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Lower Crude Prices Pull Down ConocoPhillips’s Earnings Estimates

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Jan. 29 2016, Updated 3:46 p.m. ET

ConocoPhillips’s 4Q15 revenue estimates

ConocoPhillips (COP) will release its 4Q15 earnings on February 4, 2016. 4Q15 revenue estimates stand at $8.0 billion. Revenue in the corresponding quarter of 2014 was ~$11.7 billion.

In 3Q15, ConocoPhillips reported revenue of $7.5 billion. This was 42% lower than the revenue reported in 3Q14. Sequentially, revenue declined by ~10%. Given that revenues have fallen short of analysts’ estimates in two of the past three quarters of 2015, investors will watch to see if this trend continues in 4Q15.

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ConocoPhillips’s 4Q15 earnings per share estimate

ConocoPhillips’s 4Q15 loss per share estimate is $0.57. The corresponding quarter’s EPS (earnings per share) in 2014 were $0.58. The 3Q15 loss per share was $0.38.

ConocoPhillips’s fiscal 2015 revenue and earnings estimates

For 2015, analysts expect ConocoPhillips to report revenue of ~$32 billion, ~39% lower than the 2014 revenue of $52.5 billion. Analysts expect ConocoPhillips to report an adjusted loss of ~$1.08 per share, versus 2014’s profit per share of $5.30.

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Why were ConocoPhillips’s revenue and EPS estimates lowered?

2015 was particularly bad for upstream oil companies given the rapid decline in crude oil prices. The sub-$40 oil prices in 4Q15 were yet another blow to upstream oil companies and explain the lower 4Q15 EPS estimate for ConocoPhillips. Lower prices would mean lower price realizations for the company, which could hurt its fiscal 2015 revenues and earnings.

ConocoPhillips’s 3Q15 earnings recap

ConocoPhillips reported a 3Q15 adjusted net loss of $466 million, compared with adjusted earnings of $1.6 billion in 3Q14. Upstream companies such as Apache (APA), Anadarko Petroleum (APC), Hess (HES), and Marathon Oil (MRO) recorded adjusted net losses of $21 million, $291 million, $358 million, and $138 million, respectively, in 3Q15. These companies combined make up ~10% of the Vanguard Energy ETF (VDE).

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