity

ConocoPhillips’ balance sheet shows total current liabilities in its 3Q14 report at ~$14 billion. As you can see in the above chart, this is less than its total current assets, which are ~$16 billion. If we calculate the quick ratio, or current assets excluding inventory/ current liabilities, we arrive at the figure 1.05x. This represents good financial health since ratios over 1 indicate that the company has sufficient cash to cover its short-term debts.

The company’s long-term debt has also been relatively steady in 2014. The latest quarterly figure showed a drop of ~$2.7 billion compared to a year ago. This indicates that the company is not piling on debt to fund its capital expenditures.

ConocoPhillips’ (COP) total equity has grown from ~$51 billion in 3Q13 to ~$56 billion in 3Q14. Let’s compare this to ConocoPhillips’ (COP) peers for the same period. Occidental Petroleum’s (OXY) total equity grew to ~$44 billion from ~$43 billion. Anadarko Petroleum’s (APC) total equity saw a decline from ~$24 billion to ~$23 billion. Apache Corporation’s (APA) total equity more or less remained stagnant at ~$33 billion. All these companies are components of the Energy Select Sector SPDR ETF (XLE).

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