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Can ConocoPhillips Reduce Net Losses in 4Q16?

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EPS estimates

For 4Q16, excluding any one-time items, Wall Street analysts are expecting ConocoPhillips (COP) to report EPS (earnings per share) of -$0.59 to -$0.05. The current consensus EPS estimate for 4Q16 is -$0.41.

On a year-over-year basis, ConocoPhillips’s 4Q16 current consensus EPS estimate is ~$0.49 higher than its 4Q15 adjusted EPS of -$0.90. Sequentially, COP’s 4Q16 current consensus EPS estimate is ~$0.25 higher than -$0.66 in 3Q16.

For 2016, excluding any one-time items, Wall Street analysts are expecting ConocoPhillips to report adjusted net income of -$3.5 billion, or -$2.81 per share, from -$1.7 billion, or -$1.40 per share, in 2015.

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COP’s earnings performance in 3Q16

In its 3Q16 earnings release in October 2016, ConocoPhillips reported negative but sequentially higher adjusted net income compared to 2Q16. Its 3Q16 adjusted EPS was $0.13 higher than -$0.79 in 2Q16.

The company reported sequentially higher production costs and higher costs of purchased commodities in 3Q16 compared to 2Q16. But higher revenues, along with lower exploration expenses, higher income tax benefits, and gains from foreign currency transactions, boosted its 3Q16 adjusted net income. Its exploration expenses fell to ~$457.0 million in 3Q16, from ~$610.0 million in 2Q16.

Below are the net incomes of ConocoPhillips’s peers in 3Q16:

  • Marathon Oil (MRO): -$97.0 million, or -$0.23 per share
  • Diamondback Energy (FANG): -$2.2 million, or -$0.03 per share
  • EOG Resources (EOG): -$190.0 million, or -$0.35 per share

The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) generally invests at least 80.0% of its total assets in oil and gas exploration companies.

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